Document:

Exhibit 10.1

SECOND AMENDMENT
AND RESTATEMENT OF 

THE 2001 INCENTIVE AWARD PLAN OF

WATSON PHARMACEUTICALS, INC.

Watson Pharmaceuticals, Inc., a Nevada  corporation, adopted the 2001 Incentive Award Plan of
Watson Pharmaceuticals, Inc. (the “Plan”),
effective as of February 12, 2001 (the “Effective
Date”), for the benefit of its eligible Employees, Consultants and
Directors. The Plan was subsequently amended effective as of May 16, 2001,
May 19, 2003, and August 4, 2003, May 13, 2005, and November 3,
2006.

The Plan is hereby amended and restated in its
entirety to provide for certain additional types of awards to eligible
Employees, Consultants and Directors. This amendment and restatement of the
Plan is effective as of May 4, 2007, subject to the approval of this
amendment and restatement of the Plan by the stockholders of the Company.
Awards authorized under this amendment and restatement of the Plan that were
not authorized under the Plan (as in effect prior to this amendment and
restatement) shall not be granted unless and until this amendment and
restatement of the Plan is so approved. If this amendment and restatement of
the Plan is not so approved, this amendment and restatement of the Plan shall
be null and void and of no further force and effect, and the Plan (as in effect
prior to such amendment and restatement) shall continue in full force and
effect in accordance with the terms and conditions thereof.

The purposes of
the Plan are as follows:

(1)           To
provide an additional incentive for Directors, key Employees and Consultants
(as such terms are defined below) to further the growth, development and
financial success of the Company by personally benefiting through the ownership
of Company stock and/or rights which recognize such growth, development and
financial success.

(2)           To
enable the Company to obtain and retain the services of Directors, key
Employees and Consultants considered essential to the long range success of the
Company by offering them an opportunity to own stock in the Company and/or
rights which will reflect the growth, development and financial success of the
Company.

ARTICLE I.

DEFINITIONS

Wherever the
following terms are used in the Plan they shall have the meanings specified
below, unless the context clearly indicates otherwise. The singular pronoun
shall include the plural where the context so indicates.

1.1.          “Administrator” shall mean the entity that conducts the
general administration of the Plan as provided herein. With reference to the
administration of the Plan with respect to Awards granted to Independent
Directors, the term “Administrator” shall refer to the Board. With reference to
the administration of the Plan with respect to any other Award, the term “Administrator”
shall refer to the Committee unless the Board has assumed the authority for
administration of the Plan generally as provided in Section 11.1. With
reference to the duties of the Committee under the Plan which have been
delegated to one or more persons pursuant to Section 11.5, the term “Administrator”
shall refer to such person(s) unless the Committee or the Board has
revoked such delegation.

1.2.          “Award” shall mean an Option, a Restricted Stock award, a
Restricted Stock Unit award, a Dividend Equivalents award, a Deferred Stock
award, a Stock Payment award or a Stock Appreciation Right, which may be
awarded or granted under the Plan (collectively, “Awards”).

1.3.          “Award Agreement” shall mean a written agreement executed by
an authorized officer of the Company and the Holder which shall contain such
terms and conditions with respect to an Award as the Administrator shall
determine, consistent with the Plan.

1.4.          “Award Limit”
shall mean five hundred thousand (500,000) shares of Common Stock, as adjusted
pursuant to Section 12.3; provided, however, that each share of
Common Stock subject to an Award shall be counted as one share against the
Award Limit.

1.5.          “Board” shall mean the Board of Directors of the Company.

1.6.          “Change in Control” shall mean the occurrence of any of the
following:

(a)           a
sale of assets representing fifty percent (50%) or more of the net book value
and of the fair market value of the Company’s consolidated assets (in a single
transaction or in a series of related transactions);

(b)           a
liquidation or dissolution of the Company;

(c)           a
merger or consolidation involving the Company or any subsidiary of the Company
after the completion of which: (i) in the case of a merger (other than a
triangular merger) or a consolidation involving the Company, the stockholders
of the Company immediately prior to the completion of such merger or
consolidation beneficially own (within the meaning of Rule 13d-3
promulgated under the Exchange Act, or comparable successor rules), directly or
indirectly, outstanding voting securities representing less than sixty percent
(60%) of the combined voting power of the surviving entity in such merger or
consolidation, and (ii) in the case of a triangular merger involving the
Company or a subsidiary of the Company, the stockholders of the Company
immediately prior to the completion of such merger beneficially own (within the
meaning of Rule 13d-3 promulgated under the Exchange Act, or
comparable successor rules), directly or indirectly, outstanding voting
securities representing less than sixty percent (60%) of the combined voting
power of the surviving entity in such merger and less than sixty percent (60%)
of the combined voting power of the parent of the surviving entity in such
merger;

(d)           an
acquisition by any person, entity or “group” (within the meaning of Section 13(d) or
14(d) of the Exchange Act or any comparable successor provisions), other
than any employee benefit plan, or related trust, sponsored or maintained by
the Company or an affiliate of the Company and other than in a merger or
consolidation of the type referred to in subsection (c), of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act, or comparable successor rules) of outstanding voting securities
of the Company representing more than thirty percent (30%) of the combined
voting power of the Company (in a single transaction or series of related
transactions); or

(e)           in
the event that the individuals who, as of the Effective Date, are members of
the Board (the “Incumbent Board”), cease for any
reason to constitute at least fifty percent (50%) of the Board; provided, that if the election, or nomination for election
by the Company’s stockholders, of any new member of the Board is approved by a
vote of at least fifty percent (50%) of the Incumbent Board, such new member of
the Board shall be considered as a member of the Incumbent Board.

1.7.          “Code” shall mean the Internal Revenue Code of 1986, as
amended.

1.8.          “Committee” shall mean the Compensation Committee of the
Board, or another committee or subcommittee of the Board, appointed as provided
in Section 11.1.

1.9.          “Common Stock” shall mean the common stock of the Company,
par value $0.0033 per share.

1.10.        “Company” shall mean Watson Pharmaceuticals, Inc., a Nevada corporation.

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1.11.        “Consultant” shall mean any consultant or adviser if: (a) the
consultant or adviser renders bona fide services to the Company; (b) the
services rendered by the consultant or adviser are not in connection with the
offer or sale of securities in a capital-raising transaction and do not
directly or indirectly promote or maintain a market for the Company’s
securities; and (c) the consultant or adviser is a natural person who has
contracted directly with the Company to render such services.

1.12.        “Deferred Stock” shall mean rights to receive Common Stock
awarded under Section 8.4 of the Plan.

1.13.        “Director” shall mean a member of the Board.

1.14.        “Dividend Equivalent” shall mean a right to receive the
equivalent value (in cash or Common Stock) of dividends paid on Common Stock,
awarded under Section 8.2 of the Plan.

1.15.        “DRO” shall mean a domestic relations order as defined by the
Code or Title I of the Employee Retirement Income Security Act of 1974, as
amended, or the rules thereunder.

1.16.        “Employee” shall mean any officer or other employee (as
defined in accordance with Section 3401(c) of the Code) of the
Company, or of any corporation which is a Subsidiary.

1.17.        “Exchange Act” shall mean the Securities Exchange Act of
1934, as amended.

1.18.        “Fair Market Value”
means, as of any date, the value of a share of Common Stock determined as follows:

(a)           If
the Common Stock is listed on any established stock exchange (such as the New
York Stock Exchange, the NASDAQ Global Market and the NASDAQ Global Select
Market) or any national market system, including without limitation any market
system of The NASDAQ Stock Market, the value of a share of Common Stock shall
be the closing sales price for a share of Common Stock as quoted on such
exchange or system for such date, or if there is no closing sales price for a
share of Common Stock on the date in question, the closing sales price for a
share of Common Stock on the last preceding date for which such quotation
exists, as reported in The Wall Street Journal or such other source as the
Administrator deems reliable;

(b)           If
the Common Stock is regularly quoted by a recognized securities dealer but
closing sales prices are not reported, the value of a share of Common Stock
shall be the mean of the high bid and low asked prices for such date or, if
there are no high bid and low asked prices for a share of Common Stock on the
date in question, the high bid and low asked prices for a share of Common Stock
on the last preceding date for which such information exists, as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable; or

(c)           If
the Common Stock is neither listed on an established stock exchange or a
national market system nor regularly quoted by a recognized securities dealer,
the value of a share of Common Stock shall be established by the Administrator in good
faith.

1.19.        “Holder” shall mean a person who has been granted or awarded
an Award.

1.20.        “Incentive Stock Option” shall mean an option which conforms
to the applicable provisions of Section 422 of the Code and which is
designated as an Incentive Stock Option by the Administrator.

1.21.        “Independent Director” shall mean a member of the Board who
is not an Employee.

1.22.        “Full
Value Award” shall mean any Award other than an Option or Stock Appreciation
Right.

1.23.        “Non-Qualified Stock Option” shall mean an Option which is
not designated as an Incentive Stock Option by the Administrator.

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1.24.        “Option” shall mean a stock option granted under
Article IV of the Plan. An Option granted under the Plan shall, as
determined by the Administrator, be either a Non-Qualified Stock Option or an
Incentive Stock Option; provided, however, that Options granted to Independent Directors and
Consultants shall be Non-Qualified Stock Options.

1.25.        “Performance Criteria” shall mean any one or more of the
following business criteria with respect to the Company, any Subsidiary or any
division or operating unit thereof: (a) revenue or sales, (b) net
income, (c) pre-tax income, (d) operating income, (e) cash flow,
(f) earnings per share, (g) return on equity, (h) return on
invested capital or assets, (i) cost reductions or savings, (j) funds
from operations, (k) appreciation in the Fair Market Value of Common
Stock, or (l) earnings before any one or more of the following:
(i) interest, (ii) taxes, (iii) depreciation or
(iv) amortization, each as determined in accordance with generally
accepted accounting principles.

1.26.        “Plan” shall mean the 2001 Incentive Award Plan of Watson
Pharmaceuticals, Inc., as amended.

1.27.        “Restricted Stock” shall mean Common Stock awarded under
Article VII of the Plan.

1.28.        “Restricted Stock Units” shall mean rights to receive Common
Stock awarded under Section 8.5 of the Plan.

1.29.        “Rule 16b-3” shall mean Rule 16b-3
promulgated under the Exchange Act, as such Rule may be amended from time
to time.

1.30.        “Section 162(m) Participant” shall mean any key
Employee designated by the Administrator as a key Employee whose compensation
for the fiscal year in which the key Employee is so designated or a future
fiscal year may be subject to the limit on deductible compensation imposed by
Section 162(m) of the Code.

1.31.        “Securities Act” shall mean the Securities Act of 1933, as
amended.

1.32.        “Stock Appreciation Right” shall mean a stock appreciation
right granted under Article IX of the Plan.

1.33.        “Stock Payment” shall mean: (a) a payment in the form of
shares of Common Stock, or (b) an option or other right to purchase shares
of Common Stock, as part of a deferred compensation arrangement, made in lieu
of all or any portion of the compensation, including without limitation,
salary, bonuses and commissions, that otherwise would become payable to a key
Employee, Independent Director or Consultant in cash, awarded under
Section 8.3 of the Plan.

1.34.        “Subsidiary” shall mean any corporation in an unbroken chain
of corporations beginning with the Company if each of the corporations other
than the last corporation in the unbroken chain then owns stock possessing
fifty percent (50%) or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain.

1.35.        “Substitute Award” shall mean an Option granted under this
Plan upon the assumption of, or in substitution for, outstanding equity awards
previously granted by a company or other entity in connection with a corporate
transaction, such as a merger, combination, consolidation or acquisition of
property or stock; provided, however, that in no event shall the term “Substitute Award”
be construed to refer to an award made in connection with the cancellation and
repricing of an Option.

1.36.        “Termination of Consultancy” shall mean the time when the
engagement of a Holder as a Consultant to the Company or a Subsidiary is
terminated for any reason, with or without cause, including, but not by way of
limitation, by resignation, discharge, death or retirement, but excluding
terminations where there is a simultaneous commencement of employment with the
Company or any Subsidiary, or any parent thereof. The Administrator, in its
absolute discretion, shall determine the effect of all matters and questions
relating to Termination of Consultancy, including, but not by way of
limitation, the question of whether a Termination of Consultancy resulted from
a discharge for good cause, and all questions of 

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whether a particular
leave of absence constitutes a Termination of Consultancy. Notwithstanding any
other provision of the Plan, the Company or any Subsidiary has an absolute and
unrestricted right to terminate a Consultant’s service at any time for any reason
whatsoever, with or without cause, except to the extent expressly provided
otherwise in writing.

1.37.        “Termination of Directorship” shall mean the time when a
Holder who is an Independent Director ceases to be a Director for any reason,
including, but not by way of limitation, a termination by resignation, removal,
failure to be elected, death or retirement. The Board, in its sole and absolute
discretion, shall determine the effect of all matters and questions relating to
Termination of Directorship with respect to Independent Directors.

1.38.        “Termination of Employment” shall mean the time when the
employee-employer relationship between a Holder and the Company or any
Subsidiary is terminated for any reason, with or without cause, including, but
not by way of limitation, a termination by resignation, discharge, death,
disability or retirement; but excluding: (a) terminations where there is a
simultaneous reemployment or continuing employment of a Holder by the Company
or any Subsidiary, or any parent thereof, (b) at the discretion of the
Administrator, terminations which result in a temporary severance of the
employee-employer relationship, and (c) at the discretion of the
Administrator, terminations which are followed by the simultaneous establishment
of a consulting relationship by the Company or a Subsidiary, or any parent
thereof, with the former employee. The Administrator, in its absolute
discretion, shall determine the effect of all matters and questions relating to
Termination of Employment, including, but not by way of limitation, the
question of whether a Termination of Employment resulted from a discharge for
good cause, and all questions of whether a particular leave of absence
constitutes a Termination of Employment; provided, however, that, with respect to Incentive Stock Options,
unless otherwise determined by the Administrator in its discretion, a leave of
absence, change in status from an employee to an independent contractor or
other change in the employee-employer relationship shall constitute a
Termination of Employment if, and to the extent that, such leave of absence,
change in status or other change interrupts employment for the purposes of
Section 422(a)(2) of the Code and the then applicable regulations and
revenue rulings under said Section.

ARTICLE II.

SHARES SUBJECT TO PLAN

2.1.          Shares Subject to Plan.

(a)           The
shares of stock subject to Awards shall be Common Stock.  Subject to adjustment as provided in Section
12.3, the aggregate number of such shares of Common Stock which may be issued
pursuant to Awards under the Plan shall not exceed 19,728,333 shares.  The shares of Common Stock issuable upon
exercise of such Options or rights or upon any such Awards may be either
previously authorized but unissued shares or treasury shares.  The aggregate number of shares of Common
Stock available for issuance under the Plan pursuant to this Section 2.1 shall
be reduced by two shares for each share of Common Stock delivered in settlement
of any Full Value Award.

(b)           The
maximum number of shares which may be subject to Awards granted under the Plan
to any individual in any fiscal year of the Company shall not exceed the Award
Limit.  To the extent required by Section
162(m) of the Code, shares subject to Awards which are canceled continue to be
counted against the Award Limit.

2.2.          Add-Back of Options and Other Rights.   If any Option,
or other right to acquire shares of Common Stock under any other Award under
the Plan, expires or is canceled without having been fully exercised, the
number of shares subject to such Option or other right but as to which such
Option or other right was not exercised prior to its expiration, cancellation
or exercise may again be optioned, granted or 

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awarded hereunder,
subject to the limitations of Section 2.1; provided, however, that the
number of shares that shall again be available for the grant of an Award
pursuant to the Plan shall be increased by two shares for each share of Common
Stock subject to a Full Value Award at the time such Full Value Award
terminates, expires, lapses or is forfeited for any reason. Furthermore, any
shares subject to Awards which are adjusted pursuant to Section 12.3 and
become exercisable with respect to shares of stock of another corporation shall
be considered cancelled and may again be optioned, granted or awarded
hereunder, subject to the limitations of Section 2.1. If any shares of
Restricted Stock are surrendered by the Holder or repurchased by the Company
pursuant to Section 7.4 or 7.5 hereof, such shares may again be optioned,
granted or awarded hereunder, subject to the limitations of Section 2.1.
To the extent exercised, the full number of shares subject to an Option or
Stock Appreciation Right shall be counted for purposes of calculating the
aggregate number of shares of Common Stock available for issuance under the
Plan as set forth in Section 2.1(a) and for purposes of calculating
the share limitation set forth in Section 2.1(b), regardless of the actual
number of shares issued or transferred upon any net exercise of an Option (in
which Common Stock is withheld to satisfy the exercise price or taxes) or upon
exercise of any Stock Appreciation Right for Common Stock or cash.
Notwithstanding the provisions of this Section 2.2, no shares of Common
Stock may again be optioned, granted or awarded if such action would cause an
Incentive Stock Option to fail to qualify as an incentive stock option under
Section 422 of the Code.

ARTICLE III.

GRANTING OF AWARDS

3.1.          Award Agreement.   Each Award shall be evidenced by an
Award Agreement. Award Agreements evidencing Awards intended to qualify as
performance-based compensation as described in
Section 162(m)(4)(C) of the Code shall contain such terms and
conditions as may be necessary to meet the applicable provisions of
Section 162(m) of the Code. Award Agreements evidencing Incentive
Stock Options shall contain such terms and conditions as may be necessary to
meet the applicable provisions of Section 422 of the Code.

3.2.          Provisions Applicable to Section 162(m) Participants.

(a)           The
Committee, in its discretion, may determine whether an Award is to qualify as
performance-based compensation as described in
Section 162(m)(4)(C) of the Code.

(b)           Notwithstanding
anything in the Plan to the contrary, the Committee may grant any Award to a
Section 162(m) Participant, including a Restricted Stock award, a
Restricted Stock Unit award, a Dividend Equivalent award, a Deferred Stock
award or a Stock Payment award, the restrictions with respect to which lapse
upon the attainment of performance goals which are related to one or more of
the Performance Criteria and any Award described in Article VIII that
vests or becomes exercisable or payable upon the attainment of performance
goals which are related to one or more of the Performance Criteria.

(c)           To
the extent necessary to comply with the performance-based compensation
requirements of Section 162(m)(4)(C) of the Code, with respect to any
Award granted under Articles VII and VIII which may be granted to one or more
Section 162(m) Participants, no later than ninety (90) days following
the commencement of any fiscal year in question or any other designated fiscal
period or period of service (or such other time as may be required or permitted
by Section 162(m) of the Code), the Committee shall, in writing,
(i) designate one or more Section 162(m) Participants,
(ii) select the Performance Criteria applicable to the fiscal year or
other designated fiscal period or period of service, (iii) establish the
various performance targets, in terms of an objective formula or standard, and
amounts of such Awards, as applicable, which may be earned for such fiscal year
or other designated fiscal period or period of service, and (iv) specify
the relationship between Performance Criteria and the performance targets and
the amounts of such Awards, as applicable, to be earned by 

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each
Section 162(m) Participant for such fiscal year or other designated
fiscal period or period of service. Following the completion of each fiscal year
or other designated fiscal period or period of service, the Committee shall
certify in writing whether the applicable performance targets have been
achieved for such fiscal year or other designated fiscal period or period of
service. In determining the amount earned by a
Section 162(m) Participant, the Committee shall have the right to
reduce (but not to increase) the amount payable at a given level of performance
to take into account additional factors that the Committee may deem relevant to
the assessment of individual or corporate performance for the fiscal year or
other designated fiscal period or period of service.

(d)           Furthermore,
notwithstanding any other provision of the Plan, any Award which is granted to
a Section 162(m) Participant and is intended to qualify as
performance-based compensation as described in
Section 162(m)(4)(C) of the Code shall be subject to any additional
limitations set forth in Section 162(m) of the Code (including any
amendment to Section 162(m) of the Code) or any regulations or
rulings issued thereunder that are requirements for qualification as
performance-based compensation as described in
Section 162(m)(4)(C) of the Code, and the Plan shall be deemed
amended to the extent necessary to conform to such requirements.

3.3.          Limitations Applicable to Section 16 Persons.   Notwithstanding
any other provision of the Plan, the Plan, and any Award granted or awarded to
any individual who is then subject to Section 16 of the Exchange Act,
shall be subject to any additional limitations set forth in any applicable
exemptive rule under Section 16 of the Exchange Act (including any
amendment to Rule 16b-3 of the Exchange Act) that are requirements
for the application of such exemptive rule. To the extent permitted by
applicable law, the Plan and Awards granted or awarded hereunder shall be
deemed amended to the extent necessary to conform to such applicable exemptive
rule.

3.4.          Consideration.   In consideration of the granting of an
Award under the Plan, the Holder shall agree, in the Award Agreement, to remain
in the employ of (or to consult for or to serve as an Independent Director of,
as applicable) the Company or any Subsidiary for a period of at least one year
(or such shorter period as may be fixed in the Award Agreement or by action of
the Administrator following grant of the Award) after the Award is granted (or,
in the case of an Independent Director, until the next annual meeting of stockholders
of the Company).

3.5.          At-Will Employment.   Nothing in the Plan or in any
Award Agreement hereunder shall confer upon any Holder any right to continue in
the employ of, or as a Consultant for, the Company or any Subsidiary, or as a
Director of the Company, or shall interfere with or restrict in any way the
rights of the Company and any Subsidiary, which are hereby expressly reserved,
to discharge any Holder at any time for any reason whatsoever, with or without
cause, except to the extent expressly provided otherwise in a written
employment agreement between the Holder and the Company and any Subsidiary.

ARTICLE IV.

GRANTING OF OPTIONS TO EMPLOYEES,

CONSULTANTS AND INDEPENDENT DIRECTORS

4.1.          Eligibility.   Any Employee or Consultant selected by
the Administrator pursuant to Section 4.4(a)(i) shall be eligible to
be granted an Option. Each Independent Director of the Company shall be
eligible to be granted Options at the times and in the manner set forth in Section 4.5.

4.2.          Disqualification for Stock Ownership.   No person may be
granted an Incentive Stock Option under the Plan if such person, at the time
the Incentive Stock Option is granted, owns stock possessing more than 10% of
the total combined voting power of all classes of stock of the Company or any
then existing Subsidiary or parent corporation (within the meaning of
Section 422 of the Code) unless such Incentive Stock Option conforms to
the applicable provisions of Section 422 of the Code.

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4.3.          Qualification of Incentive Stock Options.   No Incentive
Stock Option shall be granted to any person who is not an Employee.

4.4.          Granting of Options to Employees and Consultants.

(a)           The
Administrator shall from time to time, in its absolute discretion, and, subject
to applicable limitations of the Plan:

(i)            Determine
which Employees are key Employees and select from among the key Employees or
Consultants (including Employees or Consultants who have previously received
Awards under the Plan) such of them as in its opinion should be granted
Options;

(ii)           Subject
to the Award Limit, determine the number of shares to be subject to such
Options granted to the selected key Employees or Consultants;

(iii)          Subject
to Section 4.3, determine whether such Options are to be Incentive Stock
Options or Non-Qualified Stock Options and whether such Options are to qualify
as performance-based compensation as described in
Section 162(m)(4)(C) of the Code; and

(iv)          Determine
the terms and conditions of such Options, consistent with the Plan; provided, however, that
the terms and conditions of Options intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code shall
include, but not be limited to, such terms and conditions as may be necessary
to meet the applicable provisions of Section 162(m) of the Code.

(b)           Upon
the selection of a key Employee or Consultant to be granted an Option, the
Administrator shall instruct the Secretary of the Company to issue the Option
and may impose such conditions on the grant of the Option as it deems
appropriate.

(c)           Any
Incentive Stock Option granted under the Plan may be modified by the
Administrator, with the consent of the Holder, to disqualify such Option from
treatment as an “incentive stock option” under Section 422 of the Code.

4.5.          Granting of Options to Independent Directors.   The
Board shall from time to time, in its absolute discretion, and subject to
applicable limitations of the Plan:

(a)           Select
from among the Independent Directors (including Independent Directors who have
previously received Options under the Plan) such of them as in its opinion
should be granted Options;

(b)           Subject
to the Award Limit, determine the number of shares to be subject to such
Options granted to the selected Independent Directors; and

(c)           Determine
the terms and conditions of such Options, consistent with the Plan.

All the foregoing
Option grants authorized by this Section 4.5 are subject to stockholder
approval of the Plan.

4.6.          Options in Lieu of Cash Compensation.   Options may be
granted under the Plan to Employees and Consultants in lieu of cash bonuses
which would otherwise be payable to such Employees and Consultants, and to
Independent Directors in lieu of directors’ fees which would otherwise be
payable to such Independent Directors, pursuant to such policies which may be
adopted by the Administrator from time to time.

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ARTICLE V.

TERMS OF OPTIONS

5.1.          Option Price.   The price per share of the shares
subject to each Option granted to Employees, Independent Directors and
Consultants shall be set by the Administrator; provided,
however, that:

(a)           In
the case of Options intended to qualify as performance-based compensation as
described in Section 162(m)(4)(C) of the Code, such price shall not
be less than 100% of the Fair Market Value of a share of Common Stock on the
date the Option is granted;

(b)           In
the case of Incentive Stock Options such price shall not be less than 100% of
the Fair Market Value of a share of Common Stock on the date the Option is
granted (or the date the Option is modified, extended or renewed for purposes
of Section 424(h) of the Code);

(c)           In
the case of Incentive Stock Options granted to an individual then owning
(within the meaning of Section 424(d) of the Code) more than 10% of
the total combined voting power of all classes of stock of the Company or any
Subsidiary or parent corporation thereof (within the meaning of
Section 422 of the Code), such price shall not be less than 110% of the
Fair Market Value of a share of Common Stock on the date the Option is granted
(or the date the Option is modified, extended or renewed for purposes of
Section 424(h) of the Code); and

(d)           In
the case of Non-Qualified Stock Options, such price shall not be less than 100%
of the Fair Market Value of a share of Common Stock on the date the Option is
granted.

5.2.          Option Term.   The term of an Option granted to an
Employee, Independent Director or Consultant shall be set by the Administrator
in its discretion; provided, however, that the term shall not be more than ten
(10) years from the date the Option is granted, or five (5) years
from the date the Option is granted if the Option is an Incentive Stock Option
granted to an individual then owning (within the meaning of
Section 424(d) of the Code) more than 10% of the total combined
voting power of all classes of stock of the Company or any Subsidiary
Corporation or parent corporation thereof (as defined in
Section 424(e) of the Code). Except as limited by requirements of
Section 422 of the Code and regulations and rulings thereunder applicable
to Incentive Stock Options, the Administrator may extend the term of any
outstanding Option in connection with any Termination of Employment,
Termination of Directorship or Termination of Consultancy of the Holder, or
amend any other term or condition of such Option relating to such a Termination
of Employment, Termination of Directorship or Termination of Consultancy.

5.3.          Option Vesting.

(a)           The
period during which the right to exercise, in whole or in part, an Option
granted to an Employee, Independent Director or a Consultant vests in the Holder
shall be set by the Administrator and the Administrator may determine that an
Option may not be exercised in whole or in part for a specified period after it
is granted; provided, however,
that, unless the Administrator otherwise provides in the terms of the Award
Agreement or otherwise, no Option shall be exercisable by any Holder who is
then subject to Section 16 of the Exchange Act within the period ending
six months and one day after the date the Option is granted. At any time after
grant of an Option, the Administrator may, in its sole and absolute discretion
and subject to whatever terms and conditions it selects, accelerate the period
during which an Option granted to an Employee, Independent Director or
Consultant vests.

(b)           No
portion of an Option granted to an Employee, Independent Director or Consultant
which is unexercisable at Termination of Employment, Termination of
Directorship or Termination of Consultancy, as applicable, shall thereafter
become exercisable, except as may be otherwise provided 

 -9-
 

by the Administrator
either in the Award Agreement or by action of the Administrator following the
grant of the Option.

(c)           To
the extent that the aggregate fair market value of stock with respect to which “incentive
stock options” (within the meaning of Section 422 of the Code, but without
regard to Section 422(d) of the Code) are exercisable for the first
time by a Holder during any calendar year under the Plan, and all other plans
of the Company and any Subsidiary or parent corporation thereof, within the
meaning of Section 424 of the Code, exceeds $100,000, the Options shall be
treated as Non-Qualified Stock Options to the extent required by
Section 422 of the Code. The rule set forth in the preceding sentence
shall be applied by taking Options and other “incentive stock options” into
account in the order in which they were granted. For purposes of this
Section 5.3(c), the fair market value of stock shall be determined as of
the time the Option or other “incentive stock options” with respect to such
stock is granted.

5.4.          Substitute Awards.   Notwithstanding the foregoing
provisions of this Article V to the contrary, in the case of an Option
that is a Substitute Award, the price per share of the shares subject to such
Option may be less than the Fair Market Value per share on the date of grant, provided, that the excess of:  (a) the aggregate Fair Market Value (as
of the date such Substitute Award is granted) of the shares subject to the
Substitute Award, over (b) the aggregate exercise price thereof, does not
exceed the excess of:  (c) the
aggregate fair market value (as of the time immediately preceding the
transaction giving rise to the Substitute Award, such fair market value to be
determined by the Committee) of the shares of the predecessor entity that were
subject to the grant assumed or substituted for by the Company, over
(d) the aggregate exercise price of such shares.

5.5.          Substitution of Stock Appreciation Rights.   The
Administrator may provide in the Award Agreement evidencing the grant of an
Option that the Administrator, in its sole discretion, shall have the right to
substitute a Stock Appreciation Right for such Option at any time prior to or
upon exercise of such Option, subject to the provisions of Section 9.2; provided, that such Stock Appreciation Right shall be
exercisable with respect to the same number of shares of Common Stock for which
such substituted Option would have been exercisable and at the Option exercise
price per share.

ARTICLE VI.

EXERCISE OF OPTIONS

6.1.          Partial Exercise.   An exercisable Option may be
exercised in whole or in part. However, an Option shall not be exercisable with
respect to fractional shares and the Administrator may require that, by the
terms of the Option, a partial exercise be with respect to a minimum number of
shares.

6.2.          Manner of Exercise.   All or a portion of an exercisable
Option shall be deemed exercised upon delivery of all of the following to the
Secretary of the Company, or such other person or entity designated by the
Board, or his, her or its office, as applicable:

(a)           A
written notice complying with the applicable rules established by the
Administrator stating that the Option, or a portion thereof, is exercised. The
notice shall be signed by the Holder or other person then entitled to exercise
the Option or such portion of the Option;

(b)           Such
representations and documents as the Administrator, in its absolute discretion,
deems necessary or advisable to effect compliance with all applicable
provisions of the Securities Act and any other federal or state securities laws
or regulations. The Administrator may, in its absolute discretion, also take
whatever additional actions it deems appropriate to effect such compliance
including, without limitation, placing legends on share certificates and
issuing stop-transfer notices to agents and registrars;

 -10-
 

(c)           In
the event that the Option shall be exercised pursuant to Section 12.1 by
any person or persons other than the Holder, appropriate proof of the right of
such person or persons to exercise the Option; and

(d)           Full
cash payment to the Secretary of the Company for the shares with respect to
which the Option, or portion thereof, is exercised. However, the Administrator
may, in its discretion, (i)  allow payment, in whole or in part, through
the delivery of shares of Common Stock which have been owned by the Holder for
at least six months, duly endorsed for transfer to the Company with a Fair
Market Value on the date of delivery equal to the aggregate exercise price of
the Option or exercised portion thereof; (ii) allow payment, in whole or
in part, through the surrender of shares of Common Stock then issuable upon
exercise of the Option having a Fair Market Value on the date of Option
exercise equal to the aggregate exercise price of the Option or exercised
portion thereof; (iii) allow payment, in whole or in part, through the
delivery of property of any kind which constitutes good and valuable
consideration; (iv) allow payment, in whole or in part, through the
delivery of a notice that the Holder has placed a market sell order with a
broker with respect to shares of Common Stock then issuable upon exercise of
the Option, and that the broker has been directed to pay a sufficient portion
of the net proceeds of the sale to the Company in satisfaction of the Option
exercise price, provided, that payment of such
proceeds is then made to the Company upon settlement of such sale; or
(v) allow payment through any combination of the consideration provided in
the foregoing paragraphs (i), (ii), (iii) and (iv); provided,
however, that the payment in the manner
prescribed in the preceding paragraphs shall not be permitted to the extent
that the Administrator determines that payment in such manner shall result in
an extension or maintenance of credit, an arrangement for the extension of
credit, or a renewal or an extension of credit in the form of a personal loan
to or for any Director or executive officer of the Company that is prohibited
by Section 13(k) of the Exchange Act or other applicable law.

6.3.          Conditions to Issuance of Stock Certificates.   The
Company shall not be required to issue or deliver any certificate or
certificates for shares of stock purchased upon the exercise of any Option or
portion thereof prior to fulfillment of all of the following conditions:

(a)           The
admission of such shares to listing on all stock exchanges on which such class
of stock is then listed;

(b)           The
completion of any registration or other qualification of such shares under any
state or federal law, or under the rulings or regulations of the Securities and
Exchange Commission or any other governmental regulatory body which the
Administrator shall, in its absolute discretion, deem necessary or advisable;

(c)           The
obtaining of any approval or other clearance from any state or federal governmental
agency which the Administrator shall, in its absolute discretion, determine to
be necessary or advisable;

(d)           The
lapse of such reasonable period of time following the exercise of the Option as
the Administrator may establish from time to time for reasons of administrative
convenience; and

(e)           The
receipt by the Company of full payment for such shares, including payment of
any applicable withholding tax, which in the discretion of the Administrator
may be in the form of consideration used by the Holder to pay for such shares
under Section 6.2(d).

6.4.          Rights as Stockholders.   Holders shall not be, nor have
any of the rights or privileges of, stockholders of the Company in respect of
any shares purchasable upon the exercise of any part of an Option unless and
until certificates representing such shares have been issued by the Company to
such Holders.

 -11-
 

6.5.          Ownership and Transfer Restrictions.   The
Administrator, in its absolute discretion, may impose such restrictions on the
ownership and transferability of the shares purchasable upon the exercise of an
Option as it deems appropriate. Any such restriction shall be set forth in the
respective Award Agreement and may be referred to on the certificates
evidencing such shares. The Holder shall give the Company prompt notice of any
disposition of shares of Common Stock acquired by exercise of an Incentive
Stock Option within (a) two years from the date of granting (including the
date the Option is modified, extended or renewed for purposes of Section 424(h) of
the Code) such Option to such Holder, or (b) one year after the transfer
of such shares to such Holder.

6.6.          Additional Limitations on Exercise of Options.   Holders
may be required to comply with any timing or other restrictions with respect to
the settlement or exercise of an Option, including a window-period limitation,
as may be imposed in the discretion of the Administrator.

ARTICLE VII.

AWARD OF RESTRICTED STOCK

7.1.          Eligibility.   Subject to the Award Limit, Restricted
Stock may be awarded to any Employee whom the Administrator determines is a key
Employee, or any Independent Director or any Consultant, whom the Administrator
determines should receive such an Award.

7.2.          Award of Restricted Stock.

(a)           The Administrator may from time to
time, in its absolute discretion:

(i)            Determine
which Employees are key Employees, and select from among the key Employees,
Independent Directors or Consultants (including Employees, Independent
Directors or Consultants who have previously received other Awards under the
Plan) such of them as in its opinion should be awarded Restricted Stock; and

(ii)           Determine
the purchase price, if any, and other terms and conditions applicable to such
Restricted Stock, consistent with the Plan.

(b)           The
Administrator shall establish the purchase price, if any, and form of payment
for Restricted Stock; provided, however, that such purchase price shall be no less than the
par value of the Common Stock to be purchased, unless otherwise permitted by
applicable state law. In all cases, legal consideration shall be required for
each issuance of Restricted Stock.

(c)           Upon
the selection of an Employee, Independent Director or Consultant to be awarded
Restricted Stock, the Administrator shall instruct the Secretary of the Company
to issue such Restricted Stock and may impose such conditions on the issuance
of such Restricted Stock as it deems appropriate.

7.3.          Rights as Stockholders.   Subject to Section 7.4,
upon delivery of the shares of Restricted Stock to the escrow holder pursuant
to Section 7.7, the Holder shall have, unless otherwise provided by the
Administrator, all the rights of a stockholder with respect to said shares,
subject to the restrictions in his or her Award Agreement, including the right
to receive all dividends and other distributions paid or made with respect to
the shares; provided, however,
that, in the discretion of the Administrator, any dividends or distributions
with respect to the Common Stock shall be subject to the restrictions set forth
in Section 7.4.

7.4.          Restriction.   All shares of Restricted Stock issued
under the Plan (including any shares received by Holders thereof with respect
to shares of Restricted Stock as a result of stock dividends, stock splits or
any other form of recapitalization) shall, in the terms of each individual
Award Agreement, be subject to such restrictions as the Administrator shall
provide, which restrictions may include, without limitation, restrictions
concerning voting rights and transferability and restrictions based on duration
of employment, directorship or consultancy with the Company, or any Subsidiary,
or any parent thereof, Company 

 -12-
 

performance and
individual performance, or any one or more of the Performance Criteria or other
specific performance criteria determined appropriate by the Administrator; provided, however, that,
unless the Administrator otherwise provides in the terms of the Award Agreement
or otherwise, no share of Restricted Stock granted to a person subject to
Section 16 of the Exchange Act shall be sold, assigned or otherwise
transferred until at least six months and one day have elapsed from the date on
which the Restricted Stock was issued; and, provided, further, that, except with respect to shares of Restricted
Stock granted to Section 162(m) Participants, by action taken after
the Restricted Stock is issued, the Administrator may, on such terms and
conditions as it may determine to be appropriate, remove any or all of the
restrictions imposed by the terms of the Award Agreement. Restricted Stock may
not be sold or encumbered until all restrictions are terminated or expire. If
no consideration was paid by the Holder upon issuance, a Holder’s rights in
unvested Restricted Stock shall lapse, and such Restricted Stock shall be
surrendered to the Company without consideration, upon Termination of
Employment, Termination of Directorship, or Termination of Consultancy, as
applicable; provided, however,
that the Administrator in its sole and absolute discretion may provide that
such rights shall not lapse in the event of a Termination of Employment,
Termination of Directorship or Termination of Consultancy, as applicable,
following a “change of ownership or control” (within the meaning of Treasury
Regulation Section 1.162-27(e)(2)(v) or any successor
regulation thereto) of the Company or because of the Holder’s death or
disability; and, provided, further,
except with respect to shares of Restricted Stock granted to
Section 162(m) Participants that is intended to qualify as
performance-based compensation as described in Section 162(m)(4)(C) of
the Code, the Administrator in its sole and absolute discretion may provide
that no such lapse or surrender shall occur in the event of a Termination of
Employment, Termination of Directorship, or Termination of Consultancy,  as applicable, without cause or following any
Change in Control  or because of the Holder’s
retirement, or otherwise.

7.5.          Repurchase of Restricted Stock.   The Administrator
shall provide in the terms of each individual Award Agreement that the Company
shall have the right to repurchase from the Holder the Restricted Stock then
subject to restrictions under the Award Agreement immediately upon a
Termination of Employment, Termination of Directorship, or Termination of
Consultancy, as applicable, at a cash price per share equal to the price paid
by the Holder for such Restricted Stock; provided, however, that the Administrator in its sole and absolute
discretion may provide that no such right of repurchase shall exist in the
event of a Termination of Employment, Termination of Directorship or
Termination of Consultancy, as applicable, following a “change of ownership or
control” (within the meaning of Treasury Regulation Section 1.162-27(e)(2)(v) or
any successor regulation thereto) of the Company or because of the Holder’s death
or disability; and, provided, further, that, except with respect to shares of Restricted
Stock granted to Section 162(m) Participants that is intended to
qualify as performance-based compensation as described in
Section 162(m)(4)(C) of the Code, the Administrator in its sole and
absolute discretion may provide that no such right of repurchase shall exist in
the event of a Termination of Employment, Termination of Directorship, or
Termination of Consultancy, as applicable, without cause or following any Change
in Control or because of the Holder’s retirement, or otherwise.

7.6.          Escrow.   The Secretary of the Company or such other
escrow holder as the Administrator may appoint shall retain physical custody of
each certificate representing Restricted Stock until all of the restrictions
imposed under the Award Agreement with respect to the shares evidenced by such
certificate expire or shall have been removed.

7.7.          Legend.   In order to enforce the restrictions imposed
upon shares of Restricted Stock hereunder, the Administrator shall cause a
legend or legends to be placed on certificates representing all shares of
Restricted Stock that are still subject to restrictions under Award Agreements,
which legend or legends shall make appropriate reference to the conditions
imposed thereby.

7.8.          Section 83(b) Election.   If a Holder makes an
election under Section 83(b) of the Code, or any successor section
thereto, to be taxed with respect to the Restricted Stock as of the date of
transfer of 

 -13-
 

the Restricted Stock
rather than as of the date or dates upon which the Holder would otherwise be
taxable under Section 83(a) of the Code, the Holder shall deliver a
copy of such election to the Company immediately after filing such election
with the Internal Revenue Service.

ARTICLE VIII.

DIVIDEND EQUIVALENTS, DEFERRED STOCK, STOCK PAYMENTS, 

RESTRICTED STOCK UNITS

8.1.          Eligibility.   Subject to the Award Limit, one or more
Dividend Equivalent awards, Deferred Stock awards, Stock Payment awards, and/or
Restricted Stock Unit awards may be granted to any Employee whom the
Administrator determines is a key Employee, or any Independent Director or any
Consultant, whom the Administrator determines should receive such an Award.

8.2.          Dividend Equivalents.

(a)           Any
key Employee, Independent Director or Consultant selected by the Administrator
may be granted Dividend Equivalents based on the dividends declared on the
Common Stock, to be credited as of dividend payment dates, during the period
between the date a Stock Appreciation Right, Deferred Stock award, or
Restricted Stock Unit award is granted, and the date such Stock Appreciation
Right, Deferred Stock award, or Restricted Stock Unit award vests, is
exercised, is distributed, terminates or expires, as determined by the
Administrator. Such Dividend Equivalents shall be converted to cash or
additional shares of Common Stock by such formula and at such time and subject
to such limitations as may be determined by the Administrator.

(b)           Any
Holder of an Option who is an Employee, Independent Director or Consultant
selected by the Administrator may be granted Dividend Equivalents based on the
dividends declared on the Common Stock, to be credited as of dividend payment
dates, during the period between the date an Option is granted, and the date
such Option vests, is exercised, terminates or expires, as determined by the
Administrator. Such Dividend Equivalents shall be converted to cash or
additional shares of Common Stock by such formula and at such time and subject
to such limitations as may be determined by the Administrator.

(c)           Dividend
Equivalents granted with respect to Options intended to be qualified
performance-based compensation for purposes of Section 162(m) of the
Code shall be payable, with respect to pre-exercise periods, regardless of
whether such Option is subsequently exercised.

8.3.          Stock Payments.   Any key Employee, Independent Director
or Consultant selected by the Administrator may receive Stock Payments in the
manner determined from time to time by the Administrator. The number of shares
shall be determined by the Administrator and may be based upon the Performance
Criteria or other specific performance criteria determined appropriate by the
Administrator, determined on the date such Stock Payment is made or on any date
thereafter.

8.4.          Deferred Stock.   Any key Employee, Independent Director
or Consultant selected by the Administrator may be granted an award of Deferred
Stock in the manner determined from time to time by the Administrator. The
number of shares of Deferred Stock shall be determined by the Administrator and
may be based upon the Performance Criteria or other specific performance
criteria determined to be appropriate by the Administrator, in each case on a
specified date or dates or over any period or periods determined by the
Administrator. Common Stock underlying a Deferred Stock award shall not be
issued until the Deferred Stock award shall have vested, pursuant to a vesting
schedule or performance criteria set by the Administrator. The Administrator
shall specify the distribution dates applicable to each Deferred Stock award
which shall be no earlier than the vesting dates or events of the award and may
be determined at the election of the Employee, Independent Director or
Consultant. Unless otherwise provided by the Administrator, a Holder of
Deferred Stock shall have no rights as a Company stockholder 

 -14-
 

with respect to such
Deferred Stock until such time as the Award has vested and the Common Stock
underlying the Award has been issued.

8.5.          Restricted Stock Units.   Any key Employee, Independent
Director or Consultant selected by the Administrator may be granted an award of
Restricted Stock Units in the manner determined from time to time by the
Administrator. The Administrator is authorized to make awards of Restricted
Stock Units in such amounts and subject to such terms and conditions as
determined by the Administrator. The Administrator shall specify the date or
dates on which the Restricted Stock Units shall become fully vested and
nonforfeitable, and may specify such conditions to vesting as it deems
appropriate, and may  specify that such
Restricted Stock Units become fully vested and nonforfeitable pursuant to the
satisfaction of one or more Performance Goals or other specific performance
goals as the Administrator determines to be appropriate at the time of the
grant of the Restricted Stock Units or thereafter, in each case on a specified
date or dates or over any period or periods determined by the Administrator.
The Administrator shall specify the distribution dates applicable to each award
of Restricted Stock Units which shall be no earlier than the vesting dates or
events of the award and may be determined at the election of the Employee,
Independent Director or Consultant. On the distribution dates, the Company
shall issue to the Participant one unrestricted, fully transferable share of
Common Stock for each Restricted Stock Unit distributed. The Administrator
shall specify the purchase price, if any, to be paid by the Employee,
Independent Director or Consultant to the Company for such shares of Common
Stock to be distributed pursuant to the Restricted Stock Unit award.

8.6.          Term.   The term of a Dividend Equivalent award,
Deferred Stock award, Stock Payment award and/or Restricted Stock Unit award
shall be set by the Administrator in its discretion.

8.7.          Exercise or Purchase Price.   The Administrator may
establish the exercise or purchase price of shares of Deferred Stock, shares
distributed as a Stock Payment award or shares distributed pursuant to a
Restricted Stock Unit award; provided, however, that such price shall not be less than the par
value of a share of Common Stock, unless otherwise permitted by applicable
state law.

8.8.          Exercise upon Termination of Employment, Termination of Consultancy or
Termination of Directorship.   A Dividend Equivalent award,
Deferred Stock award, Stock Payment award and/or Restricted Stock Unit award is
exercisable or distributable only while the Holder is an Employee, Consultant
or Independent Director, as applicable; provided, however, that the Administrator in its sole and absolute
discretion may provide that the Dividend Equivalent award, Deferred Stock
award, Stock Payment award and/or Restricted Stock Unit award may be exercised
or distributed subsequent to a Termination of Employment, Termination of
Directorship or Termination of Consultancy following a “change of control or
ownership” (within the meaning of Section 1.162-27(e)(2)(v) or
any successor regulation thereto) of the Company.

8.9.          Form of Payment.   Payment of the amount determined
under Section 8.2 above shall be in cash, in Common Stock or a combination
of both, as determined by the Administrator. To the extent any payment under
this Article VIII is effected in Common Stock, it shall be made subject to
satisfaction of all provisions of Section 6.3.

ARTICLE IX.

STOCK APPRECIATION RIGHTS

9.1.          Grant of Stock Appreciation Rights.   A Stock
Appreciation Right may be granted to any key Employee, Independent Director or
Consultant selected by the Administrator. A Stock Appreciation Right may be
granted:  (a) in connection and
simultaneously with the grant of an Option, (b) with respect to a
previously granted Option, or (c) independent of an Option. A Stock
Appreciation Right shall be subject to such terms and conditions not
inconsistent with the Plan as the Administrator shall impose and shall be
evidenced by an Award Agreement.

 -15-
 

9.2.          Coupled Stock Appreciation Rights.

(a)           A
Coupled Stock Appreciation Right (“CSAR”) shall be
related to a particular Option and shall be exercisable only when and to the
extent the related Option is exercisable.

(b)           A
CSAR may be granted to the Holder for no more than the number of shares subject
to the simultaneously or previously granted Option to which it is coupled.

(c)           A
CSAR shall entitle the Holder (or other person entitled to exercise the Option
pursuant to the Plan) to surrender to the Company unexercised a portion of the
Option to which the CSAR relates (to the extent then exercisable pursuant to
its terms) and to receive from the Company in exchange therefor an amount
determined by multiplying the difference obtained by subtracting the Option
exercise price from the Fair Market Value of a share of Common Stock on the
date of exercise of the CSAR by the number of shares of Common Stock with
respect to which the CSAR shall have been exercised, subject to any limitations
the Administrator may impose.

9.3.          Independent Stock Appreciation Rights.

(a)           An Independent Stock Appreciation Right (“ISAR”) shall be unrelated to any Option and shall have a
term set by the Administrator provided, however, that the term shall not
be more than ten (10) years from the date the ISAR is granted. An ISAR
shall be exercisable in such installments as the Administrator may determine. An ISAR shall cover such
number of shares of Common Stock as the Administrator may determine; provided,
however, that unless the Administrator otherwise provides in the terms of the
ISAR or otherwise, no ISAR granted to a person subject to Section 16 of
the Exchange Act shall be exercisable until at least six months have elapsed
from (but excluding) the date on which the Option was granted. The exercise
price per share of Common Stock subject to each ISAR shall be set by the
Administrator; provided, that such exercise price per share shall not be less
than 100% of the Fair Market Value of a share of Common Stock on the date the
ISAR is granted. An ISAR is exercisable only while the Holder is an Employee,
Independent Director or Consultant; provided, that the Administrator may
determine that the ISAR may be exercised subsequent to Termination of
Employment, Termination of Directorship or Termination of Consultancy without
cause, or following a Change in Control of the Company, or because of the
Holder’s retirement, death or disability, or otherwise.

(b)           An
ISAR shall entitle the Holder (or other person entitled to exercise the ISAR
pursuant to the Plan) to exercise all or a specified portion of the ISAR (to
the extent then exercisable pursuant to its terms) and to receive from the
Company an amount determined by multiplying the difference obtained by
subtracting the exercise price per share of the ISAR from the Fair Market Value
of a share of Common Stock on the date of exercise of the ISAR by the number of
shares of Common Stock with respect to which the ISAR shall have been
exercised, subject to any limitations the Administrator may impose.

9.4.          Payment and Limitations on Exercise.

(a)           Payment
of the amounts determined under Section 9.2(c) and 9.3(b) above
shall be in cash, in Common Stock (based on its Fair Market Value as of the
date the Stock Appreciation Right is exercised) or a combination of both, as
determined by the Administrator. To the extent such payment is effected in
Common Stock it shall be made subject to satisfaction of all provisions of
Section 6.3 above pertaining to Options.

(b)           Holders
of Stock Appreciation Rights may be required to comply with any timing or other
restrictions with respect to the settlement or exercise of a Stock Appreciation
Right, including a window-period limitation, as may be imposed in the
discretion of the Administrator.

 -16-
 

ARTICLE X.

COMPLIANCE WITH SECTION 409A OF THE CODE

10.1.        Awards subject to Code Section 409A.   Any Award
that constitutes, or provides for, a deferral of compensation subject to
Section 409A of the Code (a “Section 409A Award”)
shall satisfy the requirements of Section 409A of the Code and this
Article X, to the extent applicable. The Award Agreement with respect to a
Section 409A Award shall incorporate the terms and conditions required by
Section 409A of the Code and this Article X.

10.2.        Distributions under a Section 409A Award.

(a)           Subject
to subsection (b), any shares of Common Stock, cash or other property or
amounts to be paid or distributed upon the grant, issuance, vesting, exercise
or payment of a Section 409A Award shall be distributed in accordance with
the requirements of Section 409A(a)(2) of the Code, and shall not be
distributed earlier than:

(i)            the
Holder’s separation from service, as determined by the Secretary of the
Treasury,

(ii)           the
date the Holder becomes disabled,

(iii)          the
Holder’s death,

(iv)          a
specified time (or pursuant to a fixed schedule) specified under the Award
Agreement at the date of the deferral of such compensation,

(v)           to
the extent provided by the Secretary of the Treasury, a change in the ownership
or effective control of the Company or a Subsidiary, or in the ownership of a
substantial portion of the assets of the Company or a Subsidiary, or

(vi)          the
occurrence of an unforeseeable emergency with respect to the Holder.

(b)           In
the case of a Holder who is a specified employee, the requirement of paragraph
(a)(i) shall be met only if the distributions with respect to the
Section 409A Award may not be made before the date which is six months
after the Holder’s separation from service (or, if earlier, the date of the
Holder’s death). For purposes of this subsection (b), a Holder shall be a
specified employee if such Holder is a key employee (as defined in
Section 416(i) of the Code without regard to paragraph
(5) thereof) of a corporation any stock of which is publicly traded on an
established securities market or otherwise, as determined under
Section 409A(a)(2)(B)(i) of the Code and the Treasury Regulations
thereunder.

(c)           The
requirement of paragraph (a)(vi) shall be met only if, as determined under
Treasury Regulations under Section 409A(a)(2)(B)(ii) of the Code, the
amounts distributed with respect to the unforeseeable emergency do not exceed
the amounts necessary to satisfy such unforeseeable emergency plus amounts
necessary to pay taxes reasonably anticipated as a result of the distribution,
after taking into account the extent to which such unforeseeable emergency is
or may be relieved through reimbursement or compensation by insurance or
otherwise or by liquidation of the Holder’s assets (to the extent the
liquidation of such assets would not itself cause severe financial hardship).

(d)           For
purposes of this Section, the terms specified therein shall have the respective
meanings ascribed thereto under Section 409A of the Code and the Treasury
Regulations thereunder.

10.3.        Prohibition on Acceleration of Benefits.   The time or
schedule of any distribution or payment of any shares of Common Stock, cash or
other property or amounts under a Section 409A Award shall not be
accelerated, except as otherwise permitted under
Section 409A(a)(3) of the Code and the Treasury Regulations
thereunder.

 -17-
 

10.4.        Elections under
Section 409A Awards.

(a)           Any deferral election provided under
or with respect to an Award to any Employee, Independent Director or
Consultant, or to the Holder of a Section 409A Award, shall satisfy the
requirements of Section 409A(a)(4)(B) of the Code, to the extent
applicable, and, except as otherwise permitted under paragraph (i) or
(ii), any such deferral election with respect to compensation for services
performed during a taxable year shall be made not later than the close of the
preceding taxable year, or at such other time as provided in Treasury
Regulations.

(i)            In
the case of the first year in which an Employee, Independent Director or
Consultant, or the Holder, becomes eligible to participate in the Plan, any
such deferral election may be made with respect to services to be performed
subsequent to the election with thirty (30) days after the date the Employee,
Independent Director or Consultant, or the Holder, becomes eligible to
participate in the Plan, as provided under
Section 409A(a)(4)(B)(ii) of the Code.

(ii)           In
the case of any performance-based compensation based on services performed by
an Employee, Independent Director or Consultant, or the Holder, over a period
of at least twelve (12) months, any such deferral election may be made no later
than six months before the end of the period, as provided under
Section 409A(a)(4)(B)(iii) of the Code.

(b)           In
the event that a Section 409A Award permits, under a subsequent election
by the Holder of such Section 409A Award, a delay in a distribution or
payment of any shares of Common Stock, cash or other property or amounts under
such Section 409A Award, or a change in the form of distribution or
payment, such subsequent election shall satisfy the requirements of
Section 409A(a)(4)(C) of the Code, and:

(i)            such
subsequent election may not take effect until at least twelve (12) months after
the date on which the election is made,

(ii)           in
the case such subsequent election relates to a distribution or payment not
described in Section 10.2(a)(ii), (iii) or (vi), the first payment
with respect to such election may be deferred for a period of not less than
five years from the date such distribution or payment otherwise would have been
made, and

(iii)          in
the case such subsequent election relates to a distribution or payment
described in Section 10.2(a)(iv), such election may not be made less than
twelve (12) months prior to the date of the first scheduled distribution or
payment under Section 10.2(a)(iv).

10.5.        Compliance in Form and Operation.   A
Section 409A Award, and any election under or with respect to such
Section 409A Award, shall comply in form and operation with the
requirements of Section 409A of the Code and the Treasury Regulations
thereunder.

ARTICLE XI.

ADMINISTRATION

11.1.        Compensation Committee.   The Compensation Committee (or
another committee or a subcommittee of the Board assuming the functions of the
Committee under the Plan) shall consist solely of two or more Independent
Directors appointed by and holding office at the pleasure of the Board, each of
whom is both a “non-employee director” as defined by Rule 16b-3 and
an “outside director” for purposes of Section 162(m) of the Code.
Appointment of Committee members shall be effective upon acceptance of appointment.
Committee members may resign at any time by delivering written notice to the
Board. Vacancies in the Committee may be filled by the Board.

 -18-
 

11.2.        Duties and Powers of Committee.   It shall be the duty
of the Committee to conduct the general administration of the Plan in
accordance with its provisions. The Committee shall have the power to interpret
the Plan and the Award Agreements, and to adopt such rules for the
administration, interpretation and application of the Plan as are consistent
therewith, to interpret, amend or revoke any such rules and to amend any
Award Agreement provided that the rights or obligations of the Holder of the
Award that is the subject of any such Award Agreement are not affected
adversely. Any such grant or award under the Plan need not be the same with
respect to each Holder. Any such interpretations and rules with respect to
Incentive Stock Options shall be consistent with the provisions of Section 422
of the Code. In its absolute discretion, the Board may at any time and from
time to time exercise any and all rights and duties of the Committee under the
Plan except with respect to matters which under Rule 16b-3 or
Section 162(m) of the Code, or any regulations or rules issued
thereunder, are required to be determined in the sole discretion of the
Committee. Notwithstanding the foregoing, the full Board, acting by a majority
of its members in office, shall conduct the general administration of the Plan
with respect to Awards granted to Independent Directors.

11.3.        Majority Rule; Unanimous Written Consent.   The
Committee shall act by a majority of its members in attendance at a meeting at
which a quorum is present or by a memorandum or other written instrument signed
by all members of the Committee.

11.4.        Compensation; Professional Assistance; Good Faith Actions.   Members
of the Committee shall receive such compensation, if any, for their services as
members as may be determined by the Board. All expenses and liabilities which
members of the Committee incur in connection with the administration of the
Plan shall be borne by the Company. The Committee may, with the approval of the
Board, employ attorneys, consultants, accountants, appraisers, brokers or other
persons. The Committee, the Company and the Company’s officers and Directors
shall be entitled to rely upon the advice, opinions or valuations of any such
persons. All actions taken and all interpretations and determinations made by
the Committee or the Board in good faith shall be final and binding upon all
Holders, the Company and all other interested persons. No members of the
Committee or Board shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or Awards, and all
members of the Committee and the Board shall be fully protected by the Company
in respect of any such action, determination or interpretation.

11.5.        Delegation of Authority to Grant Awards.   The Committee
may, but need not, delegate from time to time some or all of its authority to
grant Awards under the Plan to a committee consisting of one or more members of
the Committee or of one or more officers of the Company, to the extent
permitted by applicable state law; provided, however, that the Committee may not delegate its authority
to grant Awards to individuals: 
(a) who are subject on the date of the grant to the reporting
rules under Section 16(a) of the Exchange Act, (b) who are
Section 162(m) Participants, or (c) who are officers of the
Company who are delegated authority by the Committee hereunder. Any delegation
hereunder shall be subject to the restrictions and limits that the Committee
specifies at the time of such delegation of authority and may be rescinded at
any time by the Committee. At all times, any committee appointed under this
Section 11.5 shall serve in such capacity at the pleasure of the
Committee.

ARTICLE XII.

MISCELLANEOUS PROVISIONS

12.1.        Transferability of Awards.

(a)           Except
as otherwise provided in Section 12.1(b):

(i)            No
Award under the Plan may be sold, pledged, assigned or transferred in any
manner other than by will or the laws of descent and distribution or, subject
to the consent of the Administrator, pursuant to a DRO, unless and until such
Award has been exercised, or the shares 

 -19-
 

underlying such Award
have been issued, and all restrictions applicable to such shares have lapsed;

(ii)           No
Option, Restricted Stock award, Deferred Stock award, Stock Appreciation Right,
Dividend Equivalent  award, Stock Payment
award, or Restricted Stock Unit award, or any interest or right therein, shall
be liable for the debts, contracts or engagements of the Holder or his
successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or any other means
whether such disposition be voluntary or involuntary or by operation of law by
judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect, except to the extent that such disposition
is permitted by the preceding sentence; and

(iii)          During
the lifetime of the Holder, only the Holder may exercise an Option or other
Award (or any portion thereof) granted to him under the Plan, unless it has
been disposed of pursuant to a DRO; after the death of the Holder, any
exercisable portion of an Option or other Award may, prior to the time when
such portion becomes unexercisable under the Plan or the applicable Award
Agreement, be exercised by his personal representative or by any person
empowered to do so under the deceased Holder’s will or under the then
applicable laws of descent and distribution.

(b)           Notwithstanding
Section 12.1(a), the Administrator, in its sole discretion, may determine
to permit a Holder to transfer a Non-Qualified Stock Option to any one or more
Permitted Transferees (as defined below), subject to the following terms and
conditions:  (i) a Non-Qualified
Stock Option transferred to a Permitted Transferee shall not be assignable or
transferable by the Permitted Transferee other than by will or the laws of
descent and distribution; (ii) any Non-Qualified Stock Option which is
transferred to a Permitted Transferee shall continue to be subject to all the
terms and conditions of the Non-Qualified Stock Option as applicable to the
original Holder (other than the ability to further transfer the Non-Qualified
Stock Option); and (iii) the Holder and the Permitted Transferee shall
execute any and all documents requested by the Administrator, including,
without limitation documents to (A) confirm the status of the transferee
as a Permitted Transferee, (B) satisfy any requirements for an exemption
for the transfer under applicable federal and state securities laws and
(C) evidence the transfer. For purposes of this Section 12.1(b), “Permitted Transferee” shall mean, with respect to a Holder,
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 relationships, any person sharing the Holder’s household (other than a
tenant or employee), a trust in which these persons (or the Holder) control the
management of assets, and any other entity in which these persons (or the
Holder) own more than fifty percent of the voting interests, or any other
transferee specifically approved by the Administrator after taking into account
any state or federal tax or securities laws applicable to transferable
Non-Qualified Stock Options.

12.2.        Amendment, Suspension or Termination of the Plan.   Except
as otherwise provided in this Section 12.2, the Plan may be wholly or
partially amended or otherwise modified, suspended or terminated at any time or
from time to time by the Board. However, without approval of the Company’s
stockholders given within twelve (12) months before or after the action by the
Board, no action of the Board may, except as provided in Section 12.3,
(i) increase the limits imposed in Section 2.1 on the maximum number
of shares which may be issued under the Plan, or the maximum number of shares
which may be granted or issued as Restricted Stock awards, Restricted Stock
Unit awards, Dividend Equivalent awards, Deferred Stock awards, or Stock
Payment awards, (ii) expand the classes of persons to whom Awards may be
granted under the Plan, or (iii) decrease 
the exercise price of any outstanding Option or Stock Appreciation Right
granted under the Plan. No amendment, suspension or termination of the Plan
shall, 

 -20-
 

without the consent of
the Holder, alter or impair any rights or obligations under any Award
theretofore granted or awarded, unless the Award itself otherwise expressly so
provides. No Awards may be granted or awarded during any period of suspension
or after termination of the Plan, and in no event may any Award be granted under
the Plan after the first to occur of the following events:

(a)           The expiration of ten (10) years from the date
this second amendment and restatement of the Plan is adopted by the Board; or

(b)           The
expiration of ten (10) years from the date this second amendment and
restatement of the Plan is approved by the Company’s stockholders under
Section 12.4.

12.3.        Changes in Common Stock or Assets of the Company, Acquisition or
Liquidation of the Company and Other Corporate Events.

(a)           Subject
to Section 12.3(e), in the event that the Administrator determines that
any dividend or other distribution (whether in the form of cash, Common Stock,
other securities or other property), recapitalization, reclassification, stock
split, reverse stock split, reorganization, merger, consolidation, split-up,
spin-off, combination, repurchase, liquidation, dissolution, or sale,
transfer, exchange or other disposition of all or substantially all of the
assets of the Company, or exchange of Common Stock or other securities of the Company,
issuance of warrants or other rights to purchase Common Stock or other
securities of the Company, or other similar corporate transaction or event
affects the Common Stock, then the Administrator shall equitably adjust any or
all of the following in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the Plan or
with respect to an Award:

(i)            The
number and kind of shares of Common Stock (or other securities or property)
with respect to which Awards may be granted or awarded (including, but not
limited to, adjustments of the limitations in Section 2.1 on the maximum
number and kind of shares which may be issued under the Plan, and the maximum
number and kind of shares which may be granted or issued as Restricted Stock
awards, Restricted Stock Unit awards, Dividend Equivalent awards, Deferred
Stock awards or Stock Payment awards, adjustments of the Award Limit, and
adjustments of the manner in which shares subject to Full Value Awards will be
counted);

(ii)           The
number and kind of shares of Common Stock (or other securities or property)
subject to outstanding Awards; and

(iii)          The
grant or exercise price with respect to any Award.

(b)           Subject
to Sections 12.3(c) and 12.3(e), in the event of any transaction or event
described in Section 12.3(a) or any unusual or nonrecurring
transactions or events affecting the Company, any affiliate of the Company, or
the financial statements of the Company or any affiliate, or of changes in
applicable laws, regulations or accounting principles, the Administrator, in
its sole and absolute discretion, and on such terms and conditions as it deems
appropriate, either by the terms of the Award or by action taken prior to the
occurrence of such transaction or event and either automatically or upon the
Holder’s request, is hereby authorized to take any one or more of the following
actions whenever the Administrator determines that such action is appropriate
in order to prevent dilution or enlargement of the benefits or potential
benefits intended to be made available under the Plan or with respect to any
Award under the Plan, to facilitate such transactions or events or to give
effect to such changes in laws, regulations or principles:

(i)            To
provide for either the purchase of any such Award for an amount of cash equal
to the amount that could have been attained upon the exercise of such Award or
realization of the Holder’s rights had such Award been currently exercisable or
payable or fully vested or the 

 -21-
 

replacement of such Award
with other rights or property selected by the Administrator in its sole
discretion;

(ii)           To
provide that the Award cannot vest, be exercised or become payable after such
event;

(iii)          To
provide that such Award shall be exercisable as to all shares covered thereby,
notwithstanding anything to the contrary in Section 5.3 or the provisions
of such Award;

(iv)          To
provide that such Award be assumed by the successor or survivor corporation, or
a parent or subsidiary thereof, or shall be substituted for by similar options,
rights or awards covering the stock of the successor or survivor corporation,
or a parent or subsidiary thereof, with appropriate adjustments as to the
number and kind of shares and prices; and

(v)           To
make adjustments in the number and type of shares of Common Stock (or other
securities or property) subject to outstanding Awards, and/or in the terms and
conditions of (including the grant, exercise or purchase price), and the
criteria included in, outstanding options, rights and awards and options,
rights and awards which may be granted in the future.

(vi)          To
provide that, for a specified period of time prior to such event, the
restrictions imposed under an Award Agreement upon some or all shares of
Restricted Stock, Restricted Stock Units or Deferred Stock may be terminated,
and, in the case of Restricted Stock, some or all shares of such Restricted
Stock may cease to be subject to repurchase under Section 7.5 or
forfeiture under Section 7.4 after such event.

(c)           Notwithstanding
any other provision of the Plan, in the event of a Change in Control, each
outstanding Award shall remain outstanding, or shall be assumed or an
equivalent award substituted by the successor corporation, or a parent or
subsidiary of the successor corporation. In the event that the successor
corporation, or a parent or subsidiary of the successor corporation, with
respect to the Change in Control transaction refuses to assume or substitute
for the Award, the Holder shall have the right to exercise the Award as to all
of the shares subject thereto, including shares as to which such Award
otherwise would not be exercisable, and the Holder shall have the right to vest
in, and received a distribution of, such Award, with respect to all of the shares
subject thereto. If an Award becomes exercisable in lieu of assumption or
substitution by the successor corporation, or a parent or subsidiary
corporation, with respect to a Change in Control transaction, the Administrator
shall notify the Holder that the Award shall be fully exercisable for a period
of not less than fifteen (15) days from the date of such notice prior to the
Change in Control transaction, and the Award shall terminate upon the
expiration of such period. For purposes of this Section 12.3(c), the Award
shall be assumed, or an equivalent award shall be substituted for such Award,
if, following the Change in Control transaction, the Award or substituted award
confers on the Holder the right to purchase or receive, for each share subject to
the Award immediately prior to the Change in Control transaction, the
consideration (whether in stock, cash, or other securities or property, or a
combination thereof) received or to be received for each share of Common Stock
in the Change in Control transaction on the effective date of the Change in
Control transaction (and if holders of shares of Common Stock were offered a
choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding shares of Common Stock); provided,
however, that, if such consideration
received in the Change in Control transaction was not solely common stock of
the successor corporation or its parent, the Administrator may, with the
consent of the successor corporation or its parent, provide for the
consideration to be received upon the exercise, vesting or distribution of the
assumed Award or substituted award, for each share subject to the Award, to be
solely common stock of the successor corporation or its parent equal in fair
market value to the per share consideration received by the holders of Common
Stock in the Change in Control transaction.

 -22-
 

(d)           Subject
to Sections 12.3(e), 3.2 and 3.3, the Administrator may, in its discretion,
include such further provisions and limitations in any Award or Award Agreement
as it may deem equitable and in the best interests of the Company.

(e)           With
respect to Awards which are granted to Section 162(m) Participants
and are intended to qualify as performance-based compensation under
Section 162(m)(4)(C), no adjustment or action described in this
Section 12.3 or in any other provision of the Plan shall be authorized to
the extent that such adjustment or action would cause such Award to fail to so
qualify under Section 162(m)(4)(C), or any successor provisions thereto.
No adjustment or action described in this Section 12.3 or in any other
provision of the Plan shall be authorized to the extent that such adjustment or
action would cause the Plan to violate Section 422(b)(1) of the Code.
Furthermore, no such adjustment or action shall be authorized to the extent
such adjustment or action would result in short-swing profits liability under
Section 16 or violate the exemptive conditions of Rule 16b-3
unless the Administrator determines that the Award is not to comply with such
exemptive conditions. The number of shares of Common Stock subject to any Award
shall always be rounded to the next whole number.

(f)            Notwithstanding
the foregoing, in the event that the Company becomes a party to a transaction
that is intended to qualify for “pooling of interests” accounting treatment
and, but for one or more of the provisions of this Plan or any Award Agreement
would so qualify, then this Plan and any Award Agreement shall be interpreted
so as to preserve such accounting treatment, and to the extent that any
provision of the Plan or any Award Agreement would disqualify the transaction
from pooling of interests accounting treatment (including, if applicable, an
entire Award Agreement), then such provision shall be null and void. All
determinations to be made in connection with the preceding sentence shall be
made by the independent accounting firm whose opinion with respect to “pooling
of interests” treatment is required as a condition to the Company’s
consummation of such transaction.

(g)           The
existence of the Plan, the Award Agreement and the Awards granted hereunder
shall not affect or restrict in any way the right or power of the Company or
the shareholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company’s capital
structure or its business, any merger or consolidation of the Company, any
issue of stock or of options, warrants or rights to purchase stock or of bonds,
debentures, preferred or prior preference stocks whose rights are superior to
or affect the Common Stock or the rights thereof or which are convertible into
or exchangeable for Common Stock, or the dissolution or liquidation of the
company, or any sale or transfer of all or any part of its assets or business,
or any other corporate act or proceeding, whether of a similar character or
otherwise.

(h)           No
action shall be taken under this Section 12.3 which shall cause an Award
to fail to comply with Section 409A of the Code or the Treasury
Regulations thereunder, to the extent applicable to such Award.

12.4.        Approval of Plan by Stockholders.   The Plan will be
submitted for the approval of the Company’s stockholders within twelve (12)
months after the date of the Board’s initial adoption of the Plan. Awards may
be granted or awarded prior to such stockholder approval, provided,
that such Awards shall not be exercisable nor shall such Awards vest prior to
the time when the Plan is approved by the stockholders, and provided  further, that
if such approval has not been obtained at the end of said twelve-month period,
all Awards previously granted or awarded under the Plan shall thereupon be
canceled and become null and void. In addition, if the Board determines that
Awards other than Options or Stock Appreciation Rights which may be granted to
Section 162(m) Participants should continue to be eligible to qualify
as performance-based compensation under Section 162(m)(4)(C) of the
Code, the Performance Criteria must be disclosed to and approved by the Company’s
stockholders no later than the first 

 -23-
 

stockholder meeting that
occurs in the fifth year following the year in which the Company’s stockholders
previously approved the Plan, as amended and restated to include the
Performance Criteria.

12.5.        Tax Withholding.   The Company shall be entitled to
require payment in cash or deduction from other compensation payable to each
Holder of any sums required by federal, state or local tax law to be withheld
with respect to the grant, issuance, vesting, exercise or payment of any Award.
The Administrator may in its discretion and in satisfaction of the foregoing
requirement allow such Holder to elect to have the Company withhold shares of
Common Stock otherwise issuable under such Award (or allow the return of shares
of Common Stock) having a Fair Market Value equal to the sums required to be
withheld. Notwithstanding any other provision of the Plan, the number of shares
of Common Stock which may be withheld with respect to the issuance, vesting,
exercise or payment of any Award (or which may be repurchased from the Holder
of such Award within six months after such shares of Common Stock were acquired
by the Holder from the Company) in order to satisfy the Holder’s federal and
state income and payroll tax liabilities with respect to the issuance, vesting,
exercise or payment of the Award shall be limited to the number of shares which
have a Fair Market Value on the date of withholding or repurchase equal to the
aggregate amount of such liabilities based on the minimum statutory withholding
rates for federal and state tax income and payroll tax purposes that are
applicable to such supplemental taxable income.

12.6.        Prohibition on Repricing.   Subject to
Section 12.3, the Administrator shall not, without the approval of the
stockholders of the Company, authorize the amendment of any outstanding Award
to reduce its price per share. Furthermore, no Award shall be canceled and
replaced with the grant of an Award having a lesser price per share without the
further approval of stockholders of the Company.

12.7.        Forfeiture Provisions.   Pursuant to its general
authority to determine the terms and conditions applicable to Awards and the
Award Agreements under the Plan, the Administrator shall have the right to
provide, in the terms of Awards made under the Plan, or to require a Holder to agree
by separate written instrument, that: 
(a)(i) any proceeds, gains or other economic benefit actually or
constructively received by the Holder upon any receipt or exercise of the
Award, or upon the receipt or resale of any Common Stock underlying the Award,
must be paid to the Company, and (ii) the Award shall terminate and any
unexercised portion of the Award (whether or not vested) shall be forfeited, if
(b)(i) a Termination of Employment, Termination of Directorship or  Termination of Consultancy occurs prior to a
specified date, or within a specified time period following receipt or exercise
of the Award, or (ii) the Holder at any time, or during a specified time
period, engages in any activity in competition with the Company, or which is
inimical, contrary or harmful to the interests of the Company, as further
defined by the Administrator or (iii) the Holder incurs a Termination of
Employment, Termination of Directorship or Termination of Consultancy for “cause”
(as such term is defined in the sole and absolute discretion of the Committee,
or as set forth in a written agreement relating to such Award between the
Company and the Holder).

12.8.        Effect of Plan upon Options and Compensation Plans.   The
adoption of the Plan shall not affect any other compensation or incentive plans
in effect for the Company or any Subsidiary. Nothing in the Plan shall be
construed to limit the right of the Company: 
(a) to establish any other forms of incentives or compensation for
Employees, Directors or Consultants of the Company or any Subsidiary, or
(b) to grant or assume options or other rights or awards otherwise than
under the Plan in connection with any proper corporate purpose including but
not by way of limitation, the grant or assumption of options in connection with
the acquisition by purchase, lease, merger, consolidation or otherwise, of the
business, stock or assets of any corporation, partnership, limited liability
company, firm or association.

12.9.        Compliance with Laws.   The Plan, the granting and
vesting of Awards under the Plan and the issuance and delivery of shares of
Common Stock and the payment of money under the Plan or under Awards granted or
awarded hereunder are subject to compliance with all applicable federal and
state laws, rules and regulations (including but not limited to state and
federal securities law and federal margin 

 -24-
 

requirements) and to such
approvals by any listing, regulatory or governmental authority as may, in the
opinion of counsel for the Company, be necessary or advisable in connection
therewith. Any securities delivered under the Plan shall be subject to such restrictions,
and the person acquiring such securities shall, if requested by the Company,
provide such assurances and representations to the Company as the Company may
deem necessary or desirable to assure compliance with all applicable legal
requirements. To the extent permitted by applicable law, the Plan and Awards
granted or awarded hereunder shall be deemed amended to the extent necessary to
conform to such laws, rules and regulations.

12.10.       Titles.   Titles
are provided herein for convenience only and are not to serve as a basis for
interpretation or construction of the Plan.

12.11.       Governing Law.   The Plan and any agreements hereunder
shall be administered, interpreted and enforced under the internal laws of the
State of California without regard to conflicts of laws thereof.

*  *  *

I hereby certify that the foregoing amendment and
restatement of the Plan was duly adopted by the Board of Directors of Watson
Pharmaceuticals, Inc. on March 23, 2007.

Executed on this 4th
day of May, 2007.

	
  

  	
  /s/ David A. Buchen

  
	
   

  	
  Secretary

  

 

*  *  *

I hereby certify that the foregoing amendment and
restatement of the Plan was approved by the stockholders of Watson
Pharmaceuticals, Inc. on May 4, 2007.

Executed on this 4th
day of May, 2007.

	
  

  	
  /s/ David A. Buchen

  
	
   

  	
  Secretary

  

 

 

 -25-Exhibit
10 (a)

Name

Address
1

Address 2

Dear                         :

The
Empire District Electric Company

2006 Stock Incentive Plan (the “Plan”)

Form
of Notice of Award of Dividend Equivalents

This is to advise you that effective as of January
31, 2007 (the “Grant Date”), The Empire District Electric Company (“the Company”)
has granted to you dividend equivalents as set forth in this Award (the “Dividend
Equivalents”) subject to the conditions and terms herein stated and the
applicable terms and conditions of the Plan (copy attached). The Dividend
Equivalents covered by this Award relate to the Non-Qualified Stock Option
Award dated [            ]
made to you under the Plan (the “Related Option”) granting you the right to
purchase                             
shares of Common Stock of the Company (“Stock”) subject to the terms and
conditions of that award and the applicable terms and conditions of the
Plan.  This Award is intended to be a
Restricted Stock Award within the meaning of the Plan and constitutes a
separate arrangement from the Related Option.

1.             Dividend Equivalents. 
You are
hereby granted the right to receive a number of shares of Stock on the terms
and conditions hereinafter set forth. 
During the period from the Grant Date to the earlier of:  (i) the Conversion Date (as hereinafter
defined) or (ii) the date on which your employment terminates for any reason,
there shall be credited to an account (“Account”) established on the books of
the Company Dividend Equivalents in an amount equal to the dividends that would
have been payable to you if you owned the number of shares of Stock covered by
the Related Option.  No interest or
earnings will be credited on such Dividend Equivalents.  the “Conversion Date” shall be the earlier of
(i) [           ], 2010, or (ii) the date
of a Change in Control of the Company. 
if your employment terminates other than by reason of a Designated
Termination (as defined in Section 12 below) before the Conversion Date, you
will forfeit the entire amount credited to your Account and will have no right
to any benefits under this Award.  If you
either (i) continue in employment with the Company and its Subsidiaries through
the Conversion Date or (ii) terminate employment before the Conversion Date by
reason of a Designated Termination (as defined in Section 12 below), then as of
the Conversion Date, your Account will be converted into a number of shares of
Stock determined by dividing the amount credited to your Account by the Fair
Market Value (as defined in the Plan) of a share of Stock on the Conversion
Date (disregarding fractions of a share).

2.             Payment of Stock.  In the event of the conversion of your Account into shares of
Stock pursuant to the provisions of Section 1 above, a certificate for the
shares of Stock to which you

become entitled will be
delivered to you or, in the event of your death, to the person or persons
determined pursuant to Section 3 below, as of the Conversion Date.

3.             Heirs and Successors.  This Award shall be binding
upon, and inure to the benefit of, the Company and its successors and assigns,
and upon any person acquiring, whether by merger, consolidation, purchase of
assets or otherwise, all or substantially all of the Company’s assets and
business.  If any of the benefits
distributable to you under this Award have not been distributed at the time of
your death, such benefits shall be distributed to your Designated Beneficiary,
in accordance with the provisions of this Award and the Plan.  The “Designated Beneficiary” shall be the
beneficiary or beneficiaries designated by you in a writing filed with the
Committee in such form and at such time as the Committee shall require.  If you are deceased and failed to designate a
beneficiary, or if the Designated Beneficiary does not survive you, any benefits
distributable to you shall be distributed to the legal representative of your
estate.  If you are deceased and have
designated a beneficiary and the Designated Beneficiary survives you but dies
before the complete distribution of benefits to the Designated Beneficiary
under this award, then any benefits distributable to the Designated Beneficiary
shall be distributed to the legal representative of the estate of the
Designated Beneficiary.

4.             Administration.  The authority to manage and
control the operation and administration of this Award shall be vested in the
Committee identified in the Plan, and the Committee shall have all of the
powers with respect to this Award that it has with respect to the Plan.  Any interpretation of the Award by the
Committee and any decision made by it with respect to the Award are final and
binding on all persons.

5.             Amendment.  This Award may be amended
by written agreement between you and the Company, without the consent of any
other person.

6.             Nontransferability.  This Award shall not be
transferable except by will or the laws of descent and distribution or by
beneficiary designation in accordance with Section 3 above.

7.             Taxes.  The Company shall be
entitled to withhold the amount of any withholding tax payable with respect to
the Award and to sell such number of shares of Stock as may be necessary to
produce the amount so required to be withheld, unless the recipient supplies to
the Company cash in the amount requested by the Company for the purpose.

8.             Employee and Shareholder
Status.  This Award
does not constitute a contract of continued service and does not give you the
right to be retained as an employee of the Company or any of its Subsidiaries.
This Award does not confer upon you or any other holder thereof any right as a
shareholder of the Company prior to the issuance of shares of Stock pursuant to
this Award.

9.             Plan Governs.  Notwithstanding anything in
this Award to the contrary, the terms of this Award shall be subject to the
terms of the Plan.

10.          Unsecured Creditor.  Your rights with respect to
the Award and the shares of Stock subject thereto prior to the delivery of a
certificate for shares of Stock pursuant to Section 2 above are those of an
unsecured general creditor of the Company. 
No shares of Stock or other specific property is or will be set apart in
trust or otherwise with respect to the Award but all of your rights in the
award will be evidenced only by entries on the books of the Company unless and
until shares of Stock are actually issued to you, your beneficiary or your
estate pursuant to the Award.

 2
 

11.          Rules Relating to Termination of
Employment.  For
purposes of this Award, the date of termination of your employment shall be the
first day occurring on or after the Grant Date on which you are not employed by
the Company or any Subsidiary, regardless of the reason for the termination of
employment; provided that a termination of employment shall not be
deemed to occur by reason of a transfer of you between the Company and a
Subsidiary or between two Subsidiaries; and further  provided that
your employment shall not be considered terminated while you are on a leave of
absence from the Company or a Subsidiary approved by your employer.  If, as a result of a sale or other
transaction, your employer ceases to be a Subsidiary (and your employer is or
becomes an entity that is separate from the Company), and you are not, at the
end of the 30-day period following the transaction, employed by the Company or
an entity that is then a Subsidiary, then, the occurrence of such transaction
shall be treated as the date of termination of your employment caused by you
being discharged by the employer.

12.          Definitions.  For purposes of this Award,
the terms used in this Award shall have the following meanings:

(i)            Cause.  A termination of employment
for “Cause” means any termination of your employment by the Company or any of
its Subsidiaries for (i) serious, willful misconduct in respect of your
obligations to the Company or its Subsidiaries, which has caused demonstrable
and serious injury to the Company or any of its Subsidiaries, monetary or
otherwise, as evidenced by a determination in a binding and final judgment,
order or decree of a court or administrative agency of competent jurisdiction,
in effect after exhaustion or lapse of all rights of appeal, in an action, suit
or proceeding, whether civil, criminal, administrative or investigative; (ii)
conviction of a felony, which has caused demonstrable and serious injury to the
Company or any of its Subsidiaries, monetary or otherwise, as evidenced by a
binding and final judgment, order, or decree of a court of competent
jurisdiction, in effect after exhaustion or lapse of all rights of appeal; or
(iii) your willful and continual failure to substantially perform your duties
for the Company or any of its Subsidiaries (other than resulting from your
incapacity due to physical or mental illness) which failure continued for a
period of at least thirty (30) days after a written notice of demand for
substantial performance has been delivered to you specifying the manner in
which you have failed to substantially perform.

(ii)           Change
in Control.  A “Change
in Control” of the Company shall mean “a change in the ownership or effective
control” of the Company, or “in the ownership of a substantial portion of the
assets” of the Company, within the meaning of Section 409A of the Internal
Revenue Code of 1986, as amended, and Treasury regulations and Internal Revenue
Service guidance thereunder.

(iii)         Designated
Termination.  “Designated
Termination” means the termination of your employment with the Company and its
Subsidiaries by reason of your death, Retirement, Disability, involuntary
termination by the Company and its Subsidiaries without Cause or voluntary
termination by you with the consent of the Committee.

(iv)          Disability.  Except as otherwise
provided by the Committee, “Disability” means the determination by the
Committee, in its sole discretion, that a permanent and total disability exists
in accordance with uniform and non-discriminatory standards adopted by the
Committee from time to time.

(v)            Retirement.  “Retirement” means your
retirement on an “Early Retirement Date”

 3
 

or on or after your “Normal Retirement Date,” as those terms are
defined in The Empire District Electric Company Employees’ Retirement Plan.

(vi)          Plan
Definitions. Except where the context clearly implies or
indicates the contrary, a word, term, or phrase used in the Plan is similarly
used in this Award.

Please acknowledge receipt of this Notice of Award
by signing and returning to the Secretary of the Company the enclosed copy
thereof, together with a completed and signed beneficiary designation form.

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Chairman of the
  Plan Committee

  
	
   

  	
   

  
	
   

  	
   

  
	
  Receipt of the
  foregoing Award of Dividend

  	
   

  
	
  Equivalents is
  hereby acknowledged. My

  	
   

  
	
  signed
  beneficiary designation form is attached.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Name

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date

  	
   

  

 

 4

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