Common use of Stock Option and Other Plans Clause in Contracts

Stock Option and Other Plans. (a) Effective as of the Effective Time, Parent shall assume each outstanding option to acquire Common Stock (each, a "Company Option"), under any stock option or similar plan of the Company (each, a "Stock Plan") in accordance with this Section 2.10 and with the terms of the Stock Plan under which such Company Option was granted and the stock option agreement by which such Company Option is evidenced. Parent acknowledges and agrees that each Company Option, to the extent currently not exercisable, will become exercisable in accordance with its terms upon the acceptance for payment of and payment for the Shares by Merger Subsidiary pursuant to the Offer and, if applicable, the exercise of the Option as contemplated by Section 1.01(e). The proceeds from the exercise of any Company Option shall be excluded from the calculation of Company Net Working Capital. (b) Effective as of the Effective Time, each Company Option shall be deemed to constitute an option (a "New Parent Option") to purchase, on the same terms and conditions as were applicable to such Company Option, the number of shares of Parent common stock (rounded to the nearest whole number) equal to the product of (A) and (B), where (A) is the number of shares of Common Stock subject to such Company Option and (B) is the Offer Price divided by the average of the closing sales prices of Parent common stock on the New York Stock Exchange for the ten (10) consecutive days immediately prior to and including the day preceding the Effective Time, at an exercise price per share of Parent common stock (rounded to the nearest whole cent) equal to (x) divided by (y), where (x) is the aggregate exercise price for the shares of Common Stock subject to such Company Option and (y) is the aggregate number of shares of Parent common stock purchasable pursuant to the New Parent Option (as calculated immediately above); provided, however, that in the case of any Company Option to which Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), applies, the option price, the number of shares purchasable pursuant to such option and the terms and conditions of exercise of such option shall be determined in accordance with the foregoing, subject to such adjustments as are necessary in order to satisfy the requirements of Section 424(a) of the Code. At or prior to the Effective Time, the Company shall take all necessary actions to permit the assumption of the unexercised Company Options by Parent pursuant to this Section. Section 2.10(b) of the Company Disclosure Schedule sets forth two examples of the calculations contemplated by this paragraph. (c) Not later than twenty-one calendar days after the Effective Time, Parent shall file a registration statement under the Securities Act of 1933, as amended (the "Securities Act") on Form S-8 or other appropriate form covering shares of Parent common stock subject to issuance upon the exercise of the New Parent Options. (d) All Stock Plans shall terminate as of the Effective Time and the Company shall use commercially reasonable efforts to ensure that following the Effective Time no holder of a Company Option or any participant in any Stock Plans shall have any right thereunder to acquire any capital stock of the Company or any Subsidiary or the Surviving Corporation.

Stock Option and Other Plans. (a) Effective as The Company shall, prior to Closing, accelerate the vesting or exercisability of all outstanding employee stock options to purchase Company Stock, whether set forth in any stock option plan or plans of the Effective TimeCompany ("COMPANY STOCK OPTION PLANS"), Parent shall assume in an option agreement with the optionee or otherwise. At the Closing, each outstanding such option to acquire Common Stock (each, a "Company OptionCOMPANY OPTION"), under any stock option or similar plan of ) granted by the Company to purchase shares of Company Stock that is outstanding and unexercised immediately prior to the Closing Date shall be deemed to be exercised, and the optionees thereunder (the "OPTIONEES") shall be deemed to be Sellers for purposes of Article I and II of this Agreement. As required by Section 6.2(e) hereof, the Seller shall cause each Optionee to deliver prior to the Closing a joinder agreement whereby each such Optionee agrees to be bound by the provisions of Articles I and II of this Agreement as if he or she were a Seller hereunder (each, a "Stock PlanJOINDER AGREEMENT") in accordance with this Section 2.10 and with the terms of the Stock Plan under which such Company Option was granted and the stock option agreement by which such Company Option is evidenced. Parent acknowledges and agrees that each Company Option, to the extent currently not exercisable, will become exercisable in accordance with its terms upon the acceptance for payment of and payment for the Shares by Merger Subsidiary pursuant to the Offer and, if applicable, the exercise of the Option as contemplated by Section 1.01(e). The proceeds from the exercise of any Company Option shall be excluded from the calculation of Company Net Working Capital. (b) Effective Any then outstanding stock appreciation rights or limited stock appreciation rights shall be canceled as of the Effective Time, each Company Option shall be deemed to constitute an option (a "New Parent Option") to purchase, on the same terms and conditions as were applicable to such Company Option, the number of shares of Parent common stock (rounded to the nearest whole number) equal to the product of (A) and (B), where (A) is the number of shares of Common Stock subject to such Company Option and (B) is the Offer Price divided by the average of the closing sales prices of Parent common stock on the New York Stock Exchange for the ten (10) consecutive days immediately prior to and including the day preceding the Effective Time, at an exercise price per share of Parent common stock (rounded to the nearest whole cent) equal to (x) divided by (y), where (x) is the aggregate exercise price for the shares of Common Stock subject to such Company Option and (y) is the aggregate number of shares of Parent common stock purchasable pursuant to the New Parent Option (as calculated immediately above); provided, however, that in the case of Closing without any Company Option to which Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), applies, the option price, the number of shares purchasable pursuant to such option and the terms and conditions of exercise of such option shall be determined in accordance with the foregoing, subject to such adjustments as are necessary in order to satisfy the requirements of Section 424(a) of the Codepayment therefor. At or prior to the Effective TimeAs provided herein, the Company shall take all necessary actions to permit Stock Option Plans and any other plan, program or arrangement providing for the assumption issuance or grant of any other interest in respect of the unexercised Company Options by Parent pursuant to this Section. Section 2.10(b) capital stock of the Company Disclosure Schedule sets forth two examples of or any Subsidiary (collectively with the calculations contemplated by this paragraph. (c) Not later than twenty-one calendar days after the Effective TimeCompany Stock Option Plans, Parent shall file a registration statement under the Securities Act of 1933, as amended (the "Securities ActCOMPANY STOCK INCENTIVE PLANS") on Form S-8 or other appropriate form covering shares of Parent common stock subject to issuance upon the exercise of the New Parent Options. (d) All Stock Plans shall terminate as of the Effective Time and the Closing Date. The Company shall use commercially reasonable efforts will take all steps to ensure that following neither the Effective Time no holder Company nor any of a its Subsidiaries is or will be bound by any Company Option Options, other options, warrants, rights or agreements which would entitle any participant in any Stock Plans shall have any right thereunder Person, other than EMKT, Top Team or either of their affiliates, to acquire own any capital stock of the Company or any Subsidiary of its Subsidiaries or to receive any payment in respect thereof. The Company will use its best efforts to obtain all necessary consents to ensure that after the Surviving CorporationEffective Time, the only rights of the holders of Options to purchase shares of Common Stock in respect of such Options will be to receive the Purchase Consideration and Exchange Consideration in cancellation and settlement thereof.

Stock Option and Other Plans. (a) Effective as of Prior to the Effective Time, Parent shall assume each outstanding option to acquire Common Stock (each, a "Company Option"), under any stock option or similar plan the Board of Directors of the Company (eachor, a if appropriate, any committee thereof) and the Board of Directors of FAFCO (or, if appropriate, any committee thereof) shall adopt appropriate resolutions and take all other actions necessary to provide that effective at the Effective Time (i) all the outstanding stock options, stock appreciation rights, limited stock appreciation rights, performance units and stock purchase rights (the "Company Stock Rights") heretofore granted under any stock option, performance unit or similar plan, agreement and arrangement of the Company and its Subsidiaries, except for the Director Option Plan (the "Stock PlanPlans"), shall be assumed by FAFCO and converted automatically into options to purchase FAFCO Common Shares (collectively, "New Stock Rights") in accordance with this Section 2.10 and with the terms of the Stock Plan under which such Company Option was granted and the stock option agreement by which such Company Option is evidenced. Parent acknowledges and agrees that each Company Option, to the extent currently not exercisable, will become exercisable in accordance with its terms upon the acceptance for payment of and payment for the Shares by Merger Subsidiary pursuant to the Offer an amount and, if applicable, at an exercise price determined as provided below: (A) The number of FAFCO Common Shares to be subject to each New Stock Right shall be equal to the product of (x) the number of Company Common Shares remaining subject (as of immediately prior to the Effective Time) to the original Company Stock Right and (y) the Exchange Ratio, provided that any fractional FAFCO Common Shares resulting from such multiplication shall be rounded down to the nearest share; and (B) The exercise price per FAFCO Common Share under each New Stock Right shall be equal to the exercise of price per Company Common Share under the Option as contemplated original Company Stock Right divided by Section 1.01(e). The proceeds from the Exchange Ratio, provided that such exercise of any Company Option price shall be excluded from rounded down to the calculation of Company Net Working Capital.nearest cent; and (bii) Effective as of each restricted Stock Purchase Agreement and Joint Escrow Instructions to which the Company is a party pursuant to the Company's 1986 Stock Option Plan shall be assumed by FAFCO, and the Company Common Shares subject to each such Agreement and Instructions shall be converted automatically into FAFCO Common Shares, pursuant to Section 2.2 hereof. After the Effective Time, each Company Option New Stock Right shall be deemed to constitute an option (a "New Parent Option") to purchase, on exercisable and shall vest upon the same terms and conditions as were applicable to such the related Company Option, the number of shares of Parent common stock (rounded to the nearest whole number) equal to the product of (A) and (B), where (A) is the number of shares of Common Stock subject to such Company Option and (B) is the Offer Price divided by the average of the closing sales prices of Parent common stock on the New York Stock Exchange for the ten (10) consecutive days Right immediately prior to and including the day preceding the Effective Time, at an exercise price per share of Parent common stock (rounded to the nearest whole cent) equal to (x) divided by (y), where (x) is the aggregate exercise price for the shares of Common Stock subject to such Company Option and (y) is the aggregate number of shares of Parent common stock purchasable pursuant to the New Parent Option (as calculated immediately above); provided, however, that in the case of any Company Option to which Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), applies, the option price, the number of shares purchasable pursuant to such option and the terms and conditions of exercise of such option shall be determined in accordance with the foregoing, subject to such adjustments as are necessary in order to satisfy the requirements of Section 424(a) of the Code. At or prior to the Effective TimeTime (except that with regard to such New Stock Right, any references to the Company shall be deemed, as appropriate, to include FAFCO). (b) The Board of Directors of the Company shall take all actions necessary actions to permit assure that all Persons holding outstanding options heretofore granted under the assumption of Director Option Plan shall have been notified in accordance with such plan at least ten (10) days prior to the unexercised Company Options by Parent pursuant to this Section. Section 2.10(b) of the Company Disclosure Schedule sets forth two examples of the calculations contemplated by this paragraphClosing. (c) Not later than twenty-one calendar days after the Effective Time, Parent shall file a registration statement under the Securities Act of 1933, as amended (the "Securities Act") on Form S-8 or other appropriate form covering shares of Parent common stock subject to issuance upon the exercise of the New Parent Options. (d) All Stock Plans shall terminate as of the Effective Time and the The Company shall use commercially reasonable efforts to ensure take all actions so that following the Effective Time no holder of a Company Stock Right or a stock option under the Director Option Plan or any participant in any Stock Plans or the Director Option Plan shall have any right thereunder to acquire any capital stock of the Company or any Subsidiary or the Surviving Corporation. The Company will take all actions so that, as of the Effective Time, neither the Company nor the Surviving Corporation or any of their respective Subsidiaries is or will be bound by any Company Stock Rights, stock options under the Director Option Plan, other options, warrants, rights or agreements which would entitle any person, other than FAFCOSUB or its affiliates, to own any capital stock of the Company, the Surviving Corporation or any of their respective subsidiaries or to receive any payment in respect thereof, except as otherwise provided herein. (d) FAFCO agrees that it shall take all action necessary, on or prior to the Effective Time, to authorize and reserve a number of FAFCO Common Shares sufficient for issuance upon exercise of options as contemplated by this Section 2.6. (e) Unless at the Effective Time the New Stock Rights are registered pursuant to an effective FAFCO registration statement, as soon as practicable following the Effective Time, FAFCO shall prepare and file with the SEC a registration statement on Form S-8 (or another appropriate form) registering a number of FAFCO Common Shares equal to the number of shares subject to the New Stock Rights. Any such registration statement shall be kept effective (and the current status of the initial offering prospectus or prospectuses required thereby shall be maintained) for at least as long as any New Stock Right remains outstanding.

Stock Option and Other Plans. (a) Except as set forth in Section 2.10(b), at the Effective Time, each then outstanding option to acquire Shares (each such option issued under a Company Option Plan, a “Company Stock Option”), whether or not then exercisable, shall (without any action on the part of the Company) automatically be converted into an option to purchase Parent Common Stock in accordance with this Section 2.10(a). Each Company Stock Option so converted shall continue to have, and be subject to, the same terms and conditions (including vesting schedule) as are currently applicable to each such Company Stock Option (after giving effect to any acceleration thereof described on Section 3.14(e) of the Company Disclosure Schedule) and any agreements thereunder immediately prior to the Effective Time, except that, as of the Effective Time, Parent shall assume each outstanding option to acquire Common Stock (each, a "Company Option"), under any stock option or similar plan of the Company (each, a "Stock Plan"i) in accordance with this Section 2.10 and with the terms of the Stock Plan under which such Company Option was granted and the stock option agreement by which such Company Option is evidenced. Parent acknowledges and agrees that each Company Option, to the extent currently not exercisable, will Stock Option shall be exercisable (or shall become exercisable in accordance with its terms upon the acceptance terms) for payment that number of and payment for the Shares by Merger Subsidiary pursuant whole shares of Parent Common Stock equal to the Offer and, if applicable, the exercise product of the Option as contemplated by Section 1.01(e). The proceeds from the exercise of any Company Option shall be excluded from the calculation of Company Net Working Capital. (b) Effective as of the Effective Time, each Company Option shall be deemed to constitute an option (a "New Parent Option") to purchase, on the same terms and conditions as were applicable to such Company Option, the number of shares Shares that were issuable upon exercise of Parent common stock (such Company Stock Option immediately prior to the Effective Time multiplied by the Option Exchange Ratio, rounded down to the nearest whole number) equal to the product of (A) and (B), where (A) is the number of shares of Parent Common Stock subject to such Company Option and (Bii) is the Offer Price divided by the average of the closing sales prices of Parent common stock on the New York Stock Exchange for the ten (10) consecutive days immediately prior to and including the day preceding the Effective Time, at an exercise price per share of Parent common stock (rounded to the nearest whole cent) equal to (x) divided by (y), where (x) is the aggregate exercise price for the shares of Parent Common Stock subject to issuable upon exercise of such Company Stock Option and (y) is the aggregate number of shares of Parent common stock purchasable pursuant so converted shall be equal to the New Parent quotient determined by dividing the exercise price per Share at which such Company Stock Option (as calculated was exercisable immediately above); providedprior to the Effective Time by the Option Exchange Ratio, howeverrounded up to the nearest whole cent. Notwithstanding the foregoing, that in the case conversion of any Company Option to Stock Options which are “incentive stock options,” within the meaning of Section 422 of the Internal Revenue Code of 1986Code, into options to purchase Parent Common Stock shall be made so as amended (the "Code"), applies, the option price, the number of shares purchasable pursuant not to such option and the terms and conditions of exercise constitute a “modification” of such option shall be determined in accordance with Company Stock Options within the foregoing, subject to such adjustments as are necessary in order to satisfy the requirements meaning of Section 424(a) 424 of the Code. At or . (b) Notwithstanding the provisions of Section 2.10(a), prior to the Effective Time, the Company shall take all necessary actions cause each then-outstanding Company Stock Option that is issued pursuant to permit the assumption TSI International Software, Ltd. 1997 Directors Stock Option Plan shall (without any action on the part of the Company) automatically become fully vested and exercisable. Prior to the Effective Time, the Company shall notify, in accordance with the terms of each such plan, each holder of such a Company Stock Option that (1) each such Company Stock Option may be exercised in accordance with its terms, in whole or in part, prior to the Effective Time and (2) that to the extent any such Company Stock Option is unexercised Company Options by Parent pursuant to this Section. Section 2.10(b) at the Effective Time it shall be automatically cancelled, without consideration, as of the Effective Time. Each such Company Disclosure Schedule sets forth two examples Stock Option which has not been exercised as of the calculations contemplated by this paragraphEffective Time shall (without any action on the part of the Company) automatically be cancelled without consideration. (c) Not later than twenty-one calendar days after As of the Effective Time, Parent shall file a registration statement except as provided in this Section 2.10, all rights under any provision of any other plan, program or arrangement providing for the Securities Act issuance or grant of 1933, as amended (the "Securities Act") on Form S-8 or any other appropriate form covering shares of Parent common stock subject to issuance upon the exercise interest in respect of the New Parent Options. (d) All Stock Plans shall terminate as of the Effective Time and the Company shall use commercially reasonable efforts to ensure that following the Effective Time no holder of a Company Option or any participant in any Stock Plans shall have any right thereunder to acquire any capital stock of the Company or any Subsidiary of the Company shall be canceled. The Company shall take all action necessary to ensure that, as of and after the Effective Time, except as provided in this Section 2.10, no person shall have any right under the Company Option Plans or any other plan, program or arrangement with respect to equity securities of the Company, the Surviving CorporationCorporation or any Subsidiary thereof. (d) The Company shall accelerate the August 1, 2003 exercise of Company Stock Options under the Company’s 1997 Employee Stock Purchase Plan (the “Company ESPP”) so that it occurs immediately prior to the Effective Time and shall take all necessary and appropriate action so that following the Effective Time participants shall have no right to acquire Common Stock under the Company ESPP.

Stock Option and Other Plans. (a) Effective as of Prior to the Effective Time, Parent the Board of Directors of the Company (or, if appropriate, any committee thereof) shall assume each adopt appropriate resolutions and use its reasonable best efforts to take all other actions necessary to provide for the cancellation, effective at the Effective Time of all the outstanding option stock options to acquire purchase Common Stock (each, a the "Company OptionOPTIONS"), ) heretofore granted under any stock option plan or similar plan agreement of the Company (each, a the "Stock PlanSTOCK PLANS") in accordance with this Section 2.10 and with the terms of the Stock Plan under which such Company Option was granted and the stock option agreement by which such Company Option is evidenced. Parent acknowledges and agrees that each Company Option, to the extent currently not exercisable, will become exercisable in accordance with its terms upon the acceptance for payment of and payment for the Shares by Merger Subsidiary pursuant to the Offer and, if applicable, the exercise of the Option as contemplated by Section 1.01(e). The proceeds from the exercise of any Company Option shall be excluded from the calculation of Company Net Working Capital. (b) Effective as of Immediately prior to the Effective Time, the Company shall use its reasonable best efforts to ensure that (i) each Company Option shall be deemed to constitute an option (a "New Parent Option") to purchase, on the same terms and conditions as were applicable to such Company Option, whether or not then vested or exercisable, shall no longer be exercisable for the number purchase of shares of Parent common stock Common Stock but shall entitle each holder thereof, in cancellation and settlement therefor, to payments in cash (rounded subject to any applicable withholding taxes, the nearest whole number) "CASH PAYMENT"), at the Effective Time, equal to the product of (Ax) and (B), where (A) is the total number of shares of Common Stock subject to such Company Option as to which such Option could have been exercisable and (By) is the Offer Price divided by the average excess, if any, of the closing sales prices of Parent common stock on Merger Consideration over the New York Stock Exchange for the ten (10) consecutive days immediately prior to and including the day preceding the Effective Time, at an exercise price per share of Parent common stock (rounded to the nearest whole cent) equal to (x) divided by (y), where (x) is the aggregate exercise price for the shares of Common Stock subject to such Company Option, each such Cash Payment to be paid to each holder of an outstanding Option at the Effective Time and (yii) is the aggregate number each share of shares of Parent common stock purchasable pursuant to the New Parent Option (as calculated immediately above); provided, however, that Common Stock previously issued in the case form of any Company Option to which Section 422 grants of the Internal Revenue Code restricted stock or grants of 1986, as amended (the "Code"), applies, the option price, the number of contingent or bonus shares purchasable pursuant to such option shall fully vest and the terms and conditions of exercise of such option shall be determined paid in accordance with the foregoing, subject to such adjustments as are necessary in order to satisfy the requirements of Section 424(a) of the Codetheir respective terms. At or prior to the Effective TimeAs provided herein, the Company shall take all necessary actions use its reasonable best efforts to permit ensure that the assumption of the unexercised Company Options by Parent pursuant to this Section. Section 2.10(b) of the Company Disclosure Schedule sets forth two examples of the calculations contemplated by this paragraph. (c) Not later than twenty-one calendar days after the Effective Time, Parent shall file a registration statement under the Securities Act of 1933, as amended (the "Securities Act") on Form S-8 or other appropriate form covering shares of Parent common stock subject to issuance upon the exercise of the New Parent Options. (d) All Stock Plans shall terminate as of the Effective Time and the provisions of any Employee Benefit Plan (as defined in Section 2.01(j)) providing for the issuance or grant of shares of the capital stock of the Company shall use commercially be deleted as of the Effective Time. The Company will take all reasonable efforts steps to ensure that following neither the Effective Time no holder Company nor any of a Company Option its Subsidiaries is or will be bound by any participant in Options, other options, warrants, rights or agreements which would entitle any Stock Plans shall have any right thereunder Person, other than Parent or its affiliates, to acquire own any capital stock of the Company Surviving Corporation or any Subsidiary of its Subsidiaries. The Company will use its reasonable best efforts to obtain any necessary consents to ensure that after the Effective Time, the only rights of the holders of Options to purchase shares of Common Stock in respect of such Options will be to receive the Cash Payment in cancellation and settlement thereof. Notwithstanding the foregoing, Parent and any employee of the Company may agree in writing that all or a portion of the Surviving CorporationOptions held by such employee will, in lieu of being canceled in consideration for the Cash Payment pursuant to this Section 1.09, be rolled over into options to acquire shares of Parent common stock in a manner which complies with the requirements of Section 424 of the Code. In such event, the Company shall not make any Cash Payment in respect of any such rolled-over Options.

Stock Option and Other Plans. (a) Effective as of At the FBR Asset Effective Time, Parent each option granted by FBR Asset to purchase FBR Asset Shares ("FBR Asset Stock Option") which is outstanding and unexercised immediately prior thereto shall assume each outstanding cease to represent a right to acquire FBR Asset Shares and shall be converted automatically into an option to acquire purchase Newco Class A Common Stock Shares in an amount and at an exercise price determined as provided below (each, a "Company Option"), under any stock option or similar plan of the Company (each, a "Stock Plan") in accordance with this Section 2.10 and with shall otherwise remain subject to the terms of the Stock Plan under FBR Asset stock option plan pursuant to which such Company Option was granted option has been issued and the stock option agreement by which evidencing such Company Option is evidenced. Parent acknowledges and agrees that each Company Option, grant thereunder): (i) The number of Newco Class A Common Shares to be subject to the extent currently not exercisable, will become exercisable in accordance with its terms upon the acceptance for payment of and payment for the Shares by Merger Subsidiary pursuant to the Offer and, if applicable, the exercise of the Option as contemplated by Section 1.01(e). The proceeds from the exercise of any Company Option new option shall be excluded from the calculation of Company Net Working Capital. (b) Effective as of the Effective Time, each Company Option shall be deemed to constitute an option (a "New Parent Option") to purchase, on the same terms and conditions as were applicable to such Company Option, the number of shares of Parent common stock (rounded to the nearest whole number) equal to the product of (A) and (B), where (A) is the number of shares of Common Stock FBR Asset Shares subject to such Company Option the original option and (B) is the Offer Price divided by the average of the closing sales prices of Parent common stock on the New York Stock Exchange for the ten (10) consecutive days immediately prior to and including the day preceding the Effective Time, at an exercise price per share of Parent common stock (rounded to the nearest whole cent) equal to (x) divided by (y), where (x) is the aggregate exercise price for the shares of Common Stock subject to such Company Option and (y) is the aggregate number of shares of Parent common stock purchasable pursuant to the New Parent Option (as calculated immediately above)3.65; provided, however, that any fractional Newco Class A Common Shares resulting from such multiplication shall be rounded to the nearest whole share; and (ii) The exercise price per Newco Class A Common Share under the new option shall be equal to the exercise price per FBR Asset Share under the original option divided by 3.65; provided, however, that such exercise price shall be rounded down to the nearest whole cent. The adjustment provided herein with respect to any options which are "incentive stock options" (as defined in the case of any Company Option to which Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), applies, the option price, the number of shares purchasable pursuant to such option and the terms and conditions of exercise of such option ) shall be determined and is intended to be effected in accordance a manner which is consistent with the foregoing, subject to such adjustments as are necessary in order to satisfy the requirements of Section 424(a) of the Code. . (b) At or the Effective Time, each option granted by FBR Group to purchase FBR Group Class A Common Shares ("FBR Group Stock Option") which is outstanding and unexercised immediately prior thereto shall cease to represent a right to acquire FBR Group Class A Common Shares and shall be converted automatically into an option to purchase a number of Newco Class A Common Shares equal to the number of FBR Group Class A Common Shares subject to such option immediately prior to the Effective Time, Time at an exercise price per Newco Class A Common Share equal to the Company exercise price per FBR Group Class A Common Share in effect immediately prior to the Effective Time (and shall take all necessary actions otherwise be subject to permit the assumption terms of the unexercised Company Options by Parent FBR Group stock option plan pursuant to this Sectionwhich such option has been issued and the agreement evidencing such grant thereunder). The adjustment provided herein with respect to any FBR Group Stock Options which are "incentive stock options" (as defined in Section 2.10(b422 of the Code) shall be and is intended to be effected in a manner which is consistent with Section 424(a) of the Company Disclosure Schedule sets forth two examples of the calculations contemplated by this paragraphCode. (c) Not later than twenty-one calendar days after the Effective Time, Parent shall file a registration statement under the Securities Act of 1933, as amended (the "Securities Act") on Form S-8 or other appropriate form covering shares of Parent common stock subject to issuance upon the exercise of the New Parent Options. (d) All Stock Plans shall terminate as of the Effective Time and the Company shall use commercially reasonable efforts to ensure that following the Effective Time no holder of a Company Option or any participant in any Stock Plans shall have any right thereunder to acquire any capital stock of the Company or any Subsidiary or the Surviving Corporation.

Stock Option and Other Plans. (a) Effective as of Prior to the Effective Time, Parent each of the Board of Directors of the Company (or, if appropriate, any Committee thereof) and the Company shall assume each outstanding option use its reasonable best efforts to acquire obtain the consent of all of the holders of options to purchase Common Stock (each, a the "Company OptionOptions"), ) heretofore granted under any stock option or similar plan of the Company (each, a the "Stock PlanPlans") in accordance with this Section 2.10 and with the terms of the Stock Plan under which such Company Option was granted and the stock option agreement by which such Company Option is evidenced. Parent acknowledges and agrees that each Company Option, to the extent currently not exercisable, will become exercisable in accordance with its terms upon the acceptance for payment of and payment provide for the Shares by Merger Subsidiary pursuant cancellation, effective at the Effective Time, of all the outstanding Options, as follows: Immediately prior to the Offer and, if applicable, the exercise of the Option as contemplated by Section 1.01(e). The proceeds from the exercise of any Company Option shall be excluded from the calculation of Company Net Working Capital. (b) Effective as of the Effective Time, each Company Option shall be deemed to constitute an option (a "New Parent Option") to purchase, on the same terms and conditions as were applicable to such Company Option, whether or not then vested or exercisable, shall no longer be exercisable for the number purchase of shares of Parent common stock Common Stock but shall entitle each holder thereof, in cancellation and settlement therefor, to payments in cash (rounded subject to any applicable withholding taxes, the nearest whole number) "Cash Payment"), at the Effective Time, equal to the product of (Ax) and (B), where (A) is the total number of shares of Common Stock subject to such Company Option as to which such Option could have been exercisable and (By) is the Offer Price divided by the average excess of the closing sales prices of Parent common stock on Merger Consideration over the New York Stock Exchange for the ten (10) consecutive days immediately prior to and including the day preceding the Effective Time, at an exercise price per share of Parent common stock (rounded to the nearest whole cent) equal to (x) divided by (y), where (x) is the aggregate exercise price for the shares of Common Stock subject to such Option, each such Cash Payment to be paid to each holder of an outstanding Option at the Effective Time. The Company Option and (y) is the aggregate number will use its reasonable best efforts to ensure that any then-outstanding stock appreciation rights or limited stock appreciation rights shall be cancelled as of shares of Parent common stock purchasable pursuant immediately prior to the New Parent Option (as calculated immediately above); providedEffective Time without any payment therefor. As provided herein, howeverthe Stock Plans and any other plan, that in program or arrangement providing for the case issuance or grant of any Company Option to which Section 422 other interest in respect of the Internal Revenue Code capital stock of 1986the Company or any Subsidiary (collectively with the Stock Plans, referred to as the "Stock Incentive Plans") shall terminate as of the Effective Time. The Company will use its reasonable best efforts to take all steps necessary to ensure that neither the Company nor any of its Subsidiaries is or will be bound by any Options, other options, warrants, rights or agreements which would entitle any Person, other than Parent or its affiliates (including Sub), to own any capital stock of the Surviving Corporation or except for certain call options in respect of the capital stock of certain of its dealership subsidiaries, as amended (the "Code"), applies, the option price, the number of shares purchasable pursuant to such option and the terms and conditions of exercise of such option shall be determined more fully set forth in accordance with the foregoing, subject to such adjustments as are necessary in order to satisfy the requirements of Section 424(a3.01(c)(ii) of the CodeCompany Disclosure Letter, any of its subsidiaries or to receive any payment in respect thereof. At or prior The Company will use its reasonable best efforts to obtain all necessary consents to ensure that after the Effective Time, the Company shall take all necessary actions to permit the assumption only rights of the unexercised Company holders of Options by Parent pursuant to this Section. Section 2.10(b) purchase shares of Common Stock in respect of such Options will be to receive the Company Disclosure Schedule sets forth two examples of the calculations contemplated by this paragraphCash Payment in cancellation and settlement thereof. (c) Not later than twenty-one calendar days after the Effective Time, Parent shall file a registration statement under the Securities Act of 1933, as amended (the "Securities Act") on Form S-8 or other appropriate form covering shares of Parent common stock subject to issuance upon the exercise of the New Parent Options. (db) All Stock Plans shall terminate as of the Effective Time and the Company shall use commercially reasonable efforts to ensure that following the Effective Time no holder of a Company Option or any participant provisions in any Stock Plans shall have any right thereunder to acquire any capital stock of other Employee Benefit Plan providing for the Company issuance, transfer or any Subsidiary or the Surviving Corporation.grant of

Stock Option and Other Plans. Prior to the Effective Time, the Board of Directors of the Company (aor, if appropriate, any committee thereof) shall take all actions and shall use its reasonable best efforts to obtain all necessary consents and releases from all of the holders of all the outstanding stock options and other rights to purchase Common Stock (the "OPTIONS") heretofore granted under any compensatory stock option plan of the Company or otherwise (the "STOCK PLANS"), to (i) provide for the cancellation, effective at the Effective Time, subject to the payment provided for in the next sentence being made, of all Options, (ii) terminate, as of the Effective Time, Parent shall assume each outstanding option to acquire Common the Stock (eachPlans and any other plan, a "Company Option"), under program or arrangement providing for the issuance or grant of any other interest in respect of the capital stock option or similar plan of the Company or any of its Subsidiaries (eachcollectively with the Stock Plans, a referred to as the "Stock PlanSTOCK INCENTIVE PLANS") in accordance with this Section 2.10 and with the terms of the Stock Plan under which such Company Option was granted and the stock option agreement by which such Company Option is evidenced. Parent acknowledges and agrees that each Company Option(iii) amend, to the extent currently not exercisable, will become exercisable in accordance with its terms upon the acceptance for payment of and payment for the Shares by Merger Subsidiary pursuant to the Offer and, if applicable, the exercise of the Option as contemplated by Section 1.01(e). The proceeds from the exercise of any Company Option shall be excluded from the calculation of Company Net Working Capital. (b) Effective as of the Effective Time, the provisions of any other Employee Benefit Plan providing for the issuance, transfer or grant of any capital stock of the Company or any such Subsidiary, or any interest in respect of any capital stock of the Company or any such Subsidiary, to provide no continuing rights to acquire, hold, transfer or grant any capital stock of the Company or any such Subsidiary or any interest in the capital stock of the Company or any such Subsidiary. Stock Plans shall not include any Intercompany Convertible Instruments and Options shall not include any options granted under any Intercompany Convertible Instrument. Immediately prior to the Effective Time, each Company Option shall be deemed to constitute an option (a "New Parent Option") to purchase, on the same terms and conditions as were applicable to such Company Option, whether or not then vested or exercisable, shall no longer be exercisable for the number purchase of shares of Parent common stock Common Stock but shall entitle each holder thereof, in cancellation and settlement therefor, to payments by the Company in cash (rounded to the nearest whole number) "CASH PAYMENT"), at the Effective Time, equal to the product of (Ax) and (B), where (A) is the total number of shares of Common Stock subject to such Company Option Option, whether or not then vested or exercisable, and (By) is the Offer Price divided amount by which the average Applicable Merger Consideration for shares of Common Stock exceeds the closing sales prices of Parent common stock on the New York Stock Exchange for the ten (10) consecutive days immediately prior to and including the day preceding the Effective Time, at an exercise price per share of Parent common stock (rounded to the nearest whole cent) equal to (x) divided by (y), where (x) is the aggregate exercise price for the shares of Common Stock subject to such Option, each such Cash Payment to be paid to each holder of an outstanding Option at the Effective Time. The Company Option and (y) is the aggregate number of shares of shall deliver to Parent common stock purchasable pursuant to the New Parent Option (as calculated immediately above); provided, however, that in the case of any Company Option to which Section 422 within five business days of the Internal Revenue Code date hereof a true and complete list of 1986the Options which are outstanding as of the date hereof, together with detailed calculations of the Cash Payments relating to such Options had the Effective Time occurred on the date of delivery thereof. The Company shall update such list and such calculations as amended (the "Code")of, appliesand deliver such update to Parent on, the option price, the number of shares purchasable pursuant to such option and the terms and conditions of exercise of such option shall be determined in accordance with the foregoing, subject to such adjustments as are necessary in order to satisfy the requirements of Section 424(adate that is two (2) of the Code. At or business days prior to the Effective Time, such updated list and calculations made as if the Effective Time would occur on such date. Except as otherwise contemplated herein, any then outstanding stock appreciation rights or limited stock appreciation rights issued by the Company or any Subsidiary of the Company shall take all necessary actions be canceled immediately prior to permit the assumption of the unexercised Company Options by Parent pursuant to this Section. Section 2.10(b) of the Company Disclosure Schedule sets forth two examples of the calculations contemplated by this paragraph. (c) Not later than twenty-one calendar days after the Effective Time, Parent shall file a registration statement under the Securities Act of 1933, as amended (the "Securities Act") on Form S-8 or other appropriate form covering shares of Parent common stock subject to issuance upon the exercise of the New Parent Options. (d) All Stock Plans shall terminate as of the Effective Time and the without any payment therefor. The Company shall use commercially its reasonable best efforts to ensure that following the Effective Time no holder neither it nor any of a Company Option its Subsidiaries is or will be bound by any participant in Options, other options, warrants, rights or agreements which would entitle any Stock Plans shall have any right thereunder Person, other than Parent or its Affiliates, to acquire own any capital stock of the Company or any Subsidiary of its Subsidiaries or to receive any payment in respect thereof. Notwithstanding any other provision of this Section 3.7, the Surviving CorporationCompany shall not be required to purchase any minority equity interests in any of its Subsidiaries. Notwithstanding any other provision of this Section 3.7 to the contrary, payment of the Cash Payment may be withheld with respect to any Option until necessary consents and releases are obtained. The Company shall take all steps as may be required to provide that with respect to each individual who is a director or officer of the Company immediately prior to the Effective Time all transactions contemplated by this Agreement with respect to stock held by such Person shall be exempt under the Exchange Act in accordance with the terms and conditions set forth in that certain No-Action Letter, dated January 12, 1999, issued by the Securities and Exchange Commission to Skadden, Arps, Slate, Meagxxx & Xlom XXX. Immediately prior to the Merger, the Company shall cause any restrictions imposed on the Restricted Stock to be lifted.

Stock Option and Other Plans. (a) Effective as The Company shall, prior to the Closing Date, use its commercially reasonable best efforts to accelerate the vesting or exercisability of all outstanding employee stock options to purchase Company Common Stock, whether set forth in any stock option plan or plans of the Effective TimeCompany ("COMPANY STOCK OPTION PLANS"), Parent in an option agreement with the optionee or otherwise. On the Closing Date, the Company shall assume use its commercially reasonable best efforts to cause each outstanding such option to acquire Common Stock (each, a "Company OptionCOMPANY OPTION"), under any stock option or similar plan of ) granted by the Company to purchase shares of Company Common Stock that is outstanding and unexercised immediately prior to Closing Date to be exercised, and the optionees thereunder (the "OPTIONEES") shall be deemed to be Sellers for purposes of Articles I and II of this Agreement. As required by Section 6.2(e) hereof, the Sellers shall cause each Optionee to deliver prior to the Option Closing a joinder agreement whereby each such Optionee agrees to be bound by the provisions of Articles I and II of this Agreement as if he or she were a Seller hereunder (each, a "Stock PlanJOINDER AGREEMENT") in accordance with this Section 2.10 and with the terms of the Stock Plan under which such Company Option was granted and the stock option agreement by which such Company Option is evidenced. Parent acknowledges and agrees that each Company Option, to the extent currently not exercisable, will become exercisable in accordance with its terms upon the acceptance for payment of and payment for the Shares by Merger Subsidiary pursuant to the Offer and, if applicable, the exercise of the Option as contemplated by Section 1.01(e). The proceeds from the exercise of any Company Option shall be excluded from the calculation of Company Net Working Capital. (b) Effective Any then outstanding stock appreciation rights or limited stock appreciation rights shall be canceled as of the Effective Time, each Company Option shall be deemed to constitute an option (a "New Parent Option") to purchase, on the same terms and conditions as were applicable to such Company Option, the number of shares of Parent common stock (rounded to the nearest whole number) equal to the product of (A) and (B), where (A) is the number of shares of Common Stock subject to such Company Option and (B) is the Offer Price divided by the average of the closing sales prices of Parent common stock on the New York Stock Exchange for the ten (10) consecutive days immediately prior to and including the day preceding the Effective Time, at an exercise price per share of Parent common stock (rounded to the nearest whole cent) equal to (x) divided by (y), where (x) is the aggregate exercise price for the shares of Common Stock subject to such Company Option and (y) is the aggregate number of shares of Parent common stock purchasable pursuant to the New Parent Option (as calculated immediately above); provided, however, that in the case of Closing without any Company Option to which Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), applies, the option price, the number of shares purchasable pursuant to such option and the terms and conditions of exercise of such option shall be determined in accordance with the foregoing, subject to such adjustments as are necessary in order to satisfy the requirements of Section 424(a) of the Codepayment therefor. At or prior to the Effective TimeAs provided herein, the Company shall take all necessary actions to permit Stock Option Plans and any other plan, program or arrangement providing for the assumption issuance or grant of any other interest in respect of the unexercised Company Options by Parent pursuant to this Section. Section 2.10(b) capital stock of the Company Disclosure Schedule sets forth two examples of or any Subsidiary (collectively with the calculations contemplated by this paragraph. (c) Not later than twenty-one calendar days after the Effective TimeCompany Stock Option Plans, Parent shall file a registration statement under the Securities Act of 1933, as amended (the "Securities ActCOMPANY STOCK INCENTIVE PLANS") on Form S-8 or other appropriate form covering shares of Parent common stock subject to issuance upon the exercise of the New Parent Options. (d) All Stock Plans shall terminate as of the Effective Time and the Closing Date. The Company shall use will take all commercially reasonable efforts steps to ensure that following neither the Effective Time no holder Company nor any of a its Subsidiaries is or will be bound by any Company Option Options, other options, warrants, rights or agreements which would entitle any participant Person, other than EMKT, Top Team or either of their Affiliated Parties (as defined in any Stock Plans shall have any right thereunder Section 8.1), to acquire own any capital stock of the Company or any Subsidiary of its Subsidiaries or to receive any payment in respect thereof. The Company will use its commercially reasonable best efforts to obtain all necessary consents to ensure that after the Surviving CorporationClosing Date, the only rights of the holders of Options to purchase shares of Company Common Stock in respect of such Options will be to receive the Purchase Consideration and the Exchange Consideration in cancellation and settlement thereof.

Stock Option and Other Plans. (a) Effective as of Prior to the Effective Time, Parent the Board of Directors of the Company (or, if appropriate, any committee thereof) shall assume each adopt appropriate resolutions and use its reasonable efforts to take all other actions necessary to provide for the cancellation, effective at the Effective Time, of all the outstanding option stock options to acquire purchase Common Stock (each, a the "Company OptionOptions"), ) heretofore granted under any stock option or similar plan of the Company (each, a the "Stock PlanPlans") in accordance with this Section 2.10 and with the terms of the Stock Plan under which such Company Option was granted and the stock option agreement by which such Company Option is evidenced. Parent acknowledges and agrees that each Company Option, to the extent currently not exercisable, will become exercisable in accordance with its terms upon the acceptance for payment of and payment for the Shares by Merger Subsidiary pursuant to the Offer and, if applicable, the exercise of the Option as contemplated by Section 1.01(e). The proceeds from the exercise of any Company Option shall be excluded from the calculation of Company Net Working Capital. (b) Effective as of Immediately prior to the Effective Time, the Company shall use its reasonable efforts to ensure that each Company Option shall be deemed to constitute an option (a "New Parent Option") to purchase, on the same terms and conditions as were applicable to such Company Option, whether or not then vested or exercisable, shall no longer be exercisable for the number purchase of shares of Parent common stock Common Stock but shall entitle each holder thereof, in cancellation and settlement therefor, to payments in cash (rounded subject to any applicable withholding taxes, the nearest whole number) "Cash Payment"), at the Effective Time, equal to the product of (Ax) and (B), where (A) is the total number of shares of Common Stock subject to such Company Option whether or not then vested or exercisable and (By) is the Offer Price divided by the average excess of the closing sales prices of Parent common stock on Merger Consideration over the New York Stock Exchange for the ten (10) consecutive days immediately prior to and including the day preceding the Effective Time, at an exercise price per share of Parent common stock (rounded to the nearest whole cent) equal to (x) divided by (y), where (x) is the aggregate exercise price for the shares of Common Stock subject to such Company Option, each such Cash Payment to be paid to each holder of an outstanding Option and (y) is the aggregate number of shares of Parent common stock purchasable pursuant to the New Parent Option (as calculated immediately above); provided, however, that in the case of any Company Option to which Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), applies, the option price, the number of shares purchasable pursuant to such option and the terms and conditions of exercise of such option shall be determined in accordance with the foregoing, subject to such adjustments as are necessary in order to satisfy the requirements of Section 424(a) of the Code. At or prior to at the Effective Time. As provided herein, the Company shall take all necessary actions use its reasonable efforts to permit ensure that the assumption of the unexercised Company Options by Parent pursuant to this Section. Section 2.10(b) of the Company Disclosure Schedule sets forth two examples of the calculations contemplated by this paragraph. (c) Not later than twenty-one calendar days after the Effective Time, Parent shall file a registration statement under the Securities Act of 1933, as amended (the "Securities Act") on Form S-8 or other appropriate form covering shares of Parent common stock subject to issuance upon the exercise of the New Parent Options. (d) All Stock Plans shall terminate as of the Effective Time and the provisions of any Employee Benefit Plan (as defined in Section 3.01(i)) providing for the issuance or grant of shares of the capital stock of the Company shall use commercially be deleted as of the Effective Time. The Company will take all reasonable efforts steps to ensure that following neither the Effective Time no holder Company nor any of a Company Option its Subsidiaries is or will be bound by any participant in Options, other options, warrants, rights or agreements which would entitle any Stock Plans shall have any right thereunder Person, other than Parent or its affiliates, to acquire own or purchase any capital stock of the Company Surviving Corporation or any Subsidiary or of its subsidiaries. The Company will use its reasonable efforts to obtain any necessary consents to ensure that after the Surviving CorporationEffective Time, the only rights of the holders of Options to purchase shares of Common Stock in respect of such Options will be to receive the Cash Payment in cancellation and settlement thereof.

Stock Option and Other Plans. Prior to the Effective Time, the Board of Directors of the Company (aor, if appropriate, any committee thereof) shall use commercially reasonable efforts to obtain all necessary consents and releases from all of the holders of all the outstanding stock options and other rights to purchase Common Stock (the "Options") heretofore granted under any stock option plan of the Company or otherwise (the "Stock Plans"), to (i) provide for the cancellation, effective at the Effective Time, subject to the payment provided for in the next sentence being made, of all Options, (ii) terminate, as of the Effective Time, Parent shall assume each outstanding option to acquire Common the Stock (eachPlans and any other plan, a "Company Option"), under program or arrangement providing for the issuance or grant of any other interest in respect of the capital stock option or similar plan of the Company or any Subsidiary thereof (eachcollectively with the Stock Plans, a referred to as the "Stock PlanIncentive Plans") in accordance with this Section 2.10 and with the terms of the Stock Plan under which such Company Option was granted and the stock option agreement by which such Company Option is evidenced. Parent acknowledges and agrees that each Company Option(iii) amend, to the extent currently not exercisable, will become exercisable in accordance with its terms upon the acceptance for payment of and payment for the Shares by Merger Subsidiary pursuant to the Offer and, if applicable, the exercise of the Option as contemplated by Section 1.01(e). The proceeds from the exercise of any Company Option shall be excluded from the calculation of Company Net Working Capital. (b) Effective as of the Effective Time, the provisions of any other Employee Benefit Plan providing for the issuance, transfer or grant of any capital stock of the Company or any such Subsidiary, or any interest in respect of any capital stock of the Company or any such Subsidiary, to provide no continuing rights to acquire, hold, transfer or grant any capital stock of the Company or any such Affiliate or any interest in the capital stock of the Company or any such Affiliate. Immediately prior to the Effective Time, each Company Option shall no longer be deemed to constitute an option (a "New Parent Option") to purchase, on exercisable for the same terms and conditions as were applicable to such Company Option, the number purchase of shares of Parent common stock Common Stock but shall entitle each holder thereof, in cancellation and settlement therefor, to payments by the Company in cash (rounded to the nearest whole number) "Option Cash Payment"), at the Effective Time, equal to the product of (Ax) and (B), where (A) is the total number of shares of Common Stock subject to such Company Option Option, whether or not then vested or exercisable and (By) is the Offer Price divided amount by which the average of Merger Consideration exceeds the closing sales prices of Parent common stock on the New York Stock Exchange for the ten (10) consecutive days immediately prior to and including the day preceding the Effective Time, at an exercise price per share of Parent common stock (rounded to the nearest whole cent) equal to (x) divided by (y), where (x) is the aggregate exercise price for the shares of Common Stock subject to such Option, each such Option Cash Payment to be paid to each holder of an outstanding Option at the Effective Time. Except as otherwise contemplated herein, any then outstanding stock appreciation rights or limited stock appreciation rights, and any other rights or interest in respect of the capital stock of the Company Option and (y) is or any Subsidiary issued by the aggregate number Company or any Subsidiary of shares of Parent common stock purchasable pursuant the Company shall be canceled immediately prior to the New Parent Option (as calculated Effective Time without any payment therefor. The Company shall take all steps to ensure that, immediately above); provided, however, that in the case of any Company Option to which Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), applies, the option price, the number of shares purchasable pursuant to such option and the terms and conditions of exercise of such option shall be determined in accordance with the foregoing, subject to such adjustments as are necessary in order to satisfy the requirements of Section 424(a) of the Code. At or prior to the Effective Time, the Company neither it nor any of its Subsidiaries is or shall take all necessary actions be bound by any Options, other options, warrants, rights or agreements which would entitle any Person, other than Buyer or its Affiliates, to permit the assumption of the unexercised Company Options by Parent pursuant to this Section. Section 2.10(b) of the Company Disclosure Schedule sets forth two examples of the calculations contemplated by this paragraph. (c) Not later than twenty-one calendar days after the Effective Time, Parent shall file a registration statement under the Securities Act of 1933, as amended (the "Securities Act") on Form S-8 or other appropriate form covering shares of Parent common stock subject to issuance upon the exercise of the New Parent Options. (d) All Stock Plans shall terminate as of the Effective Time and the Company shall use commercially reasonable efforts to ensure that following the Effective Time no holder of a Company Option or any participant in any Stock Plans shall have any right thereunder to acquire own any capital stock of the Company or any Subsidiary of its Subsidiaries or to receive any payment in respect thereof other than pursuant to this Agreement. Notwithstanding any other provision of this Section 3.7 to the Surviving Corporation.contrary, payment of the Option Cash Payment may be withheld with respect to any Option until necessary consents and releases are obtained

Stock Option and Other Plans. (a) Effective as The Company may provide and, if requested by Parent, shall provide to the extent permitted by applicable law and the provisions of the Effective Timeapplicable Options and Stock Plans, Parent shall assume each that all outstanding option stock options and other rights to acquire Common Stock purchase Ordinary Shares (each, a the "Company OptionOptions"), ) heretofore granted under any stock option or similar plan of the Company (each, a the "Stock PlanPlans") in accordance with this Section 2.10 or otherwise shall vest and with the terms be fully exercisable, effective immediately prior to expiration of the Stock Plan under Offer which results in an Acceptance Date if the Option holder (i) tenders all Options held by such Company Option was granted holder for exercise (conditioned only upon occurrence of the Acceptance Date) and tenders and does not withdraw all Ordinary Shares issued upon exercise of such Options in the stock option agreement Offer or (ii) irrevocably surrenders all Options held by which such Company Option is evidenced. Parent acknowledges and agrees that each Company Option, holder to the extent currently not exercisable, will become exercisable in accordance Company between the final expiration date of the Offer (including any Subsequent Offer Period) if an Acceptance Date occurs with its terms upon the acceptance for payment of and payment for the Shares by Merger Subsidiary pursuant respect to the Offer and, if applicable, and the exercise earlier of the Compulsory Completion Date and the Scheme Effective Time for cancellation in exchange for a Cash Option Payment as contemplated by provided in Section 1.01(e). The proceeds from the exercise of any Company Option shall be excluded from the calculation of Company Net Working Capital3.5(c) hereof. (b) Effective as The Company may make arrangements and, if requested by Parent, shall make such arrangements to the extent permitted by applicable law and the provisions of the Effective Timeapplicable Options and Stock Plans, each to permit holders of Options to conditionally exercise their Options and tender all Ordinary Shares issued upon exercise thereof in the Offer. The Company, Parent and Sub agree that Sub shall accept as validly tendered pursuant to the Offer all Ordinary Shares which are to be issued pursuant to the Conditional Option Exercise (as defined below). "Conditional Option Exercise" shall mean the exercise of all Options that are duly surrendered to the Company Option for exercise, conditional only on the occurrence of the Acceptance Date, and accompanied by appropriate irrevocable instructions that the Ordinary Shares issuable upon such exercise shall be deemed to constitute an option (a "New Parent Option") to purchase, on the same terms and conditions as were applicable to such Company Option, the number of shares of Parent common stock (rounded to the nearest whole number) equal to the product of (A) and (B), where (A) is the number of shares of Common Stock subject to such Company Option and (B) is the Offer Price divided by the average of the closing sales prices of Parent common stock on the New York Stock Exchange for the ten (10) consecutive days be exercised immediately prior to the expiration of the Offer and including the day preceding the Effective Time, at an exercise price per share of Parent common stock (rounded properly tendered to the nearest whole cent) equal to (x) divided by (y), where (x) is the aggregate exercise price for the shares of Common Stock subject to such Company Option and (y) is the aggregate number of shares of Parent common stock purchasable Sub pursuant to the New Parent Option (as calculated immediately above); provided, however, that in the case of any Company Option to which Section 422 terms of the Internal Revenue Code of 1986, as amended (the "Code"), applies, the option price, the number of shares purchasable pursuant to such option Offer and the terms and conditions of exercise of such option shall be determined in accordance with the foregoing, subject to such adjustments as are necessary in order to satisfy the requirements of Section 424(a) of the Code. At or prior to the Effective Time, the Company shall take all necessary actions to permit the assumption of the unexercised Company Options by Parent pursuant to this Section. Section 2.10(b) of the Company Disclosure Schedule sets forth two examples of the calculations contemplated by this paragraphnot withdrawn. (c) Not later than twenty-one calendar days after the Effective Time, Parent shall file a registration statement under the Securities Act of 1933, as amended (the "Securities Act") on Form S-8 or other appropriate form covering shares of Parent common stock subject to issuance upon the exercise of the New Parent Options. (d) All Stock Plans shall terminate as of the Effective Time and the Company shall use commercially reasonable efforts to ensure that following the Effective Time no holder of a Company Option or any participant in any Stock Plans shall have any right thereunder to acquire any capital stock of the Company or any Subsidiary or the Surviving Corporation.

Stock Option and Other Plans. (a) Effective as The Company shall, prior to the Option Closing Date, use its commercially reasonable best efforts to accelerate the vesting or exercisability of all outstanding employee stock options to purchase Company Common Stock, whether set forth in any stock option plan or plans of the Effective TimeCompany ("COMPANY STOCK OPTION PLANS"), Parent in an option agreement with the optionee or otherwise. On the Option Closing Date, the Company shall assume use its commercially reasonable best efforts to cause each outstanding such option to acquire Common Stock (each, a "Company OptionCOMPANY OPTION"), under any stock option or similar plan of ) granted by the Company to purchase shares of Company Common Stock that is outstanding and unexercised immediately prior to Option Closing Date to be exercised, and the optionees thereunder (the "OPTIONEES") shall be deemed to be Sellers for purposes of Articles I and II of this Agreement. As required by Section 6.2(e) hereof, the Sellers shall cause each Optionee to deliver prior to the Option Closing a joinder agreement whereby each such Optionee agrees to be bound by the provisions of Articles I and II of this Agreement as if he or she were a Seller hereunder (each, a "Stock PlanJOINDER AGREEMENT") in accordance with this Section 2.10 and with the terms of the Stock Plan under which such Company Option was granted and the stock option agreement by which such Company Option is evidenced. Parent acknowledges and agrees that each Company Option, to the extent currently not exercisable, will become exercisable in accordance with its terms upon the acceptance for payment of and payment for the Shares by Merger Subsidiary pursuant to the Offer and, if applicable, the exercise of the Option as contemplated by Section 1.01(e). The proceeds from the exercise of any Company Option shall be excluded from the calculation of Company Net Working Capital. (b) Effective Any then outstanding stock appreciation rights or limited stock appreciation rights shall be canceled as of the Effective Time, each Company Option shall be deemed to constitute an option (a "New Parent Option") to purchase, on the same terms and conditions as were applicable to such Company Option, the number of shares of Parent common stock (rounded to the nearest whole number) equal to the product of (A) and (B), where (A) is the number of shares of Common Stock subject to such Company Option and (B) is the Offer Price divided by the average of the closing sales prices of Parent common stock on the New York Stock Exchange for the ten (10) consecutive days immediately prior to and including the day preceding the Effective Time, at an exercise price per share of Parent common stock (rounded to the nearest whole cent) equal to (x) divided by (y), where (x) is the aggregate exercise price for the shares of Common Stock subject to such Company Option and (y) is the aggregate number of shares of Parent common stock purchasable pursuant to the New Parent Option (as calculated immediately above); provided, however, that in the case of Closing without any Company Option to which Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), applies, the option price, the number of shares purchasable pursuant to such option and the terms and conditions of exercise of such option shall be determined in accordance with the foregoing, subject to such adjustments as are necessary in order to satisfy the requirements of Section 424(a) of the Codepayment therefor. At or prior to the Effective TimeAs provided herein, the Company shall take all necessary actions to permit Stock Option Plans and any other plan, program or arrangement providing for the assumption issuance or grant of any other interest in respect of the unexercised Company Options by Parent pursuant to this Section. Section 2.10(b) capital stock of the Company Disclosure Schedule sets forth two examples of or any Subsidiary (collectively with the calculations contemplated by this paragraph. (c) Not later than twenty-one calendar days after the Effective TimeCompany Stock Option Plans, Parent shall file a registration statement under the Securities Act of 1933, as amended (the "Securities ActCOMPANY STOCK INCENTIVE PLANS") on Form S-8 or other appropriate form covering shares of Parent common stock subject to issuance upon the exercise of the New Parent Options. (d) All Stock Plans shall terminate as of the Effective Time and the Closing Date. The Company shall use will take all commercially reasonable efforts steps to ensure that following neither the Effective Time no holder Company nor any of a its Subsidiaries is or will be bound by any Company Option Options, other options, warrants, rights or agreements which would entitle any participant Person, other than EMKT, Top Team or either of their Affiliated Parties (as defined in any Stock Plans shall have any right thereunder Section 8.1), to acquire own any capital stock of the Company or any Subsidiary of its Subsidiaries or to receive any payment in respect thereof. The Company will use its commercially reasonable best efforts to obtain all necessary consents to ensure that after the Surviving CorporationOption Closing Date, the only rights of the holders of Options to purchase shares of Company Common Stock in respect of such Options will be to receive the Purchase Consideration and the Exchange Consideration in cancellation and settlement thereof.

Stock Option and Other Plans. (a) Effective as The Company shall, prior to the Option Closing Date, accelerate the vesting or exercisability of all outstanding employee stock options to purchase Company Stock, whether set forth in any stock option plan or plans of the Effective TimeCompany ("COMPANY STOCK OPTION PLANS"), Parent shall assume in an option agreement with the optionee or otherwise. On the Option Closing Date, each outstanding such option to acquire Common Stock (each, a "Company OptionCOMPANY OPTION"), under any stock option or similar plan of ) granted by the Company to purchase shares of Company Stock that is outstanding and unexercised immediately prior to Option Closing Date shall be deemed to be exercised, and the optionees thereunder (the "OPTIONEES") shall be deemed to be Sellers for purposes of Articles I and II of this Agreement. As required by Section 6.2(e) hereof, the Sellers shall cause each Optionee to deliver prior to the Closing a joinder agreement whereby each such Optionee agrees to be bound by the provisions of Articles I and II of this Agreement (other than the first sentence of Section 2.4(b)) as if he, she or it were a Seller hereunder (each, a "JOINDER AGREEMENT"). In addition, the Company shall cause the Common Stock PlanWarrant Agreements, each dated November 1, 1999 issued to Grand Pacific Financing Corporation and Grand Pacific Finance Corporation (the "GP WARRANTS") in accordance with this Section 2.10 and to be exercised prior to or concurrent with the terms of the Stock Plan under which such Company Option was granted and the stock option agreement by which such Company Option is evidenced. Parent acknowledges and agrees that each Company Option, to the extent currently not exercisable, will become exercisable in accordance with its terms upon the acceptance for payment of and payment for the Shares by Merger Subsidiary pursuant to the Offer and, if applicable, the exercise of the Option as contemplated by Section 1.01(e). The proceeds from the exercise of any Company Option shall be excluded from the calculation of Company Net Working CapitalClosing. (b) Effective Any then outstanding stock appreciation rights or limited stock appreciation rights shall be canceled as of the Effective Time, each Company Option shall be deemed to constitute an option (a "New Parent Option") to purchase, on the same terms and conditions as were applicable to such Company Option, the number of shares of Parent common stock (rounded to the nearest whole number) equal to the product of (A) and (B), where (A) is the number of shares of Common Stock subject to such Company Option and (B) is the Offer Price divided by the average of the closing sales prices of Parent common stock on the New York Stock Exchange for the ten (10) consecutive days immediately prior to and including the day preceding the Effective Time, at an exercise price per share of Parent common stock (rounded to the nearest whole cent) equal to (x) divided by (y), where (x) is the aggregate exercise price for the shares of Common Stock subject to such Company Option and (y) is the aggregate number of shares of Parent common stock purchasable pursuant to the New Parent Option (as calculated immediately above); provided, however, that in the case of Closing without any Company Option to which Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), applies, the option price, the number of shares purchasable pursuant to such option and the terms and conditions of exercise of such option shall be determined in accordance with the foregoing, subject to such adjustments as are necessary in order to satisfy the requirements of Section 424(a) of the Codepayment therefor. At or prior to the Effective TimeAs provided herein, the Company shall take all necessary actions to permit Stock Option Plans and any other plan, program or arrangement providing for the assumption issuance or grant of any other interest in respect of the unexercised Company Options by Parent pursuant to this Section. Section 2.10(b) capital stock of the Company Disclosure Schedule sets forth two examples of or any Subsidiary, except for the calculations contemplated by this paragraph. GP Warrants (c) Not later than twenty-one calendar days after collectively with the Effective TimeCompany Stock Option Plans, Parent shall file a registration statement under the Securities Act of 1933, as amended (the "Securities ActCOMPANY STOCK INCENTIVE PLANS") on Form S-8 or other appropriate form covering shares of Parent common stock subject to issuance upon the exercise of the New Parent Options. (d) All Stock Plans shall terminate as of the Effective Time and the Closing Date. The Company shall use commercially reasonable efforts will take all steps to ensure that following neither the Effective Time no holder Company nor any of a its Subsidiaries is or will be bound by any Company Option Options, other options, warrants, rights or agreements which would entitle any participant Person, other than EMKT, Top Team or either of their Affiliated Parties (as defined in any Stock Plans shall have any right thereunder Section 8.1), to acquire own any capital stock of the Company or any Subsidiary of its Subsidiaries or to receive any payment in respect thereof. The Company will use its best efforts to obtain all necessary consents to ensure that after the Surviving CorporationOption Closing Date, the only rights of the holders of Options to purchase shares of Company Stock in respect of such Options will be to receive the Purchase Consideration and the Exchange Consideration in cancellation and settlement thereof.

Stock Option and Other Plans. (a) Effective as of Prior to the Effective Time, Parent shall assume each outstanding option to acquire Common Stock (each, a "Company Option"), under any stock option or similar plan the Board of Directors of the Company (eachor, a if appropriate, any committee thereof) and the Board of Directors of FACO (or, if appropriate, any committee thereof) shall adopt appropriate resolutions and take all other actions necessary to provide that effective at the Effective Time all the outstanding stock options, stock issuance rights, stock appreciation rights, limited stock appreciation rights and stock purchase rights (the "Company Stock Rights") heretofore granted under any stock -------------------- option, incentive or similar plan, agreement or arrangement of the Company and its Subsidiaries, except for the Employee Stock Purchase Plan (the "Stock Plan----- Plans"), shall be assumed by FACO and converted automatically into options to ----- purchase FACO Common Shares (collectively, "New Stock Rights") in accordance with this Section 2.10 and with the terms of the Stock Plan under which such Company Option was granted and the stock option agreement by which such Company Option is evidenced. Parent acknowledges and agrees that each Company Option, to the extent currently not exercisable, will become exercisable in accordance with its terms upon the acceptance for payment of and payment for the Shares by Merger Subsidiary pursuant to the Offer an amount and, ---------------- if applicable, at an exercise price determined as provided below: (i) The number of FACO Common Shares to be subject to each New Stock Right shall be equal to the product of (x) the number of Company Common Shares remaining subject (as of immediately prior to the Effective Time) to the original Company Stock Right and (y) the Exchange Ratio, provided that any fractional FACO Common Shares resulting from such multiplication shall be rounded down to the nearest share; and (ii) The exercise price per FACO Common Share under each New Stock Right shall be equal to the exercise of price per Company Common Share under the Option as contemplated original Company Stock Right divided by Section 1.01(e). The proceeds from the Exchange Ratio, provided that such exercise of any Company Option price shall be excluded from rounded up to the calculation of Company Net Working Capital. (b) Effective as of nearest cent. After the Effective Time, each Company Option New Stock Right shall be deemed to constitute an option (a "New Parent Option") to purchaseexercisable and shall vest in accordance with, on and shall otherwise be subject to, the same terms and conditions as were applicable to such the related Company Option, the number of shares of Parent common stock (rounded to the nearest whole number) equal to the product of (A) and (B), where (A) is the number of shares of Common Stock subject to such Company Option and (B) is the Offer Price divided by the average of the closing sales prices of Parent common stock on the New York Stock Exchange for the ten (10) consecutive days Right immediately prior to and including the day preceding the Effective Time, at an exercise price per share of Parent common stock (rounded to the nearest whole cent) equal to (x) divided by (y), where (x) is the aggregate exercise price for the shares of Common Stock subject to such Company Option and (y) is the aggregate number of shares of Parent common stock purchasable pursuant to the New Parent Option (as calculated immediately above); provided, however, that in the case of any Company Option to which Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), applies, the option price, the number of shares purchasable pursuant to such option and the terms and conditions of exercise of such option shall be determined in accordance with the foregoing, subject to such adjustments as are necessary in order to satisfy the requirements of Section 424(a) of the Code. At or prior to the Effective TimeTime (except that with regard to such New Stock Right, any references to the Company shall be deemed, as appropriate, to include FACO). (b) The Company shall take all necessary actions to permit the assumption of the unexercised Company Options by Parent pursuant to this Section. Section 2.10(b) of the Company Disclosure Schedule sets forth two examples of the calculations contemplated by this paragraph. (c) Not later than twenty-one calendar days after the Effective Time, Parent shall file a registration statement under the Securities Act of 1933, as amended (the "Securities Act") on Form S-8 or other appropriate form covering shares of Parent common stock subject to issuance upon the exercise of the New Parent Options. (d) All Stock Plans shall terminate as of the Effective Time and the Company shall use commercially reasonable efforts to ensure so that following the Effective Time no holder of a Company Option Stock Right under or any participant in any of the Stock Plans or the Employee Stock Purchase Plan shall have any right thereunder to acquire any capital stock of the Company or any Subsidiary or the Surviving Corporation. The Company shall take all actions so that, as of the Effective Time, neither the Company nor the Surviving Corporation or any of their respective Subsidiaries is or will be bound by any Company Stock Rights, any stock rights under the Employee Stock Purchase Plan or other options, warrants, rights or agreements which would entitle any Person, other than FACOSUB or its affiliates, to own any capital stock of the Company, the Surviving Corporation or any of their respective subsidiaries or to receive any payment in respect thereof, except as otherwise provided herein. The Company shall, except as otherwise expressly required under employment agreements to which the Company is a party, refrain from exercising any discretionary authority granted under any Stock Plan to (x) accelerate the vesting of any Company Stock Right or (y) terminate any repurchase and/or cancellation right held by the Company, in each case whether as a result of the transactions contemplated hereby or otherwise. (c) FACO agrees that it shall take all action necessary, at or prior to the Effective Time, to authorize and reserve a number of FACO Common Shares sufficient for issuance upon exercise of options as contemplated by this Section 2.5. (d) Unless at the Effective Time the New Stock Rights are registered pursuant to an effective FACO registration statement, as soon as practicable (and in any event within ten (10) Business Days) following the Effective Time, FACO shall prepare and file with the SEC a registration statement on Form S-8 (or another appropriate form) registering a number of FACO Common Shares equal to the number of shares subject to the New Stock Rights. Any such registration statement shall be kept effective (and the current status of the initial offering prospectus or prospectuses required thereby shall be maintained) for at least as long as any New Stock Right remains outstanding. FACO shall also, as soon as practicable (and in any event within ten (10) Business Days) following the Effective Time, prepare and submit to the NYSE a listing application covering the FACO Common Shares subject to the New Stock Rights. (e) The Company hereby assigns, effective as of the Effective Time, all repurchase and/or cancellation rights it may have under any Stock Plan to FACO, and the Company shall take all further action as is necessary, at or prior to the Effective Time, to give effect to such assignment. (f) On or before the earlier of (i) the later of (A) the tenth day following the date of this Agreement and (B) the earliest date on which the termination of the Employee Stock Purchase Plan is permitted by the terms thereof and (ii) the Closing Date, the Company shall take all actions necessary to cause the termination of the Employee Stock Purchase Plan.

Stock Option and Other Plans. (a) Effective as The Company may provide and, if requested by Parent, shall provide to the extent permitted by applicable law and the provisions of the Effective Timeapplicable Options and Stock Plans, Parent shall assume each that all outstanding option stock options and other rights to acquire Common Stock purchase Ordinary Shares (each, a the "Company OptionOptions"), ) heretofore granted under any stock option or similar plan of the Company (each, a the "Stock PlanPlans") or otherwise shall vest and be fully exercisable, effective immediately prior to expiration of the Offer which results in accordance an Acceptance Date if the Option holder (i) tenders all Options held by such holder for exercise (conditioned only upon occurrence of the Acceptance Date) and tenders and does not withdraw all Ordinary Shares issued upon exercise of such Options in the Offer or (ii) irrevocably surrenders all Options held by such holder to the Company between the final expiration date of the Offer (including any Subsequent Offer Period) if an Acceptance Date occurs with this respect to the Offer and the earlier of the Compulsory Completion Date and the Scheme Effective Time for cancellation in exchange for a Cash Option Payment as provided in Section 2.10 3.5(c) hereof. (a) The Company may make arrangements and, if requested by Parent, shall make such arrangements to the extent permitted by applicable law and with the provisions of the applicable Options and Stock Plans, to permit holders of Options to conditionally exercise their Options and tender all Ordinary Shares issued upon exercise thereof in the Offer. The Company, Parent and Sub agree that Sub shall accept as validly tendered pursuant to the Offer all Ordinary Shares which are to be issued pursuant to the Conditional Option Exercise (as defined below). "Conditional Option Exercise" shall mean the exercise of all Options that are duly surrendered to the Company for exercise, conditional only on the occurrence of the Acceptance Date, and accompanied by appropriate irrevocable instructions that the Ordinary Shares issuable upon such exercise shall be deemed to be exercised immediately prior to the expiration of the Offer and properly tendered to Sub pursuant to the terms of the Stock Plan under which such Company Option was granted Offer and the stock option agreement by which such Company Option is evidenced. Parent acknowledges and agrees that each Company Option, to the extent currently not exercisable, will become exercisable in accordance with its terms upon the acceptance for payment of and payment for the Shares by Merger Subsidiary pursuant to the Offer and, if applicable, the exercise of the Option as contemplated by Section 1.01(e). The proceeds from the exercise of any Company Option shall be excluded from the calculation of Company Net Working Capitalwithdrawn. (b) Effective as of the Effective Time, each Company Option shall be deemed to constitute an option (a "New Parent Option") to purchase, on the same terms and conditions as were applicable to such Company Option, the number of shares of Parent common stock (rounded to the nearest whole number) equal to the product of (A) and (B), where (A) is the number of shares of Common Stock subject to such Company Option and (B) is the Offer Price divided by the average of the closing sales prices of Parent common stock on the New York Stock Exchange for the ten (10) consecutive days immediately prior to and including the day preceding the Effective Time, at an exercise price per share of Parent common stock (rounded to the nearest whole cent) equal to (x) divided by (y), where (x) is the aggregate exercise price for the shares of Common Stock subject to such Company Option and (y) is the aggregate number of shares of Parent common stock purchasable pursuant to the New Parent Option (as calculated immediately above); provided, however, that in the case of any Company Option to which Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), applies, the option price, the number of shares purchasable pursuant to such option and the terms and conditions of exercise of such option shall be determined in accordance with the foregoing, subject to such adjustments as are necessary in order to satisfy the requirements of Section 424(a) of the Code. At or prior to the Effective Time, the Company shall take all necessary actions to permit the assumption of the unexercised Company Options by Parent pursuant to this Section. Section 2.10(b) of the Company Disclosure Schedule sets forth two examples of the calculations contemplated by this paragraph. (c) Not later than twenty-one calendar days after the Effective Time, Parent shall file a registration statement under the Securities Act of 1933, as amended (the "Securities Act") on Form S-8 or other appropriate form covering shares of Parent common stock subject to issuance upon the exercise of the New Parent Options. (d) All Stock Plans shall terminate as of the Effective Time and the Company shall use commercially reasonable efforts to ensure that following the Effective Time no holder of a Company Option or any participant in any Stock Plans shall have any right thereunder to acquire any capital stock of the Company or any Subsidiary or the Surviving Corporation.

Stock Option and Other Plans. (a) Effective as As of the Effective Time, Parent shall assume (i) each outstanding option to acquire Common Stock purchase Shares (each, a "Company Stock Option") issued pursuant to the Company's 1997 -------------------- Stock Option Plan, as amended (the "Company Stock Option Plan"), under any stock shall be ------------------------- converted into an immediately exercisable option or similar plan of the Company (each, a an "Stock Plan") in accordance with this Section 2.10 and with the terms of the Stock Plan under which such Adjusted Company Option was granted and the stock option agreement by which such Company Option is evidenced. Parent acknowledges and agrees that each Company Option, to the extent currently not exercisable, will become exercisable in accordance with its terms upon the acceptance for payment of and payment for the Shares by Merger Subsidiary pursuant to the Offer and, if applicable, the exercise of the Option as contemplated by Section 1.01(e). The proceeds from the exercise of any Company Option shall be excluded from the calculation of Company Net Working Capital. (b) Effective as of the Effective Time, each Company Option shall be deemed to constitute an option (a "New Parent ---------------- Option") to purchase, on the same terms and conditions as were applicable to such Company Option, the purchase a number of shares of Parent common stock stock, no par value, of ICII ------ (rounded to the nearest whole number) equal to the product of (A) and (B"ICII Common Stock"), where (A) is the number of shares of Common Stock subject to such Company Option and (B) is the Offer Price divided by the average of the closing sales prices of Parent common stock on the New York Stock Exchange for the ten (10) consecutive days immediately prior to and including the day preceding the Effective Time, at an exercise price per share as shall be determined in accordance ----------------- with the provisions hereof so that the Fair Value (as defined below) of Parent common stock each such Company Stock Option equals the Fair Value of the Adjusted Company Options to purchase ICII Common Stock into which such Company Stock Option is converted, and all references in each such Company Stock Option (rounded including the plans and agreements under which they were issued) to the nearest whole cent) equal Company shall be deemed to (x) divided by (y)refer to ICII, where (x) is the aggregate exercise price for the shares of Common Stock subject to such Company Option and (y) is the aggregate number of shares of Parent common stock purchasable pursuant to the New Parent Option (as calculated immediately above)appropriate; provided, however, that the adjustments provided in the case of this paragraph with respect to any Company Option to options which are "incentive stock options" (as defined in Section 422 of the Internal Revenue Code of 1986, as amended amended, (the "Code"), applies, the option price, the number of shares purchasable pursuant to such option and the terms and conditions of exercise of such option shall be determined effected in accordance a manner consistent with the foregoing, subject to such adjustments as are necessary in order to satisfy the requirements of ---- Section 424(a) of the Code. At , unless the option holder, in his or prior to her sole discretion, waives such requirement, and (ii) ICII shall assume the Effective Time, the Company shall take all necessary actions to permit the assumption of the unexercised Company Options by Parent pursuant to this Section. Section 2.10(b) obligations of the Company Disclosure Schedule sets forth two examples under the Company Stock Option Plan. Approval of the calculations Merger Agreement by the Company Stockholders shall constitute a "Change of Control" (as defined in the Company Stock Option Plan) and as a result each Company Stock Option shall vest and become exercisable in full on the date of such Change of Control. The other terms of each Adjusted Company Option, and the plans or agreements under which they were issued, in each case as amended in accordance herewith, shall continue to apply in accordance with their terms. The date of grant of each Adjusted Company Option shall be the date on which the corresponding Company Stock Option was granted. For the purposes hereof, the "Fair Value" of the Company Stock Options and of the Adjusted Company Options to purchase ICII Common Stock into which the Company Stock Options are converted shall be determined in the manner set forth on Schedule III and utilizing the Black-Scholes option pricing model incorporating historical data available on the Bloomberg system and reflecting, among other things, the relative current price, strike price, the risk-free rate, expected duration, volatility and dividend policies of each of ICII and the Company and of the Company Stock Options and the Adjusted Company Options into which they will be converted, based on the principle of preserving for the holders of the Company Stock Options the current value and upside potential of the Company Stock Options, as well as the level of the Merger Consideration (including any adjustment pursuant to Section 1.8(b) in respect of the Appraised Value of the Management Agreement). The Company and ICII shall work together during the 30-day period following the date hereof to determine the precise methodology to be used in determining Fair Value and with respect to the conversion of the Company Stock Options into the Adjusted Company Options. In the event they are unable to agree within such 30-day period, their respective positions on the subject shall be submitted to the Appraiser, and the Appraiser shall be directed to select one of the positions or any other intermediate position. (b) Each holder of Company Stock Options may, prior to or within 90 days following the later of the Effective Time or the date of the notices set forth in paragraph (d) below, elect to receive, in lieu of all or a portion of such holder's Adjusted Company Options as provided in Section 1.10(a), the following: (i) with respect to all or a portion of each Company Stock Option which has an option exercise price less than the Merger Consideration, a cash payment from ICII equal to the product of (A) the amount by which the Merger Consideration amount exceeds the exercise price of such Company Stock Option and (B) the number of shares issuable upon exercise of such Company Stock Option or portion thereof, as applicable, and/or (ii) with respect to all or a portion of each Company Stock Option (including those referred to in clause (i) above in lieu of the payment contemplated by clause (i)), a cash payment from ICII equal to the Fair Value of such option or portion thereof, as applicable, determined in accordance with Section 1.10(a). All cash payments shall be subject to any applicable withholding taxes and shall be made as promptly as practicable upon ICII's receipt of such holder's election pursuant to this paragraph. (c) Not later than twenty-one calendar days ICII and the Company agree that the Company Stock Option Plan shall be amended (or the Company Board or the Compensation Committee of the Company Board shall take other appropriate actions), such amendment to be effective as of the Effective Time, (i) to provide that, with respect to any particular holder of Company Stock Options, unless such option holder shall remain or become an employee of ICII or the Manager immediately after the Effective Time, Parent the employee shall be considered to have had a Voluntary Termination of Affiliation (as defined in the Company Stock Option Plan) and, as a result, such holder's Company Stock Options shall remain exercisable by such holder for a period of one year from the Effective Time, and (ii) to reflect the transactions contemplated hereby, including the conversion of Shares held or to be awarded or paid pursuant to such benefit plans, programs or the Company Stock Option Plan into shares of ICII Common Stock (or fractions thereof) on a basis consistent with the transactions contemplated by this Agreement. The parties agree that any "voluntary" termination of employment by an employee of the Company or the Manager pursuant to a constructive termination or a termination for good reason in an employment or severance agreement shall be treated as a Voluntary Termination of Affiliation for which the employee's Adjusted Company Options shall remain exercisable for a period of at least one year following such termination. (d) Prior to or as soon as practicable after the Effective Time, ICII shall deliver to the holders of Company Stock Options appropriate notices setting forth such holders' rights pursuant to the Company Stock Option Plan and the agreements evidencing the grants of such Company Stock Options and informing such holders that such Company Stock Options and the related agreements shall be assumed by ICII at the Effective Time and that such Company Stock Options shall continue in effect on the same terms and conditions as in effect immediately prior to the Effective Time (subject to the adjustments required by this Section after giving effect to the Merger). (e) ICII and the Company shall take all such steps as may be required or reasonably requested to cause the transactions contemplated by this Section and any other dispositions of Company equity securities (including derivative securities) or acquisitions of ICII equity securities (including derivative securities) in connection with this Agreement by each individual who (a) is a director or officer of the Company or (b) at the Effective Time, will become a director or officer of ICII, to be exempt under Rule 16b-3 promulgated under the Securities Exchange Act of 1934 (the "Exchange Act") and the rules and ------------ regulations promulgated thereunder, such steps to be taken in accordance with the No-Action Letter dated January 12, 1999, issued by the Securities and Exchange Commission (the "SEC") to Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, or as may otherwise be reasonably requested by the Company. (f) ICII shall (i) prior to the Effective Time, reserve for issuance the maximum number of shares of ICII Common Stock that may become subject to the Adjusted Company Options referred to in this Section and (ii) issue or cause to be issued the appropriate number of shares of ICII Common Stock (or fractions thereof) pursuant to the terms of the Adjusted Company Options upon the exercise thereof. No later than the Effective Time, ICII shall prepare and file with the SEC one or more registration statements on Form S-8 (or on any other appropriate form) (the "S-8") registering the number of shares of ICII --- Common Stock necessary to fulfill ICII's obligations under this Section. ICII shall also file a supplemental listing application with the Nasdaq Stock Market in respect of such shares and use its reasonable best efforts to cause such shares to be approved for listing on the Nasdaq Stock Market, subject to official notice of issuance prior to the Effective Time. Such registration statement shall be kept effective (and the current status of the prospectus required thereby shall be maintained) for at least as long as until the later of (i) the last date on which any Adjusted Company Options remain outstanding, or (ii) the last date on which shares of ICII Common Stock issued on exercise of Adjusted Company Options are held by an affiliate, as defined by Rule 144 of the General Rules and Regulations (an "Affiliate") under the Securities Act of 1933, --------- as amended (the "Securities Act") on Form S-8 or other appropriate form covering of ICII and any of such shares of Parent common stock subject ICII Common Stock cannot be otherwise sold immediately pursuant to issuance upon the exercise of the New Parent OptionsRule 144. (dg) All Stock Plans The provisions of this Section are intended to be for the benefit of, and shall terminate as of the Effective Time and the Company shall use commercially reasonable efforts to ensure that following the Effective Time no be enforceable by, each holder of a Company Option Stock Options or any participant in any Adjusted Company Options and such Affiliate of ICII holding shares of ICII Common Stock Plans issued on exercise of Adjusted Company Options (it being expressly agreed that such persons shall have any right thereunder to acquire any capital stock be the third party beneficiaries of the Company or any Subsidiary or the Surviving Corporationthis Section).

Stock Option and Other Plans. (a) Effective as of Prior to the Effective Time, Parent the ---------------------------- Board of Directors of the Company (or, if appropriate, any committee thereof) shall assume each adopt appropriate resolutions and use its reasonable best efforts to take all other actions necessary to provide for the cancellation, effective at the Effective Time, of all the outstanding option stock options to acquire purchase Common Stock (each, a the "Company OptionOptions"), ) heretofore granted under any stock option or similar plan of the Company (each, a the "Stock PlanPlans") in accordance with this Section 2.10 and with the terms of the Stock Plan under which such Company Option was granted and the stock option agreement by which such Company Option is evidenced. Parent acknowledges and agrees that each Company Option, to the extent currently not exercisable, will become exercisable in accordance with its terms upon the acceptance for payment of and payment for the Shares by Merger Subsidiary pursuant to the Offer and, if applicable, the exercise of the Option as contemplated by Section 1.01(e). The proceeds from the exercise of any Company Option shall be excluded from the calculation of Company Net Working Capital. (b) Effective as of Immediately prior to the Effective Time, the Company shall use its reasonable best efforts to ensure that (i) each Company Option shall be deemed to constitute an option (a "New Parent Option") to purchase, on the same terms and conditions as were applicable to such Company Option, whether or not then vested or exercisable, shall no longer be exercisable for the number purchase of shares of Parent common stock Common Stock but shall entitle each holder thereof, in cancellation and settlement therefor, to payments by the Company in cash (rounded subject to any applicable withholding taxes, the nearest whole number) "Cash Payment"), at the Effective Time, equal to the product of (Ax) and (B), where (A) is the total number of shares of Common Stock subject to such Company Option as to which such Option could have been exercised as of the Effective Date and (By) is the Offer Price divided by the average excess of the closing sales prices of Parent common stock on Merger Consideration over the New York Stock Exchange for the ten (10) consecutive days immediately prior to and including the day preceding the Effective Time, at an exercise price per share of Parent common stock (rounded to the nearest whole cent) equal to (x) divided by (y), where (x) is the aggregate exercise price for the shares of Common Stock subject to such Company Option, each such Cash Payment to be paid to each holder of an outstanding Option at the Effective Time and (yii) is the aggregate number each share of shares of Parent common stock purchasable pursuant to the New Parent Option (as calculated immediately above); provided, however, that Common Stock previously issued in the case form of any Company Option to which Section 422 grants of the Internal Revenue Code restricted stock or grants of 1986contingent or bonus shares, as amended (the "Code"), applies, the option price, the number of shares purchasable pursuant to such option and the terms and conditions of exercise of such option shall be determined in accordance with the foregoing, subject to such adjustments as are necessary in order to satisfy the requirements of Section 424(a) of the Code. At or not vested prior to the Effective Time, shall fully vest and be paid by the Company shall take all necessary actions in cash at the Effective Time in an amount equal to permit the assumption of the unexercised Company Options by Parent pursuant Merger Consideration (subject to this Sectionapplicable withholding taxes) and otherwise in accordance with their respective terms. Section 2.10(b) of the Company Disclosure Schedule sets forth two examples of the calculations contemplated by this paragraph. (c) Not later than twenty-one calendar days after Prior to the Effective Time, Parent the Board of Directors of the Company shall file a registration statement adopt appropriate resolutions and use its reasonable best efforts to take all other actions necessary to provide for the purchase prior to the Effective Time of shares of Common Stock covered by subscriptions outstanding under the Securities Act of 1933Echelon International Corporation 1996 Employee Stock Purchase Plan. As provided herein, as amended (the "Securities Act") on Form S-8 or other appropriate form covering shares of Parent common stock subject Company shall use its reasonable best efforts to issuance upon ensure that the exercise of the New Parent Options. (d) All Stock Plans shall terminate as of the Effective Time and the provisions of any Employee Benefit Plan (as defined in Section 3.01(j) hereof) providing for the issuance or grant of shares of the capital stock of the Company shall use commercially be deleted as of the Effective Time. The Company will take all reasonable efforts steps to ensure that following neither the Effective Time no holder Company nor any of a Company Option its Subsidiaries is or will be bound by any participant in Options, other options, warrants, rights or agreements which would entitle any Stock Plans shall have any right thereunder Person, other than Parent or its affiliates, to acquire own or purchase any capital stock of the Company Surviving Corporation or any Subsidiary or of its subsidiaries. The Company will use its reasonable best efforts to obtain any necessary consents to ensure that after the Surviving CorporationEffective Time, the only rights of the holders of Options, in respect of such Options, will be to receive the Cash Payment in cancellation and settlement thereof.

Stock Option and Other Plans. (a) Prior to the Effective Time, the Board of Directors of the Company shall adopt amendments to the stock option plans of the Company (the "Stock Plans") to provide that in the event of a merger pursuant to which the stockholders of the Company receive cash for their shares, the holders of outstanding options to purchase Common Stock (the "Options") heretofore granted under the Stock Plans shall be entitled, upon exercise of the Options on or after the effective date of such merger, only to receive the same cash consideration per share with respect to each share subject to such Options as received by the stockholders in connection with such merger, without interest (subject to any applicable withholding taxes, the "Cash Payment"). Except for any benefits due participants under the Company's Common Share Equivalent Plan, any then outstanding stock appreciation rights or limited stock appreciation rights shall be cancelled as of immediately prior to the Effective Time without any payment therefor. All vested benefits as of the Effective Time pursuant to the Company's Common Share Equivalent Plan shall be paid in cash at the Effective Time whether or not payment would otherwise then be due. As provided herein, the Stock Plans and any other plan, program or arrangement providing for the issuance or grant of any other interest in respect of the capital stock of the Company or any subsidiary (collectively with the Stock Plans, referred to as the "Stock Incentive Plans") shall terminate as of the Effective Time. The Company will use its reasonable best efforts to obtain all necessary consents to ensure that upon the Effective Time, the holders of Options, all of which shall become fully vested as of the Effective Time, Parent shall assume each outstanding option to acquire Common Stock (each, surrender the same in cancellation and settlement thereof for a "Company Option"), under any stock option or similar plan of the Company (each, a "Stock Plan") in accordance with this Section 2.10 and with the terms of the Stock Plan under which such Company Option was granted and the stock option agreement by which such Company Option is evidenced. Parent acknowledges and agrees that each Company Option, cash consideration equal to the extent currently not exercisableCash Payment, will become exercisable in accordance with its terms upon the acceptance for payment of and payment for the Shares by Merger Subsidiary pursuant to the Offer and, if applicable, less the exercise price of the Option as contemplated by Section 1.01(e). The proceeds from the exercise of any Company Option shall be excluded from the calculation of Company Net Working Capitalsuch related Options. (b) Effective as of the Effective Time, each Company Option shall be deemed to constitute an option (a "New Parent Option") to purchase, on the same terms and conditions as were applicable to such Company Option, the number of shares of Parent common stock (rounded to the nearest whole number) equal to the product of (A) and (B), where (A) is the number of shares of Common Stock subject to such Company Option and (B) is the Offer Price divided by the average of the closing sales prices of Parent common stock on the New York Stock Exchange for the ten (10) consecutive days immediately prior to and including the day preceding the Effective Time, at an exercise price per share of Parent common stock (rounded to the nearest whole cent) equal to (x) divided by (y), where (x) is the aggregate exercise price for the shares of Common Stock subject to such Company Option and (y) is the aggregate number of shares of Parent common stock purchasable pursuant to the New Parent Option (as calculated immediately above); provided, however, that in the case of any Company Option to which Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), applies, the option price, the number of shares purchasable pursuant to such option and the terms and conditions of exercise of such option shall be determined in accordance with the foregoing, subject to such adjustments as are necessary in order to satisfy the requirements of Section 424(a) of the Code. At or prior to the Effective Time, the Company shall take all necessary actions to permit the assumption of the unexercised Company Options by Parent pursuant to this Section. Section 2.10(b) of the Company Disclosure Schedule sets forth two examples of the calculations contemplated by this paragraph. (c) Not later than twenty-one calendar days after the Effective Time, Parent shall file a registration statement under the Securities Act of 1933, as amended (the "Securities Act") on Form S-8 or other appropriate form covering shares of Parent common stock subject to issuance upon the exercise of the New Parent Options. (d) All Stock Plans shall terminate as of the Effective Time and the provisions in any other Employee Benefit Plan (as defined in Section 2.11) providing for the issuance, transfer or grant of any capital stock of the Company or any interest in respect of any capital stock of the Company shall be deleted as of the Effective Time, and the Company shall use commercially reasonable its best efforts to ensure that following the Effective Time no holder of a Company an Option or any participant in any Stock Plans shall have any right thereunder to acquire any capital stock of the Company or any Subsidiary Company, Parent or the Surviving Corporation.

Stock Option and Other Plans. (a) Effective as Subject to the provisions of Section 4.02(d) hereof prior to the Effective Time, Parent the Board of Directors of the Company (or, if appropriate, any Committee thereof) shall assume each adopt appropriate resolutions and take all other actions necessary to provide for the cancellation, effective at the Effective Time of all the outstanding option stock options to acquire purchase Common Stock (each, a the "Company OptionOPTIONS"), ) heretofore granted under any stock option or similar plan of the Company (eachthe "STOCK PLANS"). Immediately prior to the Effective Time, a "Stock Plan") in accordance with this Section 2.10 and with subject to obtaining the terms consent of the Stock Plan under which such Company Option was granted and the stock option agreement by which such Company Option is evidenced. Parent acknowledges and agrees that each Company Optionany holder of Options, to the extent currently necessary, each Option, whether or not then vested or exercisable, will become shall no longer be exercisable in accordance with its terms upon the acceptance for payment of and payment for the Shares by Merger Subsidiary pursuant purchase of shares of Common Stock, but shall entitle each holder thereof, in cancellation and settlement therefor, to the Offer and, if applicablepayments in cash (subject to any applicable withholding taxes, the exercise of the Option as contemplated by Section 1.01(e"CASH PAYMENT"). The proceeds from the exercise of any Company Option shall be excluded from the calculation of Company Net Working Capital. (b) Effective as of , at the Effective Time, each Company Option shall be deemed to constitute an option (a "New Parent Option") to purchase, on the same terms and conditions as were applicable to such Company Option, the number of shares of Parent common stock (rounded to the nearest whole number) equal to the product of (Ax) and (B), where (A) is the total number of shares of Common Stock subject to such Company Option as to which such Option could have been exercised as of the Effective Time and (By) is the Offer Price divided by the average excess of the closing sales prices of Parent common stock on Merger Consideration over the New York Stock Exchange for the ten (10) consecutive days immediately prior to and including the day preceding the Effective Time, at an exercise price per share of Parent common stock (rounded to the nearest whole cent) equal to (x) divided by (y), where (x) is the aggregate exercise price for the shares of Common Stock subject to such Company Option Option. As provided herein, the Stock Plans and (y) is any other plan, program or arrangement providing for the aggregate number of shares of Parent common stock purchasable pursuant to the New Parent Option (as calculated immediately above); provided, however, that in the case issuance or grant of any Company Option to which Section 422 other interest in respect of the Internal Revenue Code capital stock of 1986the Company or any Subsidiary (collectively with the Stock Plans, referred to as amended (the "CodeSTOCK INCENTIVE PLANS"), applies, the option price, the number of shares purchasable pursuant to such option and the terms and conditions of exercise of such option ) shall be determined in accordance with the foregoing, subject to such adjustments terminate as are necessary in order to satisfy the requirements of Section 424(a) of the CodeEffective Time. At The Company will take all steps to ensure that neither the Company nor any of its Subsidiaries is or prior will be bound by any Options, other options, warrants, rights or agreements which would entitle any Person, other than Parent or its affiliates, to own any capital stock of the Surviving Corporation or any of its subsidiaries or to receive any payment in respect thereof. The Company will use its reasonable best efforts to obtain all necessary consents to ensure that after the Effective Time, the Company shall take all necessary actions to permit the assumption only rights of the unexercised Company holders of Options by Parent pursuant to this Section. Section 2.10(b) purchase shares of Common Stock in respect of such Options will be to receive the Company Disclosure Schedule sets forth two examples of the calculations contemplated by this paragraphCash Payment in cancellation and settlement thereof. (c) Not later than twenty-one calendar days after the Effective Time, Parent shall file a registration statement under the Securities Act of 1933, as amended (the "Securities Act") on Form S-8 or other appropriate form covering shares of Parent common stock subject to issuance upon the exercise of the New Parent Options. (db) All Stock Plans shall terminate as of the Effective Time and the Company shall use commercially its reasonable best efforts to ensure that following the Effective Time no holder of a Company an Option or any participant in any Stock Plans Plan shall have any right thereunder to acquire any capital stock of the Company or any Subsidiary Company, Parent or the Surviving Corporation, except as provided in Section 1.07(a).

Stock Option and Other Plans. Prior to the Effective Time, the Board of Directors of the Company (aor, if appropriate, any Committee thereof) shall adopt appropriate resolutions and use its reasonable best efforts to take all other actions necessary to (i) provide for the cancellation, effective at the Effective Time of all the outstanding stock options and other rights to purchase shares of Common Stock ("Options") and (ii) terminate, as of the Effective Time, Parent shall assume each outstanding option to acquire Common the Stock (eachOption Plans and any other plan, a "Company Option"), under program or arrangement providing for the issuance or grant of any other interest in respect of the capital stock option or similar plan of the Company or any of its subsidiaries (eachcollectively, a the "Stock PlanIncentive Plans") in accordance with this Section 2.10 and with the terms of the Stock Plan under which such Company Option was granted and the stock option agreement by which such Company Option is evidenced. Parent acknowledges and agrees that each Company Option(iii) amend, to the extent currently not exercisable, will become exercisable in accordance with its terms upon the acceptance for payment of and payment for the Shares by Merger Subsidiary pursuant to the Offer and, if applicable, the exercise of the Option as contemplated by Section 1.01(e). The proceeds from the exercise of any Company Option shall be excluded from the calculation of Company Net Working Capital. (b) Effective as of the Effective Time, each the provisions in any U.S. or Foreign Employee Benefit Plan providing for the issuance, transfer or grant of any capital stock of the Company Option or any of its subsidiaries or any interest in respect of any capital stock of the Company or its subsidiaries to provide that there shall be deemed no continuing rights to constitute an option acquire, hold, transfer or grant any capital stock of the company or its subsidiaries or any interest in the capital stock of the Company or its subsidiaries. Immediately prior to the Effective Time, the Company shall use its reasonable best efforts to ensure that (a "New Parent Option"i) to purchase, on the same terms and conditions as were applicable to such Company each Option, whether or not then vested or exercisable, shall no longer be exercisable for the number purchase of shares of Parent common stock Common Stock but shall entitle each holder thereof, in cancellation and settlement therefor, to payments by the Company in cash (rounded subject to any applicable withholding taxes, the nearest whole number) "Cash Payment"), at the Effective Time, equal to the product of (Ax) and (B), where (A) is the total number of shares of Common Stock subject to such Company Option whether or not then vested or exercisable and (By) is the Offer Price divided by the average excess of the closing sales prices of Parent common stock on Merger Consideration over the New York Stock Exchange for the ten (10) consecutive days immediately prior to and including the day preceding the Effective Time, at an exercise price per share of Parent common stock (rounded to the nearest whole cent) equal to (x) divided by (y), where (x) is the aggregate exercise price for the shares of Common Stock subject to such Company Option, each such Cash Payment to be paid to each holder of an outstanding Option at the Effective Time and (yii) is the aggregate number each share of shares of Parent common stock purchasable pursuant to the New Parent Option (as calculated immediately above); provided, however, that Common Stock previously issued in the case form of any Company Option to which Section 422 grants of the Internal Revenue Code restricted stock or grants of 1986, as amended (the "Code"), applies, the option price, the number of contingent shares purchasable pursuant to such option and the terms and conditions of exercise of such option shall be determined fully vest in accordance with the foregoingtheir respective terms. In addition, subject to such adjustments as are necessary in order to satisfy the requirements of Section 424(a) of the Code. At any outstanding stock appreciation rights or limited stock appreciation rights shall be cancelled immediately prior to the Effective TimeTime without any payment or other consideration therefor. As provided herein, the Company shall take all necessary actions use its reasonable best efforts to permit ensure that the assumption of the unexercised Company Options by Parent pursuant to this Section. Section 2.10(b) of the Company Disclosure Schedule sets forth two examples of the calculations contemplated by this paragraph. (c) Not later than twenty-one calendar days after the Effective Time, Parent shall file a registration statement under the Securities Act of 1933, as amended (the "Securities Act") on Form S-8 or other appropriate form covering shares of Parent common stock subject to issuance upon the exercise of the New Parent Options. (d) All Stock Incentive Plans shall terminate as of the Effective Time and the Time. The Company shall use commercially reasonable efforts will take all necessary steps to ensure that following neither the Effective Time no holder Company nor any of a Company Option its subsidiaries is or will be bound by any participant in Options, other options, warrants, rights or agreements which would entitle any Stock Plans shall have any right thereunder Person, other than Parent or its affiliates, to acquire own any capital stock of the Company Surviving Corporation or any Subsidiary of its subsidiaries or to receive any payment in respect thereof. The Company will use its reasonable best efforts to obtain all necessary consents to ensure that after the Surviving CorporationEffective Time, the only rights of the holders of Options to purchase shares of Common Stock in respect of such Options will be to receive the Cash Payment in cancellation and settlement thereof. Notwithstanding any other provision of this Section 2.07 to the contrary, payment of the Cash Payment may be withheld with respect to any Option until the necessary consents are obtained.

Stock Option and Other Plans. (a) Effective as As of the Effective Time, Parent shall assume (i) each outstanding option to acquire Common Stock purchase Shares (each, a "Company Stock Option") issued pursuant to the Company's 1997 Stock Option Plan, as amended (the "Company Stock Option Plan"), under any stock shall be converted into an immediately exercisable option or similar plan of the Company (each, a an "Stock Plan") in accordance with this Section 2.10 and with the terms of the Stock Plan under which such Adjusted Company Option was granted and the stock option agreement by which such Company Option is evidenced. Parent acknowledges and agrees that each Company Option, to the extent currently not exercisable, will become exercisable in accordance with its terms upon the acceptance for payment of and payment for the Shares by Merger Subsidiary pursuant to the Offer and, if applicable, the exercise of the Option as contemplated by Section 1.01(e). The proceeds from the exercise of any Company Option shall be excluded from the calculation of Company Net Working Capital. (b) Effective as of the Effective Time, each Company Option shall be deemed to constitute an option (a "New Parent Option") to purchase, on the same terms and conditions as were applicable to such Company Option, the purchase a number of shares of Parent common stock stock, no par value, of ICII (rounded to the nearest whole number) equal to the product of (A) and (B"ICII Common Stock"), where (A) is the number of shares of Common Stock subject to such Company Option and (B) is the Offer Price divided by the average of the closing sales prices of Parent common stock on the New York Stock Exchange for the ten (10) consecutive days immediately prior to and including the day preceding the Effective Time, at an exercise price per share as shall be determined in accordance with the provisions hereof so that the Fair Value (as defined below) of Parent common stock each such Company Stock Option equals the Fair Value of the Adjusted Company Options to purchase ICII Common Stock into which such Company Stock Option is converted, and all references in each such Company Stock Option (rounded including the plans and agreements under which they were issued) to the nearest whole cent) equal Company shall be deemed to (x) divided by (y)refer to ICII, where (x) is the aggregate exercise price for the shares of Common Stock subject to such Company Option and (y) is the aggregate number of shares of Parent common stock purchasable pursuant to the New Parent Option (as calculated immediately above)appropriate; provided, however, that the adjustments provided in the case of this paragraph with respect to any Company Option to options which are "incentive stock options" (as defined in Section 422 of the Internal Revenue Code of 1986, as amended amended, (the "Code"), applies, the option price, the number of shares purchasable pursuant to such option and the terms and conditions of exercise of such option shall be determined effected in accordance a manner consistent with the foregoing, subject to such adjustments as are necessary in order to satisfy the requirements of Section 424(a) of the Code. At , unless the option holder, in his or prior to her sole discretion, waives such requirement, and (ii) ICII shall assume the Effective Time, the Company shall take all necessary actions to permit the assumption of the unexercised Company Options by Parent pursuant to this Section. Section 2.10(b) obligations of the Company Disclosure Schedule sets forth two examples under the Company Stock Option Plan. Approval of the calculations Merger Agreement by the Company Stockholders shall constitute a "Change of Control" (as defined in the Company Stock Option Plan) and as a result each Company Stock Option shall vest and become exercisable in full on the date of such Change of Control. The other terms of each Adjusted Company Option, and the plans or agreements under which they were issued, in each case as amended in accordance herewith, shall continue to apply in accordance with their terms. The date of grant of each Adjusted Company Option shall be the date on which the corresponding Company Stock Option was granted. For the purposes hereof, the "Fair Value" of the Company Stock Options and of the Adjusted Company Options to purchase ICII Common Stock into which the Company Stock Options are converted shall be determined in the manner set forth on Schedule III and utilizing the Black-Scholes option pricing model incorporating historical data available on the Bloomberg system and reflecting, among other things, the relative current price, strike price, the risk-free rate, expected duration, volatility and dividend policies of each of ICII and the Company and of the Company Stock Options and the Adjusted Company Options into which they will be converted, based on the principle of preserving for the holders of the Company Stock Options the current value and upside potential of the Company Stock Options, as well as the level of the Merger Consideration (including any adjustment pursuant to Section 1.8(b) in respect of the Appraised Value of the Management Agreement). The Company and ICII shall work together during the 30-day period following the date hereof to determine the precise methodology to be used in determining Fair Value and with respect to the conversion of the Company Stock Options into the Adjusted Company Options. In the event they are unable to agree within such 30-day period, their respective positions on the subject shall be submitted to the Appraiser, and the Appraiser shall be directed to select one of the positions or any other intermediate position. (b) Each holder of Company Stock Options may, prior to or within 90 days following the later of the Effective Time or the date of the notices set forth in paragraph (d) below, elect to receive, in lieu of all or a portion of such holder's Adjusted Company Options as provided in Section 1.10(a), the following: (i) with respect to all or a portion of each Company Stock Option which has an option exercise price less than the Merger Consideration, a cash payment from ICII equal to the product of (A) the amount by which the Merger Consideration amount exceeds the exercise price of such Company Stock Option and (B) the number of shares issuable upon exercise of such Company Stock Option or portion thereof, as applicable, and/or (ii) with respect to all or a portion of each Company Stock Option (including those referred to in clause (i) above in lieu of the payment contemplated by clause (i)), a cash payment from ICII equal to the Fair Value of such option or portion thereof, as applicable, determined in accordance with Section 1.10 (a) All cash payments shall be subject to any applicable withholding taxes and shall be made as promptly as practicable upon ICII's receipt of such holder's election pursuant to this paragraph. (c) Not later than twenty-one calendar days ICII and the Company agree that the Company Stock Option Plan shall be amended (or the Company Board or the Compensation Committee of the Company Board shall take other appropriate actions), such amendment to be effective as of the Effective Time, (i) to provide that, with respect to any particular holder of Company Stock Options, unless such option holder shall remain or become an employee of ICII or the Manager immediately after the Effective Time, Parent the employee shall be considered to have had a Voluntary Termination of Affiliation (as defined in the Company Stock Option Plan) and, as a result, such holder's Company Stock Options shall remain exercisable by such holder for a period of one year from the Effective Time, and (ii) to reflect the transactions contemplated hereby, including the conversion of Shares held or to be awarded or paid pursuant to such benefit plans, programs or the Company Stock Option Plan into shares of ICII Common Stock (or fractions thereof) on a basis consistent with the transactions contemplated by this Agreement. The parties agree that any "voluntary" termination of employment by an employee of the Company or the Manager pursuant to a constructive termina- tion or a termination for good reason in an employment or severance agreement shall be treated as a Voluntary Termination of Affiliation for which the employee's Adjusted Company Options shall remain exercisable for a period of at least one year following such termination. (d) Prior to or as soon as practicable after the Effective Time, ICII shall deliver to the holders of Company Stock Options appropriate notices setting forth such holders' rights pursuant to the Company Stock Option Plan and the agreements evidencing the grants of such Company Stock Options and informing such holders that such Company Stock Options and the related agreements shall be assumed by ICII at the Effective Time and that such Company Stock Options shall continue in effect on the same terms and conditions as in effect immediately prior to the Effective Time (subject to the adjustments required by this Section after giving effect to the Merger). (e) ICII and the Company shall take all such steps as may be required or reasonably requested to cause the transactions contemplated by this Section and any other dispositions of Company equity securities (including derivative securities) or acquisitions of ICII equity securities (including derivative securities) in connection with this Agreement by each individual who (a) is a director or officer of the Company or (b) at the Effective Time, will become a director or officer of ICII, to be exempt under Rule 16b-3 promulgated under the Securities Exchange Act of 1934 (the "Exchange Act") and the rules and regulations promulgated thereunder, such steps to be taken in accordance with the No-Action Letter dated January 12, 1999, issued by the Securities and Exchange Commission (the "SEC") to Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, or as may otherwise be reasonably requested by the Company. (f) ICII shall (i) prior to the Effective Time, reserve for issuance the maximum number of shares of ICII Common Stock that may become subject to the Adjusted Company Options referred to in this Section and (ii) issue or cause to be issued the appropriate number of shares of ICII Common Stock (or fractions thereof) pursuant to the terms of the Adjusted Company Options upon the exercise thereof. No later than the Effective Time, ICII shall prepare and file with the SEC one or more registration statements on Form S-8 (or on any other appropriate form) (the "S-8") registering the number of shares of ICII Common Stock necessary to fulfill ICII's obligations under this Section. ICII shall also file a supplemental listing application with the Nasdaq Stock Market in respect of such shares and use its reasonable best efforts to cause such shares to be approved for listing on the Nasdaq Stock Market, subject to official notice of issuance prior to the Effective Time. Such registration statement shall be kept effective (and the current status of the prospectus required thereby shall be maintained) for at least as long as until the later of (i) the last date on which any Adjusted Company Options remain outstanding, or (ii) the last date on which shares of ICII Common Stock issued on exercise of Adjusted Company Options are held by an affiliate, as defined by Rule 144 of the General Rules and Regulations (an "Affiliate") under the Securities Act of 1933, as amended (the "Securities Act") on Form S-8 or other appropriate form covering of ICII and any of such shares of Parent common stock subject ICII Common Stock cannot be otherwise sold immediately pursuant to issuance upon the exercise of the New Parent OptionsRule 144. (dg) All Stock Plans The provisions of this Section are intended to be for the benefit of, and shall terminate as of the Effective Time and the Company shall use commercially reasonable efforts to ensure that following the Effective Time no be enforceable by, each holder of a Company Option Stock Options or any participant in any Adjusted Company Options and such Affiliate of ICII holding shares of ICII Common Stock Plans issued on exercise of Adjusted Company Options (it being expressly agreed that such persons shall have any right thereunder to acquire any capital stock be the third party beneficiaries of the Company or any Subsidiary or the Surviving Corporationthis Section).

Stock Option and Other Plans. (a) Prior to the date which is two Business Days prior to the Initial Expiration Date, the Board of Directors of the Company (or, if appropriate, any committee thereof) shall obtain all necessary consents and releases from all of the holders of all the outstanding stock options and other rights to purchase or acquire Common Stock (the "Options") heretofore granted under any stock option plan of the Company or otherwise (the "Stock Plans"), to (i) provide for the cancellation, effective at the Effective Time, subject to the payment provided for in the next sentence being made, of all Options (ii) terminate, as of the Effective Time, Parent shall assume each outstanding option to acquire Common the Stock (eachPlans and any other plan, a "Company Option"), under program or arrangement providing for the issuance or grant of any other interest in respect of the capital stock option or similar plan of the Company or any Affiliate thereof (eachcollectively with the Stock Plans, a referred to as the "Stock PlanIncentive Plans") in accordance with this Section 2.10 and with the terms of the Stock Plan under which such Company Option was granted and the stock option agreement by which such Company Option is evidenced. Parent acknowledges and agrees that each Company Option(iii) amend, to the extent currently not exercisable, will become exercisable in accordance with its terms upon the acceptance for payment of and payment for the Shares by Merger Subsidiary pursuant to the Offer and, if applicable, the exercise of the Option as contemplated by Section 1.01(e). The proceeds from the exercise of any Company Option shall be excluded from the calculation of Company Net Working Capital. (b) Effective as of the Effective Time, the provisions of any other Employee Benefit Plan providing for the issuance, -15- transfer or grant of any capital stock of the Company or any such Affiliate, or any interest in respect of any capital stock of the Company or any such Affiliate, to provide no continuing rights to acquire, hold, transfer or grant any capital stock of the Company or any such Affiliate or any interest in the capital stock of the Company or any such Affiliate. Immediately prior to the Effective Time, each Company Option shall be deemed to constitute an option (a "New Parent Option") to purchase, on the same terms and conditions as were applicable to such Company Option, whether or not then vested or exercisable, shall no longer be exercisable for the number purchase of shares of Parent common stock Common Stock, but shall entitle each holder thereof, in cancellation and settlement therefor, to payments by the Company in cash (rounded to the nearest whole number) "Cash Payment"), at the Effective Time, equal to the product of (Ax) and (B), where (A) is the total number of shares of Common Stock subject to such Company Option Option, whether or not then vested or exercisable, and (By) is the Offer Price divided amount, if any, by which the average of Merger Consideration exceeds the closing sales prices of Parent common stock on the New York Stock Exchange for the ten (10) consecutive days immediately prior to and including the day preceding the Effective Time, at an exercise price per share of Parent common stock (rounded to the nearest whole cent) equal to (x) divided by (y), where (x) is the aggregate exercise price for the shares of Common Stock subject to such Company Option and (y) is Option, each such Cash Payment to be paid to each holder of an outstanding Option. Upon receipt of the aggregate number Cash Payment therefor, all of shares the holder's Options shall be deemed cancelled. The surrender of Parent common stock purchasable pursuant the Options to the New Parent Option (as calculated immediately above); provided, however, that Company in exchange for the case Cash Payment shall be deemed a release of any Company Option to which Section 422 and all rights the holder had or may have had in respect of all of the Internal Revenue Code of 1986, as amended holder's Options. (the "Code"), applies, the option price, the number of shares purchasable pursuant to such option and the terms and conditions of exercise of such option shall be determined in accordance with the foregoing, subject to such adjustments as are necessary in order to satisfy the requirements of Section 424(ab) of the Code. At or prior Prior to the Effective Time, the Board of Directors of the Company (or, if appropriate, any committee thereof) shall take all necessary actions to permit actions, such that each restricted stock award granted under the assumption of Stock Incentive Plans (the unexercised Company Options by Parent pursuant to this Section. Section 2.10(b"AWARDS") of shall become fully and immediately vested and transferable and the Company Disclosure Schedule sets forth two examples of the calculations contemplated by this paragraphrestrictions thereon shall lapse. (c) Not later than twenty-one calendar days after the Effective TimeExcept as otherwise contemplated in this Section 3.6, Parent shall file a registration statement under the Securities Act of 1933any then outstanding stock appreciation rights or limited stock appreciation rights, as amended (the "Securities Act") on Form S-8 and any other rights or other appropriate form covering shares of Parent common stock subject to issuance upon the exercise interest in respect of the New Parent Options. (d) All Stock Plans capital stock of the Company or any Affiliate issued by the Company or any Affiliate of the Company shall terminate as of be canceled immediately prior to the Effective Time and the without any payment therefor. The Company shall use commercially reasonable efforts take all steps to ensure that following the Effective Time no holder neither it nor any of a Company Option its Affiliates is or shall be bound by any participant in Options, other options, warrants, rights or agreements which would entitle any Stock Plans shall have any right thereunder Person, other than Parent or its Affiliates, to acquire own any capital stock of the Company or any Subsidiary of its Subsidiaries or to receive any payment in respect thereof. Notwithstanding any other provision of this Section 3.6 to the Surviving Corporationcontrary, payment of the Cash Payment may be withheld with respect to any Option until necessary consents and releases are obtained.

Stock Option and Other Plans. (a) Effective as of Prior to the Effective Time, the Board of Directors of the Company (or, if appropriate, any committee thereof) and the Board of Directors of Parent (or, if appropriate, any committee thereof) shall assume each adopt appropriate resolutions and take all other actions necessary to provide that effective at the Effective Time all the outstanding option to acquire Common stock options, stock appreciation rights, limited stock appreciation rights and stock purchase rights (the “Company Stock (each, a "Company Option"), Rights”) heretofore granted under any stock option or similar plan plan, agreement and arrangement of the Company and its Subsidiaries (eachthe “Stock Plans”), a "shall be assumed by Parent and converted automatically into options to purchase shares of Parent Class A Stock Plan"(collectively, “New Stock Rights”) in accordance with this Section 2.10 and with the terms of the Stock Plan under which such Company Option was granted and the stock option agreement by which such Company Option is evidenced. Parent acknowledges and agrees that each Company Option, to the extent currently not exercisable, will become exercisable in accordance with its terms upon the acceptance for payment of and payment for the Shares by Merger Subsidiary pursuant to the Offer an amount and, if applicable, the at an exercise of the Option price determined as contemplated by Section 1.01(e). The proceeds from the exercise of any Company Option shall be excluded from the calculation of Company Net Working Capital.provided below: (bi) Effective as of the Effective Time, each Company Option shall be deemed to constitute an option (a "New Parent Option") to purchase, on the same terms and conditions as were applicable to such Company Option, the number of shares of Parent common stock (rounded Class A Stock to the nearest whole number) be subject to each New Stock Right shall be equal to the product of (Ax) and (B), where (A) is the number of shares of Company Common Stock remaining subject to such Company Option and (B) is the Offer Price divided by the average as of the closing sales prices of Parent common stock on the New York Stock Exchange for the ten (10) consecutive days immediately prior to and including the day preceding the Effective Time) to the original Company Stock Right and (y) the Exchange Ratio, at an provided that any fractional share of Parent Class A Stock resulting from such multiplication shall be rounded down to the nearest share; and (ii) the exercise price per share of Parent common stock (Class A Stock under each New Stock Right shall be equal to the exercise price per share of Company Common Stock under the original Company Stock Right divided by the Exchange Ratio, provided that such exercise price shall be rounded down to the nearest whole cent) equal to (x) divided by (y). After the Effective Time, where (x) is the aggregate exercise price for the shares of Common each New Stock Right shall be exercisable and be subject to such Company Option the same terms and conditions (y) other than vesting that is the aggregate number of shares of Parent common stock purchasable accelerated pursuant to the New Parent Option (as calculated immediately above); provided, however, that in the case terms of any written agreement in effect on the date hereof) as were applicable to the related Company Option to which Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), applies, the option price, the number of shares purchasable pursuant to such option and the terms and conditions of exercise of such option shall be determined in accordance with the foregoing, subject to such adjustments as are necessary in order to satisfy the requirements of Section 424(a) of the Code. At or Stock Right immediately prior to the Effective TimeTime (except that with regard to such New Stock Right, any references to the Company shall be deemed, as appropriate, to include Parent). (b) The Company shall take all necessary actions to permit the assumption of the unexercised Company Options by Parent pursuant to this Section. Section 2.10(b) of the Company Disclosure Schedule sets forth two examples of the calculations contemplated by this paragraph. (c) Not later than twenty-one calendar days after the Effective Time, Parent shall file a registration statement under the Securities Act of 1933, as amended (the "Securities Act") on Form S-8 or other appropriate form covering shares of Parent common stock subject to issuance upon the exercise of the New Parent Options. (d) All Stock Plans shall terminate as of the Effective Time and the Company shall use commercially reasonable efforts to ensure so that following the Effective Time no holder of a Company Option Stock Right under or any participant in any of the Stock Plans shall have any right thereunder to acquire any capital stock of the Company or any Subsidiary or the Company Surviving Corporation. The Company will take all actions so that, as of the Effective Time, neither the Company nor the Company Surviving Corporation or any of their respective Subsidiaries is or will be bound by any Company Stock Rights or other options, warrants, rights or agreements which would entitle any Person, other than Parent or its affiliates, to own any capital stock of the Company, the Company Surviving Corporation or any of their respective subsidiaries or to receive any payment in respect thereof, except as otherwise provided herein. (c) Parent shall take all action necessary at the Effective Time to authorize and reserve a number of shares of Parent Class A Stock sufficient for issuance upon exercise of each New Stock Right.

Stock Option and Other Plans. (a) Effective as Subject to the provisions of Section 4.02(d) hereof prior to the Effective Time, Parent the Board of Directors of the Company (or, if appropriate, any Committee thereof) shall assume each adopt appropriate resolutions and take all other actions necessary to provide for the cancellation, effective at the Effective Time of all the outstanding option stock options to acquire purchase Common Stock (each, a the "Company OptionOptions"), ) heretofore granted under any stock option or similar plan of the Company (each, a the "Stock PlanPlans") in accordance with this Section 2.10 and with ). Immediately prior to the terms Effective Time, subject to obtaining the consent of the Stock Plan under which such Company Option was granted and the stock option agreement by which such Company Option is evidenced. Parent acknowledges and agrees that each Company Optionany holder of Options, to the extent currently necessary, each Option, whether or not then vested or exercisable, will become shall no longer be exercisable in accordance with its terms upon the acceptance for payment of and payment for the Shares by Merger Subsidiary pursuant purchase of shares of Common Stock, but shall entitle each holder thereof, in cancellation and settlement therefor, to the Offer and, if applicablepayments in cash (subject to any applicable withholding taxes, the exercise of the Option as contemplated by Section 1.01(e"Cash Payment"). The proceeds from the exercise of any Company Option shall be excluded from the calculation of Company Net Working Capital. (b) Effective as of , at the Effective Time, each Company Option shall be deemed to constitute an option (a "New Parent Option") to purchase, on the same terms and conditions as were applicable to such Company Option, the number of shares of Parent common stock (rounded to the nearest whole number) equal to the product of (Ax) and (B), where (A) is the total number of shares of Common Stock subject to such Company Option as to which such Option could have been exercised as of the Effective Time and (By) is the Offer Price divided by the average excess of the closing sales prices of Parent common stock on Merger Consideration over the New York Stock Exchange for the ten (10) consecutive days immediately prior to and including the day preceding the Effective Time, at an exercise price per share of Parent common stock (rounded to the nearest whole cent) equal to (x) divided by (y), where (x) is the aggregate exercise price for the shares of Common Stock subject to such Company Option Option. As provided herein, the Stock Plans and (y) is any other plan, program or arrangement providing for the aggregate number of shares of Parent common stock purchasable pursuant to the New Parent Option (as calculated immediately above); provided, however, that in the case issuance or grant of any Company Option to which Section 422 other interest in respect of the Internal Revenue Code capital stock of 1986the Company or any Subsidiary (collectively with the Stock Plans, referred to as amended (the "CodeStock Incentive Plans"), applies, the option price, the number of shares purchasable pursuant to such option and the terms and conditions of exercise of such option ) shall be determined in accordance with the foregoing, subject to such adjustments terminate as are necessary in order to satisfy the requirements of Section 424(a) of the CodeEffective Time. At The Company will take all steps to ensure that neither the Company nor any of its Subsidiaries is or prior will be bound by any Options, other options, warrants, rights or agreements which would entitle any Person, other than Parent or its affiliates, to own any capital stock of the Surviving Corporation or any of its subsidiaries or to receive any payment in respect thereof. The Company will use its reasonable best efforts to obtain all necessary consents to ensure that after the Effective Time, the Company shall take all necessary actions to permit the assumption only rights of the unexercised Company holders of Options by Parent pursuant to this Section. Section 2.10(b) purchase shares of Common Stock in respect of such Options will be to receive the Company Disclosure Schedule sets forth two examples of the calculations contemplated by this paragraphCash Payment in cancellation and settlement thereof. (c) Not later than twenty-one calendar days after the Effective Time, Parent shall file a registration statement under the Securities Act of 1933, as amended (the "Securities Act") on Form S-8 or other appropriate form covering shares of Parent common stock subject to issuance upon the exercise of the New Parent Options. (db) All Stock Plans shall terminate as of the Effective Time and the Company shall use commercially its reasonable best efforts to ensure that following the Effective Time no holder of a Company an Option or any participant in any Stock Plans Plan shall have any right thereunder to acquire any capital stock of the Company or any Subsidiary Company, Parent or the Surviving Corporation, except as provided in Section 1.07(a).

Stock Option and Other Plans. (a) Effective as of Prior to the Effective Time, Parent the Board of Directors of the Company (or, if appropriate, any committee thereof) shall assume each adopt appropriate resolutions and use its reasonable best efforts to take all other actions necessary to provide for the cancellation, effective at the Effective Time, of all the outstanding option stock options to acquire purchase Common Stock (each, a the "Company OptionOptions"), ) heretofore granted under any stock option or similar plan of the Company (each, a the "Stock PlanPlans") in accordance with this Section 2.10 and with the terms of the Stock Plan under which such Company Option was granted and the stock option agreement by which such Company Option is evidenced. Parent acknowledges and agrees that each Company Option, to the extent currently not exercisable, will become exercisable in accordance with its terms upon the acceptance for payment of and payment for the Shares by Merger Subsidiary pursuant to the Offer and, if applicable, the exercise of the Option as contemplated by Section 1.01(e). The proceeds from the exercise of any Company Option shall be excluded from the calculation of Company Net Working Capital. (b) Effective as of Immediately prior to the Effective Time, the Company shall use its reasonable best efforts to ensure that (i) each Company Option shall be deemed to constitute an option (a "New Parent Option") to purchase, on the same terms and conditions as were applicable to such Company Option, whether or not then vested or exercisable, shall no longer be exercisable for the number purchase of shares of Parent common stock Common Stock but shall entitle each holder thereof, in cancellation and settlement therefor, to payments by the Company in cash (rounded subject to any applicable withholding taxes, the nearest whole number) "Cash Payment"), at the Effective Time, equal to the product of (Ax) and (B), where (A) is the total number of shares of Common Stock subject to such Company Option as to which such Option could have been exercised as of the Effective Date and (By) is the Offer Price divided by the average excess of the closing sales prices of Parent common stock on Merger Consideration over the New York Stock Exchange for the ten (10) consecutive days immediately prior to and including the day preceding the Effective Time, at an exercise price per share of Parent common stock (rounded to the nearest whole cent) equal to (x) divided by (y), where (x) is the aggregate exercise price for the shares of Common Stock subject to such Company Option, each such Cash Payment to be paid to each holder of an outstanding Option at the Effective Time and (yii) is the aggregate number each share of shares of Parent common stock purchasable pursuant to the New Parent Option (as calculated immediately above); provided, however, that Common Stock previously issued in the case form of any Company Option to which Section 422 grants of the Internal Revenue Code restricted stock or grants of 1986contingent or bonus shares, as amended (the "Code"), applies, the option price, the number of shares purchasable pursuant to such option and the terms and conditions of exercise of such option shall be determined in accordance with the foregoing, subject to such adjustments as are necessary in order to satisfy the requirements of Section 424(a) of the Code. At or not vested prior to the Effective Time, shall fully vest and be paid by the Company shall take all necessary actions in cash at the Effective Time in an amount equal to permit the assumption of the unexercised Company Options by Parent pursuant Merger Consideration (subject to this Sectionapplicable withholding taxes) and otherwise in accordance with their respective terms. Section 2.10(b) of the Company Disclosure Schedule sets forth two examples of the calculations contemplated by this paragraph. (c) Not later than twenty-one calendar days after Prior to the Effective Time, Parent the Board of Directors of the Company shall file a registration statement adopt appropriate resolutions and use its reasonable best efforts to take all other actions necessary to provide for the purchase prior to the Effective Time of shares of Common Stock covered by subscriptions outstanding under the Securities Act of 1933Echelon International Corporation 1996 Employee Stock Purchase Plan. As provided herein, as amended (the "Securities Act") on Form S-8 or other appropriate form covering shares of Parent common stock subject Company shall use its reasonable best efforts to issuance upon ensure that the exercise of the New Parent Options. (d) All Stock Plans shall terminate as of the Effective Time and the provisions of any Employee Benefit Plan (as defined in Section 3.01(j) hereof) providing for the issuance or grant of shares of the capital stock of the Company shall use commercially be deleted as of the Effective Time. The Company will take all reasonable efforts steps to ensure that following neither the Effective Time no holder Company nor any of a Company Option its Subsidiaries is or will be bound by any participant in Options, other options, warrants, rights or agreements which would entitle any Stock Plans shall have any right thereunder Person, other than Parent or its affiliates, to acquire own or purchase any capital stock of the Company Surviving Corporation or any Subsidiary or of its subsidiaries. The Company will use its reasonable best efforts to obtain any necessary consents to ensure that after the Surviving CorporationEffective Time, the only rights of the holders of Options, in respect of such Options, will be to receive the Cash Payment in cancellation and settlement thereof.

Stock Option and Other Plans. (a) Effective as of Prior to the Effective Time, Parent each of the Board of Directors of the Company (or, if appropriate, any Committee thereof) and the Company shall assume each outstanding option use its reasonable best efforts to acquire obtain the consent of all of the holders of options to purchase Common Stock (each, a the "Company OptionOptions"), ) heretofore granted under any stock option or similar plan of the Company (each, a the "Stock PlanPlans") in accordance with this Section 2.10 and with the terms of the Stock Plan under which such Company Option was granted and the stock option agreement by which such Company Option is evidenced. Parent acknowledges and agrees that each Company Option, to the extent currently not exercisable, will become exercisable in accordance with its terms upon the acceptance for payment of and payment provide for the Shares by Merger Subsidiary pursuant cancellation, effective at the Effective Time, of all the outstanding Options, as follows: Immediately prior to the Offer and, if applicable, the exercise of the Option as contemplated by Section 1.01(e). The proceeds from the exercise of any Company Option shall be excluded from the calculation of Company Net Working Capital. (b) Effective as of the Effective Time, each Company Option shall be deemed to constitute an option (a "New Parent Option") to purchase, on the same terms and conditions as were applicable to such Company Option, whether or not then vested or exercisable, shall no longer be exercisable for the number purchase of shares of Parent common stock Common Stock but shall entitle each holder thereof, in cancellation and settlement therefor, to payments in cash (rounded subject to any applicable withholding taxes, the nearest whole number) "Cash Payment"), at the Effective Time, equal to the product of (Ax) and (B), where (A) is the total number of shares of Common Stock subject to such Company Option as to which such Option could have been exercisable and (By) is the Offer Price divided by the average excess of the closing sales prices of Parent common stock on Merger Consideration over the New York Stock Exchange for the ten (10) consecutive days immediately prior to and including the day preceding the Effective Time, at an exercise price per share of Parent common stock (rounded to the nearest whole cent) equal to (x) divided by (y), where (x) is the aggregate exercise price for the shares of Common Stock subject to such Option, each such Cash Payment to be paid to each holder of an outstanding Option at the Effective Time. The Company Option and (y) is the aggregate number will use its reasonable best efforts to ensure that any then-outstanding stock appreciation rights or limited stock appreciation rights shall be cancelled as of shares of Parent common stock purchasable pursuant immediately prior to the New Parent Option (as calculated immediately above); providedEffective Time without any payment therefor. As provided herein, howeverthe Stock Plans and any other plan, that in program or arrangement providing for the case issuance or grant of any Company Option to which Section 422 other interest in respect of the Internal Revenue Code capital stock of 1986the Company or any Subsidiary (collectively with the Stock Plans, referred to as the "Stock Incentive Plans") shall terminate as of the Effective Time. The Company will use its reasonable best efforts to take all steps necessary to ensure that neither the Company nor any of its Subsidiaries is or will be bound by any Options, other options, warrants, rights or agreements which would entitle any Person, other than Parent or its affiliates (including Sub), to own any capital stock of the Surviving Corporation or except for certain call options in respect of the capital stock of certain of its dealership subsidiaries, as amended (the "Code"), applies, the option price, the number of shares purchasable pursuant to such option and the terms and conditions of exercise of such option shall be determined more fully set forth in accordance with the foregoing, subject to such adjustments as are necessary in order to satisfy the requirements of Section 424(a3.01(c)(ii) of the CodeCompany Disclosure Letter, any of its subsidiaries or to receive any payment in respect thereof. At or prior The Company will use its reasonable best efforts to obtain all necessary consents to ensure that after the Effective Time, the Company shall take all necessary actions to permit the assumption only rights of the unexercised Company holders of Options by Parent pursuant to this Section. Section 2.10(b) purchase shares of Common Stock in respect of such Options will be to receive the Company Disclosure Schedule sets forth two examples of the calculations contemplated by this paragraphCash Payment in cancellation and settlement thereof. (c) Not later than twenty-one calendar days after the Effective Time, Parent shall file a registration statement under the Securities Act of 1933, as amended (the "Securities Act") on Form S-8 or other appropriate form covering shares of Parent common stock subject to issuance upon the exercise of the New Parent Options. (db) All Stock Plans shall terminate as of the Effective Time and the provisions in any other Employee Benefit Plan providing for the issuance, transfer or grant of any capital stock of the Company or any interest in respect of any capital stock of the Company shall be deleted as of the Effective Time, and the Company shall use commercially its reasonable best efforts to ensure that following the Effective Time no holder of a Company Option an option to purchase Common Stock or any participant in any Stock Plans Plan shall have any right thereunder to acquire any capital stock of the Company or any Subsidiary Company, Parent or the Surviving Corporation.

Stock Option and Other Plans. Prior to the Effective ---------------------------- Time, the Board of Directors of the Company (aor, if appropriate, any committee thereof) shall take all actions and (i) provide for the cancellation, effective at the Effective Time, subject to the payment provided for in the next sentence being made, of all Options, (ii) terminate, as of the Effective Time, Parent shall assume each outstanding option to acquire Common the Stock (eachPlans and any other plan, a "Company Option"), under program or arrangement providing for the issuance or grant of any other interest in respect of the capital stock option or similar plan of the Company or any of its Subsidiaries (eachcollectively with the Stock Plans, a referred to as the "Stock PlanIncentive Plans") in accordance with this Section 2.10 and with the terms of the Stock Plan under which such Company Option was granted and the stock option agreement by which such Company Option is evidenced. Parent acknowledges and agrees that each Company Option---------------------and (iii) amend, to the extent currently not exercisable, will become exercisable in accordance with its terms upon the acceptance for payment of and payment for the Shares by Merger Subsidiary pursuant to the Offer and, if applicable, the exercise of the Option as contemplated by Section 1.01(e). The proceeds from the exercise of any Company Option shall be excluded from the calculation of Company Net Working Capital. (b) Effective as of the Effective Time, the provisions of any other Employee Benefit Plan providing for the issuance, transfer or grant of any capital stock of the Company or any such Subsidiary, or any interest in respect of any capital stock of the Company or any such Subsidiary, to provide no continuing rights to acquire, hold, transfer or grant any capital stock of the Company or any such Subsidiary or any interest in the capital stock of the Company or any such Subsidiary. Stock Plans shall not include any Intercompany Convertible Instruments and Options shall not include any options granted under any Intercompany Convertible Instrument. Immediately prior to the Effective Time, each Company Option shall be deemed to constitute an option (a "New Parent Option") to purchase, on the same terms and conditions as were applicable to such Company Option, whether or not then vested or exercisable, shall no longer be exercisable for the number purchase of shares of Parent common stock Common Stock but shall entitle each holder thereof, in cancellation and settlement therefor, to payments by the Company in cash (rounded to the nearest whole number) "Cash Payment"), at the Effective Time, equal to the ------------ product of (Ax) and (B), where (A) is the total number of shares of Common Stock subject to such Company Option Option, whether or not then vested or exercisable, and (By) is the Offer Price divided amount by which the average Applicable Merger Consideration for shares of Common Stock exceeds the closing sales prices of Parent common stock on the New York Stock Exchange for the ten (10) consecutive days immediately prior to and including the day preceding the Effective Time, at an exercise price per share of Parent common stock (rounded to the nearest whole cent) equal to (x) divided by (y), where (x) is the aggregate exercise price for the shares of Common Stock subject to such Option, each such Cash Payment to be paid to each holder of an outstanding Option at the Effective Time. The Company Option and (y) is the aggregate number of shares of shall deliver to Parent common stock purchasable pursuant to the New Parent Option (as calculated immediately above); provided, however, that in the case of any Company Option to which Section 422 within five business days of the Internal Revenue Code date hereof a true and complete list of 1986the Options which are outstanding as of the date hereof, together with detailed calculations of the Cash Payments relating to such Options had the Effective Time occurred on the date of delivery thereof. The Company shall update such list and such calculations as amended (the "Code")of, appliesand deliver such update to Parent on, the option price, the number of shares purchasable pursuant to such option and the terms and conditions of exercise of such option shall be determined in accordance with the foregoing, subject to such adjustments as are necessary in order to satisfy the requirements of Section 424(adate that is two (2) of the Code. At or business days prior to the Effective Time, such updated list and calculations made as if the Effective Time would occur on such date. Except as otherwise contemplated herein, any then outstanding stock appreciation rights or limited stock appreciation rights issued by the Company or any Subsidiary of the Company shall take all necessary actions be canceled immediately prior to permit the assumption of the unexercised Company Options by Parent pursuant to this Section. Section 2.10(b) of the Company Disclosure Schedule sets forth two examples of the calculations contemplated by this paragraph. (c) Not later than twenty-one calendar days after the Effective Time, Parent shall file a registration statement under the Securities Act of 1933, as amended (the "Securities Act") on Form S-8 or other appropriate form covering shares of Parent common stock subject to issuance upon the exercise of the New Parent Options. (d) All Stock Plans shall terminate as of the Effective Time and the without any payment therefor. The Company shall use commercially its reasonable best efforts to ensure that following the Effective Time no holder neither it nor any of a Company Option its Subsidiaries is or will be bound by any participant in Options, other options, warrants, rights or agreements which would entitle any Stock Plans shall have any right thereunder Person, other than Parent or its Affiliates, to acquire own any capital stock of the Company or any Subsidiary of its Subsidiaries or to receive any payment in respect thereof. Notwithstanding any other provision of this Section 3.7, the Surviving CorporationCompany shall not be required to purchase any minority equity interests in any of its Subsidiaries. Notwithstanding any other provision of this Section 3.7 to the contrary, payment of the Cash Payment may be withheld with respect to any Option until necessary consents and releases are obtained. The Company shall take all steps as may be required to provide that with respect to each individual who is a director or officer of the Company immediately prior to the Effective Time all transactions contemplated by this Agreement with respect to stock held by such Person shall be exempt under the Exchange Act in accordance with the terms and conditions set forth in that certain No-Action Letter, dated January 12, 1999, issued by the Securities and Exchange Commission to Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP. Immediately prior to the Merger, the Company shall cause any restrictions imposed on the Restricted Stock to be lifted.