Common use of Stock Options Clause in Contracts

Stock Options. (a) At the Effective Time, each outstanding option to purchase Shares (a "Company Stock Option" or collectively "Company Stock Options") issued pursuant to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan"), whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate as of the Effective Date. (b) At the Effective Time, each outstanding Company Stock Option issued pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreement. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisions.

Stock Options. (a) At the Effective Time, each outstanding unexpired and unexercised option to purchase Shares or acquire a share of Company Common Stock under the Company Equity Plans (each, a "“Company Stock Option" or collectively "Company Stock Options"”) issued pursuant to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan")shall vest and become fully exercisable, whether or not then vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate as of the Effective Date. (b) subject to any performance condition that has not been satisfied. At the Effective Time, each outstanding Company Stock Option issued pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become converted into an option to purchase the right to receive an amount, without interest, in cash paid at the Effective Time number of shares of Parent Common Stock equal to the excess, if any product of (x) the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes Option Conversion Fraction (as defined in this Section 3.15(a2.4(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by (y) the number of Shares subject shares of Company Common Stock which could have been obtained prior to such Company Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, Time upon the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of each such Company Stock Option (rounded down to the nearest whole share), at an exercise price per share (rounded up to the time nearest cent) equal to the exercise price for each such share of Company Common Stock subject to a Company Stock Option would otherwise have vested (provided that such holder is employed with divided by the Stock Option Conversion Fraction, and all references to the Company at in each such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal option shall be deemed to an amountrefer to Parent, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share where appropriate. The other terms of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right shall continue to receive such payments shall vest apply in accordance with their terms, including pursuant to such preexisting terms and conditions, provided, however, that Parent shall treat each Company Stock Option as fully vested and exercisable. Each Company Stock Option converted pursuant to the terms of this Section 2.4(a) shall be referred to as a “Parent Exchange Option.” In connection with the applicable option agreement. (d) If and issuance of Parent Exchange Options, Parent shall reserve for issuance the number of shares of Parent Common Stock that will become subject to Parent Exchange Options pursuant to this Section 2.4(a). As promptly as reasonably practicable after the extent required by the terms of the Company Option PlanEffective Time, or any other stock option plan, program, arrangement or agreement Parent shall issue to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of an outstanding Parent Exchange Option a document evidencing the foregoing assumption by Parent. Parent shall file a registration statement on Form S-8 (or any successor or other appropriate form that Parent is eligible to use) under the Securities Act on the Closing Date with respect to the shares of Parent Common Stock subject to Parent Exchange Options and shall use its commercially reasonable efforts to cause such registration statement to remain effective until the exercise or expiration of the Parent Exchange Options. For purposes of this Section 2.4(a), the “Stock Option Conversion Fraction” shall mean the Exchange Ratio subject to adjustment in accordance with Section 2.1(d). The number of shares subject to any Parent Exchange Option and the exercise price per share of such Parent Exchange Option shall be determined in a manner which would not result in the conversion of Company Stock Options into Parent Exchange Options being treated as a new grant of stock options under Section 409A of the Code, and the Company and Parent shall agree upon any adjustments to the foregoing treatment of such Company Stock Options and to take any other action this Section 2.4(a) necessary to effectuate the foregoing provisionsavoid such new grant of stock options.

Stock Options. (a) At Subject to Section 5.5(b), at the Effective Time, all rights with respect to Company Common Stock under each Company Option then outstanding option to purchase Shares (a "Company Stock Option" or collectively "Company Stock Options") issued pursuant to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan"), whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled converted into and extinguished without consideration become rights with respect to Parent Common Stock, and Parent shall assume each such Company Option in accordance with the 1999 Option Plan shall terminate requirements of Section 424(a) of the Code (as in effect as of the date of this Agreement) and the terms of the stock option plan under which it was issued and the stock option agreement by which it is evidenced. From and after the Effective DateTime, (i) each Company Option assumed by Parent may be exercised solely for shares of Parent Common Stock, (ii) the number of shares of Parent Common Stock subject to each such Company Option shall be equal to the number of shares of Company Common Stock subject to such Company Option immediately prior to the Effective Time multiplied by the Exchange Ratio, rounding down to the nearest whole share (with cash, less the applicable exercise price, being payable for any fraction of a share), (iii) the per share exercise price under each such Company Option shall be adjusted by dividing the per share exercise price under such Company Option by the Exchange Ratio and rounding up to the nearest cent and (iv) any restriction on the exercise of any such Company Option shall continue in full force and effect and the term, exercisability, vesting schedule and other provisions of such Company Option shall otherwise remain unchanged; provided, however, that each Company Option assumed by Parent in accordance with this Section 5.5(a) shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, stock dividend, reverse stock split, reclassification, recapitalization or other similar transaction subsequent to the Effective Time. (b) At Notwithstanding anything to the Effective Timecontrary contained in this Section 5.5, each in lieu of assuming outstanding Company Stock Option issued pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" andOptions in accordance with Section 5.5(a), together with the 1999 Option PlanParent may, the "at its election, cause such outstanding Company Option Plans") that is vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required Options to be withheld under applicable Federal, state or local laws and regulations multiplied replaced by issuing equivalent replacement stock options in substitution therefor that are substantially the number of Shares subject to such Company Stock Optionsame. (c) At The Company shall take all action that may be necessary (under the plans pursuant to which Company Options are outstanding and otherwise) to effectuate the provisions of this Section 5.5 and to ensure that, from and after the Effective Time, each outstanding holders of Company Stock Option issued pursuant to the Company Option Plans or any Options have no rights with respect thereto other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished those specifically provided in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreementthis Section 5.5. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisions.

Stock Options. (i) As of the close of business on October 19, 2007: (i) 3,359,430 shares of Company Common Stock were subject to issuance pursuant to outstanding options to purchase Company Common Stock under the Company Stock Plans (the “Company Options”) and (ii) 920,296 shares of Company Common Stock were reserved for future issuance pursuant to Company Options or other equity-based awards available for grant under the Company Stock Plans. Since the close of business on October 19, 2007 through the execution of this Agreement, no Company Options have been granted and no shares of Company Common Stock have been reserved for future issuance pursuant to Company Options or other equity-based awards available for grant under the Company Stock Plans. There are no outstanding or authorized stock appreciation, phantom stock or other similar rights (whether payable in stock, cash or other property) with respect to the Company. (ii) Section 2.2(a) of the Company Disclosure Letter sets forth a list of each outstanding Company Option issued and (a) At the Effective Time, each outstanding option to purchase Shares (a "particular Company Stock Option" or collectively "Company Stock Options"Plan (if any) issued pursuant to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 which such Company Option Plan")was granted, whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate as of the Effective Date. (b) At the Effective Time, each outstanding Company Stock Option issued pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as name and last known state of the Effective Time, the exercise price domicile of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Option (provided, however, that the Company may redact names of employees (other than with respect to officers of the Company) from such list), (c) the number of shares of Company Common Stock subject to such Company Option, (d) the exercise price of such Company Option at (and whether such option is subject to Section 409A of the time Code), (e) the date on which such Company Option was granted, (e) the applicable vesting schedule (including any acceleration provisions with respect thereto), and the extent to which such Company Option is vested and exercisable as of the date hereof, (f) the date on which such Company Option expires, and (g) whether such Company Option is intended to qualify as an incentive stock option as defined in Section 422 of the Code. All shares of Company Common Stock subject to issuance under the Company Stock Option Plans, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, would otherwise have vested (provided that such holder is employed with be duly authorized, validly issued, fully paid and nonassessable. True and complete copies of the forms of all agreements relating to Company Options issued under the Company at Stock Plans have been provided to Parent, such time forms of agreements are not materially different from the agreements evidencing such Company Options (other than with respect to the name of the holder, the per share exercise price, the number of shares subject to such Company Options and the applicable vesting schedule), and such agreements and instruments have not been amended, modified or supplemented, and the Company has not breached any of such holder's no obligations under any applicable employment agreement with Contract to amend, modify or supplement such agreements in any case from the Company forms provided to Parent (or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of actual agreements evidencing such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreementOptions). (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisions.

Stock Options. (a) At Prior to the Effective Time, each outstanding option holder of a ------------- Company Option shall be required to purchase Shares elect between the treatment of their Company Options under the provisions of either paragraph (a "Company Stock Option" i) or collectively "Company Stock Options"paragraph (ii) issued pursuant below. (i) Prior to the Company's 1999 Omnibus Stock Incentive Plan (Effective Time, the "1999 Option Plan")Company shall take all corporate action necessary to cause each Company Option, whether vested or unvested, exercisable or unexercisable, without any action on the exercise price of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate as part of the Effective Date. holder (bother than an election to be treated under this paragraph) At the Effective Time, each outstanding Company Stock Option issued pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become converted into the right to receive an amount, without interest, amount in cash paid at the Effective Time equal to the excess, if any product of (x) (1) the Cash Merger Consideration excess of $11.50 over (2) the exercise price per Share of subject to such Company Stock Option, less the amount of Taxes Option and (as defined in Section 3.15(a)y) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option, payable to the holder of such Company Option at any time during the period commencing on the date hereof and ending immediately prior to the Effective Time; provided, -------- that the Company shall be entitled to withhold from such cash payment any amounts required to be withheld by applicable law. Each Company Option to which this paragraph applies will be cancelled and shall cease to exist by virtue of such payment. (cA) At the Effective Time, each outstanding Company Option, whether vested or unvested, exercisable or unexercisable, shall be deemed to constitute an option to acquire, on the same terms and conditions as were applicable under such Company Option, a number of shares of Parent Company Stock equivalent to the number of Shares that could have been purchased immediately prior to the Effective Time under such Company Option issued multiplied by the Exchange Ratio (without regard to any adjustment thereof and rounded up to the nearest whole number of shares of Parent Company Stock), at a price per share of Parent Company Stock (rounded up to the nearest whole cent) equal to (y) the aggregate exercise price for the Shares otherwise purchasable pursuant to the such Company Option Plans or divided by (z) the Exchange Ratio (without regard to any other stock option planadjustment thereof); provided, programhowever, arrangement or agreement that -------- ------- -50- in the case of any Company Option to which Section 422 of the Company 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 any of its subsidiaries is a party that is not vested as of prior to the Effective Time, the exercise price of which is less than the Cash Merger Consideration Company shall be canceled and extinguished in consideration for certain compensatory payments to be paid make all necessary arrangements with respect to the holder Stock Plans to permit the assumption of such the unexercised Company Stock Option Options to which this paragraph (ii) of this Section 6.11 applies by Parent. (B) Effective at the time the Effective Time, Parent shall assume each Company Stock Option would otherwise have vested to which this paragraph (provided that such holder is employed with the Company at such time and has not breached any ii) of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest this Section 6.11 applies in accordance with the terms of the applicable option agreement. (d) If Stock Plans under which it was issued and to the extent required by the terms of the Company Option Plan, or any other stock option planagreement by which it is evidenced. As soon as practicable after the Effective Time, program, arrangement or agreement Parent shall deliver to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding a Company Stock Options Option to which paragraph (ii) of this Section 6.11 applies appropriate notices setting forth such holders' rights pursuant to the foregoing treatment Stock Plans, and the agreements evidencing the grants of such Company Stock Options shall continue in effect on the same terms and conditions (subject to take any other action the conversion required by this Section 6.11 after giving effect to the Merger and the assumption by Parent as set forth above). To the extent necessary to effectuate the foregoing provisionsprovisions of this Section 6.11, Parent may deliver new or amended agreements reflecting the terms of each Company Option assumed by Parent. (C) At or prior to the Effective Time, Parent shall take all corporate action necessary to reserve for issuance a sufficient number of shares of Parent Common Stock for delivery upon exercise of Company Options assumed by it in accordance with this Section 6.11. Promptly, but in no event later than three business days after the Effective Time, Parent shall file a registration statement on Form S-3 or Form S-8, as the case may be (or any successor or other appropriate forms), or another appropriate form, or shall cause such Company Option to be deemed an option issued pursuant to a Parent Stock Plan for which shares of Parent Common Stock have been previously registered pursuant to an appropriate registration form, with respect to the Parent Common Stock subject to such Company Options, and shall use its best efforts to maintain the effectiveness of such registration statements (and maintain the current status of the prospectus or prospectuses contained therein) for so long as such Company Options remain outstanding.

Stock Options. (ai) At the Effective Time, each outstanding option to purchase Shares (a "Company Stock Option" or collectively "Company Stock Options") issued pursuant to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan"), whether vested or unvested, without any action on the exercise price part of which is greater than the Cash Merger Considerationholder, shall be canceled deemed to constitute an option to acquire, on the same terms and extinguished without consideration and conditions as were applicable under such Company Option, a number of shares of Parent Common Stock equivalent to (x) the 1999 number of Shares that could have been purchased immediately prior to the Effective Time under such Company Option Plan multiplied by (y) the Exchange Ratio (rounded down to the nearest whole number), at a price per share of Parent Common Stock (rounded up to the nearest whole cent) equal to the aggregate exercise price for the Shares otherwise purchasable pursuant to such Company Option divided by the number of shares of Parent Common Stock determined above; provided, however, that the foregoing provisions shall terminate be subject to such adjustments as are necessary in order to satisfy the requirements of Section 424(a) of the Effective Date. (b) At Code in the Effective Time, each outstanding Company Stock Option issued pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "case of any Company Option Plans") that is vested as to which Section 422 of the Code applies. At or prior to the Effective Time, the exercise price of which is less than the Cash Merger Consideration Company shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal make all necessary arrangements with respect to the excess, if any Company Stock Plans to permit the assumption of the Cash Merger Consideration over the exercise price per Share of such unexercised Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required Options by Parent pursuant to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Optionthis Section. (cii) At Effective at the Effective Time, Parent shall assume each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable relevant Company Stock Plan under which it was issued and the stock option agreement. (d) If and agreement by which it is evidenced. At or prior to the extent required by the terms of the Company Option PlanEffective Time, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company Parent shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other all corporate action necessary to effectuate reserve for issuance a sufficient number of shares of Parent Common Stock for delivery upon exercise of Company Options and payment of Vested Stock Units (as defined below) assumed by it in accordance with this Section. At the foregoing provisionsEffective Time, all vested stock units allocated to each director's account under the Company's Amended and Restated 1993 Stock Plan for Non-Employee Directors ("Vested Stock Units"), without any action on the part of the director, shall be paid, on the same terms and conditions as are applicable under such plan, in a number of shares of Parent Common Stock equal to the number of Vested Stock Units allocated to the director's account in such plan multiplied by the Exchange Ratio (rounded down to the nearest whole number). As soon as practicable, and in no event later than 10 days after the Effective Time, Parent shall file a registration statement on Form S-3 or Form S-8, as the case may be (or any successor or other appropriate forms), or another appropriate form (or shall cause such Company Option or Vested Stock Unit to be deemed to be issued pursuant to a Parent Stock Plan for which shares of Parent Common Stock have previously been registered pursuant to an appropriate registration form) with respect to the Parent Common Stock subject to such Company Options or payable pursuant to such Vested Stock Unit, and shall use its best efforts to maintain the effectiveness of such registration statements (and maintain the current status of the prospectus or prospectuses contained therein) for so long as such Company Options remain outstanding.

Stock Options. (a) At The Company shall take, and Parent shall cooperate with the Company in taking, all steps to amend Company Options so that at the Effective Time, each Company Option which is outstanding and unexercised immediately prior to the Effective Time shall cease to represent a right to acquire Company Common Stock and shall be converted automatically into an option to purchase Shares shares of Parent common stock (a "“Parent Common Stock”) and Parent shall assume each such Company Stock Option (hereinafter, “Assumed Option" ”) subject to the terms of the stock option plan or collectively "Company Stock Options") issued program and the agreement pursuant to which such Assumed Option is outstanding, as such stock option plan, program and/or agreement may be amended pursuant to Section 6.3(c). Notwithstanding the Company's 1999 Omnibus foregoing, (i) the number of shares of Parent Common Stock Incentive Plan purchasable upon exercise of such Assumed Option shall be equal to the number of shares of Company Common Stock that were purchasable upon exercise of such Assumed Option immediately prior to the Effective Time multiplied by the Exchange Ratio (the "1999 Option Plan"as defined in Exhibit A), whether vested or unvestedand rounded down to the nearest whole share, and (ii) the per share exercise price under each such Assumed Option shall be adjusted by dividing the per share exercise price under each such Assumed Option by the Exchange Ratio, and rounding up to the nearest cent . In the case of any Assumed Option that is an “incentive stock option” (as defined in Section 422 of the Code), the exercise price price, the number of which is greater than shares of Parent Common Stock purchasable pursuant to such Assumed Option and the Cash Merger Consideration, terms and conditions of exercise of such option shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate as determined in order to comply with Section 424(a) of the Effective DateCode. (b) At Each of the Effective TimeCompany and, if applicable, Parent shall take all such steps as may be required by it to cause the transactions contemplated by this Section 6.3 as they relate to, and any other dispositions of Company equity securities (including derivative securities) or acquisitions of Parent equity securities (including derivative securities) in the Merger by, each outstanding individual who is a director or officer of the Company Stock Option issued pursuant to be exempt under Rule 16b-3 promulgated under the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" andSecurities Exchange Act of 1934, together as amended, such steps to be taken in accordance with the 1999 Option PlanNo-Action Letter dated January 12, the "Company Option Plans") that is vested as of the Effective Time1999, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied issued by the number of Shares subject SEC to such Company Stock OptionSkadden, Arps, Slate, M▇▇▇▇▇▇ & F▇▇▇ LLP. (c) At Prior to the Effective Time, each at the request of Parent, the Company shall: (i) take all action (including amending any and all of the Company’s existing stock option plans and program and any and all stock option agreements) that Parent determines may be necessary (under the plans pursuant to which Company Options are outstanding and otherwise) to effectuate the provisions of Section 6.3 and to ensure that, from and after the Effective Time, holders of Company Options have no rights with respect thereto other than those specifically provided in Section 6.3; (ii) cause to be prepared and cause the Board of Directors of the Company to adopt a new stock option plan having terms satisfactory to Parent in its sole discretion (the “New Stock Option issued Plan”); (iii) cause to be prepared and filed with the California Department of Corporations a permit application to qualify the New Stock Option Plan and the options issuable thereunder pursuant to Section 25112 of the California Corporate Securities Law of 1968, as amended, and use its best efforts to cause the permit sought pursuant to such permit application to be issued as promptly as possible; (iv) take such other actions as Parent determines may be necessary to qualify the New Stock Option Plan and the options issuable thereunder pursuant to other applicable Blue Sky Laws; (v) to the extent permissible under applicable securities laws, cause to be granted, immediately prior to the Effective Time, options to purchase shares of Company Option Plans or any Common Stock having an exercise price and other stock option plan, program, arrangement or agreement terms satisfactory to which Parent in its sole discretion to those employees of the Company or any of its subsidiaries is a party that is not vested as Subsidiary of the Effective TimeCompany as Parent shall determine in its sole discretion; and (vi) take all other action that may be reasonably requested by Parent to effectuate the provisions of clauses “(ii)” through “(v)” of this Section 6.3(c); provided that if the Company takes all actions required by this Section 6.3(c) (which actions shall not require the payment of any consideration other than customary fees and expenses) to cause the events described in this Section 6.3(c) to occur, the exercise price failure to occur of which is less than the Cash Merger Consideration any such event shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder not constitute a breach of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreementthis Agreement. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company Parent shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other all corporate action necessary to effectuate reserve for issuance a sufficient number of shares of Parent Common Stock for delivery upon exercise of the foregoing provisionsAssumed Options. Parent shall file with the SEC a registration statement on Form S-8 (or any successor form) under the Securities Act or on another appropriate form, reasonably promptly following the Effective Time, with respect to Parent Common Stock subject to the Assumed Options and shall use commercially reasonable efforts to maintain the effectiveness of such registration statement or statements for so long as the Assumed Options remain outstanding and exercisable.

Stock Options. (a) At the Effective Time all rights with respect to Company Common Stock under each Company Assumed Option then outstanding shall be converted into and become rights with respect to Parent Common Stock, and Parent shall assume each such Company Assumed Option in accordance with the terms and conditions (as in effect as of the date of this Agreement) of the Company Stock Option Plan under which it was issued and the terms and conditions of the stock option agreement by which it is evidenced. From and after the Effective Time, (i) each outstanding option Company Assumed Option assumed by Parent may be exercised solely for shares of Parent Common Stock, (ii) the number of shares of Parent Common Stock subject to purchase Shares each such Company Assumed Option shall be equal to the number of shares of Company Common Stock subject to such Company Assumed Option immediately prior to the Effective Time multiplied by the Exchange Ratio, rounding down to the nearest whole share, (a "iii) the per share exercise price under each such Company Stock Option" or collectively "Assumed Option shall be adjusted by dividing the per share exercise price under such Company Stock Options"Assumed Option by the Exchange Ratio and rounding up to the nearest cent, and (iv) issued any restriction on the exercise of any such Company Assumed Option shall continue in full force and effect and the term, exercisability, vesting schedule and other provisions of such Company Assumed Option shall otherwise remain unchanged. (b) Prior to the Effective Time, the Company shall take all actions that may be necessary (under the plans pursuant to which Company Assumed Options are outstanding and otherwise) to effectuate the Company's 1999 Omnibus Stock Incentive Plan provisions of this Section 1.11 and to ensure that, from and after the Effective Time, holders of Company Assumed Options have no rights with respect thereto other than those specifically provided in this Section 1.11. (c) For the "1999 avoidance of doubt, Parent shall not assume any Company Option Plan")which is not a Company Assumed Option, whether vested or unvested, the exercise price each of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate as of the Effective DateTime. (b) At the Effective Time, each outstanding Company Stock Option issued pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreement. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisions.

Stock Options. (a) At Effective as of the Effective TimeDistribution Date, each outstanding option to purchase Shares L Brands Option (a "Company Stock Option" or collectively "Company Stock Options") issued pursuant to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan"), whether vested or unvested) that is outstanding as of immediately prior to the Distribution Date and held by a VS Participant who is not a Former VS Employee shall be converted into an option to acquire VS Common Stock (each, a “VS Option”) and shall be subject to the same terms and conditions (including vesting) as applicable to the corresponding L Brands Option as of immediately prior to the Distribution Date; provided, that from and after the Distribution Date, the number of shares of VS Common Stock subject to, and the exercise price of which is greater than the Cash Merger Considerationper share of, such VS Option shall be canceled determined by the L Brands Compensation Committee in a manner consistent with Section 409A of the Code and extinguished intended to preserve (and without consideration enlarging) the value of such L Brands Option by taking into account (i) the exercise price per share of such L Brands Option and (ii) the relative values of the L Brands Pre-Distribution Stock Value and the 1999 Option Plan shall terminate as of the Effective DateVS Stock Value. (b) At Effective as of the Effective TimeDistribution Date, each outstanding Company Stock L Brands Option issued pursuant to the 1999 Option Plan (whether vested or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans"unvested) that is vested outstanding as of immediately prior to the Effective Time, the exercise price of which is less than the Cash Merger Consideration Distribution Date and held by an L Brands Participant or a Former VS Employee shall be canceled adjusted to reflect the Distribution and extinguished become an Adjusted L Brands Option. The number of shares of L Brands Common Stock subject to, and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share share of, such Adjusted L Brands Option shall be determined by the L Brands Compensation Committee in a manner consistent with Section 409A of the Code and intended to preserve (and without enlarging) the value of such Company L Brands Option by taking into account (i) the exercise price per share of such L Brands Option and (ii) the relative values of the L Brands Pre-Distribution Stock Option, less Value and the amount of Taxes (as defined in Section 3.15(a)) required to L Brands Post-Distribution Stock Value. Each such Adjusted L Brands Option shall be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Optionthe same terms and conditions (including vesting) as applicable to the corresponding L Brands Option as of immediately prior to the Distribution Date. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant Notwithstanding anything to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Timecontrary in this Section 8.03, the exercise price price, the number of which is less than shares of L Brands Common Stock or VS Common Stock, as applicable, and the Cash Merger Consideration terms and conditions of exercise applicable to any Adjusted L Brands Option or VS Option, as the case may be, shall be canceled and extinguished determined in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed a manner consistent with the Company at such time and has not breached any requirements of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any Section 409A of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreementCode. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisions.

Stock Options. (a) At Subsequent to the Effective Timeeffectiveness of the Form 10, but prior to the consummation of the Distribution, and subject to the consummation of the Distribution, each outstanding option to purchase Shares ALTISOURCE Common Stock (a "Company Stock Option" or collectively "Company “ALTISOURCE Stock Options"”) issued pursuant granted and outstanding under the 2009 Equity Incentive Plan of ALTISOURCE (“ALTISOURCE Option Plan”) shall remain granted and outstanding and shall not, and ALTISOURCE shall cause (to the Company's 1999 Omnibus maximum extent permitted under the ALTISOURCE Option Plan) the ALTISOURCE Stock Incentive Plan Options not to, terminate, accelerate or otherwise vest as a result of the Distribution, and each holder thereof immediately prior to the Distribution will be entitled to the following, determined in a manner in accordance with, and subject to, the ALTISOURCE Option Plan, FAS123R and Section 409A of the Code: (i) an option to acquire a number of shares of AAMC Common Stock equal to the product of (x) the number of shares of ALTISOURCE Common Stock subject to the ALTISOURCE Stock Option held by such holder on the Distribution Date and (y) the distribution ratio of one (1) share of AAMC Common Stock for every ten (10) shares of ALTISOURCE Common Stock (the "1999 Option Plan"“AAMC Stock Options”), whether vested or unvested, with an exercise price to be determined in a manner consistent with this Section 3.04 and (ii) the adjustment of the exercise price of which is greater than such holder’s ALTISOURCE Stock Option, to be determined in a manner consistent with this Section 3.04 (the Cash Merger Consideration, shall be canceled and extinguished without consideration “Adjusted ALTISOURCE Stock Options”) (the AAMC Stock Options and the 1999 Option Plan shall terminate as of Adjusted ALTISOURCE Stock Options, together, the Effective Date“Post-Distribution Stock Options”). (b) At The option exercise price of the Effective TimeAAMC Stock Options and the Adjusted ALTISOURCE Stock Options shall be set in accordance with Treasury Regulation Section 1.409A-1(b)(5)(v)(D), each outstanding Company to maintain the intrinsic value of the ALTISOURCE Stock Option issued pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested Options as of the Effective TimeDistribution Date, and to maintain the ratio of exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any fair market value of the Cash Merger Consideration over ALTISOURCE Stock Options and the exercise price per Share of such Company Post-Distribution Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock OptionOptions. (c) At the Effective TimeEach of ALTISOURCE and AAMC intends that, each outstanding Company Stock Option issued pursuant subsequent to the Company Option Plans Distribution, AAMC shall establish, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments cause to be paid established, one or more equity incentive or similar plans that will allow or provide for the issuance of restricted stock, new options (or other equity-based awards) to the holder of acquire AAMC Common Stock, or other equity awards on such Company Stock Option at the time the Company Stock Option would otherwise have vested terms, and subject to such conditions (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amountincluding, without interestlimitation, as to eligibility, vesting and performance criteria), as AAMC may decide in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreementits sole discretion. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisions.

Stock Options. (a) At Prior to the Effective Time, each outstanding option the Company shall take all actions necessary to purchase Shares (a "Company Stock Option" or collectively "Company Stock Options") issued pursuant to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan")provide, whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate as of the Effective Date. (b) At the Effective Time, each outstanding Company Stock Option issued pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested effective as of the Effective Time, for the exercise price cancellation, on the terms and conditions set forth in this Section 1.09(a) and without any payment therefor except as otherwise provided in this Section 1.09(a), of which is less than all Stock Options held by the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid Principal Stockholder that are outstanding at the Effective Time equal to the excess(whether or not then exercisable) (each such Stock Option being, if any of the Cash Merger Consideration over the exercise price per Share of such Company an “Affiliate Stock Option, less the amount “). As of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. (c) At the Effective Time, each outstanding Company Affiliate Stock Option issued pursuant (whether vested or unvested) shall be cancelled (and to the Company Option Plans or any other stock option planextent formerly so exercisable shall no longer be exercisable) and shall entitle each holder thereof, programin cancellation and settlement therefor, arrangement or agreement to which the Company or any receive a number of its subsidiaries is a party that is not vested shares of Class A Stock, as of the Effective Time, determined by dividing (i) the exercise price product of (A) the amount, if any, by which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over exceeds the exercise price per Share share with respect to such Affiliate Stock Options, and (B) the total number of shares of Company Stock then issuable upon the exercise of such Company Affiliate Stock Options (whether or not then vested or exercisable), by (ii) the Merger Consideration; provided, that would the obligations of the Principal Stockholder in respect of any withholding taxes due upon receipt of the shares of Class A Stock pursuant to this Section 1.09(a) shall be satisfied by reducing the number of shares of Class A Stock otherwise have vested at such timedeliverable pursuant to this Section 1.09(a) by a number of shares of Class A Stock determined by dividing (i) the minimum statutory amount that the Company is required to withhold upon the delivery of shares of Class A Stock pursuant to this Section 1.09(a), by (ii) the Merger Consideration, and the Company shall remit all amounts that the Company is required to withhold upon the delivery of shares of Class A Stock pursuant to this Section 1.09(a) to the applicable taxing authorities in a timely manner. Notwithstanding the foregoing, the right to receive such payments shall vest Any shares of Class A Stock delivered in respect of any Affiliate Stock Option in accordance with this Section 1.09(a) shall be deemed to be Excluded Shares and shall be cancelled at the terms of the applicable option agreementEffective Time in accordance with Section 1.07. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisions.

Stock Options. (a) At The terms of each outstanding option to purchase shares of Common Stock under any employee or director stock option or compensation plan or arrangement of the Company (a "COMPANY STOCK OPTION"), whether or not exercisable or vested, shall be adjusted as necessary so that, at the Effective Time, each Company Stock Option outstanding immediately prior to the Effective Time shall be deemed to constitute an option to purchase Shares shares of common stock, $1.00 par value, of Parent (a "PARENT STOCK"), on the same terms and conditions as were applicable under such Company Stock Option" or collectively , except as set forth below (each, as so adjusted, an "Company Stock Options") issued pursuant to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option PlanADJUSTED OPTION"), whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, . Each Adjusted Option shall be canceled fully vested and extinguished without consideration and shall entitle the 1999 Option Plan shall terminate as holder to purchase a number of the Effective Date. (b) At the Effective Timeshares of Parent Stock having an aggregate market value, each outstanding Company Stock Option issued pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as of the Effective Time, equal to the aggregate market value of the shares of Common Stock purchasable pursuant to the applicable Company Stock Option. The exercise price per share of which is less than the Cash Merger Consideration Parent Stock under each Adjusted Option shall be canceled and extinguished and equal to (A) the aggregate exercise price for the shares of Common Stock purchasable pursuant to the applicable Company Stock Option divided by (B) the aggregate number of shares of Parent Stock deemed purchasable pursuant to such Adjusted Stock Option. Notwithstanding the foregoing, any fractional share of Parent Stock resulting from the foregoing adjustment of a Company Stock Option shall become be rounded down to the right to receive an amountnearest whole share. For purposes of this Section 2.04, without interest, in cash paid at the market value of a share of Parent Stock as of the Effective Time equal shall be deemed to be the excess, if any closing sale price of such share on the New York Stock Exchange on the trading day immediately preceding the Effective Time. The market value of a share of Common Stock as of the Cash Effective Time shall be deemed the Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock OptionConsideration. (cb) Prior to the Effective Time, the Company shall (i) make any amendments to the terms of such stock option or compensation plans or arrangements that are necessary to give effect to the transactions contemplated by this Section 2.04 and (ii) to the extent required, use its best efforts to obtain any consents from holders of Company Stock Options. At the Effective Time, each outstanding Company Stock Option issued pursuant except to the extent otherwise required by the existing stock option agreements, all references to the Company Option Plans or any other in the stock option planagreements covering outstanding options to purchase Common Stock will be deemed to refer to Parent. Parent will assume all the Company's obligations with respect to those options as so amended and will, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of from and after the Effective Time, make available for issuance on exercise of those options all shares of Parent Stock covered thereby and maintain an effective registration statement under the exercise price Securities Act of 1933 (the "1933 ACT") which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreementcovers those shares. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisions.

Stock Options. In the event of a Change in Control, Executive's resignation for Good Reason or Executive's termination without Cause, all unvested stock options previously granted to Executive shall immediately vest and be exercisable as set forth below. In the event that there is a termination of Executive's employment hereunder for any reason, Executive shall be entitled to exercise any and all stock options that were previously granted to him by the Company, and are outstanding, vested and unexercised as of his Termination Date, during the exercise period ending on the shorter of (ai) two (2) years from his Termination Date or (ii) the expiration date of the stock option as specified in the stock option plan or stock option agreement, as applicable, notwithstanding any provision in such plan or agreement that provides for a more limited time period to exercise stock options following termination of employment; provided however, if said stock option plan or stock option agreement provides therein for a longer period of time to exercise such outstanding, vested and unexercised stock options following his Termination Date, then such stock option plan or agreement shall control and the remaining provisions of this SECTION 6(C) shall be inapplicable and without further force or effect. In the event that there is a termination of Executive's employment hereunder for Cause or Executive voluntarily resigns without Good Reason within two years for the date of this Agreement, Executive shall forfeit any and all stock options that were previously granted to him by the Company, and are unvested and unexercised as of his Termination Date. During the extension period specified in the previous paragraph, if applicable, the Executive shall be considered an employee of the Company who shall make himself available to provide consulting services to the Company in consideration for such extension of the option exercise period and any post-termination payments provided to Executive under SECTION 6(A) OR (B) of this Agreement. In this regard, Executive agrees to be classified as an employee of the Company solely for the limited purpose of making himself available to provide consulting services on an as-needed basis; provided, however, Executive hereby specifically waives any right, entitlement, claim or demand to (i) any additional compensation for such consulting services and (ii) coverage or benefits under any of the Company's employee benefit plans or programs, or other perquisites, terms and conditions of employment, except as expressly specified in other provisions of this Agreement. Except as expressly provided in this SECTION 6(C), the provision of consulting services by Executive shall not expand his rights or duties under this Agreement. Executive hereby agrees to provide, upon request of the Company, consulting services to the Company on the following terms and conditions: (1) Executive will make himself available, on an as-needed basis, to provide consulting services to the Company for up to three (3) days per month during the period beginning on the day after his Termination Date and ending on the last day of the extension period for exercising stock options as provided in the first paragraph of SECTION 6(C) above, subject to the following conditions: (A) At least five (5) days written advance notice to Executive is provided by the Effective TimeCompany; (B) There is no concurrent illness of Executive or his spouse; (C) There is no prior commitment of Executive including, each outstanding option without limitation, vacation or attention to purchase Shares personal affairs; and (D) No travel is required of Executive in excess of 200 miles round-trip. Executive, in any particular instance, may waive any or all of the conditions set forth in clauses (A), (B), (C) or (D) above in his complete discretion. Any such waiver shall not be a "continuing waiver and shall not release Executive of any of his rights hereunder. (2) Executive agrees to provide such information, services, advice and recollection of events as may from time to time be reasonably requested by, or on behalf of, the Company Stock Option" regarding corporate, regulatory or collectively "business matters of which Executive may have knowledge, information or understanding, including testifying truthfully in any litigation or other proceedings involving the Employer, provided that (i) Executive first determines that his interests are not adverse, or potentially adverse, to those of the Company, and (ii) the Company Stock Options") issued pursuant has indemnified Executive to his satisfaction including, without limitation, for reasonable attorney's fees and costs. The parties hereto agree that it is the quality, and not the quantity, of the consulting services to be provided by Executive that is important to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan"), whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate as of the Effective Date. (b3) At The Company will reimburse Executive for all reasonable out-of-pocket expenses incurred by Executive in the Effective Timecourse of his performance of consulting services, each outstanding Company Stock Option issued pursuant including, without limitation, supplies, mileage and travel expenses. Executive agrees not to the 1999 Option Plan incur any expense, obligation, or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as liability on behalf of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, Company without interest, in cash paid at the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Optionits prior written consent. (c4) At the Effective Time, each outstanding Company Stock Option issued pursuant to The provision of consulting services by Executive for the Company Option Plans is non-exclusive and shall not, in any way, limit the rights of Executive to seek and maintain other employment or to perform compensatory services on behalf of any other stock option plan, program, arrangement person or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreemententity. (d5) If and The consulting services contemplated under this SECTION 6(c) shall not be considered part of Executive's Employment Period pursuant to the extent required by the terms of the Company Option PlanSECTION 4, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisionsnor affect his Termination Date.

Stock Options. (a) At Subject to the terms of this Agreement, at the Effective Time, each Company Option that is outstanding option to purchase Shares (a "Company Stock Option" or collectively "Company Stock Options") issued pursuant as of immediately prior to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan")Effective Time, whether vested or unvested, and that has not been exercised prior to the Effective Time shall be cancelled and the holder thereof shall be entitled to receive in full satisfaction of the rights of such holder with respect thereto: (i) a number of Parent Shares equal to the product obtained by multiplying (i) the aggregate number of Company Common Shares subject to such Company Option as of immediately prior to the Effective Time (the “Underlying Company Shares”) by (ii) the sum of (A) the Per Share Stock Participation less (B) the quotient obtained by dividing (I) the exercise price per Underlying Company Share (the “Option Exercise Price”) by (II) the Parent Stock Price; provided, however, in no event shall such number of which is greater Parent Shares be less than zero (0); provided, further, that the Cash Merger Consideration, Option Exercise Price shall be canceled and extinguished without consideration and reduced by application of this Section 1.12(a)(i) by the 1999 Option Plan shall terminate as cash value of the Effective DatePer Share Stock Participation (as determined based on the Parent Stock Price), with any positive remainder of the Option Exercise Price after such reduction being referred to herein as the “Remaining Exercise Price”; (ii) an amount in cash equal to the product obtained by multiplying (i) the Underlying Company Shares by (ii) the sum of (A) the Per Share Cash Participation less (B) the Remaining Exercise Price per Underlying Company Share (if any) following the application of Section 1.12(a)(i); and (iii) an amount of cash equal to the product obtained by multiplying (i) the Underlying Company Shares by (ii) the sum of (A) the Contingent Per Share Participation Cash plus (B) the Contingent Per Common Share Cash plus (C) the Contingent Per Share Cash, if and when payable (such amount, an “Option Contingent Payment”). The parties agree that any payment of the Option Contingent Payment, if any, payable with respect to Company Options will be treated and reported for all tax purposes as being subject to a substantial risk of forfeiture within the meaning of Treasury Regulation Section 1.409A-1(b)(4) until such amounts become due and payable under the Agreement and shall be paid to the holders of Company Options entitled to such payments within the short-term deferral period within the meaning of Treasury Regulation Section 1.409A-1(b)(4). (b) At the Effective Time, each outstanding Company Stock Option issued pursuant or prior to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as of the Effective Time, the exercise price Company’s board of which is less than directors shall adopt appropriate resolutions, and take all other actions necessary (including, but not limited to, obtaining the Cash Merger Consideration shall be canceled and extinguished and shall become written consent of each Company Optionholder regarding the treatment of Company Options set forth in this Section 1.12), to effectuate the provisions of this Section 1.12. As a condition to the right of a holder of Company Options to receive an amountthe consideration set forth in this Section 1.12, without interest, in cash paid at the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with shall have executed and delivered to Parent (i) a consent in a form reasonably requested by Parent, consenting to and acknowledging the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreement. (d) If and to the extent required by the terms treatment of the Company Options as set forth in Section 1.12 (the “Company Option PlanConsent”), (ii) with respect to any holder of Company Options holding greater than one-fourth of one percent (0.25%) of the Fully Diluted Capital Number, a Joinder Agreement, (iii) a copy of, or any other stock option plan, program, arrangement or joinder agreement in a form reasonably satisfactory to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunderSorrento to, the Company shall cooperate with Parent Exchange Agreement and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisions(iv) an Investor Questionnaire.

Stock Options. (a) At The Company shall take all actions or cause all such actions to be taken prior to the Commencement Date as are necessary to ensure that, immediately prior to the Effective Time, each all then outstanding option options to purchase Shares Common Stock of the Company set forth on Schedule 3.03-1 of the Company Disclosure Schedule (a collectively, the "Company Stock Option" or collectively "Company Stock Options") issued pursuant to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan"), whether vested or unvestednot exercisable, the exercise price of which is greater than the Cash Merger Considerationwhether or not vested, shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate as of the Effective Date. (b) At the Effective Timewhether or not performance-based, each outstanding Company Stock Option issued pursuant to the 1999 Option Plan or under the Company's 2000 1992 Equity Incentive Stock Option Plan and 2001 Equity Incentive Plan (the "2000 Option Plan" and, together with the 1999 Option Plancollectively, the "Company Stock Option Plans") that is vested as are held by those persons set forth on Schedule 2.04A of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes Disclosure Schedule (as defined in Section 3.15(a3.01 hereof)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments automatically converted into the right to be paid to the holder receive only an amount of such Company Stock Option at the time the Company Stock Option would otherwise have vested cash (provided that such holder is employed with the Company at such time and has not breached any net of such holder's obligations under any applicable employment agreement with the Company or any Subsidiarywithholding Taxes) equal to an amount, without interest, in cash equal to (x) the excessdifference, if any of any, between the Cash Merger Consideration over Per Share Amount less the exercise price per Share share of Common Stock payable upon exercise of such Company Options multiplied by (y) the number of shares of Common Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreement. (d) If and issuable thereunder upon exercise immediately prior to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunderEffective Time. Additionally, the Company shall cooperate with Parent take all actions or cause all such actions to be taken prior to the date of the consummation of the Offer as are necessary to ensure that the holders of at least 80% of the Company Options that are not held by those persons set forth on said Schedule 2.04A (the "Remaining Options") shall be converted as set forth above. The Company shall use its reasonable best efforts to ensure that as soon as practicable and Acquisition in obtaining any event prior to the Effective Time all of the Remaining Options that were not converted as set forth above on or before the date of the consummation of the Offer shall be exercised or converted as set forth above. The Company shall use its reasonable best efforts to obtain a signed consent of each holder of outstanding Company Stock Options to the foregoing treatment conversion of such Company Stock Options as specified in this Section 2.04(a). Except with respect to Company Options for which a signed consent is obtained in accordance with this Section 2.04(a), and notwithstanding anything to the contrary in this Section 2.04(a), no payment shall be made to any holder of a Company Option that is to be converted and terminated unless such holder delivers a signed waiver acknowledging that all of his or her outstanding Company Options are converted and terminated at the Effective Time and waiving all of his or her rights under or with respect to those Company Options. The Company shall use its reasonable best efforts to take all such actions or cause such actions to be taken such that, as soon as practicable, all Company Options that have an exercise price per share of Common Stock equal to or greater than the Per Share Amount shall be converted and terminated as of the Effective Time. Purchaser shall pay, or cause to be paid, the cash amounts payable pursuant to this Section 2.04(a) in respect of Company Options at or shortly (and in no event more than five (5) business days) after the Effective Time, except that such payment with respect to the Company Options set forth on Schedule 2.04B of the Company Disclosure Schedule shall be made from the Exchange Fund on the 90th day following the Effective Time (unless such day is not a business day, in which case payment shall be made on the next succeeding business day). The Company shall not make, or agree to make, any payment of any kind to any holder of a Company Option (except for the payments described in this Section 2.04) without the prior written consent of Parent. (b) Subject to Section 2.04(a) hereof, all Company Stock Option Plans shall terminate as of the Effective Time and the provisions in any other action Company 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. The Company shall use its reasonable best efforts to ensure that, immediately following the consummation of the Offer, no holder of a Company Option or any participant in any Company Stock Option Plan shall have any right thereunder to acquire any capital stock of the Company, Parent or the Surviving Corporation. (c) The Company shall take all actions necessary pursuant to effectuate the foregoing provisionsterms of the Company's Employee Stock Purchase Plan (the "Employee Stock Purchase Plan") in order to shorten the offering period under such Plan which includes the Effective Time (the "Current Offering"), such that the Current Offering shall terminate prior to the Effective Time. The purchase price for any shares of Common Stock purchased under the Employee Stock Purchase Plan during the Current Offering (as shortened in accordance with the preceding sentence) shall be paid in cash.

Stock Options. (a) At the Effective Time, each outstanding option or warrant to purchase Shares (a "Company Stock Option" or collectively "Company Stock Options") issued pursuant to the Company's 1999 Omnibus 1988 Stock Incentive Plan (the "1999 Option Plan"), 1990 Stock Option Plan, 1992 Key Executive Stock Option Plan, 1993 Employee Qualified Stock Purchase Plan, 1996 Supplemental Stock Plan, as amended, 1997 Stock Option Plan, as amended, 1994 Outside Director Stock Option Plan, Key Executive Stock Option Plan, SpeedSim, Inc. 1995 Incentive and Nonqualified Stock Option Plan, or other agreement or arrangement, whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate converted as of the Effective Date. (b) At Time into options or warrants, as applicable, to purchase shares of Parent Common Stock in accordance with the Effective Time, each outstanding terms of this Section 1.11. All plans or agreements described above pursuant to which any Company Stock Option has been issued pursuant or may be issued other than outstanding warrants are referred to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, collectively as the "Company Plans." Each Company Stock Option Plans") that is vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled deemed to constitute an option to acquire, on the same terms and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of conditions as were applicable under such Company Stock Option, less the amount a number of Taxes (as defined in Section 3.15(a)) required shares of Parent Common Stock equal to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company shares of Parent Common Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option would have been entitled to receive pursuant to the Merger had such holder exercised such option or warrant in full immediately prior to the Effective Time at a price per share equal to (x) the time aggregate exercise price for the Shares otherwise purchasable pursuant to such Company Stock Option would divided by (y) the product of (i) the number of Shares otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal purchasable pursuant to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options Option, multiplied by (ii) the Exchange Ratio; provided, however, that would otherwise have vested at such time. Notwithstanding in the foregoingcase of any option to which Section 421 of the Code applies by reason of its qualification under Section 422 of the Code ("incentive stock options" or "ISOs" ) the option price, the right number of shares purchasable pursuant to receive such payments option and the terms and conditions of exercise of such option shall vest be determined in accordance order to comply with Section 424(a) of the Code. (b) As soon as practicable after the Effective Time, Parent shall deliver to the holders of Company Stock Options appropriate notices setting forth such holders' rights pursuant to the Company Plan and that the agreements evidencing the grants of such Options shall continue in effect on the same terms and conditions (subject to the adjustments required by this Section 1.11 after giving effect to the Merger). Parent shall comply with the terms of the applicable option agreementCompany Plans and ensure, to the extent required by and subject to the provisions of such Plans, that Company Stock Options that qualified as incentive stock options prior to the Effective Time continue to qualify as incentive stock options of Parent after the Effective Time. (c) Parent shall take all corporate action necessary to reserve for issuance a sufficient number of shares of Parent Common Stock for delivery upon exercise of Company Stock Options assumed in accordance with this Section 1.11. As soon as practicable after the Effective Time, Parent shall file a registration statement on Form S-8 (or any successor or other appropriate forms) with respect to the shares of Parent Common Stock subject to any Company Stock Options held by persons who are directors, officers or employees of the Company or its subsidiaries and shall use all reasonable efforts to maintain the effectiveness of such registration statement or registration statements (and maintain the current status of the prospectus or prospectuses contained therein) for so long as such options remain outstanding. (d) If and to At or before the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunderEffective Time, the Company shall cooperate with Parent and Acquisition in obtaining cause to be effected any necessary amendments to the consent of each holder of outstanding Company Stock Options Plans to give effect to the foregoing treatment provisions of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisionsthis Section 1.11.

Stock Options. (a) At Subject to Sections 5.5(b), at the Effective Time, all rights with respect to Company Common Stock under each Company Option then outstanding shall be converted into and become rights with respect to Parent Common Stock, and Parent shall assume each such Company Option in accordance with the terms and conditions (as in effect as of the date of this Agreement) of the stock option plan under which it was issued and the terms and conditions of the stock option agreement by which it is evidenced. From and after the Effective Time, (i) each Company Option assumed by Parent may be exercised solely for shares of Parent Common Stock, (ii) the number of shares of Parent Common Stock subject to purchase Shares each such Company Option shall be equal to the number of shares of Company Common Stock subject to such Company Option immediately prior to the Effective Time multiplied by the Exchange Ratio, rounding down to the nearest whole share, (iii) the per share exercise price under each such Company Option shall be adjusted by dividing the per share exercise price under such Company Option by the Exchange Ratio and rounding up to the nearest cent, and (iv) any restriction on the exercise of any such Company Option shall continue in full force and effect and the term, exercisability, vesting schedule and other provisions of such Company Option shall otherwise remain unchanged; provided, however, that each Company Option assumed by Parent in accordance with this Section 5.5(a) shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, stock dividend, reverse stock split, reclassification, recapitalization or other similar transaction effected subsequent to the Effective Time. (b) Notwithstanding anything to the contrary contained in this Section 5.5, in lieu of assuming outstanding Company Options in accordance with Section 5.5(a), Parent may, with the consent of each optionholder with respect to such optionholders options, cause such outstanding Company Options to be replaced by issuing reasonably equivalent replacement stock options in substitution therefor. (c) Prior to the Effective Time, the Company shall take all action that may be necessary (under the plans pursuant to which Company Options are outstanding and otherwise) to effectuate the provisions of this Section 5.5 and to ensure that, from and after the Effective Time, holders of Company Options have no rights with respect thereto other than those specifically provided in this Section 5.5. (d) Parent shall take all corporate action necessary to reserve for issuance a "sufficient number of shares of Parent Common Stock for delivery under the Company Stock Option" or collectively "Company Stock Options"Options Plans assumed in accordance with this Section 5.5. (e) issued As soon as practicable after the Effective Time, Parent shall deliver to the participants in the Company's Option Plans appropriate notice setting forth such participant's rights pursuant thereto and the grants pursuant to the Company's 1999 Omnibus Stock Incentive Plan Option Plans shall continue in effect on the same terms and conditions (subject to the "1999 Option Plan"adjustments required by this Section 5.5 after giving effect to the Merger), whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate as of the Effective Date. (bf) At the Effective Time, each outstanding Company Stock Option issued pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as As of the Effective Time, the exercise price of which is less than the Cash Merger Consideration Company ESPP shall be canceled and extinguished and terminated. The rights of participants in the Company ESPP with respect to any offering period then underway under the Company ESPP shall become be determined by treating the right last business day prior to receive an amount, without interest, in cash paid at the Effective Time equal to as the excess, if any of the Cash Merger Consideration over the exercise price per Share last day of such Company Stock Option, less offering period and by making such other pro-rata adjustments as may be necessary to reflect the amount of Taxes (shortened offering period but otherwise treating such shortened offering period as defined in Section 3.15(a)) required to be withheld a fully effective and completed offering period for all purposes under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement ESPP. Prior to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration Company shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested take all actions (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excessincluding, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoingappropriate, the right to receive such payments shall vest in accordance with the terms of the applicable option agreement. (d) If and to the extent required by amending the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement ESPP) that are necessary to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options give effect to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisionstransactions contemplated by this Section 5.5(f).

Stock Options. As of the close of business on the Reference Date: (ai) At the Effective Time, each outstanding option 7,785,062 shares of Company Common Stock were subject to purchase Shares (a "Company Stock Option" or collectively "Company Stock Options") issued issuance pursuant to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan"), whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate as of the Effective Date. (b) At the Effective Time, each outstanding Company Stock Option issued pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes Options (as defined below) to purchase Company Common Stock under the applicable Company Benefit Plans that are stock plans as set forth in Section 3.15(a)2.12(b) required to be withheld under applicable Federal, state or local laws and regulations multiplied by of the number of Shares subject to such Company Disclosure Schedule (the “Company Stock Option. Plans”) (c) At the Effective Timeequity or other equity-based awards, each outstanding Company Stock Option issued whether payable in cash, shares or otherwise, granted under or pursuant to the Company Option Plans Stock Plans, other than Company Restricted Stock or any other stock option planCompany Restricted Stock Units, programare referred to in this Agreement as “Company Options”), arrangement or agreement to which and (ii) 7,748,679 shares of Company Common Stock are reserved for future issuance under the Company or any Stock Plans. Company has made available to Parent a true, complete and correct list of its subsidiaries is a party that is not vested each Company Option outstanding as of the Effective TimeReference Date, and (1) the exercise price particular Company Stock Plan pursuant to which such Company Option was granted, (2) the name of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Option, (3) the number of shares of Company Common Stock Option at the time the subject to such Company Stock Option would otherwise have vested Option, (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary4) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Option, (5) the date on which such Company Option was granted, (6) the applicable vesting schedule, and the extent to which such Company Option was vested and exercisable as of the Reference Date, and (7) the date on which such Company Option expires. All shares of Company Common Stock subject to issuance under the applicable Company Benefit Plans, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issued, are duly authorized and will be validly issued, fully paid and nonassessable. All grants of Company Options that would otherwise have vested at such time. Notwithstanding were validly issued and properly approved by the foregoing, the right to receive such payments shall vest Board of Directors of Company (or a duly authorized committee or subcommittee thereof) in accordance material compliance with the terms of the applicable option agreement. Company Benefit Plan and all applicable Legal Requirements and recorded on the Company Financials (das defined in Section 2.4(b)) If in accordance with GAAP (as defined in Section 2.4(b)). The exercise price of each Company Option is not less than the fair market value of a share of Company Common Stock as determined on the date of grant of such Company Option. Each Company Option intended to qualify as an “incentive stock option” under Section 422 of the Code so qualifies and the per share exercise price of each Company Option was not less than the fair market value of a share of Company Common Stock on the applicable date of grant. As of the Reference Date, there are no outstanding or authorized stock appreciation, phantom stock, profit participation or other similar rights or equity based awards with respect to the extent required by the terms Company other than as set forth in Sections 2.2(b) and (c) of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisionsDisclosure Schedule.

Stock Options. (a) At the Effective Time, each outstanding option to purchase Shares (a "Company Stock Option" or collectively "Company Stock Options") issued pursuant to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan"), whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate as of the Effective Date. (b) At the Effective Time, each outstanding Company Stock Option issued pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as As of the Effective Time, the exercise price of which is less than the Cash Merger Consideration (i) each outstanding Employee Stock Option shall be canceled and extinguished and shall become converted into an option (an "Adjusted Option") to purchase the right to receive an amount, without interest, in cash paid at the Effective Time number of Parent Shares equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Employee Stock Option immediately prior to the Effective Time multiplied by the Exchange Ratio (rounded to the nearest whole number of Parent Shares), at an exercise price per share equal to the exercise price for each such Share subject to such option divided by the Exchange Ratio (rounded down to the nearest whole cent), and all references in each such Employee Stock Option to the Company shall be deemed to refer to Parent, where appropriate; provided, however, that the adjustments provided in this clause (i) with respect to any Employee Stock Options which are "incentive stock options" (as defined in Section 422 of the Code) or which are described in Section 423 of the Code, shall be affected in a manner consistent with the requirements of Section 424(a) of the Code, and (ii) Parent shall assume the obligations of the Company under the Company's stock option plans pursuant to which such Employee Stock Options were issued. The other terms of each Adjusted Option, and the plans or agreements under which they were issued, shall continue to apply in accordance with their terms. The date of grant of each Adjusted Option shall be the date on which the corresponding Employee Stock Option was granted. (b) Parent shall (i) reserve for issuance the number of Parent Shares that will become subject to the benefit plans, programs and arrangements referred to in this Section 7.9 and (ii) issue or cause to be issued the appropriate number of Parent Shares pursuant to applicable plans, programs and arrangements, upon the exercise or maturation of rights existing thereunder on the Effective Time or thereafter granted or awarded. No later than the Effective Time, Parent shall prepare and file with the SEC a registration statement on Form S-8 (or other appropriate form) registering a number of Parent Shares necessary to fulfill Parent's obligations under this Section 7.9. 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 Adjusted Options remain outstanding. (c) At As soon as practicable after the Effective Time, each outstanding Company Parent shall deliver to the holders of Employee Stock Option issued Options appropriate notices setting forth such holders' rights pursuant to the respective Company Option Plans or any other stock option plan, program, arrangement or agreement to which plans and the Company or any of its subsidiaries is a party that is not vested as of agreements evidencing the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder grants of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreement. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Employee Stock Options and that such Employee Stock Options and the related agreements shall be assumed by Parent and shall continue in effect on the same terms and conditions (subject to take any other action necessary the adjustments required by this Section 7.9 after giving effect to effectuate the foregoing provisionsMerger).

Stock Options. (ai) At the Effective Time, each outstanding option to purchase Shares (a "Company Stock Option" or collectively "Company Stock Options") issued pursuant to under the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan")Plans, whether vested or unvested, shall be deemed to constitute an option to acquire, on the same terms and conditions as were applicable under such Company Option, a number of shares of Parent Common Stock equal to the number of Shares underlying such Company Option multiplied by the Conversion Number (rounded to the nearest whole number with .5 being rounded up), at a price per share (rounded to the nearest whole cent with .5 being rounded up) equal to (y) the exercise price for the Shares otherwise purchasable pursuant to such Company Option divided by (z) the Conversion Number; provided, however, that in the case of any Company Option to which is greater than Section 422 of the Cash Merger ConsiderationCode 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 canceled and extinguished without consideration and determined in accordance with the 1999 Option Plan shall terminate foregoing, subject to such adjustments as are necessary in order to satisfy the requirements of Section 424(a) of the Effective Date. (b) Code. At the Effective Time, each outstanding Company Stock Option issued pursuant or prior to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration Company shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal make all necessary arrangements with respect to the excess, if any Stock Option Plans to permit the assumption of the Cash Merger Consideration over the exercise price per Share of such unexercised Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required Options by Parent pursuant to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Optionthis Section. (cii) At Effective at the Effective Time, Parent shall assume each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable Stock Option Plan under which it was issued and the stock option agreementagreement by which it is evidenced. At or prior to the Effective Time, Parent shall take all corporate action necessary to reserve for issuance a sufficient number of shares of Parent Common Stock for delivery upon exercise of Company Options assumed by it in accordance with this Section. In addition, the Board of Directors of the Company and Parent shall, prior to the Effective Time, take all such actions as may be necessary or appropriate pursuant to Rule 16b-3(e) to exempt (i) the conversion of Shares and Company Options into Parent Common Stock or options to purchase Parent Common Stock, as the case may be, and (ii) the acquisition of Parent Common Stock or options to purchase Parent Common Stock, as the case may be, pursuant to the terms of this Agreement by officers and directors of the Company subject to the reporting requirements of Section 16(a) of the Exchange Act. Parent and the Company shall provide to counsel to the other party copies of the resolutions to be adopted by the respective Boards of Directors to implement the foregoing. (diii) If and Immediately prior to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunderEffective Time, the Company shall cooperate with Parent terminate its 1997 Employee Stock Purchase Plan (the "Stock Purchase Plan"), the 1997 Directors' Stock Option Plan (the "Directors' Plan") and Acquisition in obtaining the consent of each holder of outstanding other Stock Option Plans (as defined below). The Company Stock Options prior to the foregoing treatment Effective Date shall amend the then current offering period for the Stock Purchase Plan so that the exercise date is on the date of such Company the Company's payday immediately preceding, but not on, the Effective Date. As used in this Agreement, the term "Stock Options Option Plans" shall mean the Directors' Plan, the Company's 1989 Stock Option Plan and to take any other action necessary to effectuate the foregoing provisionsCompany's 1995 Stock Plan.

Stock Options. (a) At Subject to Section 1.8(b), at the Effective Time, each outstanding option to purchase Shares shares of Company Common Stock (a "Company Stock Option" or collectively "Company Stock Options") issued pursuant to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan"), whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate as of the Effective Date. (b) At the Effective Time, each outstanding Company Stock Option issued pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if granted under any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, agreement or arrangement or agreement to which of the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration Subsidiaries ("Stock Option Plans") shall be canceled converted into an option to purchase Parent Common Stock, and extinguished in consideration for certain compensatory payments to be paid to the holder of Parent Corporation shall assume each such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms (as in effect as of the applicable date of this Agreement) of the Stock Option Plan under which it was issued and the stock option agreementagreement by which it is evidenced. From and after the Effective Time, (i) each Company Option assumed by the Parent Corporation may be exercised solely for shares of the Parent Common Stock, (ii) the number of shares of Parent Common Stock subject to each such Company Option shall be equal to the number of shares of Company Common Stock subject to such Company Option immediately prior to the Effective Time multiplied by the Exchange Ratio, rounding down to the nearest whole share, (iii) the per share exercise price under each such Company Option shall be adjusted by dividing the per share exercise price under such Company Option by the Exchange Ratio and rounding up to the nearest tenth of a cent and (iv) any restriction on the exercise of any such Company Option shall continue in full force and effect and the term, exercisability, vesting schedule and other provisions of such Company Option shall otherwise remain unchanged; provided, however, that each Company Option assumed by the Parent Corporation in accordance with this Section 1.8(a) shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, division or subdivision of shares, stock dividend, reverse stock split, consolidation of shares, reclassification, recapitalization or other similar transaction subsequent to the Effective Time. (db) If and Notwithstanding anything to the extent required by the terms of the Company Option Plancontrary contained in this Section 1.8, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisions.in

Stock Options. (a) All options which may be exercised for issuance of Greater Community Common Stock (each, a “Stock Option” and collectively the “Stock Options”) are described in the Greater Community Disclosure Schedule and are issued and outstanding pursuant to the Greater Community stock option plans described in the Greater Community Disclosure Schedule (collectively, the “Greater Community Stock Option Plans”) and the forms of agreements pursuant to which such Stock Options were granted (each, an “Option Grant Agreement”). True and complete copies of Greater Community’s Stock Option Plans relating to outstanding Stock Options will be delivered to Valley promptly after execution of this Agreement. At the Effective Time, each Stock Option which is outstanding option to purchase Shares (a "Company Stock Option" or collectively "Company Stock Options") issued pursuant to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan")and unexercised immediately prior thereto, whether or not then vested or unvested, the exercise price of which is greater than the Cash Merger Considerationexercisable, shall be canceled and all rights thereunder shall be extinguished without consideration and the 1999 Option Plan holder thereof shall terminate as of only be entitled to receive the Effective Dateconsideration set forth in Section 2.3(b). (b) At Holders of unexercised Greater Community Stock Options will be entitled to receive, in cancellation of their Stock Options, a cash payment from Greater Community immediately prior to the Effective Time, each outstanding Company Stock Option issued pursuant in an amount equal to the 1999 Option Plan or product of (A) the Company's 2000 number of shares of Greater Community Common Stock Option Plan into which such Stock Options are convertible and (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans"B) that is vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any any, of (x) the sum of (i) the Average Closing Price times the Exchange Ratio, plus (ii) the fair market value of 0.10 of a Warrant, based on all relevant factors, including the Black-Scholes model, which model shall take into account a discount with regard to the lack of exercisability of the Cash Merger Consideration Warrant for the first two years, over (y) the exercise price per Share share provided for in such Greater Community Stock Option (the “Cash Option Payment”), which cash payment shall be treated as compensation and shall be net of any applicable federal and state withholding taxes. At the time of receipt of such Company cash payment, each holder of a Greater Community Stock OptionOption shall acknowledge in writing, less the amount in a form reasonably satisfactory to Valley that such cash payment is in full satisfaction of Taxes (as defined in Section 3.15(a)) required to be withheld such holder’s rights under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Greater Community Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreement. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisions.

Stock Options. (ai) At the Effective Time, each outstanding option to purchase Shares (a "Company Stock Option" or collectively "Company Stock Options") issued pursuant to under the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan"), whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled deemed to constitute an option to acquire, on the same terms and extinguished without consideration and conditions as were applicable under such Company Option, the 1999 same number of shares of Parent Common Stock as the holder of such Company Option Plan shall terminate as of the Effective Date. (b) At the Effective Time, each outstanding Company Stock Option issued would have been entitled to receive pursuant to the 1999 Merger had such holder exercised such option in full immediately prior to the Effective Time and the Shares received in such exercise been deemed to be Stock Election Shares (without regard to any proration thereof) (rounded down to the nearest whole number), at a price per share (rounded up to the nearest whole cent) equal to (y) the aggregate exercise price for the Shares otherwise purchasable pursuant to such Company Option Plan or divided by (z) the Company's 2000 number of full shares of Parent Common Stock deemed purchasable pursuant to such Company Option Plan (the "2000 Option Plan" and, together in accordance with the 1999 foregoing; provided, however, that in the case of any Company Option Planwhich is intended to be an "incentive stock option" (as defined in Section 422 of the Code), the "Company Option Plans"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) that is vested as of the Code. At or prior to the Effective Time, the exercise price of which is less than Company shall make all necessary arrangements to permit the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any assumption of the Cash Merger Consideration over the exercise price per Share of such unexercised Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required Options by Parent pursuant to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Optionthis Section. (cii) At Effective at the Effective Time, Parent shall assume each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable Stock Plan under which it was issued and the stock option agreement. (d) If and agreement by which it is evidenced. At or prior to the extent required by the terms of the Company Option PlanEffective Time, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company Parent shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other all corpo- rate action necessary to effectuate reserve for issuance a sufficient number of shares of Parent Common Stock for delivery upon exercise of Company Options assumed by it in accordance with this Section. As soon as practicable after the foregoing provisionsEffec- tive Time, Parent shall file a registration statement on Form S-3 or Form S-8, as the case may be (or any successor or other appropriate forms), with respect to the Parent Common Stock subject to such Company Options, and shall use its best efforts to maintain the effectiveness of such registration statements (and maintain the current status of the prospectus or prospectuses contained therein) for so long as such Company Options remain outstanding.

Stock Options. (a) At the Effective Time, all rights with respect to Company Common Stock under each Company Option then outstanding option to purchase Shares (a "Company Stock Option" or collectively "Company Stock Options") issued pursuant to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan"), whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled converted into and extinguished without consideration become rights with respect to Parent Common Stock, and Parent shall assume each such Company Option in accordance with the 1999 Option Plan shall terminate terms (as in effect as of the date of this Agreement) of the stock option plan under which it was issued and the stock option agreement by which it is evidenced. From and after the Effective DateTime, (i) each Company Option assumed by Parent may be exercised solely for shares of Parent Common Stock, (ii) the number of shares of Parent Common Stock subject to each such Company Option shall be equal to the number of shares of Company Common Stock subject to such Company Option immediately prior to the Effective Time multiplied by the Exchange Ratio, rounded down to the nearest whole share, (iii) the per share exercise price under each such Company Option shall be adjusted by dividing the per share 39. exercise price under such Company Option by the Exchange Ratio and rounded up to the nearest cent and (iv) any restriction on the exercise of any such Company Option shall continue in full force and effect and the term, exercisability, vesting schedule and other provisions of such Company Option shall otherwise remain unchanged; provided, however, that each Company Option assumed by Parent in accordance with this Section 5.4(a) shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, division or subdivision of shares, stock dividend, reverse stock split, consolidation of shares, reclassification, recapitalization or other similar transaction subsequent to the Effective Time. Parent shall file with the SEC, promptly after the date on which the Merger becomes effective, a registration statement on Form S-8 relating to the shares of Parent Common Stock issuable with respect to the Company Options assumed by Parent in accordance with this Section 5.4(a). (b) At The Company shall take all action that may be necessary (under the plans pursuant to which Company Options are outstanding and otherwise) to effectuate the provisions of this Section 5.4 and to ensure that, from and after the Effective Time, each outstanding holders of Company Stock Option issued pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan Options have no rights with respect thereto other than those specifically provided in this Section 5.4. (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans"c) that is vested as As of the Effective Time, the exercise price of which is less than the Cash Merger Consideration ESPP shall be canceled and extinguished and terminated. The rights of participants in the ESPP with respect to any offering period then underway under the ESPP shall become be determined by treating the right last business day prior to receive an amount, without interest, in cash paid at the Effective Time equal to as the excess, if any of the Cash Merger Consideration over the exercise price per Share last day of such Company Stock Option, less offering period and by making such other pro-rata adjustments as may be necessary to reflect the amount reduced offering period but otherwise treating such offering period as a fully effective and completed offering period for all purposes of Taxes (as defined in Section 3.15(a)) required such Plan. Prior to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration Company shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested take all actions (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excessincluding, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoingappropriate, the right to receive such payments shall vest in accordance with amending the terms of the applicable option agreement. (dESPP) If and that are necessary to give effect to the extent required transactions contemplated by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisionsthis Section 5.4(d).

Stock Options. (a) At Except as provided in (b) below with respect to the Company's Employee Stock Purchase Plan, each option to purchase shares of Company Common Stock that is outstanding at the Effective Time, whether or not exercisable and whether or not vested (a "Company Option") shall, by virtue of the Merger and without any action on the part of the Company or the holder thereof, be assumed by Parent in such manner that Parent (i) is a corporation "assuming a stock option in a transaction to which Section 424(a) applies" within the meaning of Section 424 of the Code and the regulations thereunder or (ii) to the extent that Section 424 of the Code does not apply to any such Company Option, would be such a corporation were Section 424 of the Code applicable to such Company Option. Prior to the Effective Time, the Company's Board of Directors and Compensation Committee thereof shall adopt resolutions preventing the value of any outstanding Company Options, stock appreciation rights, restricted stock, performance units or other stock based awards from being paid in cash to the holders thereof. From and after the Effective Time, all references to the Company in the Company Options shall be deemed to refer to Parent. The Company Options assumed by Parent shall be exercisable upon the same terms and conditions as under the Company Options (including provisions regarding vesting and the acceleration thereof, and if and to the extent caused by and in accordance with the current terms of a Company Option, such Company Option shall vest fully as of the date on which the Merger is approved by the Company's shareholders) except that (i) such Company Options shall entitle the holder to purchase from Parent the number of shares of Parent Common Stock (rounded down to the nearest whole number of such shares) that equals the product of the Conversion Ratio multiplied by the number of shares of Company Common Stock subject to such Company Option immediately prior to the Effective Time, and (ii) the option exercise price per share of Parent Common Stock shall be an amount (rounded up to the nearest full cent) equal to the option exercise price per share of Company Common Stock in effect immediately prior to the Effective Time divided by the Conversion Ratio. Prior to the Effective Time, the Board of Directors of the Parent shall, for purposes of Rule 16b-3(d)(1) promulgated under Section 16 of the 1934 Act, specifically approve (i) the assumption by Parent of the Company Options and (ii) the issuance of Parent Common Stock in the Merger to directors, officers and shareholders of the Company subject to Section 16 of the 1934 Act. As promptly as practicable after the Effective Time, Parent shall issue to each holder of a Company Option a written instrument informing such holder of the assumption by Parent of such Company Option. As soon as reasonably practicable after the Effective Time (and in any event no later than five business days after the Effective Time), Parent shall file a registration statement on Form S-8 (or any successor form) with respect to such shares of Parent Common Stock and shall use its best efforts to maintain such registration statement (or any successor form), including the current status of any related prospectus or prospectuses, for so long as the Company Options remain outstanding. In addition, Parent shall use all reasonable efforts to cause the shares of Parent Common Stock subject to Company Options to be listed on the NYSE and such other exchanges as Parent shall determine. Parent shall take all corporate action necessary to reserve for issuance a sufficient number of shares of Parent Common Stock for delivery upon exercise of Company Options pursuant to the terms set forth in this Section 1.7. (b) The current phase in process as of the date of this Agreement under the Company's Employee Stock Purchase Plan shall continue and shares shall be issued to participants thereunder as provided under, and subject to the terms and conditions of, such Plan; provided, however, that if the Effective Time occurs prior to the originally scheduled expiration of such current phase, then immediately prior to the Effective Time, the current phase under the Company's Employee Stock Purchase Plan shall be ended, and each participant shall be deemed to have purchased immediately prior to the Effective Time, to the extent of payroll deductions accumulated by such participant as of such phase end, the number of whole shares of Company Common Stock at a per share price determined pursuant to the provisions of the Company's Employee Stock Purchase Plan, and each participant shall receive a cash payment equal to the balance, if any, of such accumulated payroll deductions remaining after such purchase of such shares. As of the Effective Time, each outstanding option participant shall receive by virtue of the Merger, for each share of Company Common Stock such participant has so purchased under the Employee Stock Purchase Plan, such number of shares of Parent Common Stock equal to purchase Shares (a "Company Stock Option" or collectively "Company Stock Options") issued pursuant to the Conversion Ratio. No phases under the Company's 1999 Omnibus Employee Stock Incentive Purchase Plan (that are subsequent to the "1999 Option Plan"), whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate phase in process as of the Effective Date. (b) At the Effective Timedate of this Agreement shall be commenced, each outstanding Company Stock Option issued pursuant to the 1999 Option Plan or and, the Company's 2000 Employee Stock Option Purchase Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested and all purchase rights thereunder shall terminate effective as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreement. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisions.

Stock Options. (a) At Prior to the Effective Time, each outstanding option to purchase Shares (a "the Board of Directors of the Company Stock Option" or collectively "Company Stock Options") issued pursuant to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan")“Company Board”) (or, whether vested or unvestedif appropriate, the exercise price of which is greater than the Cash Merger Considerationany committee thereof) shall take all actions necessary and appropriate to provide that, shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate as of the Effective Date. (b) At at the Effective Time, each outstanding all unexercised and unexpired options to purchase Company Common Stock (“Company Options”) then outstanding, under any stock option plan of the Company or any other plan, agreement or arrangement (the “Company Stock Option issued pursuant Plans”), whether or not then exercisable, shall be assumed by Parent and, as so assumed, shall continue to have, and be subject to, the 1999 Option Plan or same terms and conditions (including vesting schedule) as set forth in the Company's 2000 Company Stock Option Plan and any agreements thereunder immediately prior to the Effective Time, except that (a) each Company Option shall be exercisable (or shall become exercisable in accordance with its terms) for that number of whole shares of Parent Common Stock equal to the "2000 product of the number of shares of Company Common Stock that were issuable upon exercise of such Company Option Plan" andimmediately prior to the Effective Time multiplied by the Exchange Ratio, together rounded down to the nearest whole number of shares of Parent Common Stock, (b) the per share exercise price for the shares of Parent Common Stock issuable upon exercise of such assumed Company Option shall be equal to the quotient determined by dividing the exercise price per share of Company Common Stock at which such Company Option was exercisable immediately prior to the Effective Time by the Exchange Ratio, rounded up to the nearest whole cent, and (c) such assumed Company Option will be eligible to participate in any “cashless exercise” or “same day sale” program to the extent made available to the holders of Parent Options and to the extent consistent with the 1999 Option Plan, terms of the "Company Option Plans") that is vested agreements. The conversion of any Company Options into options to purchase Parent Common Stock shall be made so as not to constitute a “modification” of such Company Options within the meaning of Sections 409A and 424 of the Code. As of the Effective Time, Parent shall amend the exercise price Company Stock Option Plans to allow Parent to grant awards under the terms of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become Company Stock Option Plans (including the right to receive an amount, without interest, in cash paid at grant incentive stock options) with respect to Parent Common Stock after the Effective Time equal to the excess, if any product of (i) the Cash Merger Consideration over the exercise price per Share sum of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)A) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such shares of Company Common Stock authorized for issuance under the Company Stock Option. Option Plans less (cB) At shares of Company Common Stock issued under the Company Stock Option Plans prior to the Effective Time, each less (C) shares of Company Common Stock subject to outstanding Company Stock Option issued pursuant Options, multiplied by (ii) the Exchange Ratio; provided, however, such awards shall be made solely to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as employees of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreementCompany. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisions.

Stock Options. (a) At the Effective Time, each outstanding option granted by the Company to purchase Shares shares of Company Common Stock (each a "“Company Stock Option" or collectively "Company Stock Options"”) issued which was granted pursuant to any stock option plan, program or arrangement of the Company's 1999 Omnibus Stock Incentive Plan Company as set forth on Section 3.2 the Company Disclosure Letter (the "1999 Option Plan"), whether vested or unvestedcollectively, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate as of the Effective Date. (b) At the Effective Time, each outstanding Company Stock Option issued pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "“Company Option Plans") ”), that is vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled outstanding and extinguished and shall become the right unexercised immediately prior to receive an amount, without interest, in cash paid at the Effective Time shall cease to represent a right to acquire share of Company Common Stock, and Parent shall assume each such Company Option (hereafter, “Assumed Option”) subject to the terms of the applicable Company Option Plan and the agreement evidencing the grant thereunder of such Assumed Option; provided, however, that the (i) the number of shares of Parent Common Stock purchaseable upon such exercise of such Assumed Option shall be equal to the excessnumber of shares of Company Common Stock that were purchasable under such Company Option immediately prior to the Effective Time multiplied by the Exchange Ratio, and rounded to the nearest whole share, and (ii) the per share exercise price under such Assumed Option shall be adjusted by dividing the per share exercise price under such Company Option by the Exchange Ratio, and rounding to the nearest whole cent, and (iii) such Assumed Option shall not terminate if the holder ceases to be a director, officer or employee or consultant of the Surviving Corporation or any of its affiliates (including Parent and its Subsidiaries). In the Cash Merger Consideration over the exercise price per Share case of such Company Stock Option, less the amount of Taxes any Assumed Option that is an “incentive stock option” (as defined in Section 3.15(a422 of the Code)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the exercise price, the number of Shares subject shares of Parent Common Stock purchasable pursuant to such Company Stock Option. (cAssumed Option and the terms and conditions of exercise of such option shall be determined in order to comply, to the fullest extent possible, with Section 424(a) At of the Code. Prior to the Effective Time, each outstanding Company Parent shall prepare and file with the SEC a registration statement on Form S-8 (or other appropriate form) registering all the shares of Parent Common Stock Option issued pursuant subject to the Company Option Plans or any other stock option planAssumed Options, program, arrangement or agreement to which and such registration statement shall be kept effective (and the Company or any of its subsidiaries is a party that is not vested as current status of the Effective Time, the exercise price of which is less than the Cash Merger Consideration prospectus or prospectuses required thereby shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock maintained) as long as any Assumed Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreementremains outstanding. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisions.

Stock Options. (a) At Except as described in Section 7.04(b) below, as soon as practicable following the date of this Agreement, the Company Board (or, if appropriate, any committee administering the Company Option Plans) shall adopt, or shall cause to be adopted, such resolutions or take, or cause to be taken, such other actions as are required to adjust the terms of all outstanding Company Employee Stock Options (other than the Individual Options) heretofore granted under any Company Option Plan or otherwise, to provide that each Company Employee Stock Option outstanding immediately prior to the Effective TimeTime (whether or not then vested) shall be canceled as of the Effective Time in exchange for a cash payment by the Company to be made on the date following the Effective Time (or as soon as practicable thereafter) of an amount equal to (i) the excess, each outstanding option if any, of (A) the price per share of Company Common Stock to purchase Shares (a "Company Stock Option" or collectively "Company Stock Options") issued be paid pursuant to the Company's 1999 Omnibus Stock Incentive Plan Offer over (the "1999 Option Plan"), whether vested or unvested, B) the exercise price per share of Company Common Stock subject to such Company Employee Stock Option, multiplied by (ii) the number of shares of Company Common Stock for which is greater than such Company Employee Stock Option shall not theretofore have been exercised. (b) With respect to the Cash Merger ConsiderationIndividual Options granted to each of the individuals identified in Section 7.04(b) of the Company Disclosure Schedule, the Company shall take the actions specified on Schedule 7.04(b) of the Company Disclosure Schedule. (c) All amounts payable pursuant to this Section 7.04 shall be canceled subject to any required withholding of Taxes and extinguished shall be paid without consideration interest. The Company shall use its reasonable best efforts to obtain all consents of the holders of the Company Employee Stock Options as shall be necessary to effectuate the foregoing. Notwithstanding anything to the contrary contained in this Agreement, payment shall, at Parent's request, be withheld in respect of any Company Employee Stock Option until all necessary consents are obtained. (d) The Company Board shall adopt, or shall cause to be adopted, such resolutions or take such other actions as are required so that the Company Option Plans and the 1999 Option Plan Individual Options shall terminate as of the Effective Date. (b) At the Effective Time, each outstanding and the provisions in any other Company Stock Option issued pursuant to Plan providing for the 1999 Option Plan issuance, transfer or grant of any capital stock of the Company's 2000 Stock Option Plan (Company or any interest in respect of any capital stock of the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested shall be deleted as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at ensure that following the Effective Time equal to the excess, if any no holder of the Cash Merger Consideration over the exercise price per Share of such a Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. (c) At the Effective Time, each outstanding Company Employee Stock Option issued pursuant to the or any participant in any Company Option Plans Plan or other Company Plan shall have any other right thereunder to acquire any capital stock option plan, program, arrangement or agreement to which of the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreementSurviving Corporation. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisions.

Stock Options. As of the close of business on the date hereof: (ai) At the Effective Time, each 21,388,695 shares of Company Common Stock are subject to issuance pursuant to outstanding option options to purchase Shares Company Common Stock (a "such options to purchase Company Stock Option" Common Stock, whether or collectively "not outstanding, “Company Stock Options"”) issued pursuant to under the Company's ’s 1998 Equity Incentive Plan, 1999 Omnibus Stock Executive Equity Incentive Plan, 2000 Equity Incentive Plan and Bluelark 2000 Equity Incentive Plan (the "1999 Option Plan"), whether vested or unvestedcollectively, the exercise price of which is greater “Company Stock Plans”) or otherwise (other than the Cash Merger Consideration, shall be canceled Company Purchase Plan); and extinguished without consideration and the 1999 Option Plan shall terminate (ii) as of the Effective Date. (bdate hereof, 1,237,661 shares of Company Common Stock are reserved for future issuance under the Company Purchase Plan. Section 2.2(b) At of the Effective Time, Company Disclosure Letter sets forth a list of each outstanding Company Stock Option issued pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as of the Effective Time, the exercise price of which is less other than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option planPurchase Plan, program, arrangement or agreement and (a) the particular Company Stock Plan (if any) pursuant to which such Company Option was granted), (b) the Company or any name of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Option, (c) the number of shares of Company Common Stock Option at the time the subject to such Company Stock Option would otherwise have vested Option, (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiaryd) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Option, (e) the date on which such Company Option was granted, (f) the applicable vesting schedule, and the extent to which such Company Option is vested and exercisable as of the date hereof, and (g) the date on which such Company Option expires. All shares of Company Common Stock subject to issuance pursuant to the exercise of Company Options that would otherwise have vested at such time. Notwithstanding and the foregoingCompany Purchase Plan, the right to receive such payments shall vest in accordance with upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, will be duly authorized, validly issued, fully paid and nonassessable. There are no commitments or agreements of the applicable option agreement. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement character to which the Company or any of its subsidiaries is a party or bound obligating the terms Company to accelerate the vesting of any Company Stock Option granted thereunder, as a result of the Company shall cooperate Merger (whether alone or upon the occurrence of any additional or subsequent events). There are no outstanding or authorized stock appreciation, phantom stock, profit participation or other similar rights with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options respect to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisionsCompany.

Stock Options. (a) At Except as set forth on Schedule 4.4, the Effective TimeCompany shall not issue stock, each outstanding option grant stock options, warrants, or other rights to purchase Shares (a "Company Stock Option" or collectively "Company Stock Options") issued stock in the Company, except pursuant to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan"), whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate as of the Effective Date. (b) At the Effective Time, each outstanding Company Stock Option issued pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreementStock Option Plan and the Stock Incentive Plan. Unless otherwise approved by the Board of Directors, the Company shall not issue or grant any of such securities with respect to the purchase of more than 5.5 million shares of Common Stock, or any shares of Preferred Stock, under the Stock Option Plan and Stock Incentive Plan (including options issued in exchange for options for shares of Common Stock of Pathnet which are issued and outstanding as of the date hereof, and as adjusted for stock splits, stock dividends, reclassification and similar events). (db) If Notwithstanding any of the foregoing clause 4.4(a), the Company shall be permitted to grant stock options (and issue Common Stock upon the exercise thereof) of the Company to the extent required by individuals and entities listed on Schedule 4.4 in the amounts and under the terms and conditions set forth opposite such individual or entity. Pursuant to the terms of the Company Stock Option Plan and the Stock Incentive Plan, or any other qualified incentive stock option planoptions and nonqualified options may be granted to employees, programofficers, arrangement or agreement to which directors and consultants of the Company or any of its subsidiaries is a party or pursuant to and in accordance with the terms of any Company this Agreement and the terms of the Stock Option granted thereunderPlan and the Stock Incentive Plan as adopted as of the date hereof, and the Company exercise of any options shall cooperate with Parent be conditioned on the optionee making satisfactory provisions for the payment of any withholding taxes due on such exercise and Acquisition in obtaining agreeing to be bound by the provisions of Section 5 and Section 7 hereof. Neither the Stock Option Plan nor the Stock Incentive Plan may be amended, revised or waived after the date hereof without the consent of each holder a majority of outstanding Company Stock Options the Series Preferred Stockholder Directors. (c) Notwithstanding anything set forth in this Section 4.4 to the foregoing treatment contrary, management may change the composition and compensation and remuneration of existing management, consultants and employees of the Company and may hire new management, consultants and employees of the Company, provided the compensation and remuneration of such new and existing management, consultants and employees (including any capital stock of the Company issued to such new existing management, consultants or employees and any vesting schedules relating to the grant of any such capital stock) is within the ranges established from time to time by the Board of Directors with the approval of a majority of the Series Preferred Stockholder Directors. Pursuant to the terms of the Stock Options Option Plan and to take any other action necessary to effectuate the foregoing provisionsStock Incentive Plan, all awards under such plans must be administered by a "Committee" whose members must be designated by the Board of Directors.

Stock Options. The Employee shall be eligible to be granted nonqualified options to purchase shares of Corporation’s common stock or other equity compensation generally paid to the employees of the Corporation (acollectively, the “Equity Awards”), including the follow specific Equity Awards: (1) At the Effective TimeEmployee will be eligible to receive, under the Merger Agreement, two stock option grants to purchase shares of the Corporation’s common stock for each outstanding option to purchase Shares (a "Company Stock Option" or collectively "Company Stock Options") issued pursuant ICS common stock which had previously been granted to the Company's 1999 Omnibus Stock Incentive Plan Employee (the "1999 “Replacement Option Plan"Grants.”) One of the Replacement Option Grants shall be for the same number of shares and shall be vested to the same extent as the ICS option which this option is intended to replace and shall have the same term as set forth in Corporation’s standard form of stock option agreement (the “First Replacement Option Grant”), whether vested or unvested, . The second of the exercise price Replacement Option Grants shall be for a number of shares which is greater than calculated by multiplying the Cash number of shares subject to the ICS option for which this option is intended as a replacement by the Implied All Stock Exchange Ratio under the Merger ConsiderationAgreement, and then subtracting the number of shares subject to the First Replacement Option Grant, shall be canceled vest according to the vesting schedule and extinguished without consideration and shall have the 1999 same term as set forth in the Corporation’s standard form of stock option agreement (the “Second Replacement Option Plan shall terminate as of the Effective Date.Grant”); and (b2) At the Effective Time, each outstanding Company Stock Option issued pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration Employee shall also be canceled and extinguished and shall become the right eligible to receive an amountoption grant of 100,000 shares that will vest with regard to 33,333 of such option shares on Employee’s second anniversary of employment, without interest33,333 of such option shares on Employee’s third anniversary of employment and the remaining 33,334 of such option shares on Employee’s fourth anniversary of employment with Corporation, in cash paid at provided Employee continues to remain an employee of the Effective Time equal Corporation through such dates. Any Equity Awards shall be granted subject to approval of the board of directors of the Corporation (or the compensation committee thereof). Any Equity Awards shall be granted pursuant and be subject to the excess, if any terms of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other Corporation’s stock option planand/or equity incentive plans and customary form of agreements, programand, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested except as of the Effective Timeotherwise described herein, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest and become exercisable in accordance with the terms of the vesting and exercisability schedule generally applicable option agreementto stock options granted to similarly situated employees. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisions.

Stock Options. (a) At the Effective Time, each outstanding option or other right to ------------- purchase Shares shares of Company Common Stock pursuant to stock options (a "Company Stock Option" or collectively "Company Stock Options") issued pursuant to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan"), whether vested or unvested, granted by the exercise price of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration and Company under the 1999 Option Plan shall terminate as of the Effective Date. (b) At the Effective Time, each outstanding Company Stock Option issued pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Company Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that or any other plan or agreement, which is vested as of outstanding at the Effective Time, whether or not exercisable, shall be assumed by Parent and become rights with respect to Parent Stock ("Parent Options"), the exercise price of Company Option Plan or any such other plan or agreement which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid outstanding at the Effective Time equal to the excessshall be assumed by Parent, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock and Parent shall assume each Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable Option Plan and stock option agreement. agreement by which it is evidenced, except that from and after the Effective Time, (di) If Parent and its Compensation Committee shall be substituted for the Company and the Committee of the Company's Board of Directors (including, if applicable, the entire Board of Directors of the Company) administering such Option Plan, (ii) each Option assumed by Parent may be exercised solely for shares of Parent Stock, (iii) the number of shares of Parent Stock subject to such Option shall be equal to the extent required number of Company Shares subject to such Option immediately prior to the Effective Time multiplied by the terms Conversion Ratio, (iv) the per share exercise price under each such Option shall be adjusted by dividing the per share exercise price under each such Option by the Conversion Ratio and rounding up any fraction of a cent to the nearest cent and (v) all Parent Options resulting from the assumption of the Company Option Plan pursuant to this Section 3.10 shall be fully exercisable to the extent set forth in the applicable Company Option or Company Option Plan or as stipulated by the Company's Board of Directors pursuant to the applicable Company Option Plan. Notwithstanding the provisions of clause (iii) of the preceding sentence, or Parent shall not be obligated to assume option obligations with respect to any other stock option plan, program, arrangement or agreement fraction of a share of Parent Stock upon exercise of a Parent Option and any fraction of a share of Parent Stock that otherwise would be subject to which a Parent Option shall represent the right to receive a cash payment upon exercise of such Parent Option equal to the product of such fraction and the difference between the market value of one share of Parent Stock at the time of exercise and the per share exercise price of such Option. Each of the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with and Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and agrees to take any other action all necessary steps to effectuate the foregoing provisionsprovisions of this Section 3.10, including using its reasonable efforts to obtain from each holder of an Option any consent or contract that may be deemed necessary or advisable in order to effect the transactions contemplated by this Section 3.10.

Stock Options. Each option granted to a Continuing Employee (aas defined in Section 5.12(a) At hereof) to acquire a share of Common Stock, which is outstanding and unvested immediately prior to the Effective Time ("OPTION"), shall become and represent an option to purchase the Merger Consideration (a "SUBSTITUTE OPTION") at an exercise price equal to the exercise price per share of Common Stock subject to the Option immediately prior to the Effective Time; PROVIDED, HOWEVER, that in the case of an Option that is intended to qualify as an incentive stock option under Section 422 of the Code, the conversion formula shall be adjusted (in lieu of providing for any payment of cash) if necessary to conform with Section 424(a) of the Code. The parties acknowledge and agree that the number of Options and the exercise price thereof will be adjusted in accordance with the terms thereof upon consummation of a Semi Spin (as defined in Section 1.5(a)) so as to preserve the option value as determined immediately prior to consummation of the Semi Spin; PROVIDED, HOWEVER, that in the case of an Option that is intended to qualify as an incentive stock option under Section 422 of the Code, such adjustments shall be made in a manner so that the Option shall continue to be treated as an incentive stock option under Section 422 of the Code to the greatest extent allowed by law. After the Effective Time, each outstanding option to purchase Shares (a "Company Stock Option" or collectively "Company Stock Options") issued pursuant Substitute Option shall be exercisable upon the same terms and conditions as were applicable to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 related Option Plan"), whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate as of the Effective Date. (b) At the Effective Time, each outstanding Company Stock Option issued pursuant prior to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, accelerated vesting if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreement. (d) If and to the extent required by the terms applicable plans as of the date hereof. In the event of any adjustment to the conversion ratio or exercise price of any Option, such adjustments shall be made pursuant to the mutual agreement of Parent and Company Option Planprior to the Effective Time. Parent shall take such corporate action as may be necessary or appropriate to, at or prior to the Effective Time, file a registration statement on Form S-8 (or any successor or other stock option plan, program, arrangement or agreement appropriate form) with respect to which the Company or Parent Shares subject to any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Substitute Options to the foregoing treatment extent such registration is required under applicable law in order for such Parent Shares to be sold without restriction in the United States, and Parent shall maintain the effectiveness of such Company registration statement for so long as such Substitute Options remain outstanding. Notwithstanding anything to the contrary contained in this Agreement, the parties agree that (i) all options to acquire shares of Common Stock Options that are held by Continuing Employees and that are vested and outstanding immediately prior to take any other action necessary the Effective Time shall be, to effectuate the foregoing provisionsextent not exercised, cancelled on the Effective Time, and (ii) all options to acquire shares of Common Stock that are held by Persons who are not Continuing Employees shall be exercised, converted into Semi (as defined in Section 1.5(a)) or Semi Purchaser (as defined in Section 1.5(a)) options or otherwise cancelled on or prior to the Effective Time.

Stock Options. (a) At the Effective Time, each outstanding Company Stock Award that is a stock option to purchase Shares shares of Company Common Stock (each a "“Company Stock Option" ”) that is outstanding immediately prior to the Effective Time and is held by a Continuing Service Provider, whether or collectively "not then vested or exercisable (each, an “Assumed Option”) shall be assumed by Parent and converted into an option to acquire a number of shares of Parent Class A Common Stock, as provided herein. Each such Assumed Option shall be subject to the same terms and conditions as applied to the Company Stock Options") issued pursuant Option immediately prior to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan"), whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate as of the Effective Date. (b) At the Effective Time, each outstanding including the vesting schedule applicable thereto, except that (A) the number of shares of Parent Class A Common Stock subject to such Assumed Option shall be equal to the product obtained by multiplying (x) the number of shares of Company Common Stock subject to such Company Stock Option issued pursuant as of immediately prior to the 1999 Effective Time by (y) the Option Plan Exchange Ratio (with the resulting number rounded down to the nearest whole share of Parent Class A Common Stock), and (B) the per share exercise price of each Assumed Option shall be equal to the quotient obtained by dividing (x) the per share exercise price at which such Assumed Option was exercisable immediately prior to the Effective Time by (y) the Option Exchange Ratio (with the resulting price per share rounded up to the nearest whole cent). It is the intention of the parties that each Assumed Option that qualified as a United States-based incentive stock option (as defined in Section 422 of the Code) shall continue to so qualify, to the maximum extent permissible, following the Effective Time, and further, that the assumption of the Assumed Options shall be effected in a manner that satisfies the requirements of Section 409A and 424(a) of the Code and the Treasury Regulations promulgated thereunder, and this Section 2.7(d)(i) will be construed consistent with this intent. Each Company Stock Option that is outstanding immediately prior to the Effective Time and is held by a Person that is not a Continuing Service Provider shall not be assumed by Parent and by virtue of the Merger and without any further action on the part of Parent, Merger Sub One, Merger Sub Two, the Company or the Company's 2000 holder thereof, shall be cancelled and shall have no further effect following the Effective Time. The Company shall take all actions reasonably necessary to cause each Company Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") held by a Person that is vested not a Continuing Employee to be cancelled and terminated as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued either pursuant to the Company Option Plans its terms or any other stock option plan, program, arrangement or agreement pursuant to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment an agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreementholder thereof. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisions.

Stock Options. (a) At Subject to Section 5.3(b), at the Effective Time, all rights with respect to Company Common Stock under each Company Option then outstanding option shall be converted into and become rights with respect to purchase Shares Parent Common Stock, and Parent shall assume each such Company Option (a an "Company Stock Assumed Option" or collectively "Company Stock Options") issued pursuant to in accordance with the Company's 1999 Omnibus Stock Incentive Plan requirements of Section 424(a) of the Code (the "1999 Option Plan"), whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate as in effect as of the date of this Agreement) and the terms of the stock option plan under which it was issued and the stock option agreement by which it is evidenced. From and after the Effective DateTime, (i) each Assumed Option may be exercised solely for shares of Parent Common Stock, (ii) the number of shares of Parent Common Stock subject to each such Assumed Option shall be equal to the number of shares of Company Common Stock subject to the Company Option immediately prior to the Effective Time multiplied by the Exchange Ratio, rounding down to the nearest whole share, (iii) the per share exercise price under each Assumed Option shall be adjusted by dividing the per share exercise price under such Company Option by the Exchange Ratio and rounding up to the nearest cent and (iv) any restriction on the exercise of any such Company Option shall continue in full force and effect and the term, exercisability, vesting schedule and other provisions of such Company Option shall otherwise remain unchanged; provided, however, that each Assumed Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, stock dividend, reverse stock split, reclassification, recapitalization or other similar transaction subsequent to the Effective Time. It is the intention of the parties that each Assumed Option shall qualify, immediately after the Effective Time, as incentive stock options under Section 422 of the Code to the same extent those options qualified as such incentive stock options immediately prior to the Effective Time. Within 20 business days after the Effective Time, Parent shall issue to each person who, immediately after the Effective Time, was a holder of an Assumed Option a document in form and substance reasonably satisfactory to the Company evidencing the foregoing assumption of such Company Option by Parent. (b) At Notwithstanding anything to the Effective Timecontrary contained in this Section 5.3, each in lieu of assuming outstanding Company Stock Option issued pursuant Options in accordance with Section 5.3(a), Parent may, at its election, cause such outstanding Company Options to be replaced by issuing substantially equivalent replacement stock options in substitution therefor, which replacement stock options will include equivalent terms relating to acceleration, vesting and the 1999 Option Plan or the Company's 2000 Stock Option Plan effect of a change in control. Nothing in this Section 5.3(b) shall be construed to eliminate any vested right of a holder of any Company Option. (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans"c) that is vested as As of the Effective Time, the exercise price of which is less than the Cash Merger Consideration Company's Employee Stock Purchase Plan shall be canceled and extinguished and terminated. The rights of participants in the Employee Stock Purchase Plan with respect to any offering period then underway under the Employee Stock Purchase Plan shall become be determined by treating the right last business day prior to receive an amount, without interest, in cash paid at the Effective Time equal to as the excess, if any of the Cash Merger Consideration over the exercise price per Share last day of such Company offering period and by making such other pro-rata adjustments as may be necessary to reflect the shortened offering period but otherwise treating such shortened offering period as a fully effective and completed offering period for all purposes under the Employee Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required Purchase Plan. Prior to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration Company shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested take commercially reasonable actions (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excessincluding, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoingappropriate, the right to receive such payments shall vest in accordance with amending the terms of the applicable option agreementEmployee Stock Purchase Plan) that are necessary to give effect to the transactions contemplated by this Section 5.3(c). (d) If Parent agrees that all employees of the Acquired Companies who continue employment with Parent, the Surviving Corporation or any Subsidiary of the Surviving Corporation after the Effective Time ("Continuing Employees") shall be eligible to continue to participate in the Surviving Corporation's health and welfare benefit plans and 401(k) profit-sharing plan; provided, however, that (i) nothing in this Section 5.3(d) or elsewhere in this Agreement shall limit the right of Parent or the Surviving Corporation to amend or terminate any such health or welfare benefit plan or 401(k) profit-sharing plan at any time, and (ii) if Parent or the Surviving Corporation terminates any such health or welfare benefit plan or 401(k) profit-sharing plan, then (upon expiration of any appropriate transition period and subject to the other provisions of Parent's health or welfare benefit plans or 401(k) profit-sharing plan), the Continuing Employees shall be eligible to participate in Parent's health and welfare benefit plans and 401(k) profit-sharing plan, to substantially the same extent required as similarly situated employees of Parent. To the extent permitted by law and the terms of Parent's health and welfare benefit plans and 401(k) profit-sharing plan, Parent will provide each Continuing Employee with full credit for service as an employee of the Company Option PlanAcquired Companies prior to the Effective Time for purposes of eligibility, vesting and determination of the level of benefits under any such health or welfare benefit plan or 401(k) profit-sharing plan of Parent. Nothing in this Section 5.3(d) or elsewhere in this Agreement shall be construed to create a right in any employee to employment with Parent, the Surviving Corporation or any other stock option planSubsidiary of Parent and the employment of each Continuing Employee shall be "at will" employment. (e) The Company agrees to take (or cause to be taken) all actions necessary or appropriate to terminate, programeffective immediately prior to the Effective Time, arrangement or agreement to which the Company or any employee benefit plan sponsored by any of its subsidiaries is the Acquired Companies (or in which any of the Acquired Companies participate) that contains a party cash or deferred arrangement intended to qualify under Section 401(k) of the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisionsCode.

Stock Options. (a) At the Effective Time, each outstanding option to purchase Shares all options granted by the Company (a "Company Stock Option" or collectively "Company Stock Options") issued pursuant to purchase shares of Company Common Stock which are outstanding and unexercised immediately prior thereto shall, at the Company's 1999 Omnibus election to be made by written notice to the Buyer within 30 days of the date hereof, be converted, in their entirety, automatically into either options to purchase shares of Buyer Common Stock Incentive Plan (the "1999 Option Plan"), whether vested or unvested, the in an amount and at an exercise price of which is greater than the Cash Merger Consideration, shall be canceled determined as provided below (and extinguished without consideration and the 1999 Option Plan shall terminate as of the Effective Date. (b) At the Effective Time, each outstanding Company Stock Option issued pursuant otherwise subject to the 1999 Option Plan or terms of the Company's 2000 1986 and 1993 Stock Option and Incentive Plans and the Company's 1997 Directors Stock Option Plan and 1997 Stock Compensation Plan (the "2000 Option Plan" and, together with the 1999 Option Plancollectively, the "Company Option Company's Stock Plans")) that is vested as or shares of the Effective Time, the Buyer Common Stock in an amount and at an exercise price determined as provided below, provided, however, that such conversion does not impair the pooling of which is less than interests accounting treatment: (1) The number of shares of Buyer Common Stock to be subject to the Cash Merger Consideration new options or to the exchange for Company Options shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any product of the Cash Merger Consideration over number of shares of Company Common Stock subject to the original options and the Exchange Ratio, provided that any fractional shares of Buyer Common Stock resulting from such multiplication shall be rounded down to the nearest share; and (2) The exercise price per share of the Company Options if exchanged for shares of Buyer Common Stock, or of Buyer Common Stock under the new options if exchanged for options for Buyer Common Stock shall be equal to the exercise price per Share share of Company Common Stock under the original option divided by the Exchange Ratio, provided that such Company Stock Option, less exercise price shall be rounded up to the amount of Taxes nearest cent. The adjustment provided herein with respect to any options which are "incentive stock options" (as defined in Section 3.15(a422 of the Internal Revenue Code of 1986, as amended (the "Code")) required shall be and is intended to be withheld under applicable Federaleffected in a manner which is consistent with Section 424(a) of the Code. The duration and other terms of the new option shall be the same as the original option, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant except that all references to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments deemed to be paid references to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreementBuyer. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisions.

Stock Options. (a) At the Effective Time, each outstanding option option, warrant or other right to purchase Shares (a "Company Stock Option" or collectively and collectively, "Company Stock Options") issued pursuant to the Company's 1999 Omnibus Stock Incentive Option Plan (the "1999 for Non-Employee Directors and Advisors, 1996 Stock Option Plan"), as amended, 1989 Stock Option Plan, as amended, and 1996 Directors' Stock Option Plan, and all other agreements or arrangements other than the 1996 Employee Stock Purchase Plan, whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled assumed by Parent and extinguished without consideration and the 1999 Option Plan shall terminate converted as of the Effective Date. (b) At Time into an option, warrant or right, as applicable, to purchase shares of Parent Common Stock in accordance with the Effective Time, each outstanding terms of this Section 1.11. All plans or agreements described above pursuant to which any Company Stock Option has been issued pursuant or may be issued other than outstanding warrants or rights are referred to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, collectively as the "Company Plans." Each Company Stock Option Plans") that is vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration so converted shall be canceled deemed to constitute an option to acquire, on the same terms and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of conditions as were applicable under such Company Stock Option, less the amount a number of Taxes (as defined in Section 3.15(a)) required shares of Parent Common Stock equal to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company shares of Parent Common Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at would have been entitled to receive pursuant to the time the Merger had such holder exercised such Company Stock Option would otherwise have vested (provided that such holder is employed with Option, whether or not vested, in full immediately prior to the Company Effective Time rounded down to the nearest whole share at such time and has not breached any a price per share, rounded up to the nearest tenth of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) a cent, equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share pursuant to such Company Stock Option immediately prior to the Effective Time divided by the Exchange Ratio; provided, however, that in the case of any option to which Section 421 of the Code applies by reason of its qualification under Sections 422 through 424 of the Code, the option price, the number of shares purchasable pursuant to such option and the terms and conditions of exercise of such option shall be adjusted as necessary in order to comply with Section 424(a) of the Code. (b) As soon as practicable after the Effective Time, Parent shall deliver to the holders of Company Stock Options appropriate notices setting forth such holders' rights pursuant to the Company Plans and that the agreements evidencing the grants of such Company Stock Options that would otherwise have vested at such timeshall continue in effect on the same terms and conditions (subject to the adjustments required by this Section 1.11 after giving effect to the Merger). Notwithstanding the foregoing, the right to receive such payments Parent shall vest in accordance comply with the terms of the applicable option agreementCompany Plans and ensure, to the extent required by and subject to the provisions of such plans, that Company Stock Options that qualified as incentive stock options prior to the Effective Time continue to qualify as incentive stock options of Parent after the Effective Time. (c) At or before the Effective Time, Parent shall take all corporate action necessary to reserve for issuance a sufficient number of shares of Parent Common Stock for delivery upon exercise of Company Stock Options assumed in accordance with this Section 1.11. Promptly following the Effective Time, and in any event within five business days, Parent shall, if no registration statement is in effect covering such Parent shares, file a registration statement on Form S-8 (or any successor or other appropriate forms) with respect to the shares of Parent Common Stock subject to any Company Stock Options held by all persons with respect to whom registration on Form S-8 is available and shall use all commercially reasonable efforts to maintain the effectiveness of such registration statement or registration statements (and maintain the current status of the prospectus or prospectuses contained therein) for so long as such options remain outstanding. (d) If and to At or before the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunderEffective Time, the Company shall cooperate with Parent and Acquisition cause to be effected, in obtaining a manner reasonably satisfactory to Parent, such amendments, if any, to the consent of each holder of outstanding Company Stock Options Plans that are necessary to give effect to the foregoing treatment provisions of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisionsthis Section 1.11.

Stock Options. (a) At The Company has reserved 990,997 shares of Company Common Stock for issuance under the Effective Time, each outstanding option to purchase Shares (a "Company Stock Option" or collectively "Company Stock Options") issued pursuant to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan"), whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate options with respect to 843,520 shares are outstanding as of the Effective Date. (bdate of this Agreement. Part 2.3(b) At of the Effective TimeDisclosure Schedule accurately sets forth, with respect to each outstanding Company Stock Option issued pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested outstanding as of the Effective Time, date of this Agreement: (i) the exercise price name of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Option; (ii) the total number of shares of Company Common Stock that are subject to such Company Option at and the time number of shares of Company Common Stock with respect to which such Company Option is immediately exercisable; (iii) the date on which such Company Stock Option would otherwise have vested was granted and the term of such Company Option; (provided that iv) the vesting schedule for such holder is employed Company Option and whether the vesting of such Company Option shall be subject to any acceleration in connection with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company Merger or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over other transactions contemplated by this Agreement; (v) the exercise price per Share share of Company Common Stock purchasable under such Company Option; and (vi) whether such Company Option is an “incentive stock option” as defined in Section 422 of the Code. Each grant of a Company Option was duly authorized no later than the date on which the grant of such Company Stock Options that would otherwise have vested at Option was by its terms to be effective (the “Grant Date”) by all necessary corporate action, including, as applicable, approval by the board of directors of the Company (or a duly constituted and authorized committee thereof) and any required stockholder approval by the necessary number of votes or written consents, each such time. Notwithstanding the foregoing, the right to receive such payments shall vest grant was made in accordance with the terms of the applicable option agreement. (d) If compensation plan or arrangement of the Company and all other applicable Legal Requirements, the per share exercise price of each Company Option was equal to the extent required fair market value of a share of Company Common Stock on the applicable Grant Date and each such grant was properly accounted for in accordance with GAAP in the financial statements (including the related notes) of the Company. All options with respect to shares of Company Common Stock that were ever issued by the Company ceased to vest on the date on which the holder thereof ceased to be an employee of or a consultant or service provider to the Company. The exercise of the Company Options and the payment of cash in respect thereof complied and will comply with the applicable terms of the Company Option Plan, or any other stock option planif applicable, programall Contracts applicable to such Company Options and all Legal Requirements and, arrangement or agreement to which as of the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunderClosing, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each no former holder of outstanding a Company Stock Options Option will have any rights with respect to the foregoing treatment of such Company Stock Options Option other than the right to receive the Option Payment to be made in respect thereof as contemplated by Section 1.5 of this Agreement (and to take any other action necessary to effectuate the foregoing provisionsPer Share Common Escrow Proceeds, as and when such disbursements are required, if applicable).

Stock Options. (a) At the Effective Time, each outstanding option to purchase Shares (a "Company Stock Option" or collectively "Company Stock Options") issued pursuant to Each of the Company's 1999 Omnibus Stock Incentive Plan stock option plans (the "1999 Option PlanPlans"), and options to acquire shares of Company Common Stock outstanding on the date hereof, are set forth in Section 3.5(a) of the Company Disclosure Schedule (as defined in Section 5.1). Each Option Plan and all such options which are outstanding immediately prior to the Effective Date, whether vested or unvestedunvested (each, an "Option" and collectively, the exercise price of which is greater than the Cash Merger Consideration"Options"), shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate as of assumed by Parent at the Effective Date, and each such Option shall become an option to purchase a number of shares of Parent Common Stock (a "Substitute Option") equal to the number of shares of Company Common Stock subject to such Option multiplied by the Exchange Ratio (rounded to the nearest whole share). The per share exercise price for each Substitute Option shall be the current exercise price per share of Company Common Stock divided by the Exchange Ratio (rounded up to the nearest full cent), and each Substitute Option otherwise shall be subject to all of the other terms and conditions of the original Option to which it relates. Prior to the Effective Date, the Company shall take such additional actions as are necessary under applicable law and the applicable agreements and Option Plans to ensure that each outstanding Option shall, from and after the Effective Date, represent only the right to purchase, upon exercise, shares of Parent Common Stock. There shall not occur as a result of the Merger any acceleration of vesting or exercisability with respect to any Option, or any lapse of vesting restrictions with respect to any share of restricted stock, other than pursuant to the terms of the original grant agreement, and any such acceleration shall occur without the exercise of discretion by any person or entity. (b) At As soon as reasonably practicable after the Effective TimeDate, each outstanding Company Parent shall cause to be included under a registration statement on Form S-8 of Parent all shares of Parent Common Stock Option issued pursuant which are subject to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" andSubstitute Options, together with the 1999 Option Plan, the "Company Option Plans") that is vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become maintain the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share effectiveness of such Company Stock Optionregistration statement until all Substitute Options have been exercised, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state expired or local laws and regulations multiplied by the number of Shares subject to such Company Stock Optionforfeited. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreement. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisions.

Stock Options. (a) At As soon as practicable following the date of this Agreement, Parent and Company (or, if appropriate, any committee of the board of directors of Company administering the Company Stock Option Plan) shall take such action as may be required to effect the following provisions of this Section 1.8(a). Subject to the provisions of Section 16 of the Exchange Act, as of the Effective Time, Time each outstanding option to purchase Shares Company Common Stock pursuant to the Company Stock Option Plan (a "Company Stock Option" ") that is then outstanding shall be assumed by Parent and converted into an option (or collectively a new substitute option shall be granted) (an "Assumed Stock Option") exercisable for such amount of cash and shares of Parent Company Stock Options") issued pursuant as would have been received in respect of Company Common Stock subject to such Company Stock Option had such Company Stock Option been exercised in full immediately prior to the Company's 1999 Omnibus Effective Time (such that, immediately after the Effective Time, (i) a Company Stock Incentive Plan (Option for one share of Company Common Stock shall be converted into an Assumed Stock Option exercisable for the "1999 Option Plan"), whether vested or unvested, Merger Consideration at the exercise price in effect immediately prior to the Effective Time and (ii) any restriction on the exercise of which is greater than any such Company Stock Option and other provisions of such Company Stock Option in effect at the Cash Merger ConsiderationEffective Time (after taking into account any vesting that may result from the approval or consummation of the Merger) shall otherwise remain unchanged; provided, shall be canceled and extinguished without consideration however, that each Company Option assumed by Parent in accordance with this Section 1.8 (and the 1999 Option Plan shall terminate cash to be received by the holder upon exercise thereof) shall, in accordance with its terms, be subject to further adjustment as of the Effective Dateappropriate to reflect any stock split, stock dividend, reverse stock split, reclassification, recapitalization or other similar transaction. (b) At As soon as practicable after the Effective Time, each outstanding Parent shall deliver to the holders of Company Stock Option issued pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of Options appropriate notices setting forth such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued holders' rights pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which Plan and the Company or any of its subsidiaries is a party that is not vested as of agreements evidencing the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share grants of such Company Stock Options and that would otherwise such Company Stock Options and agreements have vested at such time. Notwithstanding been assumed by Parent and shall continue in effect on the foregoing, the right to receive such payments shall vest same terms and conditions as in accordance with the terms of the applicable option agreement. (d) If and effect immediately prior to the extent required by Effective Time (subject to the provisions of this Section 1.8). Parent shall comply with the terms of the Company Option PlanPlan and ensure, or any other stock option planto the extent required by, program, arrangement or agreement and subject to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunderprovisions of, the Company shall cooperate with Parent and Acquisition in obtaining Option Plan, that the consent of each holder of outstanding Company Stock Options which qualified as qualified stock options prior to the foregoing treatment Effective Time continue to qualify as qualified stock options after the Effective Time. (c) Parent shall take such actions as are reasonably necessary for the assumption of such the Company Option Plan pursuant to this Section 1.8, including the reservation, issuance and using its Reasonable Efforts to provide for the listing of Parent Common Stock as is necessary to effectuate the transactions contemplated by this Section 1.8. Parent shall use its Reasonable Efforts to prepare and file with the SEC a registration statement on Form S-8 or other appropriate form with respect to shares of Parent Common Stock subject to the Assumed Stock Options and to take any other action necessary maintain the effectiveness of such registration statement or registration statements covering such Assumed Stock Options (and maintain the current status of the prospectus or prospectuses contained therein) for so long as such Assumed Stock Options remain outstanding. With respect to effectuate those individuals, if any, who subsequent to the foregoing provisionsEffective Time will be subject to the reporting requirements under Section 16(a) of the Exchange Act, where applicable, Parent shall use all Reasonable Efforts to administer the Company Option Plans assumed pursuant to this Section 1.8 in a manner that complies with Rule 16b-3 promulgated under the Exchange Act to the extent the Company Option Plan complied with such rule prior to the Merger.

Stock Options. (a) The Parent Corporation and the Company will take all necessary actions to cause each option to purchase shares of Company Common Stock (a "Stock Option") granted under any stock option plan, program, agreement or arrangement of the Company or any of its Subsidiaries (collectively, the "Stock Plans") which is outstanding and unexercised immediately prior to the Effective Time to be converted at the Effective Time into an option to purchase the same number of shares of Parent Common Stock that could have been obtained upon the exercise of such Stock Option immediately prior to the Effective Time and the conversion and exchange of the shares of Company Common Stock issued upon such exercise for shares of Parent Common Stock as provided in Section 1.8(a). The exercise price per share applicable to each such converted stock option will be the same as was applicable to such Stock Option immediately prior to the Effective Time (subject to adjustment pursuant to the last sentence of Section 1.8(a)). Upon and following the conversion of the Stock Options pursuant to this Section 1.9(a), each converted stock option will be subject to the same terms and conditions as in effect immediately prior to the Effective Time; provided that (i) if a form of agreement evidencing the Stock Option provides for acceleration of vesting of the Stock Option upon the Merger, the converted stock option will be so vested following the Merger and (ii) consistent with the forms of stockholder's agreements in use by the Company prior to the date hereof, upon exercise of any converted stock option, there will be no obligation that the holder thereof execute a stockholder's agreement. (b) The Company and the Parent Corporation acknowledge that, consistent with the terms of such stockholder's agreements, any stockholder's agreement entered into prior to the Effective Time by reason of the exercise of a Stock Option or otherwise will cease to be of any force or effect upon and following the Effective Time. (c) The Parent Corporation will take all corporate action necessary to reserve for issuance a sufficient number of shares of Parent Common Stock for delivery upon exercise of all of the Stock Options converted into options to purchase Parent Common Stock pursuant to Section 1.9(a). Not later than one day following the Effective Time, the Parent Corporation will file a registration statement on Form S-8 (or any successor or other appropriate form) with respect to the shares of Parent Common Stock subject to the converted stock options and will deliver prospectuses to the holders of such stock options. Following the Effective Time, the Parent Corporation will use all reasonable efforts to maintain the effectiveness of the foregoing registration statement (and maintain the current status of the prospectus or prospectuses contained therein) for so long as any of the converted stock options remain outstanding and unexercised. (d) At the Effective Time, each outstanding option to purchase Shares (a "the Parent Corporation will assume the obligations of the Company under the Stock Option" or collectively "Company Plans as in effect at the Effective Time. No additional Stock Options") issued Options will be granted pursuant to the Company's 1999 Omnibus Stock Incentive Plan Plans after the Effective Time. (e) The Board of Directors or Compensation Committee of the Company and the Parent Corporation will each grant all approvals and take all other actions required pursuant to Rules 16b-3(d) and 16b-3(e) under the Securities Exchange Act of 1934, as amended (together with the rules and regulations of the SEC thereunder, the "1999 Option PlanSecurities Exchange Act"), whether vested or unvested, to cause the exercise price disposition in the Merger of which is greater than the Cash Merger Consideration, shall be canceled Company Common Stock and extinguished without consideration and the 1999 Option Plan shall terminate as of the Effective Date. (b) At the Effective Time, each outstanding Company Stock Option issued pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreement. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and the acquisition in the Merger of Parent Common Stock and options to take any other action necessary acquire Parent Common Stock to effectuate be exempt from the foregoing provisionsprovisions of Section 16(b) of the Securities Exchange Act.

Stock Options. (a) At the Effective Time, each outstanding option Prior to purchase Shares (a "Company Stock Option" or collectively "Company Stock Options") issued pursuant to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan"), whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate as of the Effective Date. (b) At the Effective Time, each outstanding Company Stock Option issued pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as of the Effective Time, the exercise price Board of which is less than Directors of the Cash Merger Consideration Company (the “Company Board”) (or, if appropriate, any committee thereof) shall be canceled take all actions necessary and extinguished and shall become the right appropriate to receive an amountprovide that, without interest, in cash paid at the Effective Time Time, all unexercised and unexpired options to purchase Company Common Stock (“Company Options”) then outstanding, under any stock option plan of the Company or any other plan, agreement or arrangement (the “Company Stock Option Plans”), whether or not then exercisable, will be assumed by Parent and, as so assumed, will continue to have, and be subject to, the same terms and conditions (including vesting schedule) as set forth in the Company Stock Option Plan and any agreements thereunder immediately prior to the Effective Time, except that (a) each Company Option will be exercisable (or will become exercisable in accordance with its terms) for that number of whole shares of Parent Common Stock equal to the excess, if any product of the Cash Merger Consideration over number of shares of Company Common Stock that were issuable upon exercise of such Company Option immediately prior to the Effective Time multiplied by the Exchange Ratio, rounded down to the nearest whole number of shares of Parent Common Stock, (b) the per share exercise price for the shares of Parent Common Stock issuable upon exercise of such assumed Company Option will be equal to the quotient determined by dividing the exercise price per Share share of Company Common Stock at which such Company Stock Option, less Option was exercisable immediately prior to the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied Effective Time by the number of Shares subject Exchange Ratio, rounded to such Company Stock Option. the nearest whole cent, and (c) At the Effective Time, each outstanding such assumed Company Stock Option issued pursuant will be eligible to participate in any “cashless exercise” or “same day sale” program to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid extent made available to the holder holders of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Parent Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreement. (d) If and to the extent required by consistent with the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms agreements. The conversion of any Company Options which are incentive stock options within the meaning of Section 422 of the Code, into options to purchase Parent Common Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options be made so as not to the foregoing treatment constitute a “modification” of such Company Stock Options and to take any other action necessary to effectuate within the foregoing provisionsmeaning of Section 424 of the Code.

Stock Options. Contemporaneous with the commencement of the Offer, the Company shall request each holder of Company Employee Stock Options (awhether or not such Company Employee Stock Options are vested as of the date of this Agreement) At to execute and deliver to the Effective TimeCompany, each outstanding option prior to purchase Shares the expiration of the Offer, an agreement in the form specified by Parent (a an "Company Stock Option" or collectively "Company Stock OptionsOption Election") under which such holder would agree, contingent upon the purchase of shares of Company Common Stock by Sub in the Offer, to cause, with effect as of immediately prior to the expiration of the Offer, such Option to be exercised and the shares of Company Common Stock issued as a result of that exercise to be tendered in the Offer. To the extent permitted by law, the Company shall advance to each holder of Company Employee Stock Options who executes and delivers a valid Option Election the funds necessary for the exercise of such Company Employee Stock Options and the funds so advanced shall be deducted from the amount payable to such holder pursuant to the Offer. The Company's 1999 Omnibus Stock Incentive Plan (, Parent and Sub shall take such further actions as may be necessary to accommodate such advancement of funds, exercise, issuance, tender and payment with respect to each such valid Option Election. Prior to the "1999 Option Plan"), whether vested or unvestedcommencement of the Offer, the exercise price Company Board shall adopt such resolutions or take such other actions as are required to elect the treatment of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate as Company Employee Stock Options described in Section 16(a)(y) of the Effective Date. (b) At the Effective Time, each outstanding Company Stock Option issued pursuant to the 1999 Option Plan or the Company's 2000 1985 Stock Option Plan (and Section 12(a)(y) of the "2000 Option Company's Equity Incentive Plan" and, together and pursuant to such Company Board action, shall cause the Company to deliver, contemporaneously with the 1999 delivery to each holder of Company Employee Stock Options of the request to execute and deliver an Option PlanElection as described above, a notice specifying that the "Company Option Plans"Employee Stock Options must be exercised no later than the later to occur of the twentieth (20th) Business Day following the commencement of the Offer, or the date of the final expiration of the Offer; and further specifying that is vested if such Company Employee Stock Options are not exercised by such date, they shall be terminated as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration . All amounts payable pursuant to this Section 7.04 shall be canceled and extinguished subject to any required withholding of Taxes and shall become the right to receive an amount, be paid without interest, in cash paid at the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreement. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisions.

Stock Options. (a) At the Effective Time, each outstanding option to purchase Company Shares (each, a "Company Stock Option" or collectively "Company Stock Options") issued pursuant to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option PlanCOMPANY STOCK OPTION"), whether vested or unvestednot granted under the Company Option Plans, the exercise price of which is greater than the Cash Merger Considerationwhether or not vested, shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate as by virtue of the Effective Date. (b) At the Effective Time, each outstanding Merger be assumed by Parent. Each Company Stock Option issued pursuant so assumed by Parent under this Agreement will continue to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" andhave, together with the 1999 Option Planand be subject to, the "Company Option Plans") that is vested as same terms and conditions of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right such options immediately prior to receive an amount, without interest, in cash paid at the Effective Time (including, without limitation, any repurchase rights or vesting provisions and provisions regarding the acceleration of vesting on certain transactions), except that (i) each Company Stock Option will be exercisable (or will become exercisable in accordance with its terms) for that number of whole shares of Parent Common Stock equal to the excess, if any product of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Company Shares subject to such Company Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the were issuable upon exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at immediately prior to the time Effective Time multiplied by the Exchange Ratio, rounded down to the nearest whole number of shares of Parent Common Stock and (ii) the per share exercise price for the shares of Parent Common Stock issuable upon exercise of such assumed Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash will be equal to the excess, if any of the Cash Merger Consideration over quotient determined by dividing the exercise price per Company Share of at which such Company Stock Options that would otherwise have vested at such timeOption was exercisable immediately prior to the Effective Time by the Exchange Ratio, rounded up to the nearest whole cent. Notwithstanding the foregoing, the right to receive such payments Parent shall vest in accordance comply with the terms of the applicable option agreement. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of all such Company Stock Options and use its best efforts to ensure, to the extent required by, and subject to the provisions of, the Company Option Plans and permitted under the Code or other relevant laws and regulations that any Company Stock Options that qualified for tax treatment under Section 424(b) of the Code prior to the Effective Time and that any Company Stock Options that qualified for tax treatment under Section 102 of the Israel Tax Ordinance prior to the Effective Time continue to so qualify after the Effective Time. Parent shall take any other action all corporate actions necessary to effectuate reserve for issuance a sufficient number of shares of Parent Common Stock for delivery upon exercise of all Company Stock Options on the foregoing provisionsterms set forth in this Section 5.11(a).

Stock Options. (a) At Each of the Company's stock option plans (the "Option Plans"), each of which is set forth in Section 3.6 of the disclosure schedule delivered by the Company to Parent in connection with this Agreement (the "Company Disclosure Schedule"), and each option to acquire shares of Company Stock outstanding immediately prior to the Effective Time thereunder, whether vested or unvested (each, an "Option" and collectively, the "Options"), shall be assumed by Parent at the Effective Time, and each outstanding such Option shall become an option, to purchase, on the same terms and condition as were applicable under the Option Plan and the underlying option to purchase Shares agreements, a number of shares of Parent Common Stock (a "Substitute Option") equal to the number of shares of Company Stock Option" or collectively "subject to such Option multiplied by the Exchange Ratio (rounded up to the nearest whole share). The per share exercise price for each Substitute Option shall be the current exercise price per share of Company Stock Options") issued pursuant divided by the Exchange Ratio (rounded up to the Company's 1999 Omnibus Stock Incentive Plan nearest full cent), and each Substitute Option otherwise shall be subject to all of the other terms and conditions of the original option to which it relates, provided, however, that in the case of any option to which Section 421 of the Internal Revenue Code of 1986, as amended (the "1999 Option PlanCode"), whether vested or unvested) applies by reason of its qualification under Section 422 of the Code, the option price, the number of shares purchasable pursuant to such option and the terms and conditions of exercise price of which is greater than the Cash Merger Consideration, such option shall be canceled determined in order to comply with Section 424 (a) of the Code. Parent acknowledges that the consummation of the Merger will constitute a "Terminating Event" (as defined in the Option Plans) or similar event with respect to the options listed on Section 3.6 of the Company Disclosure Schedule, and extinguished without consideration that the vesting of such options shall therefore become accelerated as a result of the Merger. Prior to the Effective Time, the Company shall take such additional actions as are necessary under applicable law and the 1999 applicable agreements and Option Plan shall terminate as of Plans to ensure that each outstanding Option shall, from and after the Effective DateTime, represent only the right to purchase, upon exercise, shares of Parent Common Stock. (b) At As soon as practicable after the Effective Time, each outstanding Parent shall deliver to the holders of Company Stock Option issued Options appropriate notices setting forth such holders' rights pursuant to the 1999 applicable Option Plan or Plans and the Company's 2000 Stock Option Plan (agreements pursuant to which such Options were issued and the "2000 Option Plan" and, together agreements evidencing the grants of such Options shall continue in effect on the same terms and conditions as specified with the 1999 Option Plan, the "Company Option Plans") that is vested respect to such Options as of the Effective TimeTime in the applicable Option Plan governing such Option (subject to the adjustments and amendments required by this Section 3.6, and after giving effect to the exercise price Merger and the conversion set forth above). It is the intention of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become parties that, subject to applicable law, each Option that qualified as an incentive stock option under Section 422 of the right Code prior to receive an amount, without interest, in cash paid at the Effective Time equal shall continue to qualify as an incentive stock option of Parent after the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock OptionEffective Time. (c) At Parent shall take all corporate action necessary to reserve for issuance and have available for delivery a sufficient number of shares of Parent Common Stock to be delivered upon exercise, vesting or payments, as applicable, of the Effective Time, each outstanding Company Stock Option issued pursuant to Options converted in accordance with this Section 3.6 or upon the exercise of the warrants set forth on Section 5.2 of the Company Option Plans or any other stock option plan, program, arrangement or agreement to Disclosure Schedule (which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration obligation shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest assumed by Parent in accordance with the terms of the applicable option agreement. warrants). As soon as practicable after the Effective Time, Parent shall file a registration statement on Form S-8 (dor any successor or other appropriate form) If and with respect to the delivery of such shares of Parent Common Stock, to the extent such registration statement is required by under applicable law so as to permit resale of such shares, and the terms Parent shall use its reasonable best efforts to maintain the effectiveness of such registration statement or registration statements (and maintain the current status of the Company Option Plan, prospectus or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent prospectuses contained therein) for so long as such benefits and Acquisition in obtaining the consent of each holder of outstanding Company Stock grants remain payable and such Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisionsremain outstanding.

Stock Options. (a) At the Effective Time, each outstanding option to purchase Shares (a "Company Stock Option" or collectively "Company Stock Options") issued pursuant to Each of the Company's 1999 Omnibus Stock Incentive Plan stock option plans, each of which is set forth in Section 3.5(a) of the Company Disclosure Schedule (as defined in Section 5.1) (the "1999 Option PlanPlans"), and each option to acquire shares of Common Stock outstanding immediately prior to the Effective Date thereunder, whether vested or unvestedunvested (each, an "Option" and collectively, the "Options"), shall be assumed by the Parent at the Effective Date, and each such Option shall become an option to purchase a number of shares of Parent Common Stock (a "Substitute Option") (rounded to the nearest whole share, with 0.5 shares being rounded up) equal to the number of shares of Company Common Stock subject to such Option multiplied by the Option Exchange Ratio (as defined below). The per share exercise price for each Substitute Option shall be the current exercise price per share of Company Common Stock divided by the Option Exchange Ratio (rounded up to the nearest full cent), and each Substitute Option otherwise shall after the Effective Date be subject to all of the other terms and conditions of the original Option to which it relates (including, without limitation, all provisions relating to acceleration of vesting). Prior to the Effective Date, the Company shall take such additional actions as are necessary under applicable law and the applicable agreements and Option Plans to ensure that each outstanding Option shall, from and after the Effective Date, represent only the right to purchase, upon exercise, shares of Parent Common Stock. Except as set forth in Section 3.5(a) of the Company Disclosure Schedule, the vesting of no Option shall be accelerated by reason of the Merger unless the agreement or arrangement under which it was granted or by which it is otherwise governed specifically provides for such acceleration. For avoidance of doubt, it is the intention of Parent and the Company that the Substitute Options be identical in all respects to the Options (except for the number and type of shares for which they shall be exercisable and the exercise price thereof) and that, without limitation, (i) all terms of the plans under which is greater than such Options were issued and (ii) all policies set forth in Sections 3.5 and 5.8 of the Cash Merger ConsiderationCompany Disclosure Schedule, shall be canceled apply thereto from and extinguished without consideration and the 1999 Option Plan shall terminate as of after the Effective Date. (b) At For purposes of this Amended and Restated Agreement, the term "Option Exchange Ratio" shall mean the ratio of (x) $20.50 to (y) the average of the closing prices per share of the Parent Common Stock on the New York Stock Exchange, as reported in the Wall Street Journal, for each of the ten trading days immediately preceding the Effective Time, each outstanding Company Stock Option issued pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock OptionDate. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreement. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisions.

Stock Options. (a) At the Effective Time, each outstanding Each option to purchase Shares shares of Company Common Stock (a "“Company Stock Option" ”) granted under any stock option or collectively "compensation plan or arrangement of the Company Stock Options") issued pursuant to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan"“Stock Plans”), whether vested or unvested, that is outstanding immediately prior to the Effective Time shall, at the Effective Time, cease to represent a right to acquire shares of Company Common Stock and shall, at the Effective Time, be assumed by Parent and converted into an option to purchase shares of Parent Common Stock (a “Parent Option”) on the same terms and conditions as were applicable under such Company Option and the relevant Stock Plan. The number of shares of Parent Common Stock subject to each such Parent Option shall be the number of shares of Company Common Stock subject to each such Company Option immediately prior to the Effective Time multiplied by the Exchange Ratio, rounded up, if necessary, to the nearest whole share of Parent Common Stock, and such Parent Option shall have an exercise price per share (rounded to the nearest cent) equal to the per share exercise price specified in such Company Option divided by the Exchange Ratio; provided, however, that, in the case of any Company Option to which Section 421 of the Code applies immediately prior to the Effective Time by reason of its qualification under Section 422 of the Code, the exercise price price, the number of which is greater than shares of Parent Common Stock subject to such option and the Cash Merger Consideration, terms and conditions of exercise of such option shall be canceled and extinguished without consideration and determined in a manner consistent with the 1999 Option Plan shall terminate as requirements of Section 424(a) of the Effective DateCode. (b) At As soon as practicable after the Effective Time, each outstanding Parent shall deliver to the holders of Company Stock Option issued Options appropriate notices setting forth such holder’s rights pursuant to this Agreement and the 1999 Option Plan or respective Stock Plans and agreements evidencing the Company's 2000 grants of such Company Options and stating that such Stock Option Plan Plans, Company Options and agreements have been assumed by Parent and shall continue in effect on the same terms and conditions (subject to the "2000 Option Plan" and, together with adjustments required by this Section 2.4 after giving effect to the 1999 Option Plan, Merger and the "Company Option terms of the Stock Plans"). (c) that is vested as of Prior to the Effective Time, the exercise price Company shall take all necessary action to provide for the assumption and conversion of which is less than all Company Options as contemplated by this Section 2.4. Parent shall reserve for issuance a number of shares of Parent Common Stock at least equal to the Cash Merger Consideration shall number of shares of Parent Common Stock that will be canceled and extinguished and shall become subject to Parent Options as a result of the right to receive an amount, without interest, in cash paid at assumption by Parent of Company Options as contemplated by this Section 2.4. As soon as practicable following the Effective Time equal (and in any event not later than two Business Days following the Effective Time), Parent shall file a registration statement on Form S-8 (or any successor form, or if Form S-8 is not available, other appropriate forms) with respect to the excess, if any shares of the Cash Merger Consideration over the exercise price per Share of such Company Parent Common Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. Parent Options and shall maintain the effectiveness of such registration statement or registration statements (c) At and maintain the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as current status of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration prospectus or prospectuses contained therein) for certain compensatory payments to be paid to the holder of so long as such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Parent Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreementremain outstanding. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisions.

Stock Options. (a) At On or prior to the Reverse Split, Oryx will take all action necessary such that each Oryx Stock Option (as defined in Section 3.2(b)) that was granted pursuant to the Oryx Stock Option Plans (as defined in Section 3.2(b)) prior to the Reverse Split and which remains outstanding immediately prior to the Effective Time shall cease to represent a right to acquire shares of Oryx Common Stock and shall be converted, at the Effective Time, each outstanding into an option to purchase Shares (a "Company acquire, on the same terms and conditions as were applicable under the Oryx Stock Option" or collectively ", that number of shares of Company Common Stock Options") issued pursuant determined by multiplying the number of shares of Oryx Common Stock subject to such Oryx Stock Option by the Exchange Ratio, rounded, if necessary, to the Company's 1999 Omnibus nearest whole share of Company Common Stock, at a price per share (rounded to the nearest one-hundredth of a cent) equal to the per share exercise price specified in such Oryx Stock Incentive Plan (Option divided by the "1999 Exchange Ratio; provided, however, that in the case of any Oryx Stock Option Plan"), whether vested or unvestedto which Section 421 of the Code applies by reason of its qualification under Section 422 of the Code, the option price, the number of shares subject to such option and the terms and conditions of exercise price of which is greater than the Cash Merger Consideration, such option shall be canceled and extinguished without consideration determined in a manner consistent with the requirements of Section 424(a) of the Code. On or prior to the Reverse Split, Oryx will amend the Oryx Stock Options and the 1999 Oryx Stock Option Plan shall terminate as Plans to give effect to this Section 1.10 and Section 5.5 and to make such changes in phraseology and form to give effect to the Reverse Split and the Merger and to the substitution of the Effective DateSurviving Corporation for Oryx and Company Common Stock for Oryx Common Stock. (b) At the Effective Time, each outstanding Company Stock Option issued pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested As soon as of practicable after the Effective Time, the exercise price Surviving Corporation shall deliver to the holders of which is less than Oryx Stock Options appropriate notices setting forth such holders' rights pursuant to the Cash Oryx Stock Option Plans (including, as applicable, that, by virtue of the Merger Consideration and pursuant to the terms of the Oryx Stock Option Plans, the Oryx Stock Options have become fully vested and exercisable) and the agreements evidencing the grants of such Oryx Stock Options shall be canceled continue in effect on the same terms and extinguished conditions (subject to the adjustments required by this Section 1.10 after giving effect to the Reverse Split and the Merger and the terms of the Oryx Stock Option Plans). To the extent permitted by law, the Surviving Corporation shall comply with the terms of the Oryx Stock Option Plans and shall become take such reasonable steps as are necessary or required by, and subject to the right provisions of, such Oryx Stock Option Plans, to receive an amount, without interest, in cash paid at have the Oryx Stock Options which qualified as incentive stock options prior to the Effective Time equal continue to the excess, if any qualify as incentive stock options of the Cash Merger Consideration over Surviving Corporation after the exercise price per Share of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock OptionEffective Time. (c) At the Effective Time, each outstanding The Surviving Corporation shall take all corporate action necessary to reserve for issuance a sufficient number of shares of Company Common Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any for delivery upon exercise of its subsidiaries is a party that is not vested as of Oryx Stock Options in accordance with this Section 1.10. Promptly after the Effective Time, the exercise price of which is less than Surviving Corporation shall file a registration statement on Form S-3 or Form S-8, as the Cash Merger Consideration shall case may be canceled and extinguished in consideration for certain compensatory payments to be paid (or any successor or other appropriate forms), with respect to the holder shares of Company Common Stock subject to such options and shall use commercially reasonable efforts to maintain the effectiveness of such Company Stock Option at registration statement or registration statements (and maintain the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any current status of the Cash Merger Consideration over the exercise price per Share of prospectus or prospectuses contained therein) for so long as such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreementoptions remain outstanding. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisions.

Stock Options. (a) At the Effective Time, all rights with respect to Company Common Stock under each Company Option then outstanding shall be converted into and become rights with respect to Parent Common Stock, and Parent shall assume each such Company Option in accordance with the terms (as in effect as of the date of this Agreement) of the stock option plan under which it was issued and the stock option agreement by which it is evidenced. From and after the Effective Time, (i) each Company Option assumed by Parent may be exercised solely for shares of Parent Common Stock, (ii) the number of shares of Parent Common Stock subject to purchase Shares (a "each such Company Stock Option" or collectively "Company Stock Options") issued pursuant Option shall be equal to the Company's 1999 Omnibus number of shares of Company Common Stock Incentive Plan subject to such Company Option immediately prior to the Effective Time multiplied by the Exchange Ratio, rounding down to the nearest whole share (with cash, less the "1999 Option Plan"applicable exercise price, being payable for any fraction of a share), whether vested or unvested, (iii) the per share exercise price under each such Company Option shall be adjusted by dividing the per share exercise price under such Company Option by the Exchange Ratio and rounding up to the nearest cent and (iv) any restriction on the exercise price of which is greater than the Cash Merger Consideration, any such Company Option shall be canceled continue in full force and extinguished without consideration effect and the 1999 term, exercisability, vesting schedule and other provisions of such Company Option Plan shall terminate otherwise remain unchanged; provided, however, that each Company Option assumed by Parent in accordance with this Section 5.5(a) shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, stock dividend, reverse stock split, reclassification, recapitalization or other similar transaction subsequent to the Effective Time. It is the intention of the parties that Company Options assumed by Purchaser qualify following the Effective Time as incentive stock options as defined in Section 422 of the Code to the extent such Company Options qualified as incentive stock options immediately prior to the Effective Date. (b) At The Company shall take all action that, subject to pooling restrictions, may be necessary (under the Effective Time, each outstanding Company Stock Option issued plans pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" which Company Options are outstanding and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreement. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisions.

Stock Options. The Company shall establish an incentive stock option plan for the executives, employees and directors of the Company (a) At the Effective Time"Plan"). The participants in the Plan shall be entitled to purchase, each outstanding option to purchase Shares (a "Company Stock Option" or collectively "Company Stock Options") issued pursuant to the options to be granted thereunder (which may be "incentive stock options" within the meaning of Section 422(b) of the Internal Revenue Code, or non-incentive stock options) an aggregate number of shares of the Company's common stock, one-third cent par value (the "Common Stock"), as shall be equal to approximately 20% of the total number of shares of Common Stock which shall be issued and outstanding upon consummation of the stock purchase agreement dated of as May 3, 1999 Omnibus between the Company and the Executive (the "post-agreement issued and outstanding shares"). As soon as practically possible after the Plan has been authorized by the Company's shareholders, the Company shall register the Common Stock Incentive to be issued upon exercise of the options to be granted thereunder for sale by the Company, and for resale by holders thereof, pursuant to the Securities Act of 1933, as amended. The Executive, together with the Company's new Vice President - Sales and Marketing, ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, and such other executives as shall be hired by the Company during the term of this Agreement upon the advice of the Executive, shall be entitled to purchase, pursuant to the options to be granted under the Plan an aggregate number of shares of Common Stock as shall be equal to 10% of the total number of post-agreement issued and outstanding shares. The exercise price for each of such options shall be $1.00 per share. The vesting of such options shall occur at the rate of 25% per annum at the end of each Review Period during the Employment Period, and the exercise of all vested options shall be conditioned upon the achievement of a set of pre-determined earnings, revenue and other performance targets to be formulated mutually by the Executive and the Board or the committee administering the Plan (the "1999 Option PlanPerformance Targets"). The term of such options shall be the 51 month period commencing on the date of commencement of the Employment Period. The Plan and such options shall provide that, whether upon the death, disability or termination of employment of the Executive other than "for cause," all options which shall then have vested, or which would have vested or unvested, if such event had occurred on the exercise price last day of which is greater than the Cash Merger Considerationthen current Review Period, shall be canceled exercisable by the Executive, or by the person or persons to whom such options shall pass by will or by the laws of descent and extinguished without consideration and distribution, as the 1999 Option Plan case may be, during the six month period following the date of occurrence of such event, provided, that, all applicable conditions to the exercise of such options shall terminate as have been satisfied on or before the date of the Effective Date. (b) At the Effective Time, each outstanding Company Stock Option issued exercise thereof. Each option granted pursuant to the 1999 Option Plan shall also contain such other terms, limitations and conditions as the Board or the committee administering the Plan shall deem appropriate pursuant to the provisions of the Plan. In the event that the Company's 2000 Stock Option Plan (shareholders fail to authorize the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested options to be granted hereunder shall be issued as non-Plan options in accordance with, and subject to all of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled foregoing terms and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Optionconditions. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreement. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisions.

Stock Options. (a) At the Effective Time, each outstanding option or other right to purchase Shares shares of Company Common Stock pursuant to stock options (a "Company Stock Option" or collectively "Company Stock Options") issued pursuant to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option PlanCOMPANY OPTION"), whether vested or unvested, granted by the exercise price of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration and Company under the 1999 Option Plan shall terminate as of the Effective Date. (b) At the Effective Time, each outstanding Company Stock Option issued pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option PlansCOMPANY OPTION PLAN") that or any other plan or agreement, which is vested as of outstanding at the Effective Time, whether or not exercisable, shall be assumed by Parent and become rights with respect to Parent Stock ("PARENT OPTIONS"), the exercise price of Company Option Plan or any such other plan or agreement which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid outstanding at the Effective Time equal to the excessshall be assumed by Parent, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock and Parent shall assume each Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable Option Plan and stock option agreement. agreement by which it is evidenced, except that from and after the Effective Time, (di) If Parent and its Compensation Committee shall be substituted for the Company and the Committee of the Company's Board of Directors (including, if applicable, the entire Board of Directors of the Company) administering such Option Plan, (ii) each Option assumed by Parent may be exercised solely for shares of Parent Stock, (iii) the number of shares of Parent Stock subject to such Option shall be equal to the extent required number of Company Shares subject to such Option immediately prior to the Effective Time multiplied by the terms Conversion Ratio, (iv) the per share exercise price under each such Option shall be adjusted by dividing the per share exercise price under each such Option by the Conversion Ratio and rounding up any fraction of a cent to the nearest cent and (v) all Parent Options resulting from the assumption of the Company Option Plan pursuant to this Section 3.10 shall be fully exercisable to the extent set forth in the applicable Company Option or Company Option Plan or as stipulated by the Company's Board of Directors pursuant to the applicable Company Option Plan. Notwithstanding the provisions of clause (iii) of the preceding sentence, or Parent shall not be obligated to assume option obligations with respect to any other stock option plan, program, arrangement or agreement fraction of a share of Parent Stock upon exercise of a Parent Option and any fraction of a share of Parent Stock that otherwise would be subject to which a Parent Option shall represent the right to receive a cash payment upon exercise of such Parent Option equal to the product of such fraction and the difference between the market value of one share of Parent Stock at the time of exercise and the per share exercise price of such Option. Each of the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with and Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and agrees to take any other action all necessary steps to effectuate the foregoing provisionsprovisions of this Section 3.10, including using its reasonable efforts to obtain from each holder of an Option any consent or contract that may be deemed necessary or advisable in order to effect the transactions contemplated by this Section 3.10.

Stock Options. (a) At As part of the Effective Timeconsideration to be paid to Executive for his services hereunder, each outstanding option Executive shall be eligible to purchase Shares (a "Company Stock Option" or collectively "Company Stock Options") issued pursuant to participate in any stock incentive plan adopted by the Company's 1999 Omnibus Stock Incentive Plan Corporation (the "1999 Option Plan"), whether vested or unvested, the exercise price of ) for which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate as of the Effective Datean executive level employee may participate. (b) At The Corporation hereby agrees that it shall cause to be filed with the Effective TimeSecurities and Exchange Commission a registration statement on Form S-8 (or equivalent form as may be in effect at such time) with respect to all options theretofore granted to Executive under the Plan. The Corporation covenants that it will keep such registration statement current until Executive is no longer employed by the Corporation; provided, each outstanding Company Stock Option issued however, that if Executive's employment is -------- ------- terminated hereunder other than pursuant to Sections 7(a), 7(b) or 7(d), then Executive shall have until 90 days following the termination of his employment to exercise any such vested options which he owned at the time of such termination, and the Corporation shall maintain the effectiveness of such registration statement for such period. The Corporation also hereby agrees that, for so long as either the Corporation does not have an effective registration statement on Form S-8 or the Corporation has an effective registration statement on Form S-8 but Executive is restricted in his ability to resell shares acquired pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as exercise of options because of the Effective Timeprovisions of General Instruction C.2(b) to Form S-8, the exercise price of which is less than the Cash Merger Consideration Executive shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal have "piggyback" registration rights with respect to the excess, if any of options granted to Executive under the Cash Merger Consideration over Plan and the exercise price per Share of shares underlying such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Optionoptions. (c) At the Effective Time, each outstanding Company Stock Option issued As an incentive to enter into this Agreement and pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreement. Stock Purchase Agreement dated as of January 2, 1997 (dthe "Stock Purchase Agreement") If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement pursuant to which the Company or any Corporation acquired the capital stock of its subsidiaries is BETA, the Corporation, immediately upon the execution and delivery of this Agreement, shall deliver to Executive a party or the terms of any Company Stock Option granted thereunderAgreement pursuant to its Amended and Restated 1991 Stock Option Incentive Plan, granting to Executive options for 125,000 shares of the Company shall cooperate with Parent and Acquisition in obtaining common stock of the consent Corporation at fair market value as of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisionsdate hereof, exercisable over a five year period.

Stock Options. (a) At 12.1 Upon the Effective Timetermination of the Executive without Cause under Section 9.1, each outstanding option to purchase Shares (a "Company Stock Option" or collectively "Company Stock Options") issued for Cause under Section 9.3, or if the Executive terminates this Agreement pursuant to Section 10.1, only those stock options and other incentive interests held by the Company's 1999 Omnibus Stock Incentive Plan Executive (including, for the "1999 Option Plan")purposes hereof, whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled those stock options and extinguished without consideration and the 1999 Option Plan shall terminate as of the Effective Date. (b) At the Effective Time, each outstanding Company Stock Option issued pursuant other incentive interests granted to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans"Executive by a Related Corporation) that is vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have are vested at such time. Notwithstanding Termination Date may be exercised by the foregoing, the right to receive such payments shall vest Executive in accordance with the terms of the applicable relevant agreement, stock option agreement. (d) If plan or other incentive plans of the Corporation in effect at the time, as applicable, and the Executive shall have no claim to the extent required by acceleration of vesting or the exercise on any stock options and other incentive interests which are not fully vested as at such Termination Date other than under the terms of the Company Option Planrelevant agreement, stock option plan or other incentive plans of the Corporation in effect at the time, as applicable. All such remaining unvested stock options and other incentive interests shall terminate, be null and void and of no further force and effect. 12.2 Upon termination of the Executive by reason of death or Permanent Disability, only those stock options and other incentive interests held by the Executive (including, for the purposes hereof, those stock options and other incentive interests granted to the Executive by a Related Corporation) which are vested at such Termination Date may be exercised by the Executive pursuant to the terms of the relevant agreement, stock option plan or other incentive plans of the Corporation in effect at the time, as applicable, and the Executive shall have no claim to the acceleration of vesting or to the exercise of any stock options which are not fully vested as at such Termination Date, other than under the terms of the relevant agreement, stock option plan or other incentive plans of the Corporation in effect at the time, as applicable. All such remaining unvested stock options and other incentive interests shall terminate, be null and void and of no further force and effect notwithstanding the terms of the relevant agreement, stock option plan or other incentive plans of the Corporation in effect at the time, as applicable. 12.3 Notwithstanding subsections 12.1 and 12.2 hereof, the provisions of the Corporation's stock option plan, programthe Parties agree that upon termination of the Executive pursuant to Sections 9.1, arrangement 10.2, 11.1 or 11.2 hereof, the provisions of the applicable stock option agreement to which supersede and shall govern in the Company or event of any of its subsidiaries is a party or conflict with the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisionsthis Agreement.

Stock Options. (a) At the Effective Time, each option granted by the Company to purchase shares of Company Common Stock, other than options granted under the ESPP (as defined in Section 4.2) (each a "Company Option"), which is outstanding and unexercised immediately prior thereto shall cease to represent a right to acquire shares of Company Common Stock and shall be converted automatically into a fully-vested option to purchase Shares shares of Parent Common Stock in an amount and at an exercise price determined as provided below (a "Company Stock Option" or collectively "Company Stock Options") issued pursuant and otherwise subject to the terms of the Company's 1999 Omnibus 1995 Nonstatutory Stock Incentive Plan Option Plan, as amended (the "1999 Company Option Plan"), whether vested or unvestedthe agreements evidencing grants thereunder and any other agreements between the Company and an optionee regarding Company Options): (1) the number of shares of Parent Common Stock to be subject to the new option shall be equal to the product of the number of shares of Company Common Stock subject to the original option and the Per Share Stock Consideration, provided that any fractional shares of Parent Common Stock resulting from such multiplication shall be rounded down to the nearest whole share; and (2) the exercise price per share of which is greater than Parent Common Stock under the Cash Merger new option shall be equal to the exercise price per share of Company Common Stock under the original option divided by the Per Share Stock Consideration, provided that such exercise price shall be canceled and extinguished without consideration and rounded up to the 1999 Option Plan shall terminate as of the Effective Datenearest cent. (b) At Prior to the Effective Time, each outstanding Company Parent shall reserve for issuance the number of shares of Parent Common Stock Option issued pursuant necessary to satisfy Parent's obligations under this Section 1.6. Parent shall file with the 1999 Option Plan or the Company's 2000 Stock Option Plan Securities and Exchange Commission (the "2000 Option Plan" andSEC"), together with the 1999 Option Plan, the "Company Option Plans") that is vested as of no later than two business days after the Effective Time, a registration statement on an appropriate form under the exercise price Securities Act of which is less than 1933, as amended (the Cash Merger Consideration shall be canceled and extinguished "Securities Act"), with respect to the shares of Parent Common Stock subject to options to acquire Parent Common Stock issued pursuant to Section 1.6(a) hereof, and shall become use its best efforts to maintain the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any current status of the Cash Merger Consideration over prospectus contained therein, as well as comply with applicable state securities or "blue sky" laws, for so long as such options remain outstanding; provided, however, that Parent shall only be required to file and maintain the exercise price per Share effectiveness of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required registration statement with respect to options that are eligible to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Optionregistered on a Form S-8. (c) At Prior to the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled Parent and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreement. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate take all such steps as may be required to cause any acquisitions of Parent equity securities (including derivative securities with respect to any Parent equity securities) and Acquisition in obtaining dispositions of Company equity securities (including derivative securities with respect to any Company equity securities) resulting from the consent of transactions contemplated by this Agreement by each holder of outstanding Company Stock Options individual who is anticipated to be subject to the foregoing treatment reporting requirements of such Company Stock Options and Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") with respect to take any other action necessary Parent or who is subject to effectuate the foregoing provisionsreporting requirements of Section 16(a) of the Exchange Act with respect to the Company, to be exempt under Rule 16b-3 promulgated under the Exchange Act.

Stock Options. (a) At the Effective Time, each outstanding option to purchase Company Shares (a "Company Stock Option" ") granted under the Company's plans identified in Schedule 1.4 as being the only compensation or collectively benefit plans or agreements ------------ pursuant to which Company Shares may be issued (collectively, the "Company Stock Options") issued pursuant to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option PlanPlans"), whether vested or unvested, the exercise price of which is greater than the Cash Merger Considerationnot vested, shall be canceled deemed assumed by Acquirer and extinguished without consideration shall thereafter be deemed to constitute an option to acquire, on the same terms and the 1999 Option Plan shall terminate conditions (including any provisions for acceleration) as of the Effective Date. (b) At the Effective Time, each outstanding were applicable under such Company Stock Option issued pursuant prior to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal (in accordance with the past practice of the Company with respect to interpretation and application of such terms and conditions), the number (rounded down to the excess, if any nearest whole number) of the Cash Merger Consideration over the exercise price per Share shares of such Company Acquirer Common Stock Option, less the amount of Taxes determined by multiplying (as defined in Section 3.15(a)x) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Company Shares subject to such Company Stock Option immediately prior to the Effective Time by (y) the Exchange Ratio, at a price per share of Acquirer Common Stock (rounded up to the nearest whole cent) equal to (A) the exercise price per Company Share otherwise purchasable pursuant to such Company Stock Option divided by (B) the Exchange Ratio. The parties intend that the conversion of the Company Stock Options hereunder will meet the requirements of section 424(a) of the Code and this Section 1.4(a) shall be interpreted consistent with such intention. Subject to the terms of the Company Options and the documents governing such Company Stock Options, the Merger will not terminate or accelerate any Company Stock Option or any right of exercise, vesting or repurchase relating thereto with respect to Acquirer Common Stock acquired upon exercise of such assumed Company Stock Option. Holders of Company Stock Options will not be entitled to acquire Company Shares after the Merger. In addition, prior to the Effective Time, the Company will make any amendments to the terms of such stock option or compensation plans or arrangements that are necessary to give effect to the transactions contemplated by this Section 1.4. The Company represents that no consents are necessary to give effect to the transactions contemplated by this Section 1.4. (b) Acquirer shall take all corporate action necessary to reserve for issuance a sufficient number of shares of Acquirer Common Stock for delivery pursuant to the terms set forth in this Section 1.4. (c) At the Effective Time, each award or account (including restricted stock, stock equivalents and stock units, but excluding Company Stock Options) outstanding as of the date hereof ("Company Award") that has been established, made or granted under any employee incentive or benefit plans, programs or arrangements and non-employee director plans maintained by the Company on or prior to the date hereof which provide for grants of equity-based awards or equity-based accounts shall be amended or converted into a similar instrument of Acquirer, in each case with such adjustments to the terms and conditions of such Company Awards as are appropriate to preserve the value inherent in such Company Awards with no detrimental effects on the holders thereof. The other terms and conditions of each Company Award, and the plans or agreements under which they were issued, shall continue to apply in accordance with their terms and conditions, including any provisions for acceleration (as such terms and conditions have been interpreted and applied by the Company in accordance with its past practice). The Company represents that (i) there are no Company Awards or Company Stock Options other than those reflected in Section 3.2 and (ii) all employee incentive or benefit plans, programs or arrangements and non-employee director plans under which any Company Award has been established, made or granted and all Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of are disclosed in Schedule 1.4. ------------ (d) At the Effective Time, Acquirer shall file with the exercise price Securities and Exchange Commission (the "SEC") a registration statement on an appropriate form or a post-effective amendment to a previously filed registration statement under the Securities Act of which is less than 1933, as amended (the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid "1933 Act"), with respect to the holder Acquirer Common Stock subject to options and other equity-based awards issued pursuant to this Section 1.4, and shall use its reasonable efforts to maintain the current status of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed prospectus contained therein, as well as comply with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company state securities or any Subsidiary) equal to an amount"blue sky" laws, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of for so long as such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreementoptions or other equity-based awards remain outstanding. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisions.

Stock Options. The Company shall (a) At terminate the Company's Non-statutory Stock Option Plan (as amended and restated effective as of June 10, 1997, and as subsequently amended), Amended and Restated 1993 Non-officer Employee Stock Option Plan, 1994 Director Stock Option Plan, and Amended and Restated 1996 Director Stock Plan (as amended by Amendment No. 1 effective as of July 9, 2004) (collectively, the "Company Stock Plans"), immediately prior to the Effective TimeTime without prejudice to the rights of the holders of options (each, each outstanding option to purchase Shares (a "Company Stock Option" or collectively "Company Stock Options") issued awarded pursuant to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan")thereto, whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate as of the Effective Date. (b) At following such termination grant no additional options under the Company Stock Plans or permit the receipt of shares of Company Common Stock, and (c) cause each Company Stock Option that is outstanding immediately prior to the consummation of the Merger to become fully vested and exercisable. Prior to the Effective Time, the Company and Parent will take all actions reasonably necessary to provide that, upon the Effective Time, each outstanding Company Stock Option issued pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as of shall be cancelled automatically and at the Effective Time, the exercise price of which is less than the Cash Merger Consideration Time shall be canceled converted into and extinguished and shall become constitute the right to receive cash in an amount, amount equal (less any applicable withholding and without interest, in cash paid at ) to the product of (1) the total number of shares of Company Common Stock subject to such holder's Company Stock Option or Options immediately prior to the Effective Time equal to and (2) the excess, if any any, of the Cash Merger Per Share Consideration over the exercise price per Share share of such Company Common Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option or Options (each, an "Eligible Option. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as "). No payment of the Effective Time, the exercise price of which is less than the Cash Merger Per Share Consideration with respect to an Eligible Option shall be canceled and extinguished in consideration for certain compensatory payments to be paid made by the Disbursing Agent to the holder of such Company Stock Eligible Option at until receipt by the time Disbursing Agent of an option cancellation agreement, in a form mutually and reasonably acceptable to the Company Stock Option would otherwise have vested (provided that such and Parent, with respect to all Eligible Options owned by the holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreementEligible Option. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisions.

Stock Options. (a1) At With respect to options for FSB Common Stock ("FSB Stock Option") held by directors of FSB or First Bank who are not also officers or employees of FSB or First Bank, at the Effective Time, each outstanding option to purchase granted and outstanding under the First Shares (a "Company Bancorp, Inc. Amended and Restated 1996 Option Plan and the First Shares Bancorp, Inc. Amended and Restated 1999 Stock Option" or collectively "Company Stock Options") issued pursuant to the Company's 1999 Omnibus Stock Incentive Option Plan (the "1999 Option PlanPlans"), whether vested or unvested, without any act on the exercise price part of which is greater than the Cash Merger Considerationany holder thereof, shall be canceled and extinguished without consideration and converted into the 1999 Option Plan shall terminate as of right to receive from Lincoln , at the Effective DateTime, an amount in cash equal to $14.80 minus the per share exercise price for each share of FSB Common Stock subject to an FSB Stock Option; provided, however, that the payer shall withhold from such cash payment any taxes required to be withheld by applicable law. Each FSB Stock Option held by a director to which this subparagraph applies shall be cancelled and cease to exist by virtue of such payment. (b2) At the Effective Time, subject to any consents required by law and Section 6.16 hereof, each outstanding Company option for FSB Common Stock held by an officer or employee of FSB or First Bank, whether or not vested ("FSB Common Stock"), shall be converted into an option (a "Replacement Option") to acquire, on the same terms and conditions as were applicable under such FSB Stock Option, a specified number of shares of Lincoln Common Stock, at a specified exercise price per share. In respect of each option or set of identical options outstanding to the same holder, such number shall be determined by multiplying the number of shares of FSB Common Stock subject to such FSB Stock Option issued pursuant or set of identical FSB Stock Options by the Exchange Ratio and rounding such product to the 1999 Option Plan or nearest whole number, and such exercise price per share shall be determined by dividing the Company's 2000 per share exercise price under such FSB Stock Option Plan (or set of identical FSB Stock Options by the "2000 Exchange Ratio and rounding such quotient to the nearest whole cent. For example, an FSB Stock Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as to purchase 200 shares of the Effective Time, the FSB Common Stock at an exercise price of $15.00 per share would be converted into an option to purchase 150 shares of Lincoln Common Stock at an exercise price of $20.00 per share. Notwithstanding the foregoing, each FSB Stock Option which is less than the Cash Merger Consideration shall intended to be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes "incentive stock option" (as defined in Section 3.15(a)422 of the Code) required shall be adjusted in accordance with the requirements of Section 424 of the Code. Accordingly, with respect to "incentive stock options," fractional shares will be withheld under rounded down to the nearest whole number of shares and where necessary the per share exercise price will be rounded up to the nearest cent. At or prior to the Effective Time, FSB may modify any or all outstanding FSB Stock Options held by employees of FSB and its Subsidiaries who become employees of Lincoln or its Subsidiaries on the Effective Date to provide that they shall become exercisable, subject to any applicable Federalbank regulatory requirements, state in full in the event the optionee's qualifying service with Lincoln and its Subsidiaries is terminated by Lincoln or local laws and regulations multiplied its Subsidiaries without cause or by the number optionee for good reason, in which case the Replacement Option shall reflect the terms and conditions of Shares subject to such Company the non-vested FSB Stock Option. (c) Option as so modified. At the Effective Time, each outstanding Company Lincoln shall assume FSB Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of Plans. At all times after the Effective Time, Lincoln shall reserve for issuance such number of shares of Lincoln Common Stock as are needed to permit the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments Replacement Options to be paid exercised in the manner contemplated by this Agreement and the instruments pursuant to which such options were granted. Lincoln shall file with the SEC a registration statement on an appropriate form under the Securities Act with respect to the holder shares of such Company Lincoln Common Stock Option at subject to the time Replacement Options and shall use its reasonable best efforts to maintain the Company Stock Option would otherwise have vested (provided that such holder is employed current status of the prospectus contained therein, as well as comply with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company state securities or any Subsidiary) equal to an amount"blue sky" laws, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of for so long as such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreementoptions remain outstanding. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisions.

Stock Options. As of the Termination Date, Employee holds one option (athe “Option”) At the Effective Time, each outstanding option to purchase Shares 203,084 shares of Company common stock that is vested with respect to 85,509 shares (a "Company Stock Option" or collectively "Company Stock Options"the “Vested Portion”) issued pursuant and unvested with respect to 117,575 shares (the “Unvested Portion”). Subject to the Company's 1999 Omnibus Stock Incentive Plan effectiveness of this Agreement, the vesting of the Option shall be accelerated with respect the entire Unversted Portion (the "1999 Option Plan"), whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate “Accelerated Portion”) as of the Effective Termination Date. (b) At the Effective Time, each outstanding Company Stock Option issued pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments Accelerated Portion shall vest only become exercisable in accordance with the terms sentence that follows. Contingent upon Employee’s continued compliance with Sections 7(a) and 10 of this Agreement and notwithstanding anything to the contrary in any plan or agreement governing the Option, (i) the Accelerated Portion of the Option shall become exercisable on the six-month anniversary of the Termination Date and (ii) the Accelerated Portion and the Vested Portion of the Option shall remain outstanding and exercisable until the nine-month anniversary of the Termination Date or, in the event there is a lock up period applicable option agreement. to the Company’s executive employees in conjunction with the Company’s initial public offering (d“IPO”) If in effect on such nine-month anniversary, until the three-month anniversary of the expiration of such lock up period (the later of such dates, the “Option Termination Date”). To the extent unexercised and outstanding, the Option shall terminate on the Option Termination Date. Notwithstanding anything herein to the contrary, in the event a Change in Control (within the meaning of the Company’s equity incentive plan) closes prior to the Option Termination Date, the vesting and exercisability of the Unvested Portion of the Option (inclusive of the Accelerated Portion to the extent required not then exercisable) shall automatically accelerate consistent with any vesting acceleration received by the terms Company’s executive officers upon the closing of such Change in Control. Employee understands and agrees that, except as modified by this Section 4(c), the Option is governed by the applicable plan, Notice of Grant and Incentive Stock Option Award Agreement. Employee further acknowledges that, to the extent the Option constitutes an “incentive stock option” within the meaning of Section 422 of the Company Internal Revenue Code, the amendments provided by this Section 4(c) shall cause the Option Planto no longer constitute an “incentive stock option” and that as a condition to any exercise of the Option, or any other stock option plan, program, arrangement or agreement Employee shall provide to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisionsadequate provisions for withholding taxes.

Stock Options. (a) At the Effective Time, (x) each Company Option that is outstanding and unexercised immediately prior to the Effective Time, whether or not vested, shall be converted into and become an option to purchase Shares Parent Common Stock, and Parent shall assume such Company Option in accordance with the terms (as in effect as of the date of this Agreement) of the applicable Company Option Plan and the terms of the stock option agreement by which such Company Option is evidenced; and (y) each share of Parent Common Stock into which a "share of Company Restricted Stock Option" or collectively "Company Stock Options") issued was converted pursuant to Section 1.5 shall be a share of Parent Restricted Stock and shall remain subject to the Company's 1999 Omnibus same terms and conditions as were applicable under the award of Company Restricted Stock Incentive Plan immediately prior to the Effective Time. All rights with respect to Company Common Stock under Company Options assumed by Parent shall thereupon be converted into options with respect to Parent Common Stock. Accordingly, from and after the Effective Time: (A) each Company Option assumed by Parent may be exercised solely for shares of Parent Common Stock; (B) the "1999 number of shares of Parent Common Stock subject to each Company Option Plan")assumed by Parent shall be determined by multiplying the number of shares of Company Common Stock that were subject to such Company Option immediately prior to the Effective Time by the Exchange Ratio, whether vested or unvested, and rounding the resulting number down to the nearest whole number of shares of Parent Common Stock; (C) the per share exercise price for the Parent Common Stock issuable upon exercise of each Company Option assumed by Parent shall be determined by dividing the per share exercise price of which is greater than Company Common Stock subject to such Company Option, as in effect immediately prior to the Cash Merger ConsiderationEffective Time, by the Exchange Ratio, and rounding the resulting exercise price up to the nearest whole cent; and (D) any restriction on the exercise of any Company Option assumed by Parent shall be canceled continue in full force and extinguished without consideration effect and the 1999 term, exercisability, vesting schedule and other provisions of such Company Option Plan shall terminate as remain unchanged; provided, however, that Parent Board or a committee thereof shall succeed to the authority and responsibility of the Effective DateCompany Board or any committee thereof with respect to each Company Option, Company Restricted Stock assumed by Parent. (b) At the Effective Time, each outstanding Company Stock Option issued pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together Parent shall file with the 1999 Option PlanSEC, the "Company Option Plans") that is vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at soon as practicable after the Effective Time equal but in no event later than 10 business days after the date on which the Merger becomes effective, a registration statement on Form S-8, if available for use by Parent, relating to the excessshares of Parent Common Stock issuable with respect to the Company Options, if any of the Cash Merger Consideration over the exercise price per Share of such Company Restricted Stock Option, less the amount of Taxes (as defined assumed by Parent in accordance with Section 3.15(a5.4(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to Parent shall assume all of the Company Option Plans Plans. Parent shall be entitled to grant stock awards under each such Company Option Plan, to the extent permissible under applicable Legal Requirements, using the share reserves of such Company Option Plan as of the Effective Time (including any shares returned to such share reserves as a result of the termination of Company Options that are assumed by Parent pursuant to Section 5.4(a)), except that: (i) stock covered by such awards shall be shares of Parent Common Stock; (ii) all references in such Company Option Plan to a number of shares of Company Common Stock shall be deemed amended to refer instead to a number of shares of Parent Common Stock determined by multiplying the number of referenced shares of Company Common Stock by the Exchange Ratio, and rounding the resulting number down to the nearest whole number of shares of Parent Common Stock; and (iii) the Parent Board or a committee thereof shall succeed to the authority and responsibility of the Company Board or any other stock option plan, program, arrangement or agreement committee thereof with respect to which the administration of such Company or any of its subsidiaries is a party that is not vested as of Option Plan. (d) Prior to the Effective Time, the exercise price Company shall use its commercially reasonable efforts to take all action that may be necessary (under the Company Option Plans and otherwise) to effectuate the provisions of which is less this Section 5.4 and to ensure that, from and after the Effective Time, holders of Company Options have no rights with respect thereto other than those specifically provided in this Section 5.4. To the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid extent that a Company Option qualifies immediately prior to the holder Effective Time as an “incentive stock option” within the meaning of Section 422 of the Code, the option exercise price, the number of shares of Parent Company Common Stock purchasable upon exercise thereof, and the terms and conditions of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed shall be determined in order to comply with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any SubsidiarySection 424(a) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreementCode. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisions.

Stock Options. (a) At Employee shall receive a grant of 120,000 stock options for shares of common voting stock in CCE Spinco. Such grant shall be contingent on the Effective Timeclosing of the spin-off of the Company from its current parent, each outstanding Clear Channel Communications, Inc. and issued at the time of the spin-off of the Company. The option price shall be the fair market value on the grant date, which shall be on the 3rd day following the closing of the anticipated spin-off of the Company from its current parent, Clear Channel Communications, Inc. Any further stock option grants for shares of voting common stock will be granted based upon the performance of the Employee, which will be assessed in the sole discretion of the Compensation Committee of the Board. Options shall be issued in a manner consistent with the current vesting schedule for Clear Channel Communications, Inc. or as subsequently amended by the Board of CCE Spinco; however, subsequent amendments to purchase Shares (a "the vesting schedule shall be no less favorable to Employee unless he agrees to such amendment. Of the options that are granted, ISOs shall be granted to the extent allowed by law; otherwise, non-qualified options shall be granted. If the Compensation Committee determines that Employee's performance merits issuance of options, then such options shall be issued as stated on the attached Exhibit A for calendar year 2005. For future years, any grant of options shall be determined in the discretion of the Compensation Committee; however, for 2006 and 2007, the Company shall not set incentive performance criteria that are more stringent or less favorable to Employee than the requirements stated in Exhibit A. All option grants shall be made under the terms and conditions set forth in the applicable Stock Option" Option Plan under which they are issued. The Company reserves the right to modify any future Company stock option plan with respect to the change of control or collectively "Company Stock Options") issued pursuant any other provision of said plan. The Company's obligations under this Section are conditioned upon and subject to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan"), whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate as of the Effective Date. (b) At the Effective Time, each outstanding Company Stock Option issued pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interestdecision, in cash paid at the Effective Time equal its sole discretion, to the excessalter, suspend or discontinue its stock option grant program, but if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans does so, it shall replace the program with an alternative form or any other stock option plan, program, arrangement or agreement method of compensation which would yield equal compensation to which Employee for the Company or any same level of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreementperformance. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisions.

Stock Options. Subsequent to the execution and delivery of this Agreement, the Board of Directors of the Company (the "Company Board") shall adopt appropriate resolutions and take all other actions necessary and appropriate to provide, and to cause the Company to cause, that (a) At on the Business Day prior to the Effective Time, each outstanding unvested and unexercisable option or similar right to purchase Shares (a "Company Common Stock Option" or collectively "Company Stock Options") issued pursuant to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan"), whether shall become fully vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration exercisable and the 1999 Option Plan shall terminate as of the Effective Date. (b) At immediately prior to the Effective Time, each outstanding unexpired and unexercised option or similar right to purchase Company Common Stock Option issued pursuant to (collectively, the 1999 Option Plan or "Company Options") under any stock option plan of the Company's Company other than the 2000 Employee Stock Option Purchase Plan (the "2000 Option Plan" andESPP"), together with including the 1999 1992 Stock Option Plan, 1994 Stock Option Plan, 1994 Associates Stock Option Plan, 1995 Stock Option Plan, 1999 Stock Option Plan or any other plan, agreement or arrangement (the "Company Stock Option Plans"), shall be cancelled either, as determined by the Company Board, (i) that is vested in consideration of a payment in cash (subject to any applicable withholding or other Taxes required by applicable Law to be withheld) in an amount determined by the Company Board (such amounts payable hereunder being referred to as the "Option Payment") or (ii) without the payment of cash or the Effective Timeissuance of other securities. Without the prior written consent of Parent, the Option Payment with respect to any Company Option with an exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time amount equal to the excess, if any product of the Cash total number of shares of Company Common Stock previously subject to such Company Option multiplied by the excess of the Merger Consideration over the exercise price per Share share of such the Company Common Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares previously subject to such Company Stock Option. . With respect to Company Options with an exercise price greater than or equal to the Merger Consideration, no Option Payment will be made in respect thereof unless approved by Parent, which approval shall not be unreasonably withheld or delayed. From and after the Effective Time, any such cancelled Company Option shall no longer be exercisable by the former holder thereof and shall be of no further force and effect. The Company either has or shall deliver to each holder of Company Options a prospectus in compliance with applicable federal securities laws prior to the exercise of such Company Options. The Company shall use its reasonable best efforts to cause (cx) each holder of Company Options with an exercise price less than the Merger Consideration to exercise such Company Options prior to the Effective Time or to agree to the cancellation of such Company Option in exchange for an Option Payment as provided for herein above and (y) each holder of Company Options with an exercise price greater than or equal to the Merger Consideration to consent to the termination of such Company Options prior to the Effective Time (each, an "Option Termination Consent"). Each Option Termination Consent shall include a confirmation from the holder that, upon the effectiveness of such cancellation or termination, he or she will have no rights relating to such Company Options, except to the extent contemplated above. At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration Parent shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time assume the Company Stock Option would otherwise have vested Plans for the sole purpose of enabling Parent to grant options to purchase common stock of Parent after the Effective Time thereunder (provided it being understood that such holder is employed with no Company Options shall survive the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreementEffective Time). (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisions.

Stock Options. (ai) At the Effective Time, each outstanding option entitling the holder thereof to purchase Shares shares of Company Common Stock pursuant to the Company Stock Plans, other than the 2004 Employee Plan (each, a "“Company Stock Option" ” or collectively "“Company Stock Options") issued pursuant ”), to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan"), whether extent not already fully vested or unvested, the exercise price of which is greater than the Cash Merger Considerationand exercisable, shall be canceled become fully vested and extinguished without consideration and the 1999 Option Plan shall terminate as exercisable immediately prior to consummation of the Effective Date. (b) At the Effective TimeMerger, each outstanding but excluding any Company Stock Option issued pursuant to the 1999 Option Plan Options held or the Company's 2000 Stock Option Plan (the "2000 Option Plan" andbeneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, together with the 1999 Option Plan, the "Company Option Plans") that is vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration and shall be canceled and extinguished converted into and shall become the right to receive an amountreceive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in cash paid at the Effective Time equal to an amount that shall be determined by multiplying (A) the excess, if any any, of the Cash Merger Consideration over the applicable per share exercise price per Share of such Company Stock Option, less the amount of Taxes by (as defined in Section 3.15(a)B) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to shares of Company Common Stock that are purchasable on exercise of such Company Stock Option. Option prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (c) the “Option Payment”). At the Effective Time, each all outstanding Company Stock Options (including any Company Stock Option issued pursuant for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the Company Option Plans or any other stock option plan, program, arrangement or agreement extent provided in this Section 2.1(e). Prior to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price Company and Parent shall take all actions (including, if appropriate, amending the terms of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested Plans and related option agreements) that are necessary to give effect to the transactions contemplated by this Section 2.1(e). (provided that such holder is employed with ii) Prior to the Effective Time, Parent and the Company at such time and has not breached any shall establish a procedure to effect the cancellation of such holder's obligations under any applicable employment agreement with Company Stock Options in exchange for the Company or any Subsidiary) equal Option Payments to an amount, without interest, in cash equal to which the excess, if any of the Cash Merger Consideration over the exercise price per Share holders of such Company Stock Options that would otherwise have vested at shall be entitled under Section 2.1(e)(i), and, upon cancellation of each such time. Notwithstanding Company Stock Option, Parent shall pay to the foregoingholder thereof in cash promptly after Closing but in no event more than ten (10) business days after Closing, the right to receive such payments shall vest in accordance with the terms amount of the applicable option agreementOption Payment, if any, to which such holder shall be entitled hereunder, without further action on the part of such holder. (diii) If Parent, Merger Sub and to the extent required by the terms of the Company Option Plan, hereby acknowledge and agree that the Surviving Corporation shall not assume or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of continue any Company Stock Option granted thereunderOptions, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of or substitute any additional options for such Company Stock Options and to take any other action necessary to effectuate the foregoing provisionsOptions.

Stock Options. (a) At the Effective Time, each outstanding option to purchase Shares (a "Company Stock Option" or collectively "Company Stock Options") issued pursuant to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan"), whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate as by virtue of the Effective Date. (b) At First Step Merger and without any action on the part of the holders of Company Options, each Company Option that is outstanding immediately prior to the Effective Time, whether or not then vested or exercisable, shall be assumed by Parent (the “Assumed Options”) and converted automatically at the Effective Time into an option denominated in shares of Parent Stock and which has other terms and conditions substantially identical to those of the related Company Option except that (i) each outstanding Assumed Option will be exercisable (or will become exercisable in accordance with its terms) for that number of whole shares of Parent Stock equal to the product of the number of shares of Company Stock that were issuable upon exercise of such Assumed Option issued immediately prior to the Effective Time multiplied by the Option Exchange Ratio (as defined below), rounded down to the nearest whole number of shares of Parent Stock and (ii) the per share exercise price for the shares of Parent Stock issuable upon exercise of such Assumed Option will be equal to the quotient determined by dividing the exercise price per share of Company Stock at which such Assumed Option was exercisable immediately prior to the Effective Time by the Option Exchange Ratio, rounded up to the nearest whole cent; provided, however, that in no case shall the exchange of a Company Option be performed in a manner that is not in compliance with the adjustment requirements of Section 409A of the Code. The “Option Stock Amount” means the aggregate number of shares of Parent Stock issuable pursuant to this Section 2.6(a). The “Option Exchange Ratio” means (i)(A) 0.267008, multiplied by (B) the 1999 Option Plan or Elected Stock Percentage; plus (ii) (A) the Company's 2000 quotient obtained by dividing $7.30 by the closing sale price for Parent Stock Option Plan on the NASDAQ for the last trading day immediately prior to the Closing Date, multiplied by (B) the "2000 Option Plan" and, together Elected Cash Percentage. The Company agrees that the assumption and adjustment of Company Options in accordance with this Section 2.6(a) shall preserve the 1999 Option Plan, the "compensation element of each Company Option Plans") that is vested as of the Effective Time. Notwithstanding the foregoing, unless determined otherwise by Parent, each Company Option that is held by a person who is not an employee of, or a consultant to, the exercise price Company or any Subsidiary of which is less than the Cash Merger Consideration Company immediately prior to the Effective Time (the “Non-Assumed Options”) shall not be assumed by Parent pursuant to this Section 2.6 and shall, immediately prior to the Effective Time, be canceled and extinguished and the vested portion thereof shall become automatically be converted into the right to receive an amountamount in cash, without interestif any, in cash paid at equal to the product obtained by multiplying (i) the aggregate number of shares of Company Stock that were issuable upon exercise or settlement of such Non-Assumed Options immediately prior to the Effective Time equal (for these purposes, after giving effect to any applicable vesting acceleration provisions) and (ii) $7.30, less any per share exercise price of such Non-Assumed Options. All Company Options held by non-employee members of the Board of Directors of the Company shall be Non-Assumed Options for purposes of this Agreement and converted into the right to receive cash pursuant to the excess, if any immediately preceding sentences. The Company shall at least thirty (30) days prior to the Effective Time provide a notice to all holders of Assumed Options and Non-Assumed Options of the Cash Merger Consideration over effect of the transaction on their options. The Company shall also provide notice that all holders of outstanding Company Options which as of the Effective Time will be Non-Assumed Options have the opportunity to exercise price per Share their vested options on or before the termination date of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required option and during a specified period prior to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. (c) At the Effective Time, and that upon a failure to so exercise a Non-Assumed Option, each Non-Assumed Option outstanding immediately prior to the Effective Time will be extinguished and converted into a right to receive cash in accordance with this section. Parent shall take such actions as are necessary for the assumption and conversion of the Company Stock Option issued Options pursuant to this Section 2.6, including the Company Option Plans or any other stock option planreservation, program, arrangement or agreement issuance and listing of Parent Stock as is necessary to which effectuate the Company or any of its subsidiaries is a party that is not vested transactions contemplated by this Section 2.6. As soon as of reasonably practicable after the Effective Time, the exercise price of which is less than the Cash Merger Consideration Parent shall be canceled and extinguished in consideration for certain compensatory payments deliver to be paid to the each holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreement. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Option an appropriate notice setting forth such holder’s rights pursuant to such Company Option. Parent shall prepare and file with the SEC a registration statement on Form S-8 with respect to the shares of Parent Stock Option granted thereunder, issuable upon exercise of the Assumed Options promptly (but in no event later than fifteen (15) Business Days) following the Effective Time and Parent shall exercise commercially reasonable efforts to maintain the effectiveness of such registration statement for so long as such Assumed Options remain outstanding. The Company and its counsel shall reasonably cooperate with and assist Parent and Acquisition in obtaining the consent preparation of each holder of outstanding Company Stock Options such registration statement prior to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisionsEffective Time.

Stock Options. (a) At the Effective Time, each The Company shall take all actions necessary to provide that all outstanding option options to purchase Shares acquire shares of Company Common Stock (a "Company Stock Option" or collectively "Company Stock Options") issued pursuant to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan"), whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate as of the Effective Date. (b) At the Effective Time, each outstanding Company Stock Option issued pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if granted under any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, program or similar arrangement or agreement to which of the Company or any of its subsidiaries is a party that is not Subsidiaries, each as amended (the "Stock Option Plans"), shall become fully exercisable and vested as of immediately prior to the Effective Time, the exercise price of which is less than the Cash Merger Consideration Time whether or not otherwise exercisable and vested. The Company shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance comply with the terms of the applicable option agreement. (d) If and Stock Option Plans, as applicable, and, to the extent required thereunder, provide written notice to the holders of Options that such Options shall be treated as set forth herein. All Options which are outstanding immediately prior to the Effective Time shall be canceled and become null and void and the holders thereof shall be entitled to elect (1) to receive from the Company at the same times and in the same manner as the Company Stockholders pursuant to this Article III, for each Option to acquire one share of Company Common Stock, (A) an amount in cash equal to (x) the cash payable to the holder of one share of Company Common Stock pursuant to Section 3.2 assuming all Options had been exercised prior to the Effective Time minus (y) the exercise price per share of such Option (the "Exercise Difference"), plus (B) certificates representing that number of shares of Buyer Class A Common Stock which the holder of one share of Company Common Stock would have the right to receive pursuant to Sections 3.1 and 3.2 as adjusted as set forth in Section 3.3 hereof assuming all Options had been exercised prior to the Effective Time, plus (C) Warrants in an amount issued to the holder of one share of Company Common Stock pursuant to Section 3.5, plus (D) the right to receive the Contingent Additional Consideration that may be payable to the holder of one share of Company Common Stock pursuant to Section 3.4, or (2) if the Exercise Difference is negative, as a condition for receiving the Buyer Class A Common Stock, the Warrants and the right to receive the Contingent Additional Consideration under clause (1) above, to pay such difference in cash to the Company on or before the Closing Date. All applicable withholding taxes attributable to the payments made hereunder or to distributions contemplated hereby shall be deducted from the amounts payable under clause (A) above or by payment of cash by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company holder if amounts payable under clause (A) are insufficient. (b) The Stock Option granted thereunder, the Company Plans shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options terminate immediately prior to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisionsEffective Time.

Stock Options. (a) At Options to purchase shares of LISB Common Stock that have been issued by LISB and are outstanding at the Effective Time (each, a "LISB Option"), pursuant to the L▇▇▇ ▇▇▇▇ Stock Incentive Plan and the L▇▇▇ ▇▇▇▇ Non-Employee Directors Stock Option Program (the "LISB Option Plan") shall be converted into options to purchase shares of AFC Common Stock as follows: (i) in the case of each holder of LISB Options at the Effective Time, each outstanding option to purchase Shares (a "Company the aggregate number of shares of AFC Common Stock Option" or collectively "Company Stock Options") issued pursuant issuable upon the exercise of converted LISB Options after the Effective Time shall be equal to the Company's 1999 Omnibus product of the Exchange Ratio multiplied by the number of shares of LISB Common Stock Incentive Plan issuable upon exercise of the LISB Options immediately prior to the Effective Time, such product to be rounded up to the nearest whole share of AFC Common Stock; and (ii) the "1999 exercise price per share of each converted LISB Option Plan"), whether vested or unvested, shall be equal to the quotient of the exercise price of which such LISB Option at the Effective Time divided by the Exchange Ratio, such quotient to be rounded to the nearest whole cent; PROVIDED, however, that, in the case of any LISB Option that is greater than intended to qualify as an incentive stock option under Section 422 of the Cash Merger ConsiderationCode, the number of shares of AFC Common Stock issuable upon exercise of and the exercise price per share for such converted LISB Option determined in the manner provided above shall be canceled and extinguished without consideration and further adjusted as necessary to conform to the 1999 Option Plan shall terminate as requirements of Section 424(b) of the Code. Options to purchase shares of AFC Common Stock that arise from the operation of this Section 1.04 shall be referred to as the "Converted Options." All Converted Options shall be exercisable for the same period and otherwise have the same terms and conditions applicable to the LISB Options which they replace, including any post-termination extended exercise periods as a result of the transaction contemplated by this Agreement as provided under the current terms of the LISB Options; PROVIDED, however, that such exercise periods, terms and conditions shall be further modified if and to the extent necessary to enable the Merger to qualify for pooling-of-interests accounting treatment. Prior to the Effective DateTime, AFC shall take, or cause to be taken, all necessary action to effect the intent of the provisions set forth in this Section 1.04. (b) At the Effective Time, each outstanding Company Stock Option issued pursuant Prior to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as date of the Effective TimeLISB stockholders meeting contemplated by Section 4.08, LISB shall take, or cause to be taken, appropriate action under the exercise price terms of any stock option plan, agreement or arrangement under which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right LISB Options have been granted to receive an amount, without interest, in cash paid convert LISB Options outstanding at the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes (into Converted Options as defined in contemplated by Section 3.15(a1.04(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. (c) At Concurrently with the reservation of shares of AFC Common Stock to provide for the payment of the Merger Consideration, AFC shall take all corporate action necessary to reserve for future issuance a sufficient additional number of shares of AFC Common Stock to provide for the satisfaction of its obligations with respect to the Converted Options. As soon as practicable following the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration AFC shall be canceled and extinguished in consideration for certain compensatory payments (i) cause to be paid executed and delivered to the each holder of such Company Stock a Converted Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of an agreement, certificate or other instrument evidencing such holder's obligations rights with respect to the Converted Options, which rights shall be as governed by and set forth under any applicable employment agreement with the Company LISB Option Plans and (ii) file a registration statement on Form S-8 of the Securities and Exchange Commission (the "SEC") (or any Subsidiarysuccessor or other appropriate form) equal to an amount, without interest, in cash equal with respect to the excess, if any AFC Common Stock issuable upon exercise of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreementConverted Options. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisions.

Stock Options. (a) At Each grantee under any of the Effective TimeCHK Legacy Equity Plans (i) who will be a SSE Employee and (ii) who holds as of the Distribution Date, one or more CHK Options, shall receive, effective as of the last to occur of the Distribution Date and the Registration Statement Effectiveness Date, as a replacement award in substitution for each outstanding such CHK Option (which shall be cancelled), an option to purchase Shares a number of shares of SSE Common Stock under the SSE Equity Plan (each a "Company Stock “Replacement SSE Option" or collectively "Company Stock Options"”) issued pursuant having a value (calculated using the SSE Share Price) equal to the Company's 1999 Omnibus value of the CHK Common Stock Incentive Plan subject to the CHK Option (calculated using the "1999 Pre-Distribution CHK Share Price). The number of shares of SSE Common Stock subject to a Replacement SSE Option Plan")shall be equal to the product of (i) the number of shares of CHK Common Stock subject to a CHK Option as of the Distribution Date multiplied by (ii) a fraction, whether vested or unvestedthe numerator of which is the Pre-Distribution CHK Share Price and the denominator of which is the SSE Share Price, with the resulting number being rounded down to the nearest whole share. Each such Replacement SSE Option shall have the same comparative ratio of the exercise price to the SSE Share Price as the exercise price of which is greater than each CHK Option to the Cash Merger Consideration, Pre-Distribution CHK Share Price as provided under Code Section 424 and the applicable regulations thereunder. SSE shall be canceled responsible for (i) the satisfaction of all tax reporting and extinguished without consideration and the 1999 Option Plan shall terminate as withholding requirements in respect of the Effective exercise of Replacement SSE Options issued in accordance with this Section 3.4(a) and (ii) remitting the appropriate tax or withholding amounts to the appropriate taxing authorities. Replacement SSE Options shall not be exercisable until the Registration Statement Effectiveness Date. Except as provided in the foregoing provisions of this Section 3.4(a), Replacement SSE Options granted under this Section 3.4(a) shall be granted on terms which are in all material respects identical (including with respect to vesting) to the terms of the CHK Options with respect to which they replace. (b) At Each grantee under any of the Effective TimeCHK Legacy Equity Plans (i) who is a CHK Legacy Award Holder, each outstanding Company Stock Option issued pursuant to the 1999 Option Plan will be a CHK Employee or the Company's 2000 Stock Option Plan CHK Director and (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans"ii) that is vested who will hold one or more CHK Options as of the Effective TimeDistribution Date, shall receive, effective as of the last to occur of the Distribution Date and the Registration Statement Effectiveness Date, in substitution for each such CHK Option (which shall be cancelled), an option to purchase shares of CHK Common Stock under one of the CHK Legacy Equity Plans (each a “Post-Distribution CHK Option”) having a value (calculated using the Post-Distribution CHK Share Price) equal to the value of the shares of CHK Common Stock subject to the CHK Option (calculated using the SSE Share Price). The number of shares of CHK Common Stock subject to a Post-Distribution CHK Option shall be equal to the product of (i) the number of shares of CHK Common Stock subject to a CHK Option as of the Distribution Date multiplied by (ii) a fraction, the numerator of which is the Pre-Distribution CHK Share Price and the denominator of which is the Post-Distribution CHK Share Price, with the resulting number being rounded down to the nearest whole share. Each such Post-Distribution CHK Option shall have the same comparative ratio of the exercise price to the Post-Distribution CHK Share Price as the exercise price of which is less than each CHK Option to the Cash Merger Consideration Pre-Distribution CHK Share Price as provided under Code Section 424 and the applicable regulations thereunder. CHK (or one or more of the CHK Subsidiaries, as designated by CHK) shall be canceled responsible for (i) the satisfaction of all tax reporting and extinguished and shall become the right to receive an amount, without interest, withholding requirements in cash paid at the Effective Time equal to the excess, if any respect of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. (c) At the Effective Time, each outstanding Company Stock Option Post-Distribution CHK Options issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with this Section 3.4(b) and (ii) remitting the appropriate tax or withholding amounts to the appropriate taxing authorities. Except as provided in the foregoing provisions of this Section 3.4(b), Post-Distribution CHK Options shall be granted on terms which are in all material respects identical (including with respect to vesting) to the terms of the applicable option agreement. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement CHK Options with respect to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisionsthey are substituted.

Stock Options. Subject to the absolute authority of the Stock Option Committee of the Board of Directors of the Company from time to time to grant (or not to grant) to eligible individuals options to purchase common stock of the Company ("Options"), it is the intention of the Company and the expectation of the Executive that while the Executive is employed hereunder, the Executive will receive Options annually, on the following terms and conditions (and any Options so granted shall be subject to the following terms and conditions, which shall govern any conflicts in the terms hereof with any terms and conditions in any stock option agreement): (a) At the Effective Time, each outstanding option Target awards will be in an amount (plus or minus 25%) equal to purchase Shares (a "Company Stock Option" or collectively "Company Stock Options") issued pursuant to the Company150% of Executive's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan"), whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate as of the Effective Date.salary; (b) At the Effective Time, each outstanding Company Stock Option issued pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as For purposes of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by determining the number of Shares shares subject to a given Option grant, the value of such Option shall be determined using the Black-Scholes valuation method, or another generally recognized valuation method which is being used uniformly by the Company Stock Option.for its senior executives; (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the The exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms share of the applicable option agreement.Options shall be the fair market value of the common stock on the date of grant, and the Options shall expire on the tenth anniversary of the date of grant; and (d) If The Options shall vest ratably on the first three anniversaries of the date of grant; provided, however, that all such Options and all other options to purchase Common Shares then held by the Executive which are not then vested (in the aggregate being referred to herein as "Accelerated Options") shall become fully vested and immediately exercisable during the remaining original term of each such Accelerated Option, upon the occurrence of any of the following events ("Acceleration Events"): Executive's Retirement (as defined herein), death, Disability, a Change in Control (as defined herein), and termination of Executive's employment by the Company without Cause or by the Executive for Good Reason; and (e) The Options shall be granted on such other terms and conditions as are generally made applicable to Options granted to the extent required by the terms other senior executives of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisionsCompany.

Stock Options. (a) At Each option to purchase UDS Common Stock (a "UDS Stock Option") granted under UDS Stock Plans which is outstanding immediately prior to the Effective Time shall cease to represent a right to acquire shares of UDS Common Stock and shall be converted (as so converted, a "UDS Converted Option"), at the Effective Time and subject to the immediately following sentence, into an option to purchase Valero Common Stock (a "Valero Stock Option"), on the same terms and conditions as were applicable under the UDS Stock Option. The number of shares of Valero Common Stock subject to each such Valero Stock Option shall be the number of shares of UDS Common Stock subject to the UDS Stock Option multiplied by the Exchange Ratio, rounded, if necessary, to the nearest whole share of Valero Common Stock, and such Valero Stock Option shall have an exercise price per share (rounded to the nearest one-hundredth of a cent) equal to the per share exercise price specified in such UDS Stock Option divided by the Exchange Ratio; provided, however, that in the case of any UDS Stock Option to which Section 421 of the Code as of the Effective Time (after taking into account the effect of any accelerated vesting thereof) applies by reason of its qualification under Section 422 of the Code, the exercise price, the number of shares subject to such option and the terms and conditions of exercise of such option shall be determined in a manner consistent with the requirements of Section 424(a) of the Code. As of the Effective Time, Valero shall assume the obligations of UDS under the UDS Stock Plans, and from and after the Effective Time, except as otherwise set forth herein, the terms of each outstanding option UDS Stock Option and the UDS Stock Plan under which such UDS Stock Option was initially granted, in each case, as in effect immediately prior to purchase Shares (a "Company the Effective Time, shall continue to apply to the corresponding Valero Stock Option" or collectively "Company Stock Options") issued pursuant to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan"), whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate as of the Effective Date. (b) At Prior to the Effective Time, each outstanding Company UDS shall take all necessary action for the adjustment of UDS Converted Options under this Section 3.2. Valero shall reserve for issuance a number of shares of Valero Common Stock Option issued pursuant at least equal to the 1999 Option Plan or the Company's 2000 number of shares of Valero Common Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested will be subject to UDS Converted Options. As soon as of practicable following the Effective Time, Valero shall file a registration statement on Form S-8 (or any successor, or if Form S-8 is not available, other appropriate, forms) with respect to the exercise price shares of which is less than the Cash Merger Consideration shall be canceled and extinguished Valero Common Stock subject to UDS Converted Options and shall become maintain the right to receive an amount, without interest, in cash paid at effectiveness of such registration statement or registration statements (and maintain the Effective Time equal to the excess, if any current status of the Cash Merger Consideration over the exercise price per Share of prospectus or prospectuses contained therein) for so long as such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Optionoptions remain outstanding. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreement. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisions.

Stock Options. (a) At the Effective Time, each outstanding option to purchase Shares shares of Company Common Stock (each, a "Company Stock Option" or collectively "Company Stock OptionsCOMPANY STOCK OPTION") issued pursuant to under the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan"), whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate as of the Effective Date. (b) At the Effective Time, each outstanding Company Stock Option issued pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as , whether or not vested, shall by virtue of the Effective TimeMerger and without any action on the part of -49- 55 Company, the exercise price Parent or any holder of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied assumed by the number of Shares subject to such Company Stock Option. (c) At the Effective Time, each outstanding Parent. Each Company Stock Option issued pursuant so assumed by Parent under this Agreement will continue to the Company Option Plans or any other stock option planhave, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Timeand be subject to, the exercise price of which is less than the Cash Merger Consideration shall be canceled same terms and extinguished in consideration for certain compensatory payments to be paid to the holder conditions of such Company Stock Option at immediately prior to the time the Company Stock Option would otherwise have vested Effective Time (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amountincluding, without interestlimitation, in cash equal to any repurchase rights or vesting provisions and provisions regarding the excessacceleration of vesting on certain transactions, if any of other than the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoingtransactions contemplated by this Agreement, the right to receive such payments shall vest in accordance with the terms of the applicable option agreement. (d) If and except to the extent required by the terms of the Company Option Plan, or otherwise provided for in any other stock option plan, program, arrangement plan or agreement applicable to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and disclosed on Section 2.03 or 2.18 of the Company Schedule), except that (i) each Company Stock Option will be exercisable (or will become exercisable in accordance with its terms) for that number of whole shares of Parent Common Stock equal to the product of the number of shares of Company Common Stock that were issuable upon exercise of such Company Stock Option immediately prior to the Effective Time multiplied by the Exchange Ratio, rounded down to the nearest whole number of shares of Parent Common Stock and (ii) the per share exercise price for the shares of Parent Common Stock issuable upon exercise of such assumed Company Stock Option will be equal to the quotient determined by dividing the exercise price per share of Company Common Stock at which such Company Stock Option was exercisable immediately prior to the Effective Time by the Exchange Ratio, rounded up to the nearest whole cent. Parent shall comply with the terms of all such Company Stock Options. It is intended that Company Stock Options assumed by Parent shall qualify following the Effective Time as incentive stock options as defined in Section 422 of the Code to the extent such Company Stock Options qualified as incentive stock options immediately prior to the Effective Time and the provisions of this Section 5.11 shall be applied consistent with such intent in accordance with Section 424 of the Code. Parent shall take any other action all corporate actions necessary to effectuate reserve for issuance a sufficient number of shares of Parent Common Stock for delivery upon exercise of assumed Company Stock Options on the foregoing provisionsterms set forth in this Section 5.11(a).

Stock Options. (a) All options (individually, a "Company Option" and collectively, the "Company Options") outstanding at the Effective Time under the 1992 Stock Option Plan of the Company (the "Company Plan") shall remain outstanding following the Effective Time. At the Effective Time, such Company Options shall, by virtue of the Merger and without any further action on the part of the Company or the holder of such Company Options, be assumed by Parent in such manner that Parent (a) is a corporation (or a parent or a subsidiary corporation of such corporation) "assuming a stock option in a transaction to which Section 424(a) applied" within the meaning of Section 424 of the Code; or (b) to the extent that Section 424 of the Code does not apply to any such Company Options, would be such a corporation (or a parent or a subsidiary corporation of such corporation) were Section 424 applicable to such option. At the Effective Time, (i) all references in the Company Plan to the Company shall be deemed to refer to Parent and (ii) as soon as practicable, but in no event later than 30 days following the Effective Time, Parent shall issue to each outstanding holder of a Company Option a document evidencing the assumption of such option to purchase Shares by Parent in accordance herewith. Each Company Option assumed by Company (a as assumed, the "Company Stock Option" or collectively "Company Stock Parent Options") shall be exercisable upon the same terms and conditions including, without limitation, vesting, as under the Company Plan and the applicable option agreement issued pursuant thereunder, except that (x) each such Company Option shall be exercisable for that whole number of shares of Parent Common Stock (rounded down to the Company's 1999 Omnibus nearest whole share) into which the number of shares of Company Common Stock Incentive Plan subject to such Company Option immediately prior to the Effective Time would be converted under Section 1.8 of this Agreement; and (y) the option price per share of Parent Common Stock shall be an amount equal to the option price per share of the Company Common Stock subject to such Company Option in effect immediately prior to the Effective Time divided by the Exchange Ratio (the "1999 option price per share, as so determined, being rounded upward to the nearest full cent). The date of grant of each Parent Option Plan"), whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration and the 1999 date on which the corresponding Company Option Plan was granted. A cash payment shall terminate as be made for any fractional share based upon the last reported sale price per share of Parent Common Stock on the Effective DateTrading Day immediately preceding the date of exercise. (b) At Parent shall take all corporate action necessary to reserve for issuance a sufficient number of shares of Parent Common Stock for delivery upon exercise of Parent Options in accordance with this Section 1.10. As soon as practicable after the Effective Time, each outstanding Company Stock Option issued pursuant Parent shall file a registration statement on Form S-3 or Form S-8, as the case may be (or any successor or other appropriate forms), or another appropriate form with respect to the 1999 Option Plan shares of Parent Common Stock subject to the Parent Options and shall use its best efforts to maintain the effectiveness of such registration statement or registration statements (and maintain the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as current status of the Effective Time, prospectus or prospectuses contained therein) for so long as the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock OptionParent Options remain outstanding. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreement. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisions.

Stock Options. (a) At the Effective Time, each outstanding option Company Option, whether or not then exercisable, will be assumed by Parent. Each Company Option so assumed by Parent under this Agreement will continue to purchase Shares (a "have, and be subject to, the same terms and conditions set forth in the applicable Company Stock Option" Option Plan immediately prior to the Effective Time (including any repurchase rights or collectively "vesting provisions), except that (i) each Company Stock Options"Option will be exercisable (or will become exercisable in accordance with its terms) issued pursuant for that number of whole shares of Parent Common Stock equal to the Company's 1999 Omnibus product of the number of shares of Company Common Stock Incentive Plan that were issuable upon exercise of such Company Option immediately prior to the Effective Time multiplied by the Exchange Ratio, rounded down to the nearest whole number of shares of Parent Common Stock and (ii) the "1999 per share exercise price for the shares of Parent Common Stock issuable upon exercise of such assumed Company Stock Option Plan"), whether vested or unvested, will be equal to the quotient determined by dividing the exercise price per share of Company Common Stock at which is greater than such Company Option was exercisable immediately prior to the Cash Merger ConsiderationEffective Time by the Exchange Ratio, rounded up to the nearest whole cent. Continuous employment with Company or its subsidiaries shall be canceled and extinguished without consideration and credited to the 1999 Option Plan shall terminate as optionee for purposes of determining the vesting of all assumed Company Options after the Effective DateTime. (b) At the Effective Time, each outstanding It is intended that Company Stock Option issued pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration Options assumed by Parent shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at qualify following the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes (as incentive stock options as defined in Section 3.15(a)) required 422 of the Code to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to extent such Company Stock OptionOptions qualified as incentive stock options immediately prior to the Effective Time and the provisions of this Section 5.8 shall be applied consistent with such intent. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant Warrant, whether or not then exercisable, will be assumed by Parent. Each Company Warrant so assumed by Parent under this Agreement will continue to have, and be subject to, the same terms and conditions set forth in the applicable Company Warrant immediately prior to the Effective Time (including any vesting provisions), except that (i) each Company Option Plans Warrant will be exercisable (or any other stock option plan, program, arrangement or agreement will become exercisable in accordance with its terms) for that number of whole shares of Parent Common Stock equal to which the Company or any of its subsidiaries is a party that is not vested as product of the Effective Time, the number of shares of Company Common Stock that were issuable upon exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Warrant immediately prior to the Effective Time multiplied by the Exchange Ratio, rounded down to the nearest whole number of shares of Parent Common Stock Option at and (ii) the time per share exercise price for the Company shares of Parent Common Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any issuable upon exercise of such holder's obligations under any applicable employment agreement with the assumed Company or any Subsidiary) equal to an amount, without interest, in cash Warrant will be equal to the excess, if any of the Cash Merger Consideration over quotient determined by dividing the exercise price per Share share of Company Common Stock at which such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreement. (d) If and Warrant was exercisable immediately prior to the extent required Effective Time by the terms of the Company Option PlanExchange Ratio, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options rounded up to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisionsnearest whole cent.

Stock Options. (ai) At As of the Effective TimeCapitalization Date, each outstanding option to purchase Shares (a "an aggregate of 6,500,000 shares of Company Stock Option" or collectively "were subject to issuance pursuant to Company Stock Options"Options granted under the Company Stock Plan. Section 4.2.2(i) issued pursuant to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan"), whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate as of the Effective Date. (b) At the Effective TimeCompany Disclosure Schedule sets forth a true, correct, and complete list of each outstanding Company Stock Option issued pursuant to granted under the 1999 Option Company Stock Plan or and (a) the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as name of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share holder of such Company Stock Option, less (b) the amount number of Taxes shares of Company Stock subject to such outstanding Company Stock Option, (c) the exercise price of such Company Stock Option, (d) the date on which such Company Stock Option was granted or issued, (e) the applicable vesting schedule, and the extent to which such Company Stock Option is vested and exercisable as of the date hereof, and (g) the date on which such Company Stock Option expires. All shares of Company Stock subject to issuance under the Company Stock Plan, upon issuance in accordance with the terms and conditions specified in the instruments pursuant to which they are issuable, will be duly authorized, validly issued, fully paid and non-assessable. (ii) Each outstanding Company Stock Option was granted under the Company Stock Plan and the Company Stock Plan provides that in the event of a Corporate Change (as defined in Section 3.15(athe Company Stock Plan)) required , the Company has the power to cancel any Company Stock Option that has an exercise price that is less than the per share consideration to be withheld paid under applicable Federalthe terms of the Corporate Change transaction, state or local laws and regulations multiplied by the number there are no agreements with any holder of Shares subject to such Company Stock OptionOptions to the contrary. There are no Company Stock Options that have a per share exercise price that is less than the per share Merger Consideration and as of the Closing all Company Stock Options will be canceled and the holders thereof will not be entitled to any Merger Consideration or have any other rights after the Closing with respect to Company Stock Options. (ciii) At Other than the Effective Time, each outstanding Company Stock Option issued pursuant to Options and the Company Option Plans or any other stock option plan, program, arrangement or agreement to which Warrants there are no outstanding (a) securities of the Company or any of its subsidiaries is a party that is not vested as Subsidiaries convertible into or exchangeable for Voting Debt or shares of capital stock of the Effective TimeCompany, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments (b) options, warrants or other agreements or commitments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreement. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which acquire from the Company or any of its subsidiaries Subsidiaries, or obligations of the Company or any of its Subsidiaries to issue, any Voting Debt or shares of capital stock of (or securities convertible into or exchangeable for shares of capital stock of) the Company or (c) restricted shares, restricted stock units, stock appreciation rights, performance shares, profit participation rights, contingent value rights, “phantom” stock or similar securities or rights that are derivative of, or provide economic benefits based, directly or indirectly, on the value or price of, any shares of capital stock of the Company, in each case that have been issued by the Company or its Subsidiaries (the items in clauses (a), (b) and (c), together with the capital stock of the Company, being referred to collectively as “Company Securities”). All outstanding shares of Company Stock, all outstanding Company Stock Options, all outstanding Warrants, and all outstanding shares of capital stock, voting securities or other ownership interests in any Subsidiary of the Company, have been issued or granted, as applicable, in compliance in all material respects with all applicable securities Laws. (iv) There are no outstanding Contracts requiring the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any Company Securities. Neither the Company nor any of its Subsidiaries is a party to any voting, shareholder rights or the terms of other similar agreement with respect to any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisionsSecurities.

Stock Options. (a) At Subject to Section 5.4(b), at the Effective Time, all rights with respect to Company Common Stock under each Company Option then outstanding option to purchase Shares (a "Company Stock Option" or collectively "Company Stock Options") issued pursuant to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan"), whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled converted into and extinguished without consideration become rights with respect to Parent Common Stock, and Parent shall assume each such Company Option in accordance with the 1999 Option Plan shall terminate terms (as in effect as of the date of this Agreement) of the stock option plan under which it was issued and the terms of the stock option agreement by which it is evidenced. From and after the Effective DateTime, (i) each Company Option assumed by Parent may be exercised solely for shares of Parent Common Stock, (ii) the number of shares of Parent Common Stock subject to each such Company Option shall be equal to the number of shares of Company Common Stock subject to such Company Option immediately prior to the Effective Time multiplied by the Exchange Ratio, rounding down to the nearest whole share, (iii) the per share exercise price under each such Company Option shall be adjusted by dividing the per share exercise price under such Company Option by the Exchange Ratio and rounding up to the nearest cent, and (iv) any restriction on the exercise of any such Company Option shall continue in full force and effect and the term, exercisability, vesting schedule and other provisions of such Company Option shall otherwise remain unchanged; provided, however, that each Company Option assumed by Parent in accordance with this Section 5.4(a) shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, stock dividend, reverse stock split, reclassification, recapitalization or other similar transaction effected subsequent to the Effective Time. Parent shall file with the SEC, no later than 10 business days after the date on which the Merger becomes effective, a registration statement on Form S-8 relating to the shares of Parent Common Stock issuable with respect to the Company Options and the Company ESPP Options assumed by Parent in accordance with this Section 5.4(a). (b) At the Effective Time, each outstanding Company Stock Option issued pursuant Prior to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as of the Effective Time, the exercise price Company shall take all action that may be necessary (under the plans pursuant to which Company Options are outstanding and otherwise) to effectuate the provisions of which is less than the Cash Merger Consideration shall be canceled this Section 5.4 and extinguished to ensure that, from and shall become the right to receive an amount, without interest, in cash paid at after the Effective Time equal to the excessTime, if any holders of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes (as defined Options have no rights with respect thereto other than those specifically provided in this Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option5.4. (c) At the Effective Time, each Time all outstanding rights to purchase shares of Company Common Stock Option issued pursuant under the ESPP ("Purchase Rights") shall be converted (in accordance with the Exchange Ratio) into rights to purchase shares of Parent Common Stock (with the number of shares rounded down to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which nearest whole share and the Company or any purchase price as of its subsidiaries is a party that is not vested the offering date for each offering period in effect as of the Effective Time, Time rounded up to the exercise price of which is less than the Cash Merger Consideration nearest whole cent). All such converted Purchase Rights shall be canceled assumed by Parent, and extinguished each offering period in consideration for certain compensatory payments to be paid effect under the ESPP immediately prior to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments Effective Time shall vest be continued in accordance with the terms of the applicable option agreement. (d) If and ESPP until the end of such offering period. No additional offering periods will be granted under the ESPP following the Effective Time, provided that references to the extent required by Company in the terms ESPP and related documents shall mean Parent (except that the purchase price as of the enrollment date for a relevant period shall be determined with respect to the fair market value of the Company Option PlanCommon Stock on such date, or any other as adjusted hereby). Parent agrees that, from and after the Effective Time, the Company's employees not participating in an offering which has been continued under the Company's ESPP may participate in the employee stock option planpurchase plan sponsored by Parent (the "Parent ESPP"), program, arrangement or agreement subject to which the Company or any of its subsidiaries is a party or the terms and conditions of any Company Stock Option granted thereunderthe Parent ESPP, and that service with the Company shall cooperate be treated as service with Parent and Acquisition in obtaining for purposes of determining eligibility of the consent of each holder of outstanding Company Stock Options to Company's employees under the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisionsParent ESPP.

Stock Options. (a) At Each stock option (and any related rights) to purchase capital stock of any of the Effective TimeVSP Reorganization Entities (as hereinafter defined) granted under stock option plans of the VSP Reorganization Entities outstanding prior to the consummation of the Reorganization (as hereinafter defined) (each, each outstanding a "VSP Reorganization Entity Option") shall be converted into a stock option to purchase Shares shares of Class A Common Stock under the Company's Stock Option Plans (a the "Company Stock Option" or collectively Option Plan"Company ) prior to the Closing Date on the terms and conditions described in Schedule 2.05(b) pursuant to the Reorganization (as hereinafter defined). (b) Each stock option (and any related alternative rights) to purchase one share of Common Stock (the "Stock Options") issued pursuant to granted under the Company's 1999 Omnibus Stock Incentive Option Plan (including those granted to current or former employees, consultants and directors of the Company or the VSP Reorganization Entities and including those stock options granted pursuant to Section 1.09(a) above), which Stock Options are outstanding at the Effective Time (whether or not then presently exercisable), other than those that will expire by their terms in connection with or as a result of the Merger and those that are cancelled pursuant to Section 5.09(a) in exchange for newly issued options to purchase shares of Acquiror Common Stock pursuant to separate option exchange agreements (as defined in Section 5.09(a)) entered into between Acquiror and the holders of Stock Options, will be converted at the Effective Time into an option to purchase an equal number of shares of Acquiror Common Stock at a price per share equal to the price per share of Class B Common Stock under each Stock Option (the "1999 Option PlanConsideration"), whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration and the 1999 . The Company Stock Option Plan shall terminate as of the Effective Date. (b) At Time and thereafter the Effective Time, each outstanding Company Stock Option issued pursuant only rights of participants therein shall be the right to receive the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as of consideration set forth in this Section 1.09. Prior to the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreement. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of use its reasonable efforts to cause each holder of outstanding Company Stock Options to the foregoing treatment of execute an Option Exchange Agreement in form and substance acceptable to Acquiror, and shall take such Company Stock Options and to take any other action as may be necessary to effectuate carry out the foregoing provisionsterms of this Section 1.09." Amendment to Section 1.11(b) of the Agreement. Section 1.11(b) of the Agreement is hereby amended and restated to read in its entirety:

Stock Options. (a) At Each option to purchase shares of Company Common Stock that is outstanding at the Effective Time, each outstanding option to purchase Shares whether or not exercisable and whether or not vested (a "Company Option"), shall, without any action on the part of the Company or the holder thereof, be assumed by Parent in such manner that Parent (i) is a corporation "assuming a stock option in a transaction to which Section 424(a) applies" within the meaning of Section 424 of the Code and the regulations thereunder or (ii) to the extent that Section 424 of the Code does not apply to any such Company Option, would be such a corporation were Section 424 of the Code applicable to such Company Option. From and after the Effective Time, all references to the Company in the Company Options shall be deemed to refer to Parent. The Company Options assumed by Parent shall be exercisable upon the same terms and conditions as under the Company Options (including provisions regarding vesting and the acceleration thereof) except that (i) such Company Options shall entitle the holder to purchase from Parent the number of shares of Parent Common Stock Option" or collectively "(rounded down to the nearest whole number of such shares) that equals the product of the Conversion Ratio multiplied by the number of shares of Company Common Stock Options"subject to such Company Option immediately prior to the Effective Time, (ii) issued the option exercise price per share of Parent Common Stock shall be an amount (rounded up to the nearest full cent) equal to the option exercise price per share of Company Common Stock in effect immediately prior to the Effective Time divided by the Conversion Ratio, and (iii) the Company Options shall vest to the extent required pursuant to the Companycurrent terms of such Company Options or other agreements as described in Section 1.7 of the Company Disclosure Schedule (as defined below); provided that if such vesting of Company Options or other provisions with respect to the Company Options would jeopardize the Merger being accounted for as a "pooling of interests," then the Company shall, subject to Parent's 1999 Omnibus Stock Incentive Plan written consent not to be unreasonably withheld, use reasonable best efforts to prevent such vesting or effect of other provisions. Except to the extent required pursuant to the current terms of such Company Options or other agreements as described in Section 1.7 of the Company Disclosure Schedule, the Company shall not take any action to accelerate the vesting of any Company Options. Prior to the Effective Time, the Board of Directors of Parent shall, for purposes of Rule 16b-3(d)(1) promulgated under Section 16 of the Securities Exchange Act of 1934, and the rules and regulations thereunder (the "1999 Option Plan1934 Act"), whether vested or unvested, specifically approve (i) the exercise price of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate as assumption by Parent of the Effective DateCompany Options and (ii) the issuance of Parent Common Stock in the Merger to directors, officers and stockholders of the Company subject to Section 16 of the 1934 Act. (b) At As promptly as practicable after the Effective Time, Parent shall issue to each outstanding Company Stock Option issued pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "holder of a Company Option Plans") that is vested a written instrument informing such holder of the assumption by Parent of such Company Option. As soon as of reasonably practicable after the Effective Time (and in any event no later than five business days after the Effective Time, the exercise price of which provided current option information required therefor is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right delivered to receive an amount, without interest, in cash paid Parent at the Effective Time equal Time), Parent shall file a registration statement on Form S-8 (or any successor form) with respect to the excessshares of Parent Common Stock subject to Company Options and shall use commercially reasonable efforts to maintain such registration statement (or any successor form), if including the current status of any related prospectus or prospectuses, for so long as the Company Options remain outstanding. In addition, Parent shall use commercially reasonable efforts to cause the shares of the Cash Merger Consideration over the exercise price per Share of such Parent Common Stock subject to Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required Options to be withheld under applicable Federal, state or local laws listed on the NYSE and regulations multiplied by the such other exchanges as Parent shall determine. Parent shall take all corporate action necessary to reserve for issuance a sufficient number of Shares subject to such shares of Parent Common Stock for delivery upon exercise of Company Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued Options pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration terms set forth in this Section 1.7. Parent shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed comply with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreement. (d) If and to the extent required by the terms of the Company Option Plan, or any other Plan (as defined in Section 3.3) and use commercially reasonable efforts to cause those Company Options that qualified as incentive stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options options prior to the foregoing treatment of such Company Stock Options and Effective Time to take any other action necessary continue to effectuate qualify as incentive stock options immediately after the foregoing provisionsEffective Time.

Stock Options. (ai) At the Effective Time, each outstanding option to purchase Shares (a "Company Stock Option" or collectively "Company Stock Options") issued pursuant to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan"), whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled deemed to constitute an option to acquire, on the same terms and extinguished without consideration and conditions as were applicable under such Company Option, the 1999 same number of shares of Parent Common Stock as the holder of such Company Option Plan shall terminate as of would have been entitled to receive pursuant to the Effective Date. (b) At Merger had such holder exercised such option in full immediately prior to the Effective Time, each outstanding at a price per share (rounded up to the nearest whole cent) equal to (y) the aggregate exercise price for the Common Shares otherwise purchasable pursuant to such Company Option divided by (z) the number of full shares of Parent Common Stock deemed purchasable pursuant to such Company Option in accordance with the foregoing; provided, however, that in the case of any Company Option to which Section 422 of 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; provided, further, that to the extent that Common Shares acquired upon exercise of a Company Option would be subject to vesting or other restrictions under the terms of the relevant Company Stock Plan under which such Company Option was issued ("Company Restricted Shares"), the number of shares of Parent Common Stock to be issued upon exercise of an assumed Company Option in accordance with the foregoing that bears the same ratio to the total shares of Parent Common Stock deemed purchasable pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "such assumed Company Option Plans") that is vested as the number of Company Restricted Shares bears to the total number of Company Shares issuable under such Company Option shall be subject to the same vesting and other restrictions as would be applicable to the Company Restricted Shares. At or prior to the Effective Time, the exercise price of which is less than the Cash Merger Consideration Company shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal make all necessary arrangements with respect to the excess, if any Company Stock Plans to permit the assumption of the Cash Merger Consideration over the exercise price per Share of such unexercised Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required Options by Parent pursuant to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Optionthis Section. (cii) At Effective at the Effective Time, Parent shall assume each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable relevant Company Stock Plan under which it was issued and the stock option agreement. (d) If and agreement by which it is evidenced. At or prior to the extent required by the terms of the Company Option PlanEffective Time, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company Parent shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other all corporate action necessary to effectuate reserve for issuance a sufficient number of shares of Parent Common Stock for delivery upon exercise of Company Options assumed by it in accordance with this Section. As soon as practicable after the foregoing provisionsEffective Time, Parent shall file a registration statement on Form S-3 or Form S-8, as the case may be (or any successor or other appropriate forms), or another appropriate form (or shall cause such Company Option to be deemed to be an option issued pursuant to a Parent Stock Plan for which shares of Parent Common Stock have previously been registered pursuant to an appropriate registration form) with respect to the Parent Common Stock subject to such Company Options, and shall use its reasonable best efforts to maintain the effectiveness of such registration statements (and maintain the current status of the prospectus or prospectuses contained therein) for so long as such Company Options remain outstanding.

Stock Options. As of the close of business on May 28, 2003: (ai) At the Effective Time, each 4,028,209 shares of Parent Common Stock are subject to issuance pursuant to outstanding option options to purchase Shares Parent Common Stock (a "Company such options, whether or not outstanding, “Parent Options”) under the stock option, stock award, stock appreciation or phantom stock plans of Parent (the “Parent Stock Option" or collectively "Company Option Plans”) other than the Parent Purchase Plan, an aggregate of 2,146,206 of which were unvested, (ii) 1,376,303 shares of Parent Common Stock Options"are reserved for future issuance under the Parent Purchase Plan, and (iii) issued 1,091,435 shares of Parent Common Stock are reserved for future issuance under the Parent Stock Option Plans. All Parent Options granted since May 28, 2003 have been granted in the ordinary course of business. All shares of Parent Common Stock subject to issuance pursuant to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan"), whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration Parent Options and the 1999 Parent Purchase Plans, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, will be duly authorized, validly issued, fully paid and nonassessable. There are no commitments or agreements of any character to which Parent is bound obligating Parent to accelerate the vesting of any Parent Option Plan shall terminate as a result of the Effective Date. Parent Merger or the Company Merger (b) At whether alone or upon the Effective Timeoccurrence of any additional or subsequent events). There are no outstanding or authorized stock appreciation, each outstanding Company Stock Option issued phantom stock, profit participation or other similar rights with respect to Parent. There will be no acceleration of the vesting of any Parent Options held by any employee, director or consultant of Peace, Source or any other Subsidiary of Peace, pursuant to the 1999 Option Plan or the Company's 2000 Parent Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option planotherwise, program, arrangement as a result of the Parent Merger or agreement to which the Company Merger. Upon closing of the Parent Merger, the employees of Source shall be considered as having terminated their employment with Parent or any of its subsidiaries is a party that is not vested Subsidiaries effective as of such closing under the Effective Time, terms of the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Parent Stock Option at the Plans and shall have a period of time the Company Stock Option would otherwise have from such date of termination within which to exercise any vested (provided that Parent Options following which such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Parent Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest expire in accordance with the terms of the applicable option agreement. Option agreements. At the Effective Time of Parent Merger, each Parent Option will be adjusted so that it will be exercisable (dor will become exercisable in accordance with its terms) If and for a number of share of Parent Common Stock equal in fair market value to the extent required consideration received by holders of Parent Common Stock pursuant to Section 1.8(a) hereof pursuant to the terms formula described in Section 3.2(b) of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisionsDisclosure Letter.

Stock Options. (a) At Prior to the Effective Time, the Board of Directors shall adopt such resolutions and take such other actions as are required to approve and effect the matters contemplated by this Section 1.7. The Company shall use its best efforts to obtain any necessary consents of the holders of Options (as defined below) to effect this Section 1.7. (b) The Company shall take all necessary steps to ensure that each option to acquire shares of capital stock of the Company (“Option”) that has been granted under the Company’s 1992 Stock Option Plan, 1993 Non-Employee Directors Stock Option Plan and the 1999 Non-Statutory Stock Option Plan (each, as amended and in effect on the date hereof, the “Option Plans”), or otherwise, and is outstanding as of immediately prior to the Effective Time, will (i) become fully exercisable or “vested” for a period of at least 10 days prior to the Effective Time, contingent upon the occurrence of the Effective Time, with respect to the 1999 Non-Statutory Stock Option Plan and (ii) with respect to the other Option Plans or other Option-related agreements, at the Effective Time to the extent unexercised, automatically shall be cancelled and converted into the right to receive, upon compliance with the provisions noted below, a lump sum cash payment in an amount equal to the product of the following: (i) the excess, if any, of the Per Share Merger Consideration payable per Share over the per share exercise price of each Share subject to such Option, multiplied by (ii) the number of shares of Capital Stock covered by such Option, and in each case less applicable Taxes to be withheld (any payment made pursuant to this Section 1.7 to the holder of any Option shall be reduced by any income or employment Tax withholding required under (x) the Code, (y) any applicable state, local or foreign Tax laws and (z) any other applicable Laws, and, to the extent that any amounts are so withheld, those amounts shall be treated as having been paid to the holder of that Option for all purposes under this Agreement). (c) If, in accordance with Section 1.7(b)(i), the Per Share Merger Consideration payable per Share is less than the per share exercise price of any Option, then any such Option shall automatically be cancelled without any consideration as of the Effective Time. (d) As of the Effective Time, each outstanding option of the Option Plans and any other plan, program or arrangement providing for the issuance or grant of any other interest in respect of securities or rights to purchase Shares (a "acquire securities of the Company Stock Option" or collectively "Company Stock Options") issued pursuant to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan"), whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled terminated and extinguished cancelled (without consideration and any liability on the 1999 Option Plan shall terminate part of Parent or the Surviving Corporation other than as of the Effective Dateexpressly set forth in this Section 1.7). (be) At No party to this Agreement shall be liable to any holder of any Option for any cash delivered to a public official pursuant to and in accordance with any abandoned property, escheat or similar Law. (f) The Company and the Board of Directors shall take any and all actions (including, but not limited to, giving requisite notices to, and using their best efforts to obtain all necessary consents from, holders of Options advising them of such cancellations and any rights pursuant to this Section 1.7) as are necessary to (i) fully advise holders of Options of their rights under the Option Plans or otherwise and the Options in connection with the Merger, and (ii) effectuate the provisions of this Section 1.7 under the terms of the Option Plans or other Option-related agreements. From and after the Effective Time, each outstanding Company Stock other than as expressly set forth in this Section 1.7, no holder of an Option issued shall have any rights in respect thereof other than to receive payment (if any) for the Options as set forth in this Section 1.7, and neither Parent nor the Surviving Corporation shall have any liability or obligation under any of the Option Plans or, other than the obligation to make any required payment set forth in this Section 1.7, with respect to the Options. (g) Any payment to be made to a holder of any Option in accordance with this Section 1.7 shall be made by the Surviving Corporation and, as a prerequisite to receiving any consideration pursuant to this Section 1.7, each holder of an Option shall be required to execute a written acknowledgment to the 1999 effect that (i) the payment of such consideration, if any, will satisfy in full the Company’s obligation to such person pursuant to such Option Plan and (ii) subject to the payment of the such Consideration, if any, such Option held by such holder shall, without any action on the part of the Company or the Company's 2000 Stock holder, be deemed terminated, canceled, void and of no further force and effect as between the Company and the holder and neither party shall have any further rights or obligations with respect thereto. Such written acknowledgment shall be substantially in the form attached hereto as Exhibit 1.7. Until the provisions of this Section 1.7 are satisfied by the holder of each Option, such Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as of shall represent for all purposes after the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become Time only the right to receive an amountthe payments, if any, without interest, from the Surviving Corporation pursuant to this Section 1.7. (h) The Company shall take all necessary action to provide that the Company’s 1993 Employee Stock Purchase Plan (the “ESPP”) and all options or other rights to purchase Shares granted under the ESPP shall be terminated effective as of the date of this Agreement and no participant in cash paid at the Effective Time equal ESPP shall thereafter be granted any rights thereunder to acquire any equity securities of the excessCompany, if the Surviving Corporation, Parent or any Subsidiary of any of the Cash Merger Consideration over foregoing. The Company shall refund the exercise price per Share of such Company Stock Optionpayroll deductions, less if any, credited to each participant’s account under the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amountESPP, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreementESPP. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisions.

Stock Options. (a) At On or prior to the Reverse Split, Oryx will take all action necessary such that each Oryx Stock Option (as defined in Section 3.2(b)) that was granted pursuant to the Oryx Stock Option Plans (as defined in Section 3.2(b)) prior to the Reverse Split and which remains outstanding immediately prior to the Effective Time shall cease to represent a right to acquire shares of Oryx Common Stock and shall be converted, at the Effective Time, each outstanding into an option to purchase Shares (a "Company acquire, on the same terms and conditions as were applicable under the Oryx Stock Option" or collectively ", that number of shares of Company Common Stock Options") issued pursuant determined by multiplying the number of shares of Oryx Common Stock subject to such Oryx Stock Option by the Exchange Ratio, rounded, if necessary, to the Company's 1999 Omnibus nearest whole share of Company Common Stock, at a price per share (rounded to the nearest one- hundredth of a cent) equal to the per share exercise price specified in such Oryx Stock Incentive Plan (Option divided by the "1999 Exchange Ratio; provided, however, that in the case of any Oryx Stock Option Plan"), whether vested or unvestedto which Section 421 of the Code applies by reason of its qualification under Section 422 of the Code, the option price, the number of shares subject to such option and the terms and conditions of exercise price of which is greater than the Cash Merger Consideration, such option shall be canceled and extinguished without consideration determined in a manner consistent with the requirements of Section 424(a) of the Code. On or prior to the Reverse Split, Oryx will amend the Oryx Stock Options and the 1999 Oryx Stock Option Plan shall terminate as Plans to give effect to this Section 1.10 and Section 5.5 and to make such changes in phraseology and form to give effect to the Reverse Split and the Merger and to the substitution of the Effective DateSurviving Corporation for Oryx and Company Common Stock for Oryx Common Stock. (b) At the Effective Time, each outstanding Company Stock Option issued pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested As soon as of practicable after the Effective Time, the exercise price Surviving Corporation shall deliver to the holders of which is less than Oryx Stock Options appropriate notices setting forth such holders' rights pursuant to the Cash Oryx Stock Option Plans (including, as applicable, that, by virtue of the Merger Consideration and pursuant to the terms of the Oryx Stock Option Plans, the Oryx Stock Options have become fully vested and exercisable) and the agreements evidencing the grants of such Oryx Stock Options shall be canceled continue in effect on the same terms and extinguished conditions (subject to the adjustments required by this Section 1.10 after giving effect to the Reverse Split and the Merger and the terms of the Oryx Stock Option Plans). To the extent permitted by law, the Surviving Corporation shall comply with the terms of the Oryx Stock Option Plans and shall become take such reasonable steps as are necessary or required by, and subject to the right provisions of, such Oryx Stock Option Plans, to receive an amount, without interest, in cash paid at have the Oryx Stock Options which qualified as incentive stock options prior to the Effective Time equal continue to the excess, if any qualify as incentive stock options of the Cash Merger Consideration over Surviving Corporation after the exercise price per Share of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock OptionEffective Time. (c) At the Effective Time, each outstanding The Surviving Corporation shall take all corporate action necessary to reserve for issuance a sufficient number of shares of Company Common Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any for delivery upon exercise of its subsidiaries is a party that is not vested as of Oryx Stock Options in accordance with this Section 1.10. Promptly after the Effective Time, the exercise price of which is less than Surviving Corporation shall file a registration statement on Form S-3 or Form S-8, as the Cash Merger Consideration shall case may be canceled and extinguished in consideration for certain compensatory payments to be paid (or any successor or other appropriate forms), with respect to the holder shares of Company Common Stock subject to such options and shall use commercially reasonable efforts to maintain the effectiveness of such Company Stock Option at registration statement or registration statements (and maintain the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any current status of the Cash Merger Consideration over the exercise price per Share of prospectus or prospectuses contained therein) for so long as such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreementoptions remain outstanding. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisions.

Stock Options. (a) At the Effective Time, each outstanding option to purchase Company Shares (each, a "COMPANY STOCK OPTION") under Company Option Plans or under any agreement which Company disclosed in Section 2.3 of the Company Disclosure Schedule, whether or not vested, shall by virtue of the Merger be assumed by Parent. Each Company Stock Option" Option so assumed by Parent under this Agreement will continue to have, and be subject to, the same terms and conditions of such options immediately prior to the Effective Time (including, without limitation, any repurchase rights or collectively "vesting provisions and provisions regarding the acceleration of vesting on certain transactions), except that: (i) each Company Stock Options"Option will be solely exercisable (or will become exercisable in accordance with its terms) issued for that number of whole shares of Parent Common Stock equal to the product of the number of Company Shares that were issuable upon exercise of such Company Stock Option immediately prior to the Effective Time multiplied by the Option Exchange Ratio (as defined below), rounded down to the nearest whole number of shares of Parent Common Stock and (ii) the per share exercise price for the shares of Parent Common Stock issuable upon exercise of such assumed Company Stock Option will be equal to the quotient determined by dividing the exercise price per Company Share at which such Company Stock Option was exercisable immediately prior to the Effective Time by the Option Exchange Ratio, rounded up to the nearest whole cent. Parent shall comply with the terms of all such Company Stock Options and use its best efforts to ensure, to the extent required by, and subject to the provisions of, Company Option Plans and permitted under the Code or other relevant laws and regulations that any Company Stock Options that qualified for tax treatment under Section 422 of the Code prior to the Effective Time and that any Company Stock Options that qualified for tax treatment under Section 102 of the Ordinance prior to the Effective Time continue to so qualify, with the same rights, after the Effective Time. Parent shall take all corporate actions necessary to reserve for issuance a sufficient number of shares of Parent Common Stock for delivery upon exercise of all Company Stock Options pursuant to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan"terms set forth in this Section 5.11(a), whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate as of the Effective Date. (b) At the Effective Time, each outstanding Company Stock Option issued pursuant . Prior to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as of the Effective Time, the exercise Company shall take all actions necessary to effect the transactions contemplated by this Section 5.11(a); provided, however, Company shall not be required to obtain consents from optionees with respect to the option assumption formula set forth herein: The "OPTION EXCHANGE RATIO" shall be equal to the greater of (i) the quotient obtained by dividing the Per Share Cash Consideration by the average closing sale price of which is less than one share of Parent Common Stock as reported on Nasdaq for the Cash Merger Consideration shall be canceled and extinguished and shall become the right five (5) consecutive trading days ending immediately prior to receive an amount, without interest, in cash paid at the Effective Time equal to and (ii) the excesssum of (A) 0.2365, if any of and (B) the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied quotient obtained by dividing $12.375 by the number average closing sale price of Shares subject one share of Parent Common Stock as reported on Nasdaq for the five (5) consecutive trading days ending immediately prior to such Company Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreement. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisions.

Stock Options. (a) At the Effective Time, each option outstanding option (and which by its terms does not lapse on or before the Effective Time) to purchase Shares Company Common Stock (a "Company Stock Option" or collectively "Company Stock OptionsCOMPANY STOCK OPTION") issued pursuant to granted under the Company's 1999 Omnibus 1993 Employee Stock Incentive Plan Option Plan, as amended (the "1999 Option PlanCOMPANY EMPLOYEE OPTION PLAN"), whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate as of the Effective Date. (b) At the Effective Time, each outstanding Company Stock Option issued pursuant to the 1999 Option Plan or the Company's 2000 1993 Outside Director Stock Option Plan (the "2000 Option PlanCOMPANY DIRECTOR PLAN" and, together with the 1999 Company Employee Option Plan, the "COMPANY OPTION PLANS"), whether or not then vested or exercisable, shall be replaced by a comparable option to purchase Parent Common Stock (a "PARENT STOCK OPTION"), after giving effect to the requirements of the Company Option Plans"Plans (including without limitation any provisions with respect to a change of control of the Company) that pursuant to which it was granted and any stock option agreement by which it is vested evidenced. Notwithstanding the foregoing, in the event that, as of the Effective Time, Parent shall not have reserved a sufficient number of shares for issuance upon exercise of each of the Parent Stock Options contemplated by this Section 2.5, then, to the extent of such deficiency and on a pro rata basis, each holder of a Company Stock Option (whether or not then vested or exercisable) shall be entitled to receive, immediately prior to the Effective Time, cash in an amount equal to the difference between (A) the Base Consideration Value minus (B) the per-share exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such applicable Company Stock Option, less . It is intended that the amount of Taxes (foregoing provisions shall be undertaken in a manner that will not constitute a "modification" as defined in Section 3.15(a)) required 424 of the Code as to any stock option which is an "incentive stock option." Each Parent Stock Option shall be withheld under applicable Federal, state or local laws and regulations exercisable for that number of shares of Parent Common Stock equal to the number of the Company Shares subject to the corresponding Company Stock Option multiplied by the number Stock Exchange Ratio, and shall have an exercise price per share equal to its exercise price per Company Share divided by the Stock Exchange Ratio (the "Adjusted Strike Price"). Any resulting fractional share of Shares subject to such Company Parent Common Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant shall be rounded down to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration nearest whole share and Parent shall be canceled and extinguished pay an amount in consideration for certain compensatory payments to be paid cash to the holder of such Company Stock Option at the time Effective Time equal to the product of such fractional share of Parent Common Stock multiplied by an amount equal to the Stock Value minus the Adjusted Strike Price. Parent and the Company Stock Option would otherwise have vested (provided that shall use commercially reasonable efforts to take all such holder is employed with steps as may be required to cause the Company at such time transactions contemplated by this Section 2.5 and has not breached any other dispositions of such holder's obligations under any applicable employment agreement with equity securities of the Company or any Subsidiarydispositions of Parent equity securities in connection with this Agreement by each individual who (i) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreement. (d) If and to the extent required by the terms is a director or officer of the Company Option Planor (ii) at the Effective Time, will become a director or any other stock option planofficer of Parent, program, arrangement or agreement to which be exempt under Rule 16b-3 of the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisionsExchange Act.

Stock Options. (a) At The treatment of outstanding Awards described in this Section 6.3 shall apply to Transferred Individuals, including Transferred Individuals who have terminated employment or who are compensated under a payroll which is administered outside the 50 United States, its territories and possessions, and the District of Columbia; provided, however, if such treatment is EMPLOYEE BENEFITS AGREEMENT not legally permitted, or results in adverse consequences for NSI, any of its affiliates or the Transferred Individual, as determined by NSI in its sole discretion, NSI may determine, in its sole discretion, to provide for a different treatment. Effective TimeImmediately after the Distribution Date, each outstanding option to purchase Shares (a "Company Stock Option" Award or collectively "Company Stock Options") issued pursuant to grant consisting of an option, regardless of the Company's 1999 Omnibus date of the grant, under an NSI Stock Incentive Plan (that is outstanding as of the "1999 Option Close of the Distribution Date for all Transferred Individuals and all Spinco non-employee directors who were previously non-employee directors of NSI shall be converted to options for Spinco Common Stock with the same material terms and conditions under the Spinco Stock Incentive Plan"), whether vested or unvestedand shall be transferred to the recordkeeper of the Spinco Stock Incentive Plan. As soon as practicable after the Distribution Date, the number of options and the exercise price of which is greater than the Cash Merger Consideration, for such options converted to options for Spinco Common Stock shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate as of the Effective Date. (b) At the Effective Time, each outstanding Company Stock Option issued pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together determined in accordance with the 1999 Option Plan, the "Company Option Plans") that is vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other Conversion Formula. Such converted Spinco stock option plan, program, arrangement or agreement grants shall continue to which vest and become exercisable under the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Spinco Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest Incentive Plan in accordance with the terms of the applicable original grant under the NSI Stock Incentive Plan. Spinco shall be the obligor with respect to such options and shall be solely responsible for all stock option agreement. (d) If grants and payments under the Spinco Stock Incentive Plan, with respect to, but not limited to, recordkeeping, administrative costs and fees, payroll taxes, plan maintenance, option exercise and related tax filings. Spinco shall, as soon as practicable after the Distribution Date provide each Transferred Individual with an agreement or notice relating to the extent required by Transferred Individual's options under the terms of the Company Option Spinco Stock Incentive Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisions.

Stock Options. (a) At the Effective Time, each all rights with respect to Company Common Stock under Company Options then outstanding option to purchase Shares (a "Company Stock Option" or collectively "Company Stock Options") issued pursuant to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan"), whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled converted into and extinguished without consideration become rights with respect to Veeco Shares, and Veeco shall assume each such Company Option in accordance with the 1999 Option Plan shall terminate terms (as in effect as of the date of this Merger Agreement) of the stock option plan or other arrangement under which it was issued and the terms of the stock option agreement by which it is evidenced. From and after the Effective DateTime, (i) each Company Option assumed by Veeco may be exercised by the holder thereof solely for Veeco Shares, (ii) the number of Veeco Shares subject to each such Company Option shall be equal to the product of (A) the number of shares of Company Common Stock subject to such Company Option immediately prior to the Effective Time multiplied by (B) the Exchange Ratio, rounding to the nearest whole share, (iii) the per share exercise price under each such Company Option shall be adjusted by dividing (x) the per share exercise price under such Company Option by (y) the Exchange Ratio and rounding to the nearest cent and (iv) any restriction on the exercise or transfer of any such Company Option shall continue in full force and effect in accordance with its terms and the term, exercisability, vesting schedule and other provisions of or relating to such Company Option shall otherwise remain unchanged; PROVIDED, HOWEVER, that each Company Option assumed by Veeco in accordance with this Section 5.05(a) shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, stock dividend, reverse stock split, reclassification, recapitalization or other similar transaction subsequent to the Effective Time. Veeco shall file with the SEC, no later than the date on which the Merger becomes effective, a registration statement on Form S-8 relating to the Veeco Shares issuable with respect to the Company Options assumed by Veeco in accordance with this Section 5.05(a). (b) At the Effective Time, each outstanding Company Stock Option issued pursuant Prior to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as of the Effective Time, the exercise price Company shall take all action that may be necessary (under the plans pursuant to which Company Options are outstanding and otherwise) to effectuate the provisions of which is less than the Cash Merger Consideration shall be canceled this Section 5.05 and extinguished to ensure that, from and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. (c) At after the Effective Time, each outstanding holders of Company Stock Option issued pursuant to the Company Option Plans or any Options have no rights with respect thereto other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished those specifically provided in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreementthis Section 5.05. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisions.

Stock Options. (a) At the Effective Time, each outstanding option The Company will grant Employee options to purchase Shares (a "Company Stock Option" or collectively "Company Stock Options") issued pursuant to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan")10,000 BioTime common shares, whether vested or unvestedno par value, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate as of the Effective Date. (b) At the Effective Time, each outstanding Company Stock Option issued pursuant to the 1999 Option Plan or the Company's 2000 under BioTime’s Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the Option"Company Option Plans"). (i) that is vested as of the Effective Time, the The exercise price of which is less than the Cash Merger Consideration shall Option will be canceled the last closing price of the Company’s (or Related Company’s) common shares immediately prior to approval of this grant by the Compensation Committee of the Company’s Board of Directors. The Option will vest (and extinguished and shall thereby become exercisable) as follows: 1/48th of the right to receive an amount, without interest, in cash paid number of shares of each option grant will vest at the Effective Time equal to end of each full month of employment. Vesting will depend on Employee's continued employment with the excess, if any Company through the applicable vesting date. The unvested portion of the Cash Merger Consideration over Option shall not be exercisable. The Option will not be transferable by Employee during Employee’s lifetime, except as provided in the exercise price per Share Stock Option Agreement. (ii) The vested portion of such the Option shall expire on the earliest of (A) seven (7) years from the date of grants, (B) three months after Employee ceases to be an employee of the Company Stock Option, less the amount of Taxes for any reason other than Employee's death or Disability (as defined in Section 3.15(abelow), or (C) required one year after Employee ceases to be withheld under applicable Federalan employee of the Company due to her death or Disability; provided that if Employee dies during the three month period described in clause (B) of this paragraph, state or local laws the expiration date of the vested portion of the Option shall be one year after the date of her death. (iii) The Option will be subject to the terms and regulations multiplied conditions of the BioTime’s 2002 Stock Option Plan (the "Plan") and a Stock Option Agreement consistent with the Plan. (iv) The Company will also grant Employee an option to purchase 400,000 of the Company's common shares, no par value, (the "OncoCyte Option"). (v) The exercise price of these Options is 75 cents, the fair market value of the Company's common shares on the effective date of the grant, as determined by the Board of Directors. The effective date of the grant will be the date on which this Agreement is effective. The Option will vest (and thereby become exercisable) as follows: 1/48th of the number of Shares subject to such shares will vest at the end of each full month of employment. Vesting will depend on Employee's continued employment with the Company through the applicable vesting date. The unvested portion of the Option shall not be exercisable. The Option will not be transferable by Employee during her lifetime, except as provided in the Stock OptionOption Agreement. (cvi) At The vested portion of the Effective TimeOption shall expire on the earliest of (A) seven (7) years from the date of grant, each outstanding Company Stock Option issued pursuant (B) three months after Employee ceases to be an employee of the Company Option Plans for any reason other than Employee's death or any other stock option planDisability (as defined below), program, arrangement or agreement (C) one year after Employee ceases to which be an employee of the Company due to her death or any Disability; provided that if Employee dies during the three month period described in clause (B) of its subsidiaries is a party that is not vested as this paragraph, the expiration date of the Effective Time, vested portion of the exercise price of which is less than the Cash Merger Consideration Option shall be canceled and extinguished in consideration for certain compensatory payments to be paid to one year after the holder date of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreementher death. (dvii) If and The Option will be subject to the extent required by the terms and conditions of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Company’s Stock Option granted thereunder, Plan (the Company shall cooperate "Plan") and a Stock Option Agreement consistent with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisionsPlan.

Stock Options. (a) Section 2.5.1 At the Effective Time, each outstanding option all unexercised and unexpired options to purchase Shares Company Common Stock (a "“Company Options”) then outstanding, under any stock option plan of the Company, including the First Health Group Corp. 1995 Stock Option Plan, the First Health Group Corp. 1998 Stock Option Plan, the First Health Group Corp. 1998 Directors’ Stock Option Plan, the First Health Group Corp. 2000 Stock Option Plan, the First Health Group Corp. 2001 Stock Option Plan, and the First Amended and Restated First Health Group Corp. 2001 Directors’ Stock Option Plan, as amended, or any other plan, agreement or arrangement (the “Company Stock Option" or collectively "Company Stock Options") issued pursuant to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan"Plans”), whether vested or unvestednot then exercisable, will be assumed by Parent. Each Company Option so assumed by Parent under this Agreement will continue to have, and be subject to, the exercise price of which is greater than same terms and conditions as set forth in the Cash Merger Consideration, shall be canceled and extinguished without consideration and the 1999 Company Stock Option Plan shall terminate as of the Effective Date. (b) At and any agreements thereunder immediately prior to the Effective Time, except that (i) each outstanding Company Option will be exercisable (or will become exercisable in accordance with its terms) for that number of whole shares of Parent Common Stock Option issued pursuant equal to the 1999 product of the number of shares of Company Common Stock that were issuable upon exercise of such Company Option Plan or immediately prior to the Company's 2000 Stock Option Plan Effective Time multiplied by 0.3583 (the "2000 “Option Plan" andExchange Ratio”), together rounded to the nearest whole number of shares of Parent Common Stock and (ii) the per share exercise price for the shares of Parent Common Stock issuable upon exercise of each Company Option will be equal to the quotient determined by dividing the exercise price per share of Company Common Stock at which such Company Option was exercisable immediately prior to the Effective Time by the Option Exchange Ratio, rounded to the nearest whole cent; provided, that the conversion of any Company Options which are incentive stock options within the meaning of Section 422 of the Code into options to purchase Parent Common Stock shall be made so as not to constitute a “modification” of such Company Options within the meaning of Section 424 of the Code. Continuous employment with the 1999 Option PlanCompany or its subsidiaries shall be credited to the optionee for purposes of determining the vesting of all assumed Company Options after the Effective Time. Section 2.5.2 Promptly after the date hereof, the "Company Option Plans"shall use its commercially reasonable efforts to solicit the consent of each holder (“Consents”) that is vested of Company Options outstanding to cancel his or her Company Options (whether or not then exercisable) effective as of the Effective Time, in exchange for a single lump sum cash payment equal to the exercise price product of which is less than (i) the Cash Merger Consideration shall be canceled and extinguished and shall become the right number of shares of Company Common Stock subject to receive an amount, without interest, in cash paid at such Company Option (whether or not then exercisable) immediately prior to the Effective Time equal to and (ii) the greater of (A) the excess, if any any, of the Cash Merger Consideration $18.75 over the exercise price per Share share of such Company Stock Option, less the amount of Taxes Option and (as defined in Section 3.15(a)B) required $1.25. The Company shall use its commercially reasonable efforts to be withheld under applicable Federal, state obtain such Consents on or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant prior to the Company Option Plans or any other stock option planMailing Date, program, arrangement or agreement but notwithstanding anything in this Agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Timecontrary, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments failure to be paid to the holder obtain any or all of such Company Stock Option at the time the Company Stock Option would otherwise have vested consents shall not result in a failure of a condition to Closing (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreementincluding Section 6.2.2 hereof). (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisions.

Stock Options. (a) At the Effective Time, each outstanding unexpired and unexercised option to purchase Shares or acquire a share of Company Common Stock under the Option Plan or otherwise (each, a "Company Stock Option" or collectively "Company Stock Options") issued pursuant shall be converted into an option to purchase the number of shares of Parent Common Stock equal to the Company's 1999 Omnibus product of (x) the Stock Incentive Plan Option Conversion Fraction multiplied by (y) the "1999 Option Plan"number of shares of Company Common Stock which could have been obtained prior to the Effective Time upon the exercise of each such option (rounded to the nearest whole share), whether vested or unvested, at an exercise price per share (rounded to the nearest cent) equal to the exercise price for each such share of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate as of the Effective Date. (b) At the Effective Time, each outstanding Company Common Stock subject to a Company Stock Option issued pursuant to divided by the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" andConversion Fraction, together with the 1999 Option Plan, the "Company Option Plans") that is vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant all references to the Company Option Plans or any other stock in each such option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments deemed to be paid refer to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amountParent, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share where appropriate. The other terms of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right shall continue to receive such payments shall vest apply in accordance with their terms, including any provisions for the acceleration of vesting resulting from the consummation of the transactions contemplated by this Agreement (or any subsequent termination of employment) pursuant to such preexisting terms and conditions. Each Company Stock Option converted pursuant to the terms of this Section 5.7(a) shall be referred to as a "Parent Exchange Option." In connection with the applicable option agreement. (d) If and issuance of Parent Exchange Options, Parent shall reserve for issuance the number of shares of Parent Common Stock that will become subject to Parent Exchange Options pursuant to this Section 5.7(a). As promptly as reasonably practicable after the extent required by the terms of the Company Option PlanEffective Time, or any other stock option plan, program, arrangement or agreement Parent shall issue to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of an outstanding Parent Exchange Option a document evidencing the foregoing assumption by Parent. Parent shall file a registration statement on Form S-8 (or any successor or other appropriate form that Parent is eligible to use) under the Securities Act on the Closing Date with respect to the shares of Parent Common Stock subject to Parent Exchange Options and shall use its reasonable best efforts to cause such registration statement to remain effective until the exercise or expiration of the Parent Exchange Options. For purposes of this Section 5.7(a), the Stock Option Conversion Fraction shall mean the sum of (x) the Mixed Election Stock Exchange Ratio plus (y) the fraction resulting from dividing the Per Share Cash Amount by the closing price per share of the Parent Common Stock on the NYSE on the last trading day immediately preceding the Closing Date. The number of shares subject to any Parent Exchange Option and the exercise price per share of such Parent Exchange Option shall be determined in a manner which would not result in the conversion of Company Stock Options into Parent Exchange Options being treated as a new grant of stock options under Section 409A of the Code, and the Company and Parent shall agree upon any adjustments to the foregoing treatment of such Company Stock Options and to take any other action this Section 5.7(a) necessary to effectuate the foregoing provisionsavoid such new grant of stock options.

Stock Options. (a) At Subject to and conditioned upon the Effective Time, each outstanding option to purchase Shares (a "Company Stock Option" or collectively "Company Stock Options") issued pursuant Executive’s delivering to the Company's 1999 Omnibus Stock Company the Release provided for in Section 16 with all periods for revocation expired and notwithstanding any provision in the Incentive Plan (Compensation Plan, the "1999 1998 Option Plan", other relevant plan or program or this Section 5: (i) for a period of ninety (90) days following the date of the Executive’s Termination (or such longer period as may be set forth in the applicable stock option plan or award agreement), whether but not later than the expiration of the stated option term under the award, all stock options granted to the Executive by the Company that are both outstanding and vested or unvestedimmediately prior to Termination (in accordance with their then existing terms and this Section 5(c)) shall remain outstanding and exercisable, after which all such stock options that have not been exercised shall immediately terminate; and (ii) all stock options granted to the exercise price Executive by the Company which have not otherwise vested shall be forfeited immediately upon Termination; provided, any outstanding unvested stock option award that vests in a single sum determined solely on the basis of the Executive’s continuous employment through a stated vesting period of more than one (1) year shall vest as to such number of stock options stock on the date of the Executive’s Termination as equals the fraction the numerator of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration number of full months (based on the monthly “anniversary” date of the award) so continuously employed from the first day of such vesting period through the Termination Date and the 1999 Option Plan shall terminate as of the Effective Date. (b) At the Effective Time, each outstanding Company Stock Option issued pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as of the Effective Time, the exercise price denominator of which is less the total number of months comprising the vesting period of such award, and such vested options shall remain outstanding and exercisable thereafter for a period of ninety (90) days following the date of the Executive’s Termination (or such longer period as may be set forth in the applicable stock option plan or award agreement), but not later than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any expiration of the Cash Merger Consideration over stated option term under the exercise price per Share of award, after which all such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party options that is have not vested as of the Effective Timebeen exercised shall immediately terminate. For purposes hereunder, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has term “stock option” also means all other similar equity instruments, including, but not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amountlimited to, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreementstock appreciation rights. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisions.

Stock Options. All options (athe “Company Stock Options”) outstanding under Company’s stock option plans or agreements (the “Company Stock Option Plans”), shall be or become fully vested at the Effective Time, and shall, at the option of the holder thereof, either remain outstanding following the Effective Time or be immediately exercised. If a Company Stock Option is exercised, whether before or after the Effective Time, the holder thereof may elect to relinquish a portion of the shares (having equivalent value) subject to such options in lieu of paying the cash exercise price for shares received upon such exercise. At the Effective Time, each outstanding option to purchase Shares (a "the Company Stock Option" Options shall, by virtue of the Merger and without any further action on the part of Company or collectively "the holder thereof, be assumed by Parent. From and after the Effective Time, all references to Company in the Company Stock Options") Option Plans and the applicable stock option agreements issued pursuant to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan"), whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, thereunder shall be canceled and extinguished without consideration and deemed to refer to Parent, which shall have assumed the 1999 Company Stock Option Plan shall terminate Plans as of the Effective Date. (b) At the Effective Time, each outstanding Time by virtue of this Agreement and without any further action. Each Company Stock Option issued pursuant to assumed by Parent (each, a “Substitute Option”) shall be exercisable upon the 1999 Option Plan or same terms and conditions as under the Company's 2000 applicable Company Stock Option Plan and the applicable option agreement issued thereunder, except that (the "2000 A) each such Substitute Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled immediately exercisable for, and extinguished and shall become represent the right to receive an amountacquire, without interest, in cash paid at that whole number of shares of Parent Common Stock (rounded down to the Effective Time nearest whole share) equal to the excess, if any number of shares of Company Common Stock subject to such Substitute Option multiplied by the Cash Merger Consideration over Exchange Ratio and (B) the exercise price per Share share of such Company Parent Common Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) an amount equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share share of Company Common Stock subject to such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest Substitute Option in accordance with the terms of the applicable option agreement. (d) If and effect immediately prior to the extent required Effective Time divided by the terms of Exchange Ratio (the Company Option Planexercise price per share, or any other stock option planas so determined, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options being rounded upward to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisionsnearest full cent).

Stock Options. (a) At the Effective Time, each outstanding option to purchase Shares shares of Company Common Stock (each, a "Company Stock Option" or collectively "Company Stock Options") issued pursuant to under the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Company Option Plan")Plans, whether vested or unvested, the exercise price of which is greater than the Cash Merger Considerationnot vested, shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate as of the Effective Date. (b) At the Effective Time, each outstanding assumed by Parent. Each Company Stock Option issued pursuant so assumed by Parent under this Agreement will continue to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" andhave, together with the 1999 Option Planand be subject to, the "Company Option Plans") that is vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled same terms and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share conditions of such Company Stock OptionOptions immediately prior to the Effective Time (including, less without limitation, any repurchase rights or vesting provisions and provisions regarding the amount acceleration of Taxes vesting on certain transactions, other than the transactions contemplated by this Agreement), except that (as defined i) each Company Stock Option will be exercisable (or will become exercisable in Section 3.15(a)accordance with its terms) required for that number of whole shares of Parent Common Stock equal to be withheld under applicable Federal, state or local laws and regulations multiplied by the product of the number of Shares subject to such shares of Company Common Stock Option. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the were issuable upon exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at immediately prior to the time Effective Time multiplied by the Exchange Ratio, rounded down to the nearest whole number of shares of Parent Common Stock and (ii) the per share exercise price for the shares of Parent Common Stock issuable upon exercise of such assumed Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash will be equal to the excess, if any of the Cash Merger Consideration over quotient determined by dividing the exercise price per Share share of Company Common Stock at which such Company Stock Option was exercisable immediately prior to the Effective Time by the Exchange Ratio, rounded up to the nearest whole cent. Parent shall comply with the terms of all such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoingand use its best efforts to ensure, the right to receive such payments shall vest in accordance with the terms of the applicable option agreement. (d) If and to the extent required by and subject to the terms of provisions of, the Company Option PlanPlans, or any other stock option planand to the extent permitted under the Code, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of that any Company Stock Option granted thereunder, Options that qualified for tax treatment as incentive stock options under Section 422 of the Company Code prior to the Effective Time continue to so qualify after the Effective Time. Parent shall cooperate with take all corporate actions necessary to reserve for issuance a sufficient number of shares of Parent and Acquisition in obtaining the consent Common Stock for delivery upon exercise of each holder of outstanding assumed Company Stock Options to on the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisionsterms set forth in this Section 5.8(a).

Stock Options. As of the close of business on August 4, 2006: (ai) At the Effective Time, each 8,208,706 shares of Company Class A Common Stock and 19,345,782 shares of Company Class B Common Stock were subject to issuance pursuant to outstanding option Company Options (as defined below) to purchase Shares Company Common Stock under the applicable Company Benefit Plans that are stock option plans as set forth on Section 2.12(a) of the Company Disclosure Letter (a "the “Company Stock Option" Option Plans”) (equity or collectively "Company Stock Options") issued other equity-based awards, whether payable in cash, shares or otherwise, granted under or pursuant to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan"), whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate as of the Effective Date. (b) At the Effective Time, each outstanding Company Stock Option issued pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" andPlans, together with the 1999 Option Plan, the "Company Option Plans") that is vested as of the Effective Time, the exercise price of which is less other than the Cash Merger Consideration shall be canceled Company Rights, Company Stock-Based Awards and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes Convertible Debt (as defined in Section 3.15(a2.2(c)), are referred to in this Agreement as “Company Options”), (ii) required to be withheld no shares of Company Class A Common Stock or Class B Common Stock were reserved for future issuance under applicable Federalthe Company Purchase Plan, state or local laws and regulations multiplied by the number (iii) no shares of Shares Company Class A Common Stock and no shares of Class B Common Stock were subject to such issuance pursuant to outstanding Company Stock Option. (cStock-Based Awards. Section 2.2(b) At of the Effective Time, Company Disclosure Letter sets forth a list of each outstanding Company Stock Option issued Stock-Based Award and Company Option, and (1) the particular Company Benefit Plan (if any) pursuant to the which such Company Stock-Based Award or Company Option Plans or any other stock option planwas granted, program, arrangement or agreement to which (2) the Company or any name of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock-Based Award or Company Option, (3) the number of shares of Company Common Stock Option at the time the subject to such Company Stock Option would otherwise have vested Stock-Based Award or Company Option, (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary4) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock-Based Award or Company Option, (5) the date on which such Company Stock-Based Award or Company Option was granted, (6) the applicable vesting schedule, and the extent to which such Company Stock-Based Award or Company Option is vested and exercisable, and (7) the date on which such Company Stock-Based Award or Company Option expires. All shares of Company Common Stock subject to issuance under the applicable Company Benefit Plans, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, would be duly authorized, validly issued, fully paid and nonassessable. The exercise price of each Company Stock-Based Award and Company Option is no less than the fair market value of a share of Company Common Stock as determined on the date of grant of such Company Stock-Based Award or Company Option. All grants of Company Stock-Based Awards and Company Options that would otherwise have vested at such time. Notwithstanding were validly issued and properly approved by the foregoing, Board of Directors of the right to receive such payments shall vest Company in material compliance with all applicable Legal Requirements and recorded on the Company Financials (as defined in Section 2.4(b)) in accordance with the terms of the applicable option agreement. GAAP (d) If as defined in Section 2.4(b)), and no such grants involved any “back dating,” “forward dating” or similar practices with respect to the extent required by the terms effective date of grant. There are no outstanding or authorized stock appreciation, phantom stock, profit participation or other similar rights or equity based awards with respect to the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition than as set forth in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisionsthis Section 2.2(b).

Stock Options. (a) At the Effective Time, each outstanding the Company will assume the option to purchase Shares (a "Company Stock Option" or collectively "Company Stock Options"plans listed on Section 5.7(a) issued pursuant to of the Company's 1999 Omnibus Stock Incentive Plan Seller Disclosure Schedule (the "1999 “Option Plan"), whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled Plans”) and extinguished without consideration and the 1999 Option Plan shall terminate as all of the Effective Date. (b) Seller’s obligations thereunder. At the Effective Time, each outstanding Company Stock Option option issued pursuant to the 1999 Option Plan or Plans (each, an “Option”) shall be deemed to constitute an option to acquire, on the Company's 2000 Stock same terms and conditions as were applicable under such Option Plan (the "2000 Option Plan" andincluding, together with the 1999 Option Planwithout limitation, the "time periods allowed for exercise), except as such terms and conditions are modified by this Section 5.7, a number of shares of Company Option Plans") that is vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time Common Stock equal to the excess, if any product of the Cash Merger Consideration over Exchange Ratio and the number of shares of Seller Common Stock subject to such Option (provided that any fractional shares of Company Common Stock resulting from such calculation shall be rounded to the nearest whole share), and at a price per share (rounded-up to the nearest cent) equal to the exercise price per Share share of such Company the shares of Seller Common Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. (c) At Option divided by the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such timeExchange Ratio. Notwithstanding the foregoing, the Company will make any necessary changes to the exercise price and number of shares of Company Common Stock subject to an Option after the Effective Time to the minimum extent necessary so that the holder of an Option is not subject to penalty under Section 409A of the Code and the related guidance issued thereunder. For purposes hereof, the “Exchange Ratio” means the Per Share Consideration or, if the Company exercises its right under Section 8.1(l)(iii), below, the Adjusted Per Share Consideration (as defined therein). (b) The Company shall take all corporate action necessary to receive such payments shall vest reserve for issuance a sufficient number of shares of Company Common Stock for delivery upon exercise of the Options adjusted in accordance with this Section 5.7. The Company shall file one or more registration statements on Form S-8 (or any successor form) or another appropriate form, promptly after the terms Effective Time, with respect to the Company Common Stock subject to such Options and shall use its reasonable best efforts to maintain the effectiveness of such registration statement or registration statements (and maintain the current status of the applicable option agreement. (drelated prospectus or prospectuses) If and for so long as such Options remain outstanding. With respect to those individuals who subsequent to the extent required by Merger will be subject to the terms reporting requirements under Section 16(a) of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunderExchange Act, the Company shall cooperate administer the Option Plans assumed pursuant to this Section 5.7 in a manner that complies with Parent and Acquisition in obtaining Rule 16b-3 promulgated under the consent of each holder of outstanding Company Stock Options Exchange Act to the foregoing treatment of extent the Option Plans complied with such Company Stock Options and rule prior to take any other action necessary to effectuate the foregoing provisionsMerger.

Stock Options. (a) At the Effective Time, each outstanding option to purchase Shares all options granted by FFY (a "Company Stock Option" or collectively "Company Stock FFY Options") issued pursuant to purchase shares of FFY Common Stock which are outstanding and unexercised immediately prior thereto shall be converted, in their entirety, automatically into options to purchase shares of First Place Common Stock (the "Continuing Options") in an amount and at an exercise price determined as provided below (and otherwise subject to the Companyterms of FFY's 1999 Omnibus Amended and Restated Stock Option and Incentive Plan (the "1999 Option FFY Stock Plan")): (1) The number of shares of First Place Common Stock to be subject to the Continuing Options shall be equal to the product of the number of shares of FFY Common Stock subject to the FFY Options and the Exchange Ratio, whether vested or unvested, provided that any fractional shares of First Place Common Stock resulting from such multiplication shall be rounded down to the nearest share; and (2) The exercise price per share of First Place Common Stock under the Continuing Options shall be equal to the exercise price per share of FFY Common Stock under the FFY Options divided by the Exchange Ratio, provided that such exercise price shall be rounded up to the nearest cent. The adjustment provided herein with respect to any options which are "incentive stock options" (as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the "Code")) shall be and is intended to be effected in a manner which is greater than consistent with Section 424(a) of the Cash Merger Consideration, Code. The duration and other terms of the Continuing Options shall be canceled and extinguished without consideration and the 1999 Option Plan same as the FFY Options, except that all references to FFY shall terminate as of the Effective Datebe deemed to be references to First Place. (b) At all times after the Effective Time, each outstanding Company First Place shall reserve for issuance such number of shares of First Place Common Stock Option issued as necessary so as to permit the exercise of Continuing Options in the manner contemplated by this Agreement and in the instruments pursuant to the 1999 Option Plan or the Company's 2000 which such options were granted. Shares of First Place Common Stock Option Plan (the "2000 Option Plan" andissuable upon exercise of FFY Stock Options shall be covered by an effective registration statement on Form S-8, together with the 1999 Option Plan, the "Company Option Plans") that is vested and First Place shall file a registration statement on Form S-8 covering such shares as of soon as practicable after the Effective Time, the exercise price of which is less but in no event later than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at 30 days after the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock OptionTime. (c) At It is understood that the Effective Timeholders of an FFY Option may exercise such options, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the option, and applicable option agreement. (d) If and regulations, prior to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisionsEffective Time.

Stock Options. (a) At Not later than 30 days prior to the Effective Time, each the Company will send a notice (the "Option Notice") to all holders of outstanding option options to purchase Shares shares of Company Common Stock (a other than options held by any of the Affiliated Stockholders) (the "Company Options") heretofore granted under any stock option, restricted stock or stock appreciation rights plan, program or arrangement of the Company or under any stock option or restricted stock award agreement, including, without limitation, the Company's Employee Stock Option Plan, Stock Option Plan for Outside Directors, 1998 Stock Incentive Plan, and 2002 Stock Plan (collectively, the "Company Stock Option" or collectively Plans"): (i) specifying that such options will not be assumed in connection with the Merger, and (ii) specifying that any Company Stock Options") issued pursuant to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan"), whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate Options outstanding as of the Effective DateTime will thereafter represent only the right to receive the consideration, if any, specified in Section 3.5(c) in accordance with this Agreement. (b) At The Company will permit each holder of a Company Option who desires to exercise all or any portion of such Company Option following receipt of the Option Notice to exercise such Company Option prior to the Effective Time, each outstanding Company Stock Option issued pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Option. (c) At the Effective Time, each Company Option outstanding Company Stock Option issued pursuant immediately prior to the Company Option Plans or any other stock option planEffective Time will, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as by virtue of the Effective TimeMerger and without any action on the part of the holder thereof, be converted into, and represent only, the exercise price right to receive (net of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiarywithholding taxes) equal to an amount, without interest, amount in cash equal to the excess, if any any, of (i) the product of the Cash Merger Consideration over multiplied by the number of shares of Company Common Stock issuable upon exercise price per Share of such Company Option (regardless of whether such Company Option is vested or not) immediately prior to the Effective Time over (ii) the aggregate exercise price of those shares of Company Common Stock Options that would otherwise have vested at issuable upon the exercise of such timeCompany Option immediately prior to the Effective Time. Notwithstanding The aggregate amount payable with respect to each such Company Option pursuant to this Section 3.5(c) is referred to as the foregoing"Option Cash-Out Amount." (d) Promptly following the Effective Time, the Surviving Corporation will cause the Paying Agent to mail to each holder (as of immediately prior to the Effective Time) of a Company Option which was converted into the right to receive the Option Cash-Out Amount pursuant to Section 3.5(c) hereof, (i) a letter of transmittal (which will be in such payments shall vest form and have such other provisions as the Surviving Corporation may reasonably specify), and (ii) instructions for use in receiving the Option Cash-Out Amount payable in respect of such Company Options pursuant to this Section 3.5. Upon the delivery of such letter of transmittal by or on behalf of a holder of a Company Option, duly completed and validly executed in accordance with the terms of instructions thereto, together with the applicable option agreement. (d) If and documentation representing the Company Options surrendered thereby, to the extent required by the terms Paying Agent, such holder of the a Company Option Plan, or any other stock option plan, program, arrangement or agreement will be entitled to which receive the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition Cash-Out Amount payable to it in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment respect of such Company Stock Options and Option pursuant to take any other action necessary to effectuate the foregoing provisionsSection 3.5.

Stock Options. (a) At Effective as of the Effective TimeDistribution Date, each Tenneco shall cause all outstanding option options to purchase Shares Tenneco Common Stock held by employees and officers other than (a "Company Stock Option" i) Active Employees and Former Employees of Automotive Group, (ii) employees of Packaging Corporation of America and (iii) employees of the folding carton division (or collectively "Company Stock Options") issued pursuant persons who have succeeded to the Company's 1999 Omnibus Stock Incentive Plan rights of any persons described in (the "1999 Option Plan"i), whether vested (ii) or unvested(iii) with respect to options to purchase Tenneco Common Stock) to be replaced by options to purchase Packaging Common Stock. Subject to the requirements of applicable law and generally accepted accounting principles, the number, exercise price and other terms of which is greater than such replacement options shall be determined in a manner consistent with that described in Exhibit A attached hereto. Options held by persons described in clause (ii) or (iii) above, not exercised prior to the Cash Merger Consideration, Distribution Date shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate effective as of the Effective Distribution Date. . Options held by Active Employees and Former Employees of Automotive Group (bor persons who have succeeded to the rights of such persons) At shall, unless exercised prior to the Effective TimeDistribution Date, each remain outstanding Company as adjusted as provided herein after the Distribution Date, subject to the requirements of applicable law and generally accepted accounting principles. The parties recognize that in some jurisdictions, Automotive employees were granted rights other than stock options in lieu of the Special Stock Option issued pursuant Award of 100 options per grantee, and in those jurisdictions, the outstanding rights will be adjusted comparably. The Automotive Company options and rights shall have the same terms and conditions as prior to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") Distribution Date except that is vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares options and the option exercise price shall be adjusted as described in Exhibit A attached hereto. To the extent that the exercisability of options to purchase Tenneco Common Stock currently is subject to such Company the attainment of share price hurdles, those hurdles will also be adjusted with respect to both options to purchase Packaging Common Stock Optionand Tenneco Common Stock. Tenneco may grant special pre-Distribution Date exercisability with respect to some or all options which are not otherwise exercisable. (c) At the Effective Time, each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable option agreement. (d) If and to the extent required by the terms of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisions.

Stock Options. (ai) At the Effective Time, each outstanding option to purchase Shares (a "Company Stock Option" or collectively "Company Stock Options") issued pursuant to the Company's 1999 Omnibus Stock Incentive Plan (the "1999 Option Plan"), whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled deemed to constitute an option to acquire, on the same terms and extinguished without consideration and conditions as were applicable under such Company Option, the 1999 same number of shares of Parent Common Stock as the holder of such Company Option Plan shall terminate as of the Effective Date. (b) At the Effective Time, each outstanding Company Stock Option issued would have been entitled to receive pursuant to the 1999 Merger had such holder exercised such option in full immediately prior to the Effective Time (rounded down to the nearest whole number), at a price per share (rounded up to the nearest whole cent) equal to (y) the aggregate exercise price for the Shares otherwise purchasable pursuant to such Company Option Plan or divided by (z) the Company's 2000 number of full shares of Parent Common Stock deemed purchasable pursuant to such Company Option Plan (the "2000 Option Plan" and, together in accordance with the 1999 foregoing; PROVIDED, HOWEVER, that in the case of any Company Option Planto which Section 422 of the Code applies, the "Company Option Plans"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) that is vested as of the Code. At or prior to the Effective Time, the exercise price of which is less than the Cash Merger Consideration Company shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal make all necessary arrangements with respect to the excess, if any Company Stock Plans to permit the assumption of the Cash Merger Consideration over the exercise price per Share of such unexercised Company Stock Option, less the amount of Taxes (as defined in Section 3.15(a)) required Options by Parent pursuant to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock Optionthis Section. (cii) At Effective at the Effective Time, Parent shall assume each outstanding Company Stock Option issued pursuant to the Company Option Plans or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party that is not vested as of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time the Company Stock Option would otherwise have vested (provided that such holder is employed with the Company at such time and has not breached any of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal to an amount, without interest, in cash equal to the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company Stock Options that would otherwise have vested at such time. Notwithstanding the foregoing, the right to receive such payments shall vest in accordance with the terms of the applicable Company Stock Plan under which it was issued and the stock option agreement. (d) If and agreement by which it is evidenced. At or prior to the extent required by the terms Effective Time, Parent shall take all corporate action necessary to reserve for issuance a sufficient number of shares of Parent Common Stock for delivery upon exercise of the Company Option Plan, or any other stock option plan, program, arrangement or agreement to which the Company or any of its subsidiaries is a party or the terms of any Company Stock Option granted thereunder, the Company shall cooperate Options assumed by it in accordance with Parent and Acquisition in obtaining the consent of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisionsthis Section.

Stock Options. (a) At Whenever the Effective TimeCommittee deems it appropriate to grant Options, each outstanding option notice shall be given to purchase Shares (a "Company the eligible employee stating the number of shares for which Options are granted, the Option price per share, whether the Options are Incentive Stock Option" Options or collectively "Company Nonstatutory Stock Options") issued pursuant , the extent to the Company's 1999 Omnibus which Stock Incentive Plan Appreciation Rights are granted (the "1999 Option Plan"as provided in Section 7), whether vested or unvested, the exercise price of which is greater than the Cash Merger Consideration, shall be canceled and extinguished without consideration and the 1999 Option Plan shall terminate as conditions to which the grant and exercise of the Effective DateOptions are subject. This notice shall constitute the stock option agreement between the Company and the eligible employee. (b) At the Effective Time, each outstanding The exercise price of shares of Company Stock covered by an Option issued pursuant to the 1999 Option Plan or the Company's 2000 Stock Option Plan (the "2000 Option Plan" and, together with the 1999 Option Plan, the "Company Option Plans") that is vested as shall be not less than 100% of the Effective TimeFair Market Value of such shares on the Date of Grant. If the employee is a 10% Shareholder and the Option is an Incentive Stock Option, the exercise price of which is shall be not less than the Cash Merger Consideration shall be canceled and extinguished and shall become the right to receive an amount, without interest, in cash paid at the Effective Time equal to the excess, if any 110% of the Cash Merger Consideration over the exercise price per Share Fair Market Value of such Company Stock Option, less shares on the amount Date of Taxes (as defined in Section 3.15(a)) required to be withheld under applicable Federal, state or local laws and regulations multiplied by the number of Shares subject to such Company Stock OptionGrant. (c) At Options may be exercised in whole or in part at such times as may be specified by the Effective Time, each outstanding Company Committee in the employee's stock option agreement; provided that the exercise provisions for Incentive Stock Options shall in all events not be more liberal than the following provisions: (i) No Incentive Stock Option issued pursuant may be exercised after the first to occur of (x) ten years (or, in the case of an Incentive Stock Option granted to a 10% Shareholder, five years) from the Date of Grant, (y) three months from the employee's retirement or termination of employment with the Company and its Parent and Subsidiary corporations for reasons other than Disability or death, or (z) one year from the employee's termination of employment on account of Disability or death. (ii) Except as otherwise provided in this paragraph, no Incentive Stock Option Plans or any other stock option plan, program, arrangement or agreement to which may be exercised unless the employee is employed by the Company or any of its subsidiaries is a party that is not vested as Parent or Subsidiary of the Effective Time, the exercise price of which is less than the Cash Merger Consideration shall be canceled and extinguished in consideration for certain compensatory payments to be paid to the holder of such Company Stock Option at the time of the exercise (or was so employed not more than three months before the time of the exercise) and has been employed by the Company or a Parent or Subsidiary of the Company at all times since the Date of Grant. If an employee's employment is terminated other than by reason of his Disability or death at a time when the employee holds an Incentive Stock Option that is exercisable (in whole or in part), the employee may exercise any or all of the exercisable portion of the Incentive Stock Option (to the extent exercisable on the date of termination) within three months after the employee's termination of employment. If an employee's employment is terminated by reason of his Disability at a time when the employee holds an Incentive Stock Option that is exercisable (in whole or in part), the employee may exercise any or all of the exercisable portion of the Incentive Stock Option (to the extent exercisable on the date of Disability) within one year after the employee's termination of employment. If an employee's employment is terminated by reason of his death at a time when the employee holds an Incentive Stock Option that is exercisable (in whole or in part), the Incentive Stock Option may be exercised (to the extent exercisable on the date of death) within one year after the employee's death by the person to whom the employee's rights under the Incentive Stock Option shall have passed by will or by the laws of descent and distribution. (iii) An Incentive Stock Option by its terms, shall be exercisable in any calendar year only to the extent that the aggregate Fair Market Value (determined at the Date of Grant) of the Company Stock Option would otherwise have vested with respect to which incentive stock options are exercisable for the first time during the calendar year does not exceed $100,000 (provided that such holder is employed with the "Limitation Amount"). Incentive Stock Options granted under the Plan and similar incentive options granted after 1986 under all other plans of the Company at such time and has not breached any Parent or Subsidiary of such holder's obligations under any applicable employment agreement with the Company or any Subsidiary) equal shall be aggregated for purposes of determining whether the Limitation Amount has been exceeded. The Board may impose such conditions as it deems appropriate on an Incentive Stock Option to an amount, without interest, in cash equal to ensure that the excess, if any of the Cash Merger Consideration over the exercise price per Share of such Company foregoing requirement is met. If Incentive Stock Options that would otherwise have vested at such time. Notwithstanding first become exercisable in a calendar year exceed the foregoingLimitation Amount, the right excess Options will be treated as Nonstatutory Stock Options to receive such payments shall vest the extent permitted by law. (d) The Committee may, in accordance with its discretion, grant Options which by their terms become fully exercisable upon a Change of Control, notwithstanding other conditions on exercisability in the terms of the applicable stock option agreement. (de) If and The maximum number of shares with respect to which Nonstatutory Options or Stock Appreciation Rights may be granted in any calendar year to an employee eligible to participate in the Plan is as follows: the Chief Executive Officer, 1,500,000; each of the next four most highly compensated employees, 1,000,000; each other eligible employee, 500,000. (f) The Committee may, in its discretion, grant Options containing or amend Options previously granted to provide for a Reload Feature subject to the extent required by limitations of Section 10(d). (g) Notwithstanding paragraph (c) above, the terms Committee may, in its discretion, amend a previously granted Incentive Stock Option to provide for more liberal exercise provisions; provided however if the Incentive Stock Option as amended no longer meets the requirements of Code section 422, and as a result such Option no longer qualifies for favorable Federal income tax treatment under Code section 422, the amendments shall not become effective without the written consent of the Company Participant and provided further that no Incentive Stock Option Planmay be exercised after ten (10) years (or, or any other stock option plan, program, arrangement or agreement to which in the Company or any case of its subsidiaries is a party or the terms of any Company an Incentive Stock Option granted thereunderto a 10% Shareholder, five (5) years) from the Company shall cooperate with Parent and Acquisition in obtaining the consent Date of each holder of outstanding Company Stock Options to the foregoing treatment of such Company Stock Options and to take any other action necessary to effectuate the foregoing provisionsGrant.