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                               CIRTRAN CORPORATION

                                 2006 STOCK PLAN

     1.   PURPOSES OF THE PLAN.  The  purposes of this Stock Plan are to attract
and  retain  the  best   available   personnel  for  positions  of   substantial
responsibility, to provide additional incentive to the Employees and Consultants
of the Company and to promote the  success of the  Company's  business.  Options
granted under the Plan may be either  Incentive  Stock Options (as defined under
Section 422 of the Code) or  Nonstatutory  Stock  Options,  as determined by the
Administrator  at the time of grant of an Option and  subject to the  applicable
provisions  of  Section  422  of  the  Code  and  the  regulations   promulgated
thereunder. Stock Purchase Rights may also be granted under the Plan.

     2.   DEFINITIONS. As used herein, the following definitions shall apply:

          (a)  "Administrator"  means  the  Board  or  its  Committee  appointed
pursuant to Section 4 of the Plan.

          (b)  "Affiliate"  means an entity other than a Subsidiary  (as defined
below) in which the Company owns an equity interest or which,  together with the
Company, is under common control of a third person or entity.

          (c)  "Applicable  Laws" means the legal  requirements  relating to the
administration  of stock  option  and  restricted  stock  purchase  plans  under
applicable  U.S.  state  corporate  laws,  U.S.  federal  and  applicable  state
securities  laws, the Code,  any Stock  Exchange  rules or  regulations  and the
applicable  laws of any other  country or  jurisdiction  where  Options or Stock
Purchase Rights are granted under the Plan, as such laws, rules, regulations and
requirements shall be in place from time to time.

          (d)  "Board" means the Board of Directors of the Company.

          (e)  "Cause" for  termination of a  Participant's  Continuous  Service
Status will exist if the  Participant  is  terminated  for any of the  following
reasons: (i) Participant's  willful failure  substantially to perform his or her
duties and responsibilities to the Company or any Subsidiary,  Parent, Affiliate
or successor thereto, as appropriate; (ii) Participant's repeated unexplained or
unjustified  absence from the Company or any  Subsidiary,  Parent,  Affiliate or
successor thereto, as appropriate;  (iii) Participant's commission of any act of
fraud, embezzlement, dishonesty or any other willful and serious misconduct that
has caused or is reasonably expected to result in material injury to the Company
or to any Subsidiary,  Parent, Affiliate or successor thereto; (iv) unauthorized
use or disclosure by Participant of any proprietary information or trade secrets
of the Company or any other party to whom the Participant  owes an obligation of
nondisclosure  as a result  of his or her  relationship  with the  Company  or a
Subsidiary,  Parent,  Affiliate  or  successor  thereto;  or (iv)  Participant's
willful breach of any of his or her obligations  under any written  agreement or
covenant with the Company or with any Subsidiary, Parent, Affiliate or successor
to  the  Company.  The  determination  as to  whether  a  Participant  is  being
terminated for Cause shall be made in good faith by the Company or a Subsidiary,
Parent,  Affiliate or successor thereto, as appropriate,  and shall be final and

<PAGE>

binding on the Participant.  The foregoing  definition does not in any way limit
the ability of the  Company or a  Subsidiary,  Parent,  Affiliate  or  successor
thereto to terminate a  Participant's  employment or consulting  relationship at
any time as provided in Section 5(c) below.

          (f)  "Change of Control" means a sale of all or  substantially  all of
the Company's assets, or any merger or consolidation of the Company with or into
another corporation other than a merger or consolidation in which the holders of
more  than  50% of the  shares  of  capital  stock  of the  Company  outstanding
immediately  prior to such  transaction  continue to hold  (either by the voting
securities  remaining  outstanding  or by  their  being  converted  into  voting
securities  of the  surviving  entity)  more than 50% of the total  voting power
represented by the voting  securities of the Company,  or such surviving entity,
outstanding immediately after such transaction.

          (g)  "Code" means the Internal Revenue Code of 1986, as amended.

          (h)  "Committee"  means one or more committees or subcommittees of the
Board appointed by the Board to administer the Plan in accordance with Section 4
below.

          (i)  "Common Stock" means the Common Stock of the Company.

          (j)  "Company" means CirTran Corporation, a Nevada corporation.

          (k)  "Consultant" means any person,  including an advisor, who renders
services  to  the  Company  or  any  Parent,  Subsidiary  or  Affiliate  and  is
compensated  for  such  services,  and  any  Director  of  the  Company  whether
compensated for such services or not.

          (l)  "Continuous Service Status" means the absence of any interruption
or  termination  of service as an  Employee  or  Consultant  to the Company or a
Parent,  Subsidiary  or  Affiliate.  Continuous  Service  Status  shall  not  be
considered interrupted in the case of (i) sick leave; (ii) military leave; (iii)
any other leave of absence  approved by the  Administrator,  provided  that such
leave is for a period of not more  than 90 days,  unless  reemployment  upon the
expiration  of such  leave is  guaranteed  by  contract  or  statute,  or unless
provided otherwise pursuant to Company policy adopted from time to time; or (iv)
in the case of  transfers  between  locations  of the  Company  or  between  the
Company, its Parent(s), Subsidiaries, Affiliates or their respective successors.
Unless otherwise  determined by the  Administrator  or the Company,  a change in
status from an Employee to a Consultant or from a Consultant to an Employee will
not constitute a termination of Continuous Service Status.

          (m)  "Corporate  Transaction" means a sale of all or substantially all
of  the  Company's  assets,   or  a  merger,   consolidation  or  other  capital
reorganization of the Company with or into another corporation.

          (n)  "Director" means a member of the Board.

          (o)  "Employee" means any person (including, if appropriate, any Named
Executive,  Officer  or  Director)  employed  by  the  Company  or  any  Parent,

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Subsidiary  or  Affiliate  of the  Company.  The  payment  by the  Company  of a
director's fee to a Director shall not be sufficient to constitute  "employment"
of such Director by the Company.

          (p)  "Exchange  Act" means the  Securities  Exchange  Act of 1934,  as
amended.

          (q)  "Fair Market  Value" means,  as of any date,  the value of Common
Stock determined as follows:

               (i)  If the  Common  Stock is  listed  on any  established  stock
exchange or a national market system including  without  limitation the National
Market  of the  National  Association  of  Securities  Dealers,  Inc.  Automated
Quotation  ("NASDAQ")  System,  its Fair Market Value shall be the closing sales
price for such stock (or the closing  bid, if no sales were  reported) as quoted
on such  system or exchange  on the date of  determination  (or if no trading or
bids occurred on the date of determination, on the last trading day prior to the
date of  determination),  as reported  in The Wall Street  Journal or such other
source as the Administrator deems reliable;

               (ii) If the Common Stock is quoted on the Nasdaq  System (but not
on the National Market thereof) or regularly  quoted by a recognized  securities
dealer but selling  prices are not reported,  its Fair Market Value shall be the
mean between the high bid and low asked prices for the Common Stock for the date
of determination  (or if no bids occurred on the date of  determination,  on the
last trading day prior to the date of determination); or

               (iii)In the  absence  of an  established  market  for the  Common
Stock,  the Fair Market Value  thereof  shall be determined in good faith by the
Administrator.

          (r)  "Incentive  Stock Option" means an Option  intended to qualify as
an  incentive  stock  option  within the meaning of Section 422 of the Code,  as
designated in the applicable Option Agreement.

          (s)  "Involuntary  Termination"  means  termination of a Participant's
Continuous  Service Status under the following  circumstances:  (i)  termination
without  Cause by the Company or a  Subsidiary,  Parent,  Affiliate or successor
thereto,  as  appropriate;  or (ii)  voluntary  termination  by the  Participant
following (A) a material  reduction in the Participant's  job  responsibilities,
provided that neither a mere change in title alone nor reassignment  following a
Change of Control to a position  that is  substantially  similar to the position
held prior to the Change of Control shall constitute a material reduction in job
responsibilities;  (B) without Participant's prior written approval, the Company
or a  Subsidiary,  Parent,  Affiliate  or  successor  thereto,  as  appropriate,
requires  Participant  to relocate to a facility or location  more than 50 miles
from the Company's location at the time of the Change of Control,  provided that
required travel on corporate business to an extent consistent with Participant's
job  responsibilities  does not constitute  such a forced  relocation;  or (C) a
reduction  in  Participant's   then-current   base  salary,   provided  that  an
across-the-board  reduction  in the  salary  level  of all  other  employees  or
consultants in positions  similar to the  Participant's  by the same  percentage
amount as part of a general salary level  reduction  shall not constitute such a
salary reduction.

          (t)  "Listed  Security"  means any  security  of the  Company  that is
listed or approved for listing on a national  securities  exchange or designated

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or  approved  for  designation  as a  national  market  system  security  on  an
interdealer  quotation system by the National Association of Securities Dealers,
Inc.

          (u)  "Named  Executive"  means any individual  who, on the last day of
the Company's fiscal year, is the chief executive  officer of the Company (or is
acting in such capacity) or among the four most highly  compensated  officers of
the Company (other than the chief executive officer).  Such officer status shall
be determined pursuant to the executive compensation  disclosure rules under the
Exchange Act.

          (v)  "Nonstatutory  Stock  Option"  means an Option  not  intended  to
qualify as an Incentive  Stock Option,  as designated in the  applicable  Option
Agreement.

          (w)  "Officer"  means a person who is an officer of the Company within
the meaning of Section  16(a) of the Exchange Act and the rules and  regulations
promulgated thereunder.

          (x)  "Option" means a stock option granted pursuant to the Plan.

          (y)  "Option Agreement" means a written document, the form(s) of which
shall be approved from time to time by the  Administrator,  reflecting the terms
of an Option  granted under the Plan and includes any  documents  attached to or
incorporated into such Option Agreement, including, but not limited to, a notice
of stock option grant and a form of exercise notice.

          (z)  "Option  Exchange  Program"  means  a  program  approved  by  the
Administrator whereby outstanding Options are exchanged for Options with a lower
exercise price.

          (aa) "Optioned Stock" means the Common Stock subject to an Option.

          (bb) "Optionee"  means an  Employee  or  Consultant  who  receives  an
Option.

          (cc) "Parent" means a "parent  corporation,"  whether now or hereafter
existing, as defined in Section 424(c) of the Code.

          (dd) "Participant"  means any  holder of one or more  Options or Stock
Purchase Rights,  or the Shares issuable or issued upon exercise of such awards,
under the Plan.

          (ee) "Plan" means this 2006 Stock Plan.

          (ff) "Reporting Person" means an Officer, Director or greater than 10%
stockholder of the Company within the meaning of Rule 16a-2 of the Exchange Act,
who is required to file reports pursuant to Rule 16a-3 of the Exchange Act.

          (gg) "Restricted Stock" means shares of Common Stock acquired pursuant
to a grant of a Stock Purchase Right under Section 11 below.

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<PAGE>

          (hh) "Restricted  Stock Purchase  Agreement" means a written document,
the form(s) of which shall be approved  from time to time by the  Administrator,
reflecting  the  terms of a Stock  Purchase  Right  granted  under  the Plan and
includes any documents attached to such agreement.

          (ii) "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act,
as amended from time to time, or any successor provision.

          (jj) "Share"  means  a share  of the  Common  Stock,  as  adjusted  in
accordance with Section 14 of the Plan.

          (kk) "Stock  Exchange" means any stock exchange or consolidated  stock
price  reporting  system on which  prices for the Common Stock are quoted at any
given time.

          (ll) "Stock  Purchase  Right" means the right to purchase Common Stock
pursuant to Section 11 below.

          (mm) "Subsidiary"  means a  "subsidiary  corporation,"  whether now or
hereafter existing, as defined in Section 424(f) of the Code.

          (nn) "Ten Percent  Holder" means a person who owns stock  representing
more than ten percent  (10%) of the voting  power of all classes of stock of the
Company or any Parent or Subsidiary.

     3.   STOCK SUBJECT TO THE PLAN.  Subject to the provisions of Section 14 of
the Plan, the maximum aggregate number of shares that may be sold under the Plan
is  50,000,000  Shares  of Common  Stock.  The  Shares  may be  authorized,  but
unissued, or reacquired Common Stock.

     If an Option expires or becomes unexercisable for any reason without having
been  exercised  in full,  or is  surrendered  pursuant  to an  Option  Exchange
Program, the unpurchased Shares that were subject thereto shall, unless the Plan
has been  terminated,  become  available  for future  grant  under the Plan.  In
addition,  any Shares of Common  Stock that are  retained  by the  Company  upon
exercise of an Option or Stock  Purchase  Right in order to satisfy the exercise
or purchase  price for such Option or Stock  Purchase  Right or any  withholding
taxes due with  respect to such  exercise  or  purchase  shall be treated as not
issued and shall  continue to be available  under the Plan.  Shares issued under
the Plan and later  repurchased by the Company  pursuant to any repurchase right
that the  Company  may have shall not be  available  for future  grant under the
Plan.

     4.   ADMINISTRATION OF THE PLAN.

          (a)  General.  The  Plan  shall  be  administered  by the  Board  or a
Committee, or a combination thereof, as determined by the Board. The Plan may be
administered  by  different  administrative  bodies  with  respect to  different
classes of Participants  and, if permitted by the Applicable Laws, the Board may
authorize  one or more  officers  (who may (but need not) be  Officers) to grant
Options or Stock Purchase Rights to Employees and Consultants.

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<PAGE>

          (b)  Administration with Respect to Reporting Persons. With respect to
Options  granted to Reporting  Persons and Named  Executives,  the Plan may (but
need not) be  administered  so as to permit  such  Options  to  qualify  for the
exemption  set  forth  in  Rule  16b-3  and  to  qualify  as   performance-based
compensation under Section 162(m) of the Code.

          (c)  Committee Composition. If a Committee has been appointed pursuant
to this  Section 4, such  Committee  shall  continue to serve in its  designated
capacity until otherwise  directed by the Board. From time to time the Board may
increase  the size of any  Committee  and appoint  additional  members  thereof,
remove members (with or without  cause) and appoint new members in  substitution
therefor,  fill vacancies (however caused) and remove all members of a Committee
and thereafter  directly administer the Plan, all to the extent permitted by the
Applicable Laws and, in the case of a Committee  administering the Plan pursuant
to Section  4(b) above,  to the extent  permitted  or required by Rule 16b-3 and
Section 162(m) of the Code.

          (d)  Powers of the  Administrator.  Subject to the  provisions  of the
Plan and in the case of a Committee,  the specific duties delegated by the Board
to  such  Committee,   the  Administrator  shall  have  the  authority,  in  its
discretion:

               (i)  to determine the Fair Market Value of the Common  Stock,  in
accordance with Section 2(q) of the Plan;

               (ii) to select the Employees and  Consultants to whom Options and
Stock  Purchase  Rights  or any  combination  thereof  may from  time to time be
granted;

               (iii) to determine  whether and to what extent  Options and Stock
Purchase Rights or any combination thereof are granted;

               (iv) to  determine  the  number of  Shares of Common  Stock to be
covered by each such award granted;

               (v)  to approve forms of agreement for use under the Plan;

               (vi) to determine the terms and conditions, not inconsistent with
the  terms  of the  Plan,  of any  award  granted  hereunder,  which  terms  and
conditions  include but are not limited to the exercise or purchase  price,  the
time or times when Options or Stock Purchase Rights may be exercised  (which may
be based on  performance  criteria),  any  vesting  acceleration  or  waiver  of
forfeiture restrictions, and any restriction or limitation regarding any Option,
Optioned Stock,  Stock Purchase Right or Restricted Stock, based in each case on
such factors as the Administrator, in its sole discretion, shall determine;

               (vii) to determine whether and under what circumstances an Option
may be settled in cash under Section 10(f) instead of Common Stock;

               (viii) to reduce  the  exercise  price of any  Option to the then
current Fair Market  Value if the Fair Market Value of the Common Stock  covered
by such Option shall have declined  since the date the Option was granted and to
make any other  amendments or adjustments  to any Option that the  Administrator
determines,  in its discretion  and under the authority  granted to it under the
Plan,  to be  necessary  or  advisable,  provided  however  that no amendment or

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<PAGE>

adjustment to an Option that would materially and adversely affect the rights of
any Optionee shall be made without the prior written consent of the Optionee;

               (ix) to determine the terms and restrictions  applicable to Stock
Purchase  Rights and the  Restricted  Stock  purchased by exercising  such Stock
Purchase Rights;

               (x)  to initiate an Option Exchange Program;

               (xi) to construe and  interpret  the terms of the Plan and awards
granted under the Plan; and

               (xii)in order to fulfill  the  purposes  of the Plan and  without
amending  the Plan,  to modify  grants of  Options or Stock  Purchase  Rights to
Participants who are foreign  nationals or employed outside of the United States
in order to recognize differences in local law, tax policies or customs.

          (e)  Effect of Administrator's Decision. All decisions, determinations
and  interpretations  of the  Administrator  shall be final and  binding  on all
Participants.

     5.   ELIGIBILITY.

          (a)  Recipients  of  Grants.  Nonstatutory  Stock  Options  and  Stock
Purchase  Rights may be granted to Employees and  Consultants.  Incentive  Stock
Options may be granted only to  Employees,  provided  however that  Employees of
Affiliates shall not be eligible to receive Incentive Stock Options. An Employee
or Consultant who has been granted an Option or Stock Option Right may, if he or
she is  otherwise  eligible,  be granted  additional  Options or Stock  Purchase
Rights.

          (b)  Type of Option.  Each Option  shall be  designated  in the Option
Agreement as either an Incentive  Stock Option or a  Nonstatutory  Stock Option.
However,  notwithstanding  such  designations,  to the extent that the aggregate
Fair Market Value of Shares with respect to which  Options are  exercisable  for
the first time by an Optionee  during any calendar  year (under all plans of the
Company or any Parent or Subsidiary) exceeds $100,000, such excess Options shall
be treated as  Nonstatutory  Stock  Options.  For purposes of this Section 5(b),
Incentive  Stock  Options shall be taken into account in the order in which they
were granted,  and the Fair Market Value of the Shares shall be determined as of
the date of grant of such Option.

          (c)  No  Employment  Rights.  The  Plan  shall  not  confer  upon  any
Participant  any right with respect to  continuation of employment or consulting
relationship with the Company, nor shall it interfere in any way with his or her
right or the Company's  right to terminate  his or her  employment or consulting
relationship at any time, with or without cause.

     6.   TERM OF PLAN. The Plan shall become effective upon its adoption by the
Board.  It shall  continue in effect for a term of ten (10) years unless  sooner
terminated under Section 16 of the Plan.

     7.   TERM OF OPTION.  The term of each  Option  shall be the term stated in
the Option  Agreement;  provided however that the term shall be no more than ten

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(10)  years  from the  date of  grant  thereof  or such  shorter  term as may be
provided in the Option  Agreement  and provided  further that, in the case of an
Incentive  Stock  Option  granted to a person who at the time of such grant is a
Ten Percent  Holder,  the term of such Incentive  Stock Option shall be five (5)
years from the date of grant  thereof or such shorter term as may be provided in
the Option Agreement.

     8.   LIMITATION ON GRANTS TO  EMPLOYEES.  Subject to adjustment as provided
in  Section  13 below,  the  maximum  number of Shares  which may be  subject to
Options and Stock  Purchase  Rights  granted to any one Employee under this Plan
for any fiscal year of the Company shall be 6,000,000.

     9.   OPTION EXERCISE PRICE AND CONSIDERATION.

          (a)  Exercise Price. The per Share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be such price as is determined by
the Administrator and set forth in the Option Agreement, but shall be subject to
the following:

               (i)  In the case of an Incentive Stock Option

                    (A)  granted  to an  Employee  who at the time of grant is a
Ten Percent  Holder,  the per Share exercise price shall be no less than 110% of
the Fair Market Value per Share on the date of grant; or

                    (B)  granted to any other  Employee,  the per Share exercise
price shall be no less than 100% of the Fair Market  Value per Share on the date
of grant.

               (ii) In the case of a Nonstatutory Stock Option

                    (A)  granted  prior to the date, if any, on which the Common
Stock becomes a Listed Security to a person who is at the time of grant is a Ten
Percent  Holder,  the per Share exercise price shall be no less than 110% of the
Fair Market  Value per Share on the date of grant if required by the  Applicable
Laws  and,  if not so  required,  shall be such  price as is  determined  by the
Administrator;

                    (B)  granted  to a person  who,  at the time of the grant of
such Option,  is a Named Executive of the Company,  the per share Exercise Price
shall be no less than 100% of the Fair Market Value on the date of grant if such
Option is intended to qualify as  performance-based  compensation  under Section
162(m) of the Code; or

                    (C)  granted  prior to the date, if any, on which the Common
Stock becomes a Listed  Security to any person other than a Named Executive or a
Ten Percent  Holder,  the per Share  exercise price shall be no less than 85% of
the Fair Market  Value per Share on the date of grant if required by  Applicable
Law and,  if not so  required,  shall  be such  price  as is  determined  by the
Administrator.

               (iii) Notwithstanding the foregoing, Options  may be granted with
a per Share  exercise price other than as required above pursuant to a merger or
other corporate transaction.

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<PAGE>

          (b)  Permissible  Consideration.  The consideration to be paid for the
Shares to be issued upon exercise of an Option, including the method of payment,
shall be  determined  by the  Administration  (and,  in the case of an Incentive
Stock Option, shall be determined at the time of grant) and may consist entirely
of (1) cash;  (2) check;  (3) delivery of Optionee's  promissory  note with such
recourse,  interest,  security and  redemption  provisions as the  Administrator
determines to be appropriate; (4) cancellation of indebtedness; (5) other Shares
that (x) in the case of Shares  acquired  upon exercise of an Option either have
been owned by the Optionee for more than six months on the date of surrender (or
such  other  period  as may be  required  to  avoid a  charge  to the  Company's
earnings) or were not acquired,  directly or indirectly,  from the Company,  and
(y) have a Fair Market  Value on the date of  surrender  equal to the  aggregate
exercise  price  of  the  Shares  as to  which  the  Option  is  exercised;  (6)
authorization  from the Company to retain from the total  number of Shares as to
which the Option is exercised  that number of Shares  having a Fair Market Value
on the date of  exercise  equal to the  exercise  price for the total  number of
Shares as to which the Option is exercised;  (7) delivery of a properly executed
exercise notice together with such other documentation as the Administration and
the broker,  if applicable,  shall require to effect  exercise of the Option and
prompt delivery to the Company of the sale or loan proceeds  required to pay the
exercise price and any applicable  withholding taxes; (8) any combination of the
foregoing  methods of  payment;  or (9) such other  consideration  and method of
payment for the issuance of Shares to the extent  permitted under the Applicable
Laws. In making its determination as to the type of consideration to accept, the
Administrator  shall  consider  if  acceptance  of  such  consideration  may  be
reasonably  expected to benefit the Company and the  Administrator may refuse to
accept a particular form of consideration at the time of any Option exercise if,
in its sole  discretion,  acceptance of such form of consideration is not in the
best interests of the Company at such time.

     10.  EXERCISE OF OPTION.

          (a)  Procedure  for  Exercise;  Rights as a  Stockholder.  Any  Option
granted  hereunder  shall be exercisable at such times and under such conditions
as determined by the  Administrator,  consistent with the terms of the Plan, and
reflected  in  the  Option  Agreement,  including  vesting  requirements  and/or
performance  criteria with respect to the Company and/or the Optionee;  provided
however that, if required by the  Applicable  Laws,  any Option granted prior to
the date, if any, upon which the Common Stock  becomes a Listed  Security  shall
become  exercisable  at a rate of at least 20% per year over five years from the
date the Option is  granted.  In the event that any of the  Shares  issued  upon
exercise of an Option  (which  exercise  occurs prior to the date,  if any, upon
which the Common Stock becomes a Listed  Security)  should be subject to a right
of repurchase in the Company's  favor,  such repurchase right shall, if required
by the  Applicable  Laws,  lapse at the rate of at least  20% per year over five
years from the date the Option is  granted.  Notwithstanding  the above,  in the
case of an Option granted to an officer (including but not limited to Officers),
Director  or  Consultant,  the Option may become  exercisable,  or a  repurchase
right,  if any, in favor of the Company  shall lapse,  at any time or during any
period  established  by the  Administrator.  The  Administrator  shall  have the
discretion to determine  whether and to what extent the vesting of Options shall
be tolled  during any unpaid  leave of  absence;  provided  however  that in the
absence of such  determination,  vesting of Options  shall be tolled  during any
such leave.

               (i)  An Option may not be exercised for a fraction of a Share.

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               (ii) An Option shall be deemed  exercised  when written notice of
such exercise has been given to the Company in accordance  with the terms of the
Option by the  person  entitled  to  exercise  the Option  and the  Company  has
received  full payment for the Shares.  Full payment may, as  authorized  by the
Administrator,  consist of any  consideration  and  method of payment  allowable
under  Section  9(b) of the  Plan.  Until  the  issuance  (as  evidenced  by the
appropriate  entry on the books of the Company or of a duly authorized  transfer
agent of the Company) of the stock certificate  evidencing such Shares, no right
to vote or receive  dividends or any other rights as a  stockholder  shall exist
with respect to the Optioned Stock,  notwithstanding the exercise of the Option.
The Company shall issue (or cause to be issued) such stock certificate  promptly
upon exercise of the Option.  No adjustment will be made for a dividend or other
right for which the record  date is prior to the date the stock  certificate  is
issued, except as provided in Section 14 of the Plan.

               (iii) Exercise of an  Option  in any  manner  shall  result  in a
decrease  in the number of Shares that  thereafter  may be  available,  both for
purposes of the Plan and for sale under the  Option,  by the number of Shares as
to which the Option is exercised.

          (b)  Termination of Status as an Employee or Consultant.  In the event
of termination of an Optionee's  Continuous  Service Status,  such Optionee may,
but only  within the (3) months  (or such  other  period of time,  not less than
thirty (30) days, as is determined by the Administrator, with such determination
in the case of an Incentive  Stock Option being made at the time of grant of the
Option) after the date of such  termination (but in no event later than the date
of expiration of the term of such Option as set forth in the Option  Agreement),
exercise his or her Option to the extent that he or she was entitled to exercise
it at the date of such  termination.  To the extent  that the  Optionee  was not
entitled  to  exercise  the  Option at the date of such  termination,  or if the
Optionee does not exercise the Option to the extent so entitled  within the time
specified  above,  the Option shall terminate and the Optioned Stock  underlying
the unexercised portion of the Option shall revert to the Plan. Unless otherwise
determined by the  Administrator or the Company,  no termination shall be deemed
to occur  and this  Section  10(b)  shall  not  apply if (i) the  Optionee  is a
Consultant  who becomes an  Employee,  or (ii) the  Optionee is an Employee  who
becomes a Consultant.

          (c)  Disability of Optionee.  Notwithstanding  Section 10(b) above, in
the event of termination of an Optionee's  Continuous Service Status as a result
of his or her total and permanent  disability (as defined in Section 22(e)(3) of
the Code),  such Optionee may, but only within twelve (12) months (or such other
period of time as is determined by the Administrator, with such determination in
the case of an  Incentive  Stock Option made at the time of grant of the Option)
from  the  date of such  termination  (but in no  event  later  than the date of
expiration  of the term of such  Option as set forth in the  Option  Agreement),
exercise  the Option to the extent he or she was  entitled to exercise it at the
date of such  termination.  To the extent that the  Optionee was not entitled to
exercise  the Option at the date of  termination,  or if the  Optionee  does not
exercise the Option to the extent so entitled  within the time specified  above,
the Option shall  terminate  and the Option  Stock  underlying  the  unexercised
portion of the Option shall revert to the Plan.

          (d)  Death  of  Optionee.  In the  event of the  death of an  Optionee
during the period of  Continuous  Service  Status since the date of grant of the
Option,  or within 30 days following  termination  of the Optionee's  Continuous
Service  Status,  the Option may be  exercised  at any time  within  twelve (12)

                                       10
<PAGE>

months  following  the date of death (but in no event later than the  expiration
date of the term of such  Option as set forth in the Option  Agreement)  by such
Optionee's  estate or by a person who  acquired the right to exercise the Option
by bequest or inheritance,  but only to the extent of the right to exercise that
had accrued at the date of death or, if earlier,  the date of termination of the
Optionee's  Continuous  Service Status.  To the extent that the Optionee was not
entitled to exercise the Option at the date of death or termination, as the case
may be, or if the  Optionee  does not  exercise  such  Option  to the  extent so
entitled  within the time specified  above,  the Option shall  terminate and the
Optioned Stock underlying the unexercised  portion of the Option shall revert to
the Plan.

          (e)  Extension of Exercise Period.  The Administrator  shall have full
power  and  authority  to  extend  the  period of time for which an Option is to
remain  exercisable  following  termination of an Optionee's  Continuous Service
Status from the periods set forth in Sections 10(b), 10(c) and 10(d) above or in
the  Option  Agreement  to such  greater  time as the  Administrator  shall deem
appropriate,  provided that in no event shall such Option be  exercisable  later
than  the date of  expiration  of the term of such  Option  as set  forth in the
Option Agreement.

          (f)  Buy-Out  Provisions.  The  Administrator may at any time offer to
buy out for a payment in cash or Shares an Option  previously  granted under the
Plan based on such terms and conditions as the Administrator shall establish and
communicate to the Optionee at the time such offer is made.

     11.  STOCK PURCHASE RIGHTS.

          (a)  Rights to Purchase.  Stock  Purchase  Rights may be issued either
alone,  in addition  to, or in tandem with other awards  granted  under the Plan
and/or cash awards made outside of the Plan. After the Administrator  determines
that it will offer Stock  Purchase  Rights  under the Plan,  it shall advise the
offeree  in writing of the terms,  conditions  and  restrictions  related to the
offer,  including  the number of Shares  that such  person  shall be entitled to
purchase,  the price to be paid,  and the time  within  which such  person  must
accept  such offer,  which  shall in no event  exceed 30 days from the date upon
which the  Administrator  made the  determination  to grant  the Stock  Purchase
Right.  In the case of a Stock Purchase Right granted prior to the date, if any,
on which the Common  Stock  becomes a Listed  Security  and if  required  by the
Applicable Laws at such time, the purchase price of Shares subject to such Stock
Purchase  Rights  shall  not be less  than 85% of the Fair  Market  Value of the
Shares as of the date of the  offer,  or, in the case of a person  owning  stock
representing  more than 10% of the total combined voting power of all classes of
stock of the  Company or any Parent or  Subsidiary,  the price shall not be less
than 100% of the Fair Market Value of the Shares as of the date of the offer. If
the Applicable  Laws do not impose the  requirements  set forth in the preceding
sentence and with respect to any Stock  Purchase  Rights granted after the date,
if any, on which the Common Stock becomes a Listed Security,  the purchase price
of  Shares  subject  to Stock  Purchase  Rights  shall be as  determined  by the
Administrator.  The offer to purchase  Shares subject to Stock  Purchase  Rights
shall be accepted by execution of a Restricted  Stock Purchase  Agreement in the
form determined by the Administrator.

          (b)  Repurchase Option. Unless the Administrator determines otherwise,
the  Restricted  Stock Purchase  Agreement  shall grant the Company a repurchase

                                       11
<PAGE>

option  exercisable  upon  the  voluntary  or  involuntary  termination  of  the
purchaser's  employment  with the  Company  for any reason  (including  death or
disability).   The  purchase  price  for  Shares  repurchased  pursuant  to  the
Restricted Stock Purchase Agreement shall be the original purchase price paid by
the  purchaser  and may be  paid  by  cancellation  of any  indebtedness  of the
purchaser to the Company.  The repurchase option shall lapse at such rate as the
Administrator  may  determine;  provided  however  that with  respect to a Stock
Purchase  Right  granted  prior to the date,  if any, on which the Common  Stock
becomes a Listed  Security to a purchaser  who is not an officer  (including  an
Officer),  Director or  Consultant of the Company or of any Parent or Subsidiary
of the Company,  it shall lapse at a minimum rate of 20% per year if required by
the Applicable Laws.

          (c)  Other Provisions.  The Restricted Stock Purchase  Agreement shall
contain such other terms,  provisions and conditions not  inconsistent  with the
Plan as may be  determined  by the  Administrator  in its  sole  discretion.  In
addition, the provisions of Restricted Stock Purchase Agreements need not be the
same with respect to each purchaser.

          (d)  Rights  as a  Stockholder.  Once  the  Stock  Purchase  Right  is
exercised,  the  purchaser  shall  have  the  rights  equivalent  to  those of a
stockholder, and shall be a stockholder when his or her purchase is entered upon
the records of the duly authorized  transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Stock Purchase Right is exercised, except as provided in Section 14
of the Plan.

     12.  TAXES.

          (a)  As a condition  of the  exercise  of an Option or Stock  Purchase
Right  granted  under  the  Plan,  the  Participant  (or  in  the  case  of  the
Participant's  death, the person  exercising the Option or Stock Purchase Right)
shall  make  such   arrangements  as  the  Administrator  may  require  for  the
satisfaction of any applicable federal,  state, local or foreign withholding tax
obligations  that may arise in  connection  with the exercise of Option or Stock
Purchase Right and the issuance of Shares.  The Company shall not be required to
issue any Shares under the Plan until such obligations are satisfied.

          (b)  In the  case  of an  Employee  and in the  absence  of any  other
arrangement,  the  Employee  shall be deemed to have  directed  the  Company  to
withhold or collect from his or her compensation an amount sufficient to satisfy
such tax obligations from the next payroll payment  otherwise  payable after the
date of an exercise of the Option or Stock Purchase Right.

          (c)  This Section  12(c) shall apply only after the date, if any, upon
which the Common Stock  becomes a Listed  Security.  In the case of  Participant
other than an  Employee  (or in the case of an Employee  where the next  payroll
payment is not sufficient to satisfy such tax  obligations,  with respect to any
remaining tax  obligations),  in the absence of any other arrangement and to the
extent permitted under the Applicable  Laws, the Participant  shall be deemed to
have  elected to have the  Company  withhold  from the Shares to be issued  upon
exercise of the Option or Stock  Purchase  Right that number of Shares  having a
Fair Market Value  determined as of the  applicable  Tax Date (as defined below)
equal to the amount  required to be  withheld.  For purposes of this Section 12,

                                       12
<PAGE>

the Fair Market Value of the Shares to be withheld  shall be  determined  on the
date  that the  amount  of tax to be  withheld  is to be  determined  under  the
Applicable Laws (the "Tax Date").

          (d)  If  permitted  by  the  Administrator,   in  its  discretion,   a
Participant may satisfy his or her tax withholding  obligations upon exercise of
an Option or Stock Purchase Right by surrendering to the Company Shares that (i)
in the case of Shares previously  acquired from the Company,  have been owned by
the Participant for more than six (6) months on the date of surrender,  and (ii)
have a Fair Market Value  determined as of the  applicable Tax Date equal to the
amount required to be withheld.

          (e)  Any election or deemed  election by a Participant  to have Shares
withheld to satisfy tax withholding obligations under Section 12(c) or (d) above
shall be  irrevocable  as to the  particular  Shares as to which the election is
made and shall be subject to the consent or  disapproval  of the  Administrator.
Any election by a Participant under Section 12(d) above must be made on or prior
to the applicable Tax Date.

          (f)  In the event an  election  to have  Shares  withheld is made by a
Participant and the Tax Date is deferred under Section 83 of the Code because no
election is filed under Section 83(b) of the Code, the Participant shall receive
the full  number of Shares  with  respect to which the Option or Stock  Purchase
Right is exercised but such Participant  shall be  unconditionally  obligated to
tender back to the Company the proper number of Shares on the Tax Date.

     13.  NON-TRANSFERABILITY  OF OPTIONS AND STOCK PURCHASE RIGHTS. Options and
Stock  Purchase  Rights  may  not  be  sold,  pledged,  assigned,  hypothecated,
transferred  or disposed  of in any manner  other than by will or by the laws of
descent or  distribution;  provided that, after the date, if any, upon which the
Common Stock becomes a Listed Security,  the Administrator may in its discretion
grant  transferable  Nonstatutory  Stock Options  pursuant to Option  Agreements
specifying  (i)  the  manner  in  which  such  Nonstatutory  Stock  Options  are
transferable  and (ii) that any such transfer shall be subject to the Applicable
Laws.  The  designation  of a beneficiary  by an Optionee will not  constitute a
transfer.  An  Option  or Stock  Purchase  Right may be  exercised,  during  the
lifetime of the holder of Option or Stock Purchase Right, only by such holder or
a transferee permitted by this Section 13.

     14.  ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, CORPORATE TRANSACTIONS AND
CERTAIN OTHER TRANSACTIONS.

          (a)  Changes in Capitalization.  Subject to any required action by the
stockholders  of the Company,  the number of shares of Common  Stock  covered by
each outstanding  Option or Stock Purchase Right, the number of Shares set forth
in Sections  3(a)(i) and 8 above,  and the number of shares of Common Stock that
have been  authorized  for issuance under the Plan but as to which no Options or
Stock  Purchase  Rights have yet been granted or that have been  returned to the
Plan upon  cancellation  or expiration of an Option or Stock Purchase  Right, as
well as the price per Share of Common  Stock  covered  by each such  outstanding
Option  or Stock  Purchase  Right,  shall be  proportionately  adjusted  for any
increase or decrease in the number of issued  Shares of Common  Stock  resulting
from  a  stock  split,   reverse  stock  split,  stock  dividend,   combination,

                                       13
<PAGE>

recapitalization  or  reclassification of the Common Stock (including any change
in the number of Shares of Common Stock effected in connection  with a change of
domicile  of the  Company),  or any other  increase or decrease in the number of
issued Shares of Common Stock effected  without receipt of  consideration by the
Company;  provided however that conversion of any convertible  securities of the
Company  shall  not  be  deemed  to  have  been  "effected  without  receipt  of
consideration."  Such  adjustment  shall  be  made by the  Administrator,  whose
determination in that respect shall be final, binding and conclusive.  Except as
expressly  provided herein, no issuance by the Company of shares of stock of any
class,  or  securities  convertible  into  shares of stock of any  class,  shall
affect,  and no adjustment by reason  thereof shall be made with respect to, the
number or price of Shares of Common Stock subject to an Option or Stock Purchase
Right.

          (b)  Dissolution or  Liquidation.  In the event of the  dissolution or
liquidation  of the Company,  each  outstanding  Option or Stock  Purchase Right
shall terminate immediately prior to the consummation of the transaction, unless
otherwise provided by the Administrator.

          (c)  Corporate Transactions; Change of Control.

               (i)  In the event of a Corporate  Transaction,  each  outstanding
Option and Stock  Purchase  Right  shall be assumed or an  equivalent  option or
right  shall  be  substituted  by  the  successor  corporation  or a  Parent  or
Subsidiary  of  such  successor   corporation   (such  entity,   the  "Successor
Corporation"),   unless  the  Successor  Corporation  does  not  agree  to  such
assumption or substitution, in which case such Options and Stock Purchase Rights
shall  terminate  upon  consummation  of the  transaction.  Notwithstanding  the
preceding sentence, in the event of a Change of Control, each outstanding Option
and Stock Purchase Right shall be assumed or an equivalent option or right shall
be substituted by the Successor  Corporation,  unless the Successor  Corporation
does not agree to such assumption or substitution,  in which case the vesting of
each Option shall  accelerate  and the Options shall become  exercisable in full
(including  with respect to Shares as to which an Option would not  otherwise be
vested and  exercisable),  and any repurchase right in favor of the Company with
respect to any Shares  purchased  upon  exercise of an Option or Stock  Purchase
right shall lapse in full, prior to consummation of the transaction at such time
and on such conditions as the  Administrator  shall determine.  To the extent an
Option is not exercised  prior to  consummation  of a Change of Control in which
the vesting of Options is being  accelerated,  such Option shall  terminate upon
such consummation and the  Administrator  shall notify the Optionee of such fact
at least five (5) days prior to the date on which the Option terminates.

               (ii) In the event Plan  awards  are  assumed  or  substituted  in
connection with a Change of Control and a Participant holding such an assumed or
substituted award experiences an Involuntary Termination within twenty-four (24)
months following the Change of Control,  any assumed or substituted  Option held
by the terminated  Participant at the time of termination  shall  accelerate and
become  exercisable in full  (including with respect to any shares of stock then
underlying  the Option as to which the Option would not  otherwise be vested and
exercisable),  and any repurchase right in favor of the Company or the Successor
Corporation  with  respect  to any  Shares  (or any  shares  of stock  issued in
exchange for such Shares) purchased upon exercise of an Option or Stock Purchase
Right  shall  lapse in full,  immediately  prior  to the  effective  date of the
Involuntary Termination.

                                       14
<PAGE>

               (iii) For purposes of this  Section  14(c),  an Option or a Stock
Purchase Right shall be considered assumed, without limitation,  if, at the time
of issuance of the stock or other consideration upon a Corporate  Transaction or
a Change  of  Control,  as the case may be,  each  holder  of an Option or Stock
Purchase Right would be entitled to receive upon exercise of the Option or Stock
Purchase Right the same number and kind of shares of stock or the same amount of
property,  cash or securities as such holder would have been entitled to receive
upon the occurrence of the transaction if the holder had been, immediately prior
to such transaction,  the holder of the number of Shares of Common Stock covered
by the Option or the Stock  Purchase  Right at such time (after giving effect to
any  adjustments in the number of Shares covered by the Option or Stock Purchase
Right  as  provided  for in  this  Section  14);  provided  however  that if the
consideration  received in the  transaction  is not solely  common  stock of the
Successor Corporation,  the Administrator may, with the consent of the Successor
Corporation,  provide for the  consideration to be received upon exercise of the
Option  or Stock  Purchase  Right to be  solely  common  stock of the  Successor
Corporation  equal  to the Fair  Market  Value  of the per  Share  consideration
received by holders of Common Stock in the transaction.

          (d)  Accounting and Tax Treatment.

               (i)  Pooling  Issues.  Notwithstanding  Section  14(c) above,  no
vesting  acceleration  or lapse of a repurchase  right  pursuant to such section
shall occur if such  acceleration or lapse would cause a contemplated  Change of
Control  transaction  that was  intended  to be  accounted  for as a "pooling of
interests"  transaction  to be ineligible  for such  treatment  under  generally
accepted  accounting  principles,  as determined  by the  Company's  independent
accountants prior to the Change of Control.

               (ii) Limitation  on  Payments.  In the  event  that  the  vesting
acceleration or lapse of a repurchase  right provided for in Section 14(c) above
(x) constitutes  "parachute  payments" within the meaning of Section 280G of the
Code, and (y) but for this Section  14(d)(ii) would be subject to the excise tax
imposed by Section 4999 of the Code (or any  corresponding  provisions  of state
income tax law), then such vesting  acceleration or lapse of a repurchase  right
shall be either

                    (A)  delivered in full, or

                    (B)  delivered  as to such lesser  extent which would result
in no  portion  of such  severance  benefits  subject  to excise  tax under Code
Section  4999,  whichever  of the  foregoing  amounts,  taking into  account the
applicable  federal,  state and local income taxes and the excise tax imposed by
Code Section  4999,  results in the receipt by the  Participant  on an after-tax
basis of the  greater  amount  of  acceleration  or lapse of  repurchase  rights
benefits,  notwithstanding  that all or some  portion  of such  benefits  may be
taxable under Code Section 4999. Any  determination  required under this Section
14(d) shall be made in writing by the Company's independent  accountants,  whose
determination  shall be  conclusive  and binding for all purposes on the Company
and any affected Participant.  In the event that (ii)(A) above applies, then the
Participant  shall be  responsible  for any excise taxes imposed with respect to
such  benefits.  In the event that  (ii)(B)  above  applies,  then each  benefit
provided hereunder shall be  proportionately  reduced to the extent necessary to
avoid imposition of such excise taxes.

                                       15
<PAGE>

          (e)  Certain  Distributions.  In the event of any  distribution to the
Company's  stockholders of securities of any other entity or other assets (other
than  dividends  payable  in cash or stock of the  Company)  without  receipt of
consideration  by  the  Company,  the  Administrator  may,  in  its  discretion,
appropriately  adjust  the  price  per Share of  Common  Stock  covered  by each
outstanding  Option  or Stock  Purchase  Right to  reflect  the  effect  of such
distribution.

     15.  TIME OF GRANTING OPTIONS AND STOCK PURCHASE  RIGHTS.  To date of grant
of an Option or Stock  Purchase  Right shall,  for all purposes,  be the date on
which the Administrator  makes the  determination  granting such Option or Stock
Purchase  Right,  or such  other  date as is  determined  by the  Administrator;
provided  however that in the case of an Incentive Stock Option,  the grant date
shall  be  the  later  of  the  date  on  which  the  Administrator   makes  the
determination  granting such Incentive  Stock Option or the date of commencement
of the  Optionee's  employment  relationship  with the  Company.  Notice  of the
determination shall be given to each Employee or Consultant to whom an Option or
Stock Purchase  Right is so granted  within a reasonable  time after the date of
such grant.

     16.  AMENDMENT AND TERMINATION OF THE PLAN.

          (a)  Amendment  and  Termination.  The  Board  may at any time  amend,
alter, suspend, discontinue or terminate the Plan, but no amendment, alteration,
suspension,  discontinuance  or  termination  (other  than  an  adjustment  made
pursuant to Section 14 above) shall be made that would  materially and adversely
affect the rights of any Optionee or holder of Stock  Purchase  Rights under any
outstanding  grant,  without  his or her  consent.  In  addition,  to the extent
necessary and desirable to comply with the  Applicable  Laws,  the Company shall
obtain  stockholder  approval of any Plan amendment in such a manner and to such
as degree as required.

          (b)  Effect of Amendment or  Termination.  No amendment or termination
of the Plan shall  materially  and adversely  affect  Options or Stock  Purchase
Rights already granted, unless mutually agreed otherwise between the Optionee or
holder of the Stock Purchase Rights and the Administrator,  which agreement must
be in writing and signed by such Optionee or holder and the Company.

     17.  CONDITIONS UPON ISSUANCE OF SHARES.

          (a)  Notwithstanding  any other provision of the Plan or any agreement
entered  into by the  Company  pursuant to the Plan,  the  Company  shall not be
obligated,  and shall have no  liability  for  failure,  to issue or deliver any
Shares  under the Plan unless such  issuance or delivery  would  comply with the
Applicable Laws, with such compliance  determined by the Company in consultation
with its legal counsel.

          (b)  As a condition  to the  exercise  of an Option or Stock  Purchase
Right,  the  Company  may  require  the person  exercising  such Option or Stock
Purchase  Right to represent  and warrant at the time of any such  exercise that
the Shares are being  purchased  only for  investment  and  without  any present
intention  to sell or  distribute  such Shares if, in the opinion of counsel for
the Company, such a representation is required by law.

                                       16
<PAGE>

     18.  RESERVATION OF SHARES. The Company, during the term of this Plan, will
at all  times  reserve  and keep  available  such  number  of Shares as shall be
sufficient to satisfy the requirements of the Plan.

     19.  AGREEMENTS.  Options and Stock  Purchase  Rights shall be evidenced by
Option  Agreements and Restricted Stock Purchase  Agreements,  respectively,  in
such form(s) as the Administrator shall from time to time approve.

     20.  STOCKHOLDER APPROVAL. If required by the Applicable Laws,  continuance
of the Plan shall be subject to  approval  by the  stockholders  of the  Company
within  twelve  (12) months  before or after the date the Plan is adopted.  Such
stockholder  approval shall be obtained in the manner and to the degree required
under the Applicable Laws.

     21.  INFORMATION  AND DOCUMENTS TO OPTIONEES AND  PURCHASERS.  Prior to the
date,  if any,  upon which the Common  Stock  becomes a Listed  Security  and if
required by the Applicable Laws, the Company shall provide financial  statements
at least annually to each Optionee and to each  individual  who acquired  Shares
pursuant to the Plan,  during the period such  Optionee or purchaser  has one or
more  Options  or  Stock  Purchase  Rights  outstanding,  and in the  case of an
individual  who  acquired  Shares  pursuant to the Plan,  during the period such
individual  owns such Shares.  The Company shall not be required to provide such
information if the issuance of Options or Stock  Purchase  Rights under the Plan
is limited to key employees  whose duties in connection  with the Company assure
their access to equivalent information.

                                       17

--------------------------------------------------------------------------------Exhibit 10.1

IMS
HEALTH INCORPORATED

Executive
Annual Incentive Plan

Performance Restricted Stock Incentive Plan

Form
of Summary of           
Performance Goals

And Award Opportunities

This is a summary of the
terms of authorization of awards for         
under the Executive Annual Incentive Plan (“AIP”) and the related Performance
Restricted Stock Incentive Plan (“PERS Plan”). 
The PERS Plan is an established program of IMS Health Incorporated (the “Company”)
implemented under the 1998 Employees’ Stock Incentive Plan (the “ESIP”).  These awards are authorized, and the AIP and
PERS Plan administered, by the Human Resources Committee (the “Committee”).  If there is any conflict between the terms of
this summary and the AIP, PERS Plan (as implemented in resolutions of the
Committee or otherwise), ESIP, or any resolution, award agreement, or other
document having legal effect with respect to the matters summarized herein,
such other plan or document shall govern.

Part
I.             
Performance Goal

(a)           AIP.  Individuals selected to participate in the
AIP for          shall earn the AIP
annual incentive award for         
based on the achievement of financial performance goals and other measures of
performance and discretionary factors that may be considered by the
Committee.  The AIP         
financial performance goals will be weighted 50% for revenue and 50% for
operating income, each determined on a consolidated basis.  In addition, if such financial performance
equals or exceeds 80% of the targeted level of performance for each of the
revenue and operating income components of the financial performance goal, the
Committee may exercise discretion to adjust the award upward, subject to the
determinations of the Committee and in no event to result in a payout in excess
of 200% of the individual’s target payout or in excess of the maximum
individual award under the AIP.  The
Committee intends to exercise this discretion as follows:

·                  Progress in
achieving strategic objectives: The level of achievement of strategic objectives
will be determined by the CEO and reported to the Committee with a
recommendation as to adjustments, if any; the Committee will determine whether
to adjust the payout levels upward or downward with respect to each financial
objective by up to 10% based on achievement of strategic objectives.  With respect to the CEO, the level of
achievement of strategic objectives will be determined by the Committee.

·                  Individual
performance under PMP:  Individual awards
will be further adjusted upward or downward in accordance with the Annual
Incentive Payout Guidelines under the Performance Management Program (“PMP”),
which assesses individual achievement of goals and work-related
skills/behaviors.

·                  Other
discretionary adjustment:  The Committee
also retains discretion to adjust awards upward or downward by 20% based on
such other factors as the Committee may deem relevant.

These
are guidelines representing the intent of the Committee, but the Committee
retains discretion, consistent with the terms of the Plan, to adjust any award
downward and, if any upward adjustment is authorized, to determine the basis
for and amount of such adjustment, subject to the individual maximum specified
above and the applicable award limits under the AIP.

(b)           PERS Plan.  For
        , each participant shall be
awarded PERS (restricted stock units) having a value equal to the AIP annual
incentive earned and paid for          performance.   

PERS
shall vest and become non-forfeitable if the participant remains in service
until the first business day of January,         ,
subject to the terms of the ESIP, any Employment Agreement between the
participant and the Company, and the customary terms of the form of restricted
stock units (PERS) agreement previously approved by the Committee.  The maximum PERS award that may be earned
shall be limited in accordance with applicable award limits under the ESIP.

(c)           Financial Performance Goal.

(i)            Component Payout Percentage
Table.  The “Component Payout
Percentage Table “for the AIP financial performance goal for         
shall be as follows.  Percentages
appearing in the table are referred to in this Summary as Component Payout
Percentages:

	
  Performance

  	
   

  	
  Floor

  	
   

  	
  Downside

  Minimum

  	
   

  	
  Downside

  Cliff

  	
   

  	
  Target

  	
   

  	
  Upside

  Potential

  	
   

  	
  Upside Maximum

  	
   

  
	
  Revenue

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Component

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Operating Income

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Component

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

The
Committee has separately specified the levels of Revenue and Operating Income
that correspond to the Floor, Downside Minimum, Downside Cliff, Target, Upside
Potential, and Maximum performance levels.

(ii)           Award Opportunities Earned For
Financial Performance.  The financial
Performance Goal shall be deemed achieved at the end of the Performance Period
in accordance with the following:  First,
the Committee shall determine the level of achievement of the revenue component
of the Performance Goal and the operating income component of the Performance
Goal, and for each the corresponding “Component Payout Percentage.”  (Example: 
Revenue at target has a Component Payout Percentage of 100%.)  For component performance between any two
performance levels (e.g., between “Floor” and “Downside Minimum”), the
Component Payout Percentage will be interpolated.  For performance below the “Floor” level, the
Component Payout Percentage will be zero, and for performance above the Upside
Maximum, the Component Payout Percentage will be 200%.  Second, the “Financial Performance Payout
Percentage” will be determined as the sum of 50% of the Component Payout
Percentage for revenues and 50% of the Component Payout Percentage for
operating income.

(d)           Discretionary Adjustments.  If the threshold performance requirement
specified in Part I(a) above is met, the Committee will consider whether to
make discretionary adjustments to the participant’s award (expressed as a
percentage of the target payout) based on progress toward strategic objectives,
assessed individual performance under the PMP, and other discretionary
considerations (as specified in Part I(a)).

(e)           Final Annual Incentive Award.  The Committee will calculate
the participant’s final AIP incentive award for         
by multiplying his or her Target Award by the percentage determined under Part
I(c) and (d) above,  In no event,
however, will the final AIP annual incentive exceed the applicable maximum
award limit specified in the AIP.

(f)            Adjustments to Performance Goals.  The Committee may determine in its discretion
to adjust each component of the financial Performance Goal and the threshold 

performance
required for the individual Performance Goal, and shall adjust such components
to eliminate the positive and negative effects of extraordinary items,
including acquisitions , and changes in accounting principles from         ,
provided that no such adjustment is authorized or may be made with respect to a
Covered Employee if and to the extent that such authorization or adjustment
would cause the Performance Goal not to meet the applicable requirements of
Treasury Regulation § 1.162-27(e)(2) under the Code.  In addition, the Committee retains “negative
discretion” to limit or eliminate the amount payable in settlement of any
Award.

Part II.    Award Payout/PERS Grant

A
participant’s annual incentive award earned under the AIP for         
performance will be payable promptly upon determination by the Committee, and
in no event more than 2.5 months after the end of the Company’s         
fiscal year, unless such award is validly deferred under a deferral plan of the
Company.  In addition, PERS will be
granted to such participant at the time the annual incentive award is payable
to the participant (disregarding any elective deferral) in an amount equal to
the amount of such annual incentive divided by the average closing price per
share of Company Common Stock over the final 20 trading days of         .  Unless otherwise determined by the Committee
(and subject to the terms of the AIP and any employment agreement or
change-in-control agreement between the participant and the Company), no amount
will be payable under the AIP and no PERS will be granted to a participant who
does not remain employed by the Company or a subsidiary at the payment date
determined by the Committee under this Part II.

Part
III.   Participants and Target Award
Opportunities

The
participants in the AIP and PERS Plan for         ,
and the target Award opportunities of each, are set forth by the Chairman of
the Board and Chief Executive Officer and approved by the Committee annually,
and may from time to time be revised or supplemented.  AIP award opportunities are designated under
the AIP.  With respect to PERS, Award
opportunities and shares that may be issued or delivered in settlement of PERS
shall be governed by and drawn from the ESIP. 
The foregoing notwithstanding, the Chief Executive Officer of the
Company may modify or cancel any Award opportunity or Award granted to any
participant in order to comply with local laws or customs in any jurisdiction
other than the United States, or to avoid undue administrative expense with
respect to such foreign jurisdiction, but no such modification or cancellation
is authorized with respect to a person likely to be a Covered Employee as
defined in the AIP at the time compensation is payable hereunder.

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