TELLABS, INC.

2001 STOCK OPTION PLAN

 

Article 1.

Establishment, Objectives, and Duration

	**1.1**	**Establishment of the Plan**.  Tellabs, Inc., a Delaware corporation (hereinafter referred toas the "Company"), hereby establishes the incentive compensation plan to be known as the Tellabs, Inc. 2001Stock Option Plan (hereinafter referred to as the "Plan").

	Subject to approval by the Company's stockholders, the Plan shall become effective as of January 24,2001 (the "Effective Date") and shall remain in effect as provided in Section 1.3 hereof.

	**1.2**	**Purpose of the Plan**.  The purpose of this Plan is to benefit the Company and itssubsidiaries and affiliated companies by enabling the Company to offer to certain employees stock based incentivesand other equity interests in the Company, thereby giving them a stake in the growth and prosperity of the Companyand encouraging the continuance of their services with the Company or subsidiaries or affiliated companies.

	**1.3**	**Duration of the Plan**.  The Plan shall commence on the Effective Date and shall remain ineffect, subject to the right of the Board of Directors to amend or terminate the Plan at any time pursuant toArticle 11 hereof, until all Shares subject to it shall have been purchased or acquired according to the Plan'sprovisions.

 

Article 2.

Definitions

	Whenever used in the Plan, the following terms shall have the meanings set forth below, and when the meaning isintended, the initial letter of the word shall be capitalized:

	"**Award**" means, individually or collectively, a grant under this Plan of Nonqualified StockOptions, Incentive Stock Options or Stock Appreciation Rights.

	**"Award Date"** means the date an Award is granted to the Participant.

	"**Award Agreement**" means a writing provided by the Company to each Participant setting forth theterms and provisions applicable to Awards granted under this Plan.  The Participant's acceptance of the terms of theAward Agreement shall be evidenced by his or her continued employment without written objection before any exercise orpayment of the Award.  If the Participant objects in writing, the grant of the Award shall be revoked.

	"**Board**" or "**Board of Directors**" means the Board of Directors of the Company.

	**"Change in Control"** means the first to occur of:

		(a)	Any "person" (as defined in Section 13(d) and 14(d) of the Exchange Act), excluding forthis purpose, the Company or any Subsidiary of the Company, or any employee benefit plan of the Company or anySubsidiary of the Company, or any person or entity organized, appointed or established by the Company for or pursuantto the terms of any such plan which acquires beneficial ownership of voting securities of the Company, is or becomesthe "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly ofsecurities of the Company representing twenty percent (20%) or more of the combined voting power of the Company'sthen outstanding securities; provided, however, that no Change in Control will be deemed to have occurred as a resultof a change in ownership percentage resulting solely from an acquisition of securities by the Company; and providedfurther that no Change in Control will be deemed to have occurred if a person inadvertently acquires an ownershipinterest of twenty percent (20%) or more but then promptly reduces that ownership interest below twenty percent (20%);

		(b)	During any two (2) consecutive years (not including any period beginning prior to the Effective Date),individuals who at the beginning of such two (2) year period constitute the Board of Directors of the Company and anynew director (except for a director designated by a person who has entered into an agreement with the Company to effecta transaction described elsewhere in this definition of Change in Control) whose election by the Board or nominationfor election by the Company's stockholders was approved by a vote of at least two-thirds of the directors then still inoffice who either were directors at the beginning of the period or whose election or nomination for election waspreviously so approved (such individuals and any such new director, the "Incumbent Board") cease for anyreason to constitute at least a majority of the Board;

		(c)	Consummation of a reorganization, merger or consolidation or sale or other disposition of all orsubstantially all of the assets of the Company (a "Business Combination"), in each case, unless, followingsuch Business Combination, (i) all or substantially all of the individuals and entities who were the beneficialowners of outstanding voting securities of the Company immediately prior to such Business Combination beneficially own,directly or indirectly, more than fifty percent (50%) of the combined voting power of the then outstanding votingsecurities entitled to vote generally in the election of directors, as the case may be, of the company resulting fromsuch Business Combination (including, without limitation, a company which as a result of such transaction owns theCompany or all or substantially all of the Company's assets either directly or through one or more subsidiaries) insubstantially the same proportions as their ownership, immediately prior to such Business Combination of theoutstanding voting securities of the Company; (ii) no person (excluding any company resulting from such BusinessCombination or any employee benefit plan (or related trust) of the Company or such company resulting from such BusinessCombination) beneficially owns, directly or indirectly, twenty percent (20%) or more of, respectively, the thencombined voting power of the then outstanding voting securities of such company except to the extent that such ownership existed prior to the Business Combination; and (iii) at least a majority of the members of the board of directors of the companyresulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination;

		(d)	Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company;or

		(e)	A tender offer (for which a filing has been made with the Securities and Exchange Commission("SEC")) which purports to comply with the requirements of Section 14(d) of the Securities Exchange Act of1934 and the corresponding SEC rules) is made for the outstanding voting securities of the Company, then the first tooccur of:

		(1)	Any time during the offer when the person making the offer owns or has accepted for paymentsecurities of the Company representing twenty-five percent (25%) or more of the combined  voting power of the Company'sthen outstanding securities, or

		(2)	Three business days before the offer is to terminate unless the offer is withdrawn first if theperson making the offer could own, by the terms of the offer plus any securities owned by such person, securities ofthe Company representing fifty percent (50%) or more of the combined voting power of the Company's then outstandingsecurities when the offer terminates.

	"**Code**" means the Internal Revenue Code of 1986, as amended from time to time, or any successorlegislation thereto.

	"**Committee**" means the Committee as specified in Article 3 herein appointed by the Board toadminister the Plan with respect to grants of Awards.

	"**Common Stock**" means the common stock, $.01 par value per share, of the Company.

	"**Company**" means Tellabs, Inc., a Delaware corporation, as well as any successor to such entityas provided in Article 13 herein.

	"**Director**" means any individual who is a member of the Board of Directors of the Company.

	"**Disability**" shall have the meaning ascribed to such term in the long-term disability planwhich governs any such benefits to which Participant may be or may become entitled.  If no long term disability planis in place with respect to a Participant, then with respect to that Participant, Disability shall mean:  for the firsttwenty-four (24) months of disability, that the Participant is unable to perform his or her job; thereafter, that theParticipant is unable to perform any and every duty of any gainful occupation for which the Participant is reasonablysuited by training, education or experience.

	"**Effective Date**" shall have the meaning ascribed to such term in Section 1.1 hereof.

	"**Employee**" means any employee of the Company or any Subsidiary and any individual who hasaccepted employment with the Company or any Subsidiary; but shall not include any individual while such individual isproviding services to the Company or any Subsidiary in the capacity of, or is or was designated by the Company or aSubsidiary as, an independent contractor.

	"**Exchange Act**" means the Securities Exchange Act of 1934, as amended from time to time, or anysuccessor act thereto.

	"**Fair Market Value**" shall mean an amount equal to the closing price on the applicable date forsales of shares of Common Stock made and reported through the National Market System of the National Association ofSecurities Dealers, Inc. or such national stock exchange on which the Common Stock may then be listed and whichconstitutes the principal market for the Common Stock, or, if no sales of Common Stock shall have been reported withrespect to that date, on the next preceding date with respect to which sales were reported.

	"**Freestanding SAR**" means a stock appreciation right that is granted independently of anyOptions, as described in Article 7 herein.

	"**Incentive Stock Option**" or "**ISO**" means an option to purchase Shares grantedunder Article 6 herein and which is designated as an Incentive Stock Option and which is intended to meet therequirements of Code Section 422.

	"**Nonqualified Stock Option**" or "**NQSO**" means an option to purchase Sharesgranted under Article 6 herein and which is not intended to meet the requirements of Code Section 422.

	"**Option**" means an Incentive Stock Option or a Nonqualified Stock Option, as described inArticle 6 herein.

	"**Option Price**" means the price at which a Share may be purchased by a Participant pursuant toan Option.

	"**Participant**" means any individual who has outstanding an Award granted under the Plan.

	"**Shares**" means shares of Common Stock of the Company.

	"**Stock Appreciation Right**" or "**SAR**" means an Award, granted alone or inconnection with a related Option, designated as an SAR, pursuant to the terms of Article 7 herein.

	"**Subsidiary**" means any Company, partnership, joint venture, affiliate, or other entity in whichthe Company is the direct or indirect beneficial owner of not less than twenty percent (20%) of all issued andoutstanding equity interests.

	"**Tandem SAR**" means an SAR that is granted in connection with a related Option pursuant toArticle 7 herein, the exercise of which shall require forfeiture of the right to purchase a Share under therelated Option (and when a Share is purchased under the Option, the Tandem SAR shall similarly be forfeited).

Article 3.

Administration

	**3.1**	**The Committee**.  The Plan shall be administered by the Compensation Committee of the Board,or by any other Committee appointed by the Board.  If, and to the extent that, no Committee exists that has theauthority to administer the Plan, the functions of the Committee shall be exercised by the full Board.

	**3.2**	**Authority of the Committee**.  Except as limited by law or by the Certificate ofIncorporation or Bylaws of the Company, and subject to the provisions herein, the Committee shall have full power toselect Employees and others who shall participate in the Plan; determine the sizes and types of Awards; determine theterms and conditions of Awards in a manner consistent with the Plan; construe and interpret the Plan and any agreementor instrument entered into under the Plan; establish, amend, or waive rules and regulations for the Plan'sadministration; and (subject to the provisions of Article 11 herein) amend the terms and conditions of anyoutstanding Award to the extent such terms and conditions are within the discretion of the Committee as provided in thePlan.  Further, the Committee shall make all other determinations which may be necessary or advisable for theadministration of the Plan.  As permitted by law, the Committee may delegate the authority granted to it herein.

	**3.3**	**Decisions Binding**.  All determinations and decisions made by the Committee pursuant to theprovisions of the Plan and all related orders and resolutions of the Board shall be final, conclusive and binding onall persons, including the Company, its stockholders, Employees, Participants, and their estates and beneficiaries.

 

Article 4.

Shares Subject to the Plan and Maximum Awards

	**4.1**	**Shares Available for Awards**.  The aggregate number of Shares which may be delivered forpurposes of this Plan with respect to Awards shall not exceed 38,000,000 Shares (subject to adjustment as provided inSection 4.3), which may be either authorized and unissued Shares or Shares held in or acquired for the treasury of theCompany.  Of the aggregate number of Shares, up to all of such Shares may be issued with respect to Incentive StockOption Awards or Nonqualified Stock Option awards.  In addition, up to an aggregate of 1,000,000 Freestanding SARs maybe granted under the Plan.  Upon:

		(a)	a cancellation, termination, expiration, forfeiture, or lapse for any reason (with the exception ofthe termination of a Tandem SAR upon exercise of the related Options, or the termination of a related Option uponexercise of the corresponding Tandem SAR) of any Award, then the number of Shares or SARs covered by the Award shallnot be deemed to have been delivered or used for purposes of determining the maximum number of Shares which may bedelivered or Freestanding SARs which may be granted under the Plan; or 

		(b)	payment of an  Option Price with previously-acquired shares  and/or payment of any taxes arising uponexercise of an Option with previously acquired Shares or by withholding Shares which otherwise would be acquired onexercise, then only the number of Shares issued net of the number of Shares tendered or withheld shall be deemeddelivered for purposes of determining the maximum number of Shares which may be delivered under the Plan.

	**4.2**	**Individual Participant Limitations**.  The following rules shall apply to grants of Awardsunder the Plan:

		(a)	Subject to adjustment as provided in Section 4.3 herein and subsection (b) below, the maximumaggregate number of Shares which may be issuable under Option Awards and  used for reference purposes for Awards ofFreestanding SARs that may be granted in any one (1) fiscal year to a Participant shall be 250,000.

		(b)	Notwithstanding the foregoing and subject to adjustment as provided in Section 4.3 herein, themaximum aggregate number of Shares which may be issuable under Option Awards and used for reference purposes for Awardsof Freestanding SARs that may be granted to a Participant in the first (1st) fiscal year of the Participant's employmentwith the Company shall be 500,000.

	**4.3**	**Adjustments in Authorized Shares**.  In the event of any change in corporate capitalization,such as a stock split, or a corporate transaction, such as any merger, consolidation, separation, including a spin-off,or other distribution of stock or property of the Company, any reorganization (whether or not such reorganization comeswithin the definition of such term in Code Section 368) or any partial or complete liquidation of the Company,such adjustment shall be made in the number and class of Shares available for Awards, the number and class of and/orprice of Shares subject to outstanding Awards granted under the Plan and the number of Shares set forth inSections 4.1 and 4.2, as may be determined to be appropriate and equitable by the Committee, in its solediscretion, to prevent dilution or enlargement of rights; provided, however, that the number of Shares subject to anyAward shall always be a whole number.

 

Article 5.

Eligibility and Participation

	**5.1**	**Eligibility**.  Persons eligible to participate in this Plan include all officers and otherEmployees of the Company and its Subsidiaries, as determined by the Committee, including Employees who are members ofthe Board and Employees who reside in countries other than the United States of America.  The Committee may, at itsdiscretion, permit the participation in the Plan by those individuals who have accepted employment with the Company ora Subsidiary,  but as of the date of their initial Awards have not yet commenced employment; provided, however, that inno event shall an ISO be granted to any Employee prior to the date such Employee commences employment with the Companyor a Subsidiary.  

	**5.2**	**Actual Participation**.  Subject to the provisions of the Plan, the Committee may, from timeto time, select from all eligible Employees as described in Section 5.1 hereinabove those to whom Awards shall begranted and shall determine the nature and amount of each Award.

 

Article 6.

Stock Options

	**6.1**	**Grant of Options**.  Subject to the terms and provisions of the Plan, Options may be grantedto one or more Participants in such number, and upon such terms, and at any time and from time to time as shall bedetermined by the Committee.  The Committee may grant Nonqualified Stock Options or Incentive Stock Options; provided,however, that (a) no ISO may be granted more than ten (10) years after the Effective Date of the Plan, (b) the OptionPrice with respect to any ISO granted to a Participant who is a ten percent (10%) stockholder within the meaning ofSection 422 of the Code shall be not less than one hundred ten percent (110%) of the Fair Market Value of the Shareson the date of grant and such ISO shall not be exercisable after the expiration of five (5) years from the date ofgrant, and (c) the aggregate Fair Market Value (determined on the date  the ISO is granted) of the Shares subject eachinstallment becoming exercisable for the first time in any calendar year under ISOs granted under all plans of theCompany and any Subsidiary, including this Plan, to a Participant shall not exceed $100,000 (provided, that to theextent that the aggregate Fair Market Value (determined on the date of grant of the ISO) of the Shares subject to ISOsbecoming exercisable for the first time in a calendar year exceeds $100,000 due to the acceleration of theexercisability of such installments, that portion of the ISOs  (determined by taking ISOs into account in the order inwhich they were granted) in excess of such $100,000 amount shall be treated as Nonqualified Stock Options. TheCommittee shall have complete discretion in determining the number of Options granted to each Participant (subject toArticle 4 herein).

	**6.2**	**Award Agreement**.  Each Option grant shall be evidenced by an Award Agreement that shallspecify the Option Price, the duration of the Option, the number of Shares to which the Option pertains, and such otherprovisions as the Committee shall determine.  The Award Agreement with respect to the Option also shall specify whetherthe Option is intended to be an ISO within the meaning of Code Section 422, or an NQSO whose grant is intended notto fall under the provisions of Code Section 422; provided, that the absence of any specification shall mean theOption is an NQSO.

	**6.3**	**Option Price**.  The Committee shall designate the Option Price for each grant of an Optionunder this Plan which Option Price shall be at least equal to one hundred percent (100%) of the Fair Market Value of aShare on the date the Option is granted, and which Option Price may not be subsequently changed by the Committee exceptpursuant to Section 4.3 hereof or to the extent provided in the Award Agreement. 

	**6.4**	**Duration of Options**.  Each Option granted to an Employee shall expire at such time as theCommittee shall determine at the time of grant; provided, however, that unless otherwise designated by the Committeeat the time of grant, no Option shall be exercisable later than the tenth (10th) anniversary date of its grant.

	**6.5**	**Exercise of Options**.  Options granted under this Article 6 shall be exercisable atsuch times and be subject to such restrictions and conditions as the Committee shall in each instance approve, whichneed not be the same for each grant or for each Participant.  Unless the Award Agreement  expressly provides otherwise,the Options shall be exercisable in accordance with the following schedule:

| **Years After**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | **Exercisable Percentage** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------|
| **Award Date**of SharesLess than 10%1 but less than 225%2 but less than 350%3 but less than 475%4 but less than 10100%
	**6.6**	**Notice of Exercise and Payment**.  Options granted under this Article 6 shall beexercised by the delivery of a written notice of exercise to the Company, setting forth the number of Shares withrespect to which the Option is to be exercised, accompanied by full payment for the Shares.  The Option Price uponexercise of any Option shall be payable to the Company in full either:

		(a)	in cash or its equivalent (included for this purpose, the proceeds from a cashless exercise aspermitted under Federal Reserve Board's Regulation T),

		(b)	by tendering (either actually or by attestation of ownership) previously acquired Shares (Sharesacquired on the open market or which have been held for at least six (6) months) having an aggregate Fair Market Valueat the time of exercise equal to the total Option Price, 

		(c)	by any other means which the Committee determines to be consistent with the Plan's purpose andapplicable law, or

		(d)	by any combination of (a), (b), and (c).

As soon as practicable after receipt of a written notification of exercise and full payment, the Company shalldeliver to the Participant, in the Participant's name, Share certificates in an appropriate amount based upon thenumber of Shares purchased under the Option(s).

	**6.7**	**Restrictions on Share Transferability**.  The Committee may impose such restrictions on anyShares acquired pursuant to the exercise of an Option granted under this Article 6 as it may deem advisable,including, without limitation, restrictions under applicable Federal securities laws, under the requirements of anystock exchange or market upon which such Shares are then listed and/or traded, and under any blue sky or statesecurities laws applicable to such Shares.

	**6.8**	**Termination of Employment.**Except as set forth in Article 10 with respect to the effect ofa Change in Control or except as the Committee may otherwise expressly provide in the Award Agreement evidencing anOption, the following rules shall apply upon termination of the Participant's employment with the Company and allSubsidiaries:

		(a)	Except as set forth in subsections (b), (c), and (d) below, in the event a Participant ceases to bean Employee for any reason, any Option or unexercised portion thereof granted under this Plan may be exercised, to theextent such Option would have been exercisable by the Participant hereunder on the date on which the Participant ceasedto be an Employee, within three (3) months of such date (seven (7) months in the event such termination occurs afterthe occurrence of a Change in Control), but in no event later than the date of the expiration of the term of the Option.

		(b)	In the event of termination of employment due to the death of the Participant, each Option held bythe Participant shall become exercisable in full and may be exercised at any time prior to the expiration date of theOption or within one (1) year after the date of the Participant's death, whichever period is shorter.

		(c)	In the event of termination of employment due to the Disability of  the Participant, each Option heldby the Participant may, to the extent exercisable at the time of such termination, be exercised at any time prior tothe expiration date of the Option or within three (3) years after the date of the Participant's termination ofemployment, whichever period is shorter.

		(d)	In the event of termination of employment due to the retirement of the Participant on or afterattaining age 55, all or a portion of each Option held by the Participant, to the extent not then exercisable, shallbecome exercisable in accordance with the schedule set forth below based upon one point for the Participant's attainedage and one point for each year of continuous service with the Company or its Subsidiaries as of the date of retirement(including for this purpose, continuous service with an entity prior to the date such entity was acquired by theCompany or an affiliate of the Company, but excluding any service prior to January 1, 1975), 
      At least 70 but less than 80 points50% of each unvested option shall vest      At least 80 but less than 90 points75% of each unvested option shall vest      At least 90 points100% of each unvested option shall vest
and all Options held by the Participant to the extent then exercisable may be exercised at any time prior to theexpiration date of the Option or within three (3) years after the date of the Participant's retirement, whicheverperiod is shorter.

		(e)	Notwithstanding anything in this Plan to the contrary, any ISO which is exercised after theexpiration of three (3) months following the cessation of employment for any reason other than Disability or death orone (1) year after the date of termination of employment due to Disability or death, shall be treated as a NQSO.

	**6.9**	**Limited Transferability of Options**.  Except as provided below, no Option granted under thePlan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, otherwise than by will or bythe laws of descent and distribution.  Further, all Options granted to a Participant under the Plan shall beexercisable during his lifetime only by such Participant.  Notwithstanding the foregoing, the Committee may, in itsdiscretion, authorize all or a portion of the Options (other than Incentive Stock Options) granted to a Participantto be on terms which permit transfer by such Participant to:

		(a)	the spouse, children or grandchildren of the Participant ("Immediate Family Members");

		(b)	a trust or trusts for the exclusive benefit of such Immediate Family Members; or

		(c)	a partnership in which such Immediate Family Members are the only partners, provided that:

		(1)	there may be no consideration for any such transfer;

		(2)	the Award Agreement pursuant to which such Options are granted expressly provides for transferabilityin a manner consistent with this Section 6.9; and

		(3)	subsequent transfers of transferred Options shall be prohibited except those in accordance withArticle 8. 

Following transfer, any such Options shall continue to be subject to the same terms and conditions as wereapplicable immediately prior to transfer, provided that for purposes of Article 8 hereof the term "Participant" shallbe deemed to refer to the transferee.  The provisions of Section 6 relating to the period of exercisability andexpiration of the Option shall continue to be applied with respect to the original Participant, and the Options shallbe exercisable by the transferee only to the extent, and for the periods, set forth in said Section 6. 

 
**Article 7.

Stock Appreciation Rights**
	**7.1**	**Grant of SARs**.  Subject to the terms and conditions of the Plan, SARs may be granted toParticipants at any time and from time to time as shall be determined by the Committee.  The Committee may grantFreestanding SARs, Tandem SARs, or any combination of these forms of SARs.  The Committee shall have completediscretion in determining the number of SARs granted to each Participant (subject to Article 4 herein) and,consistent with the provisions of the Plan, in determining the terms and conditions pertaining to such SARs.  TheCommittee shall designate, at the time of grant, the grant price of a Freestanding SAR which grant price shall atleast equal the Fair Market Value of a Share on the date of grant of the SAR.  The grant price of Tandem SARs shallequal the Option Price of the related Option.  Grant prices of SARs shall not subsequently be changed by the Committeeexcept pursuant to Section 4.3 hereof.

	**7.2**	**Exercise of Tandem SARs**.  Tandem SARs may be exercised for all or part of the Sharessubject to the related Option upon the surrender of the right to exercise the equivalent portion of the relatedOption.  A Tandem SAR may be exercised only with respect to the Shares for which its related Option is thenexercisable.  Notwithstanding any other provision of this Plan to the contrary, with respect to a Tandem SAR granted inconnection with an ISO:  (i) the Tandem SAR will expire no later than the expiration of the underlying ISO;(ii) the value of the payout with respect to the Tandem SAR may be for no more than one hundred percent (100%) ofthe difference between the Option Price of the underlying ISO and the Fair Market Value of the Shares subject to theunderlying ISO at the time the Tandem SAR is exercised; and (iii) the Tandem SAR may be exercised only when the FairMarket Value of the Shares subject to the ISO exceeds the Option Price of the ISO.

	**7.3**	**Exercise of Freestanding SARs**.  Freestanding SARs granted under this Article 7 shallbe exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instanceapprove, which need not be the same for each grant or for each Participant.  Unless the Award Agreement executed by theParticipant expressly provides otherwise, the Freestanding SARs shall be exercisable in accordance with the followingschedule:
**Years After****Exercisable Percentage****Award Date**of SARsLess than 10%1 but less than 225%2 but less than 350%3 but less than 475%4 but less than 10100%
	**7.4**	**SAR Agreement**.  Each SAR grant shall be evidenced by an Award Agreement that shall specifythe grant price, the term of the SAR, and such other provisions as the Committee shall determine.

	**7.5**	**Term of SARs**.  The term of an SAR granted under the Plan shall be determined by theCommittee, in its sole discretion; provided, however, that unless otherwise designated by the Committee, such termshall not exceed ten (10) years.

	**7.6**	**Notice of Exercise and Payment of SAR Amount**.  An SAR granted under this Article 7shall be exercised by the delivery of a written notice of exercise to the Company, setting forth the number of Shareswith respect to which the SAR is to be exercised. Upon exercise of an SAR, a Participant shall be entitled to receivepayment from the Company in an amount determined by multiplying:

		(a)	The excess of the Fair Market Value of a Share on the date of exercise over the grant price; by

		(b)	The number of Shares with respect to which the SAR is exercised.

At the discretion of the Committee, the payment upon SAR exercise may be in cash, in Shares of equivalent value, orin some combination thereof.

	**7.7**	**Termination of Employment.**Except as set forth in Article 10 with respect to the effect ofa Change in Control or except as the Committee may otherwise expressly provide in the Award Agreement evidencing theSAR, the following rules shall apply upon termination of the Participant's employment with the Company and allSubsidiaries:

		(a)	Except as set forth in subsections (b), (c), and (d) below, in the event a Participant ceases to bean Employee for any reason, any SAR or unexercised portion thereof granted under this Plan may be exercised, to theextent such SAR would have been exercisable by the Participant hereunder on the date on which the Participant ceasedto be an Employee, within three (3) months of such date (seven (7) months in the event such termination occurs afterthe occurrence of a Change in Control), but in no event later than the date of the expiration of the term of the SAR.

		(b)	In the event of termination of employment due to the death of the Participant, each SAR held by theParticipant shall become exercisable in full and may be exercised at any time prior to the expiration date of the SARor within one (1) year after the date of the Participant's death, whichever period is shorter.

		(c)	In the event of termination of employment due to the Disability of  the Participant, each SAR heldby the Participant may, to the extent exercisable at the time of such termination, be exercised at any time prior tothe expiration date of the SAR or within three (3) years after the date of the Participant's termination of employment,whichever period is shorter.

		(d)	In the event of termination of employment due to the retirement of the Participant on or afterattaining age 55, all or a portion of each SAR held by the Participant, to the extent not then exercisable, shallbecome exercisable in accordance with the schedule set forth below based upon one point for the Participant's attainedage and one point for each year of continuous service with the Company or its Subsidiaries as of the date of retirement(including for this purpose, continuous service with an entity prior to the date such entity was acquired by theCompany or an affiliate of the Company, but excluding any service prior to January 1, 1975), 
      At least 70 but less than 80 points50% of each unvested SAR shall vest      At least 80 but less than 90 points75% of each unvested SAR shall vest      At least 90 points100% of each unvested SAR shall vest
and all SARs held by the Participant to the extent then exercisable may be exercised at any time prior to theexpiration date of the SAR or within three (3) years after the date of the Participant's retirement, whichever periodis shorter.

	**7.8**	**Nontransferability of SARs**.  Except as otherwise provided in a Participant's AwardAgreement, no SAR granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated orhypothecated, other than by will or by the laws of descent and distribution without the express written consent of theCommittee.  Further, except as otherwise provided in a Participant's Award Agreement, all SARs granted to a Participantunder the Plan shall be exercisable during his or her lifetime only by such Participant.

 
**Article 8.

Beneficiary Designation**
	Each Participant under the Plan may, from time to time, name any beneficiary or beneficiaries (who may be namedcontingently or successively) to whom any benefit under the Plan is to be paid in case of his or her death before he orshe receives any or all of such benefit.  Each such designation shall revoke all prior designations by the sameParticipant, shall be in a form prescribed by the Company, and will be effective only when filed by the Participant inwriting with the Secretary of the Company, or such other person or entity designated by the Company, during theParticipant's lifetime.  In the absence of any such designation, benefits remaining unpaid at the Participant's deathshall be paid to the Participant's estate.
**Article 9.

Rights of Employees**
	**9.1**	**Employment**.
****
		(a)	Nothing in the Plan shall interfere with or limit in any way the right of the Company toterminate any Participant's employment at any time, nor confer upon any Participant any right to continue in the employof the Company or any Subsidiary.

		(b)	For purposes of this Plan, absence from employment because of illness, vacation, approved leaves ofabsence, and transfers of employment among the Company and its Subsidiaries, shall not be considered to terminateemployment or to interrupt continuous employment.  

	**9.2**	**Participation**.  No Employee shall have the right to be selected to receive an Award underthis Plan, or, having been so selected, to be selected to receive a future Award.

 
**Article 10.

Change in Control**
	**10.1**	**Effect of Change in Control.**  Upon the occurrence of a Change in Control, any and allOptions and SARs granted hereunder shall become immediately exercisable and remain exercisable until such Options andSARs expire or terminate under the provisions of this Plan

	**10.2**	**Change in Control Not Approved by Incumbent Board.**  Upon the occurrence of a Change inControl not approved by the Incumbent Board, any and all Options and SARs granted hereunder shall become immediatelyexercisable and shall remain exercisable throughout their entire term without regard to termination of employmentsubsequent to such Change in Control.  		
**Article 11.

Amendment, Modification, and Termination**
	**11.1**	**Amendment, Modification, and Termination**.  The Board may at any time, and from time totime, alter, amend, suspend or terminate the Plan in whole or in part, subject to any requirement of stockholderapproval imposed by applicable law, rule or regulation.

	**11.2**	**Awards Previously Granted**.  No termination, amendment, or modification of the Plan shalladversely affect in any material way any Award previously granted under the Plan, without the written consent of theParticipant holding such Award.

 
**Article 12.

Withholding**
	**12.1**	**Tax Withholding**.  The Company shall have the power and the right to deduct or withhold, orrequire a Participant to remit to the Company, an amount sufficient to satisfy Federal, state, and local taxes,domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a resultof the Plan.

	**12.2**	**Share Withholding**.  With respect to withholding required upon the exercise of Options orSARs, or upon any other taxable event arising as a result of Awards granted hereunder, Participants may elect, subjectto the approval of the Committee, to satisfy the withholding requirement, in whole or in part, by having the Companywithhold Shares having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory totaltax which would be imposed on the transaction.  All such elections shall be irrevocable, made in writing, signed by theParticipant, and shall be subject to any restrictions or limitations that the Committee, in its sole discretion, deemsappropriate.

 
**Article 13.

Successors**
	All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding on anysuccessor to the Company, whether the existence of such successor is the result of a direct or indirect merger,consolidation, purchase of all or substantially all of the business and/or assets of the Company or otherwise.

 
**Article 14.

Legal Construction**
	**14.1**	**Gender and Number**.  Except where otherwise indicated by the context, any masculine termused herein also shall include the feminine; the plural shall include the singular and the singular shall include theplural.

	**14.2**	**Severability**.  In the event any provision of the Plan shall be held illegal or invalid forany reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall beconstrued and enforced as if the illegal or invalid provision had not been included.

	**14.3**	**Requirements of Law**.  The granting of Awards and the issuance of Shares under the Planshall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies ornational securities exchanges as may be required.

	**14.4**	**Securities Law Compliance**. Transactions under this Plan are intended to comply with allapplicable conditions of Rule 16b-3 or its successors under the Exchange Act.  To the extent any provision of thePlan or action by the Committee fails to so comply, it shall be deemed null and void, to the extent permitted by lawand deemed advisable by the Committee.

	**14.5**	**Governing Law**.  To the extent not preempted by Federal law, the Plan, and all agreementshereunder, shall be construed in accordance with and governed by the laws of the State of Delaware.******** |