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Exhibit 10.38    
    

Salary Amendments to Employment Agreements with Named Executive Officers  

	Named Executive Officer
 
	 	2006 Annual Base Salary

Effective as of February 2, 2006

	Joshua S. Boger	 	$600,000
	Victor A. Hartmann	 	$452,434
	Peter Mueller	 	$432,387
	Ian F. Smith	 	$400,504
	Kenneth S. Boger	 	$377,228

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Exhibit 10.38QuickLinks
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Exhibit 10.40    
    

AMENDMENT TO NON-EMPLOYEE DIRECTOR COMPENSATION POLICY  

        In the first quarter of 2006, the Board of Directors amended the Company's non-employee director compensation policy. Prior to the amendment, the
Chair of the Audit Committee received a $15,000 annual retainer, and the Chair of the Management Development and Compensation Committee received a $10,000 annual retainer. Under the amended policy,
the Chair of the Audit Committee will receive a $20,000 annual retainer, and the Chair of the Management Development and Compensation Committee will receive a $14,000 annual retainer. 

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Exhibit 10.40<Page>

                                                                 Exhibit 4.1

016570|003590|127C|RESTRICTED|4|057-423

      COMMON STOCK                                              COMMON STOCK

       PAR VALUE $0.01                     THIS CERTIFICATE IS TRANSFERABLE IN
                                             CANTON, MA, JERSEY CITY, NJ AND
                                                        NEW YORK, NY

                                  CLAYTON

 Certificate                                                 Shares
   Number                                               **600620******
  ZQ 000411                                             ***600620*****
                                                        ****600620****
                            CLAYTON HOLDINGS, INC.      *****600620***
                      INCORPORATED UNDER THE LAWS       ******600620**
                          OF THE STATE OF DELAWARE

THIS CERTIFIES THAT      MR. SAMPLE & MRS. SAMPLE &    CUSIP 18418N 10 7
                         MR. SAMPLE & MRS. SAMPLE      SEE REVERSE FOR CERTAIN
                                                         DEFINITIONS

is the owner of           SIX HUNDRED THOUSAND
                         SIX HUNDRED AND TWENTY

          FULLY-PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF

CLAYTON HOLDINGS, INC. (HEREINAFTER CALLED THE "COMPANY"), transferable on
the books of the Company in person or by duly authorized attorney, upon
surrender of this Certificate properly endorsed.  This Certificate and the
shares represented hereby, are issued and shall be held subject to all of the
provisions of the certificate of incorporation, as amended, and the By-Laws,
as amended, of the Company (copies of which are on file with the Company and
with the Transfer Agent), to all of which each holder, by acceptance hereof,
assents.  This Certificate is not valid unless countersigned and registered
by the Transfer Agent and Registrar.

WITNESS the facsimile seal of the Company and the facsimile signatures of its
duly authorized officers.

                                              DATED [[Month Day, Year]]

                                              COUNTERSIGNED AND REGISTERED
                                              COMPUTERSHARE TRUST COMPANY, N.A.
          /s/ Frank P. Filipps                TRANSFER AGENT AND REGISTRAR
          --------------------
               President

          /s/ Frederick C. Herbst
          -----------------------
                 Treasurer                    By_________________________
                                                  AUTHORIZED SIGNATURE

CLAYTON                               CUSIP                         XXXXXXXXX
                                      Holder ID                     XXXXXXXXX
                                      Insurance Value              1,000,000.00
                                      Number of Shares                   123456
                                      DTC              12345678 123456789012345
PO BOX 43004, Providence, RI 02840-3004

<Table>
<Caption>
                                   Certificate Numbers   Num/No.  Denom.  Total
<S>                                <C>                   <C>      <C>     <C>
MR A SAMPLE                        1234567890/1234567890    1       1       1
DESIGNATION (IF ANY)               1234567890/1234567890    2       2       2
ADD 1                              1234567890/1234567890    3       3       3
ADD 2                              1234567890/1234567890    4       4       4
ADD 3                              1234567890/1234567890    5       5       5
ADD 4                              1234567890/1234567890    6       6       6
                                   Total Transaction                        7

</Table>

<Page>

CLAYTON HOLDINGS, INC.
THE COMPANY HAS MORE THAN ONE CLASS OF STOCK AUTHORIZED TO BE ISSUED. THE
COMPANY WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO REQUESTS, IN
WRITING, A SUMMARY OF THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE,
PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OF THE
COMPANY AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH
PREFERENCES AND RIGHTS, AND THE VARIATIONS IN RIGHTS, PREFERENCES AND
LIMITATIONS DETERMINED FOR EACH SERIES, WHICH ARE FIXED BY THE CERTIFICATE OF
INCORPORATION OF THE COMPANY, AS AMENDED, AND THE RESOLUTIONS OF THE BOARD OF
DIRECTORS OF THE COMPANY, AND THE AUTHORITY OF THE BOARD OF DIRECTORS TO
DETERMINE VARIATIONS FOR FUTURE SERIES.  SUCH REQUEST MAY BE MADE, IN
WRITING, TO THE OFFICE OF THE SECRETARY OF THE COMPANY OR TO THE TRANSFER
AGENT.  THE BOARD OF DIRECTORS MAY REQUIRE THE OWNER OF A LOST OR DESTROYED
STOCK CERTIFICATE, OR HIS LEGAL REPRESENTATIVES, TO GIVE THE COMPANY A BOND
TO INDEMNIFY IT AND ITS TRANSFER AGENTS AND REGISTRARS AGAINST ANY CLAIM THAT
MAY BE MADE AGAINST THEM ON ACCOUNT OF THE ALLEGED LOSS OR DESTRUCTION OF ANY
SUCH CERTIFICATE.

The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

<Table>
<S>                                        <C>

 TEN COM - as tenants in common            UNIF GIFT MIN ACT-.......Custodian....
                                                              (Cust)       (Minor)
 TEN ENT - as tenants by the entireties    under Uniform Cust to Minors Act......
                                                                           (State)
 JT TEN - as joint tenants with right      UNIF TRF MIN ACT .....Custodian (until age.).......
          of survivorship and not as                        (Cust)                    (Minor)
          tenants in common                under Uniform transfers to Minors Act......
                                                                               (State)

</Table>

          Additional abbreviations may also be used though not in the above
list.

For value received,_____________hereby sell, assign and transfer unto

[PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE]
--------------------------------------------------------------

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

___________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING POSTAL ZIP CODE OF
ASSIGNED)
______________________________________________________________
______________________________________________________________
______________________________________________________________ Shares
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
______________________________________________________________ Attorney
to transfer the said stock on the books of the within-named Corporation with
full power of substitution in the premises.

Dated:_____________________________________20_______________________________

Signature:__________________________________________________________________

Signature:__________________________________________________________________
      Notice: The signature to this assignment must correspond with the name
              as written upon the face of the certificate, in every
              particular, without alteration or enlargement, or any change
              whatever.

---------------------------------------------------------------------------
                   Signature(s) Guarantee: Medallion Guarantee Stamp
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(Banker, Stockbroker, Savings, and Loan Association and Credit Union) WITH
MEMBERSHIP IN AN APPROVED SIGNATORS GUARANTEE MEDALLION PROGRAM, PURSUANT TO
S.E.C RULE 17Ad-15.

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

SECURITY INSTRUCTIONS

    [WATERMARK]<Page>

                                                                    EXHIBIT 10.4

                             CLAYTON HOLDINGS, INC.

                      2006 STOCK OPTION AND INCENTIVE PLAN

SECTION 1.        GENERAL PURPOSE OF THE PLAN; DEFINITIONS

         The name of the plan is the Clayton Holdings, Inc. 2006 Stock Option
and Incentive Plan (the "Plan"). The purpose of the Plan is to encourage and
enable the officers, employees, Non-Employee Directors and other key persons
(including consultants and prospective employees) of Clayton Holdings, Inc. (the
"Company") and its Subsidiaries upon whose judgment, initiative and efforts the
Company largely depends for the successful conduct of its business to acquire a
proprietary interest in the Company. It is anticipated that providing such
persons with a direct stake in the Company's welfare will assure a closer
identification of their interests with those of the Company and its
stockholders, thereby stimulating their efforts on the Company's behalf and
strengthening their desire to remain with the Company.

         The following terms shall be defined as set forth below:

         "ACT" means the Securities Act of 1933, as amended, and the rules and
regulations thereunder.

         "ADMINISTRATOR" is defined in Section 2(a).

         "AWARD" or "AWARDS," except where referring to a particular category of
grant under the Plan, shall include Incentive Stock Options, Non-Qualified Stock
Options, Stock Appreciation Rights, Deferred Stock Awards, Restricted Stock
Awards, Unrestricted Stock Awards and Dividend Equivalent Rights.

         "BOARD" means the Board of Directors of the Company.

         "CODE" means the Internal Revenue Code of 1986, as amended, and any
successor Code, and related rules, regulations and interpretations.

         "COMMITTEE" means the compensation committee of the Board or a similar
committee performing the functions of the compensation committee and which is
comprised of not less than two Non-Employee Directors who are independent.

         "COVERED EMPLOYEE" means an employee who is a "Covered Employee" within
the meaning of Section 162(m) of the Code.

         "DEFERRED STOCK AWARD" means Awards granted pursuant to Section 8.

         "DIVIDEND EQUIVALENT RIGHT" means Awards granted pursuant to Section
11.

         "EFFECTIVE DATE" means the date on which the Plan is approved by
stockholders as set forth in Section 19.

<PAGE>

         "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.

         "FAIR MARKET VALUE" of the Stock on any given date means the fair
market value of the Stock determined in good faith by the Administrator;
provided, however, that if the Stock is admitted to quotation on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ"), NASDAQ
National System or a national securities exchange, the determination shall be
made by reference to market quotations. If there are no market quotations for
such date, the determination shall be made by reference to the last date
preceding such date for which there are market quotations; provided further,
however, that if the date for which Fair Market Value is determined is the first
day when trading prices for the Stock are reported on NASDAQ or on a national
securities exchange, the Fair Market Value shall be the "Price to the Public"
(or equivalent) set forth on the cover page for the final prospectus relating to
the Company's Initial Public Offering.

         "INCENTIVE STOCK OPTION" means any Stock Option designated and
qualified as an "incentive stock option" as defined in Section 422 of the Code.

         "INITIAL PUBLIC OFFERING" means the consummation of the first fully
underwritten, firm commitment public offering pursuant to an effective
registration statement under the Act covering the offer and sale by the Company
of its equity securities, or such other event as a result of or following which
the Stock shall be publicly held.

         "NON-EMPLOYEE DIRECTOR" means a member of the Board who is not also an
employee of the Company or any Subsidiary.

         "NON-QUALIFIED STOCK OPTION" means any Stock Option that is not an
Incentive Stock Option.

         "OPTION" or "STOCK OPTION" means any option to purchase shares of Stock
granted pursuant to Section 5.

         "PERFORMANCE CYCLE" means one or more periods of time, which may be of
varying and overlapping durations, as the Administrator may select, over which
the attainment of one or more performance criteria will be measured for the
purpose of determining a grantee's right to and the payment of a Restricted
Stock Award or Deferred Stock Award.

         "RESTRICTED STOCK AWARD" means Awards granted pursuant to Section 7.

         "SECTION 409A" means Section 409A of the Code and the regulations and
other guidance promulgated thereunder.

         "STOCK" means the Common Stock, par value $0.01 per share, of the
Company, subject to adjustments pursuant to Section 3.

         "STOCK APPRECIATION RIGHT" means any Award granted pursuant to Section
6.

                                       2

<PAGE>

         "SUBSIDIARY" means any corporation or other entity (other than the
Company) in which the Company has a controlling interest, either directly or
indirectly.

         "TEN PERCENT OWNER" means an employee who owns or is deemed to own (by
reason of the attribution rules of Section 424(d) of the Code) more than 10
percent of the combined voting power of all classes of stock of the Company or
any parent or subsidiary corporation.

         "UNRESTRICTED STOCK AWARD" means any Award granted pursuant to Section
9.

SECTION 2.        ADMINISTRATION OF PLAN; ADMINISTRATOR AUTHORITY TO SELECT
                  GRANTEES AND DETERMINE AWARDS

         (a) COMMITTEE.  The Plan shall be  administered  by either the Board or
the Committee (the "Administrator").

         (b) POWERS OF ADMINISTRATOR. The Administrator shall have the power and
authority to grant Awards  consistent with the terms of the Plan,  including the
power and authority:

             (i) to select the  individuals to whom Awards may from time to time
be granted;

             (ii) to determine  the time or times of grant,  and the extent,  if
any, of Incentive Stock Options, Non-Qualified Stock Options, Stock Appreciation
Rights,  Restricted  Stock Awards,  Deferred  Stock Awards,  Unrestricted  Stock
Awards and Dividend  Equivalent  Rights,  or any  combination  of the foregoing,
granted to any one or more grantees;

             (iii) to  determine  the number of shares of Stock to be covered by
any Award;

             (iv) to  determine  and  modify  from  time to time the  terms  and
conditions, including restrictions, not inconsistent with the terms of the Plan,
of any Award,  which terms and conditions may differ among individual Awards and
grantees, and to approve the form of written instruments evidencing the Awards;

             (v) to accelerate at any time the  exercisability or vesting of all
or any portion of any Award;

             (vi) subject to the  provisions of Section  5(a)(ii),  to extend at
any time the period in which Stock Options may be exercised; and

             (vii) at any time to adopt, alter and repeal such rules, guidelines
and  practices  for  administration  of the  Plan  and  for  its  own  acts  and
proceedings as it shall deem advisable; to interpret the terms and provisions of
the Plan and any Award  (including  related  written  instruments);  to make all
determinations it deems advisable for the  administration of the Plan; to decide
all disputes arising in connection with the Plan; and to otherwise supervise the
administration of the Plan.

         All decisions and interpretations of the Administrator shall be binding
on all persons, including the Company and Plan grantees.

                                       3

<PAGE>

         (c) DELEGATION OF AUTHORITY TO GRANT AWARDS. The Administrator,  in its
discretion,  may delegate to the Chief  Executive  Officer of the Company all or
part of the Administrator's authority and duties with respect to the granting of
Awards, to individuals who are not subject to the reporting and other provisions
of Section 16 of the Exchange Act or Covered  Employees.  Any such delegation by
the Administrator shall include a limitation as to the amount of Awards that may
be granted during the period of the  delegation and shall contain  guidelines as
to the  determination  of the  exercise  price  of any  Stock  Option  or  Stock
Appreciation  Right,  the  conversion  ratio or price  of other  Awards  and the
vesting  criteria.  The  Administrator  may  revoke  or  amend  the  terms  of a
delegation at any time but such action shall not invalidate any prior actions of
the Administrator's delegate or delegates that were consistent with the terms of
the Plan.

         (d)  INDEMNIFICATION.  Neither  the  Board nor the  Committee,  nor any
member of either or any delegate thereof, shall be liable for any act, omission,
interpretation,  construction or determination  made in good faith in connection
with the Plan,  and the members of the Board and the Committee (and any delegate
thereof) shall be entitled in all cases to indemnification  and reimbursement by
the Company in respect of any claim, loss, damage or expense (including, without
limitation,  reasonable  attorneys' fees) arising or resulting  therefrom to the
fullest  extent  permitted  by law and/or  under any  directors'  and  officers'
liability insurance coverage which may be in effect from time to time and/or any
indemnification agreement between such individual and the Company.

SECTION 3.        STOCK ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION

         (a) STOCK ISSUABLE.  The maximum number of shares of Stock reserved and
available  for  issuance  under the Plan shall be 1,814,130  shares,  subject to
adjustment  as provided in Section 3(b);  provided that not more than  1,814,130
shares shall be issued in the form of Incentive  Stock Options.  For purposes of
this  limitation,  the shares of Stock underlying any Awards that are forfeited,
canceled,  held back upon  exercise  of an Option or  settlement  of an Award to
cover the exercise price or tax withholding,  reacquired by the Company prior to
vesting,  satisfied without the issuance of Stock or otherwise terminated (other
than by  exercise)  shall be added  back to the  shares of Stock  available  for
issuance under the Plan.  Subject to such overall  limitations,  shares of Stock
may be issued up to such maximum number  pursuant to any type or types of Award;
provided,  however, that Stock Options or Stock Appreciation Rights with respect
to no more than  750,000  shares of Stock may be granted  to any one  individual
grantee during any one calendar year period.  The shares  available for issuance
under the Plan may be authorized but unissued shares of Stock or shares of Stock
reacquired by the Company.

         (b) CHANGES IN STOCK.  Subject to Section 3(c) hereof,  if, as a result
of any reorganization, recapitalization, reclassification, stock dividend, stock
split,  reverse  stock split or other similar  change in the  Company's  capital
stock,  the  outstanding  shares  of Stock are  increased  or  decreased  or are
exchanged  for a different  number or kind of shares or other  securities of the
Company,  or additional shares or new or different shares or other securities of
the Company or other non-cash assets are distributed with respect to such shares
of  Stock  or  other  securities,   or,  if,  as  a  result  of  any  merger  or
consolidation,  sale of all or  substantially  all of the assets of the Company,
the outstanding  shares of Stock are converted into or exchanged for a different
number or kind of securities of the Company or any successor entity (or a parent
or

                                       4

<PAGE>

subsidiary  thereof),   the  Administrator  shall  make  an  appropriate  or
proportionate  adjustment  in (i) the  maximum  number  of shares  reserved  for
issuance  under the Plan,  including  the  maximum  number of shares that may be
issued in the form of  Unrestricted  Stock  Awards,  Restricted  Stock Awards or
Deferred  Stock Awards,  (ii) the number of Stock Options or Stock  Appreciation
Rights that can be granted to any one individual  grantee and the maximum number
of shares that may be granted under a Performance-based  Award, (iii) the number
and kind of shares or other securities  subject to any then  outstanding  Awards
under the Plan,  (iv) the  repurchase  price,  if any, per share subject to each
outstanding   Restricted   Stock  Award,   (v)  the  number  of  Stock   Options
automatically  granted to  Non-Employee  Directors,  and (vi) the price for each
share  subject to any then  outstanding  Stock  Options  and Stock  Appreciation
Rights under the Plan,  without changing the aggregate exercise price (i.e., the
exercise price multiplied by the number of Stock Options and Stock  Appreciation
Rights) as to which such Stock  Options  and Stock  Appreciation  Rights  remain
exercisable.  The adjustment by the  Administrator  shall be final,  binding and
conclusive.  No  fractional  shares  of Stock  shall be  issued  under  the Plan
resulting from any such adjustment,  but the Administrator in its discretion may
make a cash payment in lieu of fractional shares.

         The Administrator may also adjust the number of shares subject to
outstanding Awards and the exercise price and the terms of outstanding Awards to
take into consideration material changes in accounting practices or principles,
extraordinary dividends, acquisitions or dispositions of stock or property or
any other event if it is determined by the Administrator that such adjustment is
appropriate to avoid distortion in the operation of the Plan, provided that no
such adjustment shall be made in the case of a Stock Option or Stock
Appreciation Right, without the consent of the grantee, if it would constitute a
modification, extension or renewal of the Option within the meaning of Section
424(h) of the Code.

         (c) MERGERS AND OTHER  TRANSACTIONS.  In the case of and subject to the
consummation of (i) the dissolution or liquidation of the Company, (ii) the sale
of all or substantially all of the assets of the Company on a consolidated basis
to  an  unrelated  person  or  entity,   (iii)  a  merger,   reorganization   or
consolidation  in which the  outstanding  shares of Stock are converted  into or
exchanged for a different  kind of  securities  of the successor  entity and the
holders of the  Company's  outstanding  voting power  immediately  prior to such
transaction  do not  own a  majority  of the  outstanding  voting  power  of the
successor entity  immediately upon completion of such  transaction,  or (iv) the
sale of all of the Stock of the  Company  to an  unrelated  person or entity (in
each case, a "Sale Event"),  all Options and Stock Appreciation  Rights that are
not exercisable  immediately prior to the effective time of the Sale Event shall
become  fully  exercisable  as of the  effective  time of the Sale Event and all
other Awards shall become fully vested and  nonforfeitable  as of the  effective
time of the Sale Event,  except as the  Administrator may otherwise specify with
respect to particular  Awards in the relevant  Award  documentation,  and Awards
with conditions and restrictions relating to the attainment of performance goals
may become  vested and  nonforfeitable  in  connection  with a Sale Event in the
Administrator's  discretion. Upon the effective time of the Sale Event, the Plan
and all outstanding  Awards granted hereunder shall terminate,  unless provision
is made in connection  with the Sale Event in the sole discretion of the parties
thereto for the assumption or continuation of Awards theretofore  granted by the
successor  entity,  or the  substitution  of such  Awards with new Awards of the
successor entity or parent thereof, with appropriate adjustment as to the number
and kind of shares and, if appropriate,  the per share exercise prices,  as such
parties shall agree (after taking

                                       5

<PAGE>

into account any acceleration hereunder). In the event of such termination, each
grantee shall be permitted, within a specified period of time prior to the
consummation of the Sale Event as determined by the Administrator, to exercise
all outstanding Options and Stock Appreciation Rights held by such grantee,
including those that will become exercisable upon the consummation of the Sale
Event; provided, however, that the exercise of Options and Stock Appreciation
Rights not exercisable prior to the Sale Event shall be subject to the
consummation of the Sale Event.

         Notwithstanding anything to the contrary in this Section 3(c), in the
event of a Sale Event pursuant to which holders of the Stock of the Company will
receive upon consummation thereof a cash payment for each share surrendered in
the Sale Event, the Company shall have the right, but not the obligation, to
make or provide for a cash payment to the grantees holding Options and Stock
Appreciation Rights, in exchange for the cancellation thereof, in an amount
equal to the difference between (A) the value as determined by the Administrator
of the consideration payable per share of Stock pursuant to the Sale Event (the
"Sale Price") times the number of shares of Stock subject to outstanding Options
and Stock Appreciation Rights (to the extent then exercisable at prices not in
excess of the Sale Price) and (B) the aggregate exercise price of all such
outstanding Options and Stock Appreciation Rights.

         (d) SUBSTITUTE AWARDS. The Administrator may grant Awards under the
Plan in substitution for stock and stock based awards held by employees,
directors or other key persons of another corporation in connection with the
merger or consolidation of the employing corporation with the Company or a
Subsidiary or the acquisition by the Company or a Subsidiary of property or
stock of the employing corporation. The Administrator may direct that the
substitute awards be granted on such terms and conditions as the Administrator
considers appropriate in the circumstances. Any substitute Awards granted under
the Plan shall not count against the share limitation set forth in Section 3(a).

SECTION 4.        ELIGIBILITY

         Grantees under the Plan will be such full or part-time officers and
other employees, Non-Employee Directors and key persons (including consultants
and prospective employees) of the Company and its Subsidiaries as are selected
from time to time by the Administrator in its sole discretion.

SECTION 5.        STOCK OPTIONS

         Any Stock Option granted under the Plan shall be in such form as the
Administrator may from time to time approve.

         Stock Options granted under the Plan may be either Incentive Stock
Options or Non-Qualified Stock Options. Incentive Stock Options may be granted
only to employees of the Company or any Subsidiary that is a "subsidiary
corporation" within the meaning of Section 424(f) of the Code. To the extent
that any Option does not qualify as an Incentive Stock Option, it shall be
deemed a Non-Qualified Stock Option.

         (a) STOCK OPTIONS GRANTED TO EMPLOYEES AND KEY PERSONS. The
Administrator in its discretion may grant Stock Options to eligible employees
and key persons of the Company or

                                       6

<PAGE>

any Subsidiary. Stock Options granted pursuant to this Section 5(a) shall be
subject to the following terms and conditions and shall contain such additional
terms and conditions, not inconsistent with the terms of the Plan, as the
Administrator shall deem desirable. If the Administrator so determines, Stock
Options may be granted in lieu of cash compensation at the optionee's election,
subject to such terms and conditions as the Administrator may establish.

             (i) EXERCISE PRICE. The exercise price per share for the Stock
covered by a Stock Option granted pursuant to this Section 5(a) shall be
determined by the Administrator at the time of grant but shall not be less than
100 percent of the Fair Market Value on the date of grant. In the case of an
Incentive Stock Option that is granted to a Ten Percent Owner, the option price
of such Incentive Stock Option shall be not less than 110 percent of the Fair
Market Value on the grant date.

             (ii) OPTION TERM. The term of each Stock Option shall be fixed by
the Administrator, but no Stock Option shall be exercisable more than ten years
after the date the Stock Option is granted. In the case of an Incentive Stock
Option that is granted to a Ten Percent Owner, the term of such Stock Option
shall be no more than five years from the date of grant.

             (iii) EXERCISABILITY; RIGHTS OF A STOCKHOLDER. Stock Options shall
become exercisable at such time or times, whether or not in installments, as
shall be determined by the Administrator at or after the grant date. The
Administrator may at any time accelerate the exercisability of all or any
portion of any Stock Option. An optionee shall have the rights of a stockholder
only as to shares acquired upon the exercise of a Stock Option and not as to
unexercised Stock Options.

             (iv) METHOD OF EXERCISE. Stock Options may be exercised in whole or
in part, by giving written notice of exercise to the Company, specifying the
number of shares to be purchased. Payment of the purchase price may be made by
one or more of the following methods to the extent provided in the Option Award
agreement:

                 (A) In cash, by certified or bank check or other instrument
         acceptable to the Administrator;

                 (B) Through the delivery (or attestation to the ownership) of
         shares of Stock that have been purchased by the optionee on the open
         market or that are beneficially owned by the optionee and are not then
         subject to restrictions under any Company plan. Such surrendered shares
         shall be valued at Fair Market Value on the exercise date. To the
         extent required to avoid variable accounting treatment under FAS 123R
         or other applicable accounting rules, such surrendered shares shall
         have been owned by the optionee for at least six months; or

                 (C) By the optionee delivering to the Company a properly
         executed exercise notice together with irrevocable instructions to a
         broker to promptly deliver to the Company cash or a check payable and
         acceptable to the Company for the purchase price; provided that in the
         event the optionee chooses to pay the purchase price as so provided,
         the optionee and the broker shall comply with such procedures and enter
         into

                                       7

<PAGE>

         such agreements of indemnity and other agreements as the Administrator
         shall prescribe as a condition of such payment procedure.

Payment instruments will be received subject to collection. The transfer to the
optionee on the records of the Company or of the transfer agent of the shares of
Stock to be purchased pursuant to the exercise of a Stock Option will be
contingent upon receipt from the optionee (or a purchaser acting in his stead in
accordance with the provisions of the Stock Option) by the Company of the full
purchase price for such shares and the fulfillment of any other requirements
contained in the Option Award agreement or applicable provisions of laws
(including the satisfaction of any withholding taxes that the Company is
obligated to withhold with respect to the optionee). In the event an optionee
chooses to pay the purchase price by previously-owned shares of Stock through
the attestation method, the number of shares of Stock transferred to the
optionee upon the exercise of the Stock Option shall be net of the number of
shares attested to.

             (v) ANNUAL LIMIT ON INCENTIVE STOCK OPTIONS. To the extent required
for "incentive stock option" treatment under Section 422 of the Code, the
aggregate Fair Market Value (determined as of the time of grant) of the shares
of Stock with respect to which Incentive Stock Options granted under this Plan
and any other plan of the Company or its parent and subsidiary corporations
become exercisable for the first time by an optionee during any calendar year
shall not exceed $100,000. To the extent that any Stock Option exceeds this
limit, it shall constitute a Non-Qualified Stock Option.

         (b) STOCK OPTIONS GRANTED TO NON-EMPLOYEE DIRECTORS.

             (i) AUTOMATIC GRANT OF OPTIONS.

                 (A) Each Non-Employee Director who is first elected to serve as
         a Director after the Initial Public Offering shall be granted, on the
         fifth business day after his election, a Non-Qualified Stock Option to
         acquire 10,000 shares of Stock.

                 (B) The exercise price per share for the Stock covered by a
         Stock Option granted under this Section 5(b) shall be equal to the Fair
         Market Value of the Stock on the date the Stock Option is granted.

                 (C) The Administrator, in its discretion, may grant additional
         Non-Qualified Stock Options to Non-Employee Directors. Any such grant
         may vary among individual Non-Employee Directors.

             (ii) EXERCISE; TERMINATION.

                 (A) An Option issued under this Section 5(b) shall not be
         exercisable after the expiration of ten years from the date of grant.

                 (B) Options granted under this Section 5(b) may be exercised
         only by written notice to the Company specifying the number of shares
         to be purchased. Payment of the full purchase price of the shares to be
         purchased may be made by one or more of the methods specified in
         Section 5(a)(iv). An optionee shall have the rights of a

                                       8

<PAGE>

         stockholder only as to shares acquired upon the exercise of a Stock
         Option and not as to unexercised Stock Options.

SECTION 6.        STOCK APPRECIATION RIGHTS

         (a) NATURE OF STOCK APPRECIATION RIGHTS. A Stock Appreciation Right is
an Award entitling the recipient to receive shares of Stock having a value equal
to the excess of the Fair Market Value of the Stock on the date of exercise over
the exercise price of the Stock Appreciation Right, which price shall not be
less than 100 percent of the Fair Market Value of the Stock on the date of grant
(or more than the option exercise price per share, if the Stock Appreciation
Right was granted in tandem with a Stock Option) multiplied by the number of
shares of Stock with respect to which the Stock Appreciation Right shall have
been exercised.

         (b) GRANT AND EXERCISE OF STOCK APPRECIATION RIGHTS. Stock Appreciation
Rights may be granted by the Administrator in tandem with, or independently of,
any Stock Option granted pursuant to Section 5 of the Plan. In the case of a
Stock Appreciation Right granted in tandem with a Non-Qualified Stock Option,
such Stock Appreciation Right may be granted either at or after the time of the
grant of such Option. In the case of a Stock Appreciation Right granted in
tandem with an Incentive Stock Option, such Stock Appreciation Right may be
granted only at the time of the grant of the Option.

         A Stock Appreciation Right or applicable portion thereof granted in
tandem with a Stock Option shall terminate and no longer be exercisable upon the
termination or exercise of the related Option.

         (c) TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS. Stock
Appreciation Rights shall be subject to such terms and conditions as shall be
determined from time to time by the Administrator, subject to the following:

             (i) Stock Appreciation Rights granted in tandem with Options shall
be exercisable at such time or times and to the extent that the related Stock
Options shall be exercisable.

             (ii) Upon exercise of a Stock Appreciation Right, the applicable
portion of any related Option shall be surrendered.

SECTION 7.        RESTRICTED STOCK AWARDS

         (a) NATURE OF RESTRICTED STOCK AWARDS. A Restricted Stock Award is an
Award entitling the recipient to acquire, at such purchase price (which may be
zero) as determined by the Administrator, shares of Stock subject to such
restrictions and conditions as the Administrator may determine at the time of
grant ("Restricted Stock"). Conditions may be based on continuing employment (or
other service relationship) and/or achievement of pre-established performance
goals and objectives. The grant of a Restricted Stock Award is contingent on the
grantee executing the Restricted Stock Award agreement. The terms and conditions
of each such agreement shall be determined by the Administrator, and such terms
and conditions may differ among individual Awards and grantees.

                                       9

<PAGE>

         (b) RIGHTS AS A STOCKHOLDER. Upon execution of a written instrument
setting forth the Restricted Stock Award and payment of any applicable purchase
price, a grantee shall have the rights of a stockholder with respect to the
voting of the Restricted Stock, subject to such conditions contained in the
written instrument evidencing the Restricted Stock Award. Unless the
Administrator shall otherwise determine, (i) uncertificated Restricted Stock
shall be accompanied by a notation on the records of the Company or the transfer
agent to the effect that they are subject to forfeiture until such Restricted
Stock are vested as provided in Section 7(d) below, and (ii) certificated
Restricted Stock shall remain in the possession of the Company until such
Restricted Stock is vested as provided in Section 7(d) below, and the grantee
shall be required, as a condition of the grant, to deliver to the Company such
instruments of transfer as the Administrator may prescribe.

         (c) RESTRICTIONS. Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of except as
specifically provided herein or in the Restricted Stock Award agreement. Except
as may otherwise be provided by the Administrator either in the Award agreement
or, subject to Section 16 below, in writing after the Award agreement is issued,
if any, if a grantee's employment (or other service relationship) with the
Company and its Subsidiaries terminates for any reason, any Restricted Stock
that has not vested at the time of termination shall automatically and without
any requirement of notice to such grantee from or other action by or on behalf
of, the Company be deemed to have been reacquired by the Company at its original
purchase price from such grantee or such grantee's legal representative
simultaneously with such termination of employment (or other service
relationship), and thereafter shall cease to represent any ownership of the
Company by the grantee or rights of the grantee as a stockholder. Following such
deemed reacquisition of unvested Restricted Stock that are represented by
physical certificates, a grantee shall surrender such certificates to the
Company upon request without consideration.

         (d) VESTING OF RESTRICTED STOCK. The Administrator at the time of grant
shall specify the date or dates and/or the attainment of pre-established
performance goals, objectives and other conditions on which the
non-transferability of the Restricted Stock and the Company's right of
repurchase or forfeiture shall lapse. Notwithstanding the foregoing, in the
event that any such Restricted Stock shall have a performance-based goal, the
restriction period with respect to such shares shall not be less than one year,
and in the event any such Restricted Stock shall have a time-based restriction,
the total restriction period with respect to such shares shall not be less than
three years; provided, however, that Restricted Stock with a time-based
restriction may become vested incrementally over such three-year period.
Subsequent to such date or dates and/or the attainment of such pre-established
performance goals, objectives and other conditions, the shares on which all
restrictions have lapsed shall no longer be Restricted Stock and shall be deemed
"vested." Except as may otherwise be provided by the Administrator either in the
Award agreement or, subject to Section 16 below, in writing after the Award
agreement is issued, a grantee's rights in any shares of Restricted Stock that
have not vested shall automatically terminate upon the grantee's termination of
employment (or other service relationship) with the Company and its Subsidiaries
and such shares shall be subject to the provisions of Section 7(c) above.

                                       10

<PAGE>

SECTION 8.        DEFERRED STOCK AWARDS

         (a) NATURE OF DEFERRED STOCK AWARDS. A Deferred Stock Award is an Award
of phantom stock units to a grantee, subject to restrictions and conditions as
the Administrator may determine at the time of grant. Conditions may be based on
continuing employment (or other service relationship) and/or achievement of
pre-established performance goals and objectives. The grant of a Deferred Stock
Award is contingent on the grantee executing the Deferred Stock Award agreement.
The terms and conditions of each such agreement shall be determined by the
Administrator, and such terms and conditions may differ among individual Awards
and grantees. Notwithstanding the foregoing, in the event that any such Deferred
Stock Award shall have a performance-based goal, the restriction period with
respect to such award shall not be less than one year, and in the event any such
Deferred Stock Award shall have a time-based restriction, the total restriction
period with respect to such award shall not be less than three years; provided,
however, that any Deferred Stock Award with a time-based restriction may become
vested incrementally over such three-year period. At the end of the deferral
period, the Deferred Stock Award, to the extent vested, shall be paid to the
grantee in the form of shares of Stock.

         (b) ELECTION TO RECEIVE DEFERRED STOCK AWARDS IN LIEU OF COMPENSATION.
The Administrator may, in its sole discretion, permit a grantee to elect to
receive a portion of future cash compensation otherwise due to such grantee in
the form of a Deferred Stock Award. Any such election shall be made in writing
and shall be delivered to the Company no later than the date specified by the
Administrator and in accordance with Section 409A and such other rules and
procedures established by the Administrator. The Administrator shall have the
sole right to determine whether and under what circumstances to permit such
elections and to impose such limitations and other terms and conditions thereon
as the Administrator deems appropriate. Any such deferred compensation shall be
converted to a fixed number of phantom stock units based on the Fair Market
Value of Stock on the date the compensation would otherwise have been paid to
the grantee but for the deferral.

         (c) RIGHTS AS A STOCKHOLDER. During the deferral period, a grantee
shall have no rights as a stockholder; provided, however, that the grantee may
be credited with Dividend Equivalent Rights with respect to the phantom stock
units underlying his Deferred Stock Award, subject to such terms and conditions
as the Administrator may determine.

         (d) TERMINATION. Except as may otherwise be provided by the
Administrator either in the Award agreement or, subject to Section 16 below, in
writing after the Award agreement is issued, a grantee's right in all Deferred
Stock Awards that have not vested shall automatically terminate upon the
grantee's termination of employment (or cessation of service relationship) with
the Company and its Subsidiaries for any reason.

SECTION 9.        UNRESTRICTED STOCK AWARDS

         GRANT OR SALE OF UNRESTRICTED STOCK. The Administrator may, in its sole
discretion, grant (or sell at par value or such higher purchase price determined
by the Administrator) an Unrestricted Stock Award to any grantee pursuant to
which such grantee may receive shares of Stock free of any restrictions
("Unrestricted Stock") under the Plan. Unrestricted Stock Awards

                                       11

<PAGE>

may be granted in respect of past services or other valid consideration, or in
lieu of cash compensation due to such grantee.

SECTION 10.       PERFORMANCE-BASED AWARDS TO COVERED EMPLOYEES

         Notwithstanding anything to the contrary contained herein, if any
Restricted Stock Award or Deferred Stock Award granted to a Covered Employee is
intended to qualify as "Performance-based Compensation" under Section 162(m) of
the Code and the regulations promulgated thereunder (a "Performance-based
Award"), such Award shall comply with the provisions set forth below:

         (a) PERFORMANCE CRITERIA. The performance criteria used in performance
goals governing Performance-based Awards granted to Covered Employees may
include any or all of the following: (i) the Company's return on equity, assets,
capital or investment: (ii) pre-tax or after-tax profit levels of the Company or
any Subsidiary, a division, an operating unit or a business segment of the
Company, or any combination of the foregoing; (iii) cash flow, funds from
operations or similar measure; (iv) total stockholder return; (v) changes in the
market price of the Stock; (vi) sales or market share; or (vii) earnings per
share.

         (b) GRANT OF PERFORMANCE-BASED AWARDS. With respect to each
Performance-based Award granted to a Covered Employee, the Committee shall
select, within the first 90 days of a Performance Cycle (or, if shorter, within
the maximum period allowed under Section 162(m) of the Code) the performance
criteria for such grant, and the achievement targets with respect to each
performance criterion (including a threshold level of performance below which no
amount will become payable with respect to such Award). Each Performance-based
Award will specify the amount payable, or the formula for determining the amount
payable, upon achievement of the various applicable performance targets. The
performance criteria established by the Committee may be (but need not be)
different for each Performance Cycle and different goals may be applicable to
Performance-based Awards to different Covered Employees.

         (c) PAYMENT OF PERFORMANCE-BASED AWARDS. Following the completion of a
Performance Cycle, the Committee shall meet to review and certify in writing
whether, and to what extent, the performance criteria for the Performance Cycle
have been achieved and, if so, to also calculate and certify in writing the
amount of the Performance-based Awards earned for the Performance Cycle. The
Committee shall then determine the actual size of each Covered Employee's
Performance-based Award, and, in doing so, may reduce or eliminate the amount of
the Performance-based Award for a Covered Employee if, in its sole judgment,
such reduction or elimination is appropriate.

         (d) MAXIMUM AWARD PAYABLE. The maximum Performance-based Award payable
to any one Covered Employee under the Plan for a Performance Cycle is 750,000
Shares (subject to adjustment as provided in Section 3(b) hereof).

SECTION 11.       DIVIDEND EQUIVALENT RIGHTS

         (a) DIVIDEND EQUIVALENT RIGHTS. A Dividend Equivalent Right is an Award
entitling the grantee to receive credits based on cash dividends that would have
been paid on the shares of Stock specified in the Dividend Equivalent Right (or
other award to which it relates) if such

                                       12

<PAGE>

shares had been issued to and held by the grantee. A Dividend Equivalent Right
may be granted hereunder to any grantee as a component of another Award or as a
freestanding award. The terms and conditions of Dividend Equivalent Rights shall
be specified in the Award agreement. Dividend equivalents credited to the holder
of a Dividend Equivalent Right may be paid currently or may be deemed to be
reinvested in additional shares of Stock, which may thereafter accrue additional
equivalents. Any such reinvestment shall be at Fair Market Value on the date of
reinvestment or such other price as may then apply under a dividend reinvestment
plan sponsored by the Company, if any. Dividend Equivalent Rights may be settled
in cash or shares of Stock or a combination thereof, in a single installment or
installments. A Dividend Equivalent Right granted as a component of another
Award may provide that such Dividend Equivalent Right shall be settled upon
exercise, settlement, or payment of, or lapse of restrictions on, such other
award, and that such Dividend Equivalent Right shall expire or be forfeited or
annulled under the same conditions as such other award. A Dividend Equivalent
Right granted as a component of another Award may also contain terms and
conditions different from such other award.

         (b) INTEREST EQUIVALENTS. Any Award under this Plan that is settled in
whole or in part in cash on a deferred basis may provide in the grant for
interest equivalents to be credited with respect to such cash payment. Interest
equivalents may be compounded and shall be paid upon such terms and conditions
as may be specified by the grant.

         (c) TERMINATION. Except as may otherwise be provided by the
Administrator either in the Award agreement or, subject to Section 16 below, in
writing after the Award agreement is issued, a grantee's rights in all Dividend
Equivalent Rights or interest equivalents granted as a component of another
Award that has not vested shall automatically terminate upon the grantee's
termination of employment (or cessation of service relationship) with the
Company and its Subsidiaries for any reason.

SECTION 12.       TRANSFERABILITY OF AWARDS

         (a) TRANSFERABILITY. Except as provided in Section 12(b) below, during
a grantee's lifetime, his or her Awards shall be exercisable only by the
grantee, or by the grantee's legal representative or guardian in the event of
the grantee's incapacity. No Awards shall be sold, assigned, transferred or
otherwise encumbered or disposed of by a grantee other than by will or by the
laws of descent and distribution. No Awards shall be subject, in whole or in
part, to attachment, execution, or levy of any kind, and any purported transfer
in violation hereof shall be null and void.

         (b) COMMITTEE ACTION. Notwithstanding Section 12(a), the Administrator,
in its discretion, may provide either in the Award agreement regarding a given
Award or by subsequent written approval that the grantee (who is an employee or
director) may transfer his or her Awards (other than any Incentive Stock
Options) to his or her immediate family members, to trusts for the benefit of
such family members, or to partnerships in which such family members are the
only partners, provided that the transferee agrees in writing with the Company
to be bound by all of the terms and conditions of this Plan and the applicable
Award.

                                       13

<PAGE>

         (c) FAMILY MEMBER. For purposes of Section 12(b), "family member" shall
mean a grantee's child, stepchild, grandchild, parent, stepparent, grandparent,
spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including
adoptive relationships, any person sharing the grantee's household (other than a
tenant of the grantee), a trust in which these persons (or the grantee) have
more than 50 percent of the beneficial interest, a foundation in which these
persons (or the grantee) control the management of assets, and any other entity
in which these persons (or the grantee) own more than 50 percent of the voting
interests.

         (d) DESIGNATION OF BENEFICIARY. Each grantee to whom an Award has been
made under the Plan may designate a beneficiary or beneficiaries to exercise any
Award or receive any payment under any Award payable on or after the grantee's
death. Any such designation shall be on a form provided for that purpose by the
Administrator and shall not be effective until received by the Administrator. If
no beneficiary has been designated by a deceased grantee, or if the designated
beneficiaries have predeceased the grantee, the beneficiary shall be the
grantee's estate.

SECTION 13.       TAX WITHHOLDING

         (a) PAYMENT BY GRANTEE. Each grantee shall, no later than the date as
of which the value of an Award or of any Stock or other amounts received
thereunder first becomes includable in the gross income of the grantee for
Federal income tax purposes, pay to the Company, or make arrangements
satisfactory to the Administrator regarding payment of, any Federal, state, or
local taxes of any kind required by law to be withheld by the Company with
respect to such income. The Company and its Subsidiaries shall, to the extent
permitted by law, have the right to deduct any such taxes from any payment of
any kind otherwise due to the grantee. The Company's obligation to deliver
evidence of book entry (or stock certificates) to any grantee is subject to and
conditioned on tax withholding obligations being satisfied by the grantee.

         (b) PAYMENT IN STOCK. Subject to approval by the Administrator, a
grantee may elect to have the Company's minimum required tax withholding
obligation satisfied, in whole or in part, by (i) authorizing the Company to
withhold from shares of Stock to be issued pursuant to any Award a number of
shares with an aggregate Fair Market Value (as of the date the withholding is
effected) that would satisfy the withholding amount due, or (ii) transferring to
the Company shares of Stock owned by the grantee with an aggregate Fair Market
Value (as of the date the withholding is effected) that would satisfy the
withholding amount due.

SECTION 14.       ADDITIONAL CONDITIONS APPLICABLE TO NONQUALIFIED DEFERRED
                  COMPENSATION UNDER SECTION 409A.

         In the event any Stock Option or Stock Appreciation Right under the
Plan is granted with an exercise price of less than 100 percent of the Fair
Market Value on the date of grant (regardless of whether or not such exercise
price is intentionally or unintentionally priced at less than Fair Market
Value), or such grant is materially modified and deemed a new grant at a time
when the Fair Market Value exceeds the exercise price, or any other Award is
otherwise determined to constitute "nonqualified deferred compensation" within
the meaning of Section

                                       14

<PAGE>

409A (a "409A Award"), the following additional conditions shall apply and shall
supersede any contrary provisions of this Plan or the terms of any agreement
relating to such 409A Award.

         (a) EXERCISE AND DISTRIBUTION. Except as provided in Section 14(b)
hereof, no 409A Award shall be exercisable or distributable earlier than upon
one of the following:

             (i) SPECIFIED TIME. A specified time or a fixed schedule set forth
in the written instrument evidencing the 409A Award.

             (ii) SEPARATION FROM SERVICE. Separation from service (within the
meaning of Section 409A) by the 409A Award grantee; provided, however, that if
the 409A Award grantee is a "key employee" (as defined in Section 416(i) of the
Code without regard to paragraph (5) thereof) and any of the Company's Stock is
publicly traded on an established securities market or otherwise, exercise or
distribution under this Section 14(a)(ii) may not be made before the date that
is six months after the date of separation from service.

             (iii) DEATH. The date of death of the 409A Award grantee. (iv)
DISABILITY. The date the 409A Award grantee becomes disabled (within the meaning
of Section 14(c)(ii) hereof).

             (v) UNFORESEEABLE EMERGENCY. The occurrence of an unforeseeable
emergency (within the meaning of Section 14(c)(iii) hereof), but only if the net
value (after payment of the exercise price) of the number of shares of Stock
that become issuable does not exceed the amounts necessary to satisfy such
emergency plus amounts necessary to pay taxes reasonably anticipated as a result
of the exercise, after taking into account the extent to which the emergency is
or may be relieved through reimbursement or compensation by insurance or
otherwise or by liquidation of the grantee's other assets (to the extent such
liquidation would not itself cause severe financial hardship).

             (vi) CHANGE IN CONTROL EVENT. The occurrence of a Change in Control
Event (within the meaning of Section 14(c)(i) hereof), including the Company's
discretionary exercise of the right to accelerate vesting of such grant upon a
Change in Control Event or to terminate the Plan or any 409A Award granted
hereunder within 12 months of the Change in Control Event.

         (b) NO ACCELERATION. A 409A Award may not be accelerated or exercised
prior to the time specified in Section 14(a) hereof, except in the case of one
of the following events:

             (i) DOMESTIC RELATIONS ORDER. The 409A Award may permit the
acceleration of the exercise or distribution time or schedule to an individual
other than the grantee as may be necessary to comply with the terms of a
domestic relations order (as defined in Section 414(p)(1)(B) of the Code).

             (ii) CONFLICTS OF INTEREST. The 409A Award may permit the
acceleration of the exercise or distribution time or schedule as may be
necessary to comply with the terms of a certificate of divestiture (as defined
in Section 1043(b)(2) of the Code).

                                       15

<PAGE>

             (iii) CHANGE IN CONTROL EVENT. The Administrator may exercise the
discretionary right to accelerate the vesting of such 409A Award upon a Change
in Control Event or to terminate the Plan or any 409A Award granted thereunder
within 12 months of the Change in Control Event and cancel the 409A Award for
compensation.

         (c) DEFINITIONS. Solely for purposes of this Section 14 and not for
other purposes of the Plan, the following terms shall be defined as set forth
below:

             (i) "Change in Control Event" means the occurrence of a change in
the ownership of the Company, a change in effective control of the Company, or a
change in the ownership of a substantial portion of the assets of the Company
(as defined in Section 1.409A-3(g) of the proposed regulations promulgated under
Section 409A by the Department of the Treasury on September 29, 2005 or any
subsequent guidance).

             (ii) "Disabled" means a grantee who (i) is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment that can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months, or (ii) is, by reason
of any medically determinable physical or mental impairment that can be expected
to result in death or can be expected to last for a continuous period of not
less than 12 months, receiving income replacement benefits for a period of not
less than three months under an accident and health plan covering employees of
the Company or its Subsidiaries.

             (iii) "Unforeseeable Emergency" means a severe financial hardship
to the grantee resulting from an illness or accident of the grantee, the
grantee's spouse, or a dependent (as defined in Section 152(a) of the Code) of
the grantee, loss of the grantee's property due to casualty, or similar
extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of the grantee.

SECTION 15.       TRANSFER, LEAVE OF ABSENCE, ETC.

         For purposes of the Plan, the following events shall not be deemed a
termination of employment:

         (a) a transfer to the employment of the Company from a Subsidiary or
from the Company to a Subsidiary, or from one Subsidiary to another; or

         (b) an approved leave of absence for military service or sickness, or
for any other purpose approved by the Company, if the employee's right to
re-employment is guaranteed either by a statute or by contract or under the
policy pursuant to which the leave of absence was granted or if the
Administrator otherwise so provides in writing.

SECTION 16.       AMENDMENTS AND TERMINATION

         The Board may, at any time, amend or discontinue the Plan and the
Administrator may, at any time, amend or cancel any outstanding Award for the
purpose of satisfying changes in law or for any other lawful purpose, but no
such action shall adversely affect rights under any outstanding Award without
the holder's consent. Except as provided in Section 3(b) or 3(c), in no event
may the Administrator exercise its discretion to reduce the exercise price of
outstanding

                                       16

<PAGE>

Stock Options or Stock Appreciation Rights or effect repricing through
cancellation and re-grants. Any material Plan amendments (other than amendments
that curtail the scope of the Plan), including any Plan amendments that (i)
increase the number of shares reserved for issuance under the Plan, (ii) expand
the type of Awards available under, materially expand the eligibility to
participate in, or materially extend the term of, the Plan, or (iii) materially
change the method of determining Fair Market Value, shall be subject to approval
by the Company stockholders entitled to vote at a meeting of stockholders. In
addition, to the extent determined by the Administrator to be required by the
Code to ensure that Incentive Stock Options granted under the Plan are qualified
under Section 422 of the Code or to ensure that compensation earned under Awards
qualifies as performance-based compensation under Section 162(m) of the Code,
Plan amendments shall be subject to approval by the Company stockholders
entitled to vote at a meeting of stockholders. Nothing in this Section 16 shall
limit the Administrator's authority to take any action permitted pursuant to
Section 3(c).

SECTION 17.       STATUS OF PLAN

         With respect to the portion of any Award that has not been exercised
and any payments in cash, Stock or other consideration not received by a
grantee, a grantee shall have no rights greater than those of a general creditor
of the Company unless the Administrator shall otherwise expressly determine in
connection with any Award or Awards. In its sole discretion, the Administrator
may authorize the creation of trusts or other arrangements to meet the Company's
obligations to deliver Stock or make payments with respect to Awards hereunder,
provided that the existence of such trusts or other arrangements is consistent
with the foregoing sentence.

SECTION 18.       GENERAL PROVISIONS

         (a) NO DISTRIBUTION; COMPLIANCE WITH LEGAL REQUIREMENTS. The
Administrator may require each person acquiring Stock pursuant to an Award to
represent to and agree with the Company in writing that such person is acquiring
the shares without a view to distribution thereof.

         No shares of Stock shall be issued pursuant to an Award until all
applicable securities law and other legal and stock exchange or similar
requirements have been satisfied. The Administrator may require the placing of
such stop-orders and restrictive legends on certificates for Stock and Awards as
it deems appropriate.

         (b) DELIVERY OF STOCK CERTIFICATES. Stock certificates to grantees
under this Plan shall be deemed delivered for all purposes when the Company or a
stock transfer agent of the Company shall have mailed such certificates in the
United States mail, addressed to the grantee, at the grantee's last known
address on file with the Company. Uncertificated Stock shall be deemed delivered
for all purposes when the Company or a Stock transfer agent of the Company shall
have given to the grantee by electronic mail (with proof of receipt) or by
United States mail, addressed to the grantee, at the grantee's last known
address on file with the Company, notice of issuance and recorded the issuance
in its records (which may include electronic "book entry" records).

                                       17

<PAGE>

         (c) OTHER COMPENSATION ARRANGEMENTS; NO EMPLOYMENT RIGHTS. Nothing
contained in this Plan shall prevent the Board from adopting other or additional
compensation arrangements, including trusts, and such arrangements may be either
generally applicable or applicable only in specific cases. The adoption of this
Plan and the grant of Awards do not confer upon any employee any right to
continued employment with the Company or any Subsidiary.

         (d) TRADING POLICY RESTRICTIONS. Option exercises and other Awards
under the Plan shall be subject to such Company's insider trading policy and
procedures, as in effect from time to time.

         (e) FORFEITURE OF AWARDS UNDER SARBANES-OXLEY ACT. If the Company is
required to prepare an accounting restatement due to the material noncompliance
of the Company, as a result of misconduct, with any financial reporting
requirement under the securities laws, then any grantee who is one of the
individuals subject to automatic forfeiture under Section 304 of the
Sarbanes-Oxley Act of 2002 shall reimburse the Company for the amount of any
Award received by such individual under the Plan during the 12-month period
following the first public issuance or filing with the United States Securities
and Exchange Commission, as the case may be, of the financial document embodying
such financial reporting requirement.

SECTION 19.       EFFECTIVE DATE OF PLAN

         This Plan shall become effective upon approval by the holders of a
majority of the votes cast at a meeting of stockholders at which a quorum is
present. No grants of Stock Options and other Awards may be made hereunder after
the tenth (10) anniversary of the Effective Date and no grants of Incentive
Stock Options may be made hereunder after the tenth (10) anniversary of the date
the Plan is approved by the Board.

SECTION 20.       GOVERNING LAW

         This Plan and all Awards and actions taken thereunder shall be governed
by, and construed in accordance with, the laws of the State of Delaware, applied
without regard to conflict of law principles.

DATE APPROVED BY BOARD OF DIRECTORS:        January 25, 2006

DATE APPROVED BY STOCKHOLDERS:              March 8, 2006

                                       18

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