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                                                                    Exhibit 10.8



                          FIVE STAR QUALITY CARE, INC.

                   2001 STOCK OPTION AND STOCK INCENTIVE PLAN

1.       PURPOSE

         The purpose of this 2001 Stock Option and Stock Incentive Plan (the
"Plan") is to encourage employees, officers, directors and other individuals
(whether or not employees) who render services to Five Star Quality Care, Inc.
(the "Company") and its Subsidiaries (as hereinafter defined), to continue their
association with the Company and its Subsidiaries by providing opportunities for
them to participate in the ownership of the Company and in its future growth
through the granting of options to acquire the Company's stock ("Options"),
stock to be transferred subject to restrictions ("Restricted Stock") and other
rights, including Stock Appreciation Rights (as defined in Section 6), to
receive compensation in amounts determined by the value of the Company's stock
("Other Rights"). The term "Subsidiary" as used in the Plan means a corporation
or other business entity of which the Company owns, directly or indirectly
through an unbroken chain of ownership, fifty percent or more of the total
combined voting power of all classes of stock, in the case of a corporation, or
fifty percent or more of the total combined interests by value, in the case of
any other type of business entity.

2.       ADMINISTRATION OF THE PLAN

         The Plan shall be administered by the Compensation Committee of the
Company's Board of Directors (the "Board") or by the Board itself. The
Compensation Committee shall from time to time determine to whom Options or
Restricted Stock shall be granted under the Plan, whether Options granted shall
be incentive stock options ("ISOs") or nonqualified stock options ("NSOs"), the
terms of the Options (including vesting provisions) and the number of shares of
Common Stock (as hereinafter defined) that may be granted under Options, and the
terms and number of shares of Restricted Stock or Other Rights. The Compensation
Committee shall report to the Board the names of individuals to whom Options,
Restricted Stock or Other Rights are to be granted, the number of shares covered
and the terms and conditions of each grant. The determinations and actions
described in this Section 2 and elsewhere in the Plan may be made by the
Compensation Committee or by the Board, as the Board shall direct in its
discretion, and references in the Plan to the Compensation Committee shall be
understood to refer to the Board in any such case.

         The Compensation Committee shall have the authority to adopt, amend and
rescind such rules and regulations as, in its opinion, may be advisable in the
administration of the Plan. All questions of interpretation and application of
such rules and regulations of the Plan and of Options or Restricted Stock
granted hereunder shall be subject to the determination of the Compensation
Committee, which shall be final and binding. The Plan shall be administered in
such a manner as to permit those Options granted hereunder and specially
designated under Section 5 hereof as an ISO to qualify as incentive stock
options as described in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code").

         For so long as Section 16 of the Securities Exchange Act of 1934, as
amended from time to time (the "Exchange Act"), is applicable to the Company,
each member of the Committee


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shall be a "non-employee director" or the equivalent within the meaning of Rule
16b-3 under the Exchange Act, and, for so long as Section 162(m) of the Code is
applicable to the Company, an "outside director" within the meaning of Section
162 of the Code and the regulations thereunder.

         With respect to persons subject to Section 16 of the Exchange Act
("Insiders"), transactions under the Plan are intended to comply with all
applicable conditions of Rule 16b-3 or its successor under the Exchange Act. To
the extent any provision of the Plan or action by the Committee fails to so
comply, it shall be deemed to be modified so as to be in compliance with such
Rule, or, if such modification is not possible, it shall be deemed to be null
and void, to the extent permitted by law and deemed advisable by the Committee.

3.       STOCK SUBJECT TO THE PLAN

         The total number of shares of capital stock of the Company that may be
subject to Options, Restricted Stock grants and Other Rights under the Plan
shall be 650,000 shares of the Company's common stock, par value $0.01 per share
(the "Common Stock"), from either authorized but unissued shares or treasury
shares. The maximum number of shares of Common Stock subject to Options that may
be granted to any Optionee in the aggregate in any calendar year shall not
exceed 100,000 shares. The number of shares stated in this Section 3 shall be
subject to adjustment in accordance with the provisions of Section 10. Shares of
Restricted Stock that fail to vest and shares of Common Stock subject to an
Option that is not fully exercised prior to its expiration or other termination
shall again become available for grant under the terms of the Plan.

4.       ELIGIBILITY

         The individuals who shall be eligible to receive Option grants,
Restricted Stock grants and Other Rights under the Plan shall be employees,
officers, directors and other individuals who render services to the management,
operation or development of the Company or a Subsidiary and who have contributed
or may be expected to contribute to the success of the Company or a Subsidiary.
ISOs shall not be granted to any individual who is not (i) an employee of the
Company or (ii) an employee of a Subsidiary who is treated as an employee of the
Company for federal tax purposes. The term "Optionee," as used in the Plan,
refers to any individual to whom an Option has been granted.

5.       TERMS AND CONDITIONS OF OPTIONS

         Every Option shall be evidenced by a written Stock Option Agreement in
such form as the Compensation Committee shall approve from time to time,
specifying the number of shares of Common Stock that may be purchased pursuant
to the Option, the time or times at which the Option shall become exercisable in
whole or in part, whether the Option is intended to be an ISO or an NSO and such
other terms and conditions as the Compensation Committee shall approve, and
containing or incorporating by reference the following terms and conditions.

                  (a) DURATION. Each Option shall expire ten years from its date
of grant; provided, however, that no ISO granted to an employee who owns
(directly or under the attribution rules of Section 424(d) of the Code) stock
possessing more than ten percent of the


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total combined voting power of all classes of stock of the Company or any
Subsidiary shall expire later than five years from its date of grant.

                  (b) EXERCISE PRICE. The exercise price of each Option shall be
any lawful consideration, as specified by the Compensation Committee in its
discretion; provided, however, that the price with respect to an ISO shall be at
least 100 percent of the Fair Market Value (as hereinafter defined) of the
shares on the date on which the Compensation Committee awards the Option, which
shall be considered the date of grant of the Option for purposes of fixing the
price; and provided, further, that the price with respect to an ISO granted to
an employee who at the time of grant owns (directly or under the attribution
rules of Section 424(d) of the Code) stock representing more than ten percent of
the voting power of all classes of stock of the Company or of any Subsidiary
shall be at least 110 percent of the Fair Market Value of the shares on the date
of grant of the ISO. For purposes of the Plan, except as may be otherwise
explicitly provided in the Plan or in any Stock Option Agreement, the "Fair
Market Value" of a share of Common Stock at any particular date shall be
determined according to the following rules: (i) if the Common Stock is not at
the time listed or admitted to trading on a stock exchange or the Nasdaq Stock
Market, the Fair Market Value shall be the closing price of the Common Stock on
the date in question in the over-the-counter market, as such price is reported
in a publication of general circulation selected by the Board and regularly
reporting the price of the Common Stock in such market, including any market
that is outside of the United States; provided, however, that if the price of
the Common Stock is not so reported, the Fair Market Value shall be determined
in good faith by the Board, which may take into consideration (1) the price paid
for the Common Stock in the most recent trade of a substantial number of shares
known to the Board to have occurred at arm's length between willing and
knowledgeable investors, (2) an appraisal by an independent party or (3) any
other method of valuation undertaken in good faith by the Board, or some or all
of the above as the Board shall in its discretion elect; or (ii) if the Common
Stock is at the time listed or admitted to trading on any stock exchange,
including any market that is outside of the United States, or the Nasdaq Stock
Market, then the Fair Market Value shall be the mean between the lowest and
highest reported sale prices (or the highest reported bid price and the lowest
reported asked price) of the Common Stock on the date in question on the
principal exchange or the Nasdaq Stock Market, as the case may be, on which the
Common Stock is then listed or admitted to trading. If no reported sale of
Common Stock takes place on the date in question on the principal exchange or
the Nasdaq Stock Market, as the case may be, then the most recent previous
reported closing sale price of the Common Stock (or, in the Board's discretion,
the reported closing asked price) of the Common Stock on such date on the
principal exchange or the Nasdaq Stock Market, as the case may be, shall be
determinative of Fair Market Value.

                  (c) METHOD OF EXERCISE. To the extent that it has become
exercisable under the terms of the Stock Option Agreement, an Option may be
exercised from time to time by notice acceptable to the Chief Executive Officer
of the Company, or his delegate, stating the number of shares with respect to
which the Option is being exercised and accompanied by payment of the exercise
price in cash or check payable to the Company or, if the Stock Option Agreement
so provides, other payment or deemed payment described in this Section 5(c).
Such notice shall be delivered in person to the Chief Executive Officer of the
Company, or his delegate, or shall be sent by registered mail, return receipt
requested, to the Chief Executive


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Officer of the Company, or his delegate, in which case delivery shall be deemed
made on the date such notice is deposited in the mail.

         Alternatively, payment of the exercise price may be made:

                  (1) In whole or in part in shares of Common Stock already
         owned by the Optionee or to be received upon exercise of the Option;
         provided, however, that such shares are fully vested and free of all
         liens, claims and encumbrances of any kind; and provided, further, that
         the Optionee may not make payment in shares of Common Stock that he
         acquired upon the earlier exercise of any ISO (or other "incentive
         stock option"), unless he has held the shares for at least two years
         after the date the ISO was granted and at least one year after the date
         the ISO was exercised. If payment is made in whole or in part in shares
         of Common Stock, then the Optionee shall deliver to the Company stock
         certificates registered in his name representing a number of shares of
         Common Stock legally and beneficially owned by him, fully vested and
         free of all liens, claims and encumbrances of every kind and having a
         Fair Market Value on the date of delivery that is not greater than the
         exercise price, such stock certificates to be duly endorsed, or
         accompanied by stock powers duly endorsed, by the record holder of the
         shares represented by such stock certificates. If the exercise price
         exceeds the Fair Market Value of the shares for which stock
         certificates are delivered, the Optionee shall also deliver cash or a
         check payable to the order of the Company in an amount equal to the
         amount of that excess or, if the Stock Option Agreement so provides,
         his promissory note as described in paragraph (2) of this Section 5(c);
         or

                  (2) By payment in cash of the par value of the Common Stock to
         be acquired and by payment of the balance of the exercise price in
         whole or in part by delivery of the Optionee's recourse promissory
         note, in a form specified by the Company, secured by the Common Stock
         acquired upon exercise of the Option and such other security as the
         Compensation Committee may require.

         At the time specified in an Optionee's notice of exercise, the Company
shall, without issue or transfer tax to the Optionee, deliver to him at the main
office of the Company, or such other place as shall be mutually acceptable, a
stock certificate for the shares as to which his Option is exercised. If the
Optionee fails to pay for or to accept delivery of all or any part of the number
of shares specified in his notice upon tender of delivery thereof, his right to
exercise the Option with respect to those shares shall be terminated, unless the
Company otherwise agrees.

                  (d) EXERCISABILITY. An Option may be exercised so long as it
is outstanding from time to time in whole or in part, to the extent and subject
to the terms and conditions that the Compensation Committee in its discretion
may provide in the Stock Option Agreement. Such terms and conditions shall
include provisions for exercise within twelve (12) months after his or her death
or disability (within the meaning of Section 22(e)(3)) of the Code, provided
that no Option shall be exercisable after the expiration of the period described
in paragraph (a) above. Except as the Compensation Committee in its discretion
may otherwise provide in the Stock Option Agreement, an Option shall cease to be
exercisable upon the expiration of ninety (90) days following the termination of
the Optionee's employment with, or his other provision of services to, the
Company or a subsidiary, subject to paragraph (a) above and Section 10 hereof.


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                  (e) NOTICE OF ISO STOCK DISPOSITION. The Optionee must notify
the Company promptly in the event that he sells, transfers, exchanges or
otherwise disposes of any shares of Common Stock issued upon exercise of an ISO
before the later of (i) the second anniversary of the date of grant of the ISO
and (ii) the first anniversary of the date the shares were issued upon his
exercise of the ISO.

                  (f) NO RIGHTS AS STOCKHOLDER. An Optionee shall have no rights
as a stockholder with respect to any shares covered by an Option until the date
of issuance of a stock certificate to him for the shares. No adjustment shall be
made for dividends or other rights for which the record date is earlier than the
date the stock certificate is issued, other than as required or permitted
pursuant to Section 9.

                  (g) TRANSFERABILITY OF OPTIONS. Options shall not be
transferable by the Optionee otherwise than by will or under the laws of descent
and distribution, and shall be exercisable during his or her lifetime only by
the Optionee, except that the Compensation Committee may specify in a Stock
Option Agreement that pertains to an NSO that the Optionee may transfer such NSO
to a member of the Immediate Family of the Optionee, to a trust solely for the
benefit of the Optionee and the Optionee's Immediate Family, or to a partnership
or limited liability company whose only partners or members are the Optionee and
members of the Optionee's Immediate Family. "Immediate Family" shall mean, with
respect to any Optionee, such Optionee's child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, and shall include
adoptive relationships.

6.       STOCK APPRECIATION RIGHTS

         The Committee may grant Stock Appreciation Rights ("SARs") in respect
of such number of Common Stock subject to the Plan as it shall determine, in its
discretion, and may grant SARs either separately or in connection with Options,
as described in the following sentence. An SAR granted in connection with an
Option may be exercised only to the extent of the surrender of the related
Option, and to the extent of the exercise of the related Option the SAR shall
terminate. Common Stock covered by an Option that terminates upon the exercise
of a related SAR shall cease to be available under the Plan. The terms and
conditions of an SAR related to an Option shall be contained in the Stock Option
Agreement, and the terms of an SAR not related to any Option shall be contained
in an SAR Agreement.

         Upon exercise of an SAR, the Optionee shall be entitled to receive from
the Company an amount equal to the excess of the fair market value, on the
exercise date, of the number of shares of Common Stock as to which the SAR is
exercised, over the exercise price for those shares under a related Option or,
if there is no related Option, over the base value stated in the SAR Agreement.
Any amount payable by the Company upon exercise of an SAR shall be paid in the
form of cash or other property (including Common Stock), as provided in the
Stock Option Agreement or SAR Agreement governing the SAR.

7.       RESTRICTED STOCK


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         The Compensation Committee may grant or award shares of Restricted
Stock in respect of such number of shares of Common Stock, and subject to such
terms or conditions, as it shall determine and specify in a Restricted Stock
Agreement, and may provide in a Stock Option Agreement for an Option to be
exercisable for Restricted Stock.

         A holder of Restricted Stock shall have all of the rights of a
stockholder of the Company, including the right to vote the shares and the right
to receive any cash dividends, unless the Compensation Committee shall otherwise
determine. Unless a grantee's Restricted Stock Agreement provides to the
contrary, unvested shares of Restricted Stock granted under the Plan shall not
be transferred without the written consent of the Board. In addition, at the
time of termination for any reason of a grantee's employment or other service
relationship with the Company or a Subsidiary, the Company shall have the right,
in the case of unvested shares of Restricted Stock, to purchase all or any of
such shares at a price equal to the lower of (a) the price paid to the Company
for such shares or (b) the Fair Market Value of such shares at the time of
repurchase. Nothing in the Plan shall be construed to give any person the right
to require the Company to purchase any Common Stock granted as Restricted Stock.

         Certificates representing Restricted Stock shall be imprinted with a
legend to the effect that the shares represented may not be sold, exchanged,
transferred, pledged, hypothecated or otherwise disposed of except in accordance
with the terms of the Restricted Stock Agreement and, if the Compensation
Committee so determines, the holder may be required to deposit the certificates
with the President, Treasurer, Secretary or other officer of the Company or with
an escrow agent designated by the Compensation Committee, together with a stock
power or other instrument of transfer appropriately endorsed in blank.

8.       METHOD OF GRANTING OPTIONS, RESTRICTED STOCK AND OTHER RIGHTS

         The grant of Options, Restricted Stock and Other Rights shall be made
by action of the Board or the Compensation Committee, at a meeting at which a
quorum of its members is present, or by unanimous written consent of all its
members; provided, however, that if an individual to whom a grant has been made
fails to execute and deliver to the Compensation Committee a Stock Option
Agreement, Restricted Stock Agreement or SAR Agreement within thirty days after
it is submitted to him, the Option, Restricted Stock or SAR granted under the
agreement shall be voidable by the Company at its election, without further
notice to the grantee.

9.       REQUIREMENTS OF LAW

         The Company shall not be required to transfer Restricted Stock or to
sell or issue any shares upon the exercise of any Option if the issuance of such
shares will result in a violation by the Optionee or the Company of any
provisions of any law, statute or regulation of any governmental authority.
Specifically, in connection with the Securities Act of 1933, as amended from
time to time (the "Securities Act"), upon the transfer of Restricted Stock or
the exercise of any Option, the Company shall not be required to issue shares
unless the Compensation Committee has received evidence satisfactory to it to
the effect that the holder of the Restricted Stock or the Option will not
transfer such shares except pursuant to a registration statement in effect under
the Securities Act or unless an opinion of counsel satisfactory to the Company
has been received by the Company to the effect that registration is not
required. Any determination


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in this connection by the Compensation Committee shall be conclusive. The
Company shall not be obligated to take any other affirmative action in order to
cause the transfer of Restricted Stock or the exercise of an Option to comply
with any law or regulations of any governmental authority, including, without
limitation, the Securities Act or applicable state securities laws.

10.      CHANGES IN CAPITAL STRUCTURE

         In the event that the outstanding shares of Common Stock are hereafter
changed for a different number or kind of shares or other securities of the
Company, by reason of a reorganization, recapitalization, exchange of shares,
stock split, combination of shares or dividend payable in shares or other
securities, a corresponding adjustment shall be made by the Compensation
Committee in the number and kind of shares or other securities covered by
outstanding Options and Other Rights and for which Options and Other Rights may
be granted under the Plan. Any such adjustment in outstanding Options shall be
made without change in the total price applicable to the unexercised portion of
the Option, but the price per share specified in each Stock Option Agreement
shall be correspondingly adjusted; provided, however, that no adjustment shall
be made with respect to an ISO that would constitute a modification as defined
in Section 424 of the Code without the consent of the holder. Any such
adjustment made by the Compensation Committee shall be conclusive and binding
upon all affected persons, including the Company and all Optionees and holders
of Other Rights.

         If while unexercised Options remain outstanding under the Plan the
Company merges or consolidates with a wholly-owned subsidiary for the purpose of
reincorporating itself under the laws of another jurisdiction, the Optionees
will be entitled to acquire shares of common stock of the reincorporated Company
upon the same terms and conditions as were in effect immediately prior to such
reincorporation (unless such reincorporation involves a change in the number of
shares or the capitalization of the Company, in which case proportional
adjustments shall be made as provided above) and the Plan, unless otherwise
rescinded by the Board, will remain the Plan of the reincorporated Company.

         Except as otherwise provided in the preceding paragraph, if the Company
is merged or consolidated with another corporation, whether or not the Company
is the surviving entity, or if the Company is liquidated or sells or otherwise
disposes of all or substantially all of its assets to another entity while
unexercised Options remain outstanding under the Plan, or if other circumstances
occur in which the Compensation Committee in its sole and absolute discretion
deems it appropriate for the provisions of this paragraph to apply (in each
case, an "Applicable Event"), then: (a) in the discretion of the Compensation
Committee, each holder of an outstanding Option shall be entitled, upon exercise
of the Option, to receive in lieu of shares of Common Stock, such stock or other
securities or property as he or she would have received had he exercised the
Option immediately prior to the Applicable Event; or (b) the Compensation
Committee may, in its sole and absolute discretion, waive, generally or in one
or more specific cases, any limitations imposed on exercise (including without
limitation a change in any existing vesting schedule) so that some or all
Options from and after a date prior to the effective date of such Applicable
Event, specified by the Compensation Committee, in its sole and absolute
discretion, shall be exercisable; or (c) the Compensation Committee may, in its
sole and absolute discretion, cancel all outstanding and unexercised Options as
of the effective date of any such Applicable Event; or (d) the Compensation
Committee may, in its sole discretion, convert some


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or all Options into Options to purchase the stock or other securities of the
surviving corporation pursuant to an Applicable Event; or (e) the Compensation
Committee may, in its sole and absolute discretion, assume the outstanding and
unexercised options to purchase stock or other securities of any corporation and
convert such options into Options to purchase Common Stock, whether pursuant to
this Plan or not, pursuant to an Applicable Event; provided, however, that
notice of any cancellation pursuant to clause (c) shall be given to each holder
of an Option not less than thirty days preceding the effective date of such
Applicable Event; and provided, further, that the Compensation Committee may, in
its sole and absolute discretion waive, generally or in one or more specific
instances, any limitations imposed on exercise (including a change in any
existing exercise schedule) with respect to any Option so that such Option shall
be exercisable in full or in part, as the Compensation Committee may, in its
sole and absolute discretion, determine, during such thirty day period.

         In the case of an Applicable Event, the Compensation Committee shall
have discretion to make adjustments or take other action with respect to Other
Rights corresponding to the provisions of the preceding paragraph.

         Except as expressly provided to the contrary in this Section 10, the
issuance by the Company of shares of stock of any class for cash or property or
for services, either upon direct sale or upon the exercise of rights or
warrants, or upon conversion of shares or obligations of the Company convertible
into such shares or other securities, shall not affect the number, class or
price of shares of Common Stock then subject to outstanding Options or Other
Rights.

11.      FORFEITURE FOR DISHONESTY, VIOLATION OF AGREEMENTS OR TERMINATION
         FOR CAUSE

         Notwithstanding any provision of the Plan to the contrary, if the
Compensation Committee determines, after full consideration of the facts, that:

                  (a) the Optionee (or holder of Restricted Stock or Other
Rights) has been engaged in fraud, embezzlement or theft in the course of his or
her employment by or involvement with the Company or a Subsidiary, has made
unauthorized disclosure of trade secrets or other proprietary information of the
Company or a Subsidiary or of a third party who has entrusted such information
to the Company or a Subsidiary, or has been convicted of a felony, or crime
involving moral turpitude or any other crime which reflects negatively upon the
Company; or

                  (b) the Optionee (or holder of Restricted Stock or Other
Rights) has violated the terms of any employment, noncompetition,
nonsolicitation, confidentiality, nondisclosure or other similar agreement with
the Company to which he is a party; or

                  (c) the employment or involvement with the Company or a
Subsidiary of the Optionee (or holder of Restricted Stock or Other Rights) of
the Optionee was terminated for "cause," as defined in any employment agreement
with the Optionee (or holder of Restricted Stock or Other Rights), if
applicable, or if there is no such agreement, as determined by the Compensation
Committee, which may determine that "cause" includes among other matters the
willful failure or refusal of the Optionee (or holder of Restricted Stock or
Other Rights) to


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perform and carry out his or her assigned duties and responsibilities diligently
and in a manner satisfactory to the Compensation Committee;

then the Optionee's right to exercise an Option shall terminate as of the date
of such act (in the case of (a) or (b)) or such termination (in the case of
(c)), the Optionee shall forfeit all unexercised Options (or the holder shall
forfeit all Other Rights) and the Company shall have the right to repurchase all
or any part of the shares of Common Stock acquired by the Optionee upon any
previous exercise of any Option (or any previous acquisition by the holder of
Restricted Stock, whether then vested or unvested), at a price equal to the
lower of (a) the amount paid to the Company upon such exercise or acquisition,
or (b) the Fair Market Value of such shares at the time of repurchase. If an
Optionee whose behavior the Company asserts falls within the provisions of the
clauses above has exercised or attempts to exercise an Option prior to
consideration of the application of this Section 11 or prior to a decision of
the Compensation Committee, the Company shall not be required to recognize such
exercise until the Compensation Committee has made its decision and, in the
event any exercise shall have taken place, it shall be of no force and effect
(and shall be void AB INITIO) if the Compensation Committee makes an adverse
determination; provided, however, that if the Compensation Committee finds in
favor of the Optionee then the Optionee will be deemed to have exercised the
Option retroactively as of the date he or she originally gave notice of his or
her attempt to exercise or actual exercise, as the case may be. The decision of
the Compensation Committee as to the cause of an Optionee's (or holder of
Restricted Stock or Other Rights) discharge and the damage done to the Company
shall be final, binding and conclusive. No decision of the Compensation
Committee, however, shall affect in any manner the finality of the discharge of
such Optionee (or holder of Restricted Stock or Other Rights) by the Company.
For purposes of this Section 11, reference to the Company shall include any
Subsidiary.

12.      MISCELLANEOUS

                  (a) NO GUARANTEE OF EMPLOYMENT OR OTHER SERVICE RELATIONSHIP.
Neither the Plan nor any Stock Option Agreement, Restricted Stock Agreement or
SAR Agreement shall give an employee the right to continue in the employment of
the Company or a Subsidiary or give the Company or a Subsidiary the right to
require an employee to continue in employment. Neither the Plan nor any Stock
Option Agreement, Restricted Stock Agreement or SAR Agreement shall give a
director or other service provider the right to continue to perform services for
the Company or a Subsidiary or give the Company or a Subsidiary the right to
require the director or service provider to continue to perform services.

                  (b) TAX WITHHOLDING. To the extent required by law, the
Company shall withhold or cause to be withheld income and other taxes with
respect to any income recognized by an Optionee by reason of the exercise or
vesting of an Option or Restricted Stock, or payments with respect to Other
Rights, and as a condition to the receipt of any Option, Restricted Stock or
Other Rights the Optionee shall agree that if the amount payable to him by the
Company and any Subsidiary in the ordinary course is insufficient to pay such
taxes, then he shall upon the request of the Company pay to the Company an
amount sufficient to satisfy its tax withholding obligations.


                                      -9-
<PAGE>

         Without limiting the foregoing, the Compensation Committee may in its
discretion permit any Optionee's withholding obligation to be paid in whole or
in part in the form of shares of Common Stock by withholding from the shares to
be issued or by accepting delivery from the Optionee of shares already owned by
him. The Fair Market Value of the shares for such purposes shall be determined
as set forth in Section 5(b). An Optionee may not make any such payment in the
form of shares of Common Stock acquired upon the exercise of an ISO until the
shares have been held by him for at least two years after the date the ISO was
granted and at least one year after the date the ISO was exercised. If payment
of withholding taxes is made in whole or in part in shares of Common Stock, the
Optionee shall deliver to the Company stock certificates registered in his name
representing shares of Common Stock legally and beneficially owned by him, fully
vested and free of all liens, claims and encumbrances of every kind, duly
endorsed or accompanied by stock powers duly endorsed by the record holder of
the shares represented by such stock certificates. If the Optionee is subject to
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), his ability to pay his withholding obligation in the form of shares of
Common Stock shall be subject to such additional restrictions as may be
necessary to avoid any transaction that might give rise to liability under
Section 16(b) of the Exchange Act.

                  (c) USE OF PROCEEDS. The proceeds from the sale of shares
pursuant to Options shall constitute general funds of the Company.

                  (d) CONSTRUCTION. All masculine pronouns used in this Plan
shall include both sexes; the singular shall include the plural and the plural
the singular unless the context otherwise requires. The titles of the sections
of the Plan are included for convenience only and shall not be construed as
modifying or affecting their provisions.

                  (e) GOVERNING LAW. This Plan shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to the principles of conflict of laws.

13.      EFFECTIVE DATE, DURATION, AMENDMENT AND TERMINATION OF PLAN

         The Plan shall be effective as of December 5, 2001, subject to
ratification by (a) the holders of a majority of the outstanding shares of
capital stock present, or represented, and entitled to vote thereon (voting as a
single class) at a duly held meeting of the stockholders of the Company or (b)
by the written consent of the holders of a majority (or such greater percentage
as may be prescribed under the Company's charter, by-laws and applicable state
law) of the capital stock of the issuer entitled to vote thereon (voting as a
single class) within twelve months after such date. Options or Restricted Stock
that are conditioned upon the ratification of the Plan by the stockholders may
be granted prior to ratification. The Compensation Committee may grant Options,
Restricted Stock or Other Rights under the Plan from time to time until the
close of business on December 5, 2011. The Board may at any time amend the
Plan; provided, however, that without approval of the Company's stockholders
there shall be no: (a) change in the number of shares of Common Stock that may
be issued under the Plan, except by operation of the provisions of Section 10,
either to any one Optionee or in the aggregate; (b) change in the class of
persons eligible to receive Options, Restricted Stock or Other Rights; or (c)
other change in the Plan that requires stockholder approval under applicable
law. No amendment shall


                                      -10-
<PAGE>

adversely affect outstanding Options (or Restricted Stock or Other Rights)
without the consent of the Optionee (or holder of Restricted Stock or Other
Rights). The Plan may be terminated at any time by action of the Board, but any
such termination will not terminate any Option, Restricted Stock or Other Rights
then outstanding without the consent of the Optionee or the holder of such
Restricted Stock or Other Rights.


                                      -11-