Document:

<PAGE>

                                                                    Exhibit 10.1

                                 AMENDMENT NO. 1

               AMENDMENT NO. 1 dated as of August 1, 2001 in respect of the
Five-Year Credit Agreement dated as of April 12, 1999 (as modified and
supplemented and in effect on the date hereof, the "Credit Agreement") between
                                                    ----------------
HEARST-ARGYLE TELEVISION, INC., a corporation duly organized and validly
existing under the laws of the State of Delaware (the "Borrower"), the lenders
                                                       --------
party thereto (individually, a "Lender" and, collectively, the "Lenders") and
                                ------                          -------
THE CHASE MANHATTAN BANK, as Administrative Agent (in such capacity, the
"Administrative Agent"). Terms defined in the Credit Agreement are used herein
 --------------------
as defined therein.

               The Borrower has requested that the Administrative Agent consent
to certain amendments to the Credit Agreement. The Administrative Agent,
pursuant to authority granted by, and having obtained all necessary consents of,
the Required Lenders (as defined in the Credit Agreement), has agreed to such
amendments and, accordingly, the parties hereto hereby agree as follows:

               Section 1. Amendments. Subject to the satisfaction of the
                          ----------
conditions set forth in Section 2 hereof, the Credit Agreement shall be amended
as follows:

               A. The aggregate amount of the Lenders' Revolving Commitments
shall be reduced on the date hereof to $750,000,000.

               B. Paragraph (a) of Section 6.10 of the Credit Agreement shall be
amended to read in its entirety as follows:

               "(a) Leverage Ratio. The Borrower will not permit the Leverage
                    --------------
     Ratio to exceed the following respective ratios at any time during the
     following respective periods:

               Period                                           Ratio
               ------                                           -----

         From August 15, 2001
          through June 29, 2003                                5.50 to 1

         From June 30, 2003
          through December 30, 2003                            5.00 to 1

         From December 31, 2003
          and at all times thereafter                          4.50 to 1"

<PAGE>

                                      -2-

               C. Paragraph (b) of Section 6.10 of the Credit Agreement shall be
amended to read in its entirety as follows:

               "(b) Interest Coverage Ratio. The Borrower will not permit the
                    -----------------------
     Interest Coverage Ratio to be less than (i) 2.00 to 1 as at the last day of
     any fiscal quarter ending on or before the fiscal quarter ending March 31,
     2003 and (ii) 2.50 to 1 as at the last day of any fiscal quarter
     thereafter."

               Section 2. Conditions. The amendment to the Credit Agreement set
                          ----------
forth in Section 1 hereof shall become effective, as of the date hereof, upon
(i) the execution of this Amendment No. 1 by the Borrower and the Administrative
Agent, and (ii) the payment to each Lender that authorizes the Administrative
Agent to execute this Amendment No. 1 no later than 5 p.m. New York time on or
prior to August 14, 2001 (or such later date to which the Borrower shall agree),
of an amendment fee in an amount equal to 0.125% of the Commitment of such
Lender as reduced on the date hereof.

               Section 3. Miscellaneous. Except as expressly herein provided,
                          -------------
the Credit Agreement shall remain unchanged and in full force and effect. This
Amendment No. 1 may be executed in any number of counterparts, all of which
taken together shall constitute one and the same amendatory instrument and any
of the parties hereto may execute this Amendment No. 1 by signing any such
counterpart. This Amendment No. 1 shall be governed by, and construed in
accordance with, the law of the State of New York.

               IN WITNESS WHEREOF, the parties hereto have caused this Amendment
No. 1 to be duly executed as of the day and year first above written.

                                            BORROWER
                                            --------

                                            HEARST-ARGYLE TELEVISION, INC.

                                            By /s/ Harry T. Hawks
                                            ----------------------------------
                                            Title: Executive Vice President and
                                                   Chief Financial Officer

                                            ADMINISTRATIVE AGENT
                                            --------------------

                                            THE CHASE MANHATTAN BANK,
                                            as Administrative Agent

                                            By Peter B. Thauer
                                            -----------------------------------
                                            Title: Vice President<PAGE>

                                                                     EXHIBIT 4.1

                                  TELLIUM, INC.

                        SPECIAL 2001 STOCK INCENTIVE PLAN

                                   as adopted

                               November 12, 2001

<PAGE>

                                  TELLIUM, INC.
                        SPECIAL 2001 STOCK INCENTIVE PLAN

         1. Purpose.
            -------

         The purpose of this Plan is to strengthen Tellium, Inc., a Delaware
corporation (the "Company"), by providing an incentive to certain of its
employees thereby encouraging them to devote their abilities and industry to the
success of the Company's business enterprise. It is intended that this purpose
be achieved by extending to certain of its employees (including certain of its
future employees who have received a formal written offer of employment) of the
Company and its Subsidiaries an added long-term incentive for high levels of
performance and unusual efforts through the grant of Incentive Stock Options,
Nonqualified Stock Options, Stock Appreciation Rights, Dividend Equivalent
Rights, Performance Units and Performance Shares, Share Awards, Phantom Stock
and Restricted Stock (as each term is herein defined).

         2. Definitions.
            -----------

         For purposes of the Plan:

            2.1 "Adjusted Fair Market Value" means, in the event of a Change in
                 --------------------------
Control, the greater of (a) the highest price per Share paid to holders of the
Shares in any transaction (or series of related transactions) constituting or
resulting in a Change in Control other than pursuant to Section 2.10(b) or (b)
the highest Fair Market Value of a Share during the ninety (90) day period
ending on the date of the Change in Control.

            2.2 "Affiliate" means, with respect to any Person, any other Person
                 ---------
that, directly or indirectly through one or more intermediaries, controls, or is
controlled by, or under common control with, such Person. Any Relative (for this
purpose, "Relative" means a spouse, child, stepchild, parent, parent of spouse,
sibling or grandchild) of an individual shall be deemed to be an Affiliate of
such individual for purposes hereof. Neither the Company nor any Person
controlled by the Company shall be deemed to be an Affiliate of any holder of
Company stock.

            2.3 "Agreement" means the written agreement between the Company and
                 ---------
an Optionee or Grantee evidencing the grant of an Option or Award and setting
forth the terms and conditions thereof.

            2.4 "Award" means a grant of Restricted Stock, Phantom Stock, a
                 -----
Stock Appreciation Right, a Performance Award, a Dividend Equivalent Right, a
Share Award, or any or all of them.

            2.5 "Beneficial Ownership" means ownership within the meaning of
                 --------------------
Rule 13d-3 promulgated under the Exchange Act.

<PAGE>

            2.6 "Beneficiary" means an individual, trust or estate who or which,
                 -----------
by a written designation of the Optionee or Grantee filed with the Company or by
operation of law succeeds to the rights and obligations of the Optionee or
Grantee under the Plan and an Agreement upon the Optionee's or Grantee's death.

            2.7 "Board" means the Board of Directors of the Company.
                 -----

            2.8 "Cause" means:
                 -----

                (a) in the case of an Optionee or Grantee whose employment with
the Company or a Subsidiary is, as the date of the applicable Agreement, subject
to the terms of an employment agreement between such Optionee or Grantee and the
Company or a Subsidiary, which employment agreement includes a definition of
"Cause," the term "Cause" as used in this Plan or any Agreement shall have the
meaning set forth in such employment agreement during the period that such
employment agreement remains in effect; or

                (b) in all other cases, the term "Cause" as used in this Plan or
any Agreement shall mean (i) willfully failing to perform reasonably assigned
duties within thirty (30) days after having received written notice from the
Company to do so, (ii) dishonesty or willful misconduct in the performance of
duties, (iii) involvement in a transaction in connection with the performance of
duties to the Company or any of its Subsidiaries which transaction is adverse to
the interests of the Company or any of its Subsidiaries and which is engaged in
for personal profit or (iv) willful violation of any law, rule or regulation
(other than traffic violations or similar offenses) in connection with the
performance of duties.

           2.9  "Change in Capitalization" means any increase or reduction in
                 ------------------------
the number of Shares, or any change (including, without limitation, in the case
of a spin-off, dividend or other distribution in respect of Shares, a change in
value) in the Shares or exchange of Shares for a different number or kind of
shares or other securities of the Company or another corporation, by reason of a
reclassification, recapitalization, merger, consolidation, reorganization,
spin-off, split-up, issuance of warrants or rights or debentures, stock
dividend, stock split or reverse stock split, cash dividend, property dividend,
combination or exchange of shares, repurchase of shares, change in corporate
structure or a substantially similar transaction.

           2.10 "Change in Control" shall mean the occurrence of any of the
                 -----------------
following:

                 (a)  An acquisition (other than directly from the Company) of
any Voting Securities of the Company by any Person, immediately after which such
Person has Beneficial Ownership of fifty percent (50%) or more of the then
outstanding Shares or the combined voting power of the Company's then
outstanding Voting

<PAGE>

Securities, provided, however, in determining whether a Change in Control has
occurred pursuant to this Section 2.10(a), Shares or Voting Securities which are
acquired in a "Non-Control Acquisition" (as hereinafter defined) shall not
constitute an acquisition which would cause a Change in Control. A "Non-Control
Acquisition" shall mean an acquisition by (i) an employee benefit plan (or a
trust forming a part thereof) maintained by (A) the Company or (B) any
corporation or other Person of which a majority of its voting power or its
voting equity securities or equity interest is owned, directly or indirectly, by
the Company (for purposes of this definition, a "Related Entity"), (ii) the
Company or any Related Entity, or (iii) any Person in connection with a
"Non-Control Transaction" (as hereinafter defined);

            (b) The individuals who, as of the date hereof, are members of the
Board (the "Incumbent Board"), cease for any reason to constitute at least a
majority of the members of the Board, or following a Merger (as defined in
paragraph (c)(i) below) which results in a Parent corporation, the board of
directors of the ultimate Parent Corporation (as defined in paragraph (c)(i)(A)
below); provided, however, that if the election, or nomination for election by
the Company `s common stockholders, of any new director was approved by a vote
of at least two-thirds of the Incumbent Board, such new director shall, for
purposes of this Plan, be considered as a member of the Incumbent Board;
provided further, however, that no individual shall be considered a member of
the Incumbent Board if such individual initially assumed office as a result of
either an actual or threatened "Election Contest" (as described in Rule 14a-11
promulgated under the Exchange Act) or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than the Board (a
"Proxy Contest") including by reason of any agreement intended to avoid or
settle any Election Contest or Proxy Contest; or

            (c) The consummation of:

                (i) A merger, consolidation or reorganization with or into the
Company or in which securities of the Company are issued (a "Merger"), unless
such Merger is a "Non-Control Transaction." A "Non-Control Transaction" shall
mean a Merger where:

                    (A) the stockholders of the Company, immediately before such
Merger own directly or indirectly immediately following such Merger at least
fifty percent (50%) of the combined voting power of the outstanding voting
securities of (x) the corporation resulting from such Merger (the "Surviving
Corporation") if fifty percent (50%) or more of the combined voting power of the
then outstanding voting securities of the Surviving Corporation is not
Beneficially Owned, directly or indirectly by another Person (a "Parent
Corporation"), or (y) if there are one or more Parent Corporations, the ultimate
Parent Corporation; and

<PAGE>

                          (B) the individuals who were members of the Incumbent
Board immediately prior to the execution of the agreement providing for such
Merger constitute at least a majority of the members of the board of directors
of (x) the Surviving Corporation, if there is no Parent Corporation, or (y) if
there are one or more Parent Corporations, the ultimate Parent Corporation; and

                          (C) no Person other than (1) the Company, (2) any
Related Entity, (3) any employee benefit plan (or any trust forming a part
thereof) that, immediately prior to such Merger was maintained by the Company or
any Related Entity, or (4) any Person who, together with its Affiliates,
immediately prior to such Merger, had Beneficial Ownership of fifty percent
(50%) or more of the then outstanding Voting Securities or Shares, owns,
together with its Affiliates, Beneficial Ownership of (i) fifty percent (50%) or
more of the combined voting power of the outstanding voting securities or common
stock of (x) the Surviving Corporation if there is no Parent Corporation, or (y)
if there are one or more Parent Corporations, the ultimate Parent Corporation.

                    (ii)  A complete liquidation or dissolution of the Company;
or

                    (iii) The sale or other disposition of all or substantially
all of the assets of the Company to any Person (other than a transfer to a
Related Entity or under conditions that would constitute a Non-Control
Transaction with the disposition of the assets being regarded as a Merger for
this purpose or the distribution to the Company's stockholders of the stock of a
Related Entity or any other assets).

      Notwithstanding the foregoing, a Change in Control shall not be deemed to
occur solely because any Person (the "Subject Person") acquired Beneficial
Ownership of more than the permitted amount of the then outstanding Shares or
Voting Securities as a result of the acquisition of Shares or Voting Securities
by the Company which, by reducing the number of Shares or Voting Securities then
outstanding, increases the proportional number of shares Beneficially Owned by
the Subject Persons, provided that if a Change in Control would occur (but for
the operation of this sentence) as a result of the acquisition of Shares or
Voting Securities by the Company, and (1) before such share acquisition by the
Company the Subject Person becomes the Beneficial Owner of any new or additional
Shares or Voting Securities in contemplation of such share acquisition by the
Company or (2) after such share acquisition by the Company the Subject Person
becomes the Beneficial Owner of any new or additional Shares or Voting
Securities which in either case increases the percentage of the then outstanding
Shares or Voting Securities Beneficially Owned by the Subject Person, then a
Change in Control shall occur.

            2.11 "Code" means the Internal Revenue Code of 1986, as amended.
                  ----

<PAGE>

                  2.12 "Committee" means a committee, as described in Section
                        ---------
3.1, appointed by the Board from time to time to administer the Plan and to
perform the functions set forth herein.

                  2.13 "Company" means Tellium, Inc.
                        -------

                  2.14 "Director" means a director of the Company.
                        --------

                  2.15 "Disability" means:
                        ----------

                       (a) in the case of an Optionee or Grantee whose
employment with the Company or a Subsidiary is, as of the date of the applicable
Agreement, subject to the terms of an employment agreement between such Optionee
or Grantee and the Company or a Subsidiary, which employment agreement includes
a definition of "Disability," the term "Disability" as used in this Plan or any
Agreement shall have the meaning set forth in such employment agreement during
the period that such employment agreement remains in effect; or

                       (b) in all other cases, the term "Disability" as used in
this Plan or any Agreement shall mean a physical or mental infirmity which
impairs the Optionee's or Grantee's ability to perform substantially his or her
duties for a period of one hundred eighty (180) consecutive days.

                  2.16 "Disability Date" means the date which is one hundred
                        ---------------
eighty (180) consecutive days after the date on which an Optionee or Grantee is
first absent from active employment with the Company by reason of a Disability.

                  2.17 "Dividend Equivalent Right" means a right to receive all
                        -------------------------
or some portion of the cash dividends that are or would be payable with respect
to Shares.

                  2.18 "Division"  means any of the  operating  units or
                        --------
divisions of the Company  designated  as a Division by the Committee.

                  2.19 "Eligible Individual" means any of the following
                        -------------------
individuals who is designated by the Committee as eligible to receive Options or
Awards subject to the conditions set forth herein: (a) any employee of the
Company or a Subsidiary, or (b) any individual to whom the Company or a
Subsidiary has extended a formal, written offer of employment.

                  2.20 "Exchange Act" means the Securities Exchange Act of 1934,
                        ------------
as amended.

                  2.21 "Fair Market Value" on any date means the closing
                        -----------------
price at the close of the primary trading session of the Shares on such date on
the principal national securities exchange on which such Shares are listed or
admitted to trading, or, if such Shares are not so listed or admitted to
trading,

<PAGE>

the closing price at the close of the primary trading session of the Shares on
such date as quoted on the Nasdaq Stock Market or such other market in which
such prices are regularly quoted, or, if there has been no such closing price
with respect to Shares on such date, the Fair Market Value shall be the value
established by the Committee in good faith and, in the case of an Incentive
Stock Option, in accordance with Section 422 of the Code.

          2.22 "Grantee" means a person to whom an Award has been granted under
                -------
the Plan.

          2.23 "Incentive Stock Option" means an Option satisfying the
                ----------------------
requirements of Section 422 of the Code and designated by the Committee as an
Incentive Stock Option.

          2.24 "Initial Public Offering" means the consummation of the first
                -----------------------
public offering of Shares pursuant to a registration statement (other than a
Form S-8 or successor forms) filed with, and declared effective by, the
Securities and Exchange Commission.

          2.25 "Nonemployee Director" means a director of the Company who is a
                --------------------
"nonemployee director" within the meaning of Rule 16b-3 promulgated under the
Exchange Act.

          2.26 "Nonqualified Stock Option" means an Option which is not an
                -------------------------
Incentive Stock Option.

          2.27 "Normal Retirement Date" means the date on which an Optionee or
                ----------------------
Grantee terminates active employment with the Company on or after attainment of
age 65, but does not include termination by the Company for Cause.

          2.28 "Option" means a Nonqualified Stock Option, an Incentive Stock
                ------
Option, or both of them.

          2.29 "Optionee" means a person to whom an Option has been granted
                --------
under the Plan.

          2.30 "Outside Director" means a director of the Company who is an
                ----------------
"outside director" within the meaning of Section 162(m) of the Code and the
regulations promulgated thereunder.

          2.31 "Parent" means any corporation which is a parent corporation
                ------
(within the meaning of Section 424(e) of the Code) with respect to the Company.

          2.32 "Performance Awards" means Performance Units, Performance Shares
                ------------------
or either or both of them.

<PAGE>

          2.33 "Performance-Based Compensation" means any Option or Award that
                ------------------------------
is intended to constitute "performance based compensation" within the meaning of
Section 162(m)(4)(C) of the Code and the regulations promulgated thereunder.

          2.34 "Performance Cycle" means the time period specified by the
                -----------------
Committee at the time Performance Awards are granted during which the
performance of the Company, a Subsidiary or a Division will be measured.

          2.35 "Performance Objectives" has the meaning set forth in Section 10.
                ----------------------

          2.36 "Performance Shares" means Shares issued or transferred to an
                ------------------
Eligible Individual under Section 10.

          2.37 "Performance Units" means Performance Units granted to an
                -----------------
Eligible Individual under Section 10.

          2.38 "Person" means 'person' as such term is used for purposes of
                ------
Section 13(d) or 14(d) of the Exchange Act, including without limitation, any
individual, corporation, limited liability company, partnership, trust,
unincorporated organization, government or any agency or political subdivision
thereof, or any other entity or any group of Persons.

          2.39 "Phantom Stock" means a right granted to an Eligible Individual
                -------------
under Section 11 representing a number of hypothetical Shares.

          2.40 "Plan" means the Tellium, Inc. Special 2001 Stock Incentive Plan,
                ----
as amended and restated from time to time.

          2.41 "Restricted Stock" means Shares issued or transferred to an
                ----------------
Eligible Individual pursuant to Section 9.

          2.42 "Share Award" means a grant of Shares pursuant to Section 11.
                -----------

          2.43 "Shares" means the common stock, par value $0.001 per share, of
                ------
the Company and any other securities into which such shares are changed or for
which such shares are exchanged.

          2.44 "Stock Appreciation Right" means a right to receive all or some
                ------------------------
portion of the increase in the value of the Shares as provided in Section 7
hereof.

          2.45 "Subsidiary" means (i) except as provided in subsection (ii)
                ----------
below, any corporation which is or becomes a subsidiary corporation (within the
meaning of Section 424(f) of the Code) with respect to the Company, and (ii)
with respect to provisions relating to the eligibility to receive Options or
Awards other than Incentive Stock Options and to continued employment for
purposes of Options and Awards (unless

<PAGE>

the Committee determines otherwise), any entity, whether or not incorporated, in
which the Company directly or indirectly owns fifty percent (50%) or more of the
outstanding equity or other ownership interests.

            2.46 "Successor Corporation" means a corporation, or a parent or
                  ---------------------
subsidiary thereof, which issues or assumes an Option or Award in a transaction
described in Section 424(a) of the Code without regard to Sections 424(a)(1) and
(2) thereof.

            2.47 "Tax Benefit" means an actual decrease in the Company's
                  -----------
liability for taxes in any period.

            2.48 "Ten-Percent Stockholder" means an Eligible Individual, who, at
                  -----------------------
the time an Incentive Stock Option is to be granted to him or her, owns (within
the meaning of Section 422(b)(6) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company, or of a Parent or a Subsidiary.

            2.49 "Termination of Employment" means the later of (i) severance of
                  -------------------------
the employer-employee relationship with the Company, a Parent or a Subsidiary or
(ii) the resignation, removal or termination of an officer or Director of the
Company, a Parent or a Subsidiary.

            2.50 "Voting Securities" means all outstanding voting securities of
                  -----------------
the Company entitled to vote generally in the election of the Board of
Directors.

         3. Administration.
            --------------

            3.1  The Plan shall be administered by the Committee, which shall
hold meetings at such times as may be necessary for the proper administration of
the Plan. The Committee shall keep minutes of its meetings. If the Committee
consists of more than one (1) member, a quorum shall consist of not fewer than
two (2) members of the Committee and a majority of a quorum may authorize any
action. Any decision or determination reduced to writing and signed by all of
the members of the Committee shall be as fully effective as if made by a
majority vote at a meeting duly called and held. The Committee shall consist of
at least one (1) Director and may consist of the entire Board; provided,
however, that from and after the date of an Initial Public Offering, (A) if the
Committee consists of less than the entire Board, then with respect to any
Option or Award to an Eligible Individual who is subject to Section 16 of the
Exchange Act, the Committee shall consist of at least two (2) Directors each of
whom shall be a Nonemployee Director and (B) to the extent necessary for any
Option or Award intended to qualify as Performance-Based Compensation to so
qualify, the Committee shall consist of at least two (2) Directors each of whom
shall be an Outside Director. For purposes of the preceding sentence, if one or
more members of the Committee is not a Nonemployee

<PAGE>

Director and, if necessary for any Option or Award intended to qualify as
Performance-Based Compensation to so qualify, an Outside Director, but recuses
himself or herself or abstains from voting with respect to a particular action
taken by the Committee, then the Committee, with respect to that action, shall
be deemed to consist only of the members of the Committee who have not recused
themselves or abstained from voting. Subject to applicable law, the Committee
may delegate its authority under the Plan to any other person or persons.

                  3.2 No member of the Committee shall be liable for any action,
failure to act, determination or interpretation made in good faith with respect
to this Plan or any transaction hereunder. The Company hereby agrees to
indemnify each member of the Committee for all costs and expenses and, to the
extent permitted by applicable law, any liability incurred in connection with
defending against, responding to, negotiating for the settlement of or otherwise
dealing with any claim, cause of action or dispute of any kind arising in
connection with any actions in administering this Plan or in authorizing or
denying authorization to any transaction hereunder.

                  3.3 Subject to the express terms and conditions set forth
herein,  the Committee  shall have the power from time to  time to:

                      (a) determine those Eligible Individuals to whom Options
shall be granted under the Plan and the number of such Options to be granted and
to prescribe the terms and conditions (which need not be identical) of each such
Option, including the purchase price per Share, the vesting schedule and the
duration of each Option, and make any amendment or modification to any Option
Agreement consistent with the terms of the Plan;

                      (b) select those Eligible Individuals to whom Awards shall
be granted under the Plan and to determine the number of Shares in respect of
which each Award is granted, the terms and conditions (which need not be
identical) of each such Award, including the restrictions or Performance
Objectives relating to Awards and the maximum value of any Award, and make any
amendment or modification to any Award Agreement consistent with the terms of
the Plan;

                      (c) construe and interpret the Plan and the Options and
Awards granted hereunder and to establish, amend and revoke rules and
regulations for the administration of the Plan, including, without limitation,
correcting any defect or supplying any omission, or reconciling any
inconsistency in the Plan or in any Agreement, in the manner and to the extent
it shall deem necessary or advisable, including so that the Plan and the
operation of the Plan complies with Rule 16b-3 under the Exchange Act, the Code
to the extent applicable and other applicable law, and otherwise to make the
Plan fully effective. All decisions and determinations by the Committee in the
exercise of this power shall be final, binding and conclusive upon the

<PAGE>

Company, its Subsidiaries, the Optionees and Grantees, and all other persons
having any interest therein;

                 (d)   determine the duration and purposes for leaves of absence
which may be granted to an Optionee or Grantee on an individual basis without
constituting a Termination of Employment or service for purposes of the Plan;

                 (e)   exercise its sole discretion with respect to the powers
and rights granted to it as set forth in the Plan; and

                 (f)   exercise, generally, such powers and to perform such acts
as are deemed necessary or advisable to promote the best interests of the
Company with respect to the Plan.

           3.4   Notwithstanding anything contained in the Plan to the contrary,
no person who is subject to section 16 of the Exchange Act may be granted
Options or Awards under the Plan.

4.   Stock Subject to the Plan; Grant Limitations.
     --------------------------------------------

           4.1   The maximum number of Shares that may be made the subject of
Options and Awards granted under this Plan shall be 1,737,500. The Company shall
reserve for the purposes of the Plan, out of Shares held in the Company's
treasury, such number of Shares as shall be determined by the Board.

           4.2   Upon the granting of an Option or an Award, the number of
Shares available under Section 4.1 for the granting of further Options and
Awards shall be reduced as follows:

                 (a)   In connection with the granting of an Option or an Award
(other than the granting of a Performance Unit denominated in dollars), the
number of Shares shall be reduced by the number of Shares in respect of which
the Option or Award is granted or denominated; provided, however, that if any
Option is exercised by tendering Shares, either actually or by attestation, to
the Company as full or partial payment of the purchase price, the maximum number
of Shares available under Section 4.1 shall be increased by the number of Shares
so tendered.

                 (b)   In connection with the granting of a Performance Unit
denominated in dollars, the number of Shares shall be reduced by an amount equal
to the quotient of (i) the dollar amount in which the Performance Unit is
denominated, divided by (ii) the Fair Market Value of a Share on the date the
Performance Unit is granted.

           4.3   Whenever any outstanding Option or Award or portion thereof
under this Plan expires, is canceled, is settled in cash (including the
settlement of tax withholding obligations using Shares), or is otherwise
terminated for any reason without having been exercised or payment having been
made in respect of the entire Option or Award, the Shares allocable to the
expired, canceled, settled or otherwise terminated

<PAGE>

portion of the Option or Award may again be the subject of Options or Awards
granted hereunder.

          4.4   In no event may more than 1,737,500 Shares be issued upon the
exercise of Incentive Stock Options granted under the Plan.

5.    Option Grants for Eligible Individuals.
      --------------------------------------

          5.1   Authority of Committee. Subject to the provisions of the
                ----------------------
Plan, the Committee shall have full and final authority to select those Eligible
Individuals who will receive Options, the terms and conditions of which shall be
set forth in an Agreement. Without limiting the generality of the preceding
sentence, unless the Committee determines otherwise in its sole discretion, in
consideration of granting an Option, the Optionee shall agree, in the Agreement,
to remain in the employ of the Company or any Subsidiary for a period of at
least one (1) year (or such shorter period as may be fixed in the Agreement or
by action of the Committee following grant of the Option) after the Option is
granted. Incentive Stock Options may be granted only to Eligible Individuals who
are employees of the Company or any Subsidiary.

          5.2   Purchase Price. The purchase price (which may be greater than,
                --------------
less than or equal to the Fair Market Value on the date of grant) or the manner
in which the purchase price is to be determined for Shares under each Option
shall be determined by the Committee and set forth in the Agreement pursuant to
which each Option is granted; provided, however, that the purchase price per
Share under each Option intended to qualify as Performance-Based Compensation
shall not be less than 100% of the Fair Market Value of a Share on the Date the
Option is granted and provided, further, however, that the purchase price per
Share under each Incentive Stock Option shall not be less than 100% of the Fair
Market Value of a Share on the date the Option is granted (110% in the case of
an Incentive Stock Option granted to a Ten-Percent Stockholder).

          5.3   Maximum Duration. Options granted hereunder shall be for such
                ----------------
term as the Committee shall determine; provided, however, that an Option shall
not be exercisable after the expiration of ten (10) years from the date it is
granted (five (5) years in the case of an Incentive Stock Option granted to a
Ten-Percent Stockholder); and provided, further, however, that the Committee may
provide that an Option (other than an Incentive Stock Option) may, upon the
death of the Optionee prior to the expiration of the Option, be exercised for up
to one (1) year following the date of the Optionee's death even if such period
extends beyond ten (10) years from the date the Option is granted. The Committee
may, subsequent to the granting of any Option, extend the term thereof, but in
no event shall the term as so extended exceed the maximum term provided for in
the preceding sentence.

          5.4   Vesting and Exercisability. Subject to Sections 5.5 and 6.5,
                --------------------------
each Option shall become vested and exercisable in such installments (which need
not be

<PAGE>

equal) and at such times as may be designated by the Committee and set forth in
the Agreement. To the extent not exercised, installments shall accumulate and be
exercisable, in whole or in part, at any time after becoming exercisable, but
not later than the date the Option expires. The Committee may accelerate the
exercisability of any Option or portion thereof at any time.

          5.5   Termination. Subject to Sections 5.3, 6.5 and 12 and unless
                -----------
otherwise provided by the Committee, in its sole discretion, at the time of
grant (and set forth in the applicable Agreement) or at a later date, the
following provisions shall apply to Options upon a Termination of Employment:

                (a)   Except in the case of termination for Cause, Disability,
retirement on or after the Optionee's Normal Retirement Date, or death as
provided in Sections 5.5(b), (c) and (d) below, upon an Optionee's Termination
of Employment with the Company, a Parent or a Subsidiary for any reason, any
unexercised Option (or portion thereof) held by such Optionee shall expire three
(3) months after the Optionee has a Termination of Employment and such Option
(or portion thereof) may only be exercised by the Optionee or his or her
Beneficiary to the extent that the Option (or a portion thereof) was exercisable
on the date of Termination of Employment.

                (b)   If the Optionee's Termination of Employment arises as a
result of a termination for Cause, then, unless the Committee determines
otherwise at the time of the Termination of Employment, any unexercised Options
(whether or not vested and exercisable) held by such Optionee shall terminate
and expire concurrently with the Optionee's Termination of Employment and no
rights thereunder may be exercised.

                (c)   If an Optionee suffers a Disability or retires on or after
the Optionee's Normal Retirement Date, any unexercised Option (or portion
thereof) held by such disabled or retired Optionee shall expire one (1) year
after the Disability Date or date of Termination of Employment by reason of
retirement, as the case may be, and such Option (or portion thereof) may only be
exercised by the Optionee or his or her guardian or legal representative to the
extent that the Option (or a portion thereof) was exercisable on the Disability
Date or the date of Termination of Employment by reason of retirement, as the
case may be.

                (d)   If an Optionee dies while still employed by the Company,
each Option (or portion thereof) held by such Optionee shall immediately become
vested and exercisable with respect to those Shares that otherwise would have
vested during the one-year period following the Optionee's death and will be
deemed to have become vested and exercisable on the day preceding the date of
the Optionee's death. The Options (or portions thereof) which the Optionee was
entitled to exercise on the date of the Optionee's death (which shall include
those Options (or portions thereof) that become vested and exercisable pursuant
to the preceding sentence by reason of the Optionee's

<PAGE>

death) may be exercised at any time after the Optionee's death by the Optionee's
Beneficiary; provided, however, that no Option (or portion thereof) may be
exercised after the earlier of: (i) one (1) year after the Optionee's death or
(ii) the expiration date specified for the particular Option in the Agreement.
If an Optionee dies after his or her Termination of Employment, then the Option
(or portions thereof) which the Optionee was entitled to exercise on the date of
the Optionee's death may be exercised by his or her Beneficiary within the
remaining portion of the period specified in Sections 5.5(a) or 5.5(c), as the
case may be.

                (e)   The Option (or portion thereof), to the extent not yet
vested and exercisable as of the date of the Optionee's Termination of
Employment, shall terminate immediately upon such date.

          5.6   Deferred Delivery of Option Shares. The Committee may, in its
                ----------------------------------
sole discretion, permit Optionees to elect to defer the issuance of Shares upon
the exercise of one or more Nonqualified Stock Options granted pursuant to the
Plan. The terms and conditions of such deferral shall be determined at the time
of the grant of the Option or thereafter and shall be set forth in the Agreement
evidencing the Option.

          5.7   Modification. No modification of an Option shall adversely alter
                ------------
or impair any rights or obligations under the Option without the Optionee's
consent.

          5.8   Limitations on Incentive Stock Options. To the extent that the
                --------------------------------------
aggregate Fair Market Value (determined as of the date of the grant) of Shares
with respect to which Incentive Stock Options granted under the Plan and
"incentive stock options" (within the meaning of Section 422 of the Code)
granted under all other plans of the Company or its Subsidiaries (in either case
determined without regard to this Section 5.8) are exercisable by an Optionee
for the first time during any calendar year exceeds $100,000, such Incentive
Stock Options shall be treated as Nonqualified Stock Options. In applying the
limitation in the preceding sentence in the case of multiple Option grants,
Options which were intended to be Incentive Stock Options shall be treated as
Nonqualified Stock Options according to the order in which they were granted
such that the most recently granted Options are first treated as Nonqualified
Stock Options.

     6.   Terms and Conditions Applicable to All Options.
          ----------------------------------------------

          6.1   Additional Terms. The provisions of this Section 6 shall apply
                ----------------
to all Options, unless otherwise provided by the Committee, in its sole
discretion, in the applicable Agreement.

          6.2   Non-Transferability. No Option granted hereunder shall be
                -------------------
transferable by the Optionee to whom it is granted otherwise than by will or by
the laws of descent and distribution or, in the case of an Option other than an
Incentive Stock Option, in the Committee's sole discretion, pursuant to a
domestic relations order (within

<PAGE>

the meaning of Rule 16a-12 promulgated under the Exchange Act) (a "Domestic
Relations Transfer"), and, except with respect to an Option transferred pursuant
to a Domestic Relations Transfer, an Option shall be exercisable during the
lifetime of such Optionee only by the Optionee or his or her guardian or legal
representative. Notwithstanding the foregoing, the Committee may set forth in
the Agreement evidencing an Option (other than an Incentive Stock Option) at the
time of grant or thereafter, that the Option may be transferred to members of
the Optionee's immediate family, to trusts solely for the benefit of such
immediate family members and to partnerships in which such family members and/or
trusts are the only partners. Following transfer, for purposes of this Plan, a
transferee of an Option shall be deemed to be the Optionee; provided that the
Option shall be exercisable by the transferee only to the extent and for such
periods that the Option would have been exercisable if held by the original
Optionee. For this purpose, immediate family means the Optionee's spouse,
parents, children, stepchildren and grandchildren and the spouses of such
parents, children, stepchildren and grandchildren. The terms of an Option shall
be final, binding and conclusive upon the beneficiaries, executors,
administrators, heirs and successors of the Optionee.

          6.3   Method of Exercise.
                ------------------

                (a)   The exercise of an Option shall be made only by a written
notice delivered in person or by mail to the Secretary of the Company at the
Company's principal executive office, specifying the number of Shares to be
purchased and, to the extent applicable, accompanied by payment therefor and
otherwise in accordance with such procedures which may be approved by the
Committee from time to time, and in accordance with the Agreement pursuant to
which the Option was granted; provided, however, that Options may not be
exercised by an Optionee for twelve months following a hardship distribution to
the Optionee, to the extent such exercise is prohibited under Treasury
Regulation ss. 1.401(k)-1(d)(2)(iv)(B)(4). The purchase price for any Shares
purchased pursuant to the exercise of an Option shall be paid, in any of the
following forms: (a) cash or (b) the transfer, either actually or by
attestation, to the Company of Shares that have been held by the Optionee for at
least six (6) months (or such lesser period as may be permitted by the
Committee) prior to the exercise of the Option and that have a Fair Market Value
equal in amount to the purchase price, such transfer to be upon such terms and
conditions as determined by the Committee or (c) a combination of cash and the
transfer of Shares, provided, however, that the Committee, in its sole
discretion, may determine in the case of Options that the purchase price shall
be paid only in cash. In addition, Options may be exercised through a registered
broker-dealer pursuant to such cashless exercise procedures which are, from time
to time, deemed acceptable by the Committee. Any Shares transferred to the
Company as payment of the purchase price under an Option shall be valued at
their Fair Market Value on the day preceding the date of exercise of such
Option. If requested by the Committee, the Optionee shall deliver the Agreement
evidencing the Option to the Secretary of the Company who shall endorse

<PAGE>

thereon a notation of such exercise and return such Agreement to the Optionee.
No fractional Shares (or cash in lieu thereof) shall be issued upon exercise of
an Option and the number of Shares that may be purchased upon exercise shall be
rounded to the nearest number of whole Shares.

               (b)   If the Fair Market Value of the Shares with respect to
which the Option is being exercised exceeds the purchase price of such Option,
an Optionee may, instead of exercising an Option as provided in Section 6.3(a),
request that the Committee authorize payment to the Optionee of the difference
between the Fair Market Value of part or all of the Shares which are the subject
of the Option and the purchase price of the Option, such difference to be
determined as of the date the Committee receives the request from the Optionee.
The Committee, in its sole discretion, may grant or deny such a request from an
Optionee with respect to part or all of the Shares as to which the Option is
then exercisable and, to the extent granted, shall direct the Company to make
the payment to the Optionee either in cash or in Shares or in any combination
thereof; provided, however, that the payment in Shares shall be based upon the
Fair Market Value of Shares as of the date the Committee received the request
from the Optionee. An Option shall be deemed to have been exercised and shall be
canceled to the extent that the Committee grants a request pursuant to this
Section 6.3(b).

          6.4  Rights of Optionees. No Optionee shall be deemed for any purpose
               -------------------
to be the owner of any Shares subject to any Option unless and until (a)
the Option shall have been exercised pursuant to the terms thereof, (b) the
Company shall have issued and delivered Shares to the Optionee, and (c) the
Optionee's name shall have been entered as a stockholder of record on the books
of the Company. Thereupon, the Optionee shall have full voting, dividend and
other ownership rights with respect to such Shares, subject to such terms and
conditions as may be set forth in the applicable Agreement.

          6.5  Effect of Change in Control.
               ---------------------------

               (a)   Notwithstanding anything to the contrary in Section 5, in
the event of a Change in Control, the Plan and the Options shall continue;
provided, however, that the Committee, in its sole discretion and on such terms
and conditions as it deems appropriate, may provide, either by the terms of the
applicable Agreement or by action taken prior to the occurrence of any such
Change in Control, for any or all of the following alternatives (separately or
in any combination):

                     (i)   for the payment in cash upon the surrender to the
Company for cancellation of any Option or portion of an Option to the extent
vested and not yet exercised in an amount equal to the excess, if any, of (a)
(i) in the case of a Nonqualified Stock Option, the greater of (A) the Fair
Market Value, on the date preceding the date of surrender, of the Shares subject
to the Option or portion thereof surrendered or (B) the Adjusted Fair Market
Value of the Shares subject to the Option or portion thereof surrendered or (ii)
in the case of an Incentive Stock Option, the Fair

<PAGE>

Market Value, on the date preceding the date of surrender, of the Shares subject
to the Option or portion thereof surrendered, over (b) the aggregate purchase
price for such Shares under the Option or portion thereof surrendered.

                     (ii)   for the replacement of the Options with other rights
or property selected by the Committee in its sole discretion;

                     (iii)  for the accelerated vesting of all or a portion of
the Options;

                     (iv)   for the assumption of the Options by the successor
or survivor corporation, or a parent or subsidiary thereof, or the substitution
by such corporation for such Options of new options 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; or

                     (v)    for adjustments in the terms and conditions of
outstanding Options and/or the number and type of Shares or other securities or
property subject to such outstanding Options.

      Any action pursuant to this Section 6.5(a) shall be conditioned upon the
consummation of the Change in Control and shall be effective only immediately
before the consummation of the Change in Control.

               (b)   Subject to Section  6.5(d) and to the extent set forth in
the applicable Agreement or provided by the Committee, in its sole discretion,
subsequent to the granting of an Option, if, as a result of a Change in Control
transaction, an Option intended to qualify as an Incentive Stock Option fails to
so qualify solely because of the failure to meet the holding requirements of
           ------
Code Section 422(a)(1) (a "Disqualifying Disposition"), the Company shall make a
cash payment to the Optionee equal to the amount which will, after taking into
account all taxes imposed on the Disqualifying Disposition and the receipt of
such payment, leave the Optionee in the same after-tax position the Optionee
would have been in had the Code Section 422(a)(1) holding requirements been met
at the time of the Disqualifying Disposition (which after-tax position will
reflect the total taxes, if any, that would have been incurred by the Optionee
had the Disqualifying Disposition been subject to federal income tax at capital
gains rates) provided, however, that no payment described in this Section shall
exceed the Tax Benefit to the Company resulting from deductions relating to
ordinary income recognized by the Optionee as a result of the Disqualifying
Disposition. The payment described in this Section shall be made by the Company
within thirty (30) days of the filing by the Company of the federal tax return
which includes the tax items associated with the income recognized by the
Optionee as a result of the Disqualifying Disposition (or, if the Tax Benefit
described in the preceding sentence is not realized until a later year, within

<PAGE>

thirty (30) days of the filing by the Company of the federal tax return with
respect to which such Tax Benefit is realized).

               (c)   Subject to Section 6.5(d) and to the extent set forth in
the applicable Agreement or provided by the Committee, in its sole discretion,
subsequent to the granting of an Option, and provided that an Optionee is not
entitled to payment under Section 6.5(b) hereof, if, as a result of a Change in
Control transaction, an Option intended to qualify as an Incentive Stock Option
fails to so qualify solely because the vesting of the Option is accelerated
                    ------
pursuant to Section 6.5(a) and such acceleration causes the aggregate fair
market value (determined at the time the Option is granted) of the Shares with
respect to which Options are exercisable for the first time by an Optionee
during the calendar year in which such vesting occurs to exceed $100,000, within
the meaning of Code Section 422(d) (a "Disqualified Option"), then, upon
exercise of such Disqualified Option, the Company shall make a cash payment to
the Optionee equal to the amount which will, after taking into account all taxes
imposed on the exercise of such Disqualified Option and the receipt of such
payment, leave the Optionee in the same after-tax position the Optionee would
have been in had the Disqualified Option continued to qualify as an Incentive
Stock Option on the date of exercise and the Optionee sold the Shares received
upon exercise of the Option at their Fair Market Value on the date of exercise,
provided, however, that no payment described in this Section shall exceed the
Tax Benefit to the Company resulting from deductions relating to ordinary income
recognized by the Optionee as a result of exercising the Disqualified Option and
the receipt of such payment. The payment described in this Section shall be made
by the Company within thirty (30) days of the filing by the Company of the
federal tax return which includes the tax items associated with the income
recognized by the Optionee as a result of exercising the Disqualified Option
(or, if the Tax Benefit described in the preceding sentence is not realized
until a later year, within thirty (30) days of the filing by the Company of the
federal tax return with respect to which such Tax Benefit is realized).

               (d)   If more than one Optionee is entitled to a cash payment
pursuant to Section 6.5(b) or Section 6.5(c) in any single tax year and the Tax
Benefit realized by the Company in such year with respect to all such Optionees
is less than the aggregate amount of the payments due to such Optionees
hereunder, then (i) each such Optionee shall receive a portion of such cash
payment equal to an amount determined by multiplying the amount of the Tax
Benefit realized by the Company in such year by a fraction the numerator of
which is equal to the amount of payment due to such Optionee and the denominator
of which is equal to the aggregate amount due to all such Optionees entitled to
a payment hereunder, and (ii) subject to further application of this Section
6.5(d), shall be entitled to receive the remaining portion within thirty (30)
days of the filing by the Company of the federal tax return with respect to
which such Tax Benefit is realized.

      7.   Stock Appreciation Rights.
           -------------------------

<PAGE>

     The Committee may in its sole discretion, either alone or in connection
with the grant of an Option, grant Stock Appreciation Rights in accordance with
the Plan, the terms and conditions of which shall be set forth in an Agreement.
If granted in connection with an Option, a Stock Appreciation Right shall cover
the same Shares covered by the Option (or such lesser number of Shares as the
Committee may determine) and shall, except as provided in this Section 7, be
subject to the same terms and conditions as the related Option.

          7.1   Time of Grant. A Stock Appreciation Right may be granted (a) at
                -------------
any time if unrelated to an Option, or (b) if related to an Option, either at
the time of grant, or (except in the case of an Incentive Stock Option) at any
time thereafter during the term of the Option.

          7.2   Stock Appreciation Right Related to an Option.
                ---------------------------------------------

                (a)   Exercise. Subject to Section 7.9, a Stock Appreciation
                      --------
Right granted in connection with an Option shall be exercisable at such time or
times and only to the extent that the related Options are exercisable
(including, without limitation, exercisability upon Termination of Employment or
a Change in Control), and will not be transferable except to the extent the
related Option may be transferable. A Stock Appreciation Right granted in
connection with an Incentive Stock Option shall expire no later than the
expiration of the related Incentive Stock Option and shall be exercisable only
if the Fair Market Value of a Share on the date of exercise exceeds the purchase
price of the Option specified in the related Incentive Stock Option Agreement.

                (b)   Treatment of Related Options and Stock Appreciation Rights
                      ----------------------------------------------------------
Upon Exercise. Upon the exercise of a Stock Appreciation Right granted in
-------------
connection with an Option, the Option shall be canceled to the extent of the
number of Shares as to which the Stock Appreciation Right is exercised, and upon
the exercise of an Option granted in connection with a Stock Appreciation Right,
the Stock Appreciation Right shall be canceled to the extent of the number of
Shares as to which the Option is exercised or surrendered.

          7.3   Stock Appreciation Right Unrelated to an Option.
                -----------------------------------------------

                (a)   Terms. Subject to Section 7.9, Stock Appreciation Rights
                      -----
unrelated to Options shall contain such terms and conditions as to
exercisability, vesting and duration as the Committee shall determine, but in no
event shall they have a term of greater than ten (10) years; provided, however,
that the Committee may provide that Stock Appreciation Rights may, upon the
death of the Grantee, be exercised for up to one (1) year following the date of
the Grantee's death even if such period extends beyond ten (10) years from the
date the Stock Appreciation Right was granted.

<PAGE>

                (b)   Termination. Subject to Section 12 and except as provided
                      -----------
in Section 7.9, and unless otherwise provided by the Committee, in its sole
discretion, in the applicable Agreement, upon a Grantee `s Termination of
Employment, a Stock Appreciation Right shall be exercisable by the Grantee to
the same extent that an Option would be exercisable by an Optionee upon the
Optionee's Termination of Employment under the provisions of Section 5.5;
provided, however, no Stock Appreciation Right may be exercised after the
expiration date specified for the particular Stock Appreciation Right in the
applicable Agreement.

          7.4   Amount Payable. Subject to Section 7.7, upon the exercise of a
                --------------
Stock Appreciation Right, the Grantee shall be entitled to receive an amount
determined by multiplying (x) the excess of the Fair Market Value of a Share on
the date preceding the date of exercise of such Stock Appreciation Right over
(A) in the case of a Stock Appreciation Right granted in connection with an
Option, the per Share purchase price under the related Option, or (B) in the
case of a Stock Appreciation Right unrelated to an Option, the Fair Market Value
of a Share on the date the Stock Appreciation Right was granted, by (y) the
number of Shares as to which such Stock Appreciation Right is being exercised.
Notwithstanding the foregoing, the Committee may limit in any manner the amount
payable with respect to any Stock Appreciation Right by including such a limit
in the Agreement evidencing the Stock Appreciation Right at the time it is
granted.

          7.5   Non-Transferability. No Stock Appreciation Right shall be
                -------------------
transferable by the Grantee to whom it was granted otherwise than by will or by
the laws of descent and distribution or, in the Committee's sole discretion,
(except in the case of a Stock Appreciation Right granted in connection with an
Incentive Stock Option), pursuant to domestic relations order (within the
meaning of Rule 16a-12 promulgated under the Exchange Act (a "Domestic Relations
Transfer") and, except with respect to a Stock Appreciation Right transferred
pursuant to a Domestic Relations Transfer, such Stock Appreciation Right shall
be exercisable during the lifetime of such Grantee only by the Grantee or his or
her guardian or legal representative. The terms of such Stock Appreciation Right
shall be final, binding and conclusive upon the beneficiaries, executors,
administrators, heirs and successors of the Grantee.

          7.6   Method of Exercise. Stock Appreciation Rights shall be exercised
                ------------------
by a Grantee only by a written notice delivered in person or by mail to the
Secretary of the Company at the Company's principal executive office, specifying
the number of Shares with respect to which the Stock Appreciation Right is being
exercised. If requested by the Committee, the Grantee shall deliver the
Agreement evidencing the Stock Appreciation Right being exercised and the
Agreement evidencing any related Option to the Secretary of the Company who
shall endorse thereon a notation of such exercise and return such Agreement to
the Grantee.

          7.7   Form of Payment. Payment of the amount determined under Section
                ---------------
7.4 may be made in the sole discretion of the Committee solely in whole Shares
in a

<PAGE>

number determined at their Fair Market Value on the date preceding the date of
exercise of the Stock Appreciation Right, or solely in cash, or in a combination
of cash and Shares. If the Committee decides to make full payment in Shares and
the amount payable results in a fractional Share, no fractional Shares (or cash
in lieu thereof) shall be issued upon the exercise of the Stock Appreciation
Right and the number of Shares that will be delivered shall be rounded to the
nearest number of whole Shares.

          7.8 Modification. No modification of an Award shall adversely alter or
              ------------
impair any rights or obligations under the Agreement without the Grantee's
consent.

          7.9 Effect of Change in Control. Notwithstanding anything contained in
              ---------------------------
this Section 7 to the contrary, in the event of a Change in Control, the Plan
and the Stock Appreciation Rights shall continue; provided, however, that the
Committee, in its sole discretion and on such terms and conditions as it deems
appropriate, may provide, either by the terms of the applicable Agreement or by
action taken prior to the occurrence of any such Change in Control, for any or
all of the following alternatives (separately or in any combination):

              (i)  with respect to a Stock Appreciation Right unrelated to an
Option, for the payment in cash upon the surrender to the Company for
cancellation of any such Stock Appreciation Right or portion of a Stock
Appreciation Right to the extent vested and not yet exercised in an amount equal
to the excess, if any, of (A) the greater of (i) the Fair Market Value, on the
date preceding the date of surrender, of the Shares subject to the Stock
Appreciation Right or portion thereof surrendered or (ii) the Adjusted Fair
Market Value, on the date preceding the date of surrender, of the Shares over
(B) the aggregate Fair Market Value, on the date the Stock Appreciation Right
was granted, of the Shares subject to the Stock Appreciation Right or portion
thereof surrendered.

              (ii) for the replacement of the Stock Appreciation Rights with
other rights or property selected by the Committee in its sole discretion;

              (iii) for the accelerated vesting of all or a portion of the Stock
Appreciation Rights;

              (iv) for the assumption of the Stock Appreciation Rights by the
successor or survivor corporation, or a parent or subsidiary thereof, or the
substitution by such corporation for such Stock Appreciation Rights of new stock
appreciation rights 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; or

<PAGE>

              (v) for adjustments in the terms and conditions of outstanding
Stock Appreciation Rights and/or the number and type of Shares or other
securities or property subject to such outstanding Stock Appreciation Rights.

          Any action pursuant to this Section 7.9 shall be conditioned upon the
consummation of the Change in Control and shall be effective only immediately
before the consummation of the Change in Control.

          8.  Dividend Equivalent Rights.
              --------------------------

          The Committee may in its sole discretion grant Dividend Equivalent
Rights to Eligible Individuals in tandem with an Option or Award or as a
separate Award. The terms and conditions (including, without limitation, terms
and conditions relating to a Change in Control) applicable to each Dividend
Equivalent Right shall be specified in the Agreement under which the Dividend
Equivalent Right is granted. In the sole discretion of the Committee, amounts
payable in respect of Dividend Equivalent Rights may be payable currently or
deferred until the lapsing of restrictions on such Dividend Equivalent Rights or
until the vesting, exercise, payment, settlement or other lapse of restrictions
on the Option or Award to which the Dividend Equivalent Rights relate. In the
event that the amount payable in respect of Dividend Equivalent Rights are to be
deferred, the Committee shall determine whether such amounts are to be held in
cash or reinvested in Shares or deemed (notionally) to be reinvested in Shares.
If amounts payable in respect of Dividend Equivalent Rights are to be held in
cash, there may be credited at the end of each year (or portion thereof)
interest on the amount of the account at the beginning of the year at a rate per
annum as the Committee, in its sole discretion, may determine. In the sole
discretion of the Committee, Dividend Equivalent Rights may be settled in cash
or Shares or a combination thereof, in a single installment or multiple
installments. To the extent necessary for any Dividend Equivalent Right intended
to qualify as Performance-Based Compensation to so qualify, the terms and
conditions of the Dividend Equivalent Right shall be such that payment of the
Dividend Equivalent Right is contingent upon attainment of specified Performance
Objectives within the Performance Cycle, as provided for in Section 10, and such
Dividend Equivalent Right shall be treated as a Performance Award for purposes
of Sections 10 and 15.

     9.   Restricted Stock.
          ----------------

          9.1 Grant. The Committee may in its sole discretion grant Awards to
              -----
Eligible Individuals of Restricted Stock, which shall be evidenced by an
Agreement between the Company and the Grantee. Each Agreement shall contain such
restrictions, terms and conditions as the Committee may, in its sole discretion,
determine and (without limiting the generality of the foregoing) such Agreements
may require that an appropriate legend be placed on Share certificates. Awards
of Restricted Stock shall be subject to the terms and provisions set forth below
in this Section 9.

<PAGE>

          9.2 Rights of Grantee. Shares of Restricted Stock granted pursuant to
              -----------------
an Award hereunder shall be issued in the name of the Grantee as soon as
reasonably practicable after the Award is granted provided that the Grantee has
executed an Agreement evidencing the Award, the appropriate blank stock powers
and, in the sole discretion of the Committee, an escrow agreement and any other
documents which the Committee may require as a condition to the issuance of such
Shares. If a Grantee shall fail to execute the Agreement evidencing a Restricted
Stock Award, the appropriate blank stock powers, an escrow agreement or any
other documents which the Committee may require within the time period
prescribed by the Committee at the time the Award is granted, the Award shall be
null and void. At the sole discretion of the Committee, Shares issued in
connection with a Restricted Stock Award shall be deposited together with the
stock powers with an escrow agent (which may be the Company) designated by the
Committee. Unless the Committee determines otherwise and as set forth in the
Agreement, upon delivery of the Shares to the escrow agent, the Grantee shall
have all of the rights of a stockholder with respect to such Shares, including
the right to vote the Shares and to receive all dividends or other distributions
paid or made with respect to the Shares.

          9.3 Non-transferability. Until all restrictions upon the Shares of
              -------------------
Restricted Stock awarded to a Grantee shall have lapsed in the manner set forth
in Section 9.4, such Shares shall not be sold, transferred or otherwise disposed
of and shall not be pledged or otherwise hypothecated, nor shall they be
delivered to the Grantee.

          9.4 Lapse of Restrictions.
              ---------------------

              (a)  Generally. Subject to Section 9.4(b), restrictions upon
                   ---------
Shares of Restricted Stock awarded hereunder shall lapse at such time or times
and on such terms and conditions as the Committee may determine; provided,
however, that except in the case of Shares of Restricted Stock issued in full or
partial settlement of another Award or other earned compensation, such
restrictions shall not fully lapse prior to the third anniversary of the date on
which such Shares of Restricted Stock were granted. The Agreement evidencing the
Award shall set forth any such restrictions.

              (b)  Effect of Change in Control. Notwithstanding anything
                   ---------------------------
contained in this Section 9 to the contrary, in the event of a Change in
Control, the Plan and the Awards of Restricted Stock shall continue; provided,
however, that the Committee, in its sole discretion and on such terms and
conditions as it deems appropriate, may provide, either by the terms of the
applicable Agreement or by action taken prior to the occurrence of any such
Change in Control, for any or all of the following alternatives (separately or
in any combination): (i) for the assumption of the shares of Restricted Stock by
the successor or survivor corporation, or a parent or subsidiary thereof, or the
substitution by such corporation for such shares of Restricted Stock of new
shares of restricted stock of the successor or survivor corporation, or a parent
or subsidiary thereof, with appropriate adjustments as to the number and kind of

<PAGE>

shares, (ii) for the lapse of all restrictions upon all or a portion of the
shares of Restricted Stock, or (iii) for adjustments in the terms and conditions
of outstanding Awards of Restricted Stock. Any action pursuant to this Section
9.5(b) shall be conditioned upon the consummation of the Change in Control and
shall be effective only immediately before the consummation of the Change in
Control.

          9.5 Terms of Restricted Stock.
              -------------------------

              (a)  Forfeiture of Restricted Stock. Subject to Sections 9.4(b),
                   ------------------------------
9.5(b) and 12, all Restricted Stock shall be forfeited and returned to the
Company and all rights of the Grantee with respect to such Restricted Stock
shall terminate unless the Grantee continues in the service of the Company as an
employee or director until the expiration of the forfeiture period for such
Restricted Stock and satisfies any and all other conditions set forth in the
Agreement. The Committee, in its sole discretion, shall determine the forfeiture
period (which may, but need not, lapse in installments) and any other terms and
conditions applicable with respect to any Restricted Stock Award.

              (b)  Waiver of Forfeiture Period. Notwithstanding anything
                   ---------------------------
contained in this Section 9 to the contrary, the Committee may, in its sole
discretion, waive the forfeiture period and any other conditions set forth in
any Agreement under appropriate circumstances (including, without limitation,
the death, Disability or retirement of the Grantee or a material change in
circumstances arising after the date of grant) and subject to such terms and
conditions (including, without limitation, forfeiture of a proportionate number
of the Restricted Stock) as the Committee shall deem appropriate, provided that
the Grantee shall at that time have completed at least one (1) year of
employment or service after the date of grant.

          9.6 Modification or Substitution. Subject to the terms of the Plan,
              ----------------------------
including, without limitation, Section 15, the Committee may modify outstanding
Awards of Restricted Stock or accept the surrender of outstanding shares of
Restricted Stock (to the extent the restrictions on such Shares have not yet
lapsed) and grant new Awards in substitution for them. Notwithstanding the
foregoing, no modification of an Award shall adversely alter or impair any
rights or obligations under the Agreement without the Grantee's consent.

          9.7 Treatment of Dividends. At the time an Award of Shares of
              ----------------------
Restricted Stock is granted, the Committee may, in its sole discretion,
determine that the payment to the Grantee of dividends, or a specified portion
thereof, declared or paid on such Shares by the Company shall be (a) deferred
until the lapsing of the restrictions imposed upon such Shares and (b) held by
the Company for the account of the Grantee until such time. In the event that
dividends are to be deferred, the Committee shall determine whether such
dividends are to be reinvested in Shares (which shall be held as additional
Shares of Restricted Stock) or held in cash. If deferred dividends are to be
held in cash, there may be credited at the end of each year (or portion thereof)
interest on

<PAGE>

the amount of the account at the beginning of the year at a rate per annum as
the Committee, in its sole discretion, may determine. Payment of deferred
dividends in respect of Shares of Restricted Stock (whether held in cash or as
additional Shares of Restricted Stock), together with interest accrued thereon,
if any, shall be made upon the lapsing of restrictions imposed on the Shares in
respect of which the deferred dividends were paid, and any dividends deferred
(together with any interest accrued thereon) in respect of any Shares of
Restricted Stock shall be forfeited upon the forfeiture of such Shares.

          9.8  Delivery of Shares. Upon the lapse of the restrictions on Shares
               ------------------
of Restricted Stock, the Committee shall cause a stock certificate to be
delivered to the Grantee with respect to such Shares, free of all restrictions
hereunder.

     10.  Performance Awards.
          ------------------

          10.1 Performance Objectives
               ----------------------

               (a) Establishment. Performance Objectives for Performance Awards
                   -------------
may be expressed in terms of (i) earnings per Share, (ii) Share price, (iii)
pre-tax profits, (iv) after-tax profits, (v) operating profits, (vi) sales or
expenses, (vii) net earnings, (viii) return on equity or assets, (ix) revenues,
(x) EBITDA (earnings before interest, taxes, depreciation and amortization),
(xi) market share, or market penetration, (xii) any combination of the
foregoing, (xiii) confidential business objectives or (xiv)prior to the end of
the Transition Period, such other criteria as the Committee may determine.
Performance Objectives may be in respect of the performance of the Company, any
of its Subsidiaries, any of its Divisions or any combination thereof.
Performance Objectives may be absolute or relative (to prior performance of the
Company or to the performance of one or more other entities or external indices)
and may be expressed in terms of a progression within a specified range. The
Performance Objectives with respect to a Performance Cycle shall be established
in writing by the Committee by the earlier of (x) the date on which a quarter of
the Performance Cycle has elapsed or (y) the date which is ninety (90) days
after the commencement of the Performance Cycle, and in any event while the
performance relating to the Performance Objectives remains substantially
uncertain.

               (b) Effect of Certain Events. At the time of the granting of a
                   ------------------------
Performance Award, or at any time thereafter, in either case to the extent
permitted under Section 162(m) of the Code and the regulations thereunder
without adversely affecting the treatment of the Performance Award as
Performance-Based Compensation, the Committee may provide for the manner in
which performance will be measured against the Performance Objectives (or may
adjust the Performance Objectives) to reflect the impact of specified corporate
transactions, accounting or tax law changes and other extraordinary or
nonrecurring events.

<PAGE>

               (c)  Determination of Performance. Prior to the vesting, payment,
                    ----------------------------
settlement or lapsing of any restrictions with respect to any Performance Award
that is intended to constitute Performance-Based Compensation made to a Grantee
who is subject to Section 162(m) of the Code, the Committee shall certify in
writing that the applicable Performance Objectives have been satisfied to the
extent necessary for such Award to qualify as Performance-Based Compensation.

          10.2 Performance Units. The Committee, in its sole discretion, may
               -----------------
grant Awards of Performance Units to Eligible Individuals, the terms and
conditions of which shall be set forth in an Agreement between the Company and
the Grantee. Performance Units may be denominated in Shares or a specified
dollar amount and, contingent upon the attainment of specified Performance
Objectives within the Performance Cycle, represent the right to receive payment
as provided in Section 10.2(b) of (i) in the case of Share-denominated
Performance Units, the Fair Market Value of a Share on the date the Performance
Unit was granted, the date the Performance Unit became vested or any other date
specified by the Committee, (ii) in the case of dollar-denominated Performance
Units, the specified dollar amount or (iii) a percentage (which may be more than
100%) of the amount described in clause (i) or (ii) depending on the level of
Performance Objective attainment; provided, however, that, the Committee may at
the time a Performance Unit is granted specify a maximum amount payable in
respect of a vested Performance Unit. Each Agreement shall specify the number of
Performance Units to which it relates, the Performance Objectives which must be
satisfied in order for the Performance Units to vest and the Performance Cycle
within which such Performance Objectives must be satisfied.

               (a)  Vesting and Forfeiture. Subject to Sections 10.1(c) and
                    ----------------------
10.4, Performance Units shall become vested in such installments (which need not
be equal) and at such time or times and on such terms, conditions and
satisfaction of Performance Objectives as the Committee may, in its sole
discretion, determine at the time an Award is granted.

               (b)  Payment of Awards. Subject to Sections 10.1(c) and 10.4,
                    -----------------
payment to Grantees in respect of vested Performance Units shall be made as soon
as practicable after the last day of the Performance Cycle to which such Award
relates unless the Agreement evidencing the Award provides for the deferral of
payment, in which event the terms and conditions of the deferral shall be set
forth in the Agreement. Subject to Section 10.4, such payments may be made
entirely in Shares valued at their Fair Market Value as of the day preceding the
date of payment or such other date specified by the Committee, entirely in cash,
or in such combination of Shares and cash as the Committee in its sole
discretion shall determine at any time prior to such payment; provided, however,
that if the Committee in its sole discretion determines to make such payment
entirely or partially in Shares of Restricted Stock, the Committee must

<PAGE>

determine the extent to which such payment will be in Shares of Restricted Stock
and the terms of such Restricted Stock at the time the Award is granted.

               (c)  Non-transferability. Until the vesting of Performance Units,
                    -------------------
such Performance Units shall not be sold, transferred or otherwise disposed of
and shall not be pledged or otherwise hypothecated.

          10.3 Performance Shares. The Committee, in its sole discretion, may
               ------------------
grant Awards of Performance Shares to Eligible Individuals, the terms and
conditions of which shall be set forth in an Agreement between the Company and
the Grantee. Each Agreement may require that an appropriate legend be placed on
Share certificates. Awards of Performance Shares shall be subject to the
following terms and provisions:

               (a)  Rights of Grantee. The Committee shall provide at the time
                    -----------------
an Award of Performance Shares is made the time or times at which the actual
Shares represented by such Award shall be issued in the name of the Grantee;
provided, however, that no Performance Shares shall be issued until the Grantee
has executed an Agreement evidencing the Award, the appropriate blank stock
powers and, in the sole discretion of the Committee, an escrow agreement and any
other documents which the Committee may require as a condition to the issuance
of such Performance Shares. If a Grantee shall fail to execute the Agreement
evidencing an Award of Performance Shares, the appropriate blank stock powers,
an escrow agreement and any other documents which the Committee may require
within the time period prescribed by the Committee at the time the Award is
granted, the Award shall be null and void. At the sole discretion of the
Committee, Shares issued in connection with an Award of Performance Shares shall
be deposited together with the stock powers with an escrow agent (which may be
the Company) designated by the Committee. Except as restricted by the terms of
the Agreement, upon delivery of the Shares to the escrow agent, the Grantee
shall have, in the sole discretion of the Committee, all of the rights of a
stockholder with respect to such Shares, including the right to vote the Shares
and to receive all dividends or other distributions paid or made with respect to
the Shares.

               (b)  Non-transferability. Until any restrictions upon the
                    -------------------
Performance Shares awarded to a Grantee shall have lapsed in the manner set
forth in Sections 10.3(c) or 10.4, such Performance Shares shall not be sold,
transferred or otherwise disposed of and shall not be pledged or otherwise
hypothecated, nor shall they be delivered to the Grantee. The Committee also may
impose such other restrictions and conditions on the Performance Shares, if any,
as it deems appropriate.

               (c)  Lapse of Restrictions. Subject to Sections 10.1(c) and 10.4,
                    ---------------------
restrictions upon Performance Shares awarded hereunder shall lapse and such
Performance Shares shall become vested at such time or times and on such terms,
conditions and satisfaction of Performance Objectives as the Committee may, in
its sole discretion, determine at the time an Award is granted.

<PAGE>

               (d)  Treatment of Dividends. At the time the Award of Performance
                    ----------------------
Shares is granted, the Committee may, in its sole discretion, determine that the
payment to the Grantee of dividends, or a specified portion thereof, declared or
paid on Shares represented by such Award which have been issued by the Company
to the Grantee shall be (i) deferred until the lapsing of the restrictions
imposed upon such Performance Shares and (ii) held by the Company for the
account of the Grantee until such time. In the event that dividends are to be
deferred, the Committee shall determine whether such dividends are to be
reinvested in Shares (which shall be held as additional Performance Shares) or
held in cash. If deferred dividends are to be held in cash, there may be
credited at the end of each year (or portion thereof) interest on the amount of
the account at the beginning of the year at a rate per annum as the Committee,
in its sole discretion, may determine. Payment of deferred dividends in respect
of Performance Shares (whether held in cash or in additional Performance
Shares), together with interest accrued thereon, if any, shall be made upon the
lapsing of restrictions imposed on the Performance Shares in respect of which
the deferred dividends were paid, and any dividends deferred (together with any
interest accrued thereon) in respect of any Performance Shares shall be
forfeited upon the forfeiture of such Performance Shares.

               (e)  Delivery of Shares. Upon the lapse of the restrictions on
                    ------------------
Performance Shares awarded hereunder, the Committee shall cause a stock
certificate to be delivered to the Grantee with respect to such Shares, free of
all restrictions hereunder.

          10.4 Effect of Change in Control. Notwithstanding anything in
               ---------------------------
this Section 10 to the contrary, in the event of a Change in Control, the Plan
and the Performance Awards shall continue; provided, however, that the
Committee, in its sole discretion and on such terms and conditions as it deems
appropriate, may provide, either by the terms of the applicable Agreement or by
action taken prior to the occurrence of any such Change in Control, for any or
all of the following alternatives (separately or in any combination): (i) for
the assumption of the Performance Awards by the successor or survivor
corporation, or a parent or subsidiary thereof, or the substitution by such
corporation for such Performance Awards of new performance awards of the
successor or survivor corporation, or a parent or subsidiary thereof, with
appropriate adjustments as to the applicable performance objectives and, if
necessary, the number and kind of shares, (ii) for the vesting of all or a
portion of the Performance Awards as if all Performance Objectives had been
satisfied at the level specified by the Committee in its sole discretion and, in
the case of Performance Units which become vested as a result of a Change in
Control, for a payment which may be made entirely in cash, entirely in Shares
valued at their Fair Market Value as of the day preceding the payment, or in
such combination of cash and Shares as the Committee shall determine in its sole
discretion at any time prior to such payment; provided that such payment shall
be made within ten (10) business days after such Change in Control, or (iii) for
adjustments in the terms and conditions of outstanding Performance Awards. Any
action pursuant to this Section 10.4 shall be

<PAGE>

conditioned upon the consummation of the Change in Control and shall be
effective only immediately before the consummation of the Change in Control.

          10.5 Termination. Subject to Sections 10.4 and 12, and unless
               -----------
otherwise provided by the Committee, in its sole discretion, in the applicable
Agreement, the following provisions shall apply to Performance Awards upon a
Termination of Employment:

               (a)  Termination of Employment Prior to End of Performance Cycle.
                    -----------------------------------------------------------
Except as provided in Sections 10.5(b) and (d), in the case of a Grantee's
Termination of Employment, prior to the end of a Performance Cycle, the Grantee
will not be entitled to any Performance Awards, and any Performance Shares shall
be forfeited.

               (b)  Disability, Retirement or Death Prior to End of Performance
                    -----------------------------------------------------------
Cycle. Unless otherwise provided by the Committee, in its sole discretion, in
-----
the Agreement, if a Grantee's Disability Date or Termination of Employment by
reason of retirement on or after the Grantee's Normal Retirement Date or death
occurs following participation in at least one-half (1/2) of the Performance
Cycle, but prior to the end of a Performance Cycle, the Grantee or such
Grantee's Beneficiary, as the case may be, shall be entitled to receive a
pro-rata share of his or her Performance Award as determined under Subsection
(c).

               (c)  Pro-Rata Payment.
                    ----------------

                    (i)  Performance Units. With respect to Performance Units,
                         -----------------
the amount of any payment made to a Grantee (or Beneficiary) under circumstances
described in Section 10.5(b) shall be the amount determined by multiplying the
amount of the Performance Units payable in Shares or dollars which would have
been earned, determined at the end of the Performance Cycle, had such employment
not been terminated, by a fraction, the numerator of which is the number of
whole months such Grantee was employed during the Performance Cycle, and the
denominator of which is the total number of months of the Performance Cycle. Any
such payment shall be made as soon as practicable after the end of the
respective Performance Cycle, and shall relate to attainment of Performance
Objectives over the entire Performance Cycle.

                    (ii) Performance Shares. With respect to Performance Shares,
                         ------------------
the amount of Performance Shares held by a Grantee (or Beneficiary) with respect
to which restrictions shall lapse under circumstances described in Section
10.5(b) shall be the amount determined by multiplying the amount of the
Performance Shares with respect to which restrictions would have lapsed,
determined at the end of the Performance Cycle, had such employment not been
terminated, by a fraction, the

<PAGE>

numerator of which is the number of whole months such Grantee was employed
during the Performance Cycle, and the denominator of which is the total number
of months of the Performance Cycle. The Committee shall determine the amount of
Performance Shares with respect to which restrictions shall lapse under this
Section 10.5(c)(ii) as soon as practicable after the end of the respective
Performance Cycle, and such determination shall relate to attainment of
Performance Objectives over the entire Performance Cycle. At that time, all
Performance Shares relating to that Performance Cycle with respect to which
restrictions shall not lapse shall be forfeited.

               (d)  Other Events. Except to the extent a Performance Award is
                    ------------
intended to qualify as Performance-Based Compensation, the Committee may, in its
sole discretion, determine to pay all or any portion of a Performance Award to a
Grantee who has a Termination of Employment prior to the end of a Performance
Cycle under certain circumstances (including, without limitation, a material
change in circumstances arising after the date of grant) and subject to such
terms and conditions as the Committee shall deem appropriate, provided that the
Grantee shall have completed at his or her date of Termination of Employment at
least one (1) year of employment after the date of grant.

               (e)  Termination of Employment After End of Performance Cycle.
                    --------------------------------------------------------
Subject to Sections 10.4 and 10.5(f), in the case of a Grantee's Termination of
Employment after the end of a Performance Cycle in which the applicable
Performance Objectives have been satisfied, the Grantee shall not be entitled to
any Performance Awards that have not yet vested as of the date of the Grantee's
Termination of Employment.

               (f)  Waiver of Forfeiture. Notwithstanding anything to the
                    --------------------
contrary in Section 10(e), in the case of a Grantee's Termination of Employment
after the end of a Performance Cycle in which the applicable Performance
Objectives have been satisfied, the Committee may, in its sole discretion, waive
the forfeiture of Performance Awards and any other conditions set forth in any
Agreement under appropriate circumstances (including, without limitation, the
death, Disability, or retirement of the Grantee or a material change in
circumstances arising after the date of grant) and subject to such terms and
conditions as the Committee shall deem appropriate.

          10.6 Modification or Substitution. Subject to the terms of the
               ----------------------------
Plan, including, without limitation, Section 15, the Committee may modify
outstanding Performance Awards or accept the surrender of outstanding
Performance Awards and grant new Performance Awards in substitution for them.
Notwithstanding the foregoing, no modification of a Performance Award shall
adversely alter or impair any rights or obligations under the Agreement without
the Grantee's consent.

     11.  Other Share Based Awards.
          ------------------------

<PAGE>

                11.1  Share Awards. The Committee, in its sole discretion, may
                      ------------
grant a Share Award to any Eligible Individual on such terms and conditions as
the Committee may determine. Share Awards may be made as additional compensation
for services rendered by the Eligible Individual or may be in lieu of cash or
other compensation to which the Eligible Individual is entitled from the
Company.

                11.2  Phantom Stock Awards.
                      --------------------

                      (a)  Grant.  The Committee,  in its sole  discretion,  may
                           -----
grant shares of Phantom Stock to any Eligible Individual. Such Phantom Stock
shall be subject to the terms and conditions established by the Committee and
set forth in the applicable Agreement.

                      (b)  Payment of Awards.  Upon the vesting of a Phantom
                           -----------------
Stock Award, the Grantee shall be entitled to receive a cash payment in respect
of each share of Phantom Stock which shall be equal to the Fair Market Value of
a Share as of the date the Phantom Stock Award was granted, or such other date
as determined by the Committee at the time the Phantom Stock Award was granted.
The Committee may, at the time a Phantom Stock Award is granted, provide a
limitation on the amount payable in respect of each share of Phantom Stock. In
lieu of a cash payment, the Committee, in its sole discretion, may settle
Phantom Stock Awards with Shares having a Fair Market Value on the date of
vesting equal to the cash payment to which the Grantee has become entitled.

        12.     Employment Agreement Governs Termination of Employment.
                ------------------------------------------------------

        An employment agreement, if applicable, between an Optionee or Grantee
and the Company shall govern with respect to the terms and conditions applicable
to such Option or Award upon a termination or change in the status of the
employment of the Optionee or Grantee, to the extent that such employment
agreement provides for terms and conditions that differ from the terms and
conditions provided for in the applicable Agreement or the Plan; provided,
however, that to the extent necessary for an Option or Award intended to qualify
as Performance-Based Compensation to so qualify, the terms of the applicable
Agreement or the Plan shall govern the Option or Award; and, provided further,
that the Committee shall have reviewed and, in its sole discretion, approved the
employment agreement.

        13.     Adjustment Upon Changes in Capitalization.
                -----------------------------------------

                (a)  In the event of a Change in Capitalization, the Committee
shall conclusively determine the appropriate adjustments, if any, to (i) the
maximum number and class of Shares or other stock or securities with respect to
which Options or Awards may be granted under the Plan, (ii) the maximum number
and class of Shares or other stock or securities that may be issued upon
exercise of Incentive Stock Options; (iii) the

<PAGE>

number and class of Shares or other stock or securities which are subject to
outstanding Options or Awards granted under the Plan and the purchase price
therefor, if applicable, and (iv) the Performance Objectives.

                (b)  Any such adjustment in the Shares or other stock or
securities (i) subject to outstanding Incentive Stock Options (including any
adjustments in the purchase price) shall be made in such manner as not to
constitute a modification as defined by Section 424(h)(3) of the Code and only
to the extent otherwise permitted by Sections 422 and 424 of the Code or (ii)
subject to outstanding Options or Awards that are intended to qualify as
Performance-Based Compensation shall be made in such a manner as not to
adversely affect the treatment of the Options or Awards as Performance-Based
Compensation.

                (c)  If, by reason of a Change in Capitalization, a Grantee of
an Award shall be entitled to, or an Optionee shall be entitled to exercise an
Option with respect to, new, additional or different shares of stock or
securities of the Company or any other corporation, such new, additional or
different shares shall thereupon be subject to all of the conditions,
restrictions and performance criteria which were applicable to the Shares
subject to the Award or Option, as the case may be, prior to such Change in
Capitalization.

         14.    Effect of Certain Transactions.
                ------------------------------

                Subject to Sections 6.5, 7.9, 9.4(b) and 10.4 or as otherwise
provided in an Agreement, in the event of (a) the liquidation or dissolution of
the Company or (b) a merger or consolidation of the Company (a "Transaction"),
the Plan and the Options and Awards issued hereunder shall continue in effect in
accordance with their respective terms, except that following a Transaction
either (i) each outstanding Option or Award shall be treated as provided for in
the agreement entered into in connection with the Transaction or (ii) if not so
provided in such agreement, each Optionee and Grantee shall be entitled to
receive in respect of each Share subject to any outstanding Options or Awards,
as the case may be, upon exercise of any Option or payment or transfer in
respect of any Award, the same number and kind of stock, securities, cash,
property or other consideration that each holder of a Share was entitled to
receive in the Transaction in respect of a Share; provided, however, that such
stock, securities, cash, property, or other consideration shall remain subject
to all of the conditions, restrictions and performance criteria which were
applicable to the Options and Awards prior to such Transaction. The treatment of
any Option or Award as provided in this Section 14 shall be conclusively
presumed to be appropriate for purposes of Section 10.

         15.    Interpretation.
                --------------

         Following the required registration of any equity security of the
Company pursuant to Section 12 of the Exchange Act:

<PAGE>

                (a)  The Plan is intended to comply with Rule 16b-3 promulgated
under the Exchange Act and the Committee shall interpret and administer the
provisions of the Plan or any Agreement in a manner consistent therewith. Any
provisions inconsistent with such Rule shall be inoperative and shall not affect
the validity of the Plan.

                (b)  Unless otherwise expressly stated in the relevant
Agreement, each Option, Stock Appreciation Right and Performance Award granted
under the Plan is intended to be Performance-Based Compensation. The Committee
shall not be entitled to exercise any discretion otherwise authorized hereunder
with respect to such Options or Awards if the ability to exercise such
discretion or the exercise of such discretion itself would cause the
compensation attributable to such Options or Awards to fail to qualify as
Performance-Based Compensation. Notwithstanding anything to the contrary in the
Plan, the provisions of the Plan may at any time be bifurcated by the Board or
the Committee in any manner so that certain provisions of the Plan or any
Performance Award intended (or required in order) to satisfy the applicable
requirements of Section 162(m) of the Code are only applicable to persons whose
compensation is subject to Section 162(m).

        16.     Effective Date, Termination and Amendment of the Plan.
                -----------------------------------------------------

                16.1   Effective Date.  The effective date of this Plan shall
                       --------------
be the date the Plan is adopted by the Board.

                16.2   Plan Amendment or Termination. The Plan shall terminate
                       -----------------------------
on the day preceding the tenth anniversary of the date of its adoption by the
Board and no Option or Award may be granted thereafter. The Board may sooner
terminate the Plan and the Board may at any time and from time to time amend,
modify or suspend the Plan; provided, however, that:

                       (a)  no such  amendment, modification, suspension or
termination shall impair or adversely alter any Options or Awards theretofore
granted under the Plan, except with the consent of the Optionee or Grantee, nor
shall any amendment, modification, suspension or termination deprive any
Optionee or Grantee of any Shares which he or she may have acquired through or
as a result of the Plan; and

                       (b)  to the extent necessary under any applicable law,
regulation or exchange requirement, no amendment shall be effective unless
approved by the stockholders of the Company in accordance with applicable law,
regulation or exchange requirement.

        17.     Non-Exclusivity of the Plan.
                ---------------------------

<PAGE>

     The adoption of the Plan by the Board shall not be construed as amending,
modifying or rescinding any previously approved incentive arrangement or as
creating any limitations on the power of the Board to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the
granting of stock options otherwise than under the Plan, and such arrangements
may be either applicable generally or only in specific cases.

     18.  Limitation of Liability.
          -----------------------

     As illustrative of the limitations of liability of the Company, but not
intended to be exhaustive thereof, nothing in the Plan shall be construed to:

          (a)  give any person any right to be granted an Option or Award other
than at the sole discretion of the Committee;

          (b)  give any person any rights whatsoever with respect to Shares
except as specifically provided in the Plan;

          (c)  interfere with or limit in any way the right of the Company or
any Subsidiary to terminate the employment of any person at any time for any
reason whatsoever, with or without good cause; or

          (d)  be evidence of any agreement or understanding, expressed or
implied, that the Company will employ any person at any particular rate of
compensation or for any particular period of time.

     19.  Regulations and Other Approvals; Governing Law.
          ----------------------------------------------

          19.1 Except as to matters of federal law, the Plan and the rights of
all persons claiming hereunder shall be construed and determined in accordance
with the laws of the State of Delaware without giving effect to conflicts of
laws principles thereof.

          19.2 The obligation of the Company to sell or deliver Shares with
respect to Options and Awards granted under the Plan shall be subject to all
applicable laws, rules and regulations, including all applicable federal and
state securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.

          19.3 The Board may make such changes as may be necessary or
appropriate to comply with the rules and regulations of any government
authority, or to obtain for Eligible Individuals granted Incentive Stock Options
the tax benefits under the applicable provisions of the Code and regulations
promulgated thereunder.

<PAGE>

          19.4 Each Option and Award is subject to the requirement that, if at
any time the Committee determines, in its sole discretion, that the listing,
registration or qualification of Shares issuable pursuant to the Plan is
required by any securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory body is necessary or
desirable as a condition of, or in connection with, the grant of an Option or
Award or the issuance of Shares, no Options or Awards shall be granted or
payment made or Shares issued, in whole or in part, unless listing,
registration, qualification, consent or approval has been effected or obtained
free of any conditions as acceptable to the Committee.

          19.5 Notwithstanding anything contained in the Plan or any Agreement
to the contrary, in the event that the disposition of Shares acquired pursuant
to the Plan is not covered by a then current registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), and is not otherwise
exempt from such registration, such Shares shall be restricted against transfer
to the extent required by the Securities Act and Rule 144 or other regulations
thereunder. The Company may place on any certificate representing any such
Shares any legend deemed desirable by the Company's counsel to comply with
federal or state securities laws and the Committee may require any individual
receiving Shares pursuant to an Option or Award granted under the Plan, as a
condition precedent to receipt of such Shares, to represent and warrant to the
Company in writing that the Shares acquired by such individual are acquired
without a view to any distribution thereof and will not be sold or transferred
other than pursuant to an effective registration thereof under said Act or
pursuant to an exemption applicable under the Securities Act or the rules and
regulations promulgated thereunder.

     20.  Miscellaneous.
          -------------

          20.1 Multiple Agreements. The terms of each Option or Award may differ
               -------------------
from other Options or Awards granted under the Plan at the same time, or at some
other time. The Committee may also grant more than one Option or Award to a
given Eligible Individual during the term of the Plan, either in addition to, or
in substitution for, one or more Options or Awards previously granted to that
Eligible Individual.

          20.2 Captions. The use of captions in this Plan or any Agreement is
               --------
for the convenience of reference only and shall not affect the meaning of any
provision of the Plan or such Agreement.

          20.3 Severability. Whenever possible, each provision of the Plan or an
               ------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of the Plan or an Agreement shall be held
by a court of competent jurisdiction to be prohibited by or invalid or
unenforceable under applicable law, then (a) such provision shall be deemed to
be amended to accomplish the objectives of the provision as originally written
to the fullest extent permitted by law and (b) all other provisions of the Plan
or an Agreement shall remain in full force and effect.

<PAGE>

          20.4 Withholding of Taxes.
               --------------------

               (a)  At such times as an Optionee or Grantee recognizes taxable
income in connection with the receipt of Shares or cash hereunder (a "Taxable
Event"), the Optionee or Grantee shall pay to the Company an amount equal to the
federal, state and local income taxes and other amounts as may be required by
law to be withheld by the Company in connection with the Taxable Event (the
"Withholding Taxes") prior to the issuance, or release from escrow, of such
Shares or the payment of such cash. The Company shall have the right to deduct
from any payment of cash to an Optionee or Grantee an amount equal to the
Withholding Taxes in satisfaction of the obligation to pay Withholding Taxes. In
satisfaction of the obligation to pay Withholding Taxes to the Company, the
Optionee or Grantee may make a written election (the "Tax Election"), which may
be accepted or rejected in the sole discretion of the Committee, to have
withheld a portion of the Shares then issuable to him or her having an aggregate
Fair Market Value equal to the Withholding Taxes.

               (b)  If an Optionee makes a disposition, within the meaning of
Section 424(c) of the Code and regulations promulgated thereunder, of any Share
or Shares issued to such Optionee pursuant to the exercise of an Incentive Stock
Option within the two-year period commencing on the day after the date of the
grant or within the one-year period commencing on the day after the date of
transfer of such Share or Shares to the Optionee pursuant to such exercise, the
Optionee shall, within ten (10) days of such disposition, notify the Company
thereof, by delivery of written notice to the Company at its principal executive
office.

          20.5 Post-Transition Period. Any Option or Award granted under the
               ----------------------
Plan after the expiration of the Transition Period which is intended to be
Performance-Based Compensation shall be subject to the approval of the material
terms of the Plan by a majority of the stockholders of the Company in accordance
with Section 162(m) of the Code and the regulations promulgated thereunder.

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