Common use of Stock Options Clause in Contracts

Stock Options. (a) Either prior to or as soon as practicable following the consummation of the Offer, the Company Board (or, if appropriate, any committee administering the Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Stock Options heretofore granted under any stock option program or arrangement of the Company (collectively, the "Stock Plans") or any other stock option plan to provide that, at the Effective Time of the Merger, each Stock Option outstanding immediately prior to the acceptance for payment of shares of Common Stock pursuant to the Offer (whether or not vested) shall be canceled in exchange for a cash payment by the Company of, or can only be exercised for net cash equal to, an amount equal to (i) the excess, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Common Stock subject to such Stock Option, multiplied by (ii) the number of shares of Common Stock for which such Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable pursuant to this Section 7.04 shall be subject to any required withholding of taxes and shall be paid without interest. (c) The Stock Plans shall terminate as of the Effective Time of the Merger, and the provisions in any other 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 of the Merger, and the Company shall ensure that following the Effective Time of the Merger no holder of a Stock Option or any participant in any Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving Corporation.

Stock Options. (a) Either prior to or as As soon as reasonably practicable following the consummation date of the Offerthis Agreement, the Company Board of Directors (or, if appropriate, any committee administering thereof with responsibility for the administration of the Company Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Stock Options heretofore granted under any stock option program or arrangement of the Company (collectively, the "Stock Plans") or any other stock option plan to provide that, unless required by the applicable Company Stock Plan, each unvested Company Stock Option outstanding at the Effective Time of is terminated and each vested and, if required by the Mergerapplicable Company Stock Plan, each unvested Company Stock Option outstanding immediately prior to at the acceptance for payment of shares of Common Stock pursuant to the Offer (whether or not vested) Effective Time shall be canceled in exchange for a cash payment by converted into the Company of, or can only be exercised for net cash equal to, right to receive from the Surviving Corporation an amount equal to (i) the excess, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer Per Share Merger Consideration over (B) the exercise price per share of Common Stock subject to such Company Stock Option, multiplied by (ii) the number of shares of Common Stock for which such Company Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable pursuant to this Section 7.04 6.04 shall be subject to any required withholding of taxes required by applicable Law and shall be paid without interest. The Company shall provide all appropriate notices as shall be necessary to effectuate the foregoing. Notwithstanding anything to the contrary contained in this Agreement, payment as to a particular holder shall, at Purchaser’s request, be withheld in respect of any Company Stock Option until all necessary notices are given and consents are obtained from such holder. (c) The Company Stock Plans shall terminate as of the Effective Time of the MergerTime, and the provisions in any other Benefit Plan 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 of the MergerTime, and the Company shall ensure that following the Effective Time of the Merger no holder of a Company Stock Option or any participant in any Company Stock Plan or other Benefit Plan Plans shall have any right thereunder to acquire any capital stock of the Company or the Surviving Corporation. (d) As of the date hereof, the Company has terminated the Stock Repurchase Program.

Stock Options. (a) Either The Company shall take all actions or cause all such actions to be taken prior to or as soon as practicable following the consummation of the Offer, the Company Board (or, if appropriate, any committee administering the Stock Plans) shall adopt such resolutions or take such other actions Commencement Date as are required necessary to adjust ensure that, immediately prior to the terms of Effective Time, all then outstanding options to purchase Common Stock Options heretofore granted under any stock option program or arrangement of the Company set forth on Schedule 3.03-1 of the Company Disclosure Schedule (collectively, the "Stock PlansCompany Options") ), whether or any other stock option plan to provide thatnot exercisable, at the Effective Time of the Merger, each Stock Option outstanding immediately prior to the acceptance for payment of shares of Common Stock pursuant to the Offer (whether or not vested, and whether or not performance-based, under the Company's 1992 Equity Incentive Stock Option Plan and 2001 Equity Incentive Plan (collectively, the "Company Stock Option Plans") that are held by those persons set forth on Schedule 2.04A of the Company Disclosure Schedule (as defined in Section 3.01 hereof), shall be canceled in exchange for a cash payment by automatically converted into the Company of, or can right to receive only be exercised for net cash equal to, an amount of cash (net of applicable withholding Taxes) equal to (ix) the excessdifference, if any, of (A) between the price per share of Common Stock to be paid pursuant to the Offer over (B) Per Share Amount less the exercise price per share of Common Stock subject to payable upon exercise of such Stock Option, Company Options multiplied by (iiy) the number of shares of Common Stock for which issuable thereunder upon exercise immediately prior to the Effective Time. Additionally, the Company shall take all actions or cause all such Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents of the holders of the Stock Options are necessary actions to effectuate the foregoing cash-out. After be taken prior to the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. 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 (bthe "Remaining Options") All shall be converted as set forth above. The Company shall use its reasonable best efforts to ensure that as soon as practicable and in 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 Options to the conversion of such Company 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 7.04 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 subject 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 required withholding holder of taxes and shall be paid a Company Option (except for the payments described in this Section 2.04) without interestthe prior written consent of Parent. (cb) The Subject to Section 2.04(a) hereof, all Company Stock Option Plans shall terminate as of the Effective Time of the Merger, and the provisions in any other Benefit Plan 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 Time. The Company shall use its reasonable best efforts to ensure that, immediately following the consummation of the MergerOffer, and the Company shall ensure that following the Effective Time of the Merger no holder of a Stock Company Option or any participant in any Company Stock Plan or other Benefit Option Plan shall have any right thereunder to acquire any capital stock of the Company Company, Parent or the Surviving Corporation. (c) The Company shall take all actions necessary pursuant to the terms 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. (ai) Either As of the Effective Time, each Company Option that is outstanding and unexercised immediately prior to the Effective Time shall be cancelled, by virtue of the Merger and without any action on the part of any holder of any Company Option; provided, however, that no Company Option may be exercised after the seventh (7th) day prior to the Closing Date. With respect to Company Options that are vested or become vested by the time of the Closing (the “Vested Options”), such Vested Options will be canceled in consideration for the right to receive (in accordance with and subject to the Israeli Option Ruling, if applicable), as soon promptly as practicable following the consummation of the Offer, the Company Board (or, if appropriate, any committee administering the Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Stock Options heretofore granted under any stock option program or arrangement of the Company (collectively, the "Stock Plans") or any other stock option plan to provide that, at the Effective Time of (and in any event no later than the Merger, each Stock Option outstanding immediately prior to the acceptance for payment of shares of Common Stock pursuant to the Offer (whether or not vested) shall be canceled in exchange for a cash payment by the Company of, or can only be exercised for net cash equal tofifth Business Day thereafter), an amount in cash equal to the product of (iA) the number of Company Ordinary Shares previously subject to such Vested Option and (B) the excess, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer Per Share Merger Consideration over (B) the exercise price per share of Common Stock Company Ordinary Share previously subject to such Stock Vested Option, multiplied by less any required withholding Taxes (the “Option Cash Payment” and the sum of all such payments, the “Total Option Cash Payments”). As of the Effective Time, all Company Options shall no longer be outstanding and shall automatically cease to exist, and each holder of a Company Option shall cease to have any rights with respect thereto, except the right of holders of Vested Options to receive the Option Cash Payment, if applicable. Prior to the Effective Time, the Company shall take the actions necessary to effectuate this Section 2.6(c), including providing holders of Company Options with notice of their rights with respect to any such Company Options as provided herein. (ii) As promptly as practicable following the number of shares of Common Stock for which such Stock Option Effective Time and in any event not later than the fifth Business Day thereafter, the Exchange Agent shall not theretofore have been exercised. The Company represents and warrants that no consents transfer to the account designated by the plan administrator under the applicable plan the portion of the Total Option Payments to which holders of the Stock Company Options (other than Company 102 Securities) are necessary entitled to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable receive pursuant to this Section 7.04 2.6. As soon as reasonably practicable thereafter, the applicable plan administrator, in coordination with the Surviving Company, shall pay to each holder of a Company Option (other than holders of Company 102 Securities) the amounts contemplated by this Section 2.6, less applicable deductions and withholding at the time of payment. All payments with respect to Company 102 Securities, as set forth on a schedule to be subject to any required withholding of taxes and shall be paid without interest. (c) The Stock Plans shall terminate as of the Effective Time of the Merger, and the provisions in any other 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 of the Merger, mutually agreed upon by Parent and the Company on or prior to the Closing Date, which schedule shall ensure that following be in a form reasonably satisfactory to Parent (the “Option Schedule”), shall be delivered by the Exchange Agent to the 102 Trustee, as soon as practicable after the Effective Time Time, to be held and distributed pursuant to the agreement with the 102 Trustee and applicable Legal Requirements (including the provisions of Section 102 of the Merger no holder of a Stock Ordinance and the regulations and rules promulgated thereunder). The 102 Trustee shall comply with any applicable Israeli Tax withholding requirements with respect to the payment in respect to Company 102 Securities and with such procedures as may be required by the Israeli Option or any participant in any Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving CorporationRuling (as defined hereinafter), if obtained.

Stock Options. (a) Either prior to or as As soon as practicable following the consummation date of this Agreement, the Board of Directors of the Offer, the Company Board (or, if appropriate, any committee administering the Individual Grants, the 1985 Stock Option Plan or the 1996 Stock Option Plan, collectively, the "Stock Option Plans") shall adopt such resolutions or take such other actions as are may be required, including, without limitation, using its reasonable best efforts to obtain the consent of each holder of the Company Stock Options (provided, that the Company will not be required to adjust take any action in violation of the terms of all outstanding any Company Stock Options heretofore granted under Option Plan or in breach of any stock option program or arrangement of the Company (collectivelyunderlying optionee agreement), the "Stock Plans") or any other stock option plan to provide that, so that at the Effective Time of the MergerTime, each then outstanding Company Stock Option outstanding immediately prior to the acceptance for payment of purchase or acquire shares of Company Common Stock pursuant to under the Offer (Stock Option Plans, whether or not then exercisable or vested) , shall be canceled and shall represent the right to receive the following consideration in exchange settlement thereof: for a cash payment by the Company of, or can only be exercised for net cash equal to, an amount equal to (i) the excess, if any, of (A) the price per each share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Company Common Stock subject to such Company Stock Option, multiplied including any additional shares subject thereto by (ii) the number reason of shares of Common Stock for which such Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents their terms upon consummation of the holders "change of control" resulting from the Stock Options are necessary Offer or the Merger, an amount (subject to effectuate any applicable withholding tax) in cash equal to the foregoing cash-out. After difference between the date Merger Consideration and the per share exercise price of this Agreement, neither the such Company Board nor any committee thereof shall cause any Stock Option to become exercisable the extent such difference is a positive number (such amount in cash as a result of described above being hereinafter referred to as the execution of the Operative Agreements or the consummation of the Transactions"Option Consideration"). (b) All amounts payable pursuant The surrender of a Company Stock Option to this the Company in exchange for the Option Consideration as set forth in Section 7.04 6.04(a) shall be subject deemed a release of any and all rights the holder had or may have had in respect of such Company Stock Option. Prior to any required withholding of taxes and shall be paid without interest. (c) The Stock Plans shall terminate as of the Effective Time Time, the Company shall take all action necessary (including causing the Board of the Merger, and the provisions in any other Benefit Plan providing for the issuance, transfer or grant of any capital stock Directors of the Company (or any interest in respect of any capital stock of committees thereof) to take such actions as are allowed by the Company shall be deleted as of the Effective Time of the MergerStock Option Plans) to ensure that, and the Company shall ensure that following the Effective Time of the Merger Time, no holder of a Stock Option or any participant in any Company Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock equity securities of the Company or Company, the Surviving CorporationCorporation or any subsidiary thereof. (c) Upon the Effective Time, Parent shall, or shall cause the Surviving Corporation to, pay to each holder of a Company Stock Option under the Stock Option Plans the Option Consideration in respect thereof. No interest shall be paid or accrued on such Option Consideration. Until settled in accordance with the provisions of this Section 6.04(c), each Company Stock Option under the 1996 Stock Option Plan shall be deemed at any time after the Effective Time to represent for all purposes only the right to receive the Option Consideration. (d) The Company shall cause the ESPP to terminate at the Effective Time and shall promptly refund to each Participant (as defined in the ESPP) the cash balance in the Participant's account in accordance with the terms of the ESPP.

Stock Options. (a) Either prior The Company shall take all actions necessary and appropriate to or as soon as practicable following the consummation cause all options to purchase any shares of the Offer, the Company Board (or, if appropriate, any committee administering the Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Stock Options heretofore granted under any capital stock option program or arrangement of the Company (collectivelyin each case, the an "Stock PlansOption") or any other stock option plan to provide that, at the Effective Time of the Merger, each Stock Option that are outstanding immediately prior to the acceptance for payment of shares of Common Stock pursuant to the Offer (Effective Time, whether or not vested) then exercisable, to become fully exercisable immediately prior to the Effective Time. Prior to the Effective Time, the Company shall make all reasonable efforts to cause each Option outstanding at the Effective Time to be canceled at the Effective Time, in consideration for which the holder thereof shall be canceled in exchange for a cash payment by the Company of, or can only be exercised for net cash equal to, entitled to receive an amount equal to (i) the product of (x) the number of shares of capital stock of the Company subject to such Option and (y) the excess, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer Merger Consideration over (B) the exercise price per share for the purchase of Common Stock the shares of capital stock of the Company subject to such Stock Option, multiplied by minus (ii) the number all applicable federal, state and local taxes required to be withheld in respect of shares of Common Stock for which such Stock Option Option. Parent shall not theretofore have been exercised. The Company represents and warrants that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither pay or cause the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of pay the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable pursuant to this Section 7.04 2.07(a) as soon as reasonably practicable following the Effective Time with funds provided by Parent. The cancellation of each Option in exchange for the consideration contemplated by this Section 2.07(a) shall be subject to deemed a release of any required withholding and all rights the holder of taxes and shall be paid without interestan Option had or may have had in respect thereof. (cb) The Company shall take all actions necessary and appropriate so that all stock option or other equity-based plans maintained with respect to the Shares, including the plans listed in Section 3.03 of the Disclosure Schedule ("Stock Plans Option Plans"), shall terminate as of the Effective Time of the Merger, and the provisions in any other 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 of the MergerTime, and the Company shall take all actions necessary and appropriate to ensure that following the Effective Time of the Merger no holder of a Stock an Option or any participant in any Stock Plan or other Benefit Option Plan shall have any right thereunder to acquire any capital stock of the Company Company, Parent, Purchaser or the Surviving Corporation. (c) Prior to the Effective Time, the Company shall (i) use its commercially reasonable efforts (but not including any payment to holders of Options) to obtain all necessary consents from, and provide (in a form acceptable to Parent) any required notices to, holders of Options, and (ii) amend the terms of the applicable Stock Option Plan and any then outstanding Options, in each case as is necessary to give effect to the provisions of Sections 2.07(a) and (b).

Stock Options. (a) Either At the earlier of (i) the Effective Time or (ii) immediately prior to the expiration of the Offer (provided that the settlement of the options below, when taken together with Shares tendered immediately prior to such expiration, meets the 90% Tender Condition), each holder of a then outstanding option to purchase Shares under the Company's 1987 Stock Option Plan and 1996 Stock Option Plan (collectively, the "Stock Option Plans"), whether or not then exercisable (the "Options"), shall, in settlement thereof, receive for each Share subject to such Option an amount (subject to any applicable withholding tax) in cash equal to the difference between the Offer Consideration and the per Share exercise price of such Option to the extent such difference is a positive number (such amount being hereinafter referred to as, the "Option Consideration"); provided, however, that with respect to any person subject to Section 16(a) of the Exchange Act, any such amount shall be paid as soon as practicable following after the consummation first date payment can be made without liability to such person under Section 16(b) of the Exchange Act. Upon receipt of the Option Consideration, the Option shall be canceled. The surrender of an Option to the Company in exchange for the Option Consideration shall be deemed a release of any and all rights the holder had or may have had in respect of such Option. Prior to the expiration of the Offer, the Company Board (or, if appropriate, any committee administering shall obtain all necessary written consents or releases from holders of Options under the Stock Plans) shall adopt such resolutions or Option Plans and take all such other actions lawful action as are required may be necessary to adjust give effect to the terms transactions contemplated by this Section 3.5. To the extent that Parent is satisfied in its sole good faith discretion that the settlement of all outstanding Stock Options heretofore granted under any stock option program or arrangement will result in satisfaction of the Company (collectively, 90% Tender Condition on the "Stock Plans") or any other stock option plan to provide that, at the Effective Time expiration of the Merger, each Stock Option outstanding immediately prior to the acceptance for payment of shares of Common Stock pursuant Offer and that all other conditions to the Offer (whether or not vested) shall be canceled in exchange for a cash payment by the Company of, or can only be exercised for net cash equal to, an amount equal to (i) the excess, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Common Stock subject to such Stock Option, multiplied by (ii) the number of shares of Common Stock for which such Stock Option shall not theretofore have been exercised. The Company represents and warrants met, Parent will loan up to $13,000,000 for that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactionspurpose. (b) All amounts payable The Company shall terminate the Company Employee Stock Purchase Plan (the "Stock Purchase Plan") as of the Effective Time pursuant to this Section 7.04 shall be subject to any required withholding of taxes Article IX thereof and shall be paid without interest. refund all payroll deductions for the current Quarterly Investment Period (c) The as defined in the Stock Purchase Plan). All Stock Option Plans shall also terminate as of the Effective Time of the Merger, and the provisions in any other Benefit Plan plan, program or arrangement providing for the issuance, transfer issuance or grant of any other interest in respect of the capital stock of the Company or any interest in respect of any capital stock of the Company Subsidiary thereof shall be deleted canceled as of the Effective Time of the Merger, and the Time. The Company shall take all action necessary to ensure that following the Effective Time of no participant in the Merger no holder of a Stock Purchase Plan, any Stock Option or any participant in any Stock Plan or other Benefit Plan plans, programs or arrangements shall have any right thereunder to acquire any capital stock equity securities of the Company or Company, the Surviving CorporationCorporation or any Subsidiary thereof and to terminate all such plans.

Stock Options. (a) Either prior With respect to or as soon as practicable following the consummation of the Offer, the Company Board (or, if appropriate, any committee administering the Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Stock Options heretofore option granted under any employee or director stock option program or compensation plan or other arrangement of with the Company to purchase shares of Company Common Stock (collectively, the "Stock Plans"an “Option”) or any other stock option plan to provide that, at the Effective Time of the Merger, each Stock Option outstanding that is exercisable immediately prior to the acceptance for payment of shares of Common Stock pursuant Closing Date (a “Vested Option”), the Company shall, prior to the Offer (whether or not vested) shall be canceled Closing Date, take all actions that are necessary to cause the holder of such Vested Option to receive, in exchange for cancellation of the Option and in lieu of any other awards with respect to the Option, promptly after the Effective Time, a cash payment by from the Company of, or can only be exercised for net cash equal to, Surviving Corporation in an amount equal to (i) the excessamount, if any, of (A) by which the price per Merger Consideration exceeds the per-share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Common Stock subject to such Stock the Option, multiplied by (ii) the number of shares of Company Common Stock for which such Stock subject to the Option shall not theretofore have been exercisedimmediately before the Effective Time (the “Option Settlement Amount”), subject to the holder’s consent, if required, and subject to all required tax withholdings by the Surviving Corporation. The Company represents and warrants that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof Parent shall cause the Option Settlement Amount payable under this Section 1.8 to be paid by the Surviving Corporation as soon as reasonably practicable following the Effective Time but in any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactionsevent within 15 days thereof. (b) All amounts payable pursuant With respect to this Section 7.04 shall any Option or portion thereof that is not exercisable immediately prior to the Closing Date (an “Unvested Option”), the Company shall, at the direction of Parent, either (i) take such action as may be necessary to convert such Unvested Option into a Vested Option to be settled as provided in paragraph (a) above, (ii) provide for the cancellation of such Unvested Option, subject to any required withholding of taxes and shall the holder’s consent, or (iii) take such other action as may be paid without interestdeemed appropriate by Parent, subject to the holder’s consent, if required. Parent may direct different treatment for different Option holders. (c) The Stock Plans shall terminate as of the Effective Time of the Merger, and the provisions in any other 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 of the Merger, and the Company shall ensure that following the Effective Time of the Merger no holder of a Stock Option or any participant in any Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving Corporation.

Stock Options. (a) Either Each option held by any Person to acquire shares of Company Capital Stock ("Company Stock Option") that is outstanding immediately prior to the Effective Time, whether or not then vested or exercisable, shall, effective as of the Effective Time, be cancelled in exchange for a single lump sum cash payment, to be paid by the Surviving Corporation as soon as practicable following the consummation Closing upon its receipt of the Offer, the Company Board (or, if appropriate, any committee administering the Stock Plans) shall adopt a release or other documentation by such resolutions or take such other actions as are required to adjust the terms of all outstanding Stock Options heretofore granted under any stock option program or arrangement of the Company (collectively, the "Stock Plans") or any other stock option plan to provide that, at the Effective Time of the Merger, each Stock Option outstanding immediately prior Person reasonably satisfactory to the acceptance for payment Parent and the Surviving Corporation, equal to the product of (i) the number of shares of Company Common Stock pursuant subject to the Offer such Company Option and (whether or not vested) shall be canceled in exchange for a cash payment by the Company of, or can only be exercised for net cash equal to, an amount equal to (iii) the excess, if any, of (A) the price per Merger Consideration for a share of Company Common Stock to be paid pursuant to at the Offer Effective Time over (B) the exercise price per share of Common Stock subject to such Stock Option, multiplied by (ii) the number of shares of Common Stock for which such Company Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents of (the holders of aggregate amount payable under this Section 2.9, the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock "Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the TransactionsConsideration"). (b) All amounts payable pursuant Prior to the Effective Time, the Company shall (i) use its reasonable best efforts to obtain any consents from holders of Company Stock Options and (ii) amend, in a manner reasonably acceptable to the Parent, the terms of its equity incentive plans or arrangements or any other agreements entered into thereunder, in each case as is necessary to give effect to the provisions of paragraph (a) of this Section 7.04 shall be subject to any required withholding of taxes and shall be paid without interest2.9. (c) The Except as otherwise agreed to by the parties, prior to the Effective Time, (i) the Company shall cause the Company Stock Plans shall terminate Option Plan to be terminated as of the Effective Time of the Merger, and the provisions in any other Benefit Plan plan, program or arrangement providing for the issuance, transfer issuance or grant of any capital stock of the Company or any other interest in respect of Company Capital Stock or any capital stock equity securities in any of the Company shall Subsidiaries to be deleted as of the Effective Time of the MergerTime, and (ii) the Company shall take all action necessary to ensure that the payments or conversions into the right to receive cash set forth in Section 2.9(a) extinguish all rights of participants under the Company Stock Option Plan and such plans, programs and arrangements to receive equity securities of the Company or any of its Subsidiaries and that following the Effective Time of the Merger no holder of a Stock Option or any such participant in any Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock equity securities of the Company or Company, the Surviving Corporation, the Parent or any of their respective Subsidiaries.

Stock Options. (a) Either prior The Company will (i) terminate, to or as soon as practicable following the consummation of extent permitted by the Offerterms thereof, the Company Board Option Plans immediately before the Effective Time, without prejudice to the rights of the holders of outstanding Options issued pursuant to the Company Option Plans and give appropriate notices of such termination to the holders of outstanding Options, (orii) grant no additional Options after the date of this Agreement under the Company Option Plans and (iii) grant or enter into, if appropriatein each case after the date of this Agreement, any committee administering no other options, warrants, rights, convertible securities or other agreements or commitments pursuant to which the Stock Plans) shall adopt such resolutions or take such other actions as are Company is required to adjust issue any shares of its capital stock or any securities convertible into or exchangeable for its capital stock. (b) The Company will, at or before the terms Closing, cancel and cause the surrender of all outstanding Stock Options, regardless of whether the Options heretofore granted under any stock option program or arrangement are then exercisable and regardless of the Company exercise price of the Options. (collectivelyc) In settlement of the surrender and cancellation of each Option that has an exercise price less than the Common Stock Per Share Merger Consideration, the "Stock Plans"holder of such Option (regardless of whether such Option is then exercisable) or will be entitled to receive an amount in cash, without any other stock option plan to provide thatinterest thereon, at the Effective Time of the Merger, each Stock Option outstanding immediately prior equal to the acceptance for payment product of shares of (i)(A) the Common Stock pursuant to the Offer (whether or not vested) shall be canceled in exchange for a cash payment by the Company ofPer Share Merger Consideration, or can only be exercised for net cash equal to, an amount equal to (i) the excess, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer over minus (B) the exercise price per share of Company Common Stock subject to under such Stock Option, multiplied by (ii) the number of shares of Company Common Stock for which issuable upon the exercise of such Stock Option shall not theretofore have been exercised. The Company represents and warrants Option; provided, however, that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable pursuant to this Section 7.04 3.6 shall be subject to reduced by any required applicable federal and state withholding of taxes and Taxes. Options shall be surrendered and canceled at the Closing and, upon such surrender and cancellation, will be paid without interest. (c) The Stock Plans shall terminate as of for by the Effective Time of the MergerSurviving Corporation at Closing. On or prior to Closing, and the provisions in any other 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 take all steps necessary to ensure that, assuming the payments contemplated by this Section 3.6 are made, no Options will remain outstanding after the Effective Time of the Merger, and the Company shall ensure that following the Effective Time of the Merger no holder of a Stock Option or any participant in any Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving CorporationTime.

Stock Options. (a) Either prior to or as soon as practicable following the consummation of the Offer, the The Company Board (or, if appropriate, any committee administering the Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Stock Options heretofore granted under any establish an incentive stock option program or arrangement plan for the executives, employees and directors of the Company (collectively, the "Stock PlansPlan"). The participants in the Plan shall be entitled to purchase, pursuant to the options to be granted thereunder (which may be "incentive stock options" within the meaning of Section 422(b) or any other stock option plan to provide that, at the Effective Time of the MergerInternal Revenue Code, each Stock Option outstanding immediately prior to the acceptance for payment or non-incentive stock options) an aggregate number of shares of the Company's common stock, one-third cent par value (the "Common Stock pursuant to the Offer (whether or not vested) Stock"), as shall be canceled in exchange for a cash payment by the Company of, or can only be exercised for net cash equal to, an amount equal to (i) approximately 20% of the excess, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Common Stock subject to such Stock Option, multiplied by (ii) 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 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 to be issued upon exercise of the options to be granted thereunder for which such Stock Option shall not theretofore have been exercisedsale 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 represents and warrants that no consents during the term of this Agreement upon the advice of the holders 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 Stock Options are necessary 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 effectuate be formulated mutually by the foregoing cash-outExecutive and the Board or the committee administering the Plan (the "Performance Targets"). After The term of such options shall be the 51 month period commencing on the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result commencement of the execution Employment Period. The Plan and such options shall provide that, upon the death, disability or termination of employment of the Operative Agreements Executive other than "for cause," all options which shall then have vested, or which would have vested if such event had occurred on the last day of the then current Review Period, shall be 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 distribution, as the 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 have been satisfied on or before the date of exercise thereof. Each option granted pursuant to the Plan shall also contain such other terms, limitations and conditions as the Board or the consummation committee administering the Plan shall deem appropriate pursuant to the provisions of the Transactions. (b) All amounts payable pursuant Plan. In the event that the Company's shareholders fail to this Section 7.04 authorize the Plan, the options to be granted hereunder shall be issued as non-Plan options in accordance with, and subject to any required withholding of taxes and shall be paid without interest. (c) The Stock Plans shall terminate as all of the Effective Time of the Merger, foregoing terms and the provisions in any other 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 of the Merger, and the Company shall ensure that following the Effective Time of the Merger no holder of a Stock Option or any participant in any Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving Corporationconditions.

Stock Options. (a) Either prior to or Except as soon as practicable following the consummation of the Offerprovided in Section 3.4(c) below, the Company Board shall take all actions (orincluding, if appropriatebut not limited to, obtaining any committee administering and all consents from employees to the Stock Plansmatters contemplated by this Section 3.4) shall adopt such resolutions or take such other actions as are required necessary to adjust the terms of provide that all outstanding options and other rights to acquire shares ("Stock Options heretofore Options") granted under any stock option or deferred compensation plan, program or similar arrangement or any employment agreement of the Company or any Subsidiaries other than options, if any, of A&S, each as amended (collectively, the "Stock Option Plans"), shall become fully exercisable and vested on the date (the "Vesting Date") or which shall be set by the Company and which, in any other stock option plan event, shall be not less than thirty (30) days prior to provide that, at the Effective Time of the MergerTime, each whether or not otherwise exercisable and vested. All Stock Option Options which are outstanding immediately prior to the acceptance for payment of shares of Common Stock pursuant to the Offer (whether or not vested) Effective Time shall be canceled in exchange cancelled as of the Effective Time and the holders thereof shall be entitled to receive from the Company, for a cash payment by the Company of, or can only be exercised for net cash equal to, an amount equal to (i) the excess, if any, of (A) the price per each share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Company Common Stock subject to such Stock Option, multiplied by (i) an amount in cash equal to the difference between the Cash Consideration and the exercise price per share of such Stock Option, which amount shall be payable at the Effective Time, plus (ii) the number of 0.25 shares of A&S Common Stock for (and in the case of fractional shares, the Fractional Share Payment), which shall be held by the Depositary pending delivery after the Effective Time. All applicable withholding taxes attributable to the payments made hereunder or to distributions contemplated hereby shall be deducted from the amounts payable under clauses (i) and (ii) above and all such taxes attributable to the exercise of Stock Option Options on or after the Vesting Date shall not theretofore have been exercised. The Company represents and warrants that no consents be withheld from the proceeds received in the Merger, in respect of the holders shares of the Company Common Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactionsissuable on such exercise. (b) All amounts payable pursuant Except as provided herein or as otherwise agreed to this Section 7.04 shall be subject by the parties and to any required withholding of taxes and shall be paid without interest. the extent permitted by the Option Plans, (ci) The Stock the Option Plans shall terminate as of the Effective Time of the Merger, and the provisions in any other Benefit Plan plan, program or arrangement, providing for the issuance, transfer issuance or grant by the Company or any of its Subsidiaries of any interest in respect of the capital stock of the Company or any interest in respect of any capital stock of the Company its Subsidiaries shall be deleted as of the Effective Time of the Merger, and (ii) the Company shall use all reasonable efforts to ensure that following the Effective Time of the Merger no holder of a Stock Option Options or any participant in the Option Plans or any Stock Plan other such plans, programs or other Benefit Plan arrangements shall have any right thereunder to acquire any capital stock equity securities of the Company, the Surviving Corporation or any subsidiary thereof. (c) (i) With respect to the employees identified on Schedule 3.4(c) of the Company Disclosure Schedule who will remain as employees or directors of A&S (the Surviving Corporation"Optionees" and individually an "Optionee"), the Company agrees to take all actions (including, but not limited to, obtaining any and all consents from the Optionees to the matters contemplated by this Section 3.4(c) and causing A&S to take such actions as are necessary to accomplish the matters contemplated by this Section 3.4(c)) necessary to provide that (A) the Stock Options identified on Schedule 3.4(c) of the Company Disclosure Schedule are amended in such a fashion that each Optionee has the right under such options to purchase (subsequent to the Merger) that number of shares of Company Common Stock that represents the same proportionate interest in the Company that such Optionee had the right to purchase prior to the Merger (such option hereafter referred to as the "Post-Merger Company Option") with appropriate adjustments (if necessary as specified below) in the exercise price of such Option and (B) such Optionee is granted a stock option (with terms equivalent to the terms in the Optionee's option to purchase Company Common Stock and with an exercise price as specified in this Section 3.4(c)) to purchase that number of shares of A&S Common Stock that represents a proportionate interest in A&S equal to the proportionate interest in the Company that the Optionee's option to purchase Company Common Stock represented (the "A&S Option"). (A) The amendment contemplated by Section 3.4(c)(i)(A) shall be accomplished by reducing the option price of the Post-Merger Company Option to a price equal to the option price (immediately before the Merger) multiplied by a fraction, the numerator of which is the aggregate value of Company Common Stock immediately subsequent to the Merger (utilizing $19.09 as the per share value of such Common Stock) and the denominator of which is the sum of such aggregate value of the Company Common Stock and the aggregate value of A&S Common Stock immediately subsequent to the Merger (based on the value of A&S Common Stock as determined pursuant to Section 5 of the Tax Sharing Agreement) and (B) the A&S Option shall have a per-share exercise price that bears the same relation to the per-share value of A&S Common Stock as the per-share exercise price of the Post-Merger Company Option (adjusted as provided in clause (A)) bears to $19.09.

Stock Options. (a) Either prior At the Effective Time, each holder of a then-outstanding option to or as soon as practicable following the consummation of the Offerpurchase Shares under Company's Amended and Restated Stock Option Plan, the Company Board (or1994 Director Stock Option Plan, if appropriate, any committee administering the 1994 Employee Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Stock Options heretofore granted under any stock option program or arrangement of the Company Option Plan and new employee compensation policy (collectively, the "Stock Option Plans") (true and correct copies of which have been delivered or any other stock option plan made available by Company to provide thatParent), at the Effective Time of the Merger, each Stock Option outstanding immediately prior to the acceptance for payment of shares of Common Stock pursuant to the Offer (whether or not vestedthen exercisable (the "Options"), shall, in settlement thereof, receive for each Share subject to such Option an amount (subject to any applicable withholding tax) in cash equal to the difference between the Merger Consideration and the per Share exercise price of such Option to the extent such difference is a positive number (such amount being hereinafter referred to as, the "Option Consideration"); provided, however, that with respect to any person subject to Section 16(a) of the Exchange Act, any such amount shall be canceled paid as soon as practicable after the first date payment can be made without liability to such person under Section 16(b) of the Exchange Act. Upon receipt of the Option Consideration therefor, each Option shall be canceled. The surrender of an Option to Company in exchange for the Option Consideration shall be deemed a cash payment by release of any and all rights the Company of, holder had or can only be exercised for net cash equal to, an amount equal to (i) the excess, if any, may have had in respect of (A) the price per share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Common Stock subject to such Stock Option, multiplied by (ii) the number of shares of Common Stock for which such Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable pursuant Prior to the Effective Time, Company shall use its reasonable best efforts to obtain all necessary consents or releases from holders of Options under the Stock Option Plans and take all such other lawful action as may be necessary to give effect to the transactions contemplated by this Section 7.04 shall be subject 3.2. Except as otherwise agreed to any required withholding of taxes and shall be paid without interest. by the parties, (ci) The the Stock Option Plans shall terminate as of the Effective Time of the Merger, and the provisions in any other Benefit Plan plan, program or arrangement providing for the issuance, transfer issuance or grant of any capital stock of the Company or any other interest in respect of any the capital stock of the Company or any Subsidiary thereof shall be deleted canceled as of the Effective Time of the Merger, and the (ii) Company shall ensure use its reasonable best efforts to assure that following the Effective Time of no participant in the Merger no holder of a Stock Option or any participant in any Stock Plan Plans or other Benefit Plan plans, programs or arrangements shall have any right thereunder to acquire any capital stock equity securities of the Company or Company, the Surviving CorporationCorporation or any Subsidiary thereof and to terminate all such plans.

Stock Options. (a) Either prior to or as soon as practicable following At the consummation of the OfferEffective Time, the obligation to honor each outstanding employee or director option to purchase shares of Common Stock (a "Company Board (or, if appropriate, any committee administering the Stock PlansOption") shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Stock Options heretofore granted under any stock option program the Company's 1990 Long-Term Incentive Plan and 2000 Long-Term Incentive Plan pursuant to which Company Options or arrangement other stock-based awards of the Company have been or may be granted (collectivelyeach as may be amended or supplemented from time to time, the "Stock Incentive Plans") ), whether vested or any other stock option plan to provide thatnot vested, at shall be deemed assumed by Parent. At and after the Effective Time of Time, (i) each Company Option then outstanding shall entitle the Merger, each Stock Option outstanding immediately prior holder thereof to acquire the number (rounded up to the acceptance for payment nearest whole number) of Parent Shares determined by multiplying (x) the number of shares of Common Stock pursuant subject to such Company Option immediately prior to the Offer Effective Time by (whether or not vested) shall be canceled in exchange for a cash payment by the Company of, or can only be exercised for net cash equal to, an amount equal to (iy) the excessExchange Ratio, if any, of and (Aii) the exercise price per share of Common Stock Parent Shares subject to any such Company Option at and after the Effective Time shall be paid pursuant an amount (rounded up to the Offer over nearest one- hundredth of a cent) equal to (Bx) the exercise price per share of Common Stock subject to such Stock OptionCompany Option prior to the Effective Time, multiplied divided by (iiy) the number Exchange Ratio (the "Substitute Options"). Other than as provided above, as of shares of Common Stock for which such Stock and after the Effective Time, each Substitute Option shall not theretofore have been exercised. The Company represents be subject to the same terms and warrants that no consents conditions of the holders Company Option as in effect immediately prior to the Effective Time. Notwithstanding the foregoing, any adjustment to a Company Option which is an "incentive stock option" shall be made in a manner consistent with Section 424(a) of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the TransactionsCode. (b) All amounts payable pursuant Parent shall take such corporate action as may be necessary or appropriate to, at or promptly following the Effective Time, file with the Securities and Exchange Commission (the "SEC") a registration statement on Form S-8 (or any successor or other appropriate form) (the "Form S-8") with respect to this Section 7.04 shall be the Parent Shares subject to any Substitute Options to the extent such registration is required withholding of taxes and shall under applicable Law in order for such Parent Shares to be paid sold without interestrestriction in the United States. (c) The Stock Plans shall terminate as Board of the Effective Time of the Merger, and the provisions in any other 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 Directors of the Company shall be deleted as of take all corpo rate action necessary to cause the Company Options outstanding at the Effective Time to be treated in accordance with Section 2.7(a) and be assumed by Parent at the Effective Time. Following the Effective Time, no holder of the Merger, a Company Option shall have any rights to acquire Common Stock. (d) Parent and the Company shall ensure that following take all such steps as may be required to cause the Effective Time transactions contemplated by this Section 2.7 and any other dispositions of the Merger no holder of a Stock Option or any participant in any Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock equity securities of the Company (including derivative securities) or acquisitions of Parent equity securities (including derivative securities) in connection with this Agreement by each individual who (i) is a director or officer of the Surviving CorporationCom pany or (ii), at the Effective Time, will become a director or officer of Parent, to be exempt under Rule 16b-3 promulgated under the Exchange Act, such steps taken in accordance with the No-Action Letter dated January 12, 1999, issued by the SEC to Skadden, Arps.

Stock Options. (a) Either prior to or Effective as soon as practicable following the consummation of the OfferEffective Time, the Company Board shall (ori) terminate the Company’s 1990, if appropriate1993, 1996, 1999 and 2001 Stock Awards Plans or any committee administering predecessor plans thereto, each as amended through the Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust the terms date of all outstanding Stock Options heretofore granted under any stock option program or arrangement of the Company this Agreement (collectively, the "Stock “Option Plans"”), and (ii) or any other stock option plan to provide thatcancel, at the Effective Time of the MergerTime, each Stock Option outstanding immediately prior option to the acceptance for payment of purchase shares of Company Common Stock granted under the Option Plans or otherwise (each, an “Option”) that is outstanding and unexercised as of such date. Each holder of an Option that is outstanding and unexercised at the Effective Time pursuant to the Offer (whether or not vested) terms of the applicable Option Plan shall be canceled entitled to receive from the Surviving Corporation immediately after the Effective Time, in exchange for a cash payment by the Company of, or can only be exercised for net cash equal tocancellation of such Option, an amount in cash equal to (i) the excess, if any, of (Ax) the price Per Share Amount over (y) the per share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Common Stock subject to such Stock Option, multiplied by (ii) the number of shares Shares subject to such Option as of Common Stock for which such Stock Option shall not theretofore have been exercisedthe Effective Time. The Company represents shall use reasonable best efforts to obtain from each holder of an Option that is outstanding and warrants that no consents unexercised at the Effective Time a written consent to the cancellation of the holders Option immediately prior to the Effective Time in exchange for the receipt of the Stock Options are necessary consideration set forth in the prior sentence, all such written consents to effectuate the foregoing cash-out. After the date of this Agreement, neither be delivered to the Company Board nor any committee thereof (and a copy provided to Parent) prior to the Initial Expiration Time. The Company shall cause any Stock Option confirm that unexercised options after the Effective Time will only be exercisable for the Merger Consideration. Any such payments shall be subject to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactionsall applicable Tax withholding requirements. (b) All Purchaser shall be entitled to deduct and withhold from the amounts otherwise payable pursuant to this Section 7.04 4.7(a) to any holder of Options such amounts as the Company is required to deduct and withhold with respect to the making of such payment under the Code or any provision of state, local or foreign tax Law. To the extent that amounts are so deducted and withheld by Purchaser, such withheld amounts shall be subject treated for all purposes of this Agreement as having been paid to any required the holder of the Options in respect of which such deduction and withholding of taxes and shall be paid without interestwas made by Purchaser. (c) The Stock Plans shall terminate as of Prior to the Effective Time of the MergerTime, and the provisions in any other 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 take all necessary action (i) (in accordance with that certain SEC no-action letter, dated January 12, 1999, to Skadden, Arps, Slate, M▇▇▇▇▇▇ & F▇▇▇) to provide that the treatment of Options pursuant to Section 4.7(a) will qualify for exemption under Rule 16b-3(d) or (e), as applicable, under the Exchange Act, and (ii) to effect the treatment of the Effective Time of the MergerOption Plans and Options set forth in this Section 4.7, including obtaining any and the Company shall ensure that following the Effective Time of the Merger no holder of a Stock Option or any participant in any Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving Corporationall necessary consents.

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) Either to execute and deliver to the Company, prior to or the expiration of the Offer, an agreement in the form specified by Parent (an "Option 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 soon of immediately prior to the expiration of the Offer, such Option to be exercised and the shares of Company Common Stock issued as practicable following a result of that exercise to be tendered in the consummation 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, 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 commencement of the Offer, the Company Board (or, if appropriate, any committee administering the Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust elect the terms treatment of all outstanding Company Employee Stock Options heretofore granted under any stock option program or arrangement described in Section 16(a)(y) of the Company (collectively, the "Company's 1985 Stock Plans"Option Plan and Section 12(a)(y) or any other stock option plan to provide that, at the Effective Time of the MergerCompany's Equity Incentive Plan, each Stock Option outstanding immediately prior to the acceptance for payment of shares of Common Stock and pursuant to the Offer (whether or not vested) such Company Board action, shall be canceled in exchange for a cash payment by cause the Company ofto deliver, contemporaneously with the delivery to each holder of Company Employee Stock Options of the request to execute and deliver an Option Election as described above, a notice specifying that the Company 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 can only be exercised for net cash equal to, an amount equal to (i) the excess, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Common Stock subject to such Stock Option, multiplied by (ii) the number of shares of Common Stock for which such Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents date of the holders final expiration of the Offer; and further specifying that if such Company Employee Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreementnot exercised by such date, neither the Company Board nor any committee thereof they shall cause any Stock Option to become exercisable be terminated as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) Effective Time. All amounts payable pursuant to this Section 7.04 shall be subject to any required withholding of taxes Taxes and shall be paid without interest. (c) The Stock Plans shall terminate as of the Effective Time of the Merger, and the provisions in any other 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 of the Merger, and the Company shall ensure that following the Effective Time of the Merger no holder of a Stock Option or any participant in any Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving Corporation.

Stock Options. (ai) Either prior to or as soon as practicable following Following the consummation of the OfferEffective Date, the Company Board granted Executive a stock option (oran “Option”) to acquire 100,000 shares of the Company's Class A Ordinary Shares, if appropriate$0.10 par value per share (“Shares”) at an exercise price per Share equal to the fair market value per Share as of the date of grant under such terms and conditions as provided for under the Company's existing stock incentive plan (the “Plan”) which are not inconsistent with clauses (ii) and (iii) below. (ii) The Options described herein were granted subject to the following terms and conditions: (A) the Options shall be granted under and subject to the Plan; (B) the exercise price per Share subject to the Options is to the fair market value per Share as of the date of grant; (C) the Options vested 25% on the date of grant and shall vest as to 25% of the Shares subject thereto on each of the first three anniversaries of the date of grant; provided, that, the Options shall cease to vest upon Executive's termination of employment with the Employer; (D) the Options are exercisable for the ten (10) year period following the date of grant; provided, that, except as otherwise provided herein, upon Executive's termination of employment with the Employer for any reason, any committee administering unvested portion of the Stock PlansOptions shall automatically terminate and the vested portion of the Options shall remain exercisable for 90 days after Executive's termination of employment with the Employer; and (E) shall adopt such resolutions or take such other actions as the Options are required to adjust evidenced by, and subject to, a stock option agreement whose terms and conditions are consistent with the terms hereof. (iii) The Options provide that upon a termination of all outstanding Stock Options heretofore granted under any stock option program or arrangement of employment by the Company Employer for Cause (collectivelyas defined below), the "Stock Plans") or any other stock option plan to provide that, at the Effective Time of the Merger, each Stock Option outstanding immediately prior to the acceptance for payment of shares of Common Stock pursuant to the Offer Options (whether or not vested) shall be canceled in exchange terminate. Upon a termination of employment due to Executive's death or Disability (as defined below), any unvested portion of the Options shall terminate and any vested portion shall remain exercisable for the remainder of its term. Upon a cash payment termination of employment by the Company ofEmployer without Cause or by Executive for Good Reason (as defined below), or can only be exercised for net cash equal toany unvested portion of the Options shall vest, an amount equal to and the Options (i) including the excess, if any, of (A) the price per share of Common Stock to be paid portion which becomes vested pursuant to this clause (iii)) shall remain exercisable for the Offer over (B) the exercise price per share remainder of Common Stock subject to such Stock Option, multiplied by (ii) the number of shares of Common Stock for which such Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactionstheir term. (biv) Subject to Executive's continuing employment with the Employer on the relevant date of grant, for each year after 2011, on the third Nasdaq trading day following the Company's release of earnings results for the quarterly periods ended on each of June 30, the Company shall grant Executive an additional Option as of such date with a Black-Scholes value of $500,000. All amounts payable Options granted pursuant to this Section 7.04 5(f)(iv) shall be subject to any required withholding of taxes the same terms and shall be paid without interestconditions as provided in Section 5(f) (ii) - (iii) above. (c) The Stock Plans shall terminate as of the Effective Time of the Merger, and the provisions in any other 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 of the Merger, and the Company shall ensure that following the Effective Time of the Merger no holder of a Stock Option or any participant in any Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving Corporation.

Stock Options. (a) Either prior to or as soon as practicable following the consummation of the Offer, the The Company Board shall (or, if appropriate, any committee administering i) terminate the Stock Plans) shall adopt such resolutions or take such Option Plans and any other actions as are required to adjust the terms of all outstanding Stock Options heretofore granted under any stock option plan, program or arrangement providing for the issuance or grant of any other interest in respect of the capital stock of the Company or any of its Subsidiaries (collectively, the collectively "Stock Incentive Plans") or any other stock option plan to provide that), at the Effective Time of the Merger, each Stock Option outstanding immediately prior to the acceptance for payment of shares of Common Stock pursuant Effective Time without prejudice to the Offer holders of Stock Options (whether or not vested) shall be canceled in exchange for a cash payment by the Company ofas hereinafter defined), or can only be exercised for net cash equal to, an amount equal to (i) the excess, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Common Stock subject to such Stock Option, multiplied by (ii) the number of shares of Common Stock for which such Stock Option shall not theretofore have been exercised. The Company represents and warrants that grant no consents of the holders of the additional Stock Options are necessary (as hereinafter defined), and (iii) amend, immediately prior to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable pursuant to this Section 7.04 shall be subject to any required withholding of taxes and shall be paid without interest. (c) The Stock Plans shall terminate as of the Effective Time of the MergerTime, and the provisions in of any other Company Benefit Plan providing for the issuance, transfer or grant of any capital stock of the Company Shares, or any interest in respect of any capital Shares, to provide no continuing rights to acquire, hold, transfer, or grant any Shares or any interest in any Shares. (b) Immediately upon the consummation of the Offer, provided that a "Change of Control" has occurred under the terms of the Stock Incentive Plans, all outstanding employee stock options, whether or not then fully exercisable or vested, to purchase Shares (a "Stock Option") heretofore granted under the Stock Incentive Plans shall become fully exercisable and vested, and the Stock Options shall be cancelled by the Company, and the holders thereof shall receive a cash payment (the "Cash Payment") from the Company in an amount (if any) equal to the number of Shares subject to such option multiplied by the difference (if positive) between the exercise price per Share covered by the option and the highest per share price offered to stockholders of the Company in the Offer. The Company shall request such holders to acknowledge the cancellation of all Stock Options held by such holders, including any Stock Options as to which the exercise price equals or exceeds such price per share. The Company shall deliver to Parent within five business days of the date hereof a true and complete list of Stock Options which are outstanding as of the date hereof, together with detailed calculations of the Cash Payments relating to such Stock Options had the Effective Time occurred on the date of delivery thereof. The Company shall update such list and such calculations as of, and deliver such update to Parent on, the date that is two business days prior to the Effective Time, such updated list and calculations made as if the Effective Time would occur on such date. Except as otherwise contemplated herein, any then-outstanding stock appreciation rights or limited stock appreciation rights issued by the Company or any Subsidiary of the Company shall be deleted as of cancelled immediately prior to the Effective Time of the Merger, and the without any payment therefor. The Company shall ensure that following the Effective Time neither it nor any of the Merger no holder of a Stock Option its Subsidiaries is or any participant in will be bound by any Stock Plan Options, other options, warrants rights or agreements which would entitle any person or entity, other Benefit Plan shall have than Parent or it Subsidiaries, to own any right thereunder Shares or to acquire receive any capital stock of the Company or the Surviving Corporationpayment in respect thereof.

Stock Options. (a) Either prior to or as soon as practicable following the consummation As part of the Offer, the Company Board (or, if appropriate, any committee administering the Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Stock Options heretofore granted under any stock option program or arrangement of the Company (collectively, the "Stock Plans") or any other stock option plan to provide that, at the Effective Time of the Merger, each Stock Option outstanding immediately prior to the acceptance for payment of shares of Common Stock pursuant to the Offer (whether or not vested) shall be canceled in exchange for a cash payment by the Company of, or can only be exercised for net cash equal to, an amount equal to (i) the excess, if any, of (A) the price per share of Common Stock consideration to be paid pursuant to Executive for his services hereunder, Executive shall be eligible to participate in any stock incentive plan adopted by the Offer over Corporation (Bthe "Plan") the exercise price per share of Common Stock subject to such Stock Option, multiplied by (ii) the number of shares of Common Stock for which such Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactionsan executive level employee may participate. (b) All amounts payable The Corporation hereby agrees that it shall cause to be filed with the Securities 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, however, that if Executive's employment is -------- ------- terminated hereunder other than pursuant to this Section 7.04 Sections 7(a), 7(b) or 7(d), then Executive shall be subject have until 90 days following the termination of his employment to exercise any required withholding such vested options which he owned at the time of taxes such termination, and the Corporation shall be paid without interestmaintain 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 exercise of options because of the provisions of General Instruction C.2(b) to Form S-8, Executive shall have "piggyback" registration rights with respect to the options granted to Executive under the Plan and the shares underlying such options. (c) The As an incentive to enter into this Agreement and pursuant to the terms of the Stock Plans Purchase Agreement dated as of January 2, 1997 (the "Stock Purchase Agreement") pursuant to which the Corporation acquired the capital stock of BETA, the Corporation, immediately upon the execution and delivery of this Agreement, shall terminate deliver to Executive a Stock Option Agreement pursuant to its Amended and Restated 1991 Stock Option Incentive Plan, granting to Executive options for 125,000 shares of the common stock of the Corporation at fair market value as of the Effective Time of the Mergerdate hereof, and the provisions in any other 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 of the Merger, and the Company shall ensure that following the Effective Time of the Merger no holder of exercisable over a Stock Option or any participant in any Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving Corporationfive year period.

Stock Options. (a) Either prior to or Except as soon as practicable following the provided herein, upon -------------- consummation of the Offer, the Company Board (or, if appropriate, any committee administering the Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Stock Options heretofore granted under any stock option program or arrangement of the Company (collectively, the "Stock Plans") or any other stock option plan to provide that, at the Effective Time of the Merger, each all then outstanding vested and unvested Company Stock Option outstanding immediately prior to the acceptance for payment of shares of Options and all Company Common Stock pursuant subject to the Offer a vesting requirement (whether or not vested"Restricted Stock") shall be canceled cancelled in exchange for a cash payment by from the ------------------ Company of, to the holder of a Company Stock Option or can only be exercised for net cash equal to, an amount Restricted Stock equal to (i) in the excesscase of Company Common Stock Options, if any, the product of (Ax) the price difference between the Per Share Merger Consideration and the per share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Common the holder's Company Stock subject to such Stock Option, Option multiplied by (iiy) the number of shares of Company Common Stock for which such subject to the holder's Company Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents (ii) in the case of Restricted Stock, the number of shares of the holders holder's Restricted Stock multiplied by the per share Merger Consideration. In the case of all unvested Company Stock Options, such cash payment shall be made on the date that is 90 days after the Effective Time. All applicable Taxes shall be withheld from any proceeds payable under this Section 3.06(a). Following the expiration of the Offer and the purchase of Shares pursuant thereto and prior to the Effective Time, Parent may, at its option, provide to each holder of an outstanding Company Stock Option who is an "accredited investor" (within the meaning of the Securities Act), in lieu of the cash payment pursuant to the foregoing sentence, an alternative, at such holder's option, of converting such Company Stock Option into phantom stock units, having the same economic value and terms of such Company Stock Options are necessary to effectuate and the foregoing cash-out. After value of which will thereafter be based on the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result market value of the execution ordinary shares of the Operative Agreements or the consummation of the TransactionsThe General Electric Company, p.l.c. (b) All amounts payable pursuant Except as provided herein or as otherwise agreed to this Section 7.04 shall be subject to any required withholding of taxes and shall be paid without interest. by the parties, (ci) The Stock the Company Option Plans shall terminate as of the Effective Time of the Merger, and the provisions in any other Benefit Plan plan, program or arrangement providing for the issuance, transfer issuance or grant by the Company or any of its Subsidiaries of any interest in respect of the capital stock of the Company or any interest in respect of any capital stock of the Company its Subsidiaries shall be deleted terminated as of the Effective Time of the MergerTime, and the Company shall ensure that (ii) following the Effective Time of the Merger no holder of a Company Stock Option Options or any participant in the Company Option Plans or any Stock Plan other such plans, programs or other Benefit Plan arrangements shall have any right thereunder to acquire any capital stock equity securities of the Company or Company, the Surviving CorporationCorporation or any Subsidiary thereof.

Stock Options. (a1) Either prior Prior to or as soon as practicable following the consummation of the Offer, the Board of Directors of the Company Board (or, if appropriate, any committee administering the Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Stock Company Options heretofore granted under any stock option program or arrangement of the Company (collectively, the "Stock Plans") or any other stock option plan to provide that, at the Effective Time of the MergerTime, each Stock Company Option outstanding immediately prior to the acceptance for payment of shares of Common Stock Shares pursuant to the Offer (whether or not vested) shall be canceled in exchange for a cash payment by the Company of, or can only be exercised for net cash equal to, an amount equal to (i) the excess, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer Price Per Share over (B) the exercise price per share of Common Stock subject to such Stock Company Option, multiplied by (ii) the number of shares of Common Stock for which such Stock Company Option shall not theretofore have been exercised. Upon surrender to Parent at the address set forth in Section 10.6 of Company Options and/or such other documents as may reasonably be requested by Parent, Parent hereby agrees to deliver to the registered holders of such Company Options (as indicated in the records of the Company) such cash payment. The Company represents and warrants that no consents of the holders of the Stock Company Options are necessary to effectuate the foregoing cash-outout except as disclosed in Schedule 6.1(d)(ii). After the date of this Agreement, neither the Board of Directors of the Company Board nor any committee thereof shall cause any Stock Company Option to become exercisable as a result of the execution of this Agreement or the Operative Agreements Stock Option Agreement or the consummation of the Transactionstransactions contemplated hereby. If there is no excess of the Price Per Share over the exercise price per share of Common Stock subject to a Company Option, such Company Option shall be canceled for no consideration. (b2) All amounts payable pursuant to this Section 7.04 7.9 shall be subject to any required withholding of taxes and shall be paid without interest. (c3) The Stock Plans shall terminate as of the Effective Time of the Merger, and the provisions in any other Compensation and 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 of the MergerTime, and the Company shall ensure that following the Effective Time of the Merger no holder of a Stock Option or any participant in any Stock Plan or other Compensation and Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving Corporation. A purchase date under the ESPP will occur immediately prior to the consummation of the Offer. The payroll deductions for the purchase period ending with that purchase date will be applied to the purchase of CombiChem Shares at eighty five percent (85%) of the fair market value of the Shares on the start date of the offering period. The employees will, thereafter, be free to tender the purchased shares in the Offer.

Stock Options. (a) Either prior to or Effective as soon as practicable following the consummation of the OfferEffective Time, the Company Board shall (ori) terminate the Company’s 1995 Omnibus Incentive Stock Plan and the 1995 Stock Option for Non-Employee Directors or any predecessor plans thereto, if appropriate, any committee administering each as amended through the Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust the terms date of all outstanding Stock Options heretofore granted under any stock option program or arrangement of the Company this Agreement (collectively, the "Stock “Option Plans"”), and (ii) or any other stock option plan to provide thatcancel, at the Effective Time of the MergerTime, each Stock Option outstanding immediately prior option to the acceptance for payment of purchase shares of Common Stock granted under the Option Plans or otherwise (each, an “Option”) that is outstanding and unexercised as of such date. Each holder of an Option that is canceled pursuant to the Offer (whether or not vested) preceding sentence shall be canceled entitled to receive from the Surviving Corporation promptly after the Effective Time, in exchange for a cash payment by the Company of, or can only be exercised for net cash equal tocancellation of such Option, an amount in cash equal to (i) the excess, if any, of (Ax) the price Merger Consideration over (y) the per share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Common Stock subject to such Stock Option, multiplied by (ii) the number of shares of Common Stock for which subject to such Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents as of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the TransactionsEffective Time. (b) All The Surviving Corporation shall be entitled to deduct and withhold from the amounts otherwise payable pursuant to this Section 7.04 2.11(a) to any holder of Options such amounts as the Surviving Corporation is required to deduct and withhold with respect to the making of such payment under any provision of United States federal or state, local or foreign law. To the extent that amounts are so deducted and withheld by the Surviving Corporation, such withheld amounts shall be subject treated for all purposes of this Agreement as having been paid to any required the holder of the Options in respect of which such deduction and withholding of taxes and shall be paid without interestwas made by the Surviving Corporation. (c) The Stock Plans Prior to the Effective Time, the Company shall terminate take all necessary action (i) (in accordance with that certain SEC no-action letter, dated January 12, 1999) to provide that the treatment of Options pursuant to Section 2.11(a) will qualify for exemption under Rule 16b-3(d) or (e), as applicable, under the Exchange Act, (ii) to effect the treatment of the Option Plans and Options set forth in this Section 2.11, including obtaining any and all necessary consents and (iii) to ensure that, at the Effective Time Time, any rights granted to any current or former director, officer or employee of the MergerCompany or its Subsidiaries (whether granted pursuant to the Option Plans or otherwise) to receive at any time any capital stock of the Company or its Subsidiaries or a payment that is based, and in whole or in part, upon the provisions value or appreciation in any other Benefit Plan providing for the issuance, transfer or grant value of any capital stock of the Company or any interest in respect of any capital stock of the its Subsidiaries has been canceled and terminated. (d) The Company shall be deleted terminate, effective as of the Effective Time date of the MergerChange-in-Control (as defined below), the Kellwood Company 2005 Stock Plan for Non-Employee Directors and pay to each participant as soon as practicable after the Change-in-Control an amount in cash equal to the Merger Consideration multiplied by the number of shares of Common Stock or other units the participant is entitled to under such plan. For this purpose, a “Change-in-Control” shall occur at 12:00 midnight, Eastern time, on February 12, 2008, or at the expiration of any such other time period applicable to extensions of the Offer in accordance with the terms of the Offer and this Agreement (the “Expiration Time”) if at such time the Majority Condition is satisfied; if the Majority Condition is not satisfied at the Expiration Time, then no Change-in-Control shall occur for this purpose. The Company shall terminate, effective as of the date of the Change-in-Control (as defined above), both the Kellwood Company Deferred Compensation Plans I and II for Non-Employee Directors and the Kellwood Company Executive Deferred Compensation Plans I and II, and pay account balances in cash to each participant as soon as practicable after the Company shall ensure that following the Effective Time of the Merger no holder of a Stock Option or any participant in any Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving CorporationChange-in-Control occurs.

Stock Options. (a) Either Prior to the Acceptance Time, the Company shall take all actions reasonably necessary to provide that each Company Stock Option that is outstanding immediately prior to the Acceptance Time (whether or not then vested or exercisable) shall at the Acceptance Time be cancelled and terminated and converted into the right to receive a cash payment in an amount equal to the amount, if any, by which the per-share Merger Consideration exceeds the per-share exercise price of such Company Stock Option, multiplied by the number of shares of Company Common Stock then subject to such Company Stock Option which shall not theretofore have been exercised (the “Option Settlement Amount” and for all the Company Stock Options, the “Aggregate Option Settlement Amount”), without interest, and less all required tax withholdings. At the Acceptance Time, Parent shall deposit, or cause to be deposited, with the Company, cash in U.S. dollars, sufficient to pay the amount set forth in this Section 3.03(a) in respect of the Company Stock Options and the Company shall use the cash deposited by Parent to pay all holders of Company Stock Options the cash payments described in this Section 3.03(a) on or as soon as reasonably practicable following after the consummation date on which the Acceptance Time occurs, but in any event within five Business Days thereafter. Following the Acceptance Time, no Company Stock Option shall remain outstanding and all holders of a Company Stock Option that was outstanding immediately prior to the OfferAcceptance Time shall only be entitled to receive the consideration set forth in this Section 3.03(a). (b) Prior to the Acceptance Time, the Company shall deliver to the holders of Company Stock Options and to participants in the Company’s 2004 Employee Stock Purchase Plan (the “ESPP”) appropriate notices setting forth such holders’ rights and shall obtain any consents from such persons reasonably necessary to effectuate the provisions of Section 3.03(a) and Section 3.03(d). Prior to the Acceptance Time, the Board of Directors of the Company (or, if appropriate, any committee thereof administering the Company Stock Plans) shall (i) be permitted to accelerate the vesting of any Company Stock Option intended to be an “incentive stock option” within the meaning of Section 422 of the Code (“ISO” ), (ii) take any action necessary or advisable to permit a “broker-assisted cashless exercise” of any ISOs and (iii) adopt such resolutions or take such other actions as are may be required to adjust the terms of all outstanding Stock Options heretofore granted under any stock option program or arrangement of the Company (collectively, the "Stock Plans") or any other stock option plan to provide that, at the Effective Time of the Merger, each Stock Option outstanding immediately prior to the acceptance for payment of shares of Common Stock pursuant to the Offer (whether or not vested) shall be canceled in exchange for a cash payment by the Company of, or can only be exercised for net cash equal to, an amount equal to (i) the excess, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Common Stock subject to such Stock Option, multiplied by (ii) the number of shares of Common Stock for which such Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date provisions of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. (bSection 3.03(a) All amounts payable pursuant to this and Section 7.04 shall be subject to any required withholding of taxes and shall be paid without interest3.03(d). (c) The For purposes of this Agreement: (i) “Company Stock Plans shall terminate as of the Effective Time of the Merger, and the provisions in Option” means any other Benefit Plan providing for the issuance, transfer option or grant of right to purchase Company Common Stock under 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 of the Merger, and the Company shall ensure that following the Effective Time of the Merger no holder of a Stock Option or any participant in any Stock Plan or (other Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving Corporation.than the

Stock Options. (a) Either prior to or as As soon as practicable following the consummation date of this Agreement, Target shall ensure that (i) each holder (each, an "Optionee") of an outstanding Target Stock Option shall have the right to irrevocably elect, subject to satisfaction of the Offerconditions set forth in Section 6.01(d), the Company Board (orto surrender, if appropriate, any committee administering the Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Stock Options heretofore granted under any stock option program or arrangement of the Company (collectively, the "Stock Plans") or any other stock option plan to provide that, at the Effective Time of the Merger, each Stock Option outstanding immediately prior to the acceptance for payment of shares of Target Common Stock pursuant to the Offer (whether or not vested) shall be canceled Offer, any outstanding and unexercised Target Stock Option then held by the Optionee in exchange for a cash payment by the Company of, or can only be exercised for net cash equal to, an amount equal to (ix) the excess, if any, of (A) the price per share of Target Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Target Common Stock subject to such Target Stock Option, multiplied by (iiy) the number of shares of Target Common Stock for which issuable pursuant to the unexercised portion of such Target Stock Option shall Option, less any tax withholding required by the Code or any provision of state or local law, payable not theretofore have been exercised. The Company represents and warrants that no consents later than twenty days after the earlier of the holders satisfaction of the Stock Options are necessary conditions set forth in Section 6.01(d) and five days after the Effective Time, (ii) each Optionee shall have the right to effectuate the foregoing cash-out. After the date purchase, effective as of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the TransactionsMerger, subject to the consummation of the Merger and in accordance with the terms of the relevant plan or document, all or any part of the shares of Target Common Stock subject to any Target Stock Option held by the Optionee, whether vested or unvested, and that each share of Target Common Stock so purchased shall be converted, as of the Effective Time, in the right to required the Merger Consideration, less any tax withholding received by the Code or any provision of state or local law, and (iii) each Target Stock Option (with respect to which an Optionee has not exercised one of the rights set forth in this section) shall terminate and expire as of the Effective Time. (b) All amounts payable pursuant Prior to this Section 7.04 the Effective Time, Target shall take or cause to be subject taken such actions as are required to any required withholding of taxes and shall be paid without interest. cause (ci) The the Target Stock Plans shall to terminate as of the Effective Time of the Merger, and (ii) the provisions in any other Target Benefit Plan providing for the issuance, transfer or grant of any capital stock of the Company Target or any interest in respect of any capital stock of the Company shall Target to be deleted as of the Effective Time of the Merger, and the Company shall ensure that following the Effective Time of the Merger no holder of a Stock Option or any participant in any Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving CorporationTime.

Stock Options. (a) Either prior to or as soon as practicable following The Company shall (i) terminate the consummation of ------------- Pulaski Furniture Corporation 1991 Stock Incentive Plan (the Offer"Stock Option Plan"), the Company Board Stock Purchase Plan (oras hereinafter defined), if appropriateand any other plan, any committee administering the Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Stock Options heretofore granted under any stock option program or arrangement providing for the issuance or grant of any other interest in respect of the capital stock of the Company or any of its Subsidiaries (collectively, the collectively "Stock Incentive Plans") or any other stock option plan to provide that), at the Effective Time of the Merger, each Stock Option outstanding immediately prior to the acceptance for payment of shares of Common Stock pursuant to the Offer (whether or not vested) shall be canceled in exchange for a cash payment by the Company ofEffective Time, or can only be exercised for net cash equal to, an amount equal to (i) the excess, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Common Stock subject to such Stock Option, multiplied by (ii) the number grant no additional Stock Options (as hereinafter defined), restricted stock awards, stock appreciation rights or other interests in respect of shares of Common Stock for which such Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents of the holders of any Shares under the Stock Options are necessary Incentive Plans and (iii) amend, immediately prior to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable pursuant to this Section 7.04 shall be subject to any required withholding of taxes and shall be paid without interest. (c) The Stock Plans shall terminate as of the Effective Time of the MergerTime, and the provisions in of any other Employee Benefit Plan (as hereinafter defined), program, arrangement or agreement providing for the issuance, transfer or grant of any capital stock of the Company Shares, or any interest in respect of any capital Shares, to provide no continuing rights to acquire, hold, transfer, or grant any Shares or any interest in any Shares. (b) Immediately prior to the Effective Time, the Company shall have taken all necessary actions, including obtaining any required consents, such that all outstanding employee stock options, whether or not then fully exercisable or vested, to purchase Shares (a "Stock Option") and all outstanding stock appreciation rights, heretofore granted under the Stock Incentive Plans whether or not then fully exercisable or vested, shall become fully exercisable and vested, and the Stock Options and stock appreciation rights shall be canceled by the Company, and the holders thereof shall receive a cash payment (the "Cash Payment") from the Company in an amount (if any), equal to the product of (i) and (ii), where (i) is the number of Shares subject to such Stock Option or, in the case of a stock appreciation right, the number of Shares to which such stock appreciation right relates, and (ii) is the difference (if positive) between the Merger Consideration and the exercise price per Share covered by the Stock Option or the stock appreciation right. Prior to the Effective Time, the Company shall have taken all actions necessary, including obtaining all required consents, such that all amounts, if any, deducted by the Company prior to the Effective Time from the payroll of a participant under the Stock Purchase Plan shall be paid to such participant immediately prior to the Effective Time. Further, all company contributions, if any, attributable to such amounts and accrued under the Stock Purchase Plan shall also be paid to such participant immediately prior to the Effective Time. (c) Immediately prior to the Effective Time, the Company shall have taken all necessary actions, including obtaining all required consents, such that each restricted stock award under the Stock Incentive Plans (an "Award") shall become fully and immediately vested and transferable and the restrictions thereon shall lapse. At the Effective Time, each holder of an Award shall be paid in full satisfaction of such Award a cash payment in an amount in respect thereof equal to the product of (i) and (ii), where (i) is the Merger Consideration and (ii) is the number of Shares subject to such Award. The number of Shares of restricted stock of the Company to be awarded to certain officers and employees of the Company pursuant to stock incentive award agreements for fiscal year 2000, each dated as of December 15, 2000, shall, for each such officer or employee, be equal to the product of (i) and (ii), where (i) is the number of shares of restricted stock of the Company that would be awarded under each such stock incentive award agreement, assuming the Company has achieved the $3.03 EPS goal set forth in such award and (ii) is a fraction where the numerator is the actual number of days such participant is employed by the Company prior to the Effective Time during the Company's fiscal year ending in 2000 and the denominator is 365, and all restrictions on such restricted stock shall be deleted lapse immediately prior to the Effective Time. (d) The Company shall deliver to Acquiror within five business days of the date hereof a true and complete list of Stock Options and stock appreciation rights under the Stock Incentive Plans which are outstanding as of the date hereof, together with detailed calculations of the Cash Payments relating to such Stock Options and stock appreciation rights had the Effective Time occurred on the date of the Mergerdelivery thereof. The Company shall update such list and such calculations as of, and deliver such update to Acquiror on, the date that is two business days prior to the Effective Time, such updated list and calculations made as if the Effective Time would occur on such date. (e) The Company shall ensure that following the Effective Time neither it nor any of the Merger no holder of a Stock Option its Subsidiaries is or any participant in will be bound by any Stock Plan Options, stock appreciation rights, other options, warrants rights or agreements which would entitle any person or entity, other Benefit Plan shall have than Acquiror or its Subsidiaries, to own any right thereunder Shares or to acquire receive any capital stock payment in respect thereof. Notwithstanding the foregoing, Acquiror and any employee of the Company may agree in writing that all or a portion of the Surviving CorporationStock Options held by such employee will, in lieu of being canceled in consideration for the Cash Payment pursuant to this Section 2.8, be converted into options to acquire shares of Parent common stock or other securities of Parent. In such event, the Company shall not make the Cash Payment in respect of any such converted Stock Options.

Stock Options. (a) Either prior At the Effective Time, each holder of a then-outstanding option to or as soon as practicable following purchase Company Common Stock under the consummation of the OfferCompany's 1995 Key Employee Stock Option Plan, the Company Board (orCompany's 1995 Non-Employee Director Stock Option Plan, if appropriatethe Non-Qualified Stock Option Agreement dated as of January 17, any committee administering the Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Stock Options heretofore granted under any stock option program or arrangement of 1995 between the Company and Green Equity Investors, L.P. and all other agreements with the Company and its employees and Directors (collectively, the "Stock Option Plans") or any other stock option plan (true and correct copies of which have been delivered by the Company to provide thatParent), at the Effective Time of the Merger, each Stock Option outstanding immediately prior to the acceptance for payment of shares of Common Stock pursuant to the Offer (whether or not vested) shall be canceled then exercisable (the "Compensation Options"), shall, in exchange settlement thereof, receive for a cash payment by the Company of, or can only be exercised for net cash equal to, an amount equal to (i) the excess, if any, of (A) the price per each share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Company Common Stock subject to such Stock Option, multiplied by Compensation Option an amount (ii) the number of shares of Common Stock for which such Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable pursuant to this Section 7.04 shall be subject to any required applicable withholding tax) in cash equal to the difference between the Merger Price and the per share exercise price of taxes and such Compensation Option to the extent such difference is a positive number (such amount being hereinafter referred to as, the "Option Consideration"). Upon receipt of the Option Consideration, the Compensation Option shall be paid without interest. canceled. The surrender of a Compensation Option to the Company in exchange for the Option Consideration shall be deemed a release of any and all rights the holder had or may have had in respect of such Compensation Option. Prior to the Effective Time, the Company shall obtain all necessary consents or releases from holders of Compensation Options under the Stock Option Plans and take all such other lawful action as may be necessary to give effect to the transactions contemplated by this Section 3.01(e) (cexcept for any such action that may require the approval of the Company's stockholders). Except as otherwise agreed to by the parties: (i) The the Stock Option Plans shall terminate as of the Effective Time of the Merger, and the provisions in any other Benefit Plan plan, program or arrangement providing for the issuance, transfer issuance or grant of any other interest in respect of the capital stock of the Company or or, any interest in respect of any capital stock of the Company Subsidiary thereof, shall be deleted canceled as of the Effective Time of the Merger, Time; and (ii) the Company shall ensure assure that following the Effective Time of no participant in the Merger no holder of a Stock Option or any participant in any Stock Plan Plans or other Benefit Plan plans, programs or arrangements, including but not limited to, the Company's Employee Stock Purchase Plan, shall have any right thereunder to acquire any capital stock equity securities of the Company or Company, the Surviving CorporationCorporation or any Subsidiary thereof and to terminate all such plans.

Stock Options. (a) Either prior Prior to or as soon as practicable following the consummation of the OfferEffective Time, the Company Board (orshall neither accelerate the vesting of any Company Option nor allow the vesting of any Company Stock Options to be accelerated. As of the Effective Time, if appropriate, any committee administering the Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust Company will accelerate the terms vesting of all outstanding Stock Options heretofore granted under any stock option program unvested ITM Options. Additionally, as of the Effective Time, the Company shall cancel, or arrangement cause to be cancelled, all of the Company (collectivelyStock Options, whether they are ITM Options or not. The cancelled ITM Options are to be paid in accordance with Section 6.3(d). No holder of a Company Stock Option, other than the "Stock Plans") ITM Optionholders, shall be entitled to receive any payment or any other stock option plan to provide that, at the Effective Time form of consideration upon cancellation of the Merger, each Company Stock Option outstanding immediately Options. Except as may be otherwise agreed to by Parent and the Company in writing prior to the acceptance for payment of shares of Common Stock pursuant to the Offer (whether or not vested) shall be canceled in exchange for a cash payment Effective Time, all stock option plans, programs and arrangements established by the Company of, or can only be exercised for net cash equal to, an amount equal to (i) the excess, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Common Stock subject to such Stock Option, multiplied by (ii) the number of shares of Common Stock for which such Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents any of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable pursuant to this Section 7.04 shall be subject to any required withholding of taxes and shall be paid without interest. (c) The Stock Plans Acquired Companies shall terminate as of the Effective Time of the Merger, and the provisions in any other Benefit Plan plan, program or arrangement providing for the issuance, transfer issuance or grant of any capital stock of the Company or any other interest in respect of any the capital stock of any of the Company Acquired Companies shall be deleted deleted, terminated and of no further force or effect as of the Effective Time Time. (b) The Company Board, or the applicable committee thereof, has determined, in good faith, that the Cash Amount, which is the amount a holder of a Company Option will be EXECUTION VERSION entitled to receive upon the cancellation of the MergerCompany Stock Options pursuant to this Section 6.3, and represents an amount equal to the value or appreciated value (if any) of such Company Stock Option as of the Effective Time. Prior to the Effective Time, at the request of Parent, the Company shall take all action (including amending any and all of the Company's existing stock option plans and programs and any and all stock option agreements) that Parent determines may be necessary (under the plans pursuant to which Company Stock Options are outstanding and otherwise) to effectuate the provisions of this Section 6.3 and to ensure that, from and after the Effective Time, holders of Company Stock Options have no rights with respect thereto other than those specifically provided in this Section 6.3. (c) As of the Effective Time, the Company shall cancel the warrants (the "COMPANY WARRANTS") issued pursuant to that following certain Securities Purchase Agreement, dated as of June 9, 2003. (d) From and after the Effective Time, and conditioned as provided below, each ITM Optionholder will be entitled to receive from the Company the Cash Amount, in full and final settlement of the cancellation of the ITM Option. The Company's obligation to pay the Cash Amount to each ITM Optionholder is subject to (i) verification that the purported ownership and terms of the applicable ITM Option is in accordance with the Company's records and (ii) delivery by the ITM Optionholder to the Company of a duly executed written instrument (the "OPTIONHOLDER'S LETTER") in a form acceptable to Parent setting forth: (A) for each ITM Option, the aggregate number of shares of Company Common Stock covered thereby, the issue date and the exercise price, (B) a representation by the ITM Optionholder that he or she is the owner of all ITM Options described in the Optionholder's Letter and that as of immediately prior to the Effective Time none of the Merger no holder ITM Options had expired or otherwise ceased to be exercisable, (C) a confirmation by the ITM Optionholder that upon payment of a Stock Option or any participant in any Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock the Cash Amount that all obligations of the Company to him or her with respect to the Surviving CorporationITM Option shall have been fully satisfied and (D) such other terms as Parent may reasonably request. (e) Prior to the Effective Time, none of the Acquired Companies nor any of their respective officers or directors shall take any action to encourage any Person holding a Company Option to exercise such option or waive any provision or use their discretion to allow any Person to exercise a Company Option prior to the Effective Time and all rights, obligations, benefits, liabilities and provisions under any plan or agreement relating to any Company Option shall be construed in favor of the Company to the fullest extent permitted under applicable Law.

Stock Options. (ai) Either prior to or as soon as practicable following the consummation The board of directors of the Offer, the Company Board (or, if appropriate, any committee administering the Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Stock Company Options heretofore granted under any stock option program or arrangement of the Company (collectively, the "Stock Plans") or any other stock option plan to provide that, at the Effective Time of the MergerTime, each Stock Company Option outstanding immediately prior to the acceptance for payment of shares of Common Stock pursuant to the Offer (whether or not vested) shall be canceled in exchange for the right to receive a cash payment by the Company of, or can only be exercised for net cash equal to, an amount equal to (iA) the excess, if any, of (A1) the price Price per share of Common Stock to be paid pursuant to the Offer Share over (B2) the exercise price per share of Common Stock subject to such Stock Company Option, multiplied by (iiB) the number of shares of Common Stock for which such Stock Company Option shall not theretofore theretofor have been exercised. The Upon surrender to the Surviving Corporation at the address set forth in Section 10.6 of Company represents and warrants that no consents Options and/or such other documents as may reasonably be requested by the Surviving Corporation, the Parent hereby agrees to cause the Surviving Corporation to deliver to the registered holders of such Company Options (as indicated in the records of the holders of the Stock Options are necessary to effectuate the foregoing cash-outCompany) such cash payment. After the date of this Agreement, neither the board of directors of the Company Board nor any committee thereof shall cause any Stock Company Option to become exercisable as a result of the execution of the Operative Agreements this Agreement or the consummation of the Transactionstransactions contemplated hereby. (bii) All amounts payable pursuant to this Section 7.04 7.9 shall be subject to any required withholding of taxes and shall be paid without interest. (ciii) The board of directors of the Company shall take all necessary action to terminate the Stock Plans shall terminate as of the Effective Time and the board of directors of the Merger, and Company shall take all necessary action to delete the provisions in any other Compensation and 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 of the MergerTime, and the Company shall ensure that following the Effective Time of the Merger no holder of a Stock Option or any participant in any Stock Plan or other Compensation and Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving Corporation.

Stock Options. (a) Either At or immediately prior to or as soon as practicable following the consummation Effective Time, each then outstanding option and warrant to purchase any shares of the Offer, the Company Board (or, if appropriate, any committee administering the Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Stock Options heretofore granted under any capital stock option program or arrangement of the Company (collectivelyin each case, the an "Stock PlansOption") or any other stock option plan to provide that, at the Effective Time of the Merger, each Stock Option outstanding immediately prior to the acceptance for payment of shares of Common Stock pursuant to the Offer (whether or not vested) shall be canceled in exchange for a cash payment cancelled by the Company. In consideration of such cancellation of Options with an exercise price of less than the Offer Price, the Company of(or, or can only be exercised for net cash equal toat Parent's option, the Purchaser) shall pay to such holders of Options an amount in respect thereof equal to the product of (iA) the excess, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer Price over the exercise price of each such Option and (B) the exercise price per share number of Common Stock Shares previously subject to the Option immediately prior to its cancellation (such Stock Option, multiplied by (ii) the number payment to be net of shares of Common Stock for which such Stock Option shall not theretofore have been exercised. The Company represents withholding taxes and warrants that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactionswithout interest). (b) All amounts payable In connection with such cancellation, the Company shall use its best efforts to obtain such consents from holders of Company Options as are required pursuant to the plans (the "Option Plans") listed in Schedule 3.3(c) of the disclosure schedule delivered by the Company to Parent at or prior to the execution of this Section 7.04 Agreement (the "Disclosure Schedule"). The Company shall be subject take all other actions necessary and appropriate so that all stock option, other equity based plans or deferred compensation plans maintained with respect to any required withholding of taxes and shall be paid the Shares, including, without interest. (c) The Stock Plans limitation, the Option Plans, shall terminate as of the Effective Time (except for the payments to be made out of the Mergercash assets remaining in the deferred compensation plans (including interest thereon) to be paid to the participants, at the option of the Company, either (i) in a lump sum upon termination of the plans or (ii) one-third in each of January 2002, January 2003 and January 2004) and the provisions in any other 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 of the MergerTime, and the Company shall use its best efforts to ensure that following the Effective Time of the Merger no holder of a Stock an Option or any participant in any Stock Option Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock of the Company Company, Parent, Purchaser or the Surviving Corporation.

Stock Options. (a) Either prior The Committee shall have the authority to or as soon as practicable following the consummation of the Offergrant any Participant Incentive Stock Options, the Company Board (or, if appropriate, any committee administering the Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Nonqualified Stock Options heretofore or both types of Stock Options (in each case with or without Stock Appreciation Rights). Incentive Stock Options may be granted under any stock option program or arrangement only to employees of the Company and its subsidiaries (collectively, within the "Stock Plans"meaning of Section 424(f) or any other stock option plan to provide that, at the Effective Time of the Merger, each Code). To the extent that any Stock Option outstanding immediately prior to the acceptance for payment of shares of Common is not designated as an Incentive Stock pursuant to the Offer (whether Option or even if so designated does not vested) shall be canceled in exchange for a cash payment by the Company of, or can only be exercised for net cash equal to, qualify as an amount equal to (i) the excess, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Common Stock subject to such Incentive Stock Option, multiplied it shall constitute a Nonqualified Stock Option. Stock Options shall be evidenced by (ii) Option Agreements, which shall include such terms and provisions as the Committee may determine from time to time. An Option Agreement shall expressly indicate whether it is intended to be an agreement for an Incentive Stock Option or a Nonqualified Stock Option. The grant of a Stock Option shall occur on the date the Committee by resolution selects an individual to be a Participant in any grant of a Stock Option, determines the number of shares of Common Stock for which to be subject to such Stock Option shall not theretofore have been exercisedto be granted to such individual and specifies the terms and provisions of the Stock Option, or on such other date as the Committee may determine. The Company represents shall notify a Participant of any grant of a Stock Option, and warrants that a written Option Agreement shall be duly executed and delivered by the Company to the Participant. Subject to Section 12(a), such agreement shall become effective upon execution by the Company and the Participant. Anything in the Plan to the contrary notwithstanding, no consents term of the holders Plan relating to Incentive Stock Options shall be interpreted, amended or altered, nor shall any discretion or authority granted under the Plan be exercised, so as to disqualify the Plan under Section 422 of the Code or, without the consent of the Participant affected, to disqualify any Incentive Stock Option under such Section 422. Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable pursuant to this Section 7.04 shall be subject to any required withholding of taxes the following terms and conditions and shall be paid without interest. (c) The Stock Plans contain such additional terms and conditions as the Committee shall terminate as of the Effective Time of the Merger, and the provisions in any other 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 of the Merger, and the Company shall ensure that following the Effective Time of the Merger no holder of a Stock Option or any participant in any Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving Corporation.deem desirable:

Stock Options. (a) Either Company shall take all action necessary so that each outstanding Company Stock Option, whether or not it is then vested or exercisable, shall be canceled immediately prior to the Effective Time, and shall thereafter represent (whether or not previously vested) only the right to receive from the Surviving Corporation, at the Effective Time or as soon as practicable following thereafter, in consideration for the consummation of the Offeroption's cancellation, the Company Board (or, if appropriate, any committee administering the Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Stock Options heretofore granted under any stock option program or arrangement of the Company (collectively, the "Stock Plans") or any other stock option plan to provide that, at the Effective Time of the Merger, each Stock Option outstanding immediately prior an amount in cash equal to the acceptance for payment product of (i) the number of shares of Company Common Stock pursuant to issuable upon exercise of the Offer option multiplied by (whether or not vested) shall be canceled in exchange for a cash payment by the Company of, or can only be exercised for net cash equal to, an amount equal to (iii) the excess, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer Merger Consideration over (B) the exercise price per share of Common Stock payable under the option, (with the amount payable subject to such Stock Option, multiplied by (ii) reduction for required withholding of taxes). Promptly following the number of shares of Common Stock for which such Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date execution of this Agreement, neither the Company Board nor any committee thereof shall cause any mail to each person who is a holder of an outstanding Company Stock Option (whether or not then vested or exercisable) a letter in a form acceptable to become exercisable as a result Parent describing the treatment of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable and payment for Company Stock Options pursuant to this Section 7.04 2.5(i) and providing instructions to use to obtain payment for the holder's Company Stock Options under this Agreement. These instructions shall require, inter alia, that as a condition of payment, the holder shall be subject required to deliver a release, in a form acceptable to Parent, by which the holder effectively relinquishes all rights in respect of the holder's Company Stock Options upon payment in accordance with this Section 2.5(i). The Surviving Corporation shall cause the Paying Agent, at the Effective Time or as soon as reasonably practicable thereafter, to deliver to such holder the amount of cash provided for in the first sentence of this Section 2.5(i). Company shall take all actions necessary to cause all stock option, stock grant and stock purchase plans, and any required withholding other plan, program or arrangement with respect to equity securities of taxes and shall Company or any Subsidiary, to be paid without interest. (c) The Stock Plans shall terminate terminated effective as of the Effective Time of the Merger, and the provisions in any other 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 of the Merger, and the Company shall to ensure that following the Effective Time of the Merger no holder of a Stock Option or any participant in any Stock Plan or other Benefit Plan Person shall have any right rights thereunder to acquire equity securities of Company, any capital stock of the Company Subsidiary, Parent or the Surviving CorporationCorporation after such time.

Stock Options. (a) Either prior to or as soon as practicable following the consummation of the Offer, The Parent Corporation and the Company Board will take all necessary actions to cause each option to purchase shares of Company Common Stock (or, if appropriate, any committee administering the a "Stock PlansOption") shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Stock Options heretofore granted under any stock option program plan, program, agreement or arrangement of the Company or any of its Subsidiaries (collectively, the "Stock Plans") or any other stock option plan which is outstanding and unexercised immediately prior to provide that, 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 Merger, each exercise of such Stock Option outstanding immediately prior to the acceptance for payment Effective Time and the conversion and exchange of the shares of Company Common Stock pursuant to the Offer (whether or not vested) shall be canceled in exchange issued upon such exercise for a cash payment by the Company of, or can only be exercised for net cash equal to, an amount equal to (i) the excess, if any, shares of (A) the price per share of Parent Common Stock to be paid pursuant to the Offer over (B) the as provided in Section 1.8(a). The exercise price per share of Common Stock subject applicable to each such converted stock option will be the same as was applicable to such Stock Option, multiplied by Option immediately prior to the Effective Time (ii) subject to adjustment pursuant to the number last sentence of shares of Common Stock for which such Stock Option shall not theretofore have been exercisedSection 1.8(a)). The Company represents Upon and warrants that no consents of following the holders conversion of the Stock Options are necessary pursuant to effectuate this Section 1.9(a), each converted stock option will be subject to the foregoing cash-out. After 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 this Agreementany converted stock option, neither there will be no obligation that the Company Board nor any committee holder thereof shall cause any Stock Option to become exercisable as execute a result of the execution of the Operative Agreements or the consummation of the Transactionsstockholder's agreement. (b) All amounts payable pursuant 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 this Section 7.04 shall the Effective Time by reason of the exercise of a Stock Option or otherwise will cease to be subject to of any required withholding of taxes force or effect upon and shall be paid without interestfollowing 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 Plans shall terminate as 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 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 Mergerforegoing 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, and the provisions in any other Benefit Plan providing for Parent Corporation will assume the issuance, transfer or grant of any capital stock obligations of the Company under the Stock Plans as in effect at the Effective Time. No additional Stock Options will be granted pursuant to the Stock Plans after the Effective Time. (e) The Board of Directors or any interest in respect of any capital stock Compensation Committee of the Company shall be deleted 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 Effective Time SEC thereunder, the "Securities Exchange Act"), to cause the disposition in the Merger of Company Common Stock and Stock Options and the acquisition in the Merger of Parent Common Stock and options to acquire Parent Common Stock to be exempt from the provisions of Section 16(b) of the Merger, and the Company shall ensure that following the Effective Time of the Merger no holder of a Stock Option or any participant in any Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving CorporationSecurities Exchange Act.

Stock Options. (a) Either prior to or as soon as practicable following the consummation of the Offer, the Company Board (or, if appropriate, any committee administering the Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Stock Options heretofore granted under any stock option program or arrangement of the Company (collectively, the "Stock Plans") or any other stock option plan to provide that, at the Effective Time of the Merger, each Stock Option outstanding immediately prior to the acceptance for payment of shares of Common Stock pursuant to the Offer (whether or not vested) shall be canceled in exchange for a cash payment by the Company of, or can only be exercised for net cash equal to, an amount equal to (i) the excess, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Common Stock subject to such Stock Option, multiplied by (ii) the number of shares of Common Stock for which such Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable pursuant to this Section 7.04 6.04 shall be subject to any required withholding of taxes and shall be paid without interest. (c) The Stock Plans shall terminate as of the Effective Time of the Merger, and the provisions in any other 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 of the Merger, and the Company shall ensure that following the Effective Time of the Merger no holder of a Stock Option or any participant in any Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving Corporation.

Stock Options. (a) Either prior to or as soon as practicable following The Company’s Board of Directors will reserve the consummation lesser of the Offer, the Company Board (or, if appropriate, any committee administering the Stock PlansA) shall adopt such resolutions or take such other actions as are required to adjust the terms an aggregate of all outstanding Stock Options heretofore granted under any stock option program or arrangement of the Company (collectively, the "Stock Plans") or any other stock option plan to provide that, at the Effective Time of the Merger, each Stock Option outstanding immediately prior to the acceptance for payment of 70,000,000 shares of Common Stock or (B) ten percent (10%) of the outstanding Equity Securities, for issuance to employees, directors, officers or consultants of the Company pursuant to the Offer Company’s 2000 Stock Incentive Plan (whether the “Reserved Employee Shares”). The Company shall not grant any options to acquire shares or not vested) shall be canceled otherwise issue any shares in exchange for a cash payment by excess of the Reserved Employee Shares to employees, directors, officers or consultants of the Company of, or can only be exercised for net cash equal to, an amount equal to (i) the excess, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer over (B) Company’s 2000 Stock Incentive Plan or any other compensatory plan, contract or arrangement without the exercise price per share of Common Stock subject to such Stock Option, multiplied by (ii) the number of shares of Common Stock for which such Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents prior approval of the holders Board of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the TransactionsDirectors. (b) All amounts payable pursuant Unless otherwise approved by the Board of Directors, all stock, stock options and other stock equivalents issued to this Section 7.04 or purchased by the Founders shall be subject to any required withholding vesting over four (4) years as set forth in the 2000 Stock Incentive Plan Incentive Stock Option Agreement attached hereto as Exhibit A and as set forth in the Prior Management Agreement attached hereto as Exhibit B, except for Shares purchased by certain of taxes the Founders pursuant to the Series A Purchase Agreements, the Series B Purchase Agreement, the Series C Purchase Agreement, the Merger Agreement, the Series F Purchase Agreement or the Series G Purchase Agreement. All stock, stock options and other stock equivalents issued to or purchased by the Founders shall be paid subject to a Company repurchase option that shall provide that upon a Founder’s termination of employment or service with the Company, with or without interest. (c) The Stock Plans shall terminate as of the Effective Time of the Mergercause, and the provisions in any other Benefit Plan providing for the issuance, transfer or grant of any capital stock of the Company or its assignee (to the extent permissible under applicable securities laws and other laws) shall have the option to purchase at cost any interest in respect unvested shares of any capital stock held by such person. Unless otherwise approved by the Board of Directors, all stock, stock options and other stock equivalents issued to or purchased by the Founders after the date hereof shall be issued or purchased at an exercise price equal to the fair market value of the Company Common Stock at the time of issue. Any vested stock held by such terminated Founder shall be deleted subject to the Right of First Refusal as of the Effective Time of the Merger, and the Company shall ensure that following the Effective Time of the Merger no holder of a Stock Option or any participant described in any Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving CorporationSection 5.2 below.

Stock Options. (a) Either prior to or as soon as practicable following the consummation Each of the Offer, the Company Board (or, if appropriate, any committee administering the Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Stock Options heretofore granted under any Company's stock option program or arrangement plans (the "Option Plans"), 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 (collectively, the "Stock Plans") or any other stock option plan to provide that, at the Effective Time of the Merger, each Stock as defined in Section 5.1). Each Option Plan and all such options which are outstanding immediately prior to the acceptance for payment Effective Date, whether vested or unvested (each, an "Option" and collectively, the "Options"), shall be 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 pursuant (a "Substitute Option") equal to the Offer number of shares of Company Common Stock subject to such Option multiplied by the Exchange Ratio (whether or not vested) rounded to the nearest whole share). The per share exercise price for each Substitute Option shall be canceled in exchange for a cash payment by the Company of, or can only be exercised for net cash equal to, an amount equal to (i) the excess, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer over (B) 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 Stock Optionadditional actions as are necessary under applicable law and the applicable agreements and Option Plans to ensure that each outstanding Option shall, multiplied by (ii) from and after the number of Effective Date, represent only the right to purchase, upon exercise, shares of Parent Common Stock for which such Stock Option Stock. There shall not theretofore have been exercised. The Company represents and warrants that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable occur as a result of the execution 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 Operative Agreements original grant agreement, and any such acceleration shall occur without the exercise of discretion by any person or the consummation of the Transactionsentity. (b) All amounts payable pursuant As soon as reasonably practicable after the Effective Date, Parent shall cause to this Section 7.04 shall be included under a registration statement on Form S-8 of Parent all shares of Parent Common Stock which are subject to any required withholding of taxes Substitute Options, and shall be paid without interestmaintain the effectiveness of such registration statement until all Substitute Options have been exercised, expired or forfeited. (c) The Stock Plans shall terminate as of the Effective Time of the Merger, and the provisions in any other 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 of the Merger, and the Company shall ensure that following the Effective Time of the Merger no holder of a Stock Option or any participant in any Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving Corporation.

Stock Options. (a) Either prior to or Except as described in Section 7.04(b) below, as soon as practicable following the consummation date of the Offerthis Agreement, the Company Board (or, if appropriate, any committee administering the Stock Company Option Plans) shall adopt adopt, or shall cause to be adopted, such resolutions or take 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 stock option program Company Option Plan or arrangement of the Company (collectivelyotherwise, the "Stock Plans") or any other stock option plan to provide that, at the Effective Time of the Merger, that each Company Employee Stock Option outstanding immediately prior to the acceptance for payment of shares of Common Stock pursuant to the Offer Effective Time (whether or not then vested) shall be canceled as of the Effective Time in exchange for a cash payment by the Company of, to be made on the date following the Effective Time (or can only be exercised for net cash equal to, as soon as practicable thereafter) of an amount equal to (i) the excess, if any, of (A) the price per share of Company Common Stock to be paid pursuant to the Offer over (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 such Company Employee Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) With respect to the Individual 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 subject to any required withholding of taxes Taxes and shall be paid without 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. (cd) The Stock 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 Individual Options shall terminate as of the Effective Time of the MergerTime, and the provisions in any other Benefit Company 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 of the MergerTime, and the Company shall to ensure that following the Effective Time of the Merger no holder of a Company Employee Stock Option or any participant in any Stock Company Option Plan or other Benefit Company Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving Corporation.

Stock Options. (a) Either prior to or as As soon as practicable following the consummation date of the Offerthis Agreement, the Company Board (or, if appropriate, any committee administering the Company Stock PlansPlan) shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Stock Options heretofore granted under any stock option program or arrangement of the provide that each Company (collectively, the "Stock Plans") or any other stock option plan to provide that, at the Effective Time of the Merger, each Stock Option outstanding immediately prior to the acceptance for payment of shares of Company Common Stock pursuant to the Offer (whether or not vested) shall be canceled canceled, with the holder thereof becoming entitled to receive (i) in exchange for a cash payment by the case of each holder listed in Section 6.04(a) of the Company of, or can only be exercised for net cash equal toDisclosure Letter, an amount of cash in respect of such Company Stock Option equal to the product of (iA) the excess, if any, of (Ax) the price per share of Common Stock to be paid pursuant to the Offer Merger Consideration over (By) the exercise price per share of Company Common Stock subject to such Company Stock Option, multiplied by Option and (iiB) the number of shares of Company Common Stock for which subject to such Company Stock Option shall not theretofore have been exercised. The immediately prior to its cancellation or (ii) in the case of each other holder, the amount of cash in respect of such Company represents and warrants that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither Option as provided in the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as Plan upon a result change of the execution of the Operative Agreements or the consummation of the Transactionscontrol. (b) All amounts payable pursuant to this Section 7.04 6.04 shall be subject to any required withholding of taxes Taxes and shall be paid at or as soon as practicable following the Effective Time, but in any event within seven days following the Effective Time, without interest. The Company shall use its reasonable best efforts to obtain all consents of the holders of the Company Stock Options as shall be necessary to effectuate the foregoing. The cancellation of a Company Stock Option in exchange for the cash payment described in this Section 6.04 shall be deemed a release of any and all rights the holder of such Company Stock Option had or may have had in respect thereof, and any required consents from all such holders shall so provide. Notwithstanding anything to the contrary contained in this Agreement, payment shall, at Parent's request, be withheld in respect of any Company Stock Option until all consents, approvals and tax certifications which Parent reasonably determines to be necessary are obtained. (c) The As soon as practicable following the date of this Agreement, the Company Board (or, if appropriate, any committee administering the Company Stock Plans Plan) shall take or cause to be taken such actions as are required to cause (i) the Company Stock Plan to terminate as of the Effective Time of the Merger, and (ii) the provisions in any other 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 to be deleted as of the Effective Time of the Merger, and the Time. The Company shall ensure that following the Effective Time of the Merger no holder of a Company Stock Option or any participant in any the Company Stock Plan or other Company Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving Corporation. (d) In this Agreement:

Stock Options. At the Effective Time, each holder of a then outstanding option to purchase Shares under the Company's 1985 Stock Option Plan and 1994 Long Term Incentive Plan (acollec- tively, the "Stock Option Plan"), whether or not then exercisable (the "Option"), shall, in settlement thereof, represent the right to receive for each Share subject to such Option an amount (subject to any applicable withholding tax) Either prior in cash equal to or the difference between the Offer Consideration and the per Share exercise price of such Option to the extent such difference is a positive number (such amount being hereinafter referred to as, the "Option Consideration"); provided, however, that with respect -------- ------- to any person subject to Section 16(a) of the Exchange Act, any such amount shall, at the written request of such Person, be paid as soon as practicable following after the consummation first date payment can be made without liability to such person under Section 16(b) of the OfferExchange Act. Upon receipt of the Option Consideration, the Option shall be canceled. The surrender of an Option to the Company in exchange for the Option Consideration shall be deemed a release of any and all rights the holder had or may have had in respect of such Option. Prior to the Effective Time, the Company Board (or, if appropriate, any committee administering shall use its commercially reasonable best efforts to obtain all necessary consents or releases from holders of Options under the Stock Plans) shall adopt such resolutions or Option Plans and take all such other actions lawful action as are required may be necessary to adjust give effect to the terms of all outstanding Stock Options heretofore granted under any stock option program or arrangement transactions contemplated by this Section 3.5 (except for such action that may require the approval of the Company (collectively, the "Stock Plans") or any other stock option plan Company's stockholders). Except as otherwise agreed to provide that, at the Effective Time of the Merger, each Stock Option outstanding immediately prior to the acceptance for payment of shares of Common Stock pursuant to the Offer (whether or not vested) shall be canceled in exchange for a cash payment by the Company ofparties, or can only be exercised for net cash equal to, an amount equal to (i) the excess, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Common Stock subject to such Stock Option, multiplied by (ii) the number of shares of Common Stock for which such all Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable pursuant to this Section 7.04 shall be subject to any required withholding of taxes and shall be paid without interest. (c) The Stock Plans shall terminate as of the Effective Time of the Merger, and the provisions in any other Benefit Plan plan, program or arrangement providing for the issuance, transfer issuance or grant of any other interest in respect of the capital stock of the Company or any interest in respect of any capital stock of the Company Subsidiary thereof, shall be deleted canceled as of the Effective Time of the MergerTime, and (ii) the Company shall take all action necessary to ensure that following the Effective Time of the Merger no holder of a Stock Option or any participant in any Stock Option Plan or other Benefit Plan plans, programs or arrangements shall have any right thereunder to acquire any capital stock equity securities of the Company or Company, the Surviving CorporationCorporation or any Subsidiary thereof and to terminate all such plans.

Stock Options. (a) Either prior to or as As soon as practicable following the consummation date of the Offerthis Agreement, the Company Board (or, if appropriate, any committee administering the Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Company Employee Stock Options heretofore granted under any stock option program Company Option Plan or arrangement of the Company (collectivelyotherwise, the "Stock Plans") or any other stock option plan to provide that, at the Effective Time of the Merger, that each Company Employee Stock Option outstanding immediately prior to the acceptance for payment of shares of Common Stock pursuant to the Offer (whether or not vested) Effective Time shall be canceled at and as of the Effective Time in exchange for a cash payment by the Company of, or can only to be exercised for net cash equal to, made on such date of an amount equal to (i) the excess, if any, of (A) the price per share of Company Common Stock to be paid pursuant to the Offer over (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 such Company Employee Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable pursuant to this Section 7.04 shall be subject to any required withholding of taxes Taxes and shall be paid without interest. The Company shall use its commercially reasonable 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. (c) The Stock Company Board shall adopt such resolutions or take such other actions as are required so that the Company Option Plans shall terminate as of the Effective Time of the MergerTime, and the provisions in any other Benefit Plan 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 of the MergerTime, and the Company shall to ensure that following the Effective Time of the Merger no holder of a Company Employee Stock Option or any participant in any Stock Company Option Plan or other Benefit Company Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving Corporation.

Stock Options. In the event that UDC elects to terminate this Agreement pursuant to Section 5 or in the event of a Change of Control of UDC the Employee's employment is terminated by the Employee for Good Reason (or in the event UDC breaches this Agreement by termination of Employee without the notice required under Section 5 or without Cause under Section 7), then UDC shall amend at least one half of all UDC stock options held by him and all restricted stock awards made to him (whether issued subject to forfeiture or to be issued when and if they become vested) so as to (a) Either prior cause to or as soon as practicable following the consummation of the Offervest, the Company Board (or, if appropriate, any committee administering the Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Stock Options heretofore granted under any stock option program or arrangement of the Company (collectively, the "Stock Plans") or any other stock option plan to provide that, at the Effective Time of the Merger, each Stock Option outstanding immediately prior to the acceptance for payment of shares of Common Stock pursuant to the Offer (whether or not vested) shall be canceled in exchange for a cash payment by the Company of, or can only be exercised for net cash equal to, an amount equal to (i) the excess, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Common Stock subject to such Stock Option, multiplied by (ii) the number of shares of Common Stock for which such Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreementsuch Change in Control or termination of employment, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. all such then unvested stock options and restricted stock awards, and (b) All amounts payable pursuant provide Employee 90 days to this Section 7.04 exercise such options (or such greater period as may have been provided in the terms of such options). The Compensation Committee of UDC, in place prior to the "Change in Control," will have the ability to cause more than one-half of these options to vest. Such determination will be made at the sole discretion of the Compensation Committee. In addition, UDC will, consistent with all applicable laws and regulations, use its reasonable efforts to assist Employee in securing independent third party financing of the funds required by employee to exercise all vested but unexercised stock options held by him. If such financing is not so obtained by Employee, then UDC shall loan to Employee the funds required by Employee to exercise such options, which loan shall be subject repayable one year from the date made, will be secured by UDC's common stock purchased upon exercise of such options and will bear interest at the prime rate (floating) of Bank One - Texas, N. A. To the extent that UDC refuses or is unable to any required withholding of taxes and shall be paid without interest. (c) The Stock Plans shall terminate as of the Effective Time of the Merger, and comply with the provisions of Section 9(a) hereof, the time period contemplated in any other Benefit Plan providing for Section 9(b) shall commence on the issuance, transfer or grant date UDC complies with the provision 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 of the Merger, and the Company shall ensure that following the Effective Time of the Merger no holder of a Stock Option or any participant in any Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving Corporationsaid Section 9(a).

Stock Options. (ai) Either prior to or as soon as practicable Promptly following the consummation Effective Date, KHI shall grant to the Executive an option to purchase Four Million Three Hundred Fifty Thousand (4,350,000) shares of common stock of KHI (“KHI Common Stock”) (the “Option”). The Option shall be granted under the KHI 2007 Equity Incentive Plan (the “EIP”). The terms and conditions of the OfferOption shall be set forth in the stock option award agreement attached hereto as Exhibit B (the “Option Award”), the Company Board which is incorporated herein by reference. The Option shall be subject to (or, if appropriate, any committee administering the Stock PlansA) shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Stock Options heretofore granted under the EIP, the Option Award, and any stock applicable shareholder, registration rights and/or option program or arrangement of the Company holder agreements (collectively, the "Stock Plans"“Equity Agreements”), provided that whenever the EIP or a related Equity Agreement permits the use of conflicting or special terms or conditions under an employment agreement, as, for example but not by way of limitation, with respect to the definitions of Cause and Good Reason, the terms of this Agreement shall be applied, and (B) other restrictions and limitations generally applicable to equity held by KHI or Company executives (which shall not be inconsistent with the terms of the Equity Agreements) or otherwise required by law. (ii) Promptly after the first time the fair market value of a share of KHI Common Stock is $10 or more (less the per share amount of any previous dividends or other distributions on shares of KHI Common Stock and as equitably adjusted by the Board for any stock splits or other changes in the Company’s capital structure and as determined as provided for below) during the term of this Agreement, subject to the receipt of any required shareholder or KHI Board or compensation committee approvals, KHI shall make a one-time grant to the Executive of an option plan to provide that, at purchase an additional Five Hundred Fifty Thousand (550,000) shares of KHI Common Stock with an exercise price equal to the Effective Time fair market value of a share of KHI Common Stock on the date of the Mergergrant (the “Additional Option”), each Stock Option outstanding immediately prior subject to the acceptance for payment of shares of Common Stock pursuant to the Offer (whether or not vested) shall be canceled in exchange for a cash payment Executive remaining continuously employed by the Company ofthrough such grant date; it being understood that for so long as the KHI Common Stock is not listed or admitted to trade on a national securities exchange (including Nasdaq), fair market value shall be determined based on the annual valuation of KHI Common Stock performed in the ordinary course by independent appraisers engaged by KHI to value such common stock for purposes of compensatory equity award grants. The Additional Option shall be granted under the EIP or can only such other equity incentive plan that may be exercised for net cash adopted by KHI. The Additional Option shall vest in equal toinstallments on each of the first five anniversaries of its date of grant, an amount equal subject to (i) the excess, if any, of Executive remaining continuously employed by the Company on each such date. The Additional Option shall be subject to (A) the price per share terms of Common Stock to the EIP (or such other equity incentive plan that may be paid pursuant adopted by KHI), the award agreement evidencing such option, and any applicable shareholder, registration rights and/or option holder agreements (collectively, the “Additional Equity Agreements”), provided that whenever the EIP (or such other equity incentive plan that may be adopted by KHI) or a related Additional Equity Agreement permits the use of conflicting or special terms or conditions under an employment agreement, as, for example, with respect to the Offer over definitions of Cause and Good Reason, the terms of this Agreement shall govern, and (B) the exercise price per share of Common Stock subject other restrictions and limitations generally applicable to such Stock Option, multiplied equity held by KHI or Company executives (ii) the number of shares of Common Stock for which such Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents be inconsistent with the terms of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements Additional Equity Agreements) or the consummation of the Transactionsotherwise required by law. (b) All amounts payable pursuant to this Section 7.04 shall be subject to any required withholding of taxes and shall be paid without interest. (c) The Stock Plans shall terminate as of the Effective Time of the Merger, and the provisions in any other 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 of the Merger, and the Company shall ensure that following the Effective Time of the Merger no holder of a Stock Option or any participant in any Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving Corporation.

Stock Options. (aExcept as set forth on Section 1.6(d) Either prior to or as soon as practicable following the consummation of the OfferCompany Disclosure Letter (as defined in Article II), each option to purchase Company Common Stock (the “Company Board (orStock Options”), if appropriatewhether vested or unvested, any committee administering the Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust the terms of and all outstanding Stock Options heretofore granted under any stock option program plans or arrangement other equity-related plans of the Company (collectively, the "“Company Stock Plans") or any other stock option plan ”), that are unexpired, unexercised and outstanding as of the Effective Time shall on the terms and subject to provide thatthe conditions set forth in this Agreement, be cancelled in its entirety at the Effective Time Time, and the holder of each shall be fully vested in such Company Stock Options, and the MergerParent shall pay or cause to be paid, as soon as reasonably practicable after the Effective Time, to each such holder of Company Stock Options an amount of cash equal to the product of (i) the number of shares of Company Common Stock as to which such Company Stock Option outstanding remains unexercised immediately prior to the acceptance for payment of shares of Common Stock pursuant to the Offer (whether or not vested) shall be canceled in exchange for a cash payment by the Company of, or can only be exercised for net cash equal to, an amount equal to (i) the excess, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Common Stock subject to such Stock OptionEffective Time, multiplied by (ii) the number Per Share Merger Consideration minus the exercise price of shares such Company Stock Option immediately prior to the Effective Time (the “Option Merger Consideration”); provided, however, that if the Per Share Merger Consideration does not exceed the exercise price of Common such Company Stock Option immediately prior to the Effective Time, the Option Merger Consideration for which such Company Stock Option shall not theretofore have been exercisedbe zero; and provided further, that nothing in this Section 1.6(d) shall prohibit the holder of a Company Stock Option from exercising such Company Stock Option prior to the Effective Time in accordance with its terms and applicable Legal Requirements. The Prior to the Effective Time, the Company represents and warrants that no consents shall timely deliver any notices to holders of Company Stock Options as may be required by the terms of the holders of the Company Stock Options are Plans and take any and all actions necessary or appropriate to effectuate the foregoing cashforegoing, including, without limitation, using all reasonable efforts to obtain any applicable consents or waivers from holders of Company Stock Options that were granted under the Company’s 2000 Non-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Employee Directors’ Stock Option to become exercisable as a result Plan. The payment of the execution of Option Merger Consideration to the Operative Agreements or the consummation of the Transactions. (b) All amounts payable pursuant to this Section 7.04 shall be subject to any required withholding of taxes and shall be paid without interest. (c) The Stock Plans shall terminate as of the Effective Time of the Merger, and the provisions in any other 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 of the Merger, and the Company shall ensure that following the Effective Time of the Merger no holder of a Company Stock Option shall be reduced by any income, employment or other Tax withholding required under the Code (as defined in Section 2.13(a)(ii)) or any participant in any Stock Plan provision of state, local or other Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving Corporationforeign Tax law.

Stock Options. (a) Either prior Prior to or as soon as practicable following the consummation Effective Time, the Board of Directors of the Offer, the Company Board (or, if appropriate, any committee administering the Stock Plansthereof) shall adopt such appropriate resolutions or and take such all other actions necessary or appropriate, if any, to (i) cause each Company Stock Option that is outstanding as are required to adjust the terms of all outstanding Stock Options heretofore granted under any stock option program or arrangement of the Company (collectively, date hereof to vest and to be exercisable immediately prior to the "Stock Plans") or any other stock option plan to provide that, at the Effective Time consummation of the Merger, each (ii) cause all restrictions applicable to any restricted stock award heretofore granted under the Company Restricted Stock Option Plan or any other similar plan outstanding upon the consummation of the Merger to lapse immediately prior to the acceptance Effective Time and (iii) cause each Company Stock Option that is outstanding upon the consummation of the Merger to be exercisable solely for payment of shares of Common Stock pursuant the Merger Consideration for each Share issuable upon exercise thereof immediately prior to the Offer Effective Time. The Company shall offer each holder of a Company Stock Option (whether or not vested) shall be canceled an "Option Holder"), in exchange for a cash payment by the cancellation thereof, the right to receive from the Company of, or can only be exercised for net cash equal to, an amount equal to (iA) the product of (1) the number of shares of Company Common Stock subject to such Company Stock Option and (2) the excess, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer Merger Consideration over (B) the exercise price per share for the purchase of the Company Common Stock subject to such Company Stock Option, multiplied minus (B) all applicable federal, state and local Taxes required to be withheld in respect of such payment. The amounts payable pursuant to the immediately preceding sentence of this 5.4 shall be paid as soon as reasonably practicable following the Effective Time. The surrender of an Option in exchange for the consideration contemplated by (ii) the number second sentence of shares this Section 5.4 shall be deemed a release of Common Stock for which such Stock any and all rights the Option shall not theretofore Holder had or may have been exercisedhad in respect thereof. The Company represents shall take all such steps as may be required to cause the transactions contemplated by this Section 5.4 and warrants that no consents any other dispositions of Company equity securities (including derivative securities) in connection with this Agreement by each individual who is a director or officer of the holders of Company to be exempt under Rule 16b-3 promulgated under the Stock Options are necessary Exchange Act, such steps to effectuate be taken in accordance with the foregoing cashNo-out. After Action Letter dated January 12, 1999, issued by the date of this AgreementSEC to Skadden, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the TransactionsArps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP. (b) All amounts payable pursuant The Company shall take all actions necessary to this ensure that (i) the Offering Period (as defined in the Company Stock Purchase Plan) applicable to the options outstanding under the Company Stock Purchase Plan (each, a "Purchase Plan Option") is shortened in accordance with Section 7.04 16 of the Company Stock Purchase Plan so as to have an Exercise Date (as defined in the Company Stock Purchase Plan) that occurs before the Effective Time; (ii) no new Offering Period, other than the Offering Period scheduled to commence on April 1, 1999, shall be subject commence on or after the date hereof, and (iii) no holder of a Purchase Plan Option is permitted to any required withholding increase his or her rate of taxes payroll deduction under the Company Stock Purchase Plan from and shall be paid without interestafter the date hereof. (c) The Company shall take all actions necessary to provide that, prior to the Effective Time, (i) the Company Stock Plans shall terminate as Option Plan, the Company Stock Purchase Plan and any similar plan or agreement of the Effective Time of the MergerCompany shall be terminated, and the provisions in (ii) any rights under any other Benefit Plan providing for plan, program, agreement or arrangement to the issuance, transfer issuance or grant of any other interest in respect of the capital stock of the Company or any interest in respect of its Subsidiaries shall be terminated, and (iii) no Option Holder will have any right to receive any shares of capital stock of the Company shall be deleted as or, if applicable, the Surviving Corporation, upon exercise of any Company Stock Option. (d) The Company represents and warrants that it has the power and authority under the terms of the Effective Time Company Stock Purchase Plan and each of the Merger, Company Stock Option Plan and the Company shall ensure that following Restricted Stock Plan to comply with subsections (a), (b) and (c) hereof without the Effective Time consent of the Merger no holder of a Stock any Option Holder or any participant in any Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving Corporationperson.

Stock Options. (a) Either prior to or as As soon as practicable following -------------- the consummation date of the Offerthis Agreement, the Company Board (or, if appropriate, any committee administering admini stering the Company Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Company Employee Stock Options heretofore granted under any stock option program or arrangement of the Company (collectively, the "Stock Plans") or any other stock option plan Plan to provide that, at the Effective Time of the Merger, that each Company Employee Stock Option outstanding immediately prior to the acceptance for payment of shares of Common Stock pursuant to the Offer (whether or not vested) shall be canceled in exchange for a cash payment by the Company of, or can only be exercised for net cash equal to, at the Effective Time of an amount equal to (i) the excess, if any, of (Ax) the price Merger Consideration per share of Company Common Stock to be paid pursuant to the Offer over (By) 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 such Company Employee Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements exercised (whether vested or the consummation of the Transactionsnot). (b) All amounts payable pursuant to this Section 7.04 6.04 shall be subject to any required withholding of taxes Taxes and shall be paid without interest. The Company shall use its 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 such consents are obtained. (c) The Subject to Section 6.04(a), the Company Stock Plans shall terminate as of the Effective Time of the MergerTime, and the provisions in any other 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 of the MergerTime, and the Company shall ensure that following the Effective Time of the Merger no holder of a Company Employee Stock Option or Company SAR or any participant in any Company Stock Plan or other Company Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving Corporation. (d) As soon as practicable following the date of this Agreement, the Company Board or, if appropriate, any committee administering the Company Stock Purchase Plan, shall adopt such resolutions or take such other actions as are required to (i) make all options granted under such plan exercisable at least 10 days prior to the Effective Time based on the payroll deductions then credited to the participants' respective accounts thereunder and (ii) cancel, as of the Effective Time, all options which have not then been exercised. (e) In this Agreement:

Stock Options. After the Effective Time (aor at such earlier time as Merger Sub shall designate), each option (an "Option") Either prior to or as soon as practicable following the consummation of the Offer, the Company Board (or, if appropriate, any committee administering the Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Stock Options heretofore which has been granted under any stock option program or arrangement of the Company Loctite Corporation 1993 Stock Option Plan and the Loctite Corporation 1976 Stock Option Plan, as amended through October 23, 1987 (collectively, the "Company Stock Option Plans") or any other stock option plan to provide that, and is outstanding at the Effective Time of the MergerTime, each Stock Option outstanding immediately prior to the acceptance for payment of shares of Common Stock pursuant to the Offer (whether or not vested) shall then exerciseable, will be canceled in exchange exchanged for, and the holder of each such Option will be entitled to receive upon surrender of the Option for a cash payment by the Company ofcancellation, or can only be exercised for net cash equal to, an amount equal to the product of the following: (i) the excesspositive difference, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer over (B) obtained by subtracting the exercise price per share of Common Stock subject to each such Stock Option, multiplied by Option from the Merger Consideration times (ii) the number of shares of Common Stock for which Shares covered by such Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this AgreementOption, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable pursuant to this Section 7.04 shall be subject to less any required withholding tax (the "Option Consideration"). The surrender of taxes and an Option in exchange for the Option Consideration shall be paid without interest. deemed a release of any and all rights the holder had or may have had in respect of such Option. Prior to the Effective Time, the Company shall use its best efforts to obtain all necessary consents or releases from holders of Options and take all such other action as may be reasonably necessary to give effect to the transactions contemplated by this Section 4.4. Except as otherwise agreed to by the parties, (ci) The the Company Stock Option Plans shall terminate as of the Effective Time of and, except with respect to the Mergerright to receive the Option Consideration under this Section 4.4, any and the all rights under any provisions in any other Benefit Plan plan, program or arrangement providing for the issuance, transfer issuance or grant of any other interest in respect of the capital stock of the Company or any interest in respect of any capital stock of the Company subsidiary thereof shall be deleted canceled as of the Effective Time of the MergerTime, and (ii) the Company shall take all reasonable action necessary to ensure that following the Effective Time of the Merger no holder of a Stock Option or any participant in any Stock Plan or other Benefit Plan person shall have any right thereunder under any Company Stock Option Plan (or any Option granted thereunder) or other plan, program or arrangement with respect to, including any right to acquire any capital stock acquire, equity securities of the Company or Company, the Surviving Corporation, Parent, Parent Sub or any subsidiary of any of the foregoing following the Effective Time.

Stock Options. (a) Either prior The Company has reserved 990,997 shares of Company Common Stock for issuance under the Company Option Plan, of which options with respect to or 843,520 shares are outstanding as soon as practicable following the consummation of the Offer, the Company Board (or, if appropriate, any committee administering the Stock Plansdate of this Agreement. Part 2.3(b) shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Stock Options heretofore granted under any stock option program or arrangement of the Disclosure Schedule accurately sets forth, with respect to each Company (collectively, the "Stock Plans") or any other stock option plan to provide that, at the Effective Time Option that is outstanding as of the Merger, each Stock Option outstanding immediately prior to the acceptance for payment date of shares of Common Stock pursuant to the Offer (whether or not vested) shall be canceled in exchange for a cash payment by the Company of, or can only be exercised for net cash equal to, an amount equal to this Agreement: (i) the excess, if any, name of the holder of such Company Option; (Aii) the price per share total number of shares of Company Common Stock that are subject to such Company Option and the number of shares of Company Common Stock with respect to which such Company Option is immediately exercisable; (iii) the date on which such Company Option was granted and the term of such Company Option; (iv) the vesting schedule for such Company Option and whether the vesting of such Company Option shall be paid pursuant subject to any acceleration in connection with the Offer over Merger or any of the other transactions contemplated by this Agreement; (Bv) the exercise price per share of Company Common Stock subject 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 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 grant was made in accordance with the terms of the applicable 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 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, if applicable, all Contracts applicable to such Stock OptionCompany Options and all Legal Requirements and, multiplied by (ii) the number of shares of Common Stock for which such Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable pursuant to this Section 7.04 shall be subject to any required withholding of taxes and shall be paid without interest. (c) The Stock Plans shall terminate as of the Effective Time of the MergerClosing, and the provisions in any other 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 of the Merger, and the Company shall ensure that following the Effective Time of the Merger no former holder of a Stock Company Option or any participant in any Stock Plan or other Benefit Plan shall will have any rights with respect to such Company Option other than the right thereunder to acquire any capital stock receive the Option Payment to be made in respect thereof as contemplated by Section 1.5 of this Agreement (and the Company or the Surviving CorporationPer Share Common Escrow Proceeds, as and when such disbursements are required, if applicable).

Stock Options. (a) Either prior At the Effective Time, each outstanding and unexercised option to or as soon as practicable following purchase Shares (a "Company Option") pursuant to the consummation of the Offer, the Company Board (or, if appropriate, any committee administering the 1998 Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Stock Options heretofore granted under any stock option program or arrangement Option Plan of the Company (collectivelythe "Company Option Plan") or pursuant to other compensatory option plans or agreements set forth in Section 3.5(a) of the Disclosure Schedule, -------------- whether vested or unvested, shall be converted into an obligation of the Company to pay, and the right of the holder thereof to receive, in full satisfaction of each Company Option, the "Stock PlansCash Amount" with respect to such Company Option. The ") or Cash Amount" for any other stock option plan to provide that, at Company Option shall equal the Effective Time of the Merger, each Stock Option outstanding immediately prior to the acceptance for payment of shares of Common Stock pursuant to the Offer product of: (whether or not vested) shall be canceled in exchange for a cash payment by the Company of, or can only be exercised for net cash equal to, an amount equal to (i1) the excess, if any, of the Offer Price over the exercise price per Share of such Company Option and (2) the number of Shares underlying such Company Option. The Company shall take all reasonable actions necessary to cause the Company's employees and directors to consent, to the extent required, to the transactions contemplated by this Section 3.5 no later than immediately prior to the Effective Time. ----------- Except as may be otherwise agreed to by Parent or Buyer and the Company, as of the Effective Time, (A) the price per share of Common Stock to be paid pursuant to the Offer over Company Option Plan shall terminate, (B) the exercise price per share of Common Stock subject to such Stock Option, multiplied by (ii) the number of shares of Common Stock for which such Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable pursuant to this Section 7.04 shall be subject to any required withholding of taxes and shall be paid without interest. (c) The Stock Plans shall terminate as of the Effective Time of the Merger, and the provisions in any other Benefit Plan plan, program or arrangement providing for the issuance, transfer issuance or grant of any other interest in respect of the capital stock of the Company or any interest in respect of any capital stock of the Company its Subsidiaries shall be deleted as of the Effective Time of the Merger, and the Company shall ensure that following the Effective Time of the Merger (C) no holder of a Stock Option Company Options or any participant in the Company Option Plans or any Stock Plan other plans, programs or other Benefit Plan arrangements shall have any right rights thereunder to acquire any capital stock Equity Interests of the Company, the Surviving Corporation or any subsidiary thereof. All Company Options outstanding as of the date hereof and the price at which they are exercisable are listed on Section 3.5(a) of the Company Disclosure Letter. The -------------- Company and Parent agree that the Cash Amounts are the sole payments that will be made with respect to or in relation to the Surviving CorporationCompany Options. (b) All warrants and other Equity Interests of the Company other than Company Options (which shall be subject to the provisions of Section 3.5(a) above) shall be canceled as of the Closing Date. At or before the Effective Time, the Company shall use commercially reasonable efforts to take all actions, in a manner reasonably satisfactory to Parent, necessary or advisable to give effect to the foregoing provisions of this Section 3.5. ----------- (c) As soon as practicable, and in no event greater than five Business Days following, the Effective Time, Parent shall cause to be mailed to the holder of each Company Option, the Cash Amount payable with respect to such Company Option to such holder pursuant to Section 3.5(a) hereof. --------------

Stock Options. Within thirty (a30) Either prior to or as soon as practicable following the consummation days of the OfferCommencement Date, the Company Board (or, if appropriate, any committee administering the Stock Plans) Executive shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding be issued Incentive Stock Options heretofore granted under any (the “Options”) to purchase 1,200,000 shares of common stock option program or arrangement of the Company (collectively, at an exercise price equal to the "Stock Plans") or any other fair market value of a share of common stock option plan to provide that, at the Effective Time of the Merger, each Stock Option outstanding immediately prior to the acceptance for payment of shares of Common Stock pursuant to the Offer (whether or not vested) shall be canceled in exchange for a cash payment by the Company of, or can only be exercised for net cash equal to, an amount equal to (i) the excess, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Common Stock subject to such Stock Option, multiplied by (ii) the number of shares of Common Stock for which such Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After on the date of this Agreement, neither grant. Such Options shall be subject to the Company Board nor any committee thereof shall cause any terms and conditions of the Company’s 2022 Equity Incentive Plan and applicable Stock Option Agreement. For the avoidance of doubt, the Options are in addition to, and do not include, any previously-granted stock options in the Company. These Options, once vested, shall be exercisable for a period not shorter than ten (10) years. The Options shall vest in 36 equal monthly installments commencing on the Commencement Date and ending on the three-year anniversary of the Commencement Date, in each case, subject to become exercisable Executive’s continued employment hereunder on the applicable vesting date or as otherwise provided herein. The Options will fully and immediately vest upon Executive’s termination as a result of Executive’s death or disability, upon Executive’s termination without Cause or resignation for Good Reason subject to and in accordance with the execution terms set forth in Section 7.2 below, or in the event of a Qualifying Sale (each, a “Vesting Acceleration Event”). In the Operative Agreements or the consummation event of the Transactions. (b) All amounts payable pursuant to this Section 7.04 a Vesting Acceleration Event, Executive shall be subject permitted to any required withholding of sell sufficient shares to cover the strike price and related taxes and shall be paid without interest. (c) The Stock Plans shall terminate as of associated with the Effective Time of the Merger, and the provisions in any other 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 of the MergerOptions, and the Company shall ensure waive any lock-up set forth in the Stock Option Agreement solely for purposes of effecting such sales. For purposes of this Section, a “Qualifying Sale” shall mean a sale of (1) ownership of equity interests in the Company that following the Effective Time constitutes more than 51% of the Merger no holder total fair market value or total voting power of the equity interests in the Company and its subsidiaries; but if any one person or more than one person acting as a Stock Option group, shall be considered to own more than 51% of the total fair market value or any participant total voting power of the equity interests in any Stock Plan the Company, the acquisition of additional equity interests by the same person or other Benefit Plan persons shall not be considered to cause a change in the ownership; or (2) assets from the Company that have any right thereunder a total gross fair market value equal to acquire any capital stock or greater than 51% of the total gross fair market value of all of the assets of the Company and its subsidiaries immediately prior to such acquisition or acquisitions. Notwithstanding the Surviving Corporationforegoing, a sale of ownership of equity interests shall not be taken into account if the primary purpose of such sale is to provide funds for the Company and its subsidiaries’ working capital and/or general corporate purposes, and a transfer of assets by the Company and its subsidiaries shall not be treated as a change of ownership of such assets if the assets are transferred to (i) equity holders of the Company and its subsidiaries (immediately before the asset transfer) in exchange for or with respect to their equity interests, (ii) an entity, 51% or more of the total value or voting power of which is owned, directly or indirectly, by the Company and its subsidiaries, (iii) a person, or more than one person acting as a group, that owns, directly or indirectly, 51% or more of the total value or voting power of all of the equity interests in the Company and its subsidiaries, or (iv) an entity, at least 51% of the total value or voting power of which is owned, directly or indirectly, by a person described in clause (iii) of this paragraph.

Stock Options. (a) Either prior to or as As soon as practicable following the consummation date of the Offerthis Agreement, the Company Board (or, if appropriate, any committee administering the Company Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Company Stock Options and all outstanding Company SARs, in each case whether vested or unvested, heretofore granted under any stock option program or arrangement of the Company (collectively, the "Stock Plans") or any other stock option plan Plan to provide that, at the Effective Time of the Merger, that each such Company Stock Option (and any Company SAR related thereto) outstanding immediately prior to the first acceptance for payment of shares of Company Common Stock pursuant to the Offer (whether or not vested) shall be canceled in exchange for a cash payment by the Company of, or can only be exercised as soon as practicable following the first acceptance for net cash equal to, payment of shares of Company Common Stock pursuant to the Offer of an amount equal to (i) the excess, if any, of (Ax) the highest price per share of Company Common Stock to be paid pursuant to the Offer over (By) the exercise price per share of Company Common Stock subject to such Company Stock Option, multiplied by (ii) the number of shares of Company Common Stock for which such Company Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents of the holders of the Stock Options are necessary will be responsible for any required reporting to effectuate the foregoing cash-out. After the date of this AgreementFederal, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements state or the consummation of the Transactionslocal tax authorities. (b) All amounts payable pursuant to this Section 7.04 6.04 shall be subject to any required withholding of taxes Taxes or proof of eligibility of exemption therefrom and shall be paid without interestinterest by the Company as soon as practicable following the first acceptance for payment of shares of Company Common Stock pursuant to the Offer. The Company shall use its best efforts to obtain all consents of the holders of Company 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 Stock Option until all necessary consents with respect to such Company Stock Option are obtained. (c) The Company Stock Plans shall terminate as of the Effective Time of the MergerTime, and the provisions in any other 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 of the MergerTime, and the Company shall ensure that following the Effective Time of the Merger no holder of a Company Stock Option or Company SAR or any participant in any Company Stock Plan or other Company Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving Corporation. (d) In this Agreement:

Stock Options. The Company shall take all necessary and appropriate actions (aincluding obtaining any necessary consents) Either such that: (i) each In-the-Money Option, whether or not vested or exercisable, shall be exercisable until immediately prior to or as soon as practicable following the Effective Time, contingent on the consummation of the OfferMerger, for shares of Company Common Stock; (ii) each In-the-Money Option that is not exercised prior to the Company Board (or, if appropriate, any committee administering Effective Time shall be cancelled and converted into the Stock Plans) shall adopt such resolutions or take such other actions as are required right to adjust the terms of all outstanding Stock Options heretofore granted under any stock option program or arrangement of the Company (collectively, the "Stock Plans") or any other stock option plan to provide that, receive a cash payment at the Effective Time of the Merger, each Stock Option outstanding immediately prior to the acceptance for payment of shares of Common Stock pursuant to the Offer (whether or not vested) shall be canceled in exchange for a cash payment by the Company of, or can only be exercised for net cash equal to, an amount equal to (i) the excess, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Common Stock subject to such Stock Option, multiplied by (ii) the number of shares of Company Common Stock for which that remain covered by such Stock Option shall unexercised option (whether or not theretofore have been exercised. The Company represents such option is otherwise vested and warrants that no consents of exercisable) multiplied by an amount equal to the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable pursuant to this Section 7.04 shall be subject to any required withholding of taxes and shall be paid without interest. (c) The Stock Plans shall terminate as excess of the Effective Time Consideration Per Outstanding Company Share over the option exercise price per share, and (iii) immediately prior to the Effective Time, each unexercised Stock Option other than an In-the-Money Option, whether or not vested or exercisable, shall be terminated by the Company and be of no further force in accordance with the terms of the Mergerapplicable Stock Option Plan (and/or any Contract memorializing such Stock Options). Except as otherwise provided herein with respect to the exchange of In-the-Money Options for the right to receive a cash payment at the Effective Time (pursuant to part (ii) of the preceding sentence), and upon the provisions in cancellation of any Stock Options, there shall be no amounts payable by Buyer, Merger Sub, or the Surviving Corporation with respect thereto. Further, the Company shall take all action to ensure that, immediately prior to the Effective Time, all rights under any provision of any other Benefit Plan plan, program or arrangement providing for the issuance, transfer issuance or grant of any capital stock of Stock Options shall have been cancelled. Two (2) Business Days prior to the Company or any interest in respect of any capital stock of Closing, the Company shall be deleted deliver to Buyer a true, complete and correct list of all Stock Options as of immediately prior to the Effective Time of (together with the Mergerexercise price therefor). Prior to the Effective Time, and the Company shall ensure that following the Effective Time of the Merger no holder of a have adopted all amendments, if necessary, to its Stock Option or Plan, and any participant other Contracts, and taken all other actions, if any, necessary to effect the changes to the Stock Options provided for in any Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving Corporationthis Section 1.7(d).

Stock Options. (a) Either prior Prior to or as soon as practicable following the consummation purchase of shares of Common Stock pursuant to the Offer, the Board of Directors of the Company Board (or, if appropriate, any committee administering the Stock Option Plans) shall adopt such resolutions or take such other actions as are required necessary to adjust the terms of all outstanding stock options to purchase Common Stock Options ("Options") heretofore granted to employees and directors under any stock option plan, program or arrangement of the Company (collectivelyall such stock option plans, employee stock purchase plans, programs and arrangements shall be collectively referred to as the "Stock Option Plans") or any other stock option plan to provide that, at for the Effective Time cancellation of such Options as set forth in this Section 2.07. As of the Merger, each Stock Option outstanding immediately prior to date of the acceptance for payment acquisition of shares of Common Stock pursuant to the Offer (Offer, each Option then outstanding, whether or not vested) then fully exercisable, shall be canceled in exchange for a cash payment by from the Company of, or can only be exercised for net cash equal to, an amount (subject to any applicable withholding taxes) equal to the product of (ix) the excess, if any, total number of (A) the price per share shares of Common Stock subject to be such Option and (y) the excess of the consideration paid pursuant to in the Offer over (B) the exercise price per share of Common Stock subject to such Stock Option, multiplied by (ii) payable in cash on the number date of acquisition of the shares of Common Stock for which such Stock Option shall not theretofore have been exercisedpursuant to the Offer. The Purchaser shall make available to the Company represents and warrants that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After on the date of payment for the shares of Common Stock pursuant to the Offer, in the form of a loan payable on the earlier of (i) the Effective Time, and (ii) May 31, 1996, bearing interest per annum at the prime rate of the Firstar Bank Milwaukee, N.A., cash (except for cash payments to be made pursuant to the penultimate sentence of this AgreementSection 2.07) in an aggregate amount necessary to make the payments pursuant to the preceding sentence. Except as provided herein, neither or as otherwise agreed to by the Company Board nor any committee thereof shall cause any parties (i) the Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable pursuant to this Section 7.04 shall be subject to any required withholding of taxes and shall be paid without interest. (c) The Stock Plans shall terminate as of the Effective Time of the Merger, and the provisions in any other Benefit Plan plan, program or arrangement providing for the issuance, transfer issuance or grant of any other interest in respect of the capital stock of the Company or any interest in respect of any capital stock of the Company subsidiary, shall be deleted as of the Effective Time of the MergerTime, and (ii) the Company shall ensure that following the Effective Time of the Merger no holder of a Stock an Option or any participant in any Stock Option Plan or other Benefit Plan plans, programs or arrangements shall have any right thereunder to acquire equity securities of the Company, the Surviving Corporation or any capital stock subsidiary thereof. Notwithstanding any provision of this Section 2.07 to the contrary, any Option granted to an officer of the Company listed on Schedule 2.07 within six months and one day of the date such Option would otherwise be canceled pursuant to this Section 2.07 shall be canceled and the payments provided for in this Section 2.07 shall be made six months and one day following the date of such grant. At the Effective Time, pursuant to an escrow agreement to be entered into by the parties hereto, the Purchaser shall deposit or cause to be deposited with an escrow agent reasonably acceptable to the Surviving CorporationCompany, to be selected by the Purchaser, cash in an aggregate amount necessary to make the payments pursuant to the preceding sentence. Except as may be set forth on Schedule 2.07(b), or as contemplated by Section 7.01(a) hereof, no consent of any stockholder of the Company is or may be required in connection with the transactions contemplated by this Section 2.07.

Stock Options. (a) Either prior to or as soon as practicable following the consummation of the Offer, the Company Board (or, if appropriate, any committee administering the Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Stock Options heretofore granted under any A stock option program or arrangement of shall entitle the Company (collectively, Participant to whom the "Stock Plans") or any other stock option plan was granted the right to provide that, at the Effective Time of the Merger, each Stock Option outstanding immediately prior to the acceptance for payment of shares of Common Stock pursuant to the Offer (whether or not vested) shall be canceled in exchange for purchase a cash payment by the Company of, or can only be exercised for net cash equal to, an amount equal to (i) the excess, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Common Stock subject to such Stock Option, multiplied by (ii) the specified number of shares of Common Stock during a specified time at a price that is fixed at the time of grant, or for which the method of determining the price is specified at the time of grant, all as the Committee may determine. Payment of the exercise price shall be made in cash, or, to the extent provided in the Agreement relating to the option, in shares of Common Stock already owned by the participant (so long as the shares either (i) have been owned by the Participant for at least six months, or (ii) acquired by the Participant in the open market) or in any combination of cash and shares of Common Stock. If the Committee permits a Participant to pay any portion of the option price and/or tax withholding liability with shares of Stock with respect to the exercise of an Option (the "underlying Option") as provided herein then the Committee, in its discretion, may grant to such Participant (but only if Participant remains an eligible Participant at that time) additional non-qualified stock options, the number of shares of Option Stock called for thereunder to be equal to all or a portion of the Stock so surrendered or withheld (a "Reload Option"). Each Reload Option will be evidenced by an Option Agreement. Unless otherwise set forth therein, each Reload Option will be immediately exercisable upon such grant and will be coterminous with the Underlying Option. The Committee, in its sole discretion, may establish such other terms and conditions for Reload Options as it deems appropriate. The Committee may permit a Participant to elect to pay the Exercise Price upon the exercise of an Option by authorizing a third party to sell Shares (or a sufficient portion of the Shares) acquired upon exercise of the Option, and remit to the Company a sufficient portion of the sale proceeds to pay the entire Exercise Price and any tax withholding resulting from such exercise. The Agreement relating to a stock option shall set forth the applicable vesting schedule as determined by the Committee. A Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable be effective for such term as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable pursuant to this Section 7.04 shall be subject determined by the Committee and set forth in the Agreement relating to any required withholding of taxes and shall be paid without interestsuch option. (c) The Stock Plans shall terminate as of the Effective Time of the Merger, and the provisions in any other 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 of the Merger, and the Company shall ensure that following the Effective Time of the Merger no holder of a Stock Option or any participant in any Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving Corporation.

Stock Options. (a) Either prior Prior to or as soon as practicable following the consummation of the OfferEffective Time, the Company Company's Board of Directors (or, if appropriate, any committee administering the Stock Plansthereof) shall adopt such appropriate resolutions or and take such all other actions as are required necessary to adjust (i) provide for the terms cancellation or exercise, effective at the Effective Time, of all the outstanding Stock Options stock options or similar rights (the "Options") heretofore granted under the Equity Incentive Plan of Omega Holdings, Inc. (the "Stock Option Plan"), without any stock option program or arrangement payment therefor except as otherwise provided in this Section 4.3, and (ii) terminate the Stock Option Plan as of the Effective Time. Each Option, to the extent unexercised as of the Effective Time, shall thereafter no longer be exercisable but shall entitle each holder thereof, in cancellation and settlement therefor, to a payment in cash by the Company (collectively, the "Stock Plans") or subject to any other stock option plan to provide thatapplicable withholding taxes), at the Effective Time of the MergerTime, each Stock Option outstanding immediately prior equal to the acceptance for payment product of shares of Common Stock pursuant to the Offer (whether or not vested) shall be canceled in exchange for a cash payment by the Company of, or can only be exercised for net cash equal to, an amount equal to (i) the total number of Company Common Shares as to which that Option remains unexercised and (ii) the excess, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer Merger Price over (B) the exercise price per share of Company Common Stock Share subject to such Stock Option (such amounts payable hereunder being referred to as the "Option Payments"). At the Effective Time, Parent or Merger Sub shall deposit, or cause to be deposited, with the Escrow and Paying Agent the aggregate Option Payments due pursuant to this Section 4.3 (net of the aggregate principal amount of the Management Notes plus accrued interest thereon to the Effective Time held by holders of Options and not otherwise deducted from the Merger Price pursuant to Section 4.2). Upon surrender of the certificate for an Option by the holder of such Option to the Escrow and Paying Agent, the Escrow and Paying Agent shall pay to such Option holder, on behalf of the Company and subject to any applicable withholding taxes, the Option Payments due under this Section 4.3 with respect to such Option. Notwithstanding the foregoing, multiplied (i) the Escrow and Paying Agent shall not pay to the Option holder that portion of the Option Payments represented by the Indemnity Escrow and the Reimbursement Fund until such time as such amounts are distributable pursuant to the terms and conditions of the Indemnity Escrow Agreement, and (ii) the number of shares of Common Stock for which such Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents amount to be paid pursuant to this Section 4.3 to any obligor on a Management Note in respect of the holders of Options held by such obligor shall (solely to the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable extent such obligor's Merger Price was not reduced as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable such Management Note pursuant to this Section 7.04 shall 4.2) be subject reduced by the principal amount of such Management Note plus accrued interest thereon to any required withholding of taxes and shall be paid without interest. (c) The Stock Plans shall terminate as of the Effective Time of the Merger, and the provisions in any other 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 such Management Note shall be deleted as of the Effective Time of the Merger, and the Company shall ensure that following the Effective Time of the Merger no holder of a Stock Option or any participant in any Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving Corporationdeemed cancelled thereafter.

Stock Options. (a) Either prior to or as soon as practicable following the consummation of the Offer, the Company Board (or, if appropriate, any committee administering the Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Stock Options heretofore granted under any stock option program or arrangement of the Company (collectively, the "Stock Plans") or any other stock option plan to provide that, at the Effective Time of the Merger, each Stock Option outstanding immediately prior to the acceptance for payment of shares of Common Stock pursuant to the Offer (whether or not vested) shall be canceled in exchange The exercise period for a cash payment by the Company of, or can only be exercised for net cash equal to, an amount equal to (i) the excess, if any, of (A) the price per share of Common non-qualified Stock to be paid pursuant to the Offer over (B) the exercise price per share of Common Stock subject to such Stock Option, multiplied by (ii) the number of shares of Common Stock for which such Stock Option option shall not theretofore have been exercised. The Company represents and warrants that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After exceed ten years from the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactionsgrant. (b) All amounts payable pursuant to this Section 7.04 Unless otherwise determined by the Committee in its discretion, the Option price per share shall be subject not less than the Fair Market Value of one share of Stock on the date the Option is granted. (d) No part of any Option may be exercised until the Key Individual who has been granted the Option shall have remained in a Required Relationship with a Participating Company for such period after the date of grant as the Committee may specify, if any, and the Committee may further require exercisability in installments. (e) Except as provided in Section 9, the purchase price of the shares as to any required withholding of taxes and which an Option shall be exercised shall be paid without interestto the Company at the time of exercise either in cash or Stock already owned by the optionee having a total Fair Market Value equal to the purchase price, or a combination of cash and Stock having a total fair market value, as so determined, equal to the purchase price. The Committee shall determine acceptable methods for tendering Stock as payment upon exercise of an Option and may impose such limitations and prohibitions on the use of Stock to exercise an Option as it deems appropriate. (cf) The Stock Plans In case of a termination of a Key Individual's Required Relationship, the following provisions shall terminate as apply: (A) If a Key Individual who has been granted an Option shall die before such Option has expired, his or her Option may be exercised, to the extent that the Key Individual could have exercised such Option on the date of his or her death, by (i) the person or persons to whom the Key Individual's rights under the Option pass by will, or if no such person has such right, by his or her executors or administrators; or (ii) his or her Beneficiary designated pursuant to Section 10, at any time, or from time to time, in either case, within three (3) months after the date of the Effective Time Key Individual's death, but not later than the expiration date of the MergerOption specified in Section 5(b) above. (B) Except as provided in Section 9, and if the provisions in any other Benefit Plan providing Key Individual's Required Relationship is terminated for cause as determined by the issuanceCommittee, transfer or grant of any capital stock all Options shall be canceled coincident with the effective date of the Company or any interest in respect of any capital stock termination of the Company Required Relationship. (C) Except as provided in Section 9, if the Key Individual's Required Relationship terminates for any reason other than death or cause, he or she may exercise his or her Options, to the extent exercisable at the date of the termination of his or her Required Relationship, at any time, or from time to time, within three (3) months after the date of the termination of his or her Required Relationship, but not later than the expiration date specified in Section 5(b) above. Any Options not so exercisable shall be deleted as cancelled coincident with the effective date of the Effective Time termination of the Merger, Required Relationship. (g) No Option granted under the Plan shall be transferable other than by will or by the laws of descent and distribution. During the Company shall ensure that following the Effective Time lifetime of the Merger no holder of a Stock optionee, an Option shall be exercisable only by the Key Individual to whom the Option is granted (or any participant in any Stock Plan his or other Benefit Plan shall have any right thereunder to acquire any capital stock of the Company her estate or the Surviving Corporationdesignated Beneficiary).

Stock Options. At the Acceptance Time, each outstanding option to purchase Shares (a“Company Option”) Either prior to or as soon as practicable following the consummation of the Offer, the Company Board (or, if appropriate, any committee administering the Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Stock Options heretofore granted under any employee stock option program or compensation plan or arrangement of the Company or otherwise (other than the ESPPs), but including, without limitation, the 1997 Incentive and Non-Qualified Stock Option Plan, the 1999 Incentive and Non-Qualified Stock Option Plan, the Amended and Restated Stock Incentive Plan, the Non-Qualified Stock Option Plan for Former Employees of Gilead Sciences, Inc. and the Stock Incentive Plan for Pre-Merger Employees of Eyetech Pharmaceuticals, Inc. (collectively, the "Stock “Equity Compensation Plans") or any other stock option plan to provide that”), at the Effective Time shall by virtue of the Merger, each Stock occurrence of the Acceptance Time and without any action on the part of any holder of any Company Option outstanding immediately prior to be cancelled and the acceptance for payment of shares of Common Stock pursuant to the Offer (whether or not vested) shall be canceled in exchange for holder thereof will receive a cash payment by the Company of, or can only be exercised for net cash equal to, an amount with respect thereto equal to the product obtained by multiplying (ia) the excess, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer Price over (B) the exercise price per share of Common Stock subject to such Stock Company Option, multiplied by (iib) the number of shares Shares issuable upon exercise of Common Stock for which such Stock Company Option (the “Option Cash Payment”). Parent and the Surviving Corporation or the Company, as applicable, shall not theretofore have been exercised. The Company represents and warrants that no consents use their respective commercially reasonable best efforts to cause the cash payments required pursuant to this Section 6.10(a) to be paid as soon as practicable after the Acceptance Time in accordance with the currently existing payroll practices of the holders of the Stock Options are necessary to effectuate the foregoing cash-outCompany. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable pursuant to this Section 7.04 6.10(a) shall be subject to and reduced by the amount of any withholding and/or deduction that is required withholding under applicable Tax Law in accordance with Section 3.2(i) of taxes this Agreement. As of the Acceptance Time, all Company Options shall no longer be outstanding and shall be paid without interest. (c) The Stock Plans shall terminate as of the Effective Time of the Mergerautomatically cease to exist, and each holder of a Company Option shall cease to have any rights with respect thereto, except the right to receive the Option Cash Payment. In order to effect the provisions in any other Benefit Plan providing for the issuanceof this Section 6.10(a), 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 permitted to fully accelerate the vesting of all Company Options at such time prior to the Acceptance Time as of the Effective Time of the Merger, and shall be determined by the Company shall ensure that following the Effective Time of the Merger no holder of a Stock Option or any participant in any Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving Corporationits sole discretion.

Stock Options. (a) Either prior Prior to or as soon as practicable following the consummation of the OfferEffective Time, the Company Rome Board (or, if appropriate, any committee administering the Rome Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Rome Stock Options heretofore granted under any stock option program or arrangement of the Company (collectively, the "Stock Plans") or any other stock option plan to provide that, at the Effective Time of the Merger, that (i) each Rome Stock Option outstanding shall be vested and exercisable effective immediately prior to the acceptance for Effective Time, and (ii) each Rome Stock Option that is not exercised prior to the Effective Time will be canceled as of the Effective Time and the holder thereof shall then become entitled to receive, as soon as practicable following the Effective Time, a single lump sum cash payment equal to the product of (x) the number of shares of Common Rome Stock pursuant to the Offer for which such Rome Stock Option shall not theretofore have been exercised and (whether or not vested) shall be canceled in exchange for a cash payment by the Company of, or can only be exercised for net cash equal to, an amount equal to (iy) the excess, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer Merger Consideration over (B) the exercise price per share of Common Stock subject to such Rome Stock Option, multiplied by (ii) the number of shares of Common Stock for which such Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable pursuant to this Section 7.04 6.04 shall be subject to any required withholding of taxes Taxes and shall be paid without interest. (c) Within seven (7) calendar days after the date of this Agreement, the Rome Board of Directors (or, if appropriate, any committee administering the Rome ESPP), shall adopt such resolutions or take such other actions as may be required to provide that (i) no offering period shall be commenced after the date of this Agreement, (ii) each participant’s outstanding right to purchase shares of Rome Common Stock under the Rome ESPP shall terminate as soon as practicable following the date of this Agreement (but in no event later than the last day of each applicable payroll period that includes the date of this Agreement), provided that all amounts allocated to each participant’s account under the Rome ESPP as of such date shall thereupon be used to purchase from Rome whole shares of Rome Common Stock at the applicable price determined under the terms of the Rome ESPP for then outstanding offering period and (iii) the Rome ESPP shall terminate immediately following such purchases of Rome Common Stock. (d) The Rome Stock Plans shall terminate as of the Effective Time of the MergerTime, and the provisions in any other Benefit Plan providing for the issuance, transfer or grant of any capital stock of the Company Rome or any interest in respect of any capital stock of the Company Rome shall be deleted as of the Effective Time of the MergerTime, and the Company Rome shall ensure that following the Effective Time of the Merger no holder of a Rome Stock Option or any participant in any Rome Stock Plan or other Rome Benefit Plan shall have any right thereunder to acquire any capital stock of the Company Rome or the Surviving Corporation. (e) In this Agreement:

Stock Options. (a) Either prior Prior to or as soon as practicable following the consummation Closing, the Board of Directors of the Offer, the Company Board (or, if appropriate, any committee administering the Stock Plansthereof) shall adopt such appropriate resolutions or and take such all other necessary actions as are required to adjust the terms of all outstanding Stock Options heretofore granted under any stock option program or arrangement of the cause each Company (collectively, the "Stock Plans") or any other stock option plan to provide that, at the Effective Time of the Merger, each Stock Option that is outstanding immediately prior to the acceptance for payment Effective Time to vest in full and become exercisable immediately prior to the Effective Time with respect to all of the shares of Company Common Stock pursuant then subject to such Company Stock Option. Each Company Stock Option that is outstanding immediately prior to the Offer (whether or not vested) Effective Time shall be canceled automatically cancelled as of the Effective Time in exchange for a cash payment amount payable by Parent to the Company of, or can only be exercised for net cash equal to, an amount holder thereof equal to (iA) the excessproduct of (1) the number of shares of Company Common Stock subject to such Company Stock Option and (2) the amount, if any, of (A) by which the price per share of Common Stock to be paid pursuant to the Offer over (B) Per-Share Cash Amount exceeds the exercise price per share of Common Stock subject to such Company Stock Option, multiplied by minus (iiB) all applicable federal, state and local Taxes required to be withheld in respect of such payment. The cash amounts payable to holders of Company Stock Options pursuant to this Section 6.8(a) shall be delivered as soon as reasonably practicable following the number Effective Time. The surrender of shares of Common Stock for which such a Company Stock Option in exchange for the consideration contemplated by this Section 6.8(a) shall not theretofore be deemed a release of any and all rights the holder thereof had or may have been exercisedhad in respect thereof. The Prior to the Closing, the Company represents shall take all actions necessary to cause each Company Stock Option with an exercise price equaling or exceeding the Per-Share Cash Amount to automatically and warrants that no consents duly terminate as of the holders Effective Time, and no Per-Share Cash Amount, other cash amount or other property or obligation shall be owed, due or payable by the Company, Parent or Merger Sub in respect of the such Company Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the TransactionsOption. (b) All amounts payable pursuant If and to this Section 7.04 shall be subject to any the extent necessary or required withholding of taxes and shall be paid without interest. (c) The Stock Plans shall terminate as of by the Effective Time of the Merger, and the provisions in any other Benefit Plan providing for the issuance, transfer or grant of any capital stock terms of the Company or any interest in respect of any capital stock of the Company shall be deleted as of the Effective Time of the Merger, and the Company shall ensure that following the Effective Time of the Merger no holder of a Stock Option or any participant in any Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock of Company Stock Option, the Company shall, prior to the Effective Time, (i) obtain any consents from holders of Company Stock Options and (ii) amend the terms of its equity incentive plans or arrangements, to give effect to the Surviving Corporationprovisions of Section 6.8(a).

Stock Options. (a) Either prior to or as soon as practicable following the consummation As of the OfferEffective Time, the each unexpired and unexercised Company Board Option then in effect, whether vested or unvested, (orand each plan, if appropriateany, under which any committee administering the Stock PlansCompany Option may be granted) shall adopt be cancelled, terminated and extinguished, and upon the cancellation thereof the holder of each such resolutions unexpired and unexercised Company Option, whether vested or take unvested, shall be granted the right to receive, in respect of each Share subject to such other actions as are required to adjust the terms of all outstanding Stock Options heretofore granted under any stock option program or arrangement of the Company (collectively, the "Stock Plans") or any other stock option plan to provide that, at the Effective Time of the Merger, each Stock Option outstanding immediately prior to the acceptance for payment of shares of Common Stock pursuant such cancellation, an amount (subject to the Offer (whether or not vestedany applicable withholding Tax) shall be canceled in exchange for a cash payment by the Company of, or can only be exercised for net cash equal to, an amount equal to : (i) the excess, if any, of Offer Price; minus (A) the price per share of Common Stock to be paid pursuant to the Offer over (Bii) the exercise price per share of Common Stock each Share subject to such Stock OptionCompany Option (it being understood that, multiplied by each unexercised Company Option (iiwith an exercise price equal to or greater than the Offer Price) shall be canceled at the number Effective Time without consideration therefor). Notwithstanding the foregoing, prior to the Offer Acceptance Time, the Company shall take all actions that may be necessary (under the plans and award agreements pursuant to which Company Options are outstanding and otherwise) to accelerate the vesting and exercisability of shares of Common Stock for which each unexpired and unexercised Company Option that is an incentive stock option then in effect so that each such Stock Company Option shall not theretofore have been exercised. The be fully vested and exercisable prior to the Offer Acceptance Time, provided that the holder of such Company represents and warrants that no consents Option agrees to tender any Shares acquired upon exercise of such Company Option into the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the TransactionsOffer. (b) All amounts payable pursuant Prior to the Offer Acceptance Time, the Company shall take all actions necessary or required under the ESPP and Legal Requirements to ensure that, except for the six month offering period under the ESPP that commenced on May 16, 2011, no additional offering shall be authorized or commenced. The rights of participants in the ESPP with respect to any offering period then underway under the ESPP shall be determined by treating the last business day prior to the Effective Time as the last day of such 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 ESPP. The Company shall terminate the ESPP effective as of the Effective Time. Prior to the Offer Acceptance Time, the Company shall take all actions (including, if appropriate, amending the terms of the ESPP) that are necessary to give effect to the transactions contemplated by this Section 7.04 shall be subject to any required withholding of taxes and shall be paid without interest6.3(b). (c) The Stock Plans Following the Closing Date, Parent shall terminate as of the Effective Time of the Merger, and the provisions in any other 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 of the Merger, and the Company shall ensure that following the Effective Time of the Merger no holder of a Stock Option or any participant in any Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or cause the Surviving CorporationCorporation to assume all outstanding Company Warrants and shall take all actions necessary and required to comply with the terms of such Company Warrants.

Stock Options. (a) Either prior During the term of his employment with the Company, Consultant was granted stock options to or as soon as practicable following the consummation purchase shares of the OfferCompany’s Common Stock (“the Option”), of which a portion of the shares remain unexercised (“the Option Shares”). The Option and the Option Shares are described on Annex A hereto. The grants were made pursuant and subject to the terms and conditions of the Company’s 2010 Equity Incentive Plan, as amended (“the Plan”), copies of which plans were previously provided to Consultant. The Option grants were made pursuant to Stock Option Agreements between Consultant and the Company Board (or“the Option Agreements”). The Company and Consultant agree that, if appropriate, any committee administering the Stock Plans) shall adopt such resolutions or take such other actions as are required pursuant to adjust the terms of all the Plan, the Option shall remain outstanding Stock Options heretofore granted under any stock option program and continue to vest in accordance with the original vesting schedule in the Option Agreements, with no change or arrangement acceleration resulting from this Agreement or the matters contemplated herein. Upon termination of the Company (collectivelyConsulting Period for any reason, the "Stock Plans"Option shall cease to vest and Consultant shall then be considered to have a “Termination of Service” (as defined in the Plan) or any other stock option plan to provide that, at the Effective Time for purposes of the MergerPlan and the Option Agreements. The Option Shares, each Stock Option outstanding immediately prior to the acceptance for payment of shares of Common Stock extent vested, must be exercised, if at all, within the time periods and pursuant to the Offer (whether or terms and conditions otherwise set forth in the Plan and the Option Agreements, including the time periods for exercise following Termination of Service, and if any portion of the Option is not vested) timely and properly exercised, such portion of the Option and the related Option Shares shall be canceled in exchange for a cash payment forfeited. To the extent permitted by and subject to the terms of the Plan, Consultant shall have the right to direct the Company in writing, delivered to the Company at least five (5) business days prior to any exercise of the Option, to withhold a portion of the Option Shares to be issued upon such exercise having a fair market value sufficient to satisfy applicable federal and state income and employment tax withholding obligations with respect to any such award. To the extent permitted by and subject to the terms of the Plan, Consultant shall also have the right to transfer his Options, and Option Shares to any legal entity that he or his immediate family members own(s) or control(s) at any time during the Consulting Period. Consultant agrees that for an eighteen (18) month period commencing on the Effective Date he will continue to hold and own, and will not sell, assign, short sell, hedge, pledge or otherwise dispose of, directly or can only be exercised for net cash equal toindirectly, an amount equal to (i) the excess, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Common Stock subject to such Stock Option, multiplied by (ii) the number of shares of Common Stock for which such Stock 1,679 Option shall not theretofore have been exercised. The Company represents and warrants that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable pursuant to this Section 7.04 shall be subject to any required withholding of taxes and shall be paid without interest. (c) The Stock Plans shall terminate as of the Effective Time of the Merger, and the provisions in any other Benefit Plan providing for the issuance, transfer or grant of any capital stock of the Company Shares or any interest in respect of any capital stock of the Company shall be deleted as of the Effective Time of the Mergertherein, and the Company may place physical and/or electronic stop payment legends and/or instructions on any such Option Shares during such period (the obligations and rights described in this sentence, the “Holding Obligations”). Such number of Option Shares shall ensure that following be equitably and proportionately adjusted in the event of any stock split, stock dividend or like event after the Effective Time Date, and the Holding Obligations of the Merger no holder of a Stock Option Parties shall promptly be adjusted accordingly by adding or any participant in any Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock of removing shares from the Company or the Surviving CorporationHolding Obligations.

Stock Options. (aThe Company shall make, under such stock option plan(s) Either prior to or as soon as practicable following the consummation of the Offer, the Company Board (or, if may deem appropriate, any committee administering annual grants of stock options to Founder with a minimum aggregate value of $300,000, or such greater amount as may be determined by the Stock Plans) shall adopt Compensation Committee. The specific terms of each such resolutions or take such other actions as are required to adjust grant, including the grant date and exercise price of stock options, will be determined by the Compensation Committee in accordance with the terms of all outstanding Stock Options heretofore granted under any stock option program or arrangement of the Company (collectively, the "Stock Plans") or any other such stock option plan and will be set forth in stock option agreements to provide that, at be executed by the Effective Time Founder and the Company. The value of the Mergerstock options shall be determined using the Black-Scholes method, each Stock Option outstanding immediately prior the binomial options model or such other method reasonably acceptable to, and determined by, the Compensation Committee (provided that the timing of stock option grants and the methodology used to value such grants shall generally be substantially similar to that associated with stock options granted to the acceptance Company’s senior management or non-management directors during the same year). For the avoidance of doubt, in the event that the stock options granted under this Section 2 have been granted under a Company plan that provides for payment of shares of Common Stock pursuant to the Offer (whether such grants to, inter alia, consultants to, or not vested) shall be canceled in exchange for a cash payment by the Company advisors of, or can only be exercised for net cash equal tothe Company, an amount equal to (i) the excess, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Common Stock subject to such Stock Option, multiplied by (ii) the number of shares of Common Stock for which such Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date any of this Agreement, neither that certain Agreement for Service as Chairman (the Company Board nor any committee thereof shall cause any Stock Option to become exercisable “Chairman’s Agreement”) of even date herewith between Founder and the Company, or that certain License Agreement, dated as of even date herewith between Founder and the Company, is in effect, or Founder is otherwise serving as a result consultant or advisor to the Company, for purposes of the execution applicable stock option plan and agreement related to such stock options granted hereunder, the Founder shall be deemed to be providing services as a “consultant” or “advisor” to the Company; in the event that the stock options granted under this Section 2 have been granted under a Company plan that provides for such grants only to non-employee directors, for purposes of the Operative Agreements or applicable stock option plan and agreement related to such stock options granted hereunder, the consummation of the Transactions. (b) All amounts payable pursuant to this Section 7.04 Founder shall be subject to any required withholding deemed a non-employee director for so long as he is serving in such capacity on the Company’s board of taxes and shall be paid without interestdirectors. (c) The Stock Plans shall terminate as of the Effective Time of the Merger, and the provisions in any other 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 of the Merger, and the Company shall ensure that following the Effective Time of the Merger no holder of a Stock Option or any participant in any Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving Corporation.

Stock Options. To ensure the transfer to Buyer of all of the outstanding capital stock and capital stock equivalents of the Company, the Company and the Sellers shall take such actions as may be necessary or appropriate in order to (a) Either prior to or as soon as practicable following accelerate the consummation of the Offer, the Company Board (or, if appropriate, any committee administering the Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust the terms vesting of all outstanding Stock Options, if and to the extent any such Option is not currently exercisable in full, (b) cause all outstanding Options heretofore granted under to be exercised by the Optionholders prior to the Closing, and (c) cancel and extinguish, without any stock option program or arrangement liability of the Company to make any payment with respect thereto, any Option that remains unexercised as of the Closing. Each such exercise of Options by an Optionholder shall be made pursuant to an agreement between the Company and such Optionholder that is in form and substance satisfactory to the Buyer in the exercise of its reasonable business judgment, which agreement (collectivelyeach, the an "Stock PlansOption Exercise and Sale Agreement") or any other stock option plan shall (i) provide for the sale and transfer to provide that, at the Effective Time Buyer of the Merger, each Stock Option outstanding immediately prior to the acceptance for payment of shares of Common Stock issuable to such Optionholder upon exercise of such Option (the "Option Shares") pursuant to Section 2.1 hereof without any further action by such Optionholder, (ii) provide for the Offer payment by such Optionholder of the aggregate exercise price of his or her Options as set forth in Section 3.2(b) of the Disclosure Schedule from the proceeds to such Optionholder of such sale, by directing the Buyer to pay such amount to the Company concurrently with, but subject to and conditioned upon, the purchase of such Option Shares by the Buyer, (whether iii) if the Company has a withholding obligation generated by the exercise of such Option or not vested) shall be canceled in exchange the sale of such Option Shares to the Buyer, provide for a cash payment portion of the proceeds of such sale equal to the amount of such withholding to be paid by the Company ofBuyer to the Company, for the purpose of the Company's remitting such amounts to the appropriate taxing authorities, (iv) contain such representations and warranties of the Optionholders as to title authority and capacity to sell the Option Shares as the Buyer shall reasonably request and to require all such Optionholders' signatures to be notarized, and (v) include a release in form and substance as set forth in Exhibit G-1 (for the Executives (the "Executive Release")) or can only be exercised Exhibit G-2 (for net cash equal tothe Specified Employees (the "Employee Release")). Except as otherwise agreed to by the parties, an amount equal to (i) the excess, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Common Stock subject to such Stock Option, multiplied by (ii) the number of shares of Common Stock for which such Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable pursuant to this Section 7.04 shall be subject to any required withholding of taxes and shall be paid without interest. (c) The Stock Plans shall terminate as of the Effective Time of the Merger, Closing and the provisions in any other Benefit Plan plan, program or arrangement providing for the issuance, transfer issuance or grant of any other interest in respect of the capital stock of the Company or any interest in respect of any capital stock of the Company subsidiary shall be deleted terminated as of the Effective Time of the MergerClosing, and (ii) the Company Sellers shall take all action necessary to ensure that following the Effective Time of the Merger Closing no holder of a Stock Option or any participant in any Stock the Executive Option Plan or the Employee Option Plan or other Benefit Plan plans, programs or arrangements shall have any right thereunder to acquire any capital stock or participate in changes in value of equity securities of the Company Company, or any subsidiary and to terminate all such plans effective as of the Surviving CorporationClosing. Each Executive who exercises his Options pursuant to this Section 2.8 shall be deemed a Seller for all purposes of this Agreement.

Stock Options. (i) In consideration of the services to be rendered hereunder, upon the requisite approval of the Company's board of directors, Executive shall be granted one or more options to purchase a number of shares of the Company's common stock ("Common Stock") equal to five and two hundred and ninths percent (5.209%) of that aggregate number of (a) Either prior additional shares of Common Stock issued in connection with any Acquisition (as defined below), plus (b) subject to or as soon as practicable following the consummation of the Offerlimitations below, the Company Board aggregate maximum number of additional shares of Common Stock issuable pursuant to any security convertible or exchangeable into Common Stock, or any warrant, option, purchase right or similar agreement or arrangement granted in connection with such Acquisition (or, if appropriatewhether or not such shares are ever issued but excluding any compensatory options or other equity-based incentives granted to service providers on or after the closing date of such Acquisition). Notwithstanding the foregoing, any committee administering shares of Common Stock which are issuable in connection with the Stock PlansAcquisition (i) shall adopt such resolutions upon exercise or take such other actions as are required to adjust the terms conversion of all outstanding Stock Options heretofore granted under any stock option program or arrangement of the Company convertible debt instrument, (collectively, the "Stock Plans"ii) or in connection with any other stock option plan to provide that, at the Effective Time of the Merger, each Stock Option outstanding immediately prior to the acceptance for payment subsequent earnout of shares of Common Stock pursuant to or similar arrangement or (iii) upon the Offer (whether occurrence of some contingent future event, milestone or not vested) shall be canceled in exchange for a cash payment by condition such that the Company of, or can only be exercised for net cash equal to, an amount equal to (i) the excess, if any, actual number of (A) the price per share shares of Common Stock to which are issuable thereby is not otherwise determinable at the closing date of such Acquisition, shall not be paid pursuant to the Offer over (B) the exercise price per share included for purposes of Common Stock subject to such Stock Option, multiplied by (ii) calculating the number of shares of Common Stock which are subject to the option on the closing date of the Acquisition; provided, however, that Executive shall be subsequently be granted an option exercisable for an additional number of shares of Common Stock in an amount equal to five and two hundred and ninths percent (5.209%) of the aggregate number of any such excluded shares of Common Stock which are in fact issued following the closing date of such Acquisition. Any such option to be granted to Executive with respect to such shares shall be presented to the Company's board of directors for approval at its regularly-scheduled meeting occurring following (i) the closing of such Acquisition or (ii) with respect to shares of Common Stock issued after the closing of the Acquisition, the date of issuance of such shares of Common Stock. In determining the number of shares of Common Stock issuable upon the exercise of any such option(s), any such fractional shares shall be rounded up to the nearest whole share. Any such option(s) shall have an exercise price equal to the then current fair market value of the Company's Common Stock on the date of the issuance of such option(s), as determined in good faith by the Company's board of directors, and shall be evidenced by, and subject to the terms and conditions set forth in, the form of Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents of Agreement which is attached hereto as Exhibit A (the holders of the "Stock Options are necessary to effectuate the foregoing cash-out. After the date Option Agreement"). (ii) For purposes of this Agreement, neither an "Acquisition" shall mean any business combination consummated on or after August 7, 2003 and on or prior to August 7, 2004 in which the Company Board nor any committee thereof shall cause any issues or may issue shares of Common Stock Option to become exercisable as for the consideration thereof, including, without limitation, a result stock purchase, sale, merger, joint venture or otherwise and whether in one or more transactions for the purchase of the execution an organization's equity, debt securities or assets, or by means of the Operative Agreements a merger, consolidation, reorganization, spin-off, joint venture, partnership, tender offer, exchange offer, purchase, lease, licensing arrangement, strategic alliance or the consummation of the Transactions. (b) All amounts payable pursuant to this Section 7.04 shall be subject to any required withholding of taxes and shall be paid without interest. (c) The Stock Plans shall terminate as of the Effective Time of the Merger, and the provisions in any other 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 of the Merger, and the Company shall ensure that following the Effective Time of the Merger no holder transaction of a Stock Option or any participant in any Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock like nature, regardless of the Company or the Surviving Corporationform.

Stock Options. (a) Either prior As additional consideration for executing this Agreement, the Employee shall receive the option to or purchase that number of shares of Guardian Common Stock having an aggregate Guardian Market Value as soon as practicable following determined at the consummation time of the OfferClosing equal to Twenty Thousand Dollars ($20,000) (the "Options"), the Company Board (or, if appropriate, any committee administering the Stock Plans) shall adopt such resolutions or take such other actions as are required subject to adjust the terms of all outstanding Stock Options heretofore granted under any stock option program or arrangement and conditions of the Company (collectively, the "Stock Plans") or any other stock option plan to provide that, at be established by Guardian (the Effective Time "Stock Option Plan") and a grant agreement granting such Options (the "Grant Agreement"). The exercise price of the Merger, each Options shall be equal to the exercise price equal to the five-day average closing price of the Common Stock Option outstanding immediately for the five days prior to the acceptance for payment grant thereof.. The Options will vest at the rate of shares one-fifth per year commencing with the Effective Date. Vested Options shall be exercisable on each anniversary of Common Stock pursuant the date of the grant of such Options. If the Employee does not exercise all of the vested Options in any given year, such vested Options may be exercised in subsequent years but in no event later than ten years from the date of the grant thereof. In the event that the Employee's employment hereunder is terminated by Employer "without cause" prior to the Offer (whether or not vested) vesting of all Options, any such unvested Options shall be canceled in exchange vest automatically as of the date of termination. For purposes for a cash payment by this Agreement, "without cause" shall mean termination of the Company of, or can only be exercised Employee's employment hereunder for net cash equal to, an amount equal to reasons other than: (i) any conviction of the excess, Employee of a felony or any conduct which if any, proved would support conviction of (A) the price per share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Common Stock subject to such Stock Option, multiplied by a felony; (ii) conduct amounting to a material act of fraud, gross misconduct or dishonesty involving the number Employer; (iii) a material act of shares fraud or dishonesty not involving the Employer which has a material adverse effect upon the Business or reputation of Common Stock Employer; (iv) continuing material violation by the Employee of his obligations under this Agreement after written notice thereof to the Employee and failure to cure such violation within fifteen (15) days following such notice; (v) misuse of alcohol or controlled substance that materially impairs the Employee's ability to perform the duties of his employment as determined by a physician retained by the Employer or, if the Employee refuses to submit to appropriate examinations by such physician at the request of the Board of Directors of the Employer, then by at least three members of the Board of Directors; (vi) the unlawful use of drugs or other controlled substances; (vii) death; or (viii) disability. In the event that Employee's employment hereunder is terminated for which any reason other than without cause prior to the vesting of all Options, any such unvested Options shall be forfeited, unless otherwise provided in the Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable pursuant to this Section 7.04 shall be subject to any required withholding of taxes and shall be paid without interest. (c) The Stock Plans shall terminate as of the Effective Time of the Merger, and the provisions in any other 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 of the Merger, and the Company shall ensure that following the Effective Time of the Merger no holder of a Stock Option or any participant in any Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving CorporationGrant Agreement.

Stock Options. (a) Either prior to or as As soon as practicable following the consummation date of the Offerthis Agreement, the Company Board (or, if appropriate, any committee administering the Company Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Company Employee Stock Options heretofore granted under any stock option program or arrangement of the Company (collectively, the "Stock Plans") or any other stock option plan to provide that, that each Company Employee Stock Option outstanding at the Effective Time shall become fully exercisable and vested and shall not give the holder thereof the right to receive any capital stock of the MergerCompany or the Surviving Corporation after the Effective Time or to receive from the Company or the Surviving Corporation any consideration other than, each in the case of the exercise of any Company Employee Stock Option, cash equal to the product of (i) the number of shares of Company Common Stock subject to such Company Employee Stock Option outstanding immediately prior to the acceptance for payment of shares of Common Stock pursuant to the Offer Effective Time and (whether or not vested) shall be canceled in exchange for a cash payment by the Company of, or can only be exercised for net cash equal to, an amount equal to (iii) the excess, if any, of (A) the price Merger Consideration over the per share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Common Stock subject to such Company Employee Stock Option, multiplied by (ii) the number of shares of Common Stock for which such Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable pursuant to this Section 7.04 6.04 shall be subject to any required withholding of taxes and shall be paid without 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. (c) The Company Stock Plans shall terminate as of the Effective Time of the MergerTime, and the provisions in any other Benefit Plan 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 of the MergerTime, and the Company shall ensure that following the Effective Time of the Merger no holder of a Company Employee Stock Option or any participant in any Company Stock Plan or other Benefit Plan Company benefit plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving Corporation. (d) In this Agreement:

Stock Options. (a) Either prior to or as soon as practicable following During the consummation term of the OfferAgreement, COMPANY shall grant to EMPLOYEE options to purchase shares of COMPANY Common Stock (the Company Board "Option") under the COMPANY's 2003 Stock Option and Incentive Plan (or"Plan"). The Option, which shall be in the form attached hereto as Exhibit A, shall be subject to the terms and conditions thereof and of the Plan, and shall additionally provide as follows: (1) The number of shares subject to the Option and the vesting schedule relating thereto, if appropriateany. (2) The purchase price per share, any committee administering which shall be equal to the Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust closing bid price on the terms date of all outstanding Stock Options heretofore granted under any stock option program or arrangement issuance of the Company Option. (collectively, the "Stock Plans"3) or any other stock option plan to provide that, at the Effective Time of the Merger, each Stock The Option outstanding immediately prior to the acceptance for payment of shares of Common Stock pursuant to the Offer (whether or not vested) shall be canceled in exchange for a cash payment by the Company of, or can only be exercised for net cash equal to, designated as an amount equal to Incentive Option. (4) The Option shall terminate on (i) the excess, if any, of (A) expiration date specified in the price per share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Common Stock subject to such Stock Option, multiplied by Option Agreement or (ii) such earlier date as termination may occur according to the number terms and conditions of shares of Common Stock for which such the Plan and/or the Stock Option Agreement; provided, however, provided, however, EMPLOYEE shall not theretofore have been exercised. The Company represents an irrevocable right to exercise any and warrants that no consents of the holders of the Stock Options are necessary all options to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable pursuant to this Section 7.04 shall be subject to any required withholding of taxes and shall be paid without interest. (c) The Stock Plans shall terminate as of the Effective Time of the Merger, and the provisions in any other Benefit Plan providing for the issuance, transfer or grant of any capital purchase common stock of the Company issued to him at any time, assuming such options are fully vested, through the final date on which such options are exercisable by EMPLOYEE; provided, further, EMPLOYEE shall not be bound by the terms of Section 6(f) of the Plan. (6) All Options to acquire common stock of COMPANY granted to EMPLOYEE during the term of this Agreement shall become 100% vested (to the extent such options are not otherwise fully vested at that time) upon (i) any merger or consolidation involving COMPANY if COMPANY is not the surviving corporation; (ii) any transfer of all or substantially all of the assets of COMPANY; (iii) any voluntary or involuntary dissolution of COMPANY; (iv) any material change in ownership of COMPANY which results in a change of a majority of the Board of Directors; or (v) if COMPANY or any interest successor or assignee of COMPANY should terminate this Agreement other than for Cause. In addition to the foregoing, in respect the event of any capital stock merger, consolidation, transfer of assets or change in ownership, the surviving or resulting corporation or the transferee of COMPANY's assets may terminate this Agreement without cause only upon payment to EMPLOYEE of a sum equal to EMPLOYEE's salary which would be payable under the remaining term of this Agreement pursuant to Section 5(a) assuming that COMPANY would allow the Agreement to expire at the earliest possible date by providing notice pursuant to Section 1; provided, further, that the provisions of the Company first sentence of this Section 5(d)(6) shall be deleted as of the Effective Time of the Merger, and the Company shall ensure that following the Effective Time of the Merger no holder of a Stock Option or any participant continue to apply in any Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving Corporationsuch event.

Stock Options. (a) Either prior The Company shall take all actions necessary ------------- (which include, but are not limited to, satisfying the requirements of Rule 16b- 3(e) promulgated under Section 16 of the Exchange Act, without incurring any liability in connection therewith) to or as soon as practicable following the provide that, upon consummation of the OfferMerger, each then-outstanding option to purchase Shares (the Company Board (or, if appropriate, any committee administering the Stock Plans"Options") shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Stock Options heretofore granted ------- under any of the Company's stock option program or arrangement of the Company plans referred to in Section 4.2 hereof, each as amended (collectively, the "Stock Option Plans") or any other stock option plan to provide that), at the Effective Time of the Merger, each Stock Option outstanding immediately prior to the acceptance for payment of shares of Common Stock pursuant to the Offer (whether or not vested) shall will be canceled by the ------------ Company in exchange for a cash payment by to the Company of, or can only be exercised for net cash equal to, holders of such Options of an amount in respect thereof equal to the product of (i1) the excess, if any, of (A) the price Per Share Amount over the per share of Common Stock to be paid pursuant to the Offer over (B) the Share exercise price per share of Common Stock subject to such Stock Option, multiplied by thereof and (ii2) the number of shares Shares subject thereto (such payment to be net of Common Stock for which applicable withholding taxes). Any Options not canceled, exercised or converted prior to the Effective Time will, by reason of the Merger, thereafter represent the right to receive, upon payment of the exercise price therefor, an amount in cash, without interest, equal to the Per Share Amount times the number of Shares subject thereto (such Stock Option shall not theretofore have been exercised. payment to be net of applicable withholding taxes). (b) The Company represents and warrants that no consents of the holders of the Stock Options are shall take all actions necessary to effectuate the foregoing cash-out. After provide that on and after the date of this Agreement, neither the Company Board nor (i) no Shares shall be purchased under any committee thereof shall cause any Stock Option to become exercisable Plan that is an "employee stock purchase plan," as a result defined in Section 423(b) of the execution Internal Revenue Code of 1986, as amended, including all citations thereto or to the Treasury Regulations promulgated thereunder and shall include any amendment, substitute or successor provisions thereto (the "Code") from and after the date of this Agreement and (ii) any amounts previously contributed by employees (through payroll deduction or otherwise) for the purpose of purchasing Shares under any such Option Plan (for which the Shares have not been purchased as of the Operative Agreements or the consummation date of the Transactions. (bthis Agreement) All amounts payable pursuant to this Section 7.04 shall be subject returned to any required withholding of taxes and shall be paid without interestsuch employees prior to the Effective Time. (c) The Stock Except as provided herein or as otherwise agreed to by the parties, (i) the Company shall cause the Option Plans shall to terminate as of the Effective Time of the Merger, and the provisions in any other 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 of the Merger, and (ii) the Company shall ensure that following the Effective Time of the Merger no person, including any holder of a Stock Option Options or any participant in any Stock Plan or other Benefit Plan shall the Option Plans, will have any right thereunder to acquire any capital stock equity securities of the Company or Company, the Surviving CorporationCorporation or any subsidiary thereof. (d) Prior to the Effective Time, the Company shall, if necessary (i) obtain any consents from holders of Options and (ii) make any amendments to the terms of the Option Plans that the Company deems necessary to give effect to the actions contemplated by subsections (a), (b) and (c) of this Section 2.9. Notwithstanding any other provision of this Section 2.9, payment may be withheld in respect of any Option until the necessary consents are obtained.

Stock Options. (a) Either prior At the Effective Time, each outstanding option to purchase Shares (the “Company Options”), whether granted under the Company Option Plans or as otherwise, whether vested or unvested in accordance with its terms (including by reason of the transactions contemplated by this Agreement), shall be canceled without any action on the part of any holder of a Company Option, and each holder of a Company Option shall be entitled to receive in exchange therefor cash in an amount equal to the product of (i) the positive difference, if any, between the Per Share Merger Consideration and the exercise price of such Company Option multiplied by (ii) the number of shares of Common Stock subject to such Company Option. As soon as reasonable practicable following the consummation Effective Time, the Exchange Agent (as defined below) shall mail to each holder of a Company Option entitled to consideration pursuant to this Section 3.2(a) a check in the Offeramount of such consideration. (b) As soon as reasonably practicable following the date of this Agreement, the Company Board (or, if appropriate, any committee administering the Stock Company Option Plans) shall adopt such resolutions or take such other actions as are may be required to adjust the terms of all in order that (i) each outstanding Stock Options heretofore granted under any stock option program or arrangement of the Company (collectivelyOption shall automatically accelerate so that each such Company Option shall, the "Stock Plans") or any other stock option plan to provide that, at the Effective Time of the Merger, each Stock Option outstanding immediately prior to the acceptance Effective Time, become fully exercisable for payment all of the shares of Common Stock pursuant at the time subject to such Company Option and may be exercised by the holder thereof for any or all of such shares as fully-vested shares of Common Stock and (ii) upon the Effective Time, all outstanding Company Options, to the Offer (whether or extent not vested) exercised prior to the Effective Time, shall be canceled automatically cancelled without any action on the part of any holder of Company Options in exchange for a cash payment by the Company of, or can only be exercised for net cash equal to, an amount equal to (i) the excessconsideration, if any, set forth in Section 3.2(a). For avoidance of (A) the price per share of Common Stock to be paid pursuant doubt, prior to the Offer over (B) Closing, the Company shall take all actions as may be required in order that each Company Option with an exercise price per share of Common Stock subject equaling or exceeding the Per Share Merger Consideration to such Stock Option, multiplied by (ii) the number of shares of Common Stock for which such Stock Option shall not theretofore have been exercised. The Company represents automatically and warrants that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable pursuant to this Section 7.04 shall be subject to any required withholding of taxes and shall be paid without interest. (c) The Stock Plans shall duly terminate as of the Effective Time of the MergerTime, and no Per Share Merger Consideration, other cash amount or other property or obligation shall be owed, due or payable by the provisions in any other Benefit Plan providing for Company, the issuance, transfer Parent or grant of any capital stock of the Company or any interest Acquisition Sub in respect of any capital stock of the such Company shall be deleted as of the Effective Time of the Merger, and the Company shall ensure that following the Effective Time of the Merger no holder of a Stock Option or any participant in any Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving CorporationOption.

Stock Options. (a) Either prior 10.1 As an inducement to or as soon as practicable following the consummation of the Offer, Employee to enter into this Agreement the Company Board (orhereby grants, if appropriate, any committee administering the Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Stock Options heretofore granted under any stock option program or arrangement of the Company (collectively, the "Stock Plans") or any other stock option plan to provide that, at the Effective Time of the Merger, each Stock Option outstanding immediately prior to the acceptance for payment of shares of Common Stock pursuant to the Offer (whether or not vested) shall be canceled in exchange for a cash payment by the Company of, or can only be exercised for net cash equal to, an amount equal to (i) the excess, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Common Stock subject to such Stock Option, multiplied by (ii) the number of shares of Common Stock for which such Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither to Employee options to purchase shares of the Company Board nor any committee thereof shall cause any Company’s Common Stock, $.01 par value, as follows: Subject to the terms and conditions of the Company’s 2004 Omnibus Incentive Compensation Plan (the “Plan”), and the terms and conditions set forth in the Stock Option Agreement which are incorporated herein by reference, the Employee is hereby granted options to become exercisable as a result purchase 600,000 shares of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable pursuant to this Section 7.04 Company’s Common Stock, which options shall be subject to any required withholding the following vesting requirements: options to purchase 200,000 shares shall vest on the Commencement Date and options to purchase an additional 400,000 shares shall vest in equal amounts of taxes 100,000 on each of the first four anniversary dates of the Commencement Date (the “Options”). Further, the vesting and duration of the Options shall be subject to: (a) the condition that Employee continues to be an employee of the Company and (b) the provisions of Sections 10.2 and 10.3 hereto. The exercise price of the Options shall be equal to the closing price of the Company’s stock on the Commencement Date and shall contain such other terms and conditions as set forth in the stock option agreement. The foregoing Options shall be qualified as incentive stock options to the maximum amount as allowed by law. The Options provided for herein are not transferable by Employee and shall be paid without interestexercised only by Employee, or by his legal representative or executor, as provided in the Plan. Such Options shall expire ten years from the Commencement Date but shall sooner terminate as provided for in the Plan, except as otherwise modified by this Agreement. (c) The 10.2 In the event of a termination of Employee’s employment with the Company pursuant to Section 8.1(c), notwithstanding anything herein or in any stock option agreement to the contrary, the Employee’s right to purchase shares of Common Stock Plans shall terminate of the Company pursuant to any stock option or stock option plan to the extent vested as of the Effective Time Termination Date, shall remain exercisable for a period of three months following the Termination Date, but in no event after the expiration of the Mergerexercise period. In the event of a termination of Employee’s employment with the Company pursuant to Section 8.1(b), options granted and not exercised as of the provisions in any other Benefit Plan providing for Termination Date shall terminate immediately and be null and void. In the issuanceevent of a termination of Employee’s employment with the Company due to the Employee’s death, transfer or grant Disability, the Employee’s (or his estate’s or legal representative’s) right to purchase shares of any capital stock Common Stock of the Company pursuant to any stock option or any interest stock option plan to the extent vested as of the Termination Date shall remain exercisable for a period of twelve (12) months following the Termination Date, but in respect no event after the expiration of any capital stock the exercise period. In the event of a termination of Employee’s employment with the Company by the Employee, the Employee’s right to purchase shares of Common Stock of the Company shall be deleted pursuant to any stock option or stock option plan to the extent vested as of the Effective Time Termination Date shall remain exercisable for a period of three months following the Termination Date, but in no event after the expiration of the Mergerexercise period. 10.3 Notwithstanding the foregoing, in the event of a Change of Control (as defined in the Plan), the Options granted hereunder shall become immediately vested and exercisable in accordance with, and subject to, the Company shall ensure that following the Effective Time terms and conditions of the Merger no holder of a Stock Option or any participant in any Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving CorporationPlan.

Stock Options. At the Acceptance Time, each outstanding option to purchase Shares (a“Company Option”) Either prior to or as soon as practicable following the consummation of the Offer, the Company Board (or, if appropriate, any committee administering the Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Stock Options heretofore granted under any employee stock option program or compensation plan or arrangement of the Company or otherwise (other than the ESPPs), but including, without limitation, the 1997 Incentive and Non-Qualified Stock Option Plan, the 1999 Incentive and Non-Qualified Stock Option Plan, the Amended and Restated Stock Incentive Plan, the Non- Qualified Stock Option Plan for Former Employees of Gilead Sciences, Inc. and the Stock Incentive Plan for Pre-Merger Employees of Eyetech Pharmaceuticals, Inc. (collectively, the "Stock “Equity Compensation Plans") or any other stock option plan to provide that”), at the Effective Time shall by virtue of the Merger, each Stock occurrence of the Acceptance Time and without any action on the part of any holder of any Company Option outstanding immediately prior to be cancelled and the acceptance for payment of shares of Common Stock pursuant to the Offer (whether or not vested) shall be canceled in exchange for holder thereof will receive a cash payment by the Company of, or can only be exercised for net cash equal to, an amount with respect thereto equal to the product obtained by multiplying (ia) the excess, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer Price over (B) the exercise price per share of Common Stock subject to such Stock Company Option, multiplied by (iib) the number of shares Shares issuable upon exercise of Common Stock for which such Stock Company Option (the “Option Cash Payment”). Parent and the Surviving Corporation or the Company, as applicable, shall not theretofore have been exercised. The Company represents and warrants that no consents use their respective commercially reasonable best efforts to cause the cash payments required pursuant to this Section 6.10(a) to be paid as soon as practicable after the Acceptance Time in accordance with the currently existing payroll practices of the holders of the Stock Options are necessary to effectuate the foregoing cash-outCompany. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable pursuant to this Section 7.04 6.10(a) shall be subject to and reduced by the amount of any withholding and/or deduction that is required withholding under applicable Tax Law in accordance with Section 3.2(i) of taxes this Agreement. As of the Acceptance Time, all Company Options shall no longer be outstanding and shall be paid without interest. (c) The Stock Plans shall terminate as of the Effective Time of the Mergerautomatically cease to exist, and each holder of a Company Option shall cease to have any rights with respect thereto, except the right to receive the Option Cash Payment. In order to effect the provisions in any other Benefit Plan providing for the issuanceof this Section 6.10(a), 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 permitted to fully accelerate the vesting of all Company Options at such time prior to the Acceptance Time as of the Effective Time of the Merger, and shall be determined by the Company shall ensure that following the Effective Time of the Merger no holder of a Stock Option or any participant in any Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving Corporationits sole discretion.

Stock Options. (a) Either prior All options, warrants or other rights to or as soon as practicable following the consummation purchase capital stock of the OfferCompany, the other than Company Board (orOptions, if appropriate, any committee administering the Stock Plans) shall adopt such resolutions be exercised or take such other actions as are required to adjust the terms of all outstanding Stock Options heretofore granted under any stock option program or arrangement of the Company (collectively, the "Stock Plans") or any other stock option plan to provide that, at the Effective Time of the Merger, each Stock Option outstanding immediately terminated prior to the acceptance for payment of shares of Common Stock pursuant Closing Date in accordance with the underlying instrument or plan and without Liability to the Offer (whether Company, the Surviving Corporation, Parent or not vested) any of its Affiliates after the Effective Time. Neither the Parent nor the Surviving Corporation shall be canceled become responsible for or otherwise assume any obligations with respect to any outstanding options, warrants or other rights to purchase capital stock of the Company. After the Effective Time, each Company Option, shall represent, in exchange substitution for a cash payment by the such Company ofOption, or can only be exercised for net cash equal to, an amount equal to solely (i) the excessright to receive, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Common Stock subject to such Stock Optionand upon compliance by the holder thereof with the requirements of Section 1.7, multiplied by (ii) the number of shares for each share of Common Stock for which such Stock Company Option shall not theretofore could have been exercised. The exercised immediately prior to the Effective Time, an amount in cash equal to (A) the Per Share Closing Consideration that would have been payable in respect of such share of Common Stock if issued immediately prior to the Effective Time minus (B) an amount equal to the per share exercise price of such Company represents Option immediately prior to the Effective Time, and warrants that no consents (ii) the conditional right to receive, subject to and upon compliance by the holder thereof with the requirements of Section 1.7, for each share of Common Stock for which such Company Option could have been exercised immediately prior to the Effective Time at the end of the holders applicable Escrow Period, subject to Article 9, the Per Share Escrow Consideration that would have been payable in respect of such share of Common Stock if issued immediately prior to the Stock Options are necessary to effectuate the foregoing cash-outEffective Time. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable Any payment made pursuant to this Section 7.04 1.10 shall be subject to any required net of applicable withholding of taxes and shall be paid without interest. (c) The Stock Plans shall terminate as excise taxes. As of the Effective Time Time, the Company Option Plan shall terminate and all rights under the Company Options and any provision of the Merger, and the provisions in any other Benefit Plan plan, program, agreement or arrangement providing for the issuance, transfer issuance or grant of any other interest in respect of the capital stock of the Company or any interest in respect of any capital stock of the Company Subsidiary shall be cancelled. The Company shall be deleted as of use its best efforts to effectuate the Effective Time of the Mergerforegoing, and the Company shall to ensure that that, from and following the Effective Time of the Merger Time, no holder of a Stock Option or any participant in any Stock Plan or other Benefit Plan Person shall have any right thereunder under the Company Options Plan, the Company Options or any other plan, program, agreement or arrangement with respect to acquire any capital stock equity securities of the Company or Company, the Surviving CorporationCorporation or any Subsidiary thereof.

Stock Options. (a) Either prior to or Prior, and as soon as practicable following a condition to, the consummation of the OfferMerger, the Company Board shall have taken all action, including, without limitation, obtaining appropriate consents and releases, necessary to cause all options (orwhether vested or unvested), if appropriatewarrants, rights, calls, commitments or agreements of any committee administering the Stock Plans) shall adopt such resolutions or take such other actions as are required character to adjust the terms of all outstanding Stock Options heretofore granted under any stock option program or arrangement of which the Company (collectively, is a party or by which it is bound calling for the "Stock Plans") or any other stock option plan to provide that, at the Effective Time of the Merger, each Stock Option outstanding immediately prior to the acceptance for payment issuance of shares of Common Stock pursuant to the Offer (whether or not vested) shall be canceled in exchange for a cash payment by the Company of, or can only be exercised for net cash equal to, an amount equal to (i) the excess, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Common Stock subject to such Stock Option, multiplied by (ii) the number of shares of Common Stock for which such Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable pursuant to this Section 7.04 shall be subject to any required withholding of taxes and shall be paid without interest. (c) The Stock Plans shall terminate as of the Effective Time of the Merger, and the provisions in any other Benefit Plan providing for the issuance, transfer or grant of any capital stock of the Company or any interest in respect of securities convertible into or exercisable or exchangeable for, or representing the right to purchase or otherwise receive, directly or indirectly, any such capital stock, or other arrangement to acquire, at any time or under any circumstances, any capital stock of the Company shall be deleted as of (the “Options”), including, without limitation, all Options issued under the Company’s 2004 Stock Plan (the “Option Plan”), outstanding immediately prior to the Effective Time to be exercised or terminated and cancelled prior to the Effective Time without liability of any nature whatsoever to Parent or the Surviving Company. Further, prior, and as a condition to, the Merger, and the Company shall have taken all action to ensure that following the Option Plan shall be terminated prior to the Effective Time and shall provide evidence satisfactory to Parent of such termination. Attached hereto as Schedule 1.7 is a true, complete and correct list of all Options (together with the exercise price therefor) exercised or terminated as contemplated hereby. Prior the Closing, the Company shall have delivered to Parent an agreement, in form and substance satisfactory to Parent signed by each holder of Options exercised or terminated as contemplated hereby (i) acknowledging and agreeing that such holder’s Options have been exercised or terminated prior to the Merger and that such holder shall have no further rights under such Options and (ii) releasing the Company, Parent and the Buyer from any and all claims relating the such Options and the exercise or termination thereof (and, if applicable, the termination of the Merger no holder of a Stock Option or any participant in any Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving CorporationPlan).

Stock Options. At the Effective Time, each holder of an Employee Option (aas hereafter defined), whether or not then vested or exercisable shall, in settlement thereof, receive for each Share subject to such Employee Option an amount (subject to any applicable withholding tax) Either prior in cash equal to or the difference between the Offer Consideration and the per Share exercise price of such Employee Option to the extent such difference is a positive number (such amount being hereinafter referred to as, the "Option Consideration"); PROVIDED, HOWEVER, that with respect to any person subject to Section 16(a) of the Exchange Act, any such amount shall be paid as soon as practicable following after the consummation first date payment can be made without liability to such person under Section 16(b) of the OfferExchange Act. Upon receipt of the Option Consideration, the Employee Option shall be canceled. The surrender of an Employee Option to the Company in exchange for the Option Consideration shall be deemed a release of any and all rights the holder had or may have had in respect of such Employee Option. Prior to the Effective Time, the Company Board (or, if appropriate, any committee administering shall obtain all necessary consents or releases from holders of Employee Options under the Stock Plans) shall adopt such resolutions or Company's stock option plan and to take all such other actions lawful action as are required may be necessary to adjust give effect to the terms of transactions contemplated by this Section 2.8. Except as otherwise agreed to by the parties, (i) all outstanding Stock Options heretofore granted under any stock option program or arrangement plans of the Company (collectively, the "Stock Plans") or any other stock option plan to provide that, at the Effective Time of the Merger, each Stock Option outstanding immediately prior to the acceptance for payment of shares of Common Stock pursuant to the Offer (whether or not vested) shall be canceled in exchange for a cash payment by the Company of, or can only be exercised for net cash equal to, an amount equal to (i) the excess, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Common Stock subject to such Stock Option, multiplied by (ii) the number of shares of Common Stock for which such Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable pursuant to this Section 7.04 shall be subject to any required withholding of taxes and shall be paid without interest. (c) The Stock Plans shall terminate as of the Effective Time of the Merger, and the provisions in any other Benefit Plan plan, program or arrangement providing for the issuance, transfer issuance or grant of any other interest in respect of the capital stock of the Company or any interest in respect of any capital stock of the Company Subsidiary thereof, shall be deleted canceled as of the Effective Time of the MergerTime, and (ii) the Company shall ensure that following the Effective Time of the Merger no holder of a Stock Option or any participant in any Stock Plan stock option plan or other Benefit Plan plans, programs, arrangements or agreements shall have any right thereunder to acquire equity securities of the Company, the Surviving Corporation or any capital stock Subsidiary thereof and to terminate all such plans. The failure of the Company to cancel any Employee Option or to ensure that following the Effective Time no participants in any stock option plan or other plan, program, arrangement or agreement shall have the right thereunder to acquire any equity interest of the Company, the Surviving Corporation or any Subsidiary or to terminate any such plans, which options or equity interests shall not be material in number, shall not be deemed to have a Material Adverse Effect for the purposes of Section 7.2(b) and paragraph (C) of ANNEX I. Prior to the Effective Time, the Company shall not take any action to accelerate the vesting of any unvested stock options as a result of the Offer or the Surviving CorporationMerger.

Stock Options. (a) Either prior to or At the Effective Time, each then-outstanding vested Company Option (including any Company Option that vests as soon as practicable following a result of the consummation of the Offer, Transactions) having a per share exercise price less than the Company Board (or, if appropriate, any committee administering the Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Stock Options heretofore granted under any stock option program or arrangement of the Company (collectively, the "Stock Plans") or any other stock option plan to provide that, at the Effective Time of the Merger, each Stock Option outstanding immediately prior to the acceptance for payment of shares of Common Stock pursuant to the Offer Merger Consideration (whether or not vested) a “Qualifying Company Option”), shall be canceled cancelled in exchange for a cash payment by the Company of, or can only be exercised right to receive from the Surviving Corporation for net cash equal to, an amount equal to (i) the excess, if any, of (A) the price per each share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Company Common Stock subject to such Stock Option, multiplied by Qualifying Company Option immediately prior to the Effective Time an amount (iisubject to any applicable withholding Tax) in cash equal to the product of (x) the number of shares of Company Common Stock for subject to such Qualifying Company Option immediately prior to the Effective Time multiplied by (y) the amount by which the Common Stock Merger Consideration exceeds the per share exercise price of such Stock Option shall not theretofore have been exercised. The Qualifying Company represents and warrants that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the TransactionsOption. (b) All amounts payable pursuant As of the Effective Time, each (i) vested Company Option having a per share exercise price equal to this Section 7.04 or greater than the Common Stock Merger Consideration and (ii) unvested Company Option, in each case that is outstanding as of the Effective Time and is unexpired and unexercised, shall be subject to any required withholding forfeited and the holder of taxes and such options shall be paid without interesthave no further rights thereunder. (c) The Stock Plans Prior to the Effective Time, the Company shall terminate as take all actions necessary (including obtaining any necessary participant consents, and determinations and/or resolutions of the Effective Time board of the Merger, and the provisions in any other Benefit Plan providing for the issuance, transfer or grant of any capital stock directors of the Company or a committee thereof) to effect the transactions anticipated by this Section 2.11 under the Company Option Plan and all applicable option agreements and any interest other plan or arrangement of the Company. The Company shall notify the holders of Company Options, which such notice shall be in respect of any capital stock compliance with the terms of the Company shall Option Plan and such Company Options, that such Company Options will be deleted as of treated in the manner set forth in this Section 2.11. Prior to the Effective Time of the MergerTime, and the Company shall ensure that following the Effective Time of the Merger no holder of a Stock Option or any participant in any Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock terminate all equity incentive plans of the Company and shall provide Parent with documentation evidencing the completion of the foregoing actions (the form and substance of which shall be subject to review and approval by Parent, such approval not to be unreasonably withheld or delayed) not later than five business days preceding the Surviving CorporationEffective Time.

Stock Options. (a) Either prior Prior to or as soon as practicable following the consummation of the OfferEffective Time, the Company Rome Board (or, if appropriate, any committee administering the Rome Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Rome Stock Options heretofore granted under any stock option program or arrangement of the Company (collectively, the "Stock Plans") or any other stock option plan to provide that, at the Effective Time of the Merger, that (i) each Rome Stock Option outstanding shall be vested and exercisable effective immediately prior to the acceptance for Effective Time, and (ii) each Rome Stock Option that is not exercised prior to the Effective Time will be canceled as of the Effective Time and the holder thereof shall then become entitled to receive, as soon as practicable following the Effective Time, a single lump sum cash payment equal to the product of (x) the number of shares of Common Rome Stock pursuant to the Offer for which such Rome Stock Option shall not theretofore have been exercised and (whether or not vested) shall be canceled in exchange for a cash payment by the Company of, or can only be exercised for net cash equal to, an amount equal to (iy) the excess, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer Merger Consideration over (B) the exercise price per share of Common Stock subject to such Rome Stock Option, multiplied by (ii) the number of shares of Common Stock for which such Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable pursuant to this Section 7.04 6.04 shall be subject to any required withholding of taxes Taxes and shall be paid without interest. (c) Within seven (7) calendar days after the date of this Agreement, the Rome Board of Directors (or, if appropriate, any committee administering the Rome ESPP), shall adopt such resolutions or take such other actions as may be required to provide that (i) no offering period shall be commenced after the date of this Agreement, (ii) each participant's outstanding right to purchase shares of Rome Common Stock under the Rome ESPP shall terminate as soon as practicable following the date of this Agreement (but in no event later than the last day of each applicable payroll period that includes the date of this Agreement), provided that all amounts allocated to each participant's account under the Rome ESPP as of such date shall thereupon be used to purchase from Rome whole shares of Rome Common Stock at the applicable price determined under the terms of the Rome ESPP for then outstanding offering period and (iii) the Rome ESPP shall terminate immediately following such purchases of Rome Common Stock. (d) The Rome Stock Plans shall terminate as of the Effective Time of the MergerTime, and the provisions in any other Benefit Plan providing for the issuance, transfer or grant of any capital stock of the Company Rome or any interest in respect of any capital stock of the Company Rome shall be deleted as of the Effective Time of the MergerTime, and the Company Rome shall ensure that following the Effective Time of the Merger no holder of a Rome Stock Option or any participant in any Rome Stock Plan or other Rome Benefit Plan shall have any right thereunder to acquire any capital stock of the Company Rome or the Surviving Corporation. (e) In this Agreement:

Stock Options. (a) Either prior As additional consideration for executing this Agreement, the Employee shall receive the option to or purchase that number of shares of Guardian Common Stock having an aggregate Guardian Market Value as soon as practicable following determined at the consummation time of the OfferClosing equal to Five Thousand Dollars ($5,000) (the "Options"), the Company Board (or, if appropriate, any committee administering the Stock Plans) shall adopt such resolutions or take such other actions as are required subject to adjust the terms of all outstanding Stock Options heretofore granted under any stock option program or arrangement and conditions of the Company (collectively, the "Stock Plans") or any other stock option plan to provide that, at be established by Guardian (the Effective Time "Stock Option Plan") and a grant agreement granting such Options (the "Grant Agreement"). The exercise price of the Merger, each Options shall be equal to the exercise price equal to the five-day average closing price of the Common Stock Option outstanding immediately for the five days prior to the acceptance for payment grant thereof.. The Options will vest at the rate of shares one-fifth per year commencing with the Effective Date. Vested Options shall be exercisable on each anniversary of Common Stock pursuant the date of the grant of such Options. If the Employee does not exercise all of the vested Options in any given year, such vested Options may be exercised in subsequent years but in no event later than ten years from the date of the grant thereof. In the event that the Employee's employment hereunder is terminated by Employer "without cause" prior to the Offer (whether or not vested) vesting of all Options, any such unvested Options shall be canceled in exchange vest automatically as of the date of termination. For purposes for a cash payment by this Agreement, "without cause" shall mean termination of the Company of, or can only be exercised Employee's employment hereunder for net cash equal to, an amount equal to reasons other than: (i) any conviction of the excess, Employee of a felony or any conduct which if any, proved would support conviction of (A) the price per share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Common Stock subject to such Stock Option, multiplied by a felony; (ii) conduct amounting to a material act of fraud, gross misconduct or dishonesty involving the number Employer; (iii) a material act of shares fraud or dishonesty not involving the Employer which has a material adverse effect upon the Business or reputation of Common Stock for which Employer; (iv) continuing material violation by the Employee of his obligations under this Agreement after written notice thereof to the Employee and failure to cure such Stock Option shall not theretofore have been exercised. The Company represents and warrants violation within fifteen (15) days following such notice; (v) misuse of alcohol or controlled substance that no consents materially impairs the Employee's ability to perform the duties of his employment as determined by a physician retained by the Employer or, if the Employee refuses to submit to appropriate examinations by such physician at the request of the holders Board of Directors of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this AgreementEmployer, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result then by at least three members of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable pursuant to this Section 7.04 shall be subject to any required withholding of taxes and shall be paid without interest. (c) The Stock Plans shall terminate as of the Effective Time of the Merger, and the provisions in any other 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 of the Merger, and the Company shall ensure that following the Effective Time of the Merger no holder of a Stock Option or any participant in any Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving Corporation.Board

Stock Options. (a) Either prior Prior to or as soon as practicable following the consummation of the OfferEffective Time, the Company Board (or, if appropriate, any committee administering the Stock Plans) shall adopt such resolutions or take such other actions as are required may be necessary such that at the Effective Time, each then outstanding option to adjust the purchase shares of Company Common Stock whether or not then vested or exercisable in accordance with its terms of all outstanding Stock Options heretofore granted under any stock option program or arrangement of the Company (collectively, the "Stock PlansOptions") or any other stock option plan to provide that), at the Effective Time of the Merger, each Stock Option outstanding immediately prior to the acceptance for payment of shares of Common Stock pursuant to the Offer (whether or not vested) shall be canceled in exchange for a cash payment by and entitle the Company ofholder thereof, or can only be exercised for net upon surrender to the Company, to receive an amount of cash equal to, an amount equal to the product of (ix) the excess, if any, of (A) amount by which the price per share of Common Stock to be paid pursuant to the Offer over (B) Merger Consideration exceeds the exercise price per share of Company Common Stock subject to such Stock Option, multiplied by Option (iiwhether vested or unvested) and (y) the number of shares of Company Common Stock for which such Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable issuable pursuant to this Section 7.04 shall be subject to the unexercised portion of such Option (whether vested or unvested), less any required withholding of taxes and (such amount being hereinafter referred to as, the "Option Consideration"). The surrender of an Option to the Company in exchange for the Option Consideration shall be paid without interest. (c) deemed a release of any and all rights the holder had or may have had in respect of such Option. The Company's 1993 Stock Plans Option Plan and all other Options to acquire Company Common Stock shall terminate as of the Effective Time of the Merger, and the provisions in any other Benefit Plan plan, program or arrangement providing for the issuance, transfer issuance or grant of any capital stock of the Company or any other interest in respect of any the capital stock of the Company shall be deleted canceled as of the Effective Time of the MergerTime, and the Company shall take all permitted action necessary, including receiving applicable consents from optionees, to ensure that following the Effective Time of the Merger no holder of a Stock Option or any participant in any Company's 1993 Stock Option Plan or other Benefit Plan plans, programs or arrangements shall have any right thereunder to acquire any capital stock equity securities of the Company or the Surviving CorporationCorporation and to terminate all such plans. Acquiror agrees to advance funds to the Company to the extent such funds are required by the Company in order to carry out its obligations under the terms of this Section 8.6.

Stock Options. (a) Either prior to or as soon as practicable following The Merger Agreement provides that the consummation Board of Directors of the Offer, the Company Board (or, if appropriate, any committee administering the Company Stock PlansPlans (as defined in the Merger Agreement)) shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Company Stock Options heretofore (as defined in the Merger Agreement) and all outstanding Company SARs (as defined in the Merger Agreement), in each case whether vested or unvested granted before the date of the Merger Agreement under any stock option program or arrangement of the Company (collectively, the "Stock Plans") or any other stock option plan Plan to provide that, at the Effective Time of the Merger, that each such Company Stock Option (and any Company SAR related thereto) outstanding immediately prior to the first acceptance for payment of shares of Common Stock Shares pursuant to the Offer (whether or not vested) shall be canceled in exchange for a cash payment by the Company of, or can only be exercised as soon as practicable following the first acceptance for net cash equal to, payment of Shares pursuant to the Offer of an amount equal to (i) the excess, if any, of (Ax) the highest price per share of Common Stock Share to be paid pursuant to the Offer over (By) the exercise price per share of Common Stock Share subject to such Company Stock Option, multiplied by (ii) the number of shares Shares issuable pursuant to the unexercised portion of Common such Company Stock for which such Stock Option shall not theretofore have been exercisedOptions. The Company represents and warrants that no has agreed to use its best efforts to obtain all consents of the holders of the Company Stock Options are as shall be necessary to effectuate the foregoing cash-outforegoing. After the date At Parent's request, payment may be withheld in respect of this Agreement, neither any Company Stock Option until all necessary consents with respect to such Company Stock Option are obtained. The Merger Agreement provides that the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable pursuant to this Section 7.04 shall be subject to any required withholding of taxes and shall be paid without interest. (c) The Stock Plans shall terminate as of the Effective Time of the MergerTime, and the provisions in any other 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 of the MergerTime, and the Company shall ensure that following the Effective Time of the Merger no holder of a Company Stock Option or Company SAR or any participant in any Company Stock Plan or other Company Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving Corporationsurviving corporation in the Merger.

Stock Options. (a) Either prior Prior to or as soon as practicable following the consummation Effective Time, the Board of Directors of the Offer, Company (the "Company Board Board") (or, if appropriate, any committee administering the Stock Plansthereof) shall adopt such appropriate resolutions or and take such all other actions as are required to adjust the terms of all outstanding Stock Options heretofore granted under any stock option program or arrangement of the Company (collectively, the "Stock Plans") or any other stock option plan necessary and appropriate to provide that, at the Effective Time of the Merger, each Stock Option outstanding immediately prior to the acceptance for payment of shares of Common Effective Time, each unexpired and unexercised Option under any Company Stock pursuant to the Offer (Option Plan, whether or not then exercisable or vested) , shall be canceled cancelled and, in exchange for therefor, each former holder of any such cancelled Option shall be entitled to receive, in consideration of the cancellation of such Option and in settlement therefor, a payment in cash payment (subject to any applicable withholding or other taxes required by the Company of, or can only applicable Legal Requirements to be exercised for net cash equal to, withheld) of an amount equal to the product of (iA) the total number of shares of Company Common Stock previously subject to such Option and (B) the excess, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer Per Share Price over (B) the exercise price per share of Company Common Stock previously subject to such Stock OptionOption (such amounts payable hereunder being referred to as the "Option Payment"). From and after the Effective Time, multiplied by (ii) the number of shares of Common Stock for which any such Stock cancelled Option shall not theretofore have been exercised. The Company represents and warrants that no consents longer be exercisable by the former holder thereof, but shall only entitle such holder to the payment of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable pursuant to this Section 7.04 shall be subject to any required withholding of taxes and shall be paid without interest. (c) The Stock Plans shall terminate as of the Effective Time of the Merger, and the provisions in any other 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 of the MergerPayment, and the Company shall obtain all necessary consents to ensure that following former holders of Options will have no rights other than the right to receive the Option Payment. As of the Effective Time, all Company Stock Option Plans shall be terminated and no further Options shall be granted thereunder. No less than thirty (30) days prior to the Effective Time, the Company shall provide each holder of an unexpired and unexercised Option under any Company Stock Option Plan with written notice of the potential merger contemplated by this Agreement, in a manner reasonably satisfactory to Parent and Parent's counsel. Such written notice will notify the holder of an unexpired and unexercised Option of the right to exercise such Option within thirty (30) days from the date of the notice, and that such Option will terminate upon the expiration of the 30-day period. As an alternative to the foregoing, prior to the Effective Time, the Company may adopt appropriate resolutions and take all other actions necessary and appropriate to provide that, prior to the Effective Time, each unexpired and unexercised Option under any Company Stock Option Plan, whether or not then exercisable or vested, shall be exercisable prior to the Effective Time of the Merger no holder of a Stock Option or any participant in any Stock Plan or other Benefit Plan and, if not so exercised, shall have any right thereunder to acquire any capital stock of the Company or the Surviving Corporationbe terminated.

Stock Options. (a) Either prior to or as soon as practicable following On the consummation day of the OfferCorporation's 2001 Annual Shareholders Meeting, scheduled to be held on April 17, 2001, the Company Board (orCorporation shall grant you, if appropriate, any committee administering subject to the Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Stock Options heretofore granted under any stock option program or arrangement of the Company (collectively, the "Stock Plans") or any other Corporation's shareholders approving a new Corporation stock option plan to provide that, at the Effective Time 2001 Annual Shareholders Meeting, non-qualified stock options to purchase fifteen thousand (15,000) shares of the Merger, each Stock Option outstanding immediately prior Corporation's common stock at a price equal to the acceptance fair market value of the stock on that date. Provided this Agreement has not been terminated for payment Cause, due to your death, or disability as defined hereunder, or by you for other than Good Reason, on the day of the Corporation's Annual Shareholders Meetings in the year 2002 and in the year 2003, the Corporation shall each such year, grant you options to purchase an additional ten thousand (10,000) shares of Common Stock pursuant the Corporation's common stock at a price equal to the Offer (whether or not vested) shall fair market value of the shares of the Corporation's stock on those respective dates." Otherwise the Agreement remains unaltered. Intending to be canceled in exchange legally bound, for a cash payment by good and sufficient consideration, the Company ofreceipt of which is hereby acknowledged and as an inducement for making this Amendment, or can only be exercised for net cash equal tothe parties hereto hereby represent and warrant, an amount equal to as applicable, that (i) all representations and warranties set forth in the excess, if any, Agreement are true and correct as of (A) the price per share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Common Stock subject to such Stock Option, multiplied by date hereof; and (ii) no condition or event exists or has occurred which would constitute a default under the number Agreement, or upon the giving of shares notice or the passage of Common Stock for which such Stock Option shall not theretofore have been exercisedtime, or both would constitute a default. The Company represents undersigned hereby acknowledges and warrants confirms that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable pursuant to this Section 7.04 shall be subject to any required withholding of taxes hereby amended, is valid, binding and shall be paid without interest. (c) The Stock Plans shall terminate in full force and effect as of the Effective Time date hereof and fully enforceable against the parties hereto. All capitalized terms used herein, which are not defined herein or otherwise conventionally capitalized, shall have the meanings ascribed to them in the Agreement. By signing below, you confirm and approve the terms and conditions of the MergerAgreement, as amended and the provisions in any other 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 of the Merger, and the Company shall ensure that following the Effective Time of the Merger no holder acknowledge receipt of a Stock Option or any participant in any Stock Plan or other Benefit Plan shall copy of this Amendment. If you have any right thereunder to acquire any capital stock of the Company questions or the Surviving Corporation.desire additional information, kindly advise me. Sincerely yours,

Stock Options. (a) Either prior to or as 5.11.1 As soon as practicable following the consummation date of the Offerthis Agreement, the Company Board Canaan's board of directors (or, if appropriate, any committee administering the Stock Canaan Plans) shall will adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Canaan Stock Options heretofore granted under any stock option program or arrangement Canaan Plan to confirm that each of the Company (collectively, the "Canaan Stock Plans") or any other stock option plan to provide that, at the Effective Time of the Merger, each Stock Option Options outstanding immediately prior to the acceptance for payment of shares of Canaan Common Stock pursuant to the Offer (whether or not vested) shall terms of this Agreement will be canceled in exchange for a cash payment by canceled, with the Company of, or can only be exercised for net holder thereof becoming entitled to receive an amount of cash equal to, an amount equal to the product of (ia) the excess, if any, of (Ai) the price per share of Common Stock to be paid pursuant to the Offer Per Share Merger Consideration over (Bii) the exercise price per share of Canaan Common Stock subject to such Canaan Stock Option, multiplied by (iib) the number of shares of Canaan Common Stock for which issuable pursuant to the unexercised portion of such Canaan Stock Option shall not theretofore have been exercisedOption. The Company represents and warrants that no consents Subject to the Closing of the holders Merger, Parent agrees to provide any funding out of the Stock Options are Merger Consideration necessary to effectuate make the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactionspayments. (b) 5.11.2 All amounts payable pursuant to this Section 7.04 shall paragraph 5.11.1 will be subject to any required withholding of taxes Taxes and shall will be paid at or as soon as practicable at or following the Effective Time, but in any event within seven days following the Effective Time, without interest. The cancellation of a Canaan Stock Option in exchange for the cash payment described in paragraph 5.11.1 will be deemed a release of any and all rights the holder of such Canaan Stock Option had or may have had in respect thereof. 5.11.3 As soon as practicable following the date of this Agreement, Canaan's board of directors (cor, if appropriate, any committee administering the Canaan Plans) The Stock will take or cause to be taken such actions as are required to cause (i) the Canaan Plans shall to terminate as of the Effective Time of the Merger, and (ii) the provisions in any other Benefit Plan plan, program or agreement providing for the issuance, transfer or grant of any capital stock of the Company Canaan or any interest in respect of any capital stock of the Company shall Canaan to be deleted terminated as of the Effective Time of the Merger, and the Company shall Time. Canaan will ensure that following the Effective Time of the Merger no holder of a Canaan Stock Option or any participant in any Stock Canaan Plan or other Benefit Plan shall benefit plan, program or agreement will have any right thereunder to acquire any capital stock of the Company Canaan or the Surviving Corporation.

Stock Options. (a) Either prior to or as As soon as practicable following the consummation date of the Offerthis Agreement, the Company Board (or, if appropriate, any committee administering the Company Stock Plans) shall adopt such resolutions or take such other actions as are required to provide notice to holders of Company Stock Options required under the terms of the Company Stock Plans and to adjust the terms of all outstanding Company Stock Options heretofore granted under any stock option program or arrangement of the Company (collectively, the "Stock Plans") or any other stock option plan Plan to provide that, after giving effect to the actions taken by the Company Board under the Company Stock Plans, such Company Stock Options will be exercisable at the Effective Time time of the Merger, each Stock Option outstanding immediately prior to the first acceptance for payment of shares of Company Common Stock pursuant to the Offer (whether or not vested) the "Exercisable Options"), and further to provide that each such Exercisable Option outstanding at the time of the first acceptance for payment of shares of Company Common Stock pursuant to the Offer shall be canceled in exchange for a cash payment by the Company of, or can only be exercised as soon as practicable following the first acceptance for net cash equal to, payment of shares of Company Common Stock pursuant to the Offer of an amount equal to (i) the excess, if any, of (Ax) the highest price per share of Company Common Stock to be paid pursuant to the Offer over (By) the exercise price per share of Company Common Stock subject to such Stock Exercisable Option, multiplied by (ii) the number of shares of Company Common Stock for which such Stock Exercisable Option shall not theretofore have been exercised. The Company represents and warrants that no consents of the holders of the Stock Options are necessary will be responsible for any required reporting to effectuate the foregoing cash-out. After the date of this AgreementFederal, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements state or the consummation of the Transactionslocal tax authorities. (b) All amounts payable pursuant to this Section 7.04 6.04(a) shall be subject to any required withholding of taxes Taxes or proof of eligibility of exemption therefrom and shall be paid without interestinterest by the Company as soon as practicable following the first acceptance for payment of shares of Company Common Stock pursuant to the Offer. The Company shall use its commercially reasonable efforts to obtain all consents of the holders of Company 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 the holder of any particular Company Stock Option until any necessary consent from such holder with respect to such Company Stock Option is obtained. (c) The Company Stock Plans shall terminate as of the Effective Time of the MergerTime, and the provisions in any other 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 of the MergerTime, and the Company shall ensure that following the Effective Time of the Merger no holder of a Company Stock Option or any participant in any Company Stock Plan Plan, or other Company Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving Corporation. (d) The Company shall use its commercially reasonable efforts to obtain all necessary consents, waivers or releases from holders of Company Stock Options and shall take such action as may be reasonably necessary to give effect to, and accomplish, the transactions contemplated by this Section 6.04; provided, however, that in no event shall this Section 6.04(d) require the Company to pay any consideration to the holders of the Company Stock Options to obtain such consents, waivers or releases. (e) In this Agreement:

Stock Options. (a) Either prior The Company shall take all actions necessary (which include, but are not limited to, satisfying the requirements of Rule 16b-3(e) promulgated under Section 16 of the Exchange Act, without incurring any liability in connection therewith) to or as soon as practicable following the provide that, upon consummation of the OfferMerger, each then-outstanding option to purchase Shares (the Company Board (or, if appropriate, any committee administering the Stock Plans"OPTIONS") shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Stock Options heretofore granted under any of the Company's stock option program or arrangement of the Company plans referred to in Section 4.2 hereof, each as amended (collectively, the "Stock PlansOPTION PLANS") or any other stock option plan to provide that), at the Effective Time of the Merger, each Stock Option outstanding immediately prior to the acceptance for payment of shares of Common Stock pursuant to the Offer (whether or not vested) shall will be canceled by the Company in exchange for a cash payment by to the Company of, or can only be exercised for net cash equal to, holders of such Options of an amount in respect thereof equal to the product of (i1) the excess, if any, of (A) the price Per Share Amount over the per share of Common Stock to be paid pursuant to the Offer over (B) the Share exercise price per share of Common Stock subject to such Stock Option, multiplied by thereof and (ii2) the number of shares Shares subject thereto (such payment to be net of Common Stock for which applicable withholding taxes). Any Options not canceled, exercised or converted prior to the Effective Time will, by reason of the Merger, thereafter represent the right to receive, upon payment of the exercise price therefor, an amount in cash, without interest, equal to the Per Share Amount times the number of Shares subject thereto (such Stock Option shall not theretofore have been exercised. payment to be net of applicable withholding taxes). (b) The Company represents and warrants that no consents of the holders of the Stock Options are shall take all actions necessary to effectuate the foregoing cash-out. After provide that on and after the date of this Agreement, neither the Company Board nor (i) no Shares shall be purchased under any committee thereof shall cause any Stock Option to become exercisable Plan that is an "employee stock purchase plan," as a result defined in Section 423(b) of the execution Internal Revenue Code of 1986, as amended, including all citations thereto or to the Treasury Regulations promulgated thereunder and shall include any amendment, substitute or successor provisions thereto (the "CODE") from and after the date of this Agreement and (ii) any amounts previously contributed by employees (through payroll deduction or otherwise) for the purpose of purchasing Shares under any such Option Plan (for which the Shares have not been purchased as of the Operative Agreements or the consummation date of the Transactions. (bthis Agreement) All amounts payable pursuant to this Section 7.04 shall be subject returned to any required withholding of taxes and shall be paid without interestsuch employees prior to the Effective Time. (c) The Stock Except as provided herein or as otherwise agreed to by the parties, (i) the Company shall cause the Option Plans shall to terminate as of the Effective Time of the Merger, and the provisions in any other 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 of the Merger, and (ii) the Company shall ensure that following the Effective Time of the Merger no person, including any holder of a Stock Option Options or any participant in any Stock Plan or other Benefit Plan shall the Option Plans, will have any right thereunder to acquire any capital stock equity securities of the Company or Company, the Surviving CorporationCorporation or any subsidiary thereof. (d) Prior to the Effective Time, the Company shall, if necessary (i) obtain any consents from holders of Options and (ii) make any amendments to the terms of the Option Plans that the Company deems necessary to give effect to the actions contemplated by subsections (a), (b) and (c) of this Section 2.9. Notwithstanding any other provision of this Section 2.9, payment may be withheld in respect of any Option until the necessary consents are obtained.

Stock Options. (a) Either prior to or as soon as practicable following the consummation As of the OfferEffective Time, each outstanding, unexercised stock option to purchase shares of Common Stock (a "Company Stock Option") issued under the Company's Amended and Restated 1987 Stock Option Plan (the "1987 Plan"), the Company Board 1989 Time Accelerated Restricted Stock Option Plan (orthe "TARSOP"), if appropriate, any committee administering the 1993 Stock PlansOption Plan for Non-Employee Directors (the "Director Plan") shall adopt such resolutions or take such other actions as are required to adjust and the terms of all outstanding 1997 Stock Options heretofore granted under any stock option program or arrangement of Option Plan (the Company "1997 Plan") (collectively, the "Company Stock Option Plans") or any other stock option plan to provide that, at the Effective Time shall terminate and be canceled and each holder of the Merger, each a Company Stock Option outstanding immediately prior to the acceptance for payment of shares of Common Stock pursuant to the Offer (whether or not vested) shall be canceled entitled to receive, in exchange for consideration therefor, a cash payment by from the Company of, or can only (which payment shall be exercised for net cash equal to, an amount made as soon as practicable after the Effective Time) equal to the product of (ia) the excess, if any, of (Ax) the price Merger Consideration over (y) the per share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Common Stock subject to such Company Stock Option, multiplied by times (iib) the number of Eligible Shares (as defined below) subject to such Company Stock Option. Such cash payment shall be net of any required withholding taxes. The term "Eligible Shares" shall mean, (i) with respect to any Company Stock Option granted under the 1987 Plan, the number of shares of Common Stock for subject to such option as to which such option shall then be vested and exercisable as of the Effective Date, and (ii) with respect to any Company Stock Option granted under the TARSOP, the Director Plan or the 1997 Plan, the aggregate number of shares that shall not theretofore have been exercisedthen be subject to such option. The Company represents and warrants that no consents of the holders of the Stock Options are necessary Company's obligation to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor make any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. such cash payment (b1) All amounts payable pursuant to this Section 7.04 shall be subject to the obtaining of any required withholding necessary consents of taxes optionees to the cancellation of such Company Stock Options, in form and substance satisfactory to Parent, and (2) shall be paid without interest. (c) The not require any action which violates any of the Company Stock Plans shall terminate as Option Plans. As of the Effective Time of the MergerTime, and the provisions in any other Benefit Plan providing for the issuance, transfer or grant of any capital stock each of the Company Stock Option Plans and the Company's 1992 Employee Stock Purchase Plan (the "ESPP") shall terminate and be of no further force or any interest in respect of any capital stock of the Company shall be deleted as of the Effective Time of the Mergereffect, and the Company shall ensure take such action as shall be necessary to ensure, to Parent's reasonable satisfaction, that following the Effective Time of the Merger no holder of a Company Stock Option or any participant in any Stock Plan or other Benefit Plan shall the ESPP will have any right thereunder to acquire any capital stock of interest in the Surviving Corporation under the Company Stock Option Plans or the Surviving CorporationESPP.

Stock Options. (a) Either prior Prior to or as soon as practicable following the consummation Effective Time, the Board of Directors of the Offer, Company (the “Company Board Board”) (or, if appropriate, any committee administering the Stock Plansthereof) shall adopt such appropriate resolutions or and take such all other actions as are required to adjust the terms of all outstanding Stock Options heretofore granted under any stock option program or arrangement of the Company (collectively, the "Stock Plans") or any other stock option plan necessary and appropriate to provide that, at the Effective Time of the Merger, each Stock Option outstanding immediately prior to the acceptance for payment of shares of Common Effective Time, each unexpired and unexercised Option under any Company Stock pursuant to the Offer (Option Plan, whether or not then exercisable or vested) , shall be canceled cancelled and, in exchange for therefor, each former holder of any such cancelled Option shall be entitled to receive, in consideration of the cancellation of such Option and in settlement therefor, a payment in cash payment (subject to any applicable withholding or other taxes required by the Company of, or can only applicable Legal Requirements to be exercised for net cash equal to, withheld) of an amount equal to the product of (iA) the total number of shares of Company Common Stock previously subject to such Option and (B) the excess, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer Per Share Price over (B) the exercise price per share of Company Common Stock previously subject to such Stock OptionOption (such amounts payable hereunder being referred to as the “Option Payment”). From and after the Effective Time, multiplied by (ii) the number of shares of Common Stock for which any such Stock cancelled Option shall not theretofore have been exercised. The Company represents and warrants that no consents longer be exercisable by the former holder thereof, but shall only entitle such holder to the payment of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable pursuant to this Section 7.04 shall be subject to any required withholding of taxes and shall be paid without interest. (c) The Stock Plans shall terminate as of the Effective Time of the Merger, and the provisions in any other 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 of the MergerPayment, and the Company shall obtain all necessary consents to ensure that following former holders of Options will have no rights other than the right to receive the Option Payment. As of the Effective Time, all Company Stock Option Plans shall be terminated and no further Options shall be granted thereunder. No less than thirty (30) days prior to the Effective Time, the Company shall provide each holder of an unexpired and unexercised Option under any Company Stock Option Plan with written notice of the potential merger contemplated by this Agreement, in a manner reasonably satisfactory to Parent and Parent’s counsel. Such written notice will notify the holder of an unexpired and unexercised Option of the right to exercise such Option within thirty (30) days from the date of the notice, and that such Option will terminate upon the expiration of the 30-day period. As an alternative to the foregoing, prior to the Effective Time, the Company may adopt appropriate resolutions and take all other actions necessary and appropriate to provide that, prior to the Effective Time, each unexpired and unexercised Option under any Company Stock Option Plan, whether or not then exercisable or vested, shall be exercisable prior to the Effective Time of the Merger no holder of a Stock Option or any participant in any Stock Plan or other Benefit Plan and, if not so exercised, shall have any right thereunder to acquire any capital stock of the Company or the Surviving Corporationbe terminated.

Stock Options. (a) Either prior to or as As soon as practicable following the consummation date of the Offerthis Agreement, the Company Board (or, if appropriate, any committee administering the Company Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Company Employee Stock Options and Potential Stock Options heretofore granted under any stock option program Company Stock Plan or arrangement of the Company (collectivelyotherwise, the "Stock Plans") or any other stock option plan to provide that, at the Effective Time of the Merger, that each Company Employee Stock Option and each Potential Stock Option outstanding immediately prior to the acceptance for payment of shares of Common Stock pursuant to the Offer (whether or not vested) Effective Time shall be canceled on the date following the Effective Time in exchange for a cash payment by the Company of, or can only to be exercised for net cash equal to, made on such date of an amount equal to (i) the excess, if any, of (Ax) the price per share of Company Common Stock to be paid pursuant to the Offer over (By) the exercise price per share of Company Common Stock subject to such Company Employee Stock Option or Potential Stock Option, multiplied by (ii) the number of shares of Company Common Stock for which such Company Employee Stock Option or Potential Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents . (b) Except with respect to the Third Party Stock Options set forth on Section 7.04(b) of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After Company Disclosure Letter, which shall be treated as described in such Section, as soon as practicable following the date of this Agreement, neither the Company Board nor any committee thereof shall cause any offer to each holder of a Third Party Stock Option the right to become exercisable as have each Third Party Stock Option outstanding immediately prior to the acceptance for payment of shares of Company Common Stock pursuant to the Offer canceled in exchange for a result cash payment by the Company in an amount equal to (i) the excess, if any, of (x) the execution price per share of Company Common Stock to be paid pursuant to the Operative Agreements or Offer over (y) the consummation exercise price per share of Company Common Stock subject to such Third Party Stock Option, multiplied by (ii) the Transactionsnumber of shares of Company Common Stock for which such Third Party Stock Option shall not theretofore have been exercised. (bc) All amounts payable pursuant to this Section 7.04 shall be subject to any required withholding of taxes and shall be paid without interest. The Company shall use commercially reasonable efforts to obtain all consents of the holders of the Company Employee Stock Options and Potential 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, Potential Stock Option or Third Party Stock Option until all necessary consents are obtained. (cd) The Company Stock Plans shall terminate as of the Effective Time of the MergerTime, and the provisions in any other 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 of the MergerTime, and the Company shall ensure that following the Effective Time of the Merger no holder of a Company Employee Stock Option, Potential Stock Option or Third Party Stock Option or any participant in any Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving Corporation.

Stock Options. (a) Either prior to or as soon as practicable following During the consummation term of the OfferAgreement, COMPANY shall grant to EMPLOYEE options to purchase shares of COMPANY Common Stock (the Company Board "Option") under the COMPANY's 2004 Stock Option and Incentive Plan (or"Plan"). The Option, which shall be in the form attached hereto as Exhibit A, shall be subject to the terms and conditions thereof and of the Plan, and shall additionally provide as follows: (1) The number of shares subject to the Option and the vesting schedule relating thereto, if appropriateany. (2) The purchase price per share, any committee administering which shall be equal to the Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust closing bid price on the terms date of all outstanding Stock Options heretofore granted under any stock option program or arrangement issuance of the Company Option. (collectively, the "Stock Plans"3) or any other stock option plan to provide that, at the Effective Time of the Merger, each Stock The Option outstanding immediately prior to the acceptance for payment of shares of Common Stock pursuant to the Offer (whether or not vested) shall be canceled in exchange for a cash payment by the Company of, or can only be exercised for net cash equal to, designated as an amount equal to Incentive Option. (4) The Option shall terminate on (i) the excess, if any, of (A) expiration date specified in the price per share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Common Stock subject to such Stock Option, multiplied by Option Agreement or (ii) such earlier date as termination may occur according to the number terms and conditions of shares of Common Stock for which such the Plan and/or the Stock Option Agreement; provided, however, provided, however, EMPLOYEE shall not theretofore have been exercised. The Company represents an irrevocable right to exercise any and warrants that no consents of the holders of the Stock Options are necessary all options to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable pursuant to this Section 7.04 shall be subject to any required withholding of taxes and shall be paid without interest. (c) The Stock Plans shall terminate as of the Effective Time of the Merger, and the provisions in any other Benefit Plan providing for the issuance, transfer or grant of any capital purchase common stock of the Company issued to him at any time, assuming such options are fully vested, through the final date on which such options are exercisable by EMPLOYEE; provided, further, EMPLOYEE shall not be bound by the terms of Section 6(f) of the Plan. (6) All Options to acquire common stock of COMPANY granted to EMPLOYEE during the term of this Agreement shall become 100% vested (to the extent such options are not otherwise fully vested at that time) upon (i) any merger or consolidation involving COMPANY if COMPANY is not the surviving corporation; (ii) any transfer of all or substantially all of the assets of COMPANY; (iii) any voluntary or involuntary dissolution of COMPANY; (iv) any material change in ownership of COMPANY which results in a change of a majority of the Board of Directors; or (v) if COMPANY or any interest successor or assignee of COMPANY should terminate this Agreement other than for Cause. In addition to the foregoing, in respect the event of any capital stock merger, consolidation, transfer of assets or change in ownership, the surviving or resulting corporation or the transferee of COMPANY's assets may terminate this Agreement without cause only upon payment to EMPLOYEE of a sum equal to EMPLOYEE's salary which would be payable under the remaining term of this Agreement pursuant to Section 5(a) assuming that COMPANY would allow the Agreement to expire at the earliest possible date by providing notice pursuant to Section 1; provided, further, that the provisions of the Company first sentence of this Section 5(d)(6) shall be deleted as of the Effective Time of the Merger, and the Company shall ensure that following the Effective Time of the Merger no holder of a Stock Option or any participant continue to apply in any Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving Corporationsuch event.

Stock Options. (a) Either prior to or Effective as soon as practicable following the consummation of the Offerdate hereof (the “Award Date”), the Company Board Corporation has granted ▇▇▇▇▇ ten (or, if appropriate, any committee administering 10) year non-qualified options for the Stock Plans) shall adopt such resolutions or take such other actions as are required purchase of up to adjust the terms of all outstanding Stock Options heretofore granted under any stock option program or arrangement 200,000 shares of the Company Corporation’s common stock, par value $0.01 per share (collectivelythe “Common Stock”) under the Corporation’s 2006 Stock Incentive Plan (“Plan”) at an exercise price of $5.11 per share, which represents the "Stock Plans") or any other closing stock option plan to provide that, at the Effective Time price of the Merger, each Corporation’s Common Stock Option outstanding on the trading date immediately prior to the acceptance for payment Award Date (the “Stock Option Grant”). The terms of the Stock Option Grant, including the vesting schedule, shall be as set forth in a separate option agreement executed by and between the parties. Such option agreement shall provide, among other things, that the options shall vest pro rata on a quarterly basis (commencing 90 days from the date hereof) over a period of four years, subject to acceleration as provided herein. Any subsequent stock option grants will be determined annually by the Board (and any committee of the Board delegated authority over employee compensation matters). The Corporation hereby represents and warrants to ▇▇▇▇▇ that the shares of Common Stock pursuant issuable upon exercise of the options referred to herein are covered by an existing effective registration statement of the Corporation on Form S-8 (a “Form S-8”). Notwithstanding anything to the Offer (whether or not vested) shall be canceled contrary contained in exchange for a cash payment by the Company of, or can only be exercised for net cash equal to, an amount equal to (i) the excessforegoing, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Common Stock subject to at any time such Stock Option, multiplied by (ii) the number of shares of Common Stock issuable upon exercise of the options referred to herein are not covered by an existing effective Form S-8, (a) the Corporation agrees that if, at any time, and from time to time, it shall authorize the filing of a registration statement under the Securities Act of 1933, as amended (the “Securities Act”), in connection with the proposed offer of any of its securities by it or any of its stockholders, the Corporation shall: (1) promptly notify ▇▇▇▇▇ that such registration statement to cover all such shares of Common Stock issuable upon exercise of the options referred to herein will be included in such registration statement at ▇▇▇▇▇’▇ request, (2) cause such registration statement to cover all such shares of Common Stock issuable upon exercises of the options referred to herein for which ▇▇▇▇▇ requests inclusion, (3) use best efforts to cause such registration statement to become effective as soon as practicable, and (4) take all other reasonable action necessary under any federal or state law or regulation of any governmental authority to permit all such shares of Common Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents issuable upon exercise of the holders options referred to herein to be sold or otherwise disposed of, and will maintain such compliance with each such federal and state law and regulation of any governmental authority for the Stock Options are period necessary for ▇▇▇▇▇ to effectuate promptly effect the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements proposed sale or the consummation of the Transactions. other disposition; and (b) All amounts payable pursuant to this Section 7.04 shall be subject to any required withholding ▇▇▇▇▇ may make a written request that the Corporation effect a registration under the Securities Act covering such shares of taxes and shall be paid without interest. (c) The Common Stock Plans shall terminate as issuable upon exercise of the Effective Time options referred to herein and the Corporation shall (1) use best efforts to cause such registration statement to become effective as soon as practicable, and (2) take all other reasonable action necessary under any federal or state law or regulation of any governmental authority to permit all such shares of Common Stock issuable upon exercise of the Mergeroptions referred to herein to be sold or otherwise disposed of, and the provisions in will maintain such compliance with each such federal and state law and regulation of any other Benefit Plan providing governmental authority for the issuance, transfer or grant of any capital stock of period necessary for ▇▇▇▇▇ to promptly effect the Company or any interest in respect of any capital stock of the Company shall be deleted as of the Effective Time of the Merger, and the Company shall ensure that following the Effective Time of the Merger no holder of a Stock Option or any participant in any Stock Plan proposed sale or other Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving Corporationdisposition.

Stock Options. (a) Either prior to or as As soon as practicable following the consummation date of this Agreement, the board of directors of the Offer, the Company Board (or, if appropriate, any committee administering the Trinity Hospice, Inc. 2002 Stock PlansOption Plan (the “Stock Option Plan”)) shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Stock Options heretofore granted under any stock option program or arrangement of the Company (collectively, the "Stock Plans") or any other stock option plan to provide that, at the Effective Time of the Merger, each Stock Option outstanding immediately prior give notice to the acceptance for payment of shares of Common Stock pursuant to the Offer (whether or not vested) shall be canceled in exchange for a cash payment by the Company of, or can only be exercised for net cash equal to, an amount equal to (i) the excess, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Common Stock subject to such Stock Option, multiplied by (ii) the number of shares of Common Stock for which optionholders under such Stock Option shall not theretofore have been exercised. The Plan of a proposed change of control event so that such optionholders must exercise any outstanding Company represents and warrants that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the within thirty (30) days or such Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the TransactionsOptions terminate. (b) All amounts payable pursuant Prior to this the Effective Time and effective upon the expiration of the 30-day notice period described in Section 7.04 3.03(a), the board of directors of the Company shall be subject adopt resolutions to any required withholding of taxes and shall be paid without interest. (c) The terminate the Stock Plans shall terminate Option Plan as of the Effective Time of the Merger, and the terminating provisions in any other Benefit Trinity Plan providing for the issuance, transfer or grant of any capital stock of Sunrise, the Company Company, the Surviving Corporation or any of their respective subsidiaries or any interest in respect of any capital stock of Sunrise, the Company shall be deleted Company, the Surviving Corporation or any of their respective subsidiaries (including any “phantom” stock, “phantom” stock rights, stock appreciation rights or stock-based performance units) as of the Effective Time of the MergerTime, and the Company shall ensure that following as of the Effective Time of the Merger (i) that no holder of a Company Stock Option or any participant in any Stock Trinity Plan or other Benefit Plan Contract shall have any right thereunder to acquire any capital stock of Sunrise, the Company, the Surviving Corporation or any of their respective subsidiaries or any interest in respect of any capital stock of Sunrise, the Company, the Surviving Corporation or any of their respective subsidiaries (including any “phantom” stock, “phantom” stock rights, stock appreciation rights or stock-based performance units) and (ii) that no holder of a Company Stock Option shall have any right to payment from Sunrise, the Company, the Surviving Corporation or any of their respective subsidiaries in respect of such Company Stock Option. In addition to and not in limitation of the foregoing provisions of this Section 3.03, the board of directors of the Company shall take all action necessary to cause the cancellation of the Company Stock Options at or prior to the Surviving CorporationEffective Time, including obtaining any consents, waivers or acknowledgments from holders of Company Stock Options or other Equity Interests that are necessary to give effect to the transactions contemplated by this Section 3.03.

Stock Options. (a) Either prior On the Effective Date, Simmons shall be granted pursuant to or as soon as practicable following the consummation The Nasdaq Stock Mark▇▇, ▇▇▇. Equity Compensation Plan (the "Stock Plan") which has been adopted by the Board and may from time to time be amended, an option to purchase 2,000,000 shares of Nasdaq common stock (subject to applicable adjustments pursuant to Section 4(b) of the OfferStock Plan), with a term of 10 years from the Company Board (or, if appropriate, any committee administering date of grant and an option exercise price equal to the Stock Plans) fair market value of Nasdaq common stock on the date of grant. Fair market value shall adopt such resolutions or take such other actions as are required to adjust be determined under the terms of all outstanding the Stock Options heretofore granted under any stock Plan. Subject to Simmons continued employment with Nasdaq, such option program or arrangement shall be▇▇▇▇ ▇▇ercisable (vest) with respect to one-third (1/3) of the Company (collectively, shares underlying the "Stock Plans") or any other stock option plan to provide that, at the Effective Time on each of the Mergerfirst, each Stock Option outstanding immediately prior to the acceptance for payment second, and third anniversaries of shares of Common Stock pursuant to the Offer (whether or not vested) shall be canceled in exchange for a cash payment by the Company of, or can only be exercised for net cash equal to, an amount equal to (i) the excess, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Common Stock subject to such Stock Option, multiplied by (ii) the number of shares of Common Stock for which such Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreementgrant. Notwithstanding the foregoing, neither upon a Change in Control (as defined in the Company Board nor any committee thereof Stock Plan) the terms set forth in the Stock Plan shall cause any Stock Option apply to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable pursuant to this Section 7.04 such option. Such option shall be subject to all the terms and conditions of the Stock Plan, including, without limitation, any required withholding repurchase rights. Upon any termination of taxes Simmons' employment hereunder prior to the end of the Term by ▇▇▇▇▇▇▇ for Good Reason or by Nasdaq without Cause (and not on ▇▇▇▇▇▇t of death or Permanent Disability), such option to the extent not then vested shall fully vest and shall remain exercisable through the expiration of its term. In the event that Simmons is terminated on account of his death or Permanent Dis▇▇▇▇▇▇▇, such option to the extent vested shall remain exercisable for a period of 365 days following such termination. In the event that Simmons is terminated on account of Cause, such option shall i▇▇▇▇▇▇▇ely expire upon such termination without further consideration to Simmons. In the event that Simmons' employ▇▇▇▇ ▇▇reunder is terminated by Simmons other t▇▇▇ ▇▇▇ Good Reason or death prior to the end o▇ ▇▇▇ ▇erm, such option to the extent vested shall expire ninety (90) days following such termination of employment by Simmons. In the event that the Term shall ▇▇▇ ▇▇▇ shall not be paid without interestrenewed pursuant to Paragraphs 4 and 10, such option shall continue through the expiration of its term. (c) The Stock Plans shall terminate as of the Effective Time of the Merger, and the provisions in any other 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 of the Merger, and the Company shall ensure that following the Effective Time of the Merger no holder of a Stock Option or any participant in any Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving Corporation.

Stock Options. (a) Either prior a. All stock options relating to or as soon as practicable following the consummation of the Offer, the Company Board (or, if appropriate, any committee administering the Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Stock Options heretofore granted under any stock option program or arrangement of the Company (collectively, the "Stock Plans") or any other stock option plan to provide that, at the Effective Time of the Merger, each Stock Option outstanding immediately prior to the acceptance for payment of shares of Common Stock pursuant to the Offer (whether or not vested) shall be canceled in exchange for a cash payment by the Company of, or can only be exercised for net cash equal to, an amount equal to (i) the excess, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Common Stock subject to such Stock Option, multiplied by (ii) the number of shares of Common Stock for which such Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable pursuant to this Section 7.04 shall be subject to any required withholding of taxes and shall be paid without interest. (c) The Stock Plans shall terminate as of the Effective Time of the Merger, and the provisions in any other Benefit Plan providing for the issuance, transfer or grant of any capital stock securities of the Company or any interest subsidiary or affiliate, held by ▇▇▇▇▇▇, or any person or entity related to him (the "Options"), to the extent not previously vested, shall immediately fully vest and be exercisable, without regard to any vesting terms to the contrary contained in any plan or agreement pursuant to which any such Options were granted. A schedule of Options subject to this Section 4, is attached hereto as Exhibit "B". Notwithstanding the foregoing, with respect to the 600,000 Options to purchase Company common stock under "ID 1650", granted to ▇▇▇▇▇▇ ▇▇▇▇▇ 26, 2000, under the Company's Amended and Restated 1997 Incentive and Non-Qualified Stock Option Plan (ID 1650), the Company has the repurchase rights as set forth in the Stock Repurchase Agreement ("Repurchase Agreement"), attached hereto as Exhibit "C". b. The period for exercise of any capital stock Option shall not expire or terminate until the final expiration date set forth in the applicable plan or agreement pursuant to which any such Options were granted, regardless of Chadha's change in status from officer, employee and/or director of the Company shall be deleted as to consultant, and regardless of any subsequent termination or expiration of this Agreement, the Effective Time Exhibits hereto, or any option plans. c. If any term or provision of any option plan, or agreement heretofore entered into between the Mergerparties pursuant to such plan, conflicts with the terms hereof, then such term or provision is hereby waived and/or modified, to the fullest extent required to effectuate the intent of this Section 4, to the extent permitted by law, and the Company shall ensure that following take all such steps as are necessary to cause such conflicting term or provision to be waived, modified or amended in accordance herewith. d. In connection with the Effective Time exercise of any or all Options, the Company will lend the holder, upon request, up to 100% of the Merger no holder purchase price for the shares purchased, at the AFR rate then prevailing under Section 7872 of the Internal Revenue Code. Any loan will be evidenced by a Stock Option promissory note payable with accrued interest in 24 months from the date of the loan, and a pledge of the shares purchased. Alternatively, if the Company then has in effect another program to facilitate exercise of outstanding options held by other persons, that program will also be available with respect to the Options. e. Any existing or future programs that the Company develops for any participant holders of outstanding options to reflect and adjust for corporate transactions, (including, without limitation, any and all dividends and distributions in any Stock Plan cash, stock of other companies, property, or grant and or forgiveness of loans or other Benefit Plan shall have any right thereunder obligations), will also be available with respect to acquire any capital stock of the Company or the Surviving CorporationOptions.

Stock Options. (a) Either prior Pursuant to or as soon as practicable following an equity award plan to be adopted by the consummation Board of Directors after the OfferEffective Date hereof and similar to the American Commercial Lines Inc. Equity Award Plan for Employees, Officers and Directors, adopted by the Board on January 10, 2005, the Company Board (or, if appropriate, any committee administering the Stock Plans) shall adopt such resolutions or take such other actions as are required to adjust the terms of all outstanding Stock Options heretofore granted under any stock option program or arrangement of the Company (collectively, the "Stock Plans") or any other stock option plan to provide that, at the Effective Time of the Merger, each Stock Option outstanding immediately prior grant to the acceptance for payment of Executive options to purchase 14,018 shares of Common Stock (the "Options"), representing approximately one quarter per cent (0.25%) of the issued and outstanding shares of Common Stock as of the Effective Date with an exercise price per share equal to the fair market value of a share of Common Stock on the Effective Date. Such grant of Options shall be effective upon the Board's approval of such equity award plan pursuant to which such Options may be granted. For purposes hereof, as determined by the Offer (whether or not vested) bankruptcy court, upon emergence from Chapter 11 proceedings, the "fair market value" of the Common Stock means $[18.00] per share. The Options shall be canceled restricted and non-transferable, as set forth in exchange the Stock Option Agreement, in the forms attached hereto as Exhibit B. To the extent permitted by applicable law, the Options shall be incentive stock options in each year and, with respect to any Options that are vested, shall be exercisable for the applicable periods set forth in the Stock Option Agreement. The term of the Options shall be for a cash payment period of ten (10) years following the date of the grant of the Options hereunder, shall vest on a pro rata basis over a period of three (3) years following the date of grant, shall be exercisable, to the extent vested, for the periods set forth in the Stock Option Agreement, and shall be subject to such other terms and conditions not inconsistent with the terms of this Agreement as are set forth in the Stock Option Agreement to be executed by the Company ofand Executive and as determined by the Compensation Committee. Executive shall not be entitled to any rights with respect to the Common Stock underlying the Options, including the right to vote or can only be exercised for net cash equal toreceive dividends or distributions with respect to any of the Common Stock underlying the Options, an amount equal to until such Options (ior any portion thereof) the excesshave been exercised. Any future awards of options, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Common Stock subject to such Stock Option, multiplied by (ii) the number of shares of Common Stock for which such Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents of the holders of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable pursuant to this Section 7.04 shall be subject to any required withholding of taxes and shall be paid without interestperformance-based vesting requirements. (c) The Stock Plans shall terminate as of the Effective Time of the Merger, and the provisions in any other 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 of the Merger, and the Company shall ensure that following the Effective Time of the Merger no holder of a Stock Option or any participant in any Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving Corporation.

Stock Options. (a) Either Neither Parent nor the Surviving Corporation shall assume any Stock Options in connection with the transactions contemplated by this Agreement. Accordingly, pursuant to the terms of the Company's 1993 Stock Option Plan, 1996 Stock Option Plan and 1999 Supplemental Stock Option Plan (collectively, and together with the Company ESPP, the "Company Stock Plans"), (i) each outstanding Stock Plan Option shall automatically accelerate so that each such Stock Plan Option shall, immediately prior to the Effective Time, become fully exercisable for all of the shares of Company Common Stock at the time subject to such Stock Plan Option and may be exercised by the holder thereof for any or all of such shares as fully-vested shares of Company Common Stock and (ii) upon the Effective Time, all outstanding Stock Plan Options, to the extent not exercised prior to the Effective Time, shall terminate and shall cease to be outstanding. In addition, as soon as practicable following the consummation date of this Agreement, the Board of Directors of the Offer, the Company Board (or, if appropriateapplicable, any committee administering the person or persons with the requisite authority under the Non-Plan Stock PlansOptions) shall adopt such resolutions or take such other actions (including, if necessary, obtaining any required consents from holders) as are may be required to adjust the terms of all cause (i) each outstanding Stock Options heretofore granted under any stock option program or arrangement of the Company (collectively, the "Stock Plans") or any other stock option plan to provide that, at the Effective Time of the Merger, each Non-Plan Stock Option outstanding to be, immediately prior to the acceptance Effective Time, fully exercisable for payment all of the shares of Company Common Stock pursuant to at the Offer (whether or not vested) shall be canceled in exchange for a cash payment by the Company of, or can only be exercised for net cash equal to, an amount equal to (i) the excess, if any, of (A) the price per share of Common Stock to be paid pursuant to the Offer over (B) the exercise price per share of Common Stock time subject to such Non-Plan Stock Option, multiplied and exercisable by the holder thereof for any or all of such shares as fully-vested shares of Company Common Stock and (ii) upon the number Effective Time, all outstanding Non-Plan Stock Options, to the extent not exercised prior to the Effective Time, shall terminate and shall cease to be outstanding. (b) The rights of shares participants in the Company's Employee Stock Purchase Plan (the "Company ESPP") with respect to any offering underway immediately prior to the Effective Time shall be determined in accordance with the provisions of Common Stock for which such Stock Option shall not theretofore have been exercised. The Company represents and warrants that no consents Section VII.G. of the holders Company ESPP as in effect as of the Stock Options are necessary to effectuate the foregoing cash-out. After the date of this Agreement. Each share of Company Common Stock purchased under such offering shall, neither the Company Board nor any committee thereof shall cause any Stock Option to become exercisable as a result of the execution of the Operative Agreements or the consummation of the Transactions. (b) All amounts payable pursuant to this Section 7.04 shall be subject to any required withholding of taxes and shall be paid without interest. (c) The Stock Plans shall terminate as of the Effective Time by virtue of the Merger, and without any action on the provisions part of the holder thereof, be converted into the right to receive a number of shares of Parent Common Stock equal to the Exchange Ratio, without issuance of certificates representing issued and outstanding shares of Company Common Stock to participants under the Company ESPP. As of the Effective Time, the Company ESPP shall be automatically terminated in any other Benefit Plan providing for the issuance, transfer or grant of any capital stock accordance with Section IX.B.(iii) of the Company or any interest in respect of any capital stock of the Company shall be deleted as of the Effective Time of the Merger, and the Company shall ensure that following the Effective Time of the Merger no holder of a Stock Option or any participant in any Stock Plan or other Benefit Plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving CorporationESPP.