Exhibit 10.3

LSB INDUSTRIES, INC.

1993 STOCK OPTION AND INCENTIVE PLAN

The Board of Directors of LSB Industries, Inc., a Delaware corporation (the
“Company”), has adopted this 1993 Stock Option and Incentive Plan (the “Plan”),
effective the              day of                     , 1993, as follows:

1. Purpose. This Plan permits selected officers and key employees, prospective
employees, consultants and independent contractors of the Company or any
Subsidiary who bear a large measure of responsibility for the success of the
Company to acquire and retain a proprietary interest in the Company and to
participate in the future of the Company as shareholders. The purpose of this
Plan is to advance the interests of the Company and its share holders by
enabling the Company and the subsidiaries to offer to its employee-directors,
officers, key employees, consultants and independent contractors, long-term
performance-based stock and/or other equity interests in the Company, thereby
enhancing its ability to attract, retain and reward such individuals, and by
providing an incentive for employee-directors, officers, key employees to render
outstanding service to the Company and to the Company’s shareholders.

2. Definitions. For purposes of the Plan, the following terms shall be defined
as set forth herein:

 

  2.1 “Act” means the Securities Act of 1933, as amended from time to time, or
any successor statute or statutes thereto.

 

  2.2 “Agreement” means the agreement between the Company and the Holder setting
forth the terms and conditions of an award under the Plan.

 

  2.3 “Board” means the Board of Directors of the Company.

 

  2.4 “Change of Control” means a change of control of the Company pursuant to
Section 8.2 hereof.

 

  2.5 “Code” means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute or statutes thereto.

 

  2.6 “Committee” means the Stock Option Committee of the Board or any other
committee of the Board which the Board may designate. In all events, the
Committee shall consist only of non-employee directors of the Company.

 

  2.7 “Common Stock” means the Common Stock of the Company, par value $.10 per
share.

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  2.8 “Disability” means disability as determined under the procedures
established by the Committee for purposes of the Plan.

 

  2.9 “Exchange Act” means the Securities Exchange Act of 1934, as amended from
time to time, or any successor statute or statutes thereto.

 

  2.10 “Fair Market Value”, unless otherwise required by any applicable
provision of the Code or any regulations issued thereunder, means, as of any
given date:

 

  2.10.1 the closing price of the Common Stock on the last preceding day on
which the Common Stock was traded, as reported on a national securities
exchange; and,

 

  2.10.2 if the fair market value of the Common Stock cannot be determined
pursuant to clause (i) hereof, such price as the Committee shall determine.

 

  2.11 “Formula Price Per Share” means the highest gross price (before brokerage
commissions, soliciting dealers’ fees and similar charges) paid for any share of
Common Stock at any time during the ninety (90) day period immediately prior to
the Change of Control (whether by way of exchange, conversion, distribution,
liquidation or otherwise) paid or to be paid for any share of Common Stock in
connection with a Change of Control. If the consideration paid or to be paid in
any transaction that results in a Change of Control consists, in whole or in
part, of consideration, other than cash, the Board shall take such action, as in
its judgment it deems appropriate, to establish the cash value of such
consideration, but such valuation shall not be less than the value, if any,
attributed to such consideration by any other party to such transaction that
results in a Change of Control.

 

  2.12 “Holder” means an eligible employee-director, officer, key employee,
consultant or independent contractor of the Company or a Subsidiary who has
received an award under the Plan.

 

  2.13 “Incentive Stock Option” or “ISO” means any Stock Option intended to be
and designated as an “incentive stock option” within the meaning of Section 422
of the Code.

 

  2.14 “Non-Qualified Stock Option” means any Stock Option that is not an
Incentive Stock Option.

 

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  2.15 “SAR Value” means the excess of the Fair Market Value of one share of
Common Stock over the exercise price per share specified in a related Stock
Option in the case of a Stock Appreciation Right granted in tandem with a Stock
Option and the Stock Appreciation Right price per share in the case of a Stock
Appreciation Right awarded on a free-standing basis multiplied by the number of
shares in respect of which the Stock Appreciation Right shall be exercised, on
the date of exercise.

 

  2.16 “Section 16(b) Holder” means such officer or director or ten percent
(10%) beneficial owner of Common Stock subject to Section 16(b) of the Exchange
Act.

 

  2.17 “Stock Appreciation Right” means the right, pursuant to an award granted
under Section 7 hereof, to recover an amount equal to the SAR Value.

 

  2.18 “Stock Option” means any Incentive Stock Option or Non-Qualified Stock
Option to purchase shares of Common Stock which is awarded pursuant to this
Plan.

 

  2.19 “Subsidiary” means any present or future subsidiary corporation of the
Company, as such term is defined in Section 424(f) of the Code.

 

3. Administration.

 

  3.1 Board; Committee. The Board shall create a committee consisting of three
members of the Board. The Board may also appoint one member of the Board as an
alternate member of the Committee. Upon such appointment, the Committee shall
have all the powers, privileges and duties set forth herein. The Board may, from
time to time, appoint members of any such Committee in substitution for, or in
addition to, members previously appointed, may fill vacancies in the Committee
and may discharge the Committee. The Committee shall select one of its members
as its Chairman and shall hold its meetings at such times and places as it shall
deem advisable. A majority of its members shall constitute a quorum and all
determinations shall be made by a majority of such quorum. Any determination
reduced to writing and signed by a majority of the members of the Committee,
shall be fully effective and a valid act of the Committee as if it had been made
by a majority vote at a meeting duly called and held. The membership of the
Committee shall at all times be constituted so as to not adversely affect the
compliance of the Plan with the requirements of Rule 16b-3 under the Exchange
Act, to the extent it is applicable, or with the requirements of any other
applicable law, rule or regulation.

 

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  3.2 Power and Authority. The Committee shall have full power and authority to
do all things necessary or appropriate to administer this Plan according to its
terms and provisions (excluding the power to appoint members of the Committee
and to terminate, modify, or amend the Plan, except as otherwise authorized by
the Board), including, but not limited to the full power and authority (subject
to the express provisions of this Plan):

 

  3.2.1 to award Stock Options and Stock Appreciation Rights, pursuant to the
terms of this Plan, to eligible individuals described under Section 5 hereof;

 

  3.2.2 to select the eligible individuals to whom Stock Options or Stock
Appreciation Rights, or any combination thereof, if any, may from time to time
be awarded hereunder;

 

  3.2.3 to determine the Incentive Stock Options, Non-Qualified Stock Options,
Stock Appreciation Rights, or any combination thereof, if any, to be awarded
hereunder to one or more eligible employees or persons;

 

  3.2.4 to determine the number of shares to be covered by each award granted
hereunder;

 

  3.2.5 to determine the terms and conditions not inconsistent with the terms of
the Plan, of any award hereunder (including, but not limited to, share price,
any restrictions or limitations, and any vesting, exchange, surrender,
cancellation, acceleration, termination, exercise or forfeiture provisions, as
the Committee shall determine);

 

  3.2.6 to determine any specified performance goals or such other factors or
criteria which need to be attained for the vesting of an award granted
hereunder;

 

  3.2.7 to determine the terms and conditions under which awards hereunder are
to operate on a tandem basis and/or in conjunction with or apart from other
equity awarded under this Plan and cash awards made by the Company or any
Subsidiary outside of this Plan;

 

  3.2.8

to determine the extent and circumstances under which Common Stock and other
amounts payable with respect to an award hereunder

 

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shall be deferred, which may be either automatic or at the election of the
Holder; and

 

  3.2.9 to substitute (i) new Stock Options for previously granted Stock
Options, which previously granted Stock Options have higher option exercise
prices and/or contain other less favorable terms, and (ii) new awards of any
other type for previously granted awards of the same or other type, which
previously granted awards are upon less favorable terms.

 

  3.3 Interpretation of Plan.

 

  3.3.1 Subject to Sections 3.2 and 9 hereof, the Committee shall have the
authority at its discretion to adopt, alter and repeal such general and special
administrative rules, regulations, and practices governing the Plan as it shall,
from time to time, deem advisable, to construe and interpret the terms and
provisions of this Plan and any award issued under this Plan (and to determine
the form and substance of all Agreements relating thereto), and to otherwise
supervise the administration of this Plan.

 

  3.3.2 Anything in this Plan to the contrary notwithstanding, no term of this
Plan relating to Incentive Stock Options shall be interpreted, amended or
altered, nor shall any discretion or authority granted under this Plan be so
exercised, so as to disqualify the Plan under Section 422 of the Code, or,
without the consent of the Holder(s) affected, to disqualify any Incentive Stock
Option under Section 422 of the Code.

 

  3.3.3 Subject to Sections 3.2 and 9 hereof, all decisions made by the
Committee pursuant to the provisions of this Plan shall be made in the
Committee’s sole discretion and shall be final and binding upon all persons
granted options pursuant to the Plan.

 

4. Shares Subject to Plan.

 

  4.1

Number of Shares. The aggregate number of shares of Common Stock reserved and
available for distribution under this Plan shall be 850,000 shares. If any
shares of Common Stock that are subject to a Stock Option or Stock Appreciation
Right cease to be subject to such

 

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Stock Option or Stock Appreciation Right, or any such award otherwise terminates
without a payment being made to the Holder in the form of Common Stock, such
shares shall again be available for distribution in connection with future
grants and awards under this Plan. The number of shares available for
distribution under this Plan shall be reduced by the number of shares of Common
Stock issued under this Plan upon the exercise of a Stock Option.

 

  4.2 Character of Shares. The Company may elect to satisfy its obligations to a
Holder exercising a Stock Option entirely by issuing authorized and unissued
shares of Common Stock to such Holder, entirely by transferring treasury shares
to such Holder, or in part by the issue of authorized and unissued shares and
the balance by the transfer of treasury shares.

 

5. Eligibility.

 

  5.1 General. Awards under this Plan may be made to: (i) officers and other key
employees of the Company or any Subsidiary who are at the time of the grant of
an award under this Plan regularly employed by the Company or any Subsidiary,
including any full time salaried officer or employee who is a member of the
Board (except as provided in the last sentence under Section 3.1); and,
(ii) consultants or independent contractors whom the Board believes have
contributed or will contribute to the success of the Company.

 

  5.2 Multiple Awards. The Committee shall from time to time designate such
employees, consultants or independent contractors to whom options are to be
granted, and the number of shares to be subject to each option. The Committee
may at any time grant one or more Stock Options or Stock Appreciation Rights or
a combination thereof to an individual to whom a Stock Option or Stock
Appreciation Right has previously been granted under this or any other stock
option plan of the Company, whether or not such previously granted Stock Option
or Stock Appreciation Right has been fully exercised.

 

  5.3

Ineligibility for Awards. No person designated by the Board to serve on the
Committee, effective at such future time so that he qualifies as a
“disinterested person” within the meaning of Rule 16b-3(c) of the Exchange Act,
shall be eligible to receive any awards under the Plan during the period from
the date such designation is made to the date such designation becomes
effective. Notwithstanding Section 5.1 hereof,

 

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no member of the Committee, while serving as such, shall be eligible to receive
an award under the Plan.

 

6. Stock Options.

 

  6.1 Grant and Exercise. Stock Options granted under the Plan may be of two
types: (i) Incentive Stock Options and (ii) Non-Qualified Stock Options. Only
full-time salaried officers or employees may be granted Incentive Stock Options.
Any individual eligible to participate under this Plan may be granted
Non-Qualified Stock Options. Any Stock Option granted under the Plan shall
contain such terms, not inconsistent with this Plan, as the Committee may from
time to time approve. The Committee shall have the authority to grant to any
eligible individual Incentive Stock Options, Non-Qualified Stock Options, or
both types of Stock Options and, in each case, may be granted alone, in tandem
with, or without, or in addition to Stock Appreciation Rights. To the extent
that any Stock Option (or portion thereof) does not qualify as an Incentive
Stock Option, it shall constitute a separate Non-Qualified Stock Option. Unless
granted in substitution for another outstanding award, Stock Options shall be
granted for no consideration other than services to the Company or a Subsidiary.

 

  6.2 Exercise Price.

 

  6.2.1 Less Than 10% Shareholder. The exercise price in any option granted
under this Plan to an individual who, at the time the Stock Option is granted,
does not own stock possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or of any Subsidiary
(computed in accordance with the provisions applicable to Section 422(b)(6) of
the Code) (a “less than 10% Shareholder”) shall be not less than the Fair Market
Value of the shares of Common Stock subject to the Stock Option at the time the
Stock Option is granted, determined by the Committee in accordance with the
applicable regulations and rulings of the Commissioner of the Internal Revenue
Service in effect at the time the Stock Option is granted.

 

  6.2.2

10% Shareholder. The exercise price in any option granted under the Plan to an
individual who is not a less than ten percent (10%) Shareholder (a “10%
Shareholder”) shall be not less than one hundred ten percent (110%) of the Fair
Market Value of the shares of Common

 

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Stock subject to the Stock Option at the time the Stock Option is granted,
determined in accordance with the applicable regulations and rulings of the
Commissioner of the Internal Revenue Service in effect at the time the Stock
Option is granted.

 

  6.3 Option Term. The term of each Stock Option shall be fixed by the Board,
but no Stock Option shall be exercisable more than ten (10) years (five
(5) years, in the case of an Incentive Stock Option granted to a 10%
Shareholder) after the date on which the Stock Option is granted.

 

  6.4 Exercise of Non-Qualified Stock Options. Non-Qualified Stock Options shall
be exercisable at such time or times and subject to such terms and conditions as
shall be determined by the Committee; provided, however, that no Non-Qualified
Stock Option granted under this Plan may be exercised until after the expiration
of six (6) months from the date the Stock Option is granted. If the Committee
provides, in its discretion, that any Stock Option is exercisable only in
installments, the Committee may waive such installment exercise provisions at
any time at or after the time of grant in whole or in part, based upon such
factors as the Committee shall determine; provided that the Committee cannot
waive the requirement that the Stock Option may not be exercised until after the
expiration of six (6) months from the date the Stock Option is granted.

 

  6.5 Exercise of Incentive Stock Options.

 

  6.5.1 By an Employee. No Incentive Stock Option granted under this Plan shall
be exercisable after the expiration of ten (10) years from the date such ISO is
granted, except that no ISO granted to a person who is not a less than 10%
Shareholder shall be exercisable after the expiration of five (5) years from the
date such option is granted. Employment by a Subsidiary shall be employment by
the Company. Unless such requirements are waived by the Committee, the employee,
while still in the employment of the Company, may exercise the options as
follows:

 

  6.5.1.1   at any time after one (1) year of continuous employment from the
date such ISO is granted, as to twenty percent (20%) of the shares subject to
the option;

 

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  6.5.1.2   at any time after two (2) years of such continuous employment from
the date such ISO is granted, as to an additional twenty percent (20%) of the
shares subject to the option;

 

  6.5.1.3   at any time after three (3) years of such continuous employment from
the date such ISO is granted, as to an additional thirty percent (30%) of the
shares subject to the option; and

 

  6.5.1.4   at any time after four (4) years of such continuous employment from
the date such ISO is granted, as to all of the shares remaining subject to the
option.

The Committee may decide in each case to what extent leaves of absence for
government or military service, illness, temporary disability, or other reasons,
shall not interrupt continuous employment.

 

  6.5.2 Termination of Employment. Except as otherwise expressly provided in
Sections 6.5.3 and 6.5.4 of this Plan or in the Agreement, no Stock Option may
be exercised at any time unless the Holder thereof is then an employee of the
Company or a Subsidiary.

 

  6.5.3 By a Former Employee. No person may exercise an ISO after he is no
longer an employee of the Company or any Subsidiary; except that if an employee
ceases to be an employee on account of physical or mental disability as defined
in Section 22(e)(3) of the Code (“Former Employee”), he may exercise the ISO
within twelve (12) months after the date on which he ceased to be an employee,
for the number of shares for which he could have exercised at the time he ceased
to be an employee. No ISO granted under this Plan shall in any event be
exercised by such Former Employee after the expiration of ten (10) years from
the date such ISO is granted, except that no ISO granted to a person who is a
10% Shareholder may be exercisable after the expiration of five (5) years from
the date such ISO is granted.

 

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  6.5.4 In Case of Death. If any employee or Former Employee who was granted an
ISO dies prior to the termination of such ISO, such ISO may be exercised within
twelve (12) months after the death of the employee or Former Employee by his
estate, or by a person who acquired the right to exercise such ISO by bequest or
inheritance, or by reason of the death of such employee or Former Employee,
provided that:

 

  6.5.4.1   such employee died while an employee of the Company or a Subsidiary;
or

 

  6.5.4.2   such Former Employee had ceased to be an employee of the Company or
a Subsidiary on account of physical or mental disability and died within three
(3) months after the date on which he ceased to be such employee.

Such ISO may be exercised only as to the number of shares for which he could
have exercised at the time the employee or Former Employee died. No ISO granted
under this Plan shall in any event be exercised in case of death of an employee
or Former Employee after the expiration of ten (10) years from the date such ISO
is granted, except that no ISO granted to a 10% Shareholder shall be exercisable
after the expiration of five (5) years from the date such ISO is granted.

 

  6.5.5 The Committee may, in its discretion, waive the installment exercise
provisions at any time at or after the time of grant, in whole or in part, based
on such factors as the Committee shall determine; provided that at all times no
ISO may be exercised until the expiration of six (6) months from the date that
the Stock Option was granted.

 

  6.6 Termination of Options. A Stock Option granted under this Plan shall be
considered terminated, in whole or in part, to the extent that it can no longer
be exercised for shares originally subject to it, provided that a Stock Option
granted shall be considered terminated at an earlier date upon surrender for
cancellation by the Holder to whom such Stock Option was granted.

 

  6.7

Notice of Exercise and Payment. Subject to any installment, exercise and waiting
period provisions that are applicable in a particular case, Stock Options

 

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granted under this Plan may be exercised, in whole or in part, at any time
during the term of the Stock Option, by giving written notice of such exercise
to the Company identifying the Stock Option being exercised and specifying the
number of shares then being purchased. Such notice shall be accompanied by
payment in full of the exercise price, which shall be in cash or, unless
otherwise provided in the Agreement, in whole shares of Common Stock which are
already owned by the Holder of the Stock Option or, unless otherwise provided in
the Agreement, partly in cash and partly in such Common Stock. Cash payments
shall be made by wire transfer, certified check or bank check or personal check,
in each case payable to the order of the Company; provided, however, that the
Company shall not be required to deliver certificates for shares of Common Stock
with respect to which a Stock Option is exercised until the Company has
confirmed the receipt of good and valuable funds in payment of the purchase
price thereof. Payments in the form of Common Stock (which shall be valued at
the Fair Market Value of a share of Common Stock on the date of exercise) shall
be made by delivery of stock certificates in negotiable form which are effective
to transfer good and valid title thereto to the Company, free of any liens or
encumbrances, with signature guaranteed by a bank or investment banking firm.

 

  6.8 Issuance of Shares. As soon as practicable after its receipt of such
notice and payment, the Company shall cause one or more certificates for the
shares so purchased to be delivered to the Holder or his or her estate, as the
case may be. No Holder or estate shall have any of the rights of a shareholder
with reference to shares of Common Stock subject to a Stock Option until after
the Stock Option has been exercised in accordance with Section 6.7 and
certificates representing the shares of Common Stock so purchased by the Holder
pursuant to the Stock Option have been delivered to the Holder or estate.

 

  6.9 Partial Exercise. A Stock Option granted under this Plan may be exercised
as to any part of the shares for which it could be exercised. Such a partial
exercise of a Stock Option shall not affect the right to exercise the Stock
Option from time to time in accordance with this Plan as to the remaining shares
of Common Stock subject to the Stock Option.

 

  6.10

$100,000 Per Year Limitation. To the extent that the aggregate Fair Market Value
of Common Stock with respect to which Incentive Stock Options are exercisable
for the first time by a Holder during any

 

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calendar year (under all of the Company’s plans) exceeds $100,000, such excess
Stock Options shall be treated as Non-Qualified Stock Options for purposes of
Section 422 of the Code.

 

  6.11 Buyout and Settlement Provisions. The Committee may at any time offer to
buy out for cash or otherwise settle a Stock Option previously granted, based
upon such terms and conditions as the Committee shall establish and communicate
to the Holder at the time that such offer is made, including a settlement for
exchange of a different award under the Plan for the surrender of the Stock
Option.

 

7. Stock Appreciation Rights.

 

  7.1 Grant and Exercise. Stock Appreciation Rights may be granted in tandem
with (“Tandem Stock Appreciation Right”) or in conjunction with all or part of
any Stock Option granted under this Plan or may be granted on a free-standing
basis. In the case of a Non-Qualified Stock Option, a Tandem Stock Appreciation
Right may be granted either at or after the time of the grant of such
Non-Qualified Stock Option. In the case of an Incentive Stock Option, a Tandem
Stock Appreciation Right may be granted only at the time of the grant of such
Incentive Stock Option. Unless granted in substitution for another outstanding
award, Stock Appreciation Rights shall be granted for no consideration other
than services to the Company or a Subsidiary.

 

  7.2 Termination. A Tandem Stock Appreciation Right shall terminate and shall
no longer be exercisable upon the termination or exercise of the related Stock
Option, except that, unless otherwise determined by the Board, a Tandem Stock
Appreciation Right granted with respect to less than the full number of shares
covered by a related Stock Option shall not be reduced until after the number of
shares remaining under the related Stock Option equals the number of shares
covered by the Tandem Stock Appreciation Right.

 

  7.3 Method of Exercise. A Tandem Stock Appreciation Right may be exercised by
a Holder, in accordance with Section 7.4 hereof, by surrendering the applicable
portion of the related Stock Option. Upon such exercise and surrender, the
Holder shall be entitled to receive such amount in the form of payment
determined in the manner prescribed in Section 7.5 hereof. Stock Options which
have been so surrendered, in whole or in part, shall no longer be exercisable to
the extent Tandem Stock Appreciation Rights have been exercised.

 

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  7.4 Exercisability. Tandem Stock Appreciation Rights shall be exercisable only
at such time or times and to the extent that the Stock Options to which they
relate shall be exercisable in accordance with the provisions of Section 6
hereof and this Section 7, and may be subject to such additional limitations on
exercisability as shall be determined by the Committee and set forth in the
Agreement. Other Stock Appreciation Rights shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by the
Committee and set forth in the Agreement. Notwithstanding anything to the
contrary contained herein (including the provisions of Section 8.1 hereof), any
Stock Appreciation Right granted to a Section 16(b) Holder to be settled wholly
or partially in cash (i) shall not be exercisable during the first six
(6) months of the term of such Stock Appreciation Right, except that this
special limitation shall not apply in the event of death or disability of such
Holder prior to the expiration of the six (6) month period, and (ii) shall only
be exercisable during the period beginning on the third business day following
the date of release for publication of the Company of quarterly or annual
summary statements of sales and earnings and ending on the twelfth (12) business
day following such date.

 

  7.5 Receipt of SAR Value. Upon the exercise of a Stock Appreciation Right, a
Holder shall be entitled to receive up to, but not more than, an amount in cash
and/or shares of Common Stock equal to the SAR Value with the Committee having
the right to determine the form of payment.

 

  7.6 Shares Affected Under Plan. Upon the exercise of a Tandem Stock
Appreciation Right, the Stock Option or part thereof to which such Tandem Stock
Appreciation Right is related shall be deemed to have been exercised for the
purpose of the limitation set forth in Section 4.1 hereof on the number of
shares of Common Stock to be issued under the Plan, but only to the extent of
the number of shares, if any, issued under the Tandem Stock Appreciation Right
at the time of exercise based upon the SAR Value.

 

  7.7

Limited Stock Appreciation Rights. The Committee may grant “Limited Stock
Appreciation Rights”, i.e., Stock Appreciation Rights that become exercisable
upon the occurrence of one or more of the events which trigger a Change of
Control as defined in Section 8.2 hereof, and shall be settled in an amount
equal to the Formula Price Per Share, subject to such other terms and conditions
as the Committee may specify; provided, however,

 

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if any Limited Stock Appreciation Right is granted to a Section 16 (b) Holder
such Limited Stock Appreciation Right (i) shall only be exercisable within sixty
(60) days after the event triggering the Change of Control; and (ii) may not be
exercised during the first six (6) months after the date of grant of such
Limited Stock Appreciation Right (except in the event of death or disability of
such Holder prior to the expiration of the six (6) month period) ; and
(iii) shall only be exercisable in the event that the date of the Change of
Control was outside the control of such Holder; and (iv) shall only be settled
in cash in an amount equal to the Formula Price Per Share.

 

8. Acceleration.

 

  8.1 Acceleration Upon Change of Control. Unless the award Agreement provides
otherwise or unless the Holder waives the application of this Section 8.1 prior
to a Change of Control (as hereinafter defined), in the event of a Change of
Control, each outstanding Stock Option, Stock Appreciation Right and Limited
Stock Appreciation Right granted under the Plan shall immediately become
exercisable in full notwithstanding the vesting or exercise provisions contained
in the Agreement.

 

  8.2 Change of Control Defined. A “Change of control” shall be deemed to have
occurred upon any of the following events:

 

  8.2.1 The consummation of any of the following transactions: any merger,
reverse stock split, recapitalization or other business combination of the
Company, with or into another corporation, or an acquisition of securities or
assets by the Company, pursuant to which the Company is not the continuing or
surviving corporation or pursuant to which shares of Common Stock would be
converted into cash, securities or other property, other than a transaction in
which the majority of the holders of Common stock immediately prior to such
transaction will own at least fifty percent (50%) of the total voting power of
the then-outstanding securities of the surviving corporation immediately after
such transaction; or

 

  8.2.2

A transaction in which any person (as such term is defined in Sections 13(d)
(3) and 14(d)(2) of the Exchange Act), corporation or other entity (other than
the Company, or any

 

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profit-sharing, employee ownership or other employee benefit plan sponsored by
the Company or any Subsidiary, or any trustee of or fiduciary with respect to
any such plan when acting in such capacity, or any group comprised solely of
such entities) : (i) shall purchase any Common Stock (or securities convertible
into Common Stock) for cash, securities or any other consideration pursuant to a
tender offer or exchange offer, without the prior consent of the Board, or
(ii) shall become the “beneficial owner” (as such term is defined in Rule 13d-3
under the Exchange Act), directly or indirectly (in one transaction or a series
of transactions), of securities of the Company representing fifty percent
(50%) or more of the total voting power of the then-outstanding securities of
the Company ordinarily (and apart from the rights accruing under special
circumstances) having the right to vote in the election of directors (calculated
as provided in Rule 13d-3 (d) in the case of rights to acquire the Company’s
securities); or

 

  8.2.3 If, during any period of two consecutive years, individuals who at the
beginning of such period constituted the entire Board and any new director whose
election by the Board, or nomination for election by the Company’s stockholders
was approved by a vote of at least two-thirds of the directors then still in
office who either were directors at the beginning of the period or whose
election or nomination for election by the stockholders was previously so
approved, cease for any reason to constitute a majority thereof.

 

  8.3 General Waiver by Board. The Committee may, after grant of an award,
accelerate the vesting of all or any part of any Stock Option, and/or waive any
limitations or restrictions, if any, for all or any part of an award.

 

  8.4 Acceleration Upon Termination of Employment. In the case of a Holder whose
employment or affiliation with the Company or a Subsidiary is involuntarily
terminated for any reason (other than for cause), the Committee may, at its
option and in its sole discretion, accelerate the vesting of all or any part of
any award and/or waive, in whole or in part, any or all of the remaining
deferral limitations or restrictions imposed hereunder or pursuant to the
Agreement.

 

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9. Amendments and Termination.

 

  9.1 Amendments to Plan; Termination. The Board may at any time, and from time
to time, amend any of the provisions of the Plan, and may at any time suspend or
terminate the Plan; provided, however, that no such amendment shall be effective
unless and until it has been duly approved by the stockholders of the
outstanding shares of Common Stock if (i) such amendment materially increases
the benefits accruing to participants under this Plan; (ii) such amendment
materially increases the number of securities which may be issued under this
Plan; (iii) such amendment materially modifies the requirements as to
eligibility for participation in this Plan; or, (iv) the failure to obtain such
approval would adversely affect the compliance of the Plan with the requirements
of Rule 16b-3 under the Exchange Act, or with the requirements of any other
applicable law, rule or regulation.

 

  9.2 Amendments to Individual Awards. The Board may amend the terms of any
award granted under the Plan; provided, however, that subject to Section 11
hereof, no such amendment may be made by the Board which in any material respect
impairs the rights of the Holder without the Holder’s consent.

 

10. Term of Plan.

 

  10.1 Effective Date. The Plan shall be effective as of
                                                             , 1993 (“Effective
Date”), subject to the approval of the Plan by the stockholders of the Company
within one year after the Effective Date. Any awards granted under the Plan
prior to such approval shall be effective when made (unless otherwise specified
by the Committee at the time of grant) but shall be conditioned upon, and
subject to, such approval of the Plan by the Company’s stockholders and approval
of the Company’s application to list the shares of the Company’s Common Stock
covered by the Plan on the American Stock Exchange (and no awards shall vest or
otherwise become free of restrictions prior to such approvals).

 

  10.2 Termination Date. No award shall be granted pursuant to the Plan on or
after the tenth (10th) anniversary of the Effective Date, but awards granted
prior to such tenth (10th) anniversary may extend beyond that date. The Plan
shall terminate at such time as no further awards may be granted and all awards
granted under the Plan are no longer outstanding.

 

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11. Adjustment Upon Change of Shares. Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock for which
Stock Options may thereafter be granted, and the number of shares of Common
Stock then subject to Stock Options previously granted, and the price per share
payable upon exercise of such Stock Option and the number of shares and exercise
price relating to Stock Appreciation Rights, shall be proportionately adjusted
for any increase or decrease in the number of issued shares of Common Stock of
the Company resulting from a subdivision or consolidation of shares of Common
Stock or the payment of a stock dividend (but only on the Common Stock) or any
other increase or decrease in the number of shares of Common Stock effected
without receipt of consideration by the Company.

 

  11.1 If the Company is reorganized or consolidated or merged with another
corporation, in which the Company is the non-surviving corporation, a Holder of
an outstanding Stock Option and/or Stock Appreciation Right granted under this
Plan shall be entitled (subject to the provisions of this Section 11) to receive
options and/or stock appreciation rights covering shares of such reorganized,
consolidated or merged corporation in the same proportion as granted to Holder
prior to such reorganization, consolidation or merger at an equivalent exercise
price, and subject to the same terms and conditions as this Plan. For purposes
of the preceding sentence, the excess of the aggregate Fair Market Value of
shares subject to the option immediately after the reorganization, consolidation
or merger over the aggregate exercise price of such shares shall not be more
than the excess of the aggregate Fair Market Value of all shares of Common Stock
subject to the option or Stock Appreciation Right immediately before such
reorganization, consolidation or merger over the aggregate exercise price of
such shares of Common Stock, and the new stock option or stock appreciation
right or assumption of the old Stock Option or old Stock Appreciation Right by
any surviving corporation shall not give the Holder additional benefits which he
did not have under the old Stock Option or Stock Appreciation Right.

 

  11.2 To the extent that the foregoing adjustments relate to the shares of
Common Stock of the Company, such adjustments shall be made by the Committee,
whose determination in that respect shall be final, binding and conclusive,
provided that each Incentive Stock Option granted pursuant to this Plan shall
not be adjusted in a manner that causes the Incentive Stock Option to fail to
continue to qualify as an incentive stock option within the meaning of
Section 422 of the Code.

 

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  11.3 Except as expressly provided in this Section 11, the Holder shall have no
rights by reason of any sub-division or consolidation of shares of stock, of any
class or the payment of any stock dividend or any other increase or decrease in
the number of shares of stock of any class or by reason of any dissolution,
liquidation, merger, consolidation, reorganization or spin-off of assets or
stock of another corporation, and any issue by the Company of shares of stock of
any class, or securities convertible into shares of stock of any class, shall
not affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to the Stock Option or the
number or price of Stock Appreciation Rights granted under this Plan.

 

  11.4 The grant of a Stock Option or Stock Appreciation Right pursuant to this
Plan shall not affect in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations or changes of its capital or
business structure or to merge or to consolidate or to dissolve, liquidate or
sell, or transfer all or any part of its business or assets.

 

12. General Provisions.

 

  12.1 Investment Representations. The Committee may require each person
acquiring shares of Common Stock pursuant to an award under this Plan to
represent to and agree with the Company in writing that the Holder is acquiring
the shares for investment without a view to distribution thereof.

 

  12.2 Additional Incentive Arrangements. Nothing contained in this Plan shall
prevent the Board from adopting such other or additional incentive arrangements
as it may deem desirable, including, but not limited to, the granting of Stock
Options and the awarding of stock and cash otherwise than under this Plan; and
such arrangements may be either generally applicable or applicable only in
specific cases.

 

  12.3 No Right of Employment. Nothing contained in this Plan or in any award
hereunder shall be deemed to confer upon any employee of the Company or any
Subsidiary any right to continued employment with the Company or any Subsidiary,
nor shall it interfere in any way with the right of the Company or any
Subsidiary to terminate the employment of any of its employees at any time.

 

  12.4

Withholding Taxes. Not later than the date as of which an amount first becomes
includible in the gross income of the Holder for federal income tax purposes
with

 

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respect to any award under the Plan, the Holder shall pay to the Company, or
make arrangements satisfactory to the Company regarding the payment of, any
federal, state and local taxes of any kind required by law to be withheld or
paid with respect to such amount. If permitted by the Board, tax withholding or
payment obligations may be settled with Common Stock, including Common Stock
that is part of the award that gives rise to the withholding requirement. The
obligations of the Company under this Plan shall be conditional upon such
payment or arrangements and the Company shall, to the extent permitted by law,
have the right to deduct any such taxes from any payment of any kind otherwise
due to the Holder from the Company.

 

  12.5 Governing Law. This Plan and all awards made and actions taken thereunder
shall be governed by and construed in accordance with the laws of the State of
Delaware (without regard to choice of law provisions).

 

  12.6 Other Benefit Plans. Any award granted under this Plan shall not be
deemed compensation for purposes of computing benefits under any retirement plan
of the Company or any Subsidiary and shall not affect any benefits under any
other benefit plan now or subsequently in effect under which the availability or
amount of benefits is related to the level of compensation (unless required by
specific reference in any such other plan to awards under this Plan).

 

  12.7 Employee Status. A leave of absence, unless otherwise determined by the
Board prior to the commencement thereof, shall not be considered a termination
of employment. Any awards granted under this Plan shall not be affected by any
change of employment, so long as the Holder continues to be an employee of the
Company or any Subsidiary.

 

  12.8 Non-Transferability. Other than the transfer of a Stock Option or Stock
Appreciation Right by will or by the laws of descent and distribution, no award
under this Plan may be alienated, sold, assigned, hypothecated, pledged,
exchanged, transferred, encumbered or charged, and any attempt to alienate,
sell, assign, hypothecate, pledge, exchange, transfer, encumber or charge the
same shall be void. No right or benefit hereunder shall in any manner be liable
for or subject to the debts, contracts, liabilities or torts of the person
entitled to such benefit. Unless otherwise provided in this Plan or the
Agreement, any Stock Option or Stock Appreciation Right granted under this Plan
is only exercisable during the lifetime of the Holder by the Holder or by his
guardian or legal representative.

 

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  12.9  Applicable Laws. The obligations of the Company with respect to all
awards under this Plan shall be subject to (i) all applicable laws, rules and
regulations, including, without limitation, the requirements of all federal
securities laws, rules and regulations and state securities and blue sky laws,
rules and regulations, and such approvals by any governmental agencies as may be
required, including, without limitation, the effectiveness of a registration
statement under the Act, and (ii) the rules and regulations of any national
securities exchange on which the Common Stock may be listed or the NASDAQ
National Market System if the Common Stock is designated for quotation thereon.

 

  12.10  Conflicts. If any of the terms or provisions of the Plan conflict with
the requirements of Rule 16b-3 under the Exchange Act, or with the requirements
of any other applicable law, rule or regulation, and/or with respect to
Incentive Stock Options, Section 422 of the Code, then such terms or provisions
shall be deemed inoperative to the extent they so conflict with the requirements
of said Rule 16b-3, and/or with respect to Incentive Stock Options, Section 42 2
of the Code. With respect to Incentive Stock Options, if this Plan does not
contain any provision required to be included herein under Section 422 of the
Code, such provision shall be deemed to be incorporated herein with the same
force and effect as if such provision had been set out at length herein.

 

  12.11  Written Agreements. Each award granted under this Plan shall be
confirmed by, and shall be subject to the terms of the Agreement approved by the
Committee and executed by the Company and the Holder. The Committee may
terminate any award made under this Plan if the Agreement relating thereto is
not executed and returned to the Company within sixty (60) days after the
Agreement has been delivered to the Holder for his or her execution.

 

  12.12 

Indemnification of Committee. In addition to such other rights of
indemnification as they may have as directors or as members of the Committee,
the members of the Committee shall be indemnified by the Company against the
reasonable expenses, including attorneys’ fees actually and necessarily incurred
in connection with the defense of any action, suit or proceeding, or in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with the
Plan or any award granted thereunder, and against all amounts paid by them in
settlement thereof (provided such settlement is approved by independent legal

 

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counsel selected by the Company) or paid by them in satisfaction of a judgment
in any such action, suit or proceeding, except in relation to matters as to
which it shall be adjudged in such action, suit or proceeding that such
Committee member is liable for negligence or misconduct in the performance of
his duties; provided that within sixty (60) days after institution of any such
action, suit or proceeding a Committee member shall in writing offer the Company
the opportunity, at its own expense, to handle and defend the same.

 

  12.13  Consideration for Common Stock. The Committee may not grant any awards
under this Plan pursuant to which the Company will be required to issue any
shares of Common Stock unless the Company will receive consideration for the
shares of Common Stock sufficient under the laws of the State of Delaware so
that such shares of Common Stock will be, when issued, validly issued and fully
paid and nonassessable when issued.

 

  12.14  Common Stock Certificates. All certificates for shares of Common Stock
delivered under this Plan shall be subject to such stop-transfer orders and
other restrictions as the Committee may deem advisable under the rules,
regulations, and other requirements of the Securities and Exchange Commission,
any stock exchange upon which the Common Stock is then listed, any applicable
federal or state securities law and any applicable corporate law, and the
Committee may cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions. Notwithstanding anything to the
contrary contained herein, whenever certificates representing shares of Common
Stock subject to an award are required to be delivered pursuant to the terms of
this Plan, the Company may, in lieu of such delivery requirement, comply with
the provisions of Section 158 of the Delaware General Corporation Law.

 

  12.15  Unfunded status of Plan. This Plan is intended to constitute an
“unfunded” plan for incentive and deferred compensation. With respect to any
payments not yet made to a Holder by the Company, nothing contained herein shall
give any such Holder any rights that are greater than those of a general
creditor of the Company.

 

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