Document:

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                                                                    Exhibit 10.1

                                    AGREEMENT

     This Agreement by and among Monsanto Company, a Delaware corporation (the
"Company"), and Robert B. Shapiro (the "Executive") is dated as of the 19th day
of December, 1999.

     WHEREAS, the Company, Pharmacia & Upjohn, Inc., a Delaware corporation
("PNU") and MP Sub, Incorporated, a Delaware corporation ("Merger Sub"), have
entered into an Agreement and Plan of Merger dated as of the 19th day of
December, 1999 (the "Merger Agreement"), pursuant to which Merger Sub will merge
with and into PNU (the "Merger"), with PNU becoming a wholly-owned subsidiary of
the Company; and

     WHEREAS, the Executive and the Company are parties to an employment
agreement dated as of April 25, 1997 (the "Employment Agreement"), a
participation agreement under the Monsanto Executive Stock Purchase Incentive
Plan dated as of May 10, 1996 (the "Participation Agreement"), a letter
agreement dated June 25, 1990 relating to the Executive's Supplemental
Retirement Benefit (the "Supplemental Retirement Letter"), and a letter
agreement dated April 31, 1991 relating to Alternate Change of Control
Provisions for Stock Options and Stock Appreciation Rights (the "Option Letter"
and together with the Participation Letter and the Supplemental Retirement
Letter, the "Letter Agreements") and the Executive is entitled to various
compensation, stock options and benefits under employee benefit plans,
management incentive plans, annual and long-term incentive plans, savings and
investment plans, programs and policies of the Company, including without
limitation the Supplemental Executive Retirement Plan and the 1999 Premium
Option Purchase Program (such compensation and benefits, collectively the
"Employee Benefits"); and

     WHEREAS, the Company has determined that it is in the best interest of its
shareholders to set forth, and the Executive has agreed to set forth, their
mutual agreement as to the rights and entitlements of the Executive under the
Employment Agreement, the Letter Agreements and the Employee Benefits from and
after the Effective Time (as defined in the Merger Agreement) and to provide for
the continuing availability to the Company of the Executive's services and
expertise following the Effective Time, all under the terms and conditions set
forth below;

     NOW, THEREFORE, it is hereby agreed as follows:

     1. Post-Merger Services. (a) The Company shall use its best efforts to
cause the Executive to be named Chairman of its Board of Directors (the "Board")
for the period beginning at the Effective Time and ending 18 months following
the Effective Time. While the Executive serves as Chairman of the Board, he
shall receive a fee at the annual rate of $50,000 in addition to all other
compensation and benefits to which he is entitled as a non-employee member of
the Board.

     (b) From the Effective Time through December 31, 2003 or until such earlier
date as the Executive dies or becomes permanently disabled (the "Advisory
Term"), the Executive shall serve as senior advisor to the Chief Executive
Officer of the Company, in which

<PAGE>   2

capacity he shall make himself available for such advice, consultation and
assistance as may be requested by the Chief Executive Officer of the Company, on
transition and other business matters within the scope of the Executive's
business expertise and experience, at mutually convenient times and places
(including by telephone), for up to five days a month.

     (c) During the Advisory Term the Company shall pay the Executive a fee of
$40,000 per month, payable monthly in advance. In addition, the Company shall
reimburse the Executive for all expenses reasonably incurred by him during the
Advisory Term in the performance of his services hereunder, within 30 days of
receipt by the Company of invoices setting forth a description of the items for
which reimbursement is sought together with the cost or fair market value of
such items and copies of invoices, receipts, credit card statements or other
appropriate supporting documentation.

     (d) During the Advisory Term, the Company shall provide the Executive and
his dependents with medical, dental, vision and prescription drug coverage at
least comparable to the coverage under the plans and programs in effect for
active employees of the Company in which the Executive participates as of the
date hereof, with contributions by him required on the same basis as if he
remained an active employee. The Company shall also make gross-up payments to
the Executive or his spouse, as applicable, as and to the extent necessary to
make him or her whole on an after-tax basis for all applicable taxes imposed as
a result of the provision of such coverage.

     (e) During the Advisory Term, the Company shall continue to provide to the
Executive, and to pay for the maintenance and upkeep of, the Executive's current
office in Chicago, Illinois, or if the Company ceases to maintain such office,
an office at a location in downtown Chicago, Illinois, reasonably satisfactory
to the Executive, in either case equipped and maintained with furniture,
fixtures and equipment (which shall be upgraded as appropriate from time to
time) comparable to that in his existing office.

     (f) During the Advisory Term, the Company shall provide for the Executive's
offices at his two existing residences state-of-the-art computer, printer/fax
and telecommunications equipment (with software) and shall provide the Executive
with a state-of-the-art laptop computer. All such equipment shall be maintained
and upgraded as appropriate at Company expense.

     (g) During the Advisory Term, the Company shall employ and provide the
Executive with the full-time services of his current executive assistant in
Chicago or, if she ceases to be an employee of the Company, with the full-time
services of another executive assistant reasonably satisfactory to the
Executive. During such assistant's employment with the Company pursuant to the
preceding sentence, she shall receive annual compensation (including any
incentive bonus) no less than her current compensation, increased as of each
anniversary of the Effective Time to reflect increases in the consumer price
index since the Effective Time or the last such anniversary as applicable, or,
if greater, as necessary to provide such executive assistant with increases at
least equal, on a percentage basis, to the increases provided to similarly
situated executive assistants of the Company.

                                      -2-
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     (h) If the Executive should die or become permanently disabled before
December 31, 2003, the Company shall pay to the Executive's estate or to the
Executive or his legal guardian, as applicable, any portion of the payments and
expense reimbursements pursuant to Section 1(c) above that have accrued through
the date of death or disability but remain unpaid.

     2. Security Measures. From the Effective Time through December 31, 2003,
and thereafter subject to review as provided below, the Company will provide to
Executive, for his benefit and that of his family, the following security
measures: (i) a personal car, equivalent to the car he currently uses, and
driver for the exclusive use of the Executive and his family; (ii) such other
personal security services as the Executive determines, from time to time, in
his reasonable judgment, are necessary when he determines that circumstances
exist that cause the Executive concern for his personal safety or that of his
family; (iii) continued maintenance and upgrade of the security systems
presently installed in the Executive's two existing residences and installation,
maintenance and upgrade of adequate security systems in any residences hereafter
occupied by the Executive or his family; and (iv) use of aircraft equivalent to
those currently being used by the Executive at the Company, to be available for
business and personal use for the Executive and his family (when accompanying
the Executive), on the same basis as currently provided (including reimbursement
for the cost of such personal use). From time to time after December 31, 2003,
but no less frequently than annually, the Company and (during his lifetime) the
Executive shall review the security needs of the Executive and his family and
the Company shall provide such security measures as shall be reasonably
effective and desirable from time to time, to assure the continuation of
adequate security.

     3. New Status. (a) It is acknowledged and agreed that as a result of the
consummation of the Merger and the other transactions contemplated by the Merger
Agreement, as of the Effective Time, the change of control provisions of the
Employment Agreement shall have become effective. Immediately following the
Effective Time, the Executive shall cease to be the Chief Executive Officer of
the Company. The Executive's ceasing to be Chief Executive Officer of the
Company shall be deemed to be (i) a termination of his employment by the
Executive for "Good Reason" under the Employment Agreement, with the
consequences described in Section 3(b) below, and (ii) retirement by the
Executive for purposes of the Letter Agreements and the Employee Benefits.

     (b) As a result of the foregoing, the Executive shall be entitled to
receive all payments and benefits provided for in Section 6 of the Employment
Agreement in accordance with the terms thereof; provided, that the Executive
hereby waives his rights to receive (i) benefits pursuant to Section 6(a)(ii) of
the Employment Agreement to the extent they would duplicate the benefits
provided pursuant to Section 1(d) above, and (ii) outplacement services pursuant
to Section 6(a)(iii) of the Employment Agreement. In addition, the provisions of
Sections 7, 8, 9, 10, 11 and 12 of the Employment Agreement shall remain in full
force and effect following the Effective Time. Without limiting the generality
of the foregoing, it is agreed and understood that the cash payments due to the
Executive pursuant to Section 6(a)(i) of the Employment Agreement shall be paid
to him as soon as practicable, and in any event not more than 30 days, after
the Effective Time.

                                      -3-
<PAGE>   4

     4. Indemnification. The Company agrees to indemnify, protect, defend and
hold the Executive and his estate, heirs, and personal representatives, harmless
from and against any actual or threatened action, suit or proceeding, whether
civil, criminal, administrative or investigative, and all losses, liabilities,
damages and expenses, including reasonable attorney's fees incurred by counsel
reasonably designated or approved by him, in connection with this Agreement or
his services hereunder, provided that any services giving rise to such
indemnification shall have been performed by the Executive in good faith and, to
the best of his knowledge, in a lawful manner. The foregoing indemnification is
in addition to any indemnification to which he may be entitled as a director of
the Company under its charter and by-laws, any indemnification agreement with
the Company, or otherwise.

     5. Successors. (a) This Agreement is personal to the Executive and without
the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.

     (b) This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns.

     (c) The Company shall require any successor (whether direct or indirect, by
the purchase, merger, consolidation or otherwise) to all or substantially all of
their respective businesses and/or assets to assume expressly and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such success had taken place. As
used in this Agreement, the "Company" shall mean the Company, as hereinbefore
defined and any successor to its respective businesses and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.

     6. Miscellaneous. (a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without reference to
principles of conflict of laws. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect. This Agreement may not
be amended or modified otherwise than by a written agreement executed by the
parties thereto or their respective successors and legal representatives.

     (b) All notices and other communications hereunder shall be in writing and
shall be given by hand delivery to the other party or by registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:

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                           If to the Executive:
                           -------------------

                           Robert B. Shapiro
                           Merchandise Mart
                           200 World Trade Center
                           Suite 900
                           Chicago, IL  60654

                           If to the Company:
                           -----------------

                           800 N. Lindbergh Boulevard
                           St. Louis, MO  63167

                           Attention: General Counsel

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.

     (c) The invalidity or unenforceability of any provision (or portion
thereof) of this Agreement shall not affect the validity or enforceability of
any other provision (or portion thereof) of this Agreement.

     (d) The Executive's status after he ceases to be Chief Executive Officer of
the Company shall be that of an independent contractor and not, for any purpose,
that of an employee or agent with authority to bind the Company in any respect.
All payments made or provided to the Executive under Section 1 shall be made as
provided without withholding or deduction of any kind except as required by
applicable law, and the Executive shall assume sole responsibility for
discharging all tax or other obligations associated therewith.

     (e) This Agreement represents the entire agreement of the parties with
respect to the subject matter of Section 1 and Section 2 hereof. Except as
specifically provided herein, this Agreement shall not modify or supersede any
other agreement between the parties, including without limitation the Employment
Agreement, the Letter Agreements and agreements with respect to Employee
Benefits.

     (f) This Agreement may be executed in several counterparts, each of which
shall be deemed an original, and said counterparts shall constitute but one and
the same instrument.

     (g) This Agreement shall be null and void, ab initio, and of no further
effect if the Merger Agreement is terminated before the Effective Time.

                                      -5-
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     IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.

                                       /s/       Robert B. Shapiro
                                       ----------------------------------------
                                                 Robert B. Shapiro

                                       MONSANTO COMPANY

                                       By /s/     R. William Ide III
                                         ---------------------------------------

                                      -6-<PAGE>   1
                                                                   EXHIBIT 10.26

                              AMENDED AND RESTATED

                               BIOPURE CORPORATION

                   1999 OMNIBUS SECURITIES AND INCENTIVE PLAN

          (AMENDMENT AND RESTATEMENT EFFECTIVE AS OF FEBRUARY 14, 2000)
<PAGE>   2
                                TABLE OF CONTENTS

<TABLE>
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<S>                                                                                                                     <C>
ARTICLE I               PURPOSE..................................................................................          1

ARTICLE II              DEFINITIONS..............................................................................          1

ARTICLE III             EFFECTIVE DATE OF PLAN...................................................................          5

ARTICLE IV              ADMINISTRATION...........................................................................          6
      Section 4.1       Composition of Committee.................................................................          6
      Section 4.2       Powers...................................................................................          6
      Section 4.3       Additional Powers........................................................................          6
      Section 4.4       Committee Action.........................................................................          6

ARTICLE V               STOCK SUBJECT TO PLAN AND LIMITATIONS THEREON............................................          6
      Section 5.1       Stock Grant and Award Limits.............................................................          6
      Section 5.2       Stock Offered............................................................................          7

ARTICLE VI              ELIGIBILITY FOR AWARDS; TERMINATION OF
                        EMPLOYMENT, DIRECTOR STATUS OR CONSULTANT
                        STATUS...................................................................................          7
      Section 6.1       Eligibility..............................................................................          7
      Section 6.2       Termination of Employment or Director Status.............................................          7
      Section 6.3       Termination of Consultant Status.........................................................          8
      Section 6.4       Special Termination Rule.................................................................          9

ARTICLE VII             OPTIONS..................................................................................         10
      Section 7.1       Option Period............................................................................         10
      Section 7.2       Limitations on Exercise of Option........................................................         10
      Section 7.3       Special Limitations on Incentive Stock Options...........................................         10
      Section 7.4       Option Agreement.........................................................................         10
      Section 7.5       Option Price and Payment.................................................................         11
      Section 7.6       Shareholder Rights and Privileges........................................................         11
      Section 7.7       Options and Rights in Substitution for Stock Options Granted by Other
                        Corporations.............................................................................         11

ARTICLE VIII            RESTRICTED STOCK AWARDS..................................................................         11
      Section 8.1       Restriction Period to be Established by Committee........................................         11
      Section 8.2       Other Terms and Conditions...............................................................         11
      Section 8.3       Payment for Restricted Stock.............................................................         12
      Section 8.4       Restricted Stock Award Agreements........................................................         12

ARTICLE IX              UNRESTRICTED STOCK AWARDS................................................................         12
</TABLE>

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<TABLE>
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<S>                                                                                                                     <C>
ARTICLE X               PERFORMANCE UNIT AWARDS..................................................................         13
      Section  10.1     Terms and Conditions.....................................................................         13
      Section  10.2     Payments.................................................................................         13

ARTICLE XI              PERFORMANCE SHARE AWARDS.................................................................         13
      Section 11.1      Terms and Conditions.....................................................................         13
      Section 11.2      Shareholder Rights and Privileges........................................................         13

ARTICLE XII             DISTRIBUTION EQUIVALENT RIGHTS...........................................................         13
      Section 12.1      Terms and Conditions.....................................................................         13
      Section 12.2      Interest Equivalents.....................................................................         13

ARTICLE XIII            RECAPITALIZATION OR REORGANIZATION.......................................................         14
      Section 13.1      Adjustments to Common Stock..............................................................         14
      Section 13.2      Recapitalization.........................................................................         14
      Section 13.3      Change of Control........................................................................         14
      Section 13.4      Other Events.............................................................................         15
      Section 13.5      Powers Not Affected......................................................................         15
      Section 13.6      No Adjustment for Certain Awards.........................................................         15

ARTICLE XIV             AMENDMENT AND TERMINATION OF PLAN........................................................         15

ARTICLE XV              MISCELLANEOUS............................................................................         16
      Section 15.1      No Right to Award........................................................................         16
      Section 15.2      No Rights Conferred......................................................................         16
      Section 15.3      Other Laws; Withholding..................................................................         16
      Section 15.4      No Restriction on Corporate Action.......................................................         17
      Section 15.5      Restrictions on Transfer.................................................................         17
      Section 15.6      Section 162(m)...........................................................................         17
      Section 15.7      Other Plans..............................................................................         17
      Section 15.8      Limits of Liability......................................................................         17
      Section 15.9      Governing Law............................................................................         18
      Section 15.10     Severability of Provisions...............................................................         18
      Section 15.11     No Funding...............................................................................         18
      Section 15.12     Headings.................................................................................         18
</TABLE>

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<PAGE>   4
                              AMENDED AND RESTATED
                               BIOPURE CORPORATION
                   1999 OMNIBUS SECURITIES AND INCENTIVE PLAN

                                    ARTICLE I
                                     PURPOSE

         The purpose of this Amended and Restated Biopure Corporation 1999
Omnibus Securities and Incentive Plan (the "Plan") is to benefit the
shareholders of Biopure Corporation, a Delaware corporation (the "Company"), by
assisting the Company to attract, retain and provide incentives to key
management employees and directors of, and non-employee consultants to, the
Company and its Affiliates, and to align the interests of such employees,
directors and non-employee consultants with those of the Company's shareholders.
Accordingly, the Plan provides for the granting of Incentive Stock Options,
Non-Qualified Stock Options, Restricted Stock Awards, Deferred Stock Awards,
Unrestricted Stock Awards, Performance Share Awards, Distribution Equivalent
Rights or any combination of the foregoing, as may be best suited to the
circumstances of the particular Employee, Director or Consultant as provided
herein.

                                   ARTICLE II
                                   DEFINITIONS

         The following definitions shall be applicable throughout the Plan
unless the context otherwise requires:

         "Affiliate" shall mean any person or entity which, at the time of
reference, directly, or indirectly through one or more intermediaries, controls,
is controlled by, or is under common control with, the Company.

         "Award" shall mean, individually or collectively, any Option,
Restricted Stock Award, Deferred Stock Award, Unrestricted Stock Award,
Performance Share Award, Performance Unit Award or Distribution Equivalent Right
Award.

         "Award Agreement" shall mean a written agreement between the Company
and the Holder with respect to an Award.

         "Board" shall mean the Board of Directors of the Company.

         "Cause" with reference to an Employee or a Director shall mean (a) an
act or acts of material personal dishonesty taken by, or committed at the
request of, an Employee or Director, intended to result in the personal
enrichment of the Employee or Director at the expense of the Company, or any of
its subsidiaries, (b) repeated willful violations by an Employee under the terms
of his or her employment or repeated willful failures by a Director to serve in
good faith as a Board member, in either case which have not been cured within
thirty (30) days after written
<PAGE>   5
notice has been given by the Board to the Employee or Director, or (c) the
conviction of an Employee or Director of a felony.

         "Change of Control" shall mean (i) the consummation of (x) any
consolidation, reorganization, merger or share exchange of the Company in which
the Company is not the continuing or surviving corporation or pursuant to which
shares of the Company's Common Stock would be converted into cash, securities or
other property, other than a merger or share exchange of the Company in which
the holders of the Company's Common Stock immediately prior to the merger have
the same proportionate ownership of common stock of the surviving corporation
immediately after the merger or share exchange, or (y) any sale, lease, exchange
or other transfer (in one transaction or a series of related transactions) of
all, or substantially all, of the assets of the Company, or (ii) the
shareholders of the Company shall approve any plan or proposal for liquidation
or dissolution of the Company, or (iii) any person (as such term is used in
Sections 13(d) and 14(d)(2) of the Exchange Act, including any "group" (as
defined in Section 13(d)(3) of the Exchange Act) (other than the Holder or any
group controlled by the Holder)) shall become the beneficial owner (within the
meaning of Rule 13d-3 under the Exchange Act) of fifty percent (50%) or more of
the Company's outstanding Common Stock (other than pursuant to a plan or
arrangement entered into by such person and the Company and such person
discloses its intent to effect a change of the control or ownership of the
Company in any filing with the Securities and Exchange Commission), or (iv)
within any twenty-four (24) month period beginning on or after the Effective
Date, the persons who were directors of the Company immediately before the
beginning of such period (the "Incumbent Directors") shall cease (for any reason
other than death, disability or retirement) to constitute at least a majority of
the Board or the board of directors of any successor to the Company, provided
that, any director who was not a director as of the Effective Date shall be
deemed to be an Incumbent Director if such director was elected to the Board by,
or on the recommendation of or with the approval of, at least two-thirds of the
directors who then qualified as Incumbent Directors either actually or by prior
operation of this definition unless such election, recommendation or approval
was the result of any actual or threatened election contest of the type
contemplated by Regulation 14a-11 promulgated under the Exchange Act or any
successor provision.

         "Code" shall mean the Internal Revenue Code of 1986, as amended.
Reference in the Plan to any section of the Code shall be deemed to include any
amendments or successor provisions to any section and any regulation under such
section.

         "Committee" shall mean (i) prior to the effective date of an initial
public offering of shares of Common Stock, the full Board, and (ii) on and after
the effective date of an initial public offering of shares of Common Stock, not
less than three (3) members of the Board who are selected by the Board as
provided in Section 4.1.

         "Common Stock" shall mean the Class A Common Stock, par value $0.01 per
share, of the Company.

         "Company" shall mean Biopure Corporation, a Delaware corporation, and
any successor thereto.

                                       -2-
<PAGE>   6
         "Consultant" shall mean any individual who is neither an Employee nor a
Director who is engaged by the Company or an Affiliate to perform consulting
services therefor.

         "Director" shall mean a member of the Board or a member of the Board of
Directors of an Affiliate, in either case, who is not an Employee.

         "Distribution Equivalent Right" shall mean an Award granted under
Article XII of the Plan which entitles the Holder to receive bookkeeping
credits, cash payments and/or Common Stock distributions equal in amount to the
distributions that would have been made to the Holder had the Holder held a
specified number of shares of Common Stock during the period that the Holder
held the Distribution Equivalent Right.

         "Distribution Equivalent Right Award Agreement" shall mean a written
agreement between the Company and a Holder with respect to a Distribution
Equivalent Right Award.

         "Effective Date" shall mean June 24, 1999. The effective date of this
amendment and restatement of the Plan shall be January 1, 2000.

         "Employee" shall mean any person employed by the Company or an
Affiliate.

         "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.

         "Fair Market Value" shall mean, as of any specified date, the mean of
the reported high and low sales prices of the Common Stock on the stock exchange
composite tape on that date, or if no prices are reported on that date, on the
last preceding date on which such prices of the Common Stock are so reported. If
the Common Stock is traded over-the-counter at the time a determination of its
fair market value is required to be made hereunder, its fair market value shall
be deemed to be equal to the average between the reported high and low or
closing bid and asked prices of Common Stock on the most recent date on which
Common Stock was publicly traded. In the event Common Stock is not publicly
traded at the time a determination of this value is required to be made
hereunder, the determination of its fair market value shall be made by the
Committee in such manner as it deems appropriate.

         "Family Member" shall mean any child, stepchild, grandchild, parent,
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 relationships, any person sharing the Holder's household (other than a
tenant or the Holder), a trust in which such persons have more than fifty
percent (50%) of the beneficial interest, a foundation in which such persons (or
the Holder) control the management of assets, and any other entity in which such
persons (or the Holder) own more than fifty percent (50%) of the voting
interests.

         "Good Reason" shall mean: (a) the reduction of an Employee's Base
Salary, (b) the changing, without his or her consent, of an Employee's title,
authority, duties or responsibilities from those immediately prior to the Change
of Control, or (c) the material breach by the

                                       -3-
<PAGE>   7
Company of any material terms of the Employee's employment which has not been
cured within thirty (30) days after a notice has been given by the Employee to
the Company.

         "Holder" shall mean an Employee, Director or Consultant who has been
granted an Award.

         "Incentive Stock Option" shall mean an Option which is an "incentive
stock option" within the meaning of Section 422 of the Code.

         "Non-Qualified Stock Option" shall mean an Option which is not an
Incentive Stock Option.

         "Option" shall mean an Award granted under Article VII of the Plan of
an option to purchase shares of Common Stock and includes both Incentive Stock
Options and Non-Qualified Stock Options.

         "Option Agreement" shall mean a written agreement between the Company
and a Holder with respect to an Option.

         "Performance Share Award" shall mean an Award granted under Article XI
of the Plan under which, upon the satisfaction of predetermined individual or
Company performance goals and/or objectives, shares of Common Stock are paid to
the Holder.

         "Performance Share Award Agreement" shall mean a written agreement
between the Company and a Holder with respect to a Performance Share Award.

         "Performance Unit" shall mean a Unit awarded to a Holder pursuant to a
Performance Unit Award.

         "Performance Unit Award" shall mean an Award granted under Article X of
the Plan under which, upon the satisfaction of predetermined individual or
Company performance goals and/or objectives, a cash payment shall be paid to the
Holder, based on the number of Units awarded to the Holder.

         "Performance Unit Award Agreement" shall mean a written agreement
between the Company and a Holder with respect to a Performance Unit Award.

         "Plan" shall mean this Biopure Corporation 1999 Omnibus Securities and
Incentive Plan, as amended from time to time.

         "Restricted Stock Award" shall mean an Award granted under Article VIII
of the Plan of shares of Common Stock, the transferability of which by the
Holder shall be subject to Transfer Restrictions.

                                       -4-
<PAGE>   8
         "Restricted Stock Award Agreement" shall mean a written agreement
between the Company and a Holder with respect to a Restricted Stock Award.

         "Restriction Period" shall mean the period of time for which shares of
Common Stock subject to a Restricted Stock Award shall be subject to Transfer
Restrictions, as set forth in the applicable Restricted Stock Award Agreement.

         "Ten Percent Shareholder" shall mean an Employee who, at the time an
Option is granted to him or her, owns more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or of any parent
corporation or subsidiary corporation thereof (both as defined in Section 424 of
the Code), within the meaning of Section 422(b)(6) of the Code.

         "Total and Permanent Disability" shall mean the inability of an
individual to provide meaningful service for the Company due to a medically
determinable physical or mental impairment, which service is reasonably
consistent with the individual's past service for the Company, training and
experience. Such determination of total and permanent disability shall be made
by the Committee. Notwithstanding the foregoing, if an individual qualifies for
Federal Social Security disability benefits or for payments under a long-term
disability income Plan of the Company or the Affiliate which employs such
individual, based upon his physical or mental condition, such individual shall
be deemed to suffer from a Total and Permanent Disability hereunder.

         "Transfer Restrictions" shall mean restrictions on the transferability
of shares of Common Stock awarded to an Employee, Director or Consultant under
the Plan pursuant to a Restricted Stock Award Agreement.

         "Units" shall mean bookkeeping units, each of which represents such
monetary amount as shall be designated by the Committee in each Performance Unit
Award Agreement.

         "Unrestricted Stock Award" shall mean an Award granted under Article IX
of the Plan of shares of Common Stock which are not subject to Transfer
Restrictions.

         "Unrestricted Stock Award Agreement" shall mean a written agreement
between the Company and a Holder with respect to an Unrestricted Stock Award.

                                   ARTICLE III
                             EFFECTIVE DATE OF PLAN

         The Plan shall be effective as of the Effective Date, provided that the
Plan is approved by the shareholders of the Company within twelve (12) months of
such date.

                                       -5-
<PAGE>   9
                                   ARTICLE IV
                                 ADMINISTRATION

         Section 4.1 Composition of Committee. The Plan shall be administered by
the Committee, which shall be (i) appointed by the Board, and (ii) constituted
so as to permit applicable Awards under the Plan to constitute
"performance-based compensation" for purposes of Section 162(m) of the Code and
applicable interpretive authority thereunder. If a member of the Committee shall
be eligible to receive an Award under the Plan, such Committee member shall have
no authority hereunder with respect to his or her own Award.

         Section 4.2 Powers. Subject to the provisions of the Plan, the
Committee shall have the sole authority, in its discretion, to determine which
individuals shall receive an Award, the time or times when such Award shall be
made, what type of Award shall be granted and the number of shares of Common
Stock which may be issued under such Award, as applicable. In making such
determinations the Committee may take into account the nature of the services
rendered by the respective individuals, their present and potential contribution
to the Company's (or the Affiliate's) success and such other factors as the
Committee in its discretion shall deem relevant.

         Section 4.3 Additional Powers. The Committee shall have such additional
powers as are delegated to it under the other provisions of the Plan. Subject to
the express provisions of the Plan, the Committee is authorized to construe the
Plan and the respective Award Agreements executed hereunder, to prescribe such
rules and regulations relating to the Plan as it may deem advisable to carry out
the intent of the Plan, and to determine the terms, restrictions and provisions
of each Award, including such terms, restrictions and provisions as shall be
requisite in the judgment of the Committee to cause designated Options to
qualify as Incentive Stock Options, and to make all other determinations
necessary or advisable for administering the Plan. The Committee may correct any
defect or supply any omission or reconcile any inconsistency in any Award
Agreement in the manner and to the extent it shall deem expedient to carry it
into effect. The determinations of the Committee on the matters referred to in
this Article IV shall be conclusive.

         Section 4.4 Committee Action. In the absence of specific rules to the
contrary, action by the Committee shall require the consent of a majority of the
members of the Committee, expressed either orally at a meeting of the Committee
or in writing in the absence of a meeting.

                                    ARTICLE V
                  STOCK SUBJECT TO PLAN AND LIMITATIONS THEREON

         Section 5.1 Stock Grant and Award Limits. The Committee may from time
to time grant Awards to one or more Employees, Directors and/or Consultants
determined by it to be eligible for participation in the Plan in accordance with
the provisions of Article VI. Subject to Article XV, (i) the aggregate number of
shares of Common Stock that may be issued under the Plan shall not exceed two
million eight hundred thousand (2,800,000) shares, and (ii) the aggregate number
of shares of Common Stock that may be issued under the Plan as Incentive Stock
Options, shall not exceed two million eight hundred thousand (2,800,000) shares.
Shares shall be deemed to

                                       -6-
<PAGE>   10
have been issued under the Plan solely to the extent actually issued and
delivered pursuant to an Award. To the extent that an Award lapses or the rights
of its Holder terminate, any shares of Common Stock subject to such Award shall
again be available for the grant of a new Award. Notwithstanding any provision
in the Plan to the contrary, the maximum number of shares of Common Stock that
may be subject to Awards of Options under Article VII granted to any one
Employee during any calendar year shall be one hundred thousand (100,000) shares
(subject to adjustment in the same manner as provided in Article XIII with
respect to shares of Common Stock subject to Awards then outstanding). The
limitation set forth in the preceding sentence shall be applied in a manner
which shall permit compensation generated in connection with the exercise of
Options to constitute "performance-based" compensation for purposes of Section
162(m) of the Code, including, but not limited to, counting against such maximum
number of shares, to the extent required under Section 162(m) of the Code and
applicable interpretive authority thereunder, any shares subject to Options that
are canceled or repriced.

         Section 5.2 Stock Offered. The stock to be offered pursuant to the
grant of an Award may be authorized but unissued Common Stock, Common Stock
purchased on the open market or Common Stock previously issued and outstanding
and reacquired by the Company.

                                   ARTICLE VI
                     ELIGIBILITY FOR AWARDS; TERMINATION OF
                EMPLOYMENT, DIRECTOR STATUS OR CONSULTANT STATUS

         Section 6.1 Eligibility. Awards made under the Plan may be granted
solely to persons who, at the time of grant, are Employees, Directors or
Consultants. An Award may be granted on more than one occasion to the same
Employee, Director or Consultant, and, subject to the limitations set forth in
the Plan, such Award may include, a Non-Qualified Stock Option, a Restricted
Stock Award, a Deferred Stock Award, an Unrestricted Stock Award, a Distribution
Equivalent Right Award, any combination thereof or, solely for Employees, an
Incentive Stock Option.

         Section 6.2 Termination of Employment or Director Status. Except to the
extent inconsistent with the terms of the applicable Award Agreement and/or the
provisions of Section 6.4, the following terms and conditions shall apply with
respect to the termination of a Holder's employment with, or status as a
Director of, the Company or an Affiliate, as applicable, for any reason,
including, without limitation, retirement upon or after attaining age sixty-five
(65), Total and Permanent Disability or death:

                  (a) The Holder's rights, if any, to exercise any then
         exercisable Non-Qualified Stock Options shall terminate:

                           (1) If such termination is for a reason other than
                  the Holder's retirement upon or after attaining age sixty-five
                  (65), Total and Permanent Disability or death, not more than
                  ninety (90) days after the date of such termination of
                  employment or six (6) months after the date of such
                  termination Director status;

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<PAGE>   11
                           (2) If such termination is on account of the Holder's
                  retirement upon or after attaining age sixty-five (65) or on
                  account of the Holder's Total and Permanent Disability, one
                  (1) year after the date of such termination of employment or
                  Director status; or

                           (3) If such termination is on account of the Holder's
                  death, one (1) year after the date of the Holder's death.

         Upon such applicable date the Holder (and such Holder's estate,
         designated beneficiary or other legal representative) shall forfeit any
         rights or interests in or with respect to any such Non-Qualified Stock
         Options.

                  (b) The Holder's rights, if any, to exercise any then
exercisable Incentive Stock Option shall terminate:

                           (1) If such termination is for a reason other than
                  the Holder's Total and Permanent Disability or death, not more
                  than ninety (90) days after the date of such termination of
                  employment;

                           (2) If such termination is on account of the Holder's
                  Total and Permanent Disability, one (1) year after the date of
                  such termination of employment; or

                           (3) If such termination is on account of the Holder's
                  death, one (1) year after the date of the Holder's death.

         Upon such applicable date the Holder (and such Holder's estate,
         designated beneficiary or other legal representative) shall forfeit any
         rights or interests in or with respect to any such Incentive Stock
         Options.

                  (c) If a Holder's employment with, or status as a Director of,
the Company or an Affiliate, as applicable, terminates for any reason prior to
the actual or deemed satisfaction and/or lapse of the restrictions, terms and
conditions applicable to an Award of Restricted Stock and/or Deferred Stock,
such Restricted Stock and/or Deferred Stock shall immediately be canceled, and
the Holder (and such Holder's estate, designated beneficiary or other legal
representative) shall forfeit any rights or interests in and with respect to any
such Restricted Stock and/or Deferred Stock. The immediately preceding sentence
to the contrary notwithstanding, the Committee, in its sole discretion, may
determine, prior to or within thirty (30) days after the date of such
termination of employment or Director status, that all or a portion of any such
Holder's Restricted Stock and/or Deferred Stock shall not be so canceled and
forfeited.

         Section 6.3 Termination of Consultant Status. Except to the extent
inconsistent with the terms of the applicable Award Agreement and/or the
provisions of Section 6.4(d), the

                                       -8-
<PAGE>   12
following terms and conditions shall apply with respect to the termination of a
Holder's status as a Consultant, for any reason:

                  (a) The Holder's rights, if any, to exercise any then
exercisable Non-Qualified Stock Options shall terminate:

                           (1) If such termination is for a reason other than
                  the Holder's death, not more than ninety (90) days after the
                  date of such termination; or

                           (2) If such termination is on account of the Holder's
                  death, one (1) year after the date of the Holder's death.

                  (b) If the status of a Holder as a Consultant terminates for
any reason prior to the actual or deemed satisfaction and/or lapse of the
restrictions, terms and conditions applicable to an Award of Restricted Stock
and/or Deferred Stock, such Restricted Stock and/or Deferred Stock shall
immediately be canceled, and the Holder (and such Holder's estate, designated
beneficiary or other legal representative) shall forfeit any rights or interests
in and with respect to any such Restricted Stock and/or Deferred Stock. The
immediately preceding sentence to the contrary notwithstanding, the Committee,
in its sole discretion, may determine, prior to or within thirty (30) days after
the date of such termination of such a Holder's status as a Consultant, that all
or a portion of any such Holder's Restricted Stock and/or Deferred Stock shall
not be so canceled and forfeited.

         Section 6.4 Special Termination Rule. Except to the extent inconsistent
with the terms of the applicable Award Agreement, and notwithstanding anything
to the contrary contained in this Article VI, if a Holder's employment with, or
status as a Director of, the Company or an Affiliate shall terminate, if, within
ninety (90) days of such termination, such Holder shall become a Consultant,
such Holder's rights with respect to any Award or portion thereof granted
thereto prior to the date of such termination may be preserved if and to the
extent determined by the Committee in its sole discretion as if such Holder had
been a Consultant for the entire period during which such Award or portion
thereof had been outstanding and, should the Committee effect such determination
with respect to such Holder, for all purposes of the Plan, such Holder shall not
be treated as if his or her employment or Director status had terminated until
such time as his or her Consultant status shall terminate, in which case his or
her Award, as it may have been reduced in connection with the Holder's becoming
a Consultant, shall be treated pursuant to the provisions of Section 6.3. Should
a Holder's status as a Consultant terminate, if, within ninety (90) days of such
termination, such Holder shall become an Employee or a Director, such Holder's
rights with respect to any Award or portion thereof granted thereto prior to the
date of such termination may be preserved if and to the extent determined by the
Committee in its sole discretion as if such Holder had been an Employee or a
Director, as applicable, for the entire period during which such Award or
portion thereof had been outstanding, and, should the Committee effect such
determination with respect to such Holder, for all purposes of the Plan, such
Holder shall not be treated as if his or her Consultant status had terminated
until such time as his or her employment with the

                                       -9-
<PAGE>   13
Company or an Affiliate, or his or her Director status, as applicable, shall
terminate, in which case his or her Award shall be treated pursuant to the
provisions of Section 6.2.

                                   ARTICLE VII
                                     OPTIONS

         Section 7.1 Option Period. The term of each Option shall be as
specified in the Option Agreement.

         Section 7.2 Limitations on Exercise of Option. An Option shall be
exercisable in whole or in such installments and at such times as specified in
the Option Agreement.

         Section 7.3 Special Limitations on Incentive Stock Options. To the
extent that the aggregate Fair Market Value (determined at the time the
respective Incentive Stock Option is granted) of Common Stock with respect to
which Incentive Stock Options are exercisable for the first time by an
individual during any calendar year under all plans of the Company and any
parent corporation or subsidiary corporation thereof (both as defined in Section
424 of the Code) which provide for the grant of Incentive Stock Options exceeds
One Hundred Thousand Dollars ($100,000)(or such other individual limit as may be
in effect under the Code on the date of grant), such Incentive Stock Options
shall be treated as Non-Qualified Stock Options. The Committee shall determine,
in accordance with applicable provisions of the Code, Treasury Regulations and
other administrative pronouncements, which of a Holder's Options, which were
intended by the Committee to be Incentive Stock Options when granted to the
Holder, will not constitute Incentive Stock Options because of such limitation
and shall notify the Holder of such determination as soon as practicable after
such determination. No Incentive Stock Option shall be granted to an Employee
if, at the time the Option is granted, such Employee is a Ten Percent
Shareholder, unless (i) at the time such Incentive Stock Option is granted the
Option price is at least one hundred ten percent (110%) of the Fair Market Value
of the Common Stock subject to the Option, and (ii) such Incentive Stock Option
by its terms is not exercisable after the expiration of five (5) years from the
date of grant.

         Section 7.4 Option Agreement. Each Option shall be evidenced by an
Option Agreement in such form and containing such provisions not inconsistent
with the provisions of the Plan as the Committee from time to time shall
approve, including, but not limited to, provisions to qualify an Option as an
Incentive Stock Option. An Option Agreement may provide for the payment of the
Option price, in whole or in part, by the delivery of a number of shares of
Common Stock (plus cash if necessary) having a Fair Market Value equal to such
Option price. Each Option Agreement shall, solely to the extent inconsistent
with the provisions of Section 6.2, specify the effect of termination of
employment, Director status or Consultant status on the exercisability of the
Option. Moreover, an Option Agreement may provide for a "cashless exercise" of
the Option by establishing procedures whereby the Holder, by a properly-executed
written notice, directs (i) an immediate market sale or margin loan respecting
all or a part of the shares of Common Stock to which he is entitled upon
exercise pursuant to an extension of credit by the Company to the Holder of the
Option price, (ii) the delivery of the shares of Common Stock from the Company
directly to a brokerage firm and

                                      -10-
<PAGE>   14
(iii) the delivery of the Option price from sale or margin loan proceeds from
the brokerage firm directly to the Company. An Option Agreement may also include
provisions relating to (i) subject to the provisions hereof, accelerated vesting
of Options, (ii) tax matters (including provisions covering any applicable
Employee wage withholding requirements and requiring additional "gross-up"
payments to Holders to meet any excise taxes or other additional income tax
liability imposed as a result of a payment upon a Change of Control resulting
from the operation of the Plan or of such Option Agreement) and (iii) any other
matters not inconsistent with the terms and provisions of the Plan that the
Committee shall in its sole discretion determine. The terms and conditions of
the respective Option Agreements need not be identical.

         Section 7.5 Option Price and Payment. The price at which a share of
Common Stock may be purchased upon exercise of an Option shall be determined by
the Committee, but such Option price (i) in the case of an Option that is an
Incentive Stock Option, shall not be less than the Fair Market Value of a share
of Common Stock on the date such Option is granted, and (ii) shall be subject to
adjustment as provided in Article XIII. The Option or portion thereof may be
exercised by delivery of an irrevocable notice of exercise to the Company. The
Option price for the Option or portion thereof shall be paid in full in the
manner prescribed by the Committee. Separate stock certificates shall be issued
by the Company for those shares of Common Stock acquired pursuant to the
exercise of an Incentive Stock Option and for those shares of Common Stock
acquired pursuant to the exercise of a Non-Qualified Stock Option.

         Section 7.6 Shareholder Rights and Privileges. The Holder of an Option
shall be entitled to all the privileges and rights of a shareholder of the
Company solely with respect to such shares of Common Stock as have been
purchased under the Option and for which certificates of stock have been
registered in the Holder's name.

         Section 7.7 Options and Rights in Substitution for Stock Options
Granted by Other Corporations. Options may be granted under the Plan from time
to time in substitution for stock options held by individuals employed by
entities who become Employees as a result of a merger or consolidation of the
employing entity with the Company or any Affiliate, or the acquisition by the
Company or an Affiliate of the assets of the employing entity, or the
acquisition by the Company or an Affiliate of stock of the employing entity with
the result that such employing entity becomes an Affiliate.

                                  ARTICLE VIII
                             RESTRICTED STOCK AWARDS

         Section 8.1 Restriction Period to be Established by Committee. At the
time a Restricted Stock Award is made, the Committee shall establish the
Restriction Period applicable to such Award. Each Restricted Stock Award may
have a different Restriction Period, in the discretion of the Committee. The
Restriction Period applicable to a particular Restricted Stock Award shall not
be changed except as permitted by Section 8.2 or Article XIV.

                                      -11-
<PAGE>   15
         Section 8.2 Other Terms and Conditions. Common Stock awarded pursuant
to a Restricted Stock Award shall be represented by a stock certificate
registered in the name of the Holder of such Restricted Stock Award. If provided
for under the Restricted Stock Award Agreement, the Holder shall have the right
to vote Common Stock subject thereto and to enjoy all other shareholder rights,
except that (i) the Holder shall not be entitled to delivery of the stock
certificate until the Restriction Period shall have expired, (ii) the Company
shall retain custody of the stock during the Restriction Period, (iii) the
Holder may not sell, transfer, pledge, exchange, hypothecate or otherwise
dispose of the stock during the Restriction Period, (iv) the Holder shall be
entitled to receive dividends on the Common Stock during the Restriction Period
and (v) a breach of the terms and conditions established by the Committee
pursuant to the Restricted Stock Award Agreement shall cause a forfeiture of the
Restricted Stock Award. At the time of such Award, the Committee may, in its
sole discretion, prescribe additional terms and conditions or restrictions
relating to Restricted Stock Awards, including, but not limited to, rules
pertaining to the effect of termination of employment, Director status or
Consultant status prior to expiration of the Restriction Period, solely to the
extent inconsistent with the provisions of Section 6.2. Such additional terms,
conditions or restrictions shall, to the extent inconsistent with the provisions
of Section 6.2, be set forth in a Restricted Stock Award Agreement made in
conjunction with the Award. Such Restricted Stock Award Agreement may also
include provisions relating to (i) subject to the provisions hereof, accelerated
vesting of Awards, including but not limited to accelerated vesting upon the
occurrence of a Change of Control, (ii) tax matters (including provisions
covering any applicable Employee wage withholding requirements and requiring
additional "gross-up" payments to Holders to meet any excise taxes or other
additional income tax liability imposed as a result of a Change of Control
payment resulting from the operation of the Plan or of such Restricted Stock
Award Agreement) and (iii) any other matters not inconsistent with the terms and
provisions of the Plan that the Committee shall in its sole discretion
determine. The terms and conditions of the respective Restricted Stock
Agreements need not be identical.

         Section 8.3 Payment for Restricted Stock. The Committee shall determine
the amount and form of any payment for Common Stock received pursuant to a
Restricted Stock Award, provided that in the absence of such a determination, a
Holder shall not be required to make any payment for Common Stock received
pursuant to a Restricted Stock Award, except to the extent otherwise required by
law.

         Section 8.4 Restricted Stock Award Agreements. At the time any Award is
made under this Article VIII, the Company and the Holder shall enter into a
Restricted Stock Award Agreement setting forth each of the matters contemplated
hereby and such other matters as the Committee may determine to be appropriate.

                                   ARTICLE IX
                            UNRESTRICTED STOCK AWARDS

         Pursuant to the terms of the applicable Unrestricted Stock Award
Agreement, a Holder may be awarded (or sold at a discount) shares of Common
Stock which are not subject to

                                      -12-
<PAGE>   16
Transfer Restrictions, in consideration for past services rendered thereby to
the Company or an Affiliate or for other valid consideration.

                                    ARTICLE X
                             PERFORMANCE UNIT AWARDS

         Section 10.1 Terms and Conditions. The Committee shall set forth in the
applicable Performance Unit Award Agreement the performance goals and objectives
(and the period of time to which such goals and objectives shall apply) which
the Holder and/or the Company would be required to satisfy before becoming
entitled to payment pursuant to Section 10.2, the number of Units awarded to the
Holder and the dollar value assigned to each such Unit.

         Section 10.2 Payments. The Holder of a Performance Unit shall be
entitled to receive a cash payment equal to the dollar value assigned to such
Unit under the applicable Performance Unit Award Agreement if the Holder and/or
the Company satisfy (or partially satisfy, if applicable under the applicable
Performance Unit Award Agreement) the performance goals and objectives set forth
in such Performance Unit Award Agreement.

                                   ARTICLE XI
                            PERFORMANCE SHARE AWARDS

         Section 11.1 Terms and Conditions. The Committee shall set forth in the
applicable Performance Share Award Agreement the performance goals and
objectives (and the period of time to which such goals and objectives shall
apply) which the Holder and/or the Company would be required to satisfy before
becoming entitled to the receipt of shares of Common Stock pursuant to such
Holder's Performance Share Award and the number of shares of Common Stock
subject to such Performance Share Award.

         Section 11.2 Shareholder Rights and Privileges. The Holder of a
Performance Share Award shall have no rights as a shareholder of the Company
until such time, if any, as the Holder actually receives shares of Common Stock
pursuant to the Performance Share Award.

                                   ARTICLE XII
                         DISTRIBUTION EQUIVALENT RIGHTS

         Section 12.1 Terms and Conditions. The Committee shall set forth in the
applicable Distribution Equivalent Rights Award Agreement the terms and
conditions, if any, including whether the Holder is to receive credits currently
in cash, is to have such credits reinvested (at Fair Market Value determined as
of the date of reinvestment) in additional shares of Common Stock or is to be
entitled to choose among such alternatives. Distribution Equivalent Rights
Awards may be settled in cash or in shares of Common Stock, as set forth in the
Applicable Distribution Equivalent Rights Award Agreement. A Distribution
Equivalent Rights Award may, but need not be, awarded as a component of another
Award, where, if so awarded, such Distribution Equivalent Rights Award shall
expire or be forfeited by the Holder under the same conditions as under such
other Award.

                                      -13-
<PAGE>   17
         Section 12.2 Interest Equivalents. The Distribution Equivalent Rights
Award Agreement for a Distribution Equivalent Rights Award may provide for the
crediting of interest on a Distribution Rights Award to be settled in cash at a
future date, at a rate set forth in the applicable Distribution Equivalent
Rights Award Agreement, on the amount of cash payable thereunder.

                                  ARTICLE XIII
                       RECAPITALIZATION OR REORGANIZATION

         Section 13.1 Adjustments to Common Stock. The shares with respect to
which Awards may be granted are shares of Common Stock as presently constituted;
provided, however, that if, and whenever, prior to the expiration or
distribution to the Holder of an Award theretofore granted, the Company shall
effect a subdivision or consolidation of shares of Common Stock or the payment
of a stock dividend on Common Stock without receipt of consideration by the
Company, the number of shares of Common Stock with respect to which such Award
may thereafter be exercised or satisfied, as applicable, (i) in the event of an
increase in the number of outstanding shares, shall be proportionately
increased, and the purchase price per share shall be proportionately reduced,
and (ii) in the event of a reduction in the number of outstanding shares, shall
be proportionately reduced, and the purchase price per share shall be
proportionately increased.

         Section 13.2 Recapitalization. If the Company recapitalizes or
otherwise changes its capital structure, thereafter upon any exercise or
satisfaction, as applicable, of a previously granted Award, the Holder shall be
entitled to receive (or entitled to purchase, if applicable) under such Award,
in lieu of the number of shares of Common Stock then covered by such Award, the
number and class of shares of stock and securities to which the Holder would
have been entitled pursuant to the terms of the recapitalization if, immediately
prior to such recapitalization, the Holder had been the holder of record of the
number of shares of Common Stock then covered by such Award.

         Section 13.3 Change of Control. Except to the extent otherwise provided
in the applicable Award Agreement, in the event of the occurrence of a Change of
Control, and within one year following the change in control (a) an Employee's
employment is terminated by the Company without Cause or by the Employee with
Good Reason or (b) a Director is removed from the Board without the approving
vote of a majority of the directors in office immediately prior to the Change of
Control, outstanding Awards of the Employee or Director, as the case may be,
shall immediately vest and become exercisable and/or required employment or
Board membership periods with the Company or an Affiliate and/or performance
goals and/or objectives shall be deemed to have been fully satisfied, as
applicable. The Committee, in its discretion by unanimous action, may determine
that upon the occurrence of a Change of Control, each Award outstanding
hereunder shall terminate within a specified number of days after notice to the
Holder, and such Holder shall receive, (i) with respect to Awards which are
Performance Units or Distribution Equivalent Rights (which Distribution
Equivalent Rights, pursuant to the applicable Distribution Equivalent Rights
Award Agreement, are to be settled in cash), cash in an amount equal to the
amount of

                                      -14-
<PAGE>   18
cash that would otherwise have been payable thereunder assuming that all of the
applicable performance goals and objectives set forth in the applicable
Performance Units Award Agreement had been fully satisfied, and (ii) with
respect to each share of Common Stock subject to such Award, cash in an amount
equal to the excess of (A) the greater of (I) the Fair Market Value of such
share of Common Stock immediately prior to the occurrence of such Change of
Control or (II) the value of the consideration to be received in connection with
such Change of Control for one share of Common Stock, over (B) the exercise
price per share, if applicable, of one share of Common Stock. If the
consideration offered to shareholders of the Company in any transaction
described in this Section 13.3 consists of anything other than cash, the
Committee shall determine the fair cash equivalent of the portion of the
non-cash consideration offered. The provisions contained in this Section 13.3
shall not terminate any rights of the Holder to further payments pursuant to any
other agreement with the Company following the occurrence of a Change of
Control.

         Section 13.4 Other Events. In the event of changes to the outstanding
Common Stock by reason of recapitalization, reorganization, mergers,
consolidations, combinations, exchanges or other relevant changes in
capitalization occurring after the date of the grant of any Award and not
otherwise provided for under this Article XIII, any outstanding Awards and any
Award Agreements evidencing such Awards shall be subject to adjustment by the
Committee in its discretion as to the number and price of shares of Common Stock
or other consideration subject to such Awards. In the event of any such change
to the outstanding Common Stock, the aggregate number of shares available under
the Plan may be appropriately adjusted by the Committee, the determination of
which shall be conclusive.

         Section 13.5 Powers Not Affected. The existence of the Plan and the
Awards granted hereunder shall not affect in any way the right or power of the
Board or of the shareholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change of the Company's capital
structure or business, any merger or consolidation of the Company, any issue of
debt or equity securities ahead of or affecting Common Stock or the rights
thereof, the dissolution or liquidation of the Company or any sale, lease,
exchange or other disposition of all or any part of its assets or business or
any other corporate act or proceeding.

         Section 13.6 No Adjustment for Certain Awards. Except as hereinabove
expressly provided, the issuance by the Company of shares of stock of any class
or securities convertible into shares of stock of any class, for cash, property,
labor or services, upon direct sale, upon the exercise of rights or warrants to
subscribe therefor or upon conversion of shares or obligations of the Company
convertible into such shares or other securities, and in any case whether or not
for fair value, shall not affect previously granted Awards, and no adjustment by
reason thereof shall be made with respect to the number of shares of Common
Stock subject to Awards theretofore granted or the purchase price per share, if
applicable.

                                   ARTICLE XIV
                        AMENDMENT AND TERMINATION OF PLAN

                                      -15-
<PAGE>   19
         The Board in its discretion may terminate the Plan at any time with
respect to any shares for which Awards have not theretofore been granted. The
Board shall have the right to alter or amend the Plan or any part hereof from
time to time; provided, however, that no change in any Award theretofore granted
may be made which would materially and adversely impair the rights of a Holder
without the consent of the Holder (unless such change is required in order to
cause the benefits under the Plan to qualify as performance-based compensation
within the meaning of Section 162(m) of the Code and applicable interpretive
authority thereunder).

                                   ARTICLE XV
                                  MISCELLANEOUS

         Section 15.1 No Right to Award. Neither the adoption of the Plan by the
Company nor any action of the Board or the Committee shall be deemed to give an
Employee, Director or Consultant any right to an Award except as may be
evidenced by an Award Agreement duly executed on behalf of the Company, and then
solely to the extent and on the terms and conditions expressly set forth
therein.

         Section 15.2 No Rights Conferred. Nothing contained in the Plan shall
(i) confer upon any Employee any right with respect to continuation of
employment with the Company or any Affiliate, (ii) interfere in any way with the
right of the Company or any Affiliate to terminate the employment of an Employee
at any time, (iii) confer upon any Director any right with respect to
continuation of such Director's membership on the Board, (iv) interfere in any
way with the right of the Company or an Affiliate to terminate a Director's
membership on the Board at any time, (v) confer upon any Consultant any right
with respect to continuation of his or her consulting engagement with the
Company or any Affiliate, or (vi) interfere in any way with the right of the
Company or an Affiliate to terminate a Consultant's consulting engagement with
the Company or an Affiliate at any time.

         Section 15.3 Other Laws; Withholding. The Company shall not be
obligated to issue any Common Stock pursuant to any Award granted under the Plan
at any time when the shares covered by such Award have not been registered under
the Securities Act of 1933 and such other state and federal laws, rules or
regulations as the Company or the Committee deems applicable and, in the opinion
of legal counsel of the Company, there is no exemption from the registration
requirements of such laws, rules or regulations available for the issuance and
sale of such shares. No fractional shares of Common Stock shall be delivered,
nor shall any cash in lieu of fractional shares be paid. The Company shall have
the right to deduct in cash (whether under this Plan or otherwise) in connection
with all Awards any taxes required by law to be withheld and to require any
payments required to enable it to satisfy its withholding obligations. In the
case of any Award satisfied in the form of shares of Common Stock, no shares
shall be issued unless and until arrangements satisfactory to the Company shall
have been made to satisfy any tax withholding obligations applicable with
respect to such Award. Subject to such terms and conditions as the Committee may
impose, the Company shall have the right to retain, or the Committee may,
subject to such terms and conditions as it may establish from time to time,
permit Holders to elect to tender Common Stock (including

                                      -16-
<PAGE>   20
Common Stock issuable in respect of an Award) to satisfy, in whole or in part,
the amount required to be withheld.

         Section 15.4 No Restriction on Corporate Action. Nothing contained in
the Plan shall be construed to prevent the Company or any Affiliate from taking
any corporate action which is deemed by the Company or such Affiliate to be
appropriate or in its best interest, whether or not such action would have an
adverse effect on the Plan or any Award made under the Plan. No Employee,
Director, Consultant, beneficiary or other person shall have any claim against
the Company or any Affiliate as a result of any such action.

         Section 15.5 Restrictions on Transfer. No Award under the Plan or any
Award Agreement and no rights or interests herein or therein, shall or may be
assigned, transferred, sold, exchanged, encumbered, pledged or otherwise
hypothecated or disposed of by a Holder except (i) by will or by the laws of
descent and distribution, or (ii) except for an Incentive Stock Option, by gift
to any Family Member of the Holder. An award may be exercisable during the
lifetime of the Holder only by such Holder or by the Holder's guardian or legal
representative unless it has been transferred by gift to a Family Member of the
Holder, in which case it shall be exercisable solely by such transferee.
Notwithstanding any such transfer, the Holder shall continue to be subject to
the withholding requirements provided for under Section 15.3 hereof.

         Section 15.6 Section 162(m). It is intended that the Plan shall comply
fully with and meet all the requirements of Section 162(m) of the Code so that
Awards hereunder which are made to Holders who are "covered employees" (as
defined in Section 162(m) of the Code) shall constitute "performance-based"
compensation within the meaning of Section 162(m) of the Code. The performance
criteria to be utilized under the Plan for such purposes shall consist of
objective tests based on one or more of the following: earnings or earnings per
share, cash flow, customer satisfaction, revenues, financial return ratios (such
as return on equity and/or return on assets), market performance, shareholder
return and/or value, operating profits, EBITDA, net profits, profit returns and
margins, stock price, credit quality, sales growth, market share, comparisons to
peer companies (on a company-wide or divisional basis), working capital and/or
individual or aggregate employee performance. If any provision of the Plan would
disqualify the Plan or would not otherwise permit the Plan to comply with
Section 162(m) as so intended, such provision shall be construed or deemed
amended to conform to the requirements or provisions of Section 162(m);
provided, however, that no such construction or amendment shall have an adverse
effect on the economic value to a Holder of any Award previously granted
hereunder.

         Section 15.7 Other Plans. No Award, payment or amount received
hereunder shall be taken into account in computing an Employee's salary or
compensation for the purposes of determining any benefits under any pension,
retirement, life insurance or other benefit plan of the Company or any
Affiliate, unless such other plan specifically provides for the inclusion of
such Award, payment or amount received.

                                      -17-
<PAGE>   21
         Section 15.8 Limits of Liability. Any liability of the Company with
respect to an Award shall be based solely upon the contractual obligations
created under the Plan and the Award Agreement. Neither the Company nor any
member of the Committee shall have any liability to any party for any action
taken or not taken, in good faith, in connection with or under the Plan.

         Section 15.9 Governing Law. Except as otherwise provided herein, the
Plan shall be construed in accordance with the laws of the State of Delaware.

         Section 15.10 Severability of Provisions. If any provision of the Plan
is held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provision of the Plan, and the Plan shall be construed and
enforced as if such invalid or unenforceable provision had not been included in
the Plan.

         Section 15.11 No Funding. The Plan shall be unfunded. The Company shall
not be required to establish any special or separate fund or to make any other
segregation of funds or assets to ensure the payment of any Award.

         Section 15.12 Headings. Headings used throughout the Plan are for
convenience only and shall not be given legal significance.

                                      -18-

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