Document:

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                                                                   Exhibit 10(r)
                                OLIN CORPORATION
                          2000 LONG TERM INCENTIVE PLAN
                      (As Amended through October 25, 2001)

Section 1.  Purpose.
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The general purposes of the Olin Corporation 2000 Long Term Incentive Plan (the
"Plan") are to (i) attract and retain persons eligible to participate in the
Plan; (ii) motivate Participants, by means of appropriate incentives, to achieve
long-range goals; (iii) provide incentive compensation opportunities that are
competitive with those of other similar companies; and (iv) further identify
Participants' interests with those of other shareholders of Olin Corporation
(together with any successor, "Olin") through compensation that is based on
Olin's common stock; and thereby promote the long-term financial interest of
Olin and its Affiliates, including growth in the value of Olin's equity and
enhancement of long-term shareholder return.

Section 2.  Definitions.
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As used in the Plan:

(a)     "Affiliate" means any corporation, partnership, joint venture or other
        entity during any period in which Olin owns, directly or indirectly, at
        least 50% of the total voting or profits interest.

(b)     "Award" means any Option, Stock Appreciation Right, Restricted Stock,
        Restricted Stock Unit, Performance Share or Dividend Equivalent granted
        under the Plan.

(c)     "Award Agreement" means any written agreement or other instrument or
        document evidencing an Award granted under the Plan. The terms of any
        plan or guideline adopted by the Board or the Committee and applicable
        to an Award shall be deemed incorporated in and a part of the related
        Award Agreement.

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

(e)     "Cash Flow" means consolidated net income of Olin, before the after-tax
        effect of any special charge or gain or cumulative effect of any change
        in accounting, plus depreciation and amortization, less capital and
        investment spending and plus or minus changes in working capital.

(f)     "Code" means the Internal Revenue Code of 1986, as amended. A reference
        to any provision of the Code shall include reference to any successor
        provision of the Code.

(g)     "Committee" means a committee of the Board designated by the Board to
        administer the Plan, each member of which is an "outside director" for
        purposes of Section 162(m) of the Code and a "non-employee director" for
        the purpose of Rule 16b-3, and, to the extent the Committee delegates
        authority to one or more individuals in accordance with the Plan, such
        individual(s).

(h)     "Dividend Equivalent" means any right granted under Section 6(c)(ii) of
        the Plan.

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(i)     "Earnings Per Share" means, for a fiscal year, consolidated net income
        of Olin before the after-tax effect of any special charge or gain or
        cumulative effect of a change in accounting, divided by the weighted
        average number of shares of common stock outstanding, on a fully diluted
        basis.

(j)     "Economic Value Added" means Olin's consolidated sales less its
        operating costs (including tax) less a capital charge based on Olin's
        cost of capital on assets employed in the business.

(k)     "Employee" means any employee of Olin or of an Affiliate.

(l)     "Fair Market Value" means, with respect to shares of Olin common stock,
        the mean of the high and low per share sales prices of such common stock
        as reported on the consolidated transaction reporting system for New
        York Stock Exchange issues as of the relevant date, or the last
        preceding trading date, if such Shares were not traded on such date,
        and, with respect to any other property (including, without limitation,
        securities other than Shares), the fair market value of such property
        determined by such methods or procedures as shall be established from
        time to time by the Committee.

(m)     "Family Member" means any child, stepchild, grandchild, parent,
        stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
        mother-in-law, father-in-law, son-in-law, daughter-in-law,
        brother-in-law or sister-in-law, including adoptive relationship, or any
        person sharing the Participant's household, other than a tenant or
        employee.

(n)     "Incentive Stock Option" means an option to purchase Shares granted
        under the Plan that is intended to meet the requirements of Section 422
        of the Code.

(o)     "Non-Qualified Stock Option" means an option to purchase Shares granted
        under the Plan that is not intended to be an Incentive Stock Option.

(p)     "Option" means an Incentive Stock Option or a Non-Qualified Stock
        Option.

(q)     "Participant" means an Employee granted an Award under the Plan.

(r)     "Performance Share" means any grant of a right to receive Shares which
        is contingent on the achievement of performance or other objectives
        during a specified period.

(s)     "Person" means any individual, corporation, partnership, limited
        liability company, association, joint venture, stock company, trust,
        unincorporated organization, or government or political subdivision
        thereof.

(t)     "Pre-Tax Profit" means, for a fiscal year, the consolidated income
        before taxes of Olin, before any special charges or gains.

(u)     "Released Securities" means securities that were Restricted Securities
        with respect to which all applicable restrictions imposed under the
        terms of the relevant Award have expired, lapsed or been waived or
        satisfied.

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(v)     "Restricted Securities" means Awards of Restricted Stock or other Awards
        under which outstanding Shares are held subject to certain restrictions.

(w)     "Restricted Stock" means any grant of Shares, and "Restricted Stock
        Unit" means the grant of a right to receive Shares in the future, with
        such Shares or right to future delivery of Shares subject to a risk of
        forfeiture or other restrictions that will lapse upon the achievement of
        one or more goals relating to completion of service by the Participant,
        or achievement of performance or other objectives, as determined by the
        Committee.

(x)     "Return on Capital" means consolidated net income of Olin plus after-tax
        interest expense and the after-tax effect of any special charge or gain
        and any cumulative effect of a change in accounting, divided by average
        consolidated total assets of Olin less total non-interest-bearing
        liabilities.

(y)     "ROE" shall mean the consolidated net income of Olin before the after
        tax effect of any special charge or gain and any cumulative effect of
        any change in accounting, divided by average shareholders equity.

(z)     "RONA" means Pre-tax Profit before interest expense divided by average
        consolidated total assets of Olin less total non-interest-bearing
        liabilities.

(aa)    "Rule 16b-3" means Rule 16b-3 promulgated by the Securities and Exchange
        Commission under the Securities Exchange Act of 1934, as amended, or any
        successor rule.

(bb)    "Shares" means the common stock of Olin and such other securities or
        property as may become the subject of Awards pursuant to an adjustment
        made under Section 4(b) of the Plan.

(cc)    "Stock Appreciation Right" or "SAR" means any such right granted under
        Section 6(b) of the Plan.

Section 3.  Administration.
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(a)     Powers of Committee. The Plan shall be administered by the Committee
        -------------------
        which shall have full power and authority to: (i) designate
        Participants; (ii) determine the Awards to be granted to Participants;
        (iii) determine the number of Shares (or securities convertible into
        Shares) to be covered by Awards; (iv) determine the terms and conditions
        of any Award; (v) determine whether, to what extent, and under what
        circumstances Awards may be settled or exercised in cash, Shares, other
        securities, other Awards, or other property, or canceled, substituted,
        forfeited or suspended, and the method or methods by which Awards may be
        settled, exercised, canceled, substituted, forfeited or suspended,
        provided that no such action will result in repricing of Options
        prohibited by Section 6(f)(ii); (vi) determine whether, to what extent,
        and under what circumstances cash, Shares, other securities, other
        Awards, other property and other amounts payable with respect to an
        Award under the Plan shall be deferred either automatically or at the
        election of the Participant or of the Committee; (vii) interpret and
        administer the Plan and any instrument or agreement relating to, or
        Award made under, the Plan; (viii) establish, amend, suspend or waive
        such rules and guidelines and appoint such agents as it shall deem
        appropriate for the administration of the Plan; and (ix) make any other

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        determination and take any other action that it deems necessary or
        desirable for such administration.

(b)     Committee Discretion. All designations, determinations, interpretations
        --------------------
        and other decisions with respect to the Plan or any Award shall be
        within the sole discretion of the Committee and shall be final,
        conclusive and binding upon all Persons, including Olin, any Affiliate,
        any Participants, any holder or beneficiary of any Award, any
        shareholder and any employee of Olin or of any Affiliate. The
        Committee's powers include the adoption of modifications, amendments,
        procedures, subplans and the like as are necessary to comply with
        provisions of the laws of other countries in which Olin or an Affiliate
        may operate in order to assure the viability of Awards granted under the
        Plan and to enable Participants employed in such other countries to
        receive benefits under the Plan and such laws, provided that no such
        action results in repricing of Options prohibited by Section 6(f)(ii).

(c)     Board Authority. If the Committee does not exist, or for any other
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        reason determined by the Board, the Board may take any action under the
        Plan that would otherwise be the responsibility of the Committee.

(d)     Delegation. Notwithstanding any provision of the Plan to the contrary,
        ----------
        except to the extent prohibited by applicable law or the applicable
        rules of a stock exchange, the Committee may delegate to one or more
        officers or managers of Olin or any Affiliate, or a committee of such
        officers or managers, the authority, subject to such terms and
        limitations as the Committee shall determine, to grant Awards to, or to
        cancel, modify, waive rights or conditions with respect to, alter,
        discontinue, suspend, or terminate Awards held by, Employees who are not
        officers or directors of Olin for purposes of Section 16 of the
        Securities Exchange Act of 1934, as amended, provided that no such
        action shall result in repricing of Options prohibited by Section
        6(f)(ii).

(e)     Prohibition on Option Repricing. Notwithstanding any other provision of
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        the Plan, neither the Board nor the Committee may reprice, replace or
        regrant any Option granted under the Plan or any other plan of Olin, (i)
        through cancellation and replacement or regrant with lower priced
        options or (ii) by lowering the option exercise price of a previously
        granted award, without the prior approval of Olin's shareholders.

Section 4.  Shares Available for Awards.
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(a)     Shares Available. Subject to adjustment as provided in Section 4(b) of
        ----------------
        the Plan:

          (i)  The aggregate number of Shares available for granting Awards
               under the Plan shall be 2,250,000. If an Award is denominated in
               or relates to a security of Olin convertible into its Common
               Stock, the number of shares of Common Stock into which such
               security shall be convertible (calculated as of the date of grant
               of the Award, subject to adjustment as provided in Section 4(b)
               hereof or under the terms of such security) shall be deemed
               denominated in Shares and counted against the aggregate number of
               Shares available for the granting of Awards under the Plan.

          (ii) For purposes of this Section 4(a) and of Section 4(c)(iv):

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               (A)  If any Shares covered by an Award are not delivered to a
                    Participant or beneficiary because the Award is forfeited or
                    canceled, or if the Shares are not delivered because the
                    Award is settled in cash or used to satisfy the applicable
                    tax withholding obligation, such Shares shall not be deemed
                    to have been delivered for purposes of determining the
                    maximum number of Shares available for delivery under the
                    Plan; and

               (B)  If the exercise price of any Option granted under the Plan
                    is satisfied by tendering Shares (by either actual delivery
                    or by attestation), only the number of Shares issued net of
                    the Shares tendered shall be deemed delivered for purposes
                    of determining the maximum number of Shares available for
                    delivery under the Plan.

(b)     Adjustments. In the event of any change in the Shares by reason of stock
        -----------
        dividends, stock splits, recapitalization, mergers, consolidations,
        combinations or exchanges of shares, split-ups, split-offs, spin-offs,
        liquidations or other similar changes in capitalization, or any
        distributions to shareholders other than cash dividends, (i) the
        numbers, class and prices of Shares covered by outstanding Awards under
        the Plan (provided that no such adjustment shall result in repricing of
        Options prohibited by Section 6(f)(ii) of the Plan), (ii) the aggregate
        number and class of Shares available under the Plan, and (iii) the
        numbers and class of Shares that may be the subject of Awards pursuant
        to Section 4(c), shall be adjusted by the Committee, whose determination
        shall be conclusive.

        (i)    Without limiting the foregoing, in the event of any split-up,
               split-off, spin-off or other distribution to shareholders of
               shares representing a part of Olin's business, properties and
               assets, the Committee may modify an outstanding Award so that
               such Award shall thereafter relate to Shares of Olin and shares
               of capital stock of the corporation owning the business,
               properties and assets so split-up, split-off, spun-off or
               otherwise distributed to shareholders of Olin in the same ratio
               in which holders of the Shares became entitled to receive shares
               of capital stock of the corporation owning the business,
               properties and assets so split-up, split-off or spun-off or
               otherwise distributed, provided that no such action results in
               repricing of Options prohibited by Section 6(f)(ii).

        (ii)   With respect to Awards of Incentive Stock Options, no such
               adjustment shall be authorized to the extent that such authority
               would cause the Plan to violate Section 422 of the Code or any
               successor provision thereto, unless the holder of such Award of
               Incentive Stock Options agrees to convert such options to
               Non-qualified Stock Options.

        (iii)  Notwithstanding the foregoing, a Participant to whom Dividend
               Equivalents or dividend units have been awarded shall not be
               entitled to receive a special or extraordinary dividend or
               distribution unless the Committee shall have expressly authorized
               such receipt.

(c)     Additional Restrictions. Subject to adjustment as provided in Section
        -----------------------
        4(b), the following additional maximums are imposed under the Plan:

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          (i)    The maximum number of Shares that may be issued for Options
                 intended to be Incentive Stock Options shall be 900,000 Shares.

          (ii)   The maximum number of Shares that may be covered by Awards
                 granted to any one individual shall be 300,000 Shares during
                 any calendar year.

          (iii)  No more than 100,000 Shares may be subject to Restricted Stock
                 Awards, Restricted Stock Unit Awards and Performance Share
                 Awards, and no more than 300,000 Shares may be subject to
                 Options and Stock Appreciation Rights, granted to any one
                 individual during any calendar-year period (regardless of when
                 such Shares are deliverable) for any Award intended to  be
                 "performance-based compensation" (as that term is used for
                 purposes of Code Section 162(m)).

          (iv)   No more than 450,000 Shares may be subject to Restricted Stock
                 Awards, Restricted Stock Unit Awards and Performance Share
                 Awards.

Section 5.  Eligibility.
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Any Employee, including any officer or employee-director, of Olin or an
Affiliate shall be eligible to be designated a Participant, subject to any
restrictions imposed by applicable law. An Award may be granted to an Employee
prior to the date the Employee first performs services for the Company or the
Affiliate, provided that such Awards shall not become vested prior to the date
the Employee first performs such services.

Section 6.  Awards.
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(a)       Options. The Committee is authorized to grant Options to Participants
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          with the following terms and conditions and with such additional terms
          and conditions, not inconsistent with the provisions of the Plan, as
          the Committee shall determine:

          (i)    Exercise Price. The per Share exercise price shall be
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                 determined by the Committee; provided, however, that such
                 exercise price shall not be less than the Fair Market Value of
                 a Share on the date of the Option grant; provided that, if a
                 Non-qualified Option is granted in connection with the
                 recipient's hiring, promotion or similar event, the exercise
                 price may be not less than the Fair Market Value of the Shares
                 on the date on which the recipient is hired or promoted (or the
                 similar event occurs), if the Option grant occurs not more than
                 90 days after the date of such event.

          (ii)   Option Term. The term of each Option shall be fixed by the
                 -----------
                 Committee, provided that in no event shall the term of an
                 Option be more than a period of ten years from the date of its
                 grant.

          (iii)  Exercise. The Committee shall determine the time or times at
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                 which an Option may be exercised in whole or in part, and the
                 method or methods by which, and the form or forms in which
                 payment of the exercise price with respect thereto may be made.

          (iv)   Incentive Stock Options. The terms of any Incentive Stock
                 -----------------------
                 Option granted under the Plan shall comply in all respects with
                 the provisions of Section 422 of the Code, or any

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                  successor provision thereto, and any regulations promulgated
                  thereunder. Without limiting the preceding sentence, the
                  aggregate Fair Market Value (determined at the time an option
                  is granted) of Shares with respect to which Incentive Stock
                  Options are exercisable for the first time by a Participant
                  during any calendar year (under the Plan and any other plan of
                  the Participant's employer corporation and its parent and
                  subsidiary corporations providing for Options) shall not
                  exceed such dollar limitation as shall be applicable to
                  Incentive Stock Options under Section 422 of the Code or a
                  successor provision.

          (v)     Termination of Employment. In the event the employment of a
                  -------------------------
                  Participant to whom an Option has been granted under the Plan
                  shall be terminated (other than by reason of the Participant's
                  death or disability), such Option may, subject to the
                  provisions of the next to last sentence of Section 6(a)(vi) be
                  exercised (to the extent of the number of shares that the
                  Participant was entitled to purchase under such Option at the
                  termination of employment) at any time within three months
                  after such termination (which three-month period may be
                  extended by the Committee), but in no event shall such
                  three-month period or any such extension permit the exercise
                  of an Option after the expiration date of the Option. Options
                  granted under the Plan shall not be affected by any change of
                  duties or position so long as the Participant continues to be
                  an Employee.

          (vi)    Agreement to Service. Each Participant receiving an Option
                  --------------------
                  shall, by accepting the Option, agree that he or she will,
                  during employment, devote his or her entire time, energy and
                  skill to the service of Olin and the promotion of its
                  interests, subject to vacations, sick leave and other absences
                  in accordance with the regular policies of, or other reasons
                  satisfactory to, Olin and its Affiliates. Such employment
                  shall (subject to the terms of any contract between Olin or
                  any such Affiliate and such Participant) be at the pleasure of
                  Olin or such Affiliate, and shall be at such compensation as
                  Olin or such Affiliate shall determine from time to time. Upon
                  termination of such Participant's employment either (a) for
                  cause, or (b) voluntarily on the part of the Participant and
                  without the written consent of Olin, any Awards held by him or
                  her under the Plan, to the extent not theretofore exercised or
                  vested, shall forthwith terminate. Retirement pursuant to any
                  retirement plan of Olin or of an Affiliate shall be deemed to
                  be a termination of employment with Olin's consent.

          (vii)   Death. If a Participant to whom an Option has been granted
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                  shall die while an Employee, such Option may be exercised by
                  the Participant's executors, administrators, personal
                  representatives or distributees or permitted transferees at
                  any time within a period of one year after the Participant's
                  death (which period may be extended by the Committee),
                  regardless of whether or not such Option had vested at the
                  time of death. If a Participant to whom an Option has been
                  granted shall die after his or her employment has terminated
                  but while the Option remains exercisable, the Option may be
                  exercised by the persons described above at any time within
                  the longer of (a) the period that the Participant could have
                  exercised the Option had he or she not died, or (b) one year
                  after the date of death (which period may be extended by the
                  Committee), but only to the extent the Option was exercisable
                  at the time of the Participant's death.

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          (viii)  Disability. If a Participant to whom an Option has been
                  ----------
                  granted shall become totally and permanently disabled, as that
                  term is defined in Section 22(e)(3) of the Code (or a
                  successor provision), and the Participant's employment is
                  terminated as a result, such option may be exercised by the
                  Participant or permitted transferee within one year after the
                  date of termination of employment, to the extent that the
                  Option was exercisable at the time of termination of
                  employment.

(b)       Stock Appreciation Rights. The Committee is authorized to grant Stock
          -------------------------
          Appreciation Rights to Participants which may but need not relate to a
          specific Option granted under the Plan. Subject to the terms of the
          Plan and any applicable Award Agreement, each Stock Appreciation Right
          granted under the Plan shall confer on the holder thereof a right to
          receive, upon exercise thereof, up to the excess of (i) the Fair
          Market Value of one Share on the date of exercise over (ii) the
          exercise price of the right as specified by the Committee, which shall
          not be less than the Fair Market Value of one Share on the date of
          grant of the Stock Appreciation Right. Subject to the terms of the
          Plan and any applicable Award Agreement, the exercise price, term,
          methods of exercise, methods of payment or settlement and any other
          terms and conditions of any Stock Appreciation Right shall be as
          determined by the Committee, but in no event shall the term of a Stock
          Appreciation Right exceed a period of ten years from the date of its
          grant.

(c)       Other Stock Awards.
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          (i)     Issuance. The Committee is authorized to grant Awards of
                  --------
                  Restricted Stock, Restricted Stock Units and Performance
                  Shares to Participants.

          (ii)    Dividends and Dividend Equivalents. An Award (including
                  ----------------------------------
                  without limitation an Option or Stock Appreciation Right) may
                  provide the Participant with the right to receive dividend
                  payments or dividend equivalent payments with respect to
                  Shares subject to the Award (both before and after the Shares
                  subject to the Award are earned, vested, or acquired), which
                  payments may be either made currently or credited to an
                  account for the Participant, and may be settled in cash or
                  Shares as determined by the Committee. Any such settlements,
                  and any such crediting of dividends or dividend equivalents or
                  reinvestment in Shares, may be subject to such conditions,
                  restrictions and contingencies as the Committee shall
                  establish, including the reinvestment of such credited amounts
                  in Share equivalents.

          (iii)   Restrictions. Any such Award shall be subject to such
                  ------------
                  conditions, restrictions and contingencies as the Committee
                  may impose (including, without limitation, any limitation on
                  the right to vote Restricted Stock or the right to receive any
                  dividend or other right or property), which may lapse
                  separately or in combination at such time or times, as the
                  Committee may deem appropriate, provided that in order for a
                  Participant to vest in Awards of Restricted Stock, the
                  Participant must remain in the employ of Olin or an Affiliate
                  for a period of not less than one (1) year after the grant of
                  a performance-based Restricted Stock Award, and not less than
                  three (3) years after the grant of a Restricted Stock Award
                  that is not performance-based, in each case, subject to
                  Section 9 hereof and subject to relief for specified reasons
                  as may be approved by the Committee. Notwithstanding the
                  foregoing, the Committee may grant Awards for

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                  Restricted Stock for an aggregate number of Shares not to
                  exceed 45,000 which vest in less than one (1) year after the
                  date of grant, including immediate vesting.

           (iv)   Forfeiture. Except as otherwise determined by the Committee,
                  ----------
                  upon termination of employment for any reason during the
                  applicable restriction period, all Shares of Restricted Stock
                  still subject to restriction shall be forfeited and reacquired
                  by Olin.

           (v)    Performance-Based Awards. The Committee may designate whether
                  ------------------------
                  any such Awards being granted to a Participant is intended to
                  be "performance-based compensation" as that term is used in
                  Section 162(m) of the Code. Any Award so designated shall be
                  conditioned on the achievement of one or more performance
                  measures. Performance measures that may be used by the
                  Committee for such purpose shall be based on one or more of
                  the following: Pre-Tax Profit and/or Earnings Per Share, Cash
                  Flow, Economic Value Added, ROE, Return on Capital or RONA.
                  For Awards intended to be "performance-based compensation,"
                  the grant of the Awards and the establishment of the
                  performance measures shall be made during the period required
                  under Code Section 162(m).

(d)      Forms of Payment Under Awards. Subject to the terms of the Plan and of
         -----------------------------
         any applicable Award agreement, payments to be made by Olin or an
         Affiliate upon the grant, exercise, or payment of an Award may be made
         in such form or forms as the Committee shall determine, including,
         without limitation, cash, Shares, other securities, other Awards, or
         other property or any combination thereof, and may be made in a single
         payment or transfer, in installments, or on a deferred basis, in each
         case in accordance with rules and procedures established by the
         Committee. Notwithstanding the foregoing, the payment of the exercise
         price of an Option shall be subject to the following:

         (i)      Subject to the following provisions of this subsection the
                  full exercise price for Shares purchased upon the exercise of
                  any Option shall be paid at the time of such exercise (except
                  that, in the case of an exercise arrangement approved by the
                  Committee and described below, payment may be made as soon as
                  practicable after the exercise).

         (ii)     The exercise price shall be payable in cash or by tendering,
                  by either actual delivery of Shares or by attestation, Shares
                  acceptable to the Committee, which Shares were either acquired
                  at least six months before the exercise date or purchased on
                  the open market, and valued at Fair Market Value as of the day
                  of exercise, or in any combination thereof, as determined by
                  the Committee.

         (iii)    The Committee may permit a Participant to elect to pay the
                  exercise price upon the exercise of an Option by irrevocably
                  authorizing a third party to sell Shares (or a sufficient
                  portion of the Shares) acquired upon exercise of an Option and
                  remit to Olin a sufficient portion of the sale proceeds to pay
                  the entire exercise price and any tax withholding resulting
                  from such exercise.

(e)      Limits on Transfer of Awards. No Award (other than Released Securities)
         ----------------------------
         or right thereunder shall be assignable or transferable by a
         Participant, other than:

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         (i)      by will or the laws of descent and distribution (or, in the
                  case of an Award of Restricted Securities, to Olin); or

         (ii)     in the case of Awards other than Incentive Stock Options, to
                  the extent permitted under the terms of the Award, by a gift
                  or domestic relations order to any Family Member, to a trust
                  in which the Participant and/or his or her Family Members hold
                  more than 50% of the beneficial interest, to a foundation in
                  which the Participant and/or Family Members control the
                  management of assets, and any other entity in which the
                  Participant and/or his or her Family Members own more than 50%
                  of the voting interests.

         For purposes of this provision, a transfer to an entity in exchange for
         an interest in that entity shall constitute a gift.

(f)      General.
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           (i)    No Cash Consideration for Awards. Participants shall not be
                  --------------------------------
                  required to make any cash payment for the granting of an Award
                  except for such minimum consideration as may be required by
                  applicable law.

           (ii)   Awards May Be Granted Separately or Together. Awards may be
                  --------------------------------------------
                  granted either alone or in addition to, in tandem with, or in
                  substitution for any other Award or any award or benefit
                  granted under any other plan or arrangement of Olin or any
                  Affiliate, or as payment for or to assure payment of an award
                  or benefit granted under any such other such plan or
                  arrangement, provided that the purchase or exercise price
                  under an Option or other Award encompassing the right to
                  purchase Shares shall not be reduced by the cancellation of
                  such Award and the substitution of another Award. Awards so
                  granted may be granted either at the same time as or at a
                  different time from the grant of such other Awards or awards
                  or benefits.

           (iii)  General Restrictions. Delivery of Shares or other amounts
                  --------------------
                  under the Plan shall be subject to the following:

                  (A)   Notwithstanding any other provision of the Plan, Olin
                        shall have no liability to deliver any Shares under the
                        Plan or make any other distribution of benefits under
                        the Plan unless such delivery or distribution would
                        comply with all applicable laws (including, without
                        limitation, the requirements of the Securities Act of
                        1933), and the applicable requirements of any securities
                        exchange or similar entity.

                  (B)   To the extent that the Plan provides for issuance of
                        stock certificates to reflect the issuance of Shares the
                        issuance may be effected on a non-certificated basis, to
                        the extent not prohibited by applicable law or the
                        applicable rules of any stock exchange.

           (iv)   Agreement With Olin. An Award under the Plan shall be subject
                  -------------------
                  to such terms and conditions, not inconsistent with the Plan,
                  as the Committee shall, in its sole discretion, prescribe. The
                  terms and conditions of any Award to any Participant may be
                  reflected

                                       10

<PAGE>

                  in such form of written document as is determined by the
                  Committee. A copy of such document shall be provided to the
                  Participant, and the Committee may, but need not, require the
                  Participant to sign a copy of such document, (an "Award
                  Agreement" regardless of whether any Participant signature is
                  required).

           (v)    Beneficiary. A Participant may, in the manner established by
                  -----------
                  the Committee, designate a beneficiary or beneficiaries with
                  respect to any Award to exercise the rights of the
                  Participant, and to receive any property distributable, upon
                  the death of the Participant. Each Award, and each right under
                  any Award, shall be exercisable, during the Participant's
                  lifetime, only by the Participant or a permitted transferee,
                  or, if permissible under applicable law by the Participant's
                  guardian or legal representative.

           (vi)   No Lien or Security Interest. No Award (other than Released
                  ----------------------------
                  Securities), and no right under any such Award, may be
                  pledged, attached or otherwise encumbered other than in favor
                  of Olin, and any purported pledge, attachment, or encumbrance
                  thereof other than in favor of Olin shall be void and
                  unenforceable against Olin or any Affiliate.

           (vii)  No Rights to Awards. No Employee, Participant or other Person
                  -------------------
                  shall have any claim to be granted an Award, and there is no
                  obligation for uniformity of treatment of Employees,
                  Participants or beneficiaries of Awards under the Plan. The
                  terms and conditions of Awards need not be the same with
                  respect to each recipient. The prospective recipient of any
                  Award under the Plan shall not, with respect to such Award, be
                  deemed to have become a Participant, or to have any rights
                  with respect to such Award, until and unless such recipient
                  shall have executed an agreement or other instrument accepting
                  the Award required by the Committee and delivered a fully
                  executed copy thereof to Olin, and otherwise complied with the
                  then applicable terms and conditions.

           (viii) Withholding. All distributions under the Plan are subject to
                  -----------
                  withholding of all applicable taxes, and, except as otherwise
                  provided by the Committee, the delivery of any Shares or other
                  benefits under the Plan to a Participant are conditioned on
                  satisfaction of the applicable withholding requirements. The
                  Committee, in its discretion, and subject to such requirements
                  as the Committee may impose prior to the occurrence of such
                  withholding, may permit such withholding obligations to be
                  satisfied through cash payment by the Participant, through the
                  surrender of Shares which the Participant already owns, or
                  through the surrender of Shares to which the Participant is
                  otherwise entitled under the Plan.

           (ix)   Other Compensation Arrangements. Nothing contained in the Plan
                  -------------------------------
                  shall prevent Olin or any Affiliate from adopting or
                  continuing in effect other or additional compensation
                  arrangements, and such arrangements may be either generally
                  applicable or applicable only in specific cases.

           (x)    No Right to Employment. The grant of an Award shall not be
                  ----------------------
                  construed as giving a Participant the right to be retained in
                  the employ of Olin or any Affiliate. Nothing in the Plan or
                  any Award Agreement shall limit the right of Olin or an
                  Affiliate at any time to dismiss a Participant from
                  employment, free from any liability or any claim under the
                  Plan or the Award Agreement.

                                       11

<PAGE>

           (xi)   Governing Law. The validity, construction and effect of the
                  -------------
                  Plan and any rules and regulations relating to the Plan shall
                  be determined in accordance with the laws of the State of
                  Connecticut, excluding any conflicts or choice of law rule or
                  principle that might otherwise refer construction or
                  interpretation of this Plan or any award Agreement to the
                  substantive law of another jurisdiction.

           (xii)  Severability. If any provision of the Plan or any Award is
                  ------------
                  determined to be invalid, illegal or unenforceable, or as to
                  any Person or Award, or would disqualify the Plan or any
                  Award, such provision shall be construed or deemed amended to
                  conform to applicable laws, or, if it cannot be so construed
                  or deemed amended without, in the determination of the
                  Committee, materially altering the intent of the Plan or the
                  Award, such provision shall be stricken as to such Person or
                  Award, and the remainder of the Plan and any such Award shall
                  remain in full force and effect.

           (xiii) No Trust or Fund Created. Neither the Plan nor any Award shall
                  ------------------------
                  create or be construed to create a trust or separate fund of
                  any kind or a fiduciary relationship between Olin or any
                  Affiliate and a Participant or any other Person. To the extent
                  that any Person acquires a right to receive payments from Olin
                  or any Affiliate pursuant to an Award, such right shall be no
                  greater than the right of any unsecured general creditor of
                  Olin or any Affiliate.

           (xiv)  No Fractional Shares. No fractional Shares shall be issued or
                  --------------------
                  delivered pursuant to the Plan or any Award, and the Committee
                  shall determine whether cash, other securities or other
                  property shall be paid or transferred in lieu of any
                  fractional Shares, or whether such fractional Shares or any
                  rights thereto shall be canceled, terminated or otherwise
                  eliminated.

           (xv)   Share Certificates. All certificates for Shares or other
                  ------------------
                  securities delivered under the Plan pursuant to any Award or
                  the exercise thereof shall be subject to such stop transfer
                  orders and other restrictions as the Committee may deem
                  advisable under the Plan or the rules, regulations and other
                  requirements of the Securities and Exchange Commission, any
                  stock exchange upon which such Shares or other securities are
                  then listed, and any applicable Federal or state securities
                  laws, and the Committee may cause a legend or legends to be
                  put on any such certificates to make appropriate reference to
                  such restrictions.

           (xvi)  Conflict with Plan. In the event of any inconsistency or
                  ------------------
                  conflict between the terms of the Plan and an Award Agreement,
                  the terms of the Plan shall govern.

Section 7.  Amendment and Termination.
            -------------------------

(a)  Amendments to the Plan. The Board or the Committee may amend, suspend,
     ----------------------
     discontinue or terminate the Plan, including, without limitation, any
     amendment, suspension, discontinuation or termination that would impair the
     rights of any Participant, or any other holder or beneficiary of any Award
     theretofore granted, without the consent of any shareholder, Participant,
     other holder or beneficiary of an Award, or other Person; provided,
     however, that, notwithstanding any other provision of the Plan or any Award
     Agreement, without the

                                       12

<PAGE>

         approval of the shareholders of Olin, no such amendment, suspension,
         discontinuation or termination shall be made that would:

           (i)    increase the total number of Shares available for Awards under
                  the Plan or the total number of Shares subject to one or more
                  categories of Awards pursuant to Section 4(c), in either case
                  except as provided in Section 4(b);

           (ii)   reduce the minimum Option exercise price, except as provided
                  in Section 4(b); or

           (iii)  permit repricing of Options prohibited by Section 6(f)(ii);
                  and

         provided further that no amendment, suspension, discontinuation or
         -------- -------
         termination (i) that would impair the rights of such Participant,
         holder or beneficiary shall be made with respect to Section 9 of the
         Plan after a Change in Control, as defined therein and (ii) may
         increase the amount of payment of any Award to any Participant.

(b)      Amendments to Awards. The Committee may waive any conditions or rights
         --------------------
         with respect to, or amend, alter, suspend, discontinue, or terminate,
         any unexercised Award theretofore granted, prospectively or
         retroactively, without the consent of any relevant Participant or
         holder or beneficiary of an Award, provided that no amendment,
         alteration, suspension, discontinuation or termination of an Award that
         would impair the rights of such Participant, holder or beneficiary
         shall be made after a Change in Control, as defined in Section 9;
         provided further that the Committee may not increase the payment of any
         Award granted any Participant.

(c)      Adjustments of Awards Upon Certain Acquisitions. In the event Olin or
         -----------------------------------------------
         any Affiliate shall assume outstanding employee awards or the right or
         obligation to make future such awards in connection with the
         acquisition of another business or another Person, the Committee may
         make such adjustments, not inconsistent with the terms of the Plan, in
         the terms of Awards as it shall deem appropriate.

(d)      Adjustments of Awards Upon the Occurrence of Certain Unusual or
         ---------------------------------------------------------------
         Nonrecurring Events. The Committee may make adjustments in the terms
         -------------------
         and conditions of Awards in recognition of unusual or nonrecurring
         events (including, without limitation, the events described in Section
         4(b) hereof) affecting Olin, any Affiliate, or the financial statements
         of Olin or any Affiliate, or of changes in applicable laws,
         regulations, or accounting principles, whenever the Committee
         determines that statements of Olin or any Affiliate, or of changes in
         applicable laws, regulations, or accounting principles, whenever the
         Committee determines that such adjustments are appropriate in order to
         prevent dilution or enlargement of the benefits to be made available
         under the Plan.

Section 8.  Additional Conditions to Enjoyment of Awards.
            --------------------------------------------

(a)      The Committee may cancel any unexpired, unpaid or deferred Awards if at
         any time the Participant is not in compliance with all applicable
         provisions of the Award Agreement, the Plan and the following
         conditions:

                                      13

<PAGE>

           (i)    A Participant shall not render services for any Person or
                  engage, directly or indirectly, in any business which, in the
                  judgment of the Committee is or becomes competitive with Olin
                  or any Affiliate, or which is or becomes otherwise prejudicial
                  to or in conflict with the interests of Olin or any Affiliate.
                  Such judgment shall be based on the Participant's positions
                  and responsibilities while employed by Olin or an Affiliate,
                  the Participant's post employment responsibilities and
                  position with the other Person or business, the extent of
                  past, current and potential competition or conflict between
                  Olin or an Affiliate and the other Person or business, the
                  effect on customers, suppliers and competitors of the
                  Participant's assuming the post employment position, the
                  guidelines established in the then current edition of Olin's
                  Standards of Ethical Business Practices, and such other
                  considerations as are deemed relevant given the applicable
                  facts and circumstances. The Participant shall be free,
                  however, to purchase as an investment or otherwise, stock or
                  other securities of such Person or business so long as they
                  are listed upon a recognized securities exchange or traded
                  over the counter, and such investment does not represent a
                  substantial investment to the Participant or a greater than 1%
                  equity interest in the organization or business.

           (ii)   Participant shall not, without prior written authorization
                  from Olin, disclose to anyone outside Olin, or use in other
                  than Olin's business, any secret or confidential information,
                  knowledge or data, relating to the business of Olin or an
                  Affiliate in violation of his or her agreement with Olin or
                  the Affiliate.

           (iii)  A Participant, pursuant to his or her agreement with Olin or
                  an Affiliate, shall disclose promptly and assign to Olin or
                  the Affiliate all right, title and interest in any invention
                  or idea, patentable or not, made or conceived by the
                  Participant during employment by Olin or the Affiliate,
                  relating in any manner to the actual or anticipated business,
                  research or development work of Olin or the Affiliate and
                  shall do anything reasonably necessary to enable Olin or the
                  Affiliate to secure a patent where appropriate in the United
                  States and in foreign countries.

(b)      Notwithstanding any other provision of the Plan, the Committee in its
         sole discretion may cancel any Award at any time prior to the exercise
         thereof, if the employment of the Participant shall be terminated,
         other than by reason of death, unless the conditions in this Section 8
         are met.

(c)      Failure to comply with the conditions of this Section 8 prior to, or
         during the six months after, any exercise, payment or delivery pursuant
         to an Award shall cause the exercise, payment or delivery to be
         rescinded. Olin shall notify the Participant in writing of any such
         rescission within two years after such exercise payment or delivery and
         within 10 days after receiving such notice, the Participant shall pay
         to Olin the amount of any gain realized or payment received as a result
         of the exercise, payment or delivery rescinded. Such payment shall be
         made either in cash or by returning to Olin the number of Shares that
         the Participant received in connection with the rescinded exercise,
         payment or delivery.

(d)      Upon exercise, payment or delivery pursuant to an Award, the Committee
         may require the Participant to acknowledge the terms and conditions of
         the Plan and to certify on a form acceptable to the Committee, that he
         or she is in compliance with the terms and conditions of the Plan.

                                       14

<PAGE>

(e)      Nothing herein shall be interpreted to limit the obligations of a
         Participant under his or her employee agreement or any other agreement
         with Olin.

Section 9.  Change in Control.
            -----------------

(a)      Except as the Board or the Committee may expressly provide otherwise
         prior to a Change in Control of Olin (as defined below) in the event of
         a Change in Control of Olin:

           (i)    all Options and Stock Appreciation Rights then outstanding
                  shall become immediately and fully exercisable,
                  notwithstanding any provision therein for the exercise in
                  installments;

           (ii)   all restrictions and conditions of all Restricted Stock and
                  Restricted Stock Units then outstanding shall be deemed
                  satisfied as of the date of the Change in Control; and

           (iii)  all Performance Share Awards shall become vested, deemed
                  earned in full and promptly paid to the Participants, cash
                  units in cash and phantom stock units in the Shares
                  represented thereby or such other securities, property or cash
                  as may be deliverable in respect of Shares as a result of a
                  Change in Control, without regard to payment schedules and
                  notwithstanding that the applicable performance cycle or
                  retention cycle shall not have been completed.

(b)      A Change in Control of Olin means:

           (i)    Olin ceases to be, directly or indirectly, owned by at least
                  1,000 stockholders;

           (ii)   A person, partnership, joint venture, corporation or other
                  entity, or two or more of any of the foregoing acting as a
                  "person" within the meaning of Section 13(d)(3) of the
                  Securities Exchange Act of 1934, as amended (the "Act"), other
                  than Olin, a majority-owned subsidiary of Olin or an employee
                  benefit plan (or the plan's related trust) of Olin or such
                  subsidiary, become(s) the "beneficial owner" (as defined in
                  Rule 13d-3 under such Act) of 20% or more of the then
                  outstanding voting stock of Olin;

           (iii)  During any period of two consecutive years, individuals who at
                  the beginning of such period constitute Olin's Board of
                  Directors (together with any new Director whose election by
                  Olin's Board of Directors or whose nomination for election by
                  Olin's stockholders was approved by a vote of at least
                  two-thirds of the Directors then still in office who either
                  were directors at the beginning of such period or whose
                  election or nomination for election was previously so
                  approved) cease for any reason to constitute a majority of the
                  directors then in office;

           (iv)   All or substantially all of the business of Olin is disposed
                  of pursuant to a merger, consolidation or other transaction in
                  which Olin is not the surviving corporation or Olin combines
                  with another company and is the surviving corporation (unless
                  the shareholders of Olin immediately following such merger,
                  consolidation, combination, or other transaction beneficially
                  own, directly or indirectly, more than 50% of the aggregate
                  voting stock or other ownership interests of (x) the entity or
                  entities, if any,

                                     15

<PAGE>

                  that succeed to the business of Olin or (y) the combined
                  company) or

           (v)    Approval by Olin's shareholders of (i) a sale of all or
                  substantially all the assets of Olin or (ii) a liquidation or
                  dissolution of Olin.

(c)       In the event that a Participant participates or agrees to participate
          by loan or equity investment (other than through ownership of less
          than 1% of publicly traded securities of another company) in a
          transaction ("acquisition") which would result in an event described
          in Section 9(b)(i) or (ii), the Participant must promptly disclose
          such participation or agreement to Olin. If the Participant so
          participates or agrees to participate, no benefits or payments due
          under the Plan or by virtue of the Change in Control provisions
          contained in any compensation or benefit plan of Olin will be paid to
          the Participant until the acquiring group in which the Participant
          participates or agrees to participate has completed the acquisition.
          In the event the Participant so participates or agrees to participate
          and fails to disclose his participation or agreement, the Participant
          will not be entitled to any benefits or payments under the Plan or by
          virtue of Change in Control provisions in any Olin compensation or
          benefit plan, notwithstanding any of the terms hereof or thereof.

(d)       Anything in the Plan to the contrary notwithstanding, in the event
          that it shall be determined that any benefit, payment or distribution
          by Olin to or for the benefit of the Participant (whether paid or
          payable or distributed or distributable) pursuant to the terms of the
          Plan but determined without regard to any additional payments required
          under this Section 9(d), would be subject to the excise tax imposed by
          Section 4999 of the Internal Revenue Code of 1986, as amended, the
          Participant shall be entitled to receive an additional payment (the
          "Gross-Up Payment") in an amount equal to (i) the amount of the excise
          tax imposed on the Participant in respect of the benefits or payments
          received pursuant to the Plan (the "Excise Tax") plus (ii) all
          federal, state and local income, employment and excise taxes
          (including any interest or penalties imposed with respect to such
          taxes) imposed on the Participant in respect of the Gross-Up Payment,
          such that after payments of all such taxes (including any applicable
          interest or penalties) on the Gross-Up Payment, the Participant
          retains a portion of the Gross-Up Payment equal to the Excise Tax,
          provided that, if the Participant receives a Gross-Up Payment with
          respect to benefits or payments received under the Plan pursuant to
          another benefit or compensation plan or agreement, the Gross-Up
          Payment under this Section 9(d) shall be reduced by the amount of such
          other Gross-Up Payments paid in respect to the Excise Tax due as the
          result of the benefits or payments received under the Plan.

Section 10.  Effective Date and Term.
             -----------------------

Subject to the approval of Olin's shareholders at the 2000 annual shareholders
meeting the Plan shall be effective as of January 27, 2000 (the "Effective
Date"); provided, however, that to the extent that Awards are granted under the
Plan prior to its approval by shareholders, the Awards shall be contingent on
approval of the Plan by the shareholders of Olin at such annual meeting. The
Plan shall be unlimited in duration and, in the event of Plan termination, shall
remain in effect as long as any Awards under it are outstanding; provided;
however, that, to the extent required by the Code, no Incentive Stock Option may
be granted under the Plan on a date that is more than ten years from the date
the Plan is adopted.

                                       16<PAGE>

----------------------------------                Northrop Grumman Corporation
                                                  1840 Century Park East
 Notice of Grant of Stock Options                 Los Angeles, CA 90067
 and Option Agreement
----------------------------------

--------------------------------------------------------------------------------
Name
Address
Address

 Pursuant to the terms and conditions of the company's 52 2001 NQ Stock Option
Plan (the `Plan'), you have been granted a Non-Qualified Stock Option to
purchase          shares (the `Option') of stock as outlined below.

--------------------------------------------------------------------------------

                 Granted To:     (Name)

                 Grant Date:

            Options Granted:

     Option Price per Share:     $

            Expiration Date:

           Vesting Schedule:     25% per year for 4 years

--------------------------------------------------------------------------------

This page and the attached Terms and Conditions together constitute the Option
Agreement. By your Signature and the Company's signature below, you and the
Company agree that these options are granted under and governed by the terms of
the Company's 2001 Long-Term Incentive Stock Plan and the Option Agreement.

NORTHROP GRUMMAN CORPORATION

By: ________________________________    By: ________________________________

Signature: _______________________________      Date: _________________________
           (Name)

<PAGE>

                          NORTHROP GRUMMAN CORPORATION

                       2001 LONG-TERM INCENTIVE STOCK PLAN

                           NON-QUALIFIED STOCK OPTION

                              TERMS AND CONDITIONS

     1.  The Grantee is entitled at the time or times designated in paragraph 4
hereof but before the close of business on the day before the tenth anniversary
of the Date of Grant (the "Expiration Date") to purchase and receive from the
Company the maximum number of shares of Common Stock of the Company set forth
above upon exercise of this Option, all subject, however, to the terms and
conditions stated herein and in the Northrop Grumman 2001 Long-Term Incentive
Stock Plan, as amended from time to time (the "Plan"), and any rules or guides
to administration adopted by the Company's Compensation and Management
Development Committee or any successor committee appointed by the Company's
Board of Directors to administer the Plan (the "Committee") in effect from time
to time, including, without limitation, the Plan's 2001 Guide to Administration
(the "Guide").

     2.  This Option is non-transferable and non-assignable and may be exercised
solely by the Grantee or a duly appointed guardian or personal representative,
except as provided in paragraph 3 hereof in the event of the death of the
Grantee. This Option shall not be an "incentive stock option" within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended.

     3.  This Option shall terminate if and when the Grantee ceases to be an
employee of the Company or one of its subsidiaries, except as follows:

         (i)   If the Grantee Retires (as defined below), dies, or is Disabled
(as defined below) while employed by the Company or a subsidiary, the next
succeeding vesting installment of this Option shall vest and all installments
under this Option which have vested may be exercised by the Grantee (or, in the
case of the Grantee's death, by the Grantee's successor) until the fifth
anniversary of the Grantee's Retirement, death, or Disability, whichever first
occurs, but in no event after the Expiration Date.

         (ii)  Subject to the following sentence, if the employment of the
Grantee with the Company or a subsidiary is terminated for any reason other than
the Grantee's death, Retirement or Disability, this Option may be exercised (as
to not more than the number of shares as to which the Grantee might have
exercised this Option on the date on which his or her employment terminated)
only within 90 days from the date of such termination of employment, but in no
event after the Expiration Date; provided, however, that if the Grantee is
dismissed by the Company or a subsidiary for cause, of which the Committee shall
be the sole judge, this Option shall expire forthwith. If the Grantee dies
within 90 days after a termination of employment described in the preceding
sentence (other than a termination by the Company or a subsidiary for cause),
this Option may be exercised by the Grantee's successor for one year from the
date of the Grantee's death, but in no event after the Expiration Date and as to
not more than the number of shares as to which the Grantee might have exercised
this Option on the date on which his or her employment by the Company or a
subsidiary terminated.

         (iii) For purposes of this instrument, "Disabled" means disabled
pursuant to the provisions of the Company's (or one of its subsidiary's) Long
Term Disability Plan applicable to the Grantee; or, if the Grantee is not
covered by such a Long Term Disability Plan, the incapacity of the Grantee, due
to injury, illness, disease, or bodily or mental infirmity, to engage in the
performance of substantially all of the usual duties of employment with the
Company or the subsidiary which employs the Grantee, such disability to be
determined by the Committee upon receipt and in reliance on competent medical
advice from one or more individuals, selected by the Committee, who are
qualified to give such professional medical advice. For purposes of this
instrument, "Retire" means that the Grantee terminates employment after
attaining age 55 with at least 10 years of service (other than in connection
with a termination by the Company or a subsidiary for cause).

     4.  Subject to the earlier vesting and/or termination of this Option
pursuant to paragraph 3 or paragraph 8 hereof, this Option shall become
exercisable as to 25 percent of the total number of shares set forth above on
the first anniversary of the Date of Grant, and on each succeeding anniversary
of the Date of Grant this Option shall become exercisable as to an additional 25
percent of the total number of shares so that on the fourth anniversary of the
Date of Grant this Option shall be exercisable in full. Subject to the earlier
vesting and/or termination of this Option pursuant to paragraph 3 or paragraph 8
hereof, this Option may be exercised to the extent that it is exercisable in
accordance with the foregoing at any time up to the Expiration Date.

     5.  In order to exercise this Option, the Grantee or such other person as
may be entitled to exercise the same shall (i) execute and deliver to the
Corporate Secretary of the Company a written notice indicating the number of
shares subject to this Option to be exercised, and/or (ii) complete such other
exercise procedure as may be prescribed by the Corporate Secretary of the
Company. The date of exercise of this Option shall be the day such notice is
received by the Corporate Secretary of the Company or the day such exercise
procedures are satisfied, as applicable; provided that in no event shall this
Option be considered to have been exercised unless the per share exercise price
of this Option is paid in full (or provided for in accordance with the following
sentence) for each of the shares to be acquired on such exercise and all
required tax withholding obligations with respect to such exercise have been
satisfied or provided for in accordance with paragraph 8 hereof. The purchase
price shall be paid in cash or, in the sole discretion of the Committee and on
such terms and conditions as the Corporate Secretary of the Company may
prescribe, either in whole or in part in Common Stock of the Company (either
actually or by attestation

                                      -1-

<PAGE>

and valued at their fair market value on the date of exercise of this Option as
defined in paragraph 6 hereof) or pursuant to a cashless exercise arranged
through a broker or other third party.

     6.  The fair market value of the shares of Common Stock of the Company on
the date of exercise of this Option shall be the closing price in the composite
tape of the Common Stock on the New York Stock Exchange on such date, or, if
there was no trading on such date, the closing price on the next preceding date
on which there was trading in such shares; provided, however, the Committee in
determining such fair market value may utilize such other exchange, market, or
listing as it deems appropriate. For purposes of a cashless exercise, the fair
market value of the shares shall be the price at which the shares in payment of
the exercise price are sold.

     7.  The issue and sale of shares of stock upon any exercise of this Option
is further subject to full compliance with all then applicable requirements of
law, the Securities and Exchange Commission, the Commissioner of Corporations of
the State of California, or other regulatory agencies having jurisdiction over
the Company and its shares, and of any exchanges upon which stock of the Company
may be listed. The Grantee shall not have the rights and privileges of a
stockholder with respect to shares subject to or purchased under this Option
until the date appearing on the certificate(s) issued upon the exercise of this
Option.

     8.  The number and price of shares subject to this Option are subject to
adjustment upon the occurrence of events such as stock splits, stock dividends
and other changes in capitalization in accordance with Section 6 of the Plan. In
the event of any adjustment, the Company will give the Grantee written notice
thereof which will set forth the nature of the adjustment. Except as set forth
below in this paragraph 8, the Grantee's rights with respect to this Option in
the event of a Change in Control (as defined in the Plan) shall be determined
under Section 6 of the Plan. Notwithstanding the acceleration provisions of
paragraph 3 hereof but subject to the limited exercise periods set forth
therein, further subject to the Company's ability to terminate this Option in
connection with a Change in Control in accordance with the provisions of Section
6 of the Plan, and further subject to the exceptions set forth in Section X of
the Guide, this Option shall become fully exercisable as of the date of the
Grantee's termination of employment if either within the Protected Period (as
defined in the Guide) corresponding to a Change in Control of the Company or
within twenty-four (24) calendar months following the date of a Change in
Control of the Company, the Grantee's employment by the Company and its
subsidiaries is involuntarily terminated by the Company and its subsidiaries for
reasons other than Cause (as defined in Section X of the Guide) or by the
Grantee for Good Reason (as defined in Section X of the Guide).

     9.  The vesting of this Option requires continued employment through each
vesting date as a condition to the vesting of the corresponding installment of
this Option. Employment before or between the specified vesting dates, even if
substantial, will not entitle the Grantee to any proportionate vesting or avoid
or mitigate a termination of rights and benefits upon or following a termination
of employment. Subject to the leave of absence provisions of the Guide, the term
"employment" as used herein means active employment by the Company or one of its
subsidiaries and salary continuation without active employment will not, in and
of itself, constitute "employment" for purposes hereof (in the case of salary
continuation without active employment, the participant's cessation of active
employee status shall be deemed to be a termination of "employment" for purposes
hereof). Nothing contained in this instrument, the Plan, or the Guide
constitutes an employment commitment by the Company or any subsidiary, affects
the Grantee's status (if the Grantee is otherwise an at-will employee) as an
employee at will who is subject to termination without cause, confers upon the
Grantee any right to continue in the employ of the Company or any subsidiary, or
interferes in any way with the right of the Company or of any subsidiary to
terminate such employment at any time.

     10. The Company or the subsidiary which employs the Grantee shall be
entitled to require, as a condition of issuing shares upon exercise of this
Option, that the Grantee or other person exercising this Option pay any sums
required to be withheld by federal, state or local tax law with respect to the
exercise of this Option. Alternatively, the Company or such subsidiary, in its
discretion, may make such provisions for the withholding of any taxes as it
deems appropriate.

     11. The Company will pay all federal and state transfer taxes, if any, and
other fees and expenses in connection with the issuance of shares upon exercise
of this Option.

     12. The Company may, for all purposes, regard the Grantee as the holder of
this Option until written notice of transfer pursuant to paragraph 3 hereof in
connection with the Grantee's death has been given to and received by the
Corporate Secretary of the Company.

     13. The Committee has the discretionary authority to determine any
questions as to the date when the Grantee's employment terminated and the cause
of such termination and to interpret any provision of this instrument, the Plan,
the Guide, and any other applicable rules or guides to administration. Any
action taken by, or inaction of, the Committee relating to or pursuant to this
instrument, the Plan, the Guide, or any other applicable rules or guides to
administration shall be within the absolute discretion of the Committee and
shall be conclusive and binding on all persons.

     14. This Option was granted under the Plan. This Option is governed by, and
the Grantee's rights are subject to, all of the terms and conditions of the
Plan, the Guide, and any other rules or regulations adopted by the Committee, as
the foregoing may be amended from time to time. The Grantee shall have no rights
with respect to any amendment of this instrument, the Plan or the Guide unless
such amendment is in writing and signed by a duly authorized officer of the
Company.

                                       2

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