Exhibit (10.42)

MIDWEST EXPRESS HOLDINGS, INC.
2003 ALL EMPLOYEE STOCK OPTION PLAN

        1.     PURPOSE

        This 2003 All Employee Stock Option Plan (the “Plan”) of Midwest Express
Holdings, Inc. (the “Corporation”) is intended to provide certain employees with
an opportunity to become owners of the Corporation in recognition of their
efforts, results and contributions to the survival and success of the
Corporation or of an Affiliate and, through that ownership interest in the
Corporation, to increase their motivation for and interest in the Corporation’s
or Affiliate’s long-term success.

        2.     EFFECTIVE DATE

        The Plan was adopted by the Board on August 20, 2003, subject to
approval by the shareholders of the Corporation at a Special Meeting of the
Corporation’s shareholders to be held in late 2003. The Plan will only be
effective if approved by the shareholders and will be effective as of the date
of shareholder approval.

        3.     CERTAIN DEFINITIONS

        “Affiliate” means any company in which the Corporation owns directly or
indirectly 20% or more of the equity interest (collectively, the “Affiliates”).

        “Board” means the Board of Directors of the Corporation.

        A “Change in Control” shall be deemed to have occurred if the event set
forth in any one of the following paragraphs shall have occurred:

        (a)     any “Person” (as such term is defined in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof), other
than (i) the Corporation or any of its subsidiaries, (ii) a trustee or other
fiduciary holding securities under any employee benefit plan of the Corporation
or any of its subsidiaries, (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities or (iv) a corporation owned, directly
or indirectly, by the shareholders of the Corporation in substantially the same
proportions as their ownership of stock in the Corporation (“Excluded Persons”),
is or becomes the “Beneficial Owner” (as defined in rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Corporation (not
including in the securities beneficially owned by such Person any securities
acquired directly from the Corporation or its Affiliates after July 16, 2003
pursuant to express authorization by the Board that refers to this exception)
representing 25% or more of either the then outstanding shares of Common Stock
or the combined voting power of the Corporation’s then outstanding voting
securities; or

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        (b)     the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals who, on July 16,
2003, constituted the Board and any new director (other than a director whose
initial assumption of office is in connection with an actual or threatened
election contest, including but not limited to a consent solicitation, relating
to the election of directors of the Corporation, as such terms are used in Rule
14a-11 of Regulation 14A under the Exchange Act) whose appointment or election
by the Board or nomination for election by the Corporation’s shareholders was
approved by a vote of at least two-thirds (2/3) of the directors then still in
office who either were directors on July 16, 2003 or whose appointment, election
or nomination for election was previously so approved; or

        (c)     the shareholders of the Corporation approve a merger or
consolidation of the Corporation with any other corporation or approve the
issuance of voting securities of the Corporation in connection with a merger or
consolidation of the Corporation (or any direct or indirect subsidiary of the
Corporation) pursuant to applicable stock exchange requirements, other than (i)
a merger or consolidation that would result in the voting securities of the
Corporation outstanding immediately prior to such merger or consolidation
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or any parent thereof) at least
50% of the combined voting power of the voting securities of the Corporation or
such surviving entity or any parent thereof outstanding immediately after such
merger or consolidation, or (ii) a merger or consolidation effected to implement
a recapitalization of the Corporation (or similar transaction) in which no
Person (other than an Excluded Person) is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Corporation (not including in the
securities beneficially owned by such Person any securities acquired directly
from the Corporation or its Affiliates after July 16, 2003 pursuant to express
authorization by the Board that refers to this exception) representing 25% or
more of either the then outstanding shares of Common Stock or the combined
voting power of the Corporation’s then outstanding voting securities; or

        (d)     the shareholders of the Corporation approve a plan of complete
liquidation or dissolution of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all of the Corporation’s
assets (in one transaction or a series of related transactions within any period
of 24 consecutive months), other than a sale or disposition by the Corporation
of all or substantially all of the Corporation’s assets to an entity at least
75% of the combined voting power of the voting securities of which are owned by
Persons in substantially the same proportions as their ownership of the
Corporation immediately prior to such sale.

        Notwithstanding the foregoing, no “Change in Control” shall be deemed to
have occurred if there is consummated any transaction or series of integrated
transactions immediately following which the record holders of the Common Stock
immediately prior to such transaction or series of transactions continue to have
substantially the same proportionate ownership in an entity that owns all or
substantially all of the assets of the Corporation immediately following such
transaction or series of transactions.

        With respect to Union Participants, if the applicable collective
bargaining agreement covering such Participants contains a different definition
of a Change in Control (or term having a similar effect) at the relevant time,
then the Committee may determine that such definition should apply in lieu of or
in addition to the definition used herein with respect to the Options granted to
such Union Participants.

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        “Code” means the Internal Revenue Code of 1986 and the regulations
promulgated thereunder, as amended from time to time. Any reference to a
specific provision of the Code includes any successor provision thereto.

        “Committee” means the Compensation Committee of the Board, or such other
committee of the Board appointed by the Board to administer the Plan. With
respect to grants made to Participants who are subject to Section 16(b) of the
Exchange Act, the Committee must be a committee composed solely of two or more
non-employee directors as so defined for purposes of Rule 16b-3 under the
Exchange Act.

        “Common Stock” means the common stock, par value $0.01 per share, of the
Corporation and shall include both treasury shares and authorized but unissued
shares and shall also include any security of the Corporation issued in
substitution, in exchange for, or in lieu of the Common Stock.

        “Convertible Securities” means evidences of indebtedness, Shares or
other securities that are convertible into or exchangeable or exercisable for,
with or without payment of additional consideration, shares of Common Stock,
either immediately or upon the arrival of a specified date or the happening of a
specified event (excluding the Corporation’s preferred stock purchase rights
issued pursuant to that certain Rights Agreement, dated February 14, 1996, as
amended, between the Corporation and American Stock Transfer & Trust Company and
any similar stock purchase rights that the Corporation might authorize and issue
in the future).

        “Exchange Act” means the Securities Exchange Act of 1934 and the rules
and regulations promulgated thereunder, as amended from time to time. Any
reference to a specific provision of the Exchange Act shall include any
successor provision thereto.

        “Financial Closing” means that the funds committed pursuant to the New
Financing have been received by the Corporation or its subsidiaries or are
available for drawdown and all conditions precedent to drawdown (other than no
default occurring after the closing of the New Financing) shall have been
satisfied or waived.

        “Insider” means a Participant who is required to report to the
Securities and Exchange Commission under Section 16(a) of the Exchange Act.

        “Market Price” means (a) the closing price of the Common Stock as of the
date in question, or, if no closing price is available on that date, then the
closing price on the immediately preceding business day on which there is a
closing price, if such security is listed or admitted for trading on any
domestic national securities exchange, as officially reported on the principal
securities exchange on which the Common Stock is listed; (b) if not reported as
described in clause (a), the closing sale price of the Common Stock as of the
date in question, or, if no closing sale price is available on that date, then
the closing sale price on the immediately preceding business day on which there
is a closing sale price, as reported by The Nasdaq Stock Market, or any similar
system of automated dissemination of quotations of securities prices then in
common use, if so quoted; or (c) if not reported as described in clause (a) or
quoted as described in clause (b), then the Board shall determine in good faith
and on a reasonable basis the applicable Market Price, which determination shall
be conclusive.

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        “New Financing” means any financing arrangement (including credit
facilities, subordinated credit facilities, any indebtedness evidenced by bonds,
debentures, notes, convertible notes, or similar instruments, and investments of
equity capital other than resulting from the conversion of convertible debt
securities (unless and to the extent that such conversion results in the
Corporation or its subsidiaries receiving additional equity consideration))
entered into by the Corporation or its subsidiaries following the date hereof,
but specifically excluding (a) any extensions of three hundred sixty-three (363)
days or less of existing financing arrangements, (b) any refinancings by the
existing creditors under that certain Senior Secured Revolving Credit Agreement,
dated August 31, 2001, as amended (the “U.S. Bank Credit Agreement”), among the
Corporation, as borrower, the several lenders identified on the signature pages
to the U.S. Bank Credit Agreement and such other lenders as may from time to
time become a party thereto (the “Lenders”) and U.S. Bank National Association,
as agent for the Lenders, except to the extent that any such refinancing results
in an increase of credit available to the Corporation or its subsidiaries, and
then only to the extent of such increase, or that provides for availability of
credit that extends beyond three hundred sixty-three (363) days from the
presently scheduled maturity of the U.S. Bank Credit Agreement, (c) any
increased credit availability that results from Milwaukee County, Wisconsin
providing any credit support for the industrial revenue bonds issued for the
benefit of the Corporation or its subsidiaries, (d) any indebtedness to any
aircraft or equipment vendors for the purchase of goods or services, including
any third-party financing of such amounts, (e) any indebtedness to other trade
creditors incurred in the ordinary course of business, (f) any financing
(including any sale-leaseback arrangement) related to the Corporation’s
corporate headquarters, or any extension or replacement thereof, or (g) any
obligations associated with programs of the Corporation or its subsidiaries for
the pre-purchase of tickets or similar prepayment programs.

        “Option” means a right to purchase a specified number of shares of
Common Stock at a fixed option price. None of the Options issued under this Plan
are intended to qualify under Code Section 422 or 423.

        “Option Agreement” means an agreement entered into between the
Corporation and a Participant setting forth the terms and conditions applicable
to the Option granted to the Participant.

        “Option Shares” means the aggregate number of shares of Common Stock
issuable from time to time upon exercise of an Option, as such number may be
increased or decreased pursuant to Section 7, and shall also mean any other
Shares, other securities and/or other assets otherwise deliverable upon exercise
of such Option.

        “Participant” means each employee of the Corporation or its Affiliates
on July 15, 2003 (collectively, the “Participants”). Participants shall include
both Participants whose terms and conditions of employment are subject to a
collective bargaining agreement between the Corporation and a Union
(collectively, the “Union Participants”) and Participants whose terms and
conditions are not so subject (collectively, “Non-Union Participants”).

        “Person” means an individual, a corporation, an association, a
joint-stock company, a business trust or other similar organization, a
partnership, a limited liability company, a joint venture, a trust, an
unincorporated organization or a government or any agency, instrumentality or
political subdivision thereof.

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        “Retirement” and “Retire” means the termination of employment from the
Corporation and its Affiliates on or after the date the Participant (i) is
entitled to receive retiree medical coverage under a retiree medical plan of the
Corporation or an Affiliate or (ii) has attained age 55 (or such lower age, if
any, at which the Participant may retire under a qualified benefit plan covering
the Participant) and has been credited with ten vested years of service under
the Midwest Airlines Savings and Investment Plan (or any successor plan thereto)
as of the date of such termination of employment.

        “Shares” of any Person shall include any and all shares of capital
stock, partnership interests, membership interests, or other shares, interests,
participations or other equivalents (however designated and of any class) in the
capital of, or other ownership interests in, such Person.

        “Stock Purchase Rights” means any warrants, options or other rights to
subscribe for, purchase or otherwise acquire any shares of Common Stock or any
Convertible Securities (excluding the Corporation’s preferred stock purchase
rights issued pursuant to that certain Rights Agreement, dated February 14,
1996, as amended, between the Corporation and American Stock Transfer & Trust
Company and any similar stock purchase rights that the Corporation might
authorize and issue in the future), either immediately or upon the arrival of a
specified date or the happening of a specified event.

        “Total and Permanent Disability” has the same meaning ascribed in the
Midwest Express Airlines, Inc. Employees Long-Term Disability Plan (or any
successor plan thereto), provided the Committee shall make a determination of
Total and Permanent Disability for any Participant hereunder.

        “Union” means each of the Midwest Air Line Pilots Association, the
Skyway Air Line Pilots Association, and the Midwest Association of Flight
Attendants, or any successor thereto.

        4.     ADMINISTRATION

        Except as provided herein, the Plan and all Options shall be
administered by the Committee. The Committee shall have the power to interpret
and construe the Plan and any Option Agreements. The Committee also shall have
the power to promulgate rules and other guidelines in connection with the
performance of its obligations, powers and duties under the Plan, including its
duty to administer and construe the Plan and Option Agreements.

        To the extent permitted by applicable law, the Committee may, in its
discretion, delegate to an officer of the Corporation or another committee any
or all of the authority and responsibility of the Committee with respect to the
Plan or Options, other than Participants who are subject to the provisions of
Section 16 of the Exchange Act at the time any such delegated authority or
responsibility is exercised. To the extent that the Committee has delegated such
authority and responsibility, all references to the Committee herein shall
include such officer or other committee.

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        Within 60 days following the close of each calendar year that the Plan
is in operation, the Committee shall make a report to the Board specifying the
employees who received Options during the prior year, the number of Options
granted to the individual employees, and the status of prior Options.

        5.     SHARES SUBJECT TO THE PLAN

        Subject to adjustment as provided in Section 7, the number of shares of
Common Stock available for issuance under this Plan shall be 1,551,741. The
shares of Common Stock subject to the Plan may consist in whole or in part of
authorized but unissued shares or of treasury shares, as the Board or Committee
may determine. Subject to the provisions of Subsection 6(c), shares subject to
Options which become ineligible for purchase will be available for new grants
under the Plan to the extent permitted by Section 16 of the Exchange Act.

        6.     GRANTS OF OPTIONS

        (a)    Selection of Participants. The Committee shall determine and
designate from time to time those Non-Union Participants to whom Options are to
be granted, and each Union shall determine and designate from time to time those
Union Participants who are represented by such Union to whom Options are to be
granted.

        (b)    Grant of Options. Subject to the terms of the Plan (including the
adjustment provisions of Section 7), the Committee or Union, as applicable,
shall determine the number of shares of Common Stock to be optioned to each
Participant and the dates of grant subject to the following (provided that only
the Committee, in its sole discretion, may increase the number of shares
reserved for grants to Union Participants):

                (i)     791,853 shares of Common Stock (or such higher number as
determined by the Committee) are reserved for grants of Options by the Midwest
Air Line Pilots Association to Participants who are represented by such Union;

                (ii)     22,191 shares of Common Stock (or such higher number as
determined by the Committee) are reserved for grants of Options by the Skyway
Air Line Pilots Association to Participants who are represented by such Union;

                (iii)     117,001 shares of Common Stock (or such higher number
as determined by the Committee) are reserved for grants of Options by the
Midwest Association of Flight Attendants to Participants who are represented by
such Union; and

                (iv)     the remaining shares of Common Stock reserved pursuant
to Section 5 may be granted by the Committee to any Participant.

        (c)    Re-Grant of Options. Subject to the terms of the Plan, and any
applicable collective bargaining agreement terms, on each anniversary of the
Plan’s effective date, immediately prior to a Change in Control or on such other
interim date(s) as the Committee determines, the Committee shall determine the
number of Options that were forfeited pursuant to Subsections 6(d) and (f)
without being exercised during the prior year (or such other relevant period) by
Participants who are represented by each Union. Each Union may then re-grant
such Options to such Participants represented by the Union, and in such number,
as the Union determines. All such re-granted Options will be subject to the same
terms and conditions as the original Option grant.

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        (d)    Period of Option. Each Option shall expire on the earliest to
occur of the following (except as set forth in any applicable collective
bargaining agreement):

                (i)     August 21, 2013;

                (ii)     Unless otherwise determined by the Committee, the third
anniversary of the date on which the Participant terminates employment with the
Corporation and its Affiliates as a result of death or Total and Permanent
Disability; or

                (iii)     90 days from the date of the Participant’s termination
of employment from the Corporation and its Affiliates for any reason other than
death, Total and Permanent Disability or Retirement.

If a Participant terminates employment from the Company and its Affiliates as a
result of Retirement, the Participant shall be entitled to retain his or her
Options for the full term described in clause (i).

        (e)     Option Price. Subject to adjustment as provided in Section 7,
the option price shall be $2.89 per share of Common Stock (the “Option Price”).

        (f)     Exercisability. The Committee or applicable Union shall
determine when each Option becomes vested and exercisable, provided that Options
shall become vested and exercisable only as follows: up to one-third of the
Options described in each clause of Subsection 6(b) may be exercisable prior to
August 21, 2004; up to an additional one-third of the Options described in each
clause of Subsection 6(b) may be exercisable prior to August 21, 2005; and the
remaining Options described in each clause of Subsection 6(b) may only be
exercisable on and after August 21, 2005. Unless otherwise determined by the
Committee, if the Participant’s employment with the Corporation or an Affiliate
is terminated as a result of death, Retirement, or Total and Permanent
Disability prior to the date the Option is fully vested, the Option shall become
fully and immediately vested and exercisable as of the date of such termination
of employment. If the Participant’s employment with the Corporation or an
Affiliate is terminated for any reason other than death, Retirement, or Total
and Permanent Disability, the Option shall be exercisable only for those shares
for which the right to purchase has vested as of the date of such termination.

        (g)     Exercise after Death or Total and Permanent Disability. Upon a
Participant’s death, the Option may be exercised by the person or persons to
whom such Participant’s rights under the Option shall pass by will or by
applicable law or, if no such person has such rights, by his executor or
administrator, and all references herein or in the Option Agreement to the
Participant shall mean such person. Upon a Participant’s Total and Permanent
Disability, the Option may be exercised by the personal representative of the
Participant who has appropriate authority to handle the Participant’s affairs.

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        (h)     Option Agreement. The Committee shall cause to be delivered to
each Participant who receives an Option an Option Agreement evidencing the
granting of the Option. Subject to the provisions of the Plan, the Option
Agreement shall be in such form and shall contain such terms and conditions as
the Committee shall from time to time approve.

        (i)     Termination of Employment. A termination of employment with the
Corporation or an Affiliate to accept immediate re-employment with the
Corporation or an Affiliate, or being placed on furlough shall not be deemed to
be a termination of employment for purposes of the Plan. If a Participant is
employed by an Affiliate and such entity ceases to be an Affiliate, the
Participant will be deemed to have terminated employment from the Corporation
and its Affiliates as of the date the entity ceases to be an Affiliate.

        (j)     Change in Control. Except as the Committee may otherwise provide
prior to a Change in Control, and subject to Section 7, in the event of a Change
in Control, each holder of an Option who is employed by the Corporation or an
Affiliate at such time shall have the right at any time thereafter to exercise
the remaining portion of such Option, without regard to the limitations in
Subsection 6(f), at any time during the remaining period of the Option.

        (k)     Non-transferability. During the Participant’s lifetime, Options
shall be exercisable only by such Participant except as provided in Subsection
6(g). Options shall not be transferable other than upon the Participant’s death
by will or the laws of descent and distribution.

        (l)     Exercise; Notice Thereof. A Participant may exercise his or her
Option to the extend vested in the manner specified by the Committee. A
Participant’s exercise shall be effective only upon receipt by the Corporation
(or its designated agent) of a properly completed and timely filed notice of
exercise, accompanied by payment in full of the Option Price of the shares being
acquired and any applicable taxes due as a result of such exercise. Payment of
the Option Price may be made (i) in cash, (ii) by a check payable to the
Corporation, (iii) at the sole discretion of the Committee, by tender of shares
of Common Stock that have been held by the Participant for at least six months
or acquired in the open market to the Corporation and having a Market Price on
the transfer date equal to the amount payable to the Corporation, (iv) , at the
sole discretion of the Committee, through any combination of the foregoing, or
(v) at the sole discretion of the Committee, by any other method or means as the
Committee may prescribe. Payment of any taxes due shall be made as provided in
Section 10. The date of exercise shall be deemed to be the date the Corporation
receives the written notice and payment for the shares being purchased and
applicable taxes due thereon. A Participant shall have none of the rights of a
shareholder with respect to shares covered by such Option until the Participant
becomes the record holder of such shares. Notwithstanding the foregoing, the
Corporation may cancel or delay the exercise of any Options if such exercise
would result in the disallowance of a deduction to the Corporation under Section
162(m) of the Code.

        (m)     Registration. It is contemplated that the Corporation will
register shares sold to Participants pursuant to the Plan under the Securities
Act of 1933, as amended (the “Securities Act”), and the Corporation may delay
any Option exercise until such effective registration is in place.

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        (n)     Options for Nonresident Aliens. In the case of any Option
awarded to a Participant who is not a resident of the United States or who is
employed by an Affiliate other than an Affiliate that is incorporated, or whose
place of business is, in a State of the United States, the Committee may (i)
waive or alter the conditions set forth in Subsections 6(a) through 6(l) to the
extent that such action is necessary to conform such Option to applicable
foreign law, or (ii) take any action, either before or after the award of such
Option, which it deems advisable to obtain approval of such Option by an
appropriate governmental entity; provided, however, that no action may be taken
hereunder if such action would (A) increase any benefits accruing to any
Participants under the Plan, (B) increase the number of securities which may be
issued under the Plan, (C) modify the requirements for eligibility to
participate in the Plan, or (D) result in a failure to comply with applicable
provisions of the Securities Act, the Exchange Act or the Code.

        (o)     Repricing Prohibited. Notwithstanding anything in this Plan to
the contrary, and except for the adjustments provided in Section 7, the
Committee may not decrease the Option Price for any outstanding Option after the
date of grant nor allow a Participant to surrender an outstanding Option to the
Corporation as consideration for the grant of a new Option with a lower option
price.

        7.     ANTI-DILUTION ADJUSTMENTS

        (a)     Adjustments in Case of Subsequent Issuances.

                (i)     Upon any adjustment of the Option Price of an Option as
provided in this Subsection 7(a), the number of shares subject to a
Participant’s Option shall thereafter be adjusted to that number (calculated to
the nearest 1/100th of a share) obtained by multiplying the Option Price in
effect immediately prior to such adjustment by the number of shares of Common
Stock purchasable under the Option in question immediately prior to such
adjustment and dividing the product thereof by the Option Price resulting from
such adjustment. Until the later of August 19, 2005 or the date the Corporation
has achieved Financial Closing with respect to New Financing in the amount of at
least $30 million, if and whenever the Corporation subsequent to August 19, 2003
shall issue or sell any of the following (“Additional Securities”): (A) any
Common Stock (other than Common Stock issued pursuant to Convertible Securities
or Stock Purchase Rights in respect of which an adjustment was previously made
under this Subsection 7(a)) at a price per share less than the then applicable
Option Price or (B) Convertible Securities or Stock Purchase Rights (other than
in the cases referred to in Subsection 7(b)) entitling any Person to acquire
shares of Common Stock at a price per share less than the then applicable Option
Price, then the Option Price shall be adjusted to that price determined by
multiplying the then applicable Option Price by a fraction, the numerator of
which shall be the number of shares of Common Stock actually outstanding
immediately prior to the issuance of such Additional Securities plus the number
of shares of Common Stock that the offering price for such Additional Securities
would purchase at the then applicable Option Price, and the denominator of which
shall be the sum of the number of shares of Common Stock actually outstanding
immediately prior to such issuance plus the number of shares of Common Stock so
issued or issuable. For purposes of calculating such fraction, all shares of
Common Stock that are issuable upon conversion, exercise or exchange of those
Additional Securities that are Convertible Securities or Stock Purchase Rights
shall be deemed actually outstanding immediately after the issuance of such
Convertible Securities or Stock Purchase Rights. Subject to Subsection 7(a)(ii),
such adjustment shall be made whenever such shares of Convertible Securities or
Stock Purchase Rights are issued. However, if any Convertible Securities or
Stock Purchase Rights the issuance of which resulted in an adjustment in the
Option Price pursuant to clause (B) of this Subsection 7(a)(i) shall expire and
shall not have been exercised in full, then, subject to Subsection 7(a)(ii), the
Option Price shall immediately upon such expiration be recomputed and be
increased to the price that it would have been (but reflecting any other
adjustments in the Option Price made pursuant to the provisions of this
Subsection 7(a) after the issuance of such Convertible Securities or Stock
Purchase Rights) had the adjustment of the Option Price made upon the issuance
of such Convertible Securities or Stock Purchase Rights been made on the basis
of offering for subscription or purchase only that number of shares of Common
Stock actually purchased upon the exercise of such Convertible Securities or
Stock Purchase Rights actually exercised.

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                (ii)     No adjustment in the Option Price shall be required
unless the adjustment would require an increase or decrease of at least 1% in
the then applicable Option Price; provided, however, that any adjustments that
by reason of this Subsection 7(a)(ii) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this Subsection 7(a)(ii) shall be made to the nearest cent.

                (iii)     This Subsection 7(a) shall not apply to the delivery
of any of the warrants issued by the Corporation in August 2003 (the
“Warrants”), the operation of the Warrants or the issuance of Shares pursuant to
the Warrants.

        (b)     Adjustments in Case of Stock Split, Distributions, etc.

                (i)     Upon any adjustment of the Option Price of an Option as
provided in this Subsection 7(b)(i) or (ii), the number of shares subject to a
Participant’s Option shall thereafter be adjusted to that number (calculated to
the nearest 1/100th of a share) obtained by multiplying the Option Price in
effect immediately prior to such adjustment by the number of shares of Common
Stock purchasable under the Option in question immediately prior to such
adjustment and dividing the product thereof by the Option Price resulting from
such adjustment. If and whenever the Corporation subsequent to August 19, 2003:

          (1)     declares a dividend upon, or makes any distribution in respect
of, any of its capital stock, payable in shares of Common Stock, Convertible
Securities or Stock Purchase Rights, or

          (2)     splits or otherwise subdivides its outstanding shares of
Common Stock into a larger number of shares of Common Stock, or

          (3)     combines its outstanding shares of Common Stock into a smaller
number of shares of Common Stock,

then the Option Price shall be adjusted to that price determined by multiplying
the Option Price in effect immediately prior to such event by a fraction (A) the
numerator of which shall be the total number of outstanding shares of Common
Stock immediately prior to such event, and (B) the denominator of which shall be
the total number of outstanding shares of Common Stock immediately after such
event, treating as outstanding all shares of Common Stock issuable upon
conversions or exchanges of any such Convertible Securities issued in such
dividend or distribution and exercises of any such Stock Purchase Rights issued
in such dividend or distribution. No adjustment in the Option Price shall be
required unless the adjustment would require an increase or decrease of at least
1% in the Option Price then in effect; provided, however, that any adjustments
that by reason of this sentence are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Subsection 7(b) shall be made to the nearest cent.

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                (ii)     If and whenever the Corporation subsequent to August
19, 2003 declares a dividend upon, or makes any distribution to all shareholders
generally in respect of, any of its capital stock, payable in cash, evidences of
indebtedness or assets, then the Option Price shall be adjusted to that price
determined by multiplying the Option Price in effect immediately prior to such
event by a fraction (A) the numerator of which shall be the Market Price on the
record date for the determination of shareholders entitled to receive the
payment less the then fair market value (as determined in good faith on a
reasonable basis by the Board, which determination shall be conclusive) as of
such record date of the cash, evidences of indebtedness or assets so paid with
respect to one share of Common Stock and (B) the denominator of which shall be
the Market Price per share of Common Stock as of such record date; provided,
however, that if the then fair market value (as determined in good faith by the
Board, which determination shall be conclusive) so paid with respect to one
share of Common Stock is equal to or greater than the Option Price per share of
Common Stock on the record date, then in lieu of the foregoing adjustment,
adequate provision shall be made so that a Participant shall have the right to
receive the cash, evidences of indebtedness or assets that such Participant
would have been entitled to receive had the Option in question been exercised in
full prior to the record date; and provided further that no adjustment shall be
made if the Corporation issues or distributes to such Participant the cash,
evidences of indebtedness or assets that such Participant would have been
entitled to receive had the Option in question been exercised in full prior to
the record date. No adjustment in the Option Price shall be required unless the
adjustment would require an increase or decrease of at least 1% in the Option
Price then in effect; provided, however, that any adjustments that by reason of
this sentence are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this
Subsection 7(b)(ii) shall be made to the nearest cent.

                (iii)     If the terms of both this Subsection 7(b) and
Subsection 7(c) would apply to a transaction, then the transaction will be
subject to Subsection 7(c) and not this Subsection 7(b).

        (c)    Adjustment in Case of Consolidation, Merger or Reclassification.

                (i)     If and whenever subsequent to August 19, 2003 the
Corporation shall effect (A) any reorganization or reclassification or
recapitalization of the capital stock of the Corporation, (B) any consolidation
or merger of the Corporation with or into another Person whether or not the
Corporation is the surviving corporation, (C) any share exchange to which the
Corporation is a party or (D) the sale, transfer or other disposition of all or
substantially all of the property, assets or business of the Corporation
(whether in one transaction or a series of transactions) as a result of which
holders of Common Stock become entitled to receive any Shares or other
securities and/or other assets of the Corporation, any of its subsidiaries or
any other Person (including, without limitation, cash) with respect to or in
exchange for Common Stock, there shall thereafter be deliverable upon the
exercise of an Option (until the expiration of the Option in question), in lieu
of the Option Shares theretofore deliverable, the highest number of Shares or
other securities and/or other assets (including, without limitation, cash) that
would have been deliverable to a Participant had the Option in question been
exercised in full immediately prior to, and such Participant participated in,
such reorganization, reclassification or recapitalization of capital stock,
consolidation or merger, share exchange or sale and thereafter Subsection 7(a)
shall no longer be of any force or effect. If the terms of both Subsection 7(b)
and this Subsection 7(c) would apply to a transaction, then the transaction will
be subject to this Subsection 7(c) and not Subsection 7(b).

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                (ii)     The Corporation shall not consummate any transaction
subject to Subsection 7(c)(i) unless each Person whose Shares, other securities
or other assets will be issued, delivered or paid to the holders of the Common
Stock (other than the Corporation), prior to or simultaneously with the
consummation of the transaction, expressly assumes, by an Option supplement or
other document in a form substantially similar hereto, executed and delivered to
the Participant, the obligation to deliver to the Participant such Shares, other
securities or other assets as, in accordance with the foregoing provisions of
this Subsection 7(c), the Participant is entitled to purchase, and all other
obligations and liabilities under the Option in question, including obligations
and liabilities in respect of subsequent adjustments that are required under
such Option.

                (iii)     The above provisions of this Subsection 7(c) shall
similarly apply to successive reclassifications and changes of Option Shares and
to successive consolidations, mergers, leases, sales or conveyances, with
necessary changes being made and respective differences being taken into
account.

        (d)    Adjustment in Case of Tender Offer. If the Corporation
consummates a tender or exchange offer (other than an odd lot offer) to acquire
Common Stock at a price per share in excess of the Market Price of a share of
Common Stock on the day immediately following the day on which such tender or
exchange offer expires, then the Option Price in effect immediately prior to the
day on which such tender or exchange offer expires shall be adjusted to a price
obtained by multiplying such Option Price by a fraction of which (i) the
denominator shall be the Market Price on the day immediately prior to the day on
which such tender or exchange offer expires and (ii) the numerator shall be the
result of dividing (A) an amount equal to (1) the product of the number of
shares of Common Stock outstanding and the Market Price of a share of Common
Stock, in each case immediately prior to the day on which such tender or
exchange offer expires, minus (2) the aggregate consideration paid by the
Corporation in the tender or exchange offer, by (B) the number of shares of
Common Stock outstanding immediately after the day on which such tender or
exchange offer expires.

        (e)    Other Dilutive Event. If any event or occurrence shall occur that
actually results in an adjustment under Section 11(a)(ii) or Section 13 of that
certain Rights Agreement, dated February 14, 1996, as amended, between the
Corporation and American Stock Transfer & Trust Company or corresponding
provisions under similar stock purchase rights that the Corporation might
authorize and issue in the future, and the provisions of this Section 7 are not
strictly applicable, but as to which the failure to make any adjustment to the
Option Price and/or the number of Shares or other securities or other assets
subject to an Option or the Plan would adversely affect the purchase rights or
value represented by the Option in question in accordance with the essential
intent and principles of this Section 7, then the Corporation shall determine
the adjustment, if any, on a basis consistent with the essential intent and
principles established in this Section 7, necessary to preserve, without
dilution, the purchase rights represented by such Option. If such determination
involves or is based on a determination of the fair market value of any
securities or other assets, then such determination shall be made by the Board
acting in good faith and on a reasonable basis.

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        (f)    Adjustment of Plan Reserve and Limits. If any event described in
Subsections 7(a) through (c) or 7(e) results in an adjustment in the number of
Option Shares subject to outstanding Options, then the number of shares of
Common Stock reserved for issuance under Section 5 and the share limits
described in Section 6(b) shall likewise be ratably adjusted.

        (g)    Anti-Dilution Provisions. After the later of (i) August 19, 2005
or (ii) the date the Corporation has achieved Financial Closing with respect to
New Financing in the amount of at least $30 million, if, as of that date, the
Corporation has issued or outstanding any Stock Purchase Rights or Convertible
Securities or other securities (excluding any Options, the Warrants and the
Corporation’s preferred stock purchase rights issued pursuant to that certain
Rights Agreement, dated February 14, 1996, as amended, between the Corporation
and American Stock Transfer & Trust Company and any similar stock purchase
rights that the Corporation might authorize and issue in the future) containing
provisions protecting the holder or holders thereof against dilution in any
manner more favorable to such holder or holders thereof than those set forth
herein, then such provisions (or any more favorable portion thereof) shall be
deemed to be incorporated in this Plan as if fully set forth herein and, to the
extent inconsistent with any provision of this Plan, shall be deemed to be
substituted therefor.

        8.     EFFECT ON OTHER PLANS

        All benefits under the Plan shall constitute special compensation and
shall not affect the level of benefits provided to or received by any
Participant (or the Participant’s estate or beneficiaries) as part of any
employee benefit plan of the Corporation or an Affiliate. The Plan shall not be
construed to affect in any way a Participant’s rights and obligations under any
other plan maintained by the Corporation or an Affiliate on behalf of employees.

        9.     TERM OF THE PLAN

        This Plan will terminate on the earliest to occur of: (a) August 21,
2013, (b) the date all shares of Common Stock reserved for issuance under the
Plan are so issued, or (c) the date the Board terminates this Plan pursuant to
the provisions of Subsection 10(i). Notwithstanding the foregoing, the authority
of the Committee to administer and amend the Plan and any Option Agreements will
extend beyond the date of the Plan’s termination.

        10.     GENERAL PROVISIONS

        (a)    No Right of Continued Employment. Neither the establishment of
the Plan nor the payment of any benefits hereunder nor any action of the
Corporation, its Affiliates, the Board or the Board of Directors of any
Affiliate, or the Committee or Union shall be held or construed to confer upon
any person any legal right to be continued in the employ of the Corporation or
its Affiliates, and the Corporation and its Affiliates expressly reserve the
right to discharge any Participant without liability to the Corporation, its
Affiliates, the Board or the Board of Directors of any Affiliate, or the
Committee, except as to any rights which may be expressly conferred upon a
Participant under the Plan.

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        (b)    Binding Effect. Any decision made or action taken by the
Corporation, the Board or by the Committee arising out of or in connection with
the construction, administration, interpretation and effect of the Plan shall be
conclusive and binding upon all persons. No member of the Board or Committee
shall be liable for any action taken or determination made in good faith.

        (c)    Modification of Awards. Subject to the requirements of the Plan
and any applicable collective bargaining requirements, the Committee may modify
or amend any Option or waive any restrictions or conditions applicable to any
Option or the exercise thereof, and the terms and conditions applicable to any
Options may at any time be amended, modified or canceled by mutual agreement
between the Committee and the Participant or any other persons as may then have
an interest therein, so long as any amendment or modification does not increase
the number of shares of Common Stock issuable under the Plan. Action may be
taken under this Subsection 10(c) notwithstanding expiration of the Plan under
Section 9.

        (d)    Inalienability of Benefits and Interest. Except as provided in
Subsection 6(g), no benefit payable or interest in the Plan shall be subject in
any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge, and any such attempted action shall be void and no such
benefit or interest shall be in any manner liable for or subject to debts,
contracts, liabilities, engagements, or torts of any Participant or beneficiary.

        (e)    Law to Govern. All questions pertaining to the construction,
interpretation, regulation, validity and effect of the provisions of the Plan
shall be determined in accordance with the internal laws of the state in which
the Corporation is incorporated at the time of the question.

        (f)    Purchase of Common Stock. The Corporation and its Affiliates may
purchase from time to time shares of Common Stock in such amounts as they may
determine for purposes of the Plan. The Corporation and its Affiliates shall
have no obligation to retain, and shall have the unlimited right to sell or
otherwise deal with for their own account, any shares of Common Stock purchased
pursuant to this paragraph.

        (g)    Use of Proceeds. The proceeds received by the Corporation from
the sale of Common Stock pursuant to the exercise of Options shall be used for
general corporate purposes.

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        (h)    Withholding. As a condition to the exercise of an Option, the
Participant is required to pay or otherwise satisfy all withholding taxes as
required by law. At the sole discretion of the Committee, a Participant may
elect to have any portion of the federal, state or local income tax withholding
required with respect to an exercise of an Option satisfied by tendering to the
Corporation shares of Common Stock that, in the absence of such an election,
would have been issued to such Participant in connection with such exercise. In
the event that the Market Price of the shares of Common Stock tendered to
satisfy the withholding tax required with respect to an exercise (as determined
on the date such shares are tendered) exceeds the amount of such tax, the excess
of such market value over the amount of such tax shall be returned to the
Participant, to the extent possible, in whole shares of Common Stock, and the
remainder in cash. An election pursuant to this Subsection 10(h) shall be made
in writing and signed by the Participant on such form as the Committee may
prescribe. An election pursuant to this Subsection 10(h) is irrevocable. An
Insider who exercises an Option may satisfy the income tax withholding due in
respect of such exercise pursuant to this Subsection 10(h) only if the Insider
also satisfies an exemption under Section 16(b) of the Exchange Act for such
withholding.

        (i)    Amendments; Termination. Subject to any collective bargaining
requirements, the Committee may amend this Plan, and the Board may terminate
this Plan, at any time, subject to the following limitations:

                (i)     shareholders must approve any amendment of this Plan if
the Committee determines such approval is required by: (A) the Exchange Act,
(B) the Code, (C) the listing requirements of the New York Stock Exchange or any
principal securities exchange or market on which the Common Stock is then
traded, or (D) any other applicable law; and

                (ii)     shareholders must approve any of the following Plan
amendments: (A) an amendment to increase the number of shares of Common Stock
specified in Section 5 (except as permitted by Section 7); (B) an amendment to
Subsection 6(o); or (C) an amendment to this Subsection 10(i).

        (j)    Survival of Options. Except as provided in Subsections 6(n) and
10(c), no amendment, alteration, discontinuance, suspension or termination of
the Plan shall, without the consent of the Participant, adversely change any of
the rights or obligations under any unexpired Options. Following termination of
the Plan, all unexpired Options shall continue in force and effect except as
they may lapse or be terminated by their own terms and conditions.

        (k)    Requirements of Law. The granting of Options and the issuance of
shares under the Plan are subject to all applicable laws, rules and regulations
and to such approvals by any governmental agencies or national securities
exchanges as may be required. Notwithstanding any other provision of this Plan
or any Option Agreement, the Corporation has no liability to deliver any shares
under this Plan unless such delivery would comply with all applicable laws and
the applicable requirements of any securities exchange or similar entity.

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