EXHIBIT 10.1

 

WATER PIK TECHNOLOGIES, INC.

 

1999 INCENTIVE PLAN

 

(As Amended and Restated as of May 13, 2004)

 

ARTICLE I

 

PURPOSE AND ADOPTION OF THE PLAN

 

1.01.                        Purpose.  The purpose of the Water Pik
Technologies, Inc. 1999 Incentive Plan (hereinafter referred to as the “Plan”)
is to assist in attracting and retaining highly competent employees, to act as
an incentive in motivating selected officers and other key employees of Water
Pik Technologies, Inc. and its Subsidiaries to achieve long-term corporate
objectives and to enable cash incentive awards to qualify as performance-based
for purposes of the tax deduction limitations under Section 162(m) of the Code.

 

1.02.                        Adoption and Term.  The Plan has been approved by
the Board of Directors of Water Pik Technologies, Inc., to be effective as of
the effective date of the distribution by Allegheny Teledyne Incorporated to its
stockholders of Water Pik Technologies, Inc. Common Stock (the “Effective
Date”), but is subject to the approval of the stockholders of the Company.  The
Plan shall have a fixed term of ten years from the Effective Date unless earlier
terminated by action of the Board; provided, however, that no Incentive Stock
Option may be granted hereunder after the tenth anniversary of the Effective
Date and the provisions of Articles VII, VIII and X and Section 9.01 and 9.02
with respect to performance-based awards to “covered employees” under
Section 162(m) of the Code shall expire as of the fifth anniversary of the most
recent approval by the stockholders of the Company of this Plan (whether
initially or as amended).

 

ARTICLE II

 

DEFINITIONS

 

For the purpose of this Plan, capitalized terms shall have the following
meanings:

 

2.01.                        Award means any one or a combination of
Non-Qualified Stock Options or Incentive Stock Options described in Article VI,
Stock Appreciation Rights described in Article VI, Restricted Shares described
in Article VII, Performance Awards described in Article VIII, Stock Units
described in Section 9.03, Awards of cash or any other Award made under the
terms of the Plan.

 

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2.02.                        Award Agreement means a written agreement between
the Company and a Participant or a written acknowledgment from the Company to a
Participant specifically setting forth the terms and conditions of an Award
granted under the Plan.

 

2.03.                        Award Period means, with respect to an Award, the
period of time set forth in the Award Agreement during which specified target
performance goals must be achieved or other conditions set forth in the Award
Agreement must be satisfied.

 

2.04.                        Beneficiary means an individual, trust or estate
who or which, by a written designation of the Participant filed with the Company
or by operation of law, succeeds to the rights and obligations of the
Participant under the Plan and the Award Agreement upon the Participant’s death.

 

2.05.                        Board means the Board of Directors of the Company.

 

2.06.                        Change in Control means, and shall be deemed to
have occurred upon the occurrence of, any one of the following events:

 

(a)                                  The acquisition in one or more
transactions, other than from the Company, by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of a number of Company Voting Securities in excess of 25% of the
Company Voting Securities unless such acquisition has been approved by the
Board;

 

(b)                                 Any election has occurred of persons to the
Board that causes two-thirds of the Board to consist of persons other than (i)
persons who were members of the Board on the Effective Date and (ii) persons who
were nominated for elections as members of the Board at a time when two-thirds
of the Board consisted of persons who were members of the Board on the Effective
Date, provided, however, that any person nominated for election by a Board at
least two-thirds of whom constituted persons described in clauses (i) and/or
(ii) or by persons who were themselves nominated by such Board shall, for this
purpose, be deemed to have been nominated by a Board composed of persons
described in clause (i);

 

(c)                                  Approval by the stockholders of the Company
of a reorganization, merger or consolidation, unless, following such
reorganization, merger or consolidation, all or substantially all of the
individuals and entities who were the respective beneficial owners of the
Outstanding Common Stock and Company Voting Securities immediately prior to such
reorganization, merger or consolidation, following such reorganization, merger
or consolidation beneficially own, directly or indirectly, more than seventy
five percent (75%) of, respectively, the then outstanding shares of common stock
and the combined voting power of the then outstanding voting securities entitled
to vote generally in the election of directors or trustees, as the case may be,
of the entity resulting from such reorganization, merger or consolidation in
substantially the same proportion as their

 

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ownership of the Outstanding Common Stock and Company Voting Securities
immediately prior to such reorganization, merger or consolidation, as the case
may be; or

 

(d)                                 Approval by the stockholders of the Company
of (i) a complete liquidation or dissolution of the Company or (ii) a sale or
other disposition of all or substantially all the assets of the Company.

 

2.07.                        Code means the Internal Revenue Code of 1986, as
amended. References to a section of the Code shall include that section and any
comparable section or sections of any future legislation that amends,
supplements or supersedes said section.

 

2.08.                        Committee means the Committee defined in
Section 3.01.

 

2.09.                        Company means Water Pik Technologies, Inc., a
Delaware corporation, and its successors.

 

2.10.                        Common Stock means Common Stock of the Company, par
value $0.01 per share.

 

2.11.                        Company Voting Securities means the combined voting
power of all outstanding voting securities of the Company entitled to vote
generally in the election of directors to the Board.

 

2.12.                        Date of Grant means the date designated by the
Committee as the date as of which it grants an Award, which shall not be earlier
than the date on which the Committee approves the granting of such Award.

 

2.13.                        Exchange Act means the Securities Exchange Act of
1934, as amended.

 

2.14.                        Exercise Price means, with respect to a Stock
Appreciation Right, the amount established by the Committee in the Award
Agreement which is to be subtracted from the Fair Market Value on the date of
exercise in order to determine the amount of the payment to be made to the
Participant, as further described in Section 6.02(b).

 

2.15.                        Fair Market Value means, on any date, the average
of the high and low quoted sales prices of a share of Common Stock, as reported
on the Composite Tape for New York Stock Exchange Listed Companies on such date
or, if there were no sales on such date, on the last date preceding such date on
which a sale was reported.

 

2.16.                        Incentive Stock Option means a stock option within
the meaning of Section 422 of the Code.

 

2.17.                        Merger means any merger, reorganization,
consolidation, exchange, transfer of assets or other transaction having similar
effect involving the Company.

 

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2.18.                        Non-Qualified Stock Option means a stock option
which is not an Incentive Stock Option.

 

2.19.                        Options means all Non-Qualified Stock Options and
Incentive Stock Options granted at any time under the Plan.

 

2.20.                        Outstanding Common Stock means, at any time, the
issued and outstanding shares of Common Stock.

 

2.21.                        Participant means a person designated to receive an
Award under the Plan in accordance with Section 5.01.

 

2.22.                        Performance Awards means Awards granted in
accordance with Article VIII.

 

2.23.                        Performance Goals means operating income, operating
profit (earnings from continuing operations before interest and taxes), EBITDA
(earnings before interest, taxes, depreciation and amortization), free cash
flow, IBT (income before taxes), earnings per share, return on investment or
working capital, return on average capital employed, return on stockholders’
equity, any other measurement of business value, economic value added (the
amount, if any, by which net operating profit after tax exceeds a reference cost
of capital), reductions in inventory, inventory turns and on-time delivery
performance, any one of which may be measured with respect to the Company or any
one or more of its Subsidiaries and divisions and either in absolute terms or as
compared to another company or companies, and quantifiable, objective measures
of individual performance relevant to the particular individual’s job
responsibilities.

 

2.24.                        Plan means the Water Pik Technologies, Inc. 1999
Incentive Plan as described herein, as the same may be amended from time to
time.

 

2.25.                        Purchase Price, with respect to Options, shall have
the meaning set forth in Section 6.01(b).

 

2.26.                        Restoration Option means a Non-Qualified Stock
Option granted pursuant to Section 6.01(f).

 

2.27.                        Restricted Shares means Common Stock subject to
restrictions imposed in connection with Awards granted under Article VII.

 

2.28.                        Retirement means early or normal retirement under a
pension plan or arrangement of the Company or one of its Subsidiaries in which
the Participant participates.

 

2.29.                        Rule 16b-3 means Rule 16b-3 promulgated by the
Securities and Exchange Commission under Section 16 of the Exchange Act, as the
same may be amended from time to time, and any successor rule.

 

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2.30.                        Stock Appreciation Rights means awards granted in
accordance with Article VI.

 

2.31                           Stock Unit means a unit of value, equal at any
relevant time to the Fair Market Value of a share of Common Stock, established
by the Committee as a means of measuring the value of a Participant’s Stock Unit
Account.

 

2.32                           Stock Unit Account means the bookkeeping account
maintained by the Committee on behalf of each Participant who is credited with
Stock Units and dividend equivalents thereon pursuant to Section 9.03.

 

2.33                           Stock Option Gain shall mean, with respect to the
exercise of a Non-Qualified Stock Option (whether an option granted under this
Plan or any other plan sponsored by the Company), the number of shares of Common
Stock issuable with respect to such exercise that exceed the number of shares of
Common Stock delivered to the Company (or deemed delivered to the Company) as
payment of the exercise price for such stock option.

 

2.34.                        Subsidiary means a subsidiary of the Company within
the meaning of Section 424(f) of the Code.

 

2.35.                        Termination of Employment means the voluntary or
involuntary termination of a Participant’s employment with the Company or a
Subsidiary for any reason, including death, disability, retirement or as the
result of the divestiture of the Participant’s employer or any similar
transaction in which the Participant’s employer ceases to be the Company or one
of its Subsidiaries.  Whether entering military or other government service
shall constitute Termination of Employment, or whether a Termination of
Employment shall occur as a result of disability, shall be determined in each
case by the Committee in its sole discretion.

 

ARTICLE III

 

ADMINISTRATION

 

3.01.                        Committee.                                     The
Plan shall be administered by a committee of the Board (“Committee”) comprised
of at least two persons.  The Committee shall have exclusive and final authority
in each determination, interpretation or other action affecting the Plan and its
Participants.  The Committee shall have the sole discretionary authority to
interpret the Plan, to establish and modify administrative rules for the Plan,
to impose such conditions and restrictions on Awards as it determines
appropriate, and to take such steps in connection with the Plan and Awards
granted hereunder as it may deem necessary or advisable.  The Committee shall
not, however, have or exercise any discretion that would disqualify amounts
payable under Article X as performance-based compensation for purposes of
Section 162(m) of the Code, or have any authority to substitute any Awards or
use any other methods that would constitute a “repricing” under

 

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the rules of the New York Stock Exchange.  The Committee may delegate such of
its powers and authority under the Plan as it deems appropriate to a
subcommittee of the Committee and/or designated officers or employees of the
Company.  In addition, the full Board may exercise any of the powers and
authority of the Committee under the Plan. In the event of such delegation of
authority or exercise of authority by the Board, references in the Plan to the
Committee shall be deemed to refer, as appropriate, to the delegate of the
Committee or the Board.  Actions taken by the Committee or any subcommittee
thereof, and any delegation by the Committee to designated officers or
employees, under this Section 3.01 shall comply with Section 16(b) of the
Exchange Act, the performance-based provisions of Section 162(m) of the Code,
and the regulations promulgated under each of such statutory provisions, or the
respective successors to such statutory provisions or regulations, as in effect
from time to time, to the extent applicable.

 

ARTICLE IV

 

SHARES

 

4.01.                        Number of Shares Issuable.  The maximum number of
shares of Common Stock authorized to be issued under the Plan shall be 1,900,000
shares.  In addition to such amount, for each share of outstanding restricted
stock (that was originally granted under the terms of the Water Pik
Technologies, Inc. Stock Acquisition and Retention Program or any other benefit
plan of the Company, whether currently existing or adopted in the future) that
is contributed to the Plan in accordance with Section 9.03 and thereby is
cancelled by the Company and is no longer outstanding, an additional share of
Common Stock will be added to the authorized shares to be issued under the Plan;
provided that the number of shares added to the Plan under this sentence shall
not exceed 500,000 shares.  No more than 945,000 shares of Common Stock may be
issued under the Plan as Incentive Stock Options.  The number of shares
available for issuance under the Plan shall be further subject to adjustment in
accordance with Section 11.07.  The shares to be offered under the Plan shall be
authorized and unissued Common Stock, or issued Common Stock which shall have
been reacquired by the Company.

 

4.02.                        Shares Subject to Terminated Awards.  Common Stock
covered by any unexercised portions of terminated Options (including cancelled
Options) granted under Article VI, Common Stock forfeited as provided in
Section 7.02(a), Stock Units forfeited as provided in Section 9.03, Restricted
Shares issued under the Plan that are cancelled in exchange for Stock Units
under Section 9.03(c), and Common Stock subject to any Awards which are
otherwise surrendered by the Participant may again be subject to new Awards
under the Plan.  Common Stock subject to Options, or portions thereof, which
have been surrendered in connection with the exercise of Stock Appreciation
Rights shall not be available for subsequent Awards under the Plan, but Common
Stock issued in payment of such Stock Appreciation Rights shall not be charged
against the number of shares of Common Stock available for the grant of Awards
hereunder.  In the event of the exercise of Stock Appreciation Rights not
granted in tandem with Options, only the number of shares of Common Stock
actually issued in payment of such Stock

 

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Appreciation Rights shall be charged against the number of shares of Common
Stock available for the grant of Awards hereunder.

 

ARTICLE V

 

PARTICIPATION

 

5.01.                        Eligible Participants.  Participants in the Plan
shall be such officers and other key employees of the Company and its
Subsidiaries, whether or not members of the Board, as the Committee, in its sole
discretion, may designate from time to time.  The Committee’s designation of a
Participant in any year shall not require the Committee to designate such person
to receive Awards or grants in any other year.  The designation of a Participant
to receive awards or grants under one portion of the Plan does not require the
Committee to include such Participant under other portions of the Plan.  In
order to be eligible to participate in the deferral arrangements described in
Section 9.03, an individual must be specifically designated by the Committee as
a Participant for purposes of that Section.  The Committee shall consider such
factors as it deems pertinent in selecting Participants and in determining the
type and amount of their respective Awards.  Notwithstanding any provision
herein to the contrary, the Committee may grant Awards under the Plan, other
than Incentive Stock Options, to non-employees who, in the judgment of the
Committee, render significant services to the Company or any of its
Subsidiaries, on such terms and conditions as the Committee deems appropriate
and consistent with the intent of the Plan.  Subject to adjustment in accordance
with Section 11.07, in any calendar year, no Participant shall be granted Awards
in respect of more than 500,000 shares of Common Stock (whether through grants
of Options or Stock Appreciation Rights or other grants of Common Stock or
rights with respect thereto) and $2,000,000 in cash.

 

ARTICLE VI

 

STOCK OPTIONS AND STOCK APPRECIATION RIGHTS

 

6.01.                        Option Awards.

 

(a)                                  Grant of Options.  The Committee may grant,
to such Participants as the Committee may select, Options entitling the
Participant to purchase shares of Common Stock from the Company in such number,
at such price, and on such terms and subject to such conditions, not
inconsistent with the terms of this Plan, as may be established by the
Committee.  The terms of any Option granted under this Plan shall be set forth
in an Award Agreement.

 

(b)                                 Purchase Price of Options.  The Purchase
Price of each share of Common Stock which may be purchased upon exercise of any
Option granted under the Plan shall be determined by the Committee; provided,
however, that the Purchase Price

 

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of the Common Stock purchased pursuant to Options designated by the Committee as
Incentive Stock Options shall be equal to or greater than the Fair Market Value
on the Date of Grant as required under Section 422 of the Code.

 

(c)                                  Designation of Options.  Except as
otherwise expressly provided in the Plan, the Committee may designate, at the
time of the grant of each Option, the Option as an Incentive Stock Option or a
Non-Qualified Stock Option.

 

(d)                                 Incentive Stock Option Share Limitation.  No
Participant may be granted Incentive Stock Options under the Plan (or any other
plans of the Company and its Subsidiaries) which would result in shares with an
aggregate Fair Market Value (measured on the Date of Grant) of more than
$100,000 first becoming exercisable in any one calendar year.

 

(e)                                  Rights As a Stockholder.  A Participant or
a transferee of an Option pursuant to Section 11.04 shall have no rights as a
stockholder with respect to Common Stock covered by an Option until the
Participant or transferee shall have become the holder of record of any such
shares, and no adjustment shall be made for dividends in cash or other property
or distributions or other rights with respect to any such Common Stock for which
the record date is prior to the date on which the Participant or a transferee of
the Option shall have become the holder of record of any such shares covered by
the Option; provided, however, that Participants are entitled to share
adjustments to reflect capital changes under Section 11.07.

 

(f)                                    Restoration Options Upon the Exercise of
a Non-Qualified Stock Option. In the event that any Participant delivers to the
Company, or has withheld from the shares otherwise issuable upon the exercise of
a Non-Qualified Stock Option, shares of Common Stock in payment of the Purchase
Price of any Non-Qualified Stock Option granted hereunder in accordance with
Section 6.04, the Committee shall have the authority to grant or provide for the
automatic grant of a Restoration Option to such Participant.  The grant of a
Restoration Option shall be subject to the satisfaction of such conditions or
criteria as the Committee in its sole discretion shall establish from time to
time.  A Restoration Option shall entitle the holder thereof to purchase a
number of shares of Common Stock equal to the number of such shares so delivered
or withheld upon exercise of the original Option and, in the discretion of the
Committee, the number of shares, if any, delivered or withheld to the
Corporation to satisfy any withholding tax liability arising in connection with
the exercise of the original Option.  A Restoration Option shall have a per
share Purchase Price of not less than 100% of the per share Fair Market Value of
the Common Stock on the date of grant of such Restoration Option, a term not
longer than the remaining term of the original Option at the time of exercise
thereof, and such other terms and conditions as the Committee in its sole
discretion shall determine.

 

(g)                                 Deferral of Stock Option Gains.  Stock
Option Gains with respect to Non-Qualified Stock Options granted under this Plan
may be deferred in accordance

 

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with Section 9.03 by any Participant who is designated by the Committee as
eligible to participate in such deferral arrangement.

 

6.02.                        Stock Appreciation Rights.

 

(a)                                  Stock Appreciation Right Awards.  The
Committee is authorized to grant to any Participant one or more Stock
Appreciation Rights.  Such Stock Appreciation Rights may be granted either
independent of or in tandem with Options granted to the same Participant. Stock
Appreciation Rights granted in tandem with Options may be granted simultaneously
with, or, in the case of Non-Qualified Stock Options, subsequent to, the grant
to such Participant of the related Option; provided however, that: (i) any
Option covering any share of Common Stock shall expire and not be exercisable
upon the exercise of any Stock Appreciation Right with respect to the same
share, (ii) any Stock Appreciation Right covering any share of Common Stock
shall expire and not be exercisable upon the exercise of any related Option with
respect to the same share, and (iii) an Option and Stock Appreciation Right
covering the same share of Common Stock may not be exercised simultaneously. 
Upon exercise of a Stock Appreciation Right with respect to a share of Common
Stock, the Participant shall be entitled to receive an amount equal to the
excess, if any, of (A) the Fair Market Value of a share of Common Stock on the
date of exercise over (B) the Exercise Price of such Stock Appreciation Right
established in the Award Agreement, which amount shall be payable as provided in
Section 6.02(c).

 

(b)                                 Exercise Price. The Exercise Price
established under any Stock Appreciation Right granted under this Plan shall be
determined by the Committee, but in the case of Stock Appreciation Rights
granted in tandem with Options shall not be less than the Purchase Price of the
related Option.  Upon exercise of Stock Appreciation Rights granted in tandem
with options, the number of shares subject to exercise under any related Option
shall automatically be reduced by the number of shares of Common Stock
represented by the Option or portion thereof which are surrendered as a result
of the exercise of such Stock Appreciation Rights.

 

(c)                                  Payment of Incremental Value.  Any payment
which may become due from the Company by reason of a Participant’s exercise of a
Stock Appreciation Right may be paid to the Participant as determined by the
Committee (i) all in cash, (ii) all in Common Stock, or (iii) in any combination
of cash and Common Stock.  In the event that all or a portion of the payment is
made in Common Stock, the number of shares of Common Stock delivered in
satisfaction of such payment shall be determined by dividing the amount of such
payment or portion thereof by the Fair Market Value on the Exercise Date.  No
fractional share of Common Stock shall be issued to make any payment in respect
of Stock Appreciation Rights; if any fractional share would be issuable, the
combination of cash and Common Stock payable to the Participant shall be
adjusted as directed by the Committee to avoid the issuance of any fractional
share.

 

(d)                                 Deferral of Certain Stock Appreciation
Rights.  In the case of Stock Appreciation Rights that are payable solely in
shares of Common Stock, the shares

 

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of Common Stock issuable upon the exercise thereof may be deferred in accordance
with Section 9.03 by any Participant who is designated by the Committee as
eligible to participate in such deferral arrangement.

 

6.03.                        Terms of Stock Options and Stock Appreciation
Rights.

 

(a)                                  Conditions on Exercise.  An Award Agreement
with respect to Options and/or Stock Appreciation Rights may contain such
waiting periods, exercise dates and restrictions on exercise (including, but not
limited to, periodic installments) as may be determined by the Committee at the
time of grant.

 

(b)                                 Duration of Options and Stock Appreciation
Rights.  Options and Stock Appreciation Rights shall terminate upon the first to
occur of the following events:

 

(i)                                     Expiration of the Option or Stock
Appreciation Right as provided in the Award Agreement; or

 

(ii)                                  Termination of the Award in the event of a
Participant’s disability, Retirement, death or other Termination of Employment
as provided in the Award Agreement; or

 

(iii)                               In the case of an Incentive Stock Option,
ten years from the Date of Grant; or

 

(iv)                              Solely in the case of a Stock Appreciation
Right granted in tandem with an Option, upon the expiration of the related
Option.

 

(c)                                  Acceleration or Extension of Exercise
Time.  The Committee, in its sole discretion, shall have the right (but shall
not be obligated), exercisable on or at any time after the Date of Grant, to
permit the exercise of an Option or Stock Appreciation Right (i) prior to the
time such Option or Stock Appreciation Right would become exercisable under the
terms of the Award Agreement, (ii) after the termination of the Option or Stock
Appreciation Right under the terms of the Award Agreement, or (iii) after the
expiration of the Option or Stock Appreciation Right.

 

6.04.                        Exercise Procedures.  Each Option and Stock
Appreciation Right granted under the Plan shall be exercised by accessing a
telephonic voice/data response system or internet web site maintained or
otherwise approved by the Company or its designated agent prior to the close of
business on the expiration date of the Option or Stock Appreciation Right (or by
such other method as provided in the Award Agreement or as the Committee may
establish or approve from time to time).  The Purchase Price of shares purchased
upon exercise of an Option granted under the Plan shall be paid in full by means
of a cashless exercise program under which, if so instructed by the Participant,
shares may be issued directly to the Participant’s broker or dealer upon the
Participant’s irrevocable election.  Alternatively, the Participant may pay the
purchase price by cash or any other method approved in advance by the
Committee.  In the event that any Common

 

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Stock shall be transferred to the Company to satisfy all or any part of the
Purchase Price, the part of the Purchase Price deemed to have been satisfied by
such transfer of Common Stock shall be equal to the product derived by
multiplying the Fair Market Value as of the date of exercise times the number of
shares of Common Stock transferred to the Company.  The Participant may not
transfer to the Company in satisfaction of the Purchase Price any fractional
share of Common Stock.  Any part of the Purchase Price paid in cash upon the
exercise of any Option shall be added to the general funds of the Company and
may be used for any proper corporate purpose.  Unless the Committee shall
otherwise determine, any Common Stock transferred to the Company as payment of
all or part of the Purchase Price upon the exercise of any Option shall be held
as treasury shares.

 

6.05.                        Change in Control.  Unless otherwise provided by
the Committee in the applicable Award Agreement, in the event of a Change in
Control, all Options outstanding on the date of such Change in Control, and all
Stock Appreciation Rights shall become immediately and fully exercisable.  The
provisions of this Section 6.05 shall not be applicable to any Options or Stock
Appreciation Rights granted to a Participant if any Change in Control results
from such Participant’s beneficial ownership (within the meaning of Rule 13d-3
under the Exchange Act) of Common Stock or Company Voting Securities.

 

ARTICLE VII

 

RESTRICTED SHARES

 

7.01.                        Restricted Share Awards.  The Committee may grant
to any Participant an Award of Common Stock in such number of shares, and on
such terms, conditions and restrictions, whether based on performance standards,
periods of service, retention by the Participant of ownership of purchased or
designated shares of Common Stock or other criteria, as the Committee shall
establish.  With respect to performance-based Awards of Restricted Shares to
“covered employees” (as defined in Section 162(m) of the Code), performance
targets will be limited to specified levels of one or more of the Performance
Goals.  The terms of any Restricted Share Award granted under this Plan shall be
set forth in an Award Agreement which shall contain provisions determined by the
Committee and not inconsistent with this Plan.

 

(a)                                  Issuance of Restricted Shares.  As soon as
practicable after the Date of Grant of a Restricted Share Award by the
Committee, the Company shall cause to be transferred on the books of the
Company, or its agent, Common Stock, registered on behalf of the Participant,
evidencing the Restricted Shares covered by the Award, but subject to forfeiture
to the Company as of the Date of Grant if an Award Agreement with respect to the
Restricted Shares covered by the Award is not duly executed by the Participant
and timely returned to the Company.  All Common Stock covered by Awards under
this Article VII shall be subject to the restrictions, terms and conditions
contained in the Plan and the Award Agreement entered into by the Participant. 
Until the lapse or

 

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release of all restrictions applicable to an Award of Restricted Shares, the
share certificates representing such Restricted Shares may be held in custody by
the Company, its designee, or, if the certificates bear a restrictive legend, by
the Participant.  Upon the lapse or release of all restrictions with respect to
an Award as described in Section 7.01(d), one or more share certificates,
registered in the name of the Participant, for an appropriate number of shares
as provided in Section 7.01(d), free of any restrictions set forth in the Plan
and the Award Agreement shall be delivered to the Participant.

 

(b)                                 Stockholder Rights.  Beginning on the Date
of Grant of the Restricted Share Award and subject to execution of the Award
Agreement as provided in Section 7.01(a), the Participant shall become a
stockholder of the Company with respect to all shares subject to the Award
Agreement and shall have all of the rights of a shareholder, including, but not
limited to, the right to vote such shares and the right to receive dividends;
provided, however, that any Common Stock distributed as a dividend or otherwise
with respect to any Restricted Shares as to which the restrictions have not yet
lapsed, shall be subject to the same restrictions as such Restricted Shares and
held or restricted as provided in Section 7.01(a).

 

(c)                                  Restriction on Transferability.  None of
the Restricted Shares may be assigned or transferred (other than by will or the
laws of descent and distribution, or to an inter vivos trust with respect to
which the Participant is treated as the owner under Sections 671 through 677 of
the Code, except to the extent that Section 16 of the Exchange Act limits a
participant’s right to make such transfers), pledged or sold prior to lapse of
the restrictions applicable thereto.

 

(d)                                 Delivery of Shares Upon Vesting.  Upon
expiration or earlier termination of the forfeiture period without a forfeiture
and the satisfaction of or release from any other conditions prescribed by the
Committee, or at such earlier time as provided under the provisions of
Section 7.03, the restrictions applicable to the Restricted Shares shall lapse. 
As promptly as administratively feasible thereafter, subject to the requirements
of Section 11.05, the Company shall deliver to the Participant or, in case of
the Participant’s death, to the Participant’s Beneficiary, one or more share
certificates for the appropriate number of shares of Common Stock, free of all
such restrictions, except for any restrictions that may be imposed by law.

 

7.02.                        Terms of Restricted Shares.

 

(a)                                  Forfeiture of Restricted Shares.  Subject
to Sections 7.02(b) and 7.03, all Restricted Shares shall be forfeited and
returned to the Company and all rights of the Participant with respect to such
Restricted Shares shall terminate unless the Participant continues in the
service of the Company or a Subsidiary as an employee until the expiration of
the forfeiture period for such Restricted Shares and satisfies any and all other
conditions set forth in the Award Agreement.  The Committee shall determine the
forfeiture period (which may, but need not, lapse in installments) and any other
terms and conditions applicable with respect to any Restricted Share Award.

 

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(b)                                 Waiver of Forfeiture Period. 
Notwithstanding anything contained in this Article VII to the contrary, the
Committee may, in its sole discretion, waive the forfeiture period and any other
conditions set forth in any Award Agreement under appropriate circumstances
(including the death, disability or Retirement of the Participant or a material
change in circumstances arising after the date of an Award) and subject to such
terms and conditions (including forfeiture of a proportionate number of the
Restricted Shares) as the Committee shall deem appropriate.

 

(c)                                  Deferral of Restricted Shares.  Restricted
Shares granted under this Plan may be deferred in accordance with Section 9.03
by any Participant who is designated by the Committee as eligible to participate
in such deferral arrangement.

 

7.03.                        Change in Control.  Unless otherwise provided by
the Committee in the applicable Award Agreement, in the event of a Change in
Control, all restrictions applicable to the Restricted Share Award shall
terminate fully and the Participant shall immediately have the right to the
delivery of share certificate or certificates for such shares in accordance with
Section 7.01(d).

 

ARTICLE VIII

 

PERFORMANCE AWARDS

 

8.01.                        Performance Awards.

 

(a)                                  Award Periods and Calculations of Potential
Incentive Amounts. The Committee may grant Performance Awards to Participants. A
Performance Award shall consist of the right to receive a payment (measured by
the Fair Market Value of a specified number of shares of Common Stock, increases
in such Fair Market Value during the Award Period and/or a fixed cash amount)
contingent upon the extent to which certain predetermined performance targets
have been met during an Award Period. Performance Awards may be made in
conjunction with, or in addition to, Restricted Share Awards made under
Article VII.  The Award Period shall be two or more fiscal or calendar years as
determined by the Committee.  The Committee, in its discretion and under such
terms as it deems appropriate, may permit newly eligible employees, such as
those who are promoted or newly hired, to receive Performance Awards after an
Award Period has commenced.

 

(b)                                 Performance Targets.  The performance
targets may include such goals related to the performance of the Company or,
where relevant, any one or more of its Subsidiaries or divisions and/or the
performance of a Participant as may be established by the Committee in its
discretion.  In the case of Performance Awards to “covered employees” (as
defined in Section 162(m) of the Code), the targets will be limited to specified
levels of one or more of the Performance Goals.  The performance targets
established by the Committee may vary for different Award Periods and need not
be the same for each Participant receiving a Performance Award in an Award
Period.  Except to

 

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the extent inconsistent with the performance-based compensation exception under
Section 162(m) of the Code, in the case of Performance Awards granted to
employees to whom such section is applicable, the Committee, in its discretion,
but only under extraordinary circumstances as determined by the Committee, may
change any prior determination of performance targets for any Award Period at
any time prior to the final determination of the Award when events or
transactions occur to cause the performance targets to be an inappropriate
measure of achievement.

 

(c)                                  Earning Performance Awards.  The Committee,
at or as soon as practicable after the Date of Grant, shall prescribe a formula
to determine the percentage of the Performance Award to be earned based upon the
degree of attainment of performance targets.

 

(d)                                 Payment of Earned Performance Awards. 
Subject to the requirements of Section 11.05, payments of earned Performance
Awards shall be made in cash or Common Stock, or a combination of cash and
Common Stock, in the discretion of the Committee.  The Committee, in its sole
discretion, may define such terms and conditions with respect to the payment of
earned Performance Awards as it may deem desirable.

 

8.02.                        Terms of Performance Awards.

 

(a)                                  Termination of Employment.  Unless
otherwise provided below or in Section 8.03, in the case of a Participant’s
Termination of Employment prior to the end of an Award Period, the Participant
will not have earned any Performance Awards.

 

(b)                                 Retirement. If a Participant’s Termination
of Employment is because of Retirement prior to the end of an Award Period, the
Participant will not be paid any Performance Awards, unless the Committee, in
its sole and exclusive discretion, determines that an Award should be paid. In
such a case, the Participant shall be entitled to receive a pro-rata portion of
his or her Award as determined under Subsection (d).

 

(c)                                  Death or Disability.  If a Participant’s
Termination of Employment is due to death or disability (as determined in the
sole and exclusive discretion of the Committee) prior to the end of an Award
Period, the Participant or the Participant’s personal representative shall be
entitled to receive a pro-rata share of his or her Award as determined under
Subsection (d).

 

(d)                                 Pro-Rata Payment.  The amount of any payment
made to a Participant whose employment is terminated by Retirement, death or
disability (under circumstances described in Subsections (b) and (c)) will be
the amount determined by multiplying the amount of the Performance Award which
would have been earned, determined at the end of the Award Period, had such
employment not been terminated, by a fraction, the numerator of which is the
number of whole months such Participant was employed during the Award Period,
and the denominator of which is the total number of months of the Award Period. 
Any such payment made to a Participant whose

 

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employment is terminated prior to the end of an Award Period under this
Section 8.02 shall be made at the end of the respective Award Period, unless
otherwise determined by the Committee in its sole discretion.  Any partial
payment previously made or credited to a deferred account for the benefit of a
Participant as provided under Section 8.01(d) of the Plan shall be subtracted
from the amount otherwise determined as payable as provided in this Section.

 

(e)                                  Other Events.  Notwithstanding anything to
the contrary in this Article VIII, the Committee may, in its sole and exclusive
discretion, determine to pay all or any portion of a Performance Award to a
Participant who has terminated employment prior to the end of an Award Period
under certain circumstances (including the death, disability or retirement of
the Participant or a material change in circumstances arising after the Date of
Grant) and subject to such terms and conditions as the Committee shall deem
appropriate.

 

8.03.                        Change in Control.  Unless otherwise provided by
the Committee in the applicable Award Agreement, in the event of a Change in
Control, all Performance Awards for all Award Periods shall immediately become
fully payable to all Participants and shall be paid to Participants in
accordance with Section 8.02(d), within 30 days after such Change in Control.

 

ARTICLE IX

 

OTHER STOCK-BASED AWARDS

 

9.01.                        Grant of Other Stock-Based Awards.  Other
stock-based awards, consisting of stock purchase rights (with or without loans
to Participants by the Company containing such terms as the Committee shall
determine), Awards of cash, Awards of Common Stock, or Awards valued in whole or
in part by reference to, or otherwise based on, Common Stock, may be granted
either alone or in addition to or in conjunction with other Awards under the
Plan. Subject to the provisions of the Plan, the Committee shall have sole and
complete authority to determine the persons to whom and the time or times at
which such Awards shall be made, the number of shares of Common Stock to be
granted pursuant to such Awards, and all other conditions of the Awards.  Any
such Award shall be confirmed by an Award Agreement executed by the Committee
and the Participant, which Award Agreement shall contain such provisions as the
Committee determines to be necessary or appropriate to carry out the intent of
this Plan with respect to such Award.

 

9.02.                        Terms of Other Stock-Based Awards.  In addition to
the terms and conditions specified in the Award Agreement, Awards made pursuant
to this Article IX shall be subject to the following:

 

(a)                                  Any Common Stock subject to Awards made
under this Article IX may not be sold, assigned, transferred, pledged or
otherwise encumbered prior to the date

 

15

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on which the shares are issued, or, if later, the date on which any applicable
restriction, performance or deferral period lapses; and

 

(b)                                 If specified by the Committee in the Award
Agreement, the recipient of an Award under this Article IX shall be entitled to
receive, currently or on a deferred basis, interest or dividends or dividend
equivalents with respect to the Common Stock or other securities covered by the
Award; and

 

(c)                                  The Award Agreement with respect to any
Award shall contain provisions dealing with the disposition of such Award in the
event of a Termination of Employment prior to the exercise, realization or
payment of such Award, whether such termination occurs because of Retirement,
disability, death or other reason, with such provisions to take account of the
specific nature and purpose of the Award.

 

9.03                           Stock Unit Awards.

 

(a)                                  In General.  Without limiting the
generality of the foregoing provisions of this Article IX, and subject to such
terms, limitations and restrictions as the Committee may impose, Participants
designated by the Committee as Participants for purposes of this Section 9.03
may receive Awards of Stock Units in connection with: (i) the deferral of Stock
Option Gains, (ii) the deferral of restricted stock (whether granted under this
Plan or any other plan sponsored by the Company) and (iii) in connection with
the deferral of other types of compensation, including without limitation, stock
appreciation rights, phantom stock awards and other types of compensation awards
that are payable solely in shares of Common Stock (whether granted under this
Plan or any other plan sponsored by the Company).  The Committee shall establish
rules and regulations governing the deferrals and the Stock Unit Awards under
any such arrangement as may be established.

 

(b)                                 Deferral of Stock Option Gains.  Subject to
such timing rules as the Committee may establish, a Participant may irrevocably
elect to defer receipt of all or any portion of Stock Option Gains and receive a
credit under his or her Stock Unit Account of an equivalent number of Stock
Units in accordance with such limitations, terms and conditions as the Committee
may determine.  Any such deferral election must occur in a time period
designated by the Committee from time to time, but such election must occur
prior to the exercise of such stock option and within such time frame as
determined by the Committee in its discretion so that such election could
qualify for income tax deferral in accordance with then applicable federal tax
law.  Nothing in this Section 9.03(b) of the Plan shall be interpreted to permit
a Participant to exercise any stock option to the extent such stock option is
not vested or is not otherwise exercisable in accordance with the applicable
plan and agreement.  A Participant’s election to defer Stock Option Gains shall
only apply to Option exercises in connection with which the Participant, in
accordance with the applicable plan and agreement, pays the total amount of the
exercise price of such stock option by the delivery (or deemed delivery) of
shares of Common Stock held by the Participant for at least the period of time
required by the applicable plan and agreement, but in any event, held with no
restrictions prior to

 

16

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delivery and for such time frame as determined by the Committee in its
discretion so that such election could qualify for income tax deferral in
accordance with then applicable federal tax law; provided, however, that subject
to such terms, conditions and restrictions as the Committee may determine,
Participants may be permitted, in the Committee’s discretion, to defer into this
Plan gains attributable to stock options exercised by means other than the
payment of the exercise price by the delivery (or deemed delivery) of shares of
Common Stock.

 

(c)                                  Deferral of Restricted Stock.  Subject to
such timing rules as the Committee may establish, a Participant may irrevocably
elect to defer receipt of all or any number of shares of restricted stock
(whether granted under this Plan or any other plan sponsored by the Company) and
receive a credit under his or her Stock Unit Account of an equivalent number of
Stock Units.  Any such deferral election must be made in a time period
designated by the Committee from time to time, but such election must occur
before the restrictions on the restricted stock lapse and within such time frame
as determined by the Committee in its discretion so that such election could
qualify for income tax deferral in accordance with then applicable federal tax
law.  If a Participant elects to defer all or a portion of a restricted stock
award that has previously been granted, the Participant shall transfer the
restricted stock subject to such restricted stock award to the Company.  Upon
such transfer, the restricted stock shall be cancelled by the Company and no
longer outstanding, except as treasury stock.  The Stock Units credited to a
Participant’s Stock Unit Account with respect to a deferral of shares of
restricted stock shall vest and shall be forfeited subject to the same terms and
conditions as were applicable to the original restricted stock.  The number of
Stock Units credited to a Participant’s Stock Unit Account shall be reduced by
the number of Stock Units so forfeited.

 

(d)                                 Other Deferrals.  A Participant may
irrevocably elect to defer receipt of all or any number of shares of Common
Stock issuable upon the exercise of any stock appreciation rights, phantom stock
awards or other types of compensation awards that are payable solely in shares
of Common Stock (whether granted under this Plan or any other plan sponsored by
the Company) and receive a credit under his or her Stock Unit Account of an
equivalent number of Stock Units.  Any such deferral election must be made in
the time period designated by the Committee from time to time.

 

(e)                                  Dividend Equivalents.  A Participant’s
Stock Unit Account shall be credited with a number of Stock Units equal in value
to the amount of any cash dividends or stock distributions that would be payable
with respect to such Stock Units had such Stock Units been outstanding shares of
Common Stock (“dividend equivalents”).  The number of Stock Units credited with
respect to cash dividends shall be determined by dividing the amount of cash
dividends that would be payable by the Fair Market Value of Common Stock as of
the date such cash dividends would be payable.  Dividend equivalents credited to
a Participant’s Stock Unit Account that are attributable to Stock Units that are
subject to vesting and forfeiture restrictions as a result of a deferral of
receipt of restricted stock shall be forfeited at such time as any such
underlying Stock Units are forfeited.

 

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(f)                                    Vesting of Stock Units.  A Participant
shall be vested in the Stock Units credited to such Participant’s Stock Unit
Account that are attributable to Stock Option Gains, deferred shares of
restricted stock, deferred stock appreciation rights, phantom stock awards and
other types of compensation that are payable solely in Common Stock, and the
dividend equivalents credited with respect to each type of award, in accordance
with the same terms and conditions contained in the applicable award agreement
and plan under which such stock option, restricted stock, stock appreciation
right, phantom stock or other type of compensation award was originally
granted.  Stock Units that are not vested on the date of a Participant’s
Termination of Employment shall be forfeited.

 

(g)                                 Distribution of Stock Units.  The vested
Stock Units in a Participant’s Stock Unit Account shall only be distributed, or
commence to be distributed, solely in the form of Common Stock to the
Participant, only upon such participant’s Termination of Employment, in a lump
sum payment or in periodic payments over time as the Participant may elect in
accordance with procedures established by the Committee; provided, however, that
the Committee may establish procedures pursuant to which a Participant may elect
to defer the commencement of distribution to a date later than the Participant’s
Termination of Employment.  Notwithstanding any other provision of this
Section 9.03 or of the Plan, the balance credited to a Participant’s Stock Unit
Account (whether or not it is then otherwise in pay status, but only to the
extent it is otherwise vested (whether over time or by acceleration) under the
terms of the agreements originally granting the stock) shall be distributed in a
lump sum, immediately prior to and conditioned upon, the consummation of any
transaction constituting a Change in Control.  A Participant shall be entitled
to receive a distribution of one share of Common Stock for each Stock Unit
credited to his or her Stock Unit Account and cash equal to the Fair Market
Value of any fractional Stock Unit credited to his or her Stock Unit Account.

 

(h)                                 Unsecured General Creditor.  With respect to
all Stock Units and Awards under Section 9.03 of the Plan, Participants and
their beneficiaries, heirs, successors and assigns shall have no legal or
equitable rights, claims or interest in any specific property or assets of the
Company.  The Company’s obligation under Section 9.03 of the Plan shall be
merely that of an unfunded and unsecured promise of the Company to pay shares of
Common Stock in the future, and the rights of the Participants and beneficiaries
with respect thereto shall be no greater than those of unsecured general
creditors.  However, the Committee may, in its discretion, establish one or more
vehicles for payment of its obligations under Section 9.03 of the Plan,
including a trust, know as a “rabbi trust,” for use in funding the benefits
under Section 9.03 of the Plan with a trustee to be selected by the Committee in
accordance with a trust agreement meeting the requirements of Rev. Proc. 92-64,
as it may be amended or supplemented in the future.  The Awards and benefits
under Section 9.03 of the Plan are intended to be unfunded for tax purposes
under the Code and for purposes of the Employee Retirement Income Security Act
of 1974, as amended.

 

9.04.                        Foreign Qualified Awards.  Awards under the Plan
may be granted to such employees of the Company and its Subsidiaries who are
residing in foreign jurisdictions

 

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as the Committee in its sole discretion may determine from time to time. The
Committee may adopt such supplements to the Plan as may be necessary or
appropriate to comply with the applicable laws of such foreign jurisdictions and
to afford Participants favorable treatment under such laws; provided, however,
that no Award shall be granted under any such supplement with terms or
conditions inconsistent with the provision set forth in the Plan.

 

ARTICLE X

 

SHORT-TERM CASH INCENTIVE AWARDS

 

10.01.                  Eligibility.  Executive officers of the Company who are
from time to time determined by the Committee to be “covered employees” for
purposes of Section 162(m) of the Code will be eligible to receive short-term
cash incentive awards under this Article X.

 

10.02.                  Awards.

 

(a)                                  Performance Targets.  For each fiscal year
of the Company after fiscal year 1999, the Committee shall establish objective
performance targets based on specified levels of one or more of the Performance
Goals.  Such performance targets shall be established by the Committee on a
timely basis to ensure that the targets are considered “preestablished” for
purposes of Section 162(m) of the Code.

 

(b)                                 Amounts of Awards.  In conjunction with the
establishment of performance targets for a fiscal year, the Committee shall
adopt an objective formula (on the basis of percentages of Participants’
salaries, shares in a bonus pool or otherwise) for computing the respective
amounts payable under the Plan to Participants if and to the extent that the
performance targets are attained.  Such formula shall comply with the
requirements applicable to performance-based compensation plans under
Section 162(m) of the Code and, to the extent based on percentages of a bonus
pool, such percentages shall not exceed 100% in the aggregate.

 

(c)                                  Payment of Awards.  Awards will be payable
to Participants in cash each year upon prior written certification by the
Committee of attainment of the specified performance targets for the preceding
fiscal year.

 

(d)                                 Negative Discretion.  Notwithstanding the
attainment by the Company of the specified performance targets, the Committee
shall have the discretion, which need not be exercised uniformly among the
Participants, to reduce or eliminate the award that would be otherwise paid.

 

(e)                                  Guidelines.  The Committee shall adopt from
time to time written policies for its implementation of this Article X. Such
guidelines shall reflect the

 

19

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intention of the Company that all payments hereunder qualify as
performance-based compensation under Section 162(m) of the Code.

 

(f)                                    Non-Exclusive Arrangement.  The adoption
and operation of this Article X shall not preclude the Board or the Committee
from approving other short-term incentive compensation arrangements for the
benefit of individuals who are Participants hereunder as the Board or Committee,
as the case may be, deems appropriate and in the best of the Company.

 

ARTICLE XI

 

TERMS APPLICABLE GENERALLY TO AWARDS

GRANTED UNDER THE PLAN

 

11.01.                  Plan Provisions Control Award Terms.  Except as provided
in Section 11.16, the terms of the Plan shall govern all Awards granted under
the Plan, and in no event shall the Committee have the power to grant any Award
under the Plan which is contrary to any of the provisions of the Plan.  In the
event any provision of any Award granted under the Plan shall conflict with any
term in the Plan as constituted on the Date of Grant of such Award, the term in
the Plan as constituted on the Date of Grant of such Award shall control. 
Except as provided in Section 11.03 and Section 11.07, the terms of any Award
granted under the Plan may not be changed after the Date of Grant of such Award
so as to materially decrease the value of the Award without the express written
approval of the holder.

 

11.02.                  Award Agreement.  No person shall have any rights under
any Award granted under the Plan unless and until the Company and the
Participant to whom such Award shall have been granted shall have executed and
delivered an Award Agreement or received any other Award acknowledgment
authorized by the Committee expressly granting the Award to such person and
containing provisions setting forth the terms of the Award.

 

11.03.                  Modification of Award After Grant.  No Award granted
under the Plan to a Participant may be modified (unless such modification does
not materially decrease the value of the Award) after the Date of Grant except
by express written agreement between the Company and the Participant, provided
that any such change (a) shall not be inconsistent with the terms of the Plan,
and (b) shall be approved by the Committee.

 

11.04.                  Limitation on Transfer.  Except as provided in
Section 7.01(c) in the case of Restricted Shares, a Participant’s rights and
interest under the Plan may not be assigned or transferred other than by will or
the laws of descent and distribution, and during the lifetime of a Participant,
only the Participant personally (or the Participant’s personal representative)
may exercise rights under the Plan.  The Participant’s Beneficiary may exercise
the Participant’s rights to the extent they are exercisable under the Plan
following the death of the Participant. Notwithstanding the foregoing, to the
extent

 

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permitted under Section 16(b) of the Exchange Act with respect to Participants
subject to such Section, the Committee may grant Non-Qualified Stock Options
that are transferable, without payment of consideration, to immediate family
members of the Participant or to trusts or partnerships for such family members,
and the Committee may also amend outstanding Non-Qualified Stock Options to
provide for such transferability.

 

11.05.                  Taxes.  The Company shall be entitled, if the Committee
deems it necessary or desirable, to withhold (or secure payment from the
Participant in lieu of withholding) the amount of any withholding or other tax
required by law to be withheld or paid by the Company with respect to any amount
payable and/or shares issuable under such Participant’s Award, or with respect
to any income recognized upon a disqualifying disposition of shares received
pursuant to the exercise of an Incentive Stock Option, and the Company may defer
payment or issuance of the cash or shares upon exercise or vesting of an Award
unless indemnified to its satisfaction against any liability for any such tax.
The amount of such withholding or tax payment shall be determined by the
Committee and shall be payable by the Participant at such time as the Committee
determines in accordance with the following rules:

 

(a)                                  The Participant shall have the right to
elect to meet his or her withholding requirement (i) by having withheld from
such Award at the appropriate time that number of shares of Common Stock,
rounded up to the next whole share, whose Fair Market Value is equal to the
amount of withholding taxes due, (ii) by direct payment to the Company in cash
of the amount of any taxes required to be withheld with respect to such Award or
(iii) by a combination of shares and cash.

 

(b)                                 The Committee shall have the discretion as
to any Award, to cause the Company to pay to tax authorities for the benefit of
any Participant, or to reimburse such Participant for the individual taxes which
are due on the grant, exercise or vesting of any share Award, or the lapse of
any restriction on any share Award (whether by reason of a Participant’s filing
of an election under Section 83(b) of the Code or otherwise), including, but not
limited to, Federal income tax, state income tax, local income tax and excise
tax under Section 4999 of the Code, as well as for any such taxes as may be
imposed upon such tax payment or reimbursement.

 

(c)                                  In the case of Participants who are subject
to Section 16 of the Exchange Act, the Committee may impose such limitations and
restrictions as it deems necessary or appropriate with respect to the delivery
or withholding of shares of Common Stock to meet tax withholding obligations.

 

11.06.                  Surrender of Awards.  Any Award granted under the Plan
may be surrendered to the Company for cancellation on such terms as the
Committee and the holder approve.  With the consent of the Participant, the
Committee may substitute a new Award under this Plan in connection with the
surrender by the Participant of an equity compensation award previously granted
under this Plan or any other plan sponsored by the Company; provided, however,
that no such substitution or any other change shall be

 

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permitted if it would constitute a “repricing” under the rules of the New York
Stock Exchange.

 

11.07.                  Adjustments to Reflect Capital Changes.

 

(a)                                  Recapitalization. The number and kind of
shares subject to outstanding Awards, the Purchase Price or Exercise Price for
such shares, the number and kind of shares available for Awards subsequently
granted under the Plan and the maximum number of shares in respect of which
Awards can be made to any Participant in any calendar year shall be
appropriately adjusted to reflect any stock dividend, stock split, combination
or exchange of shares, merger, consolidation or other change in capitalization
with a similar substantive effect upon the Plan or the Awards granted under the
Plan.  The maximum number of shares in respect of which Awards can be made to
any Participant in any calendar year shall be proportionately adjusted to
reflect any other event that results in an increase in the number of issued and
outstanding shares of Common Stock.  The Committee shall have the power and sole
discretion to determine the amount of the adjustment to be made in each case.

 

(b)                                 Merger.  After any Merger in which the
Company is the surviving corporation, each Participant shall, at no additional
cost, be entitled upon any exercise of all Options or receipt of other Award to
receive (subject to any required action by shareholders), in lieu of the number
of shares of Common Stock receivable or exercisable pursuant to such Award, the
number and class of shares or other securities to which such Participant would
have been entitled pursuant to the terms of the Merger if, at the time of the
Merger, such Participant had been the holder of record of a number of shares
equal to the number of shares receivable or exercisable pursuant to such Award. 
Comparable rights shall accrue to each Participant in the event of successive
Mergers of the character described above.  In the event of a Merger in which the
Company is not the surviving corporation, the surviving, continuing, successor,
or purchasing corporation, as the case may be (the “Acquiring Corporation”),
shall either assume the Company’s rights and obligations under outstanding Award
Agreements or substitute awards in respect of the Acquiring Corporation’s stock
for such outstanding Awards.  In the event the Acquiring Corporation fails to
assume or substitute for such outstanding Awards, the Board shall provide that
any unexercisable and/or unvested portion of the outstanding Awards shall be
immediately exercisable and vested as of a date prior to such Merger, as the
Board so determines.  The exercise and/or vesting of any Award that was
permissible solely by reason of this Section 11.07(b) shall be conditioned upon
the consummation of the Merger.  Any Options which are neither assumed by the
Acquiring Corporation nor exercised as of the date of the Merger shall terminate
effective as of the effective date of the Merger.

 

(c)                                  Options to Purchase Shares or Stock of
Acquired Companies.  After any Merger in which the Company or a Subsidiary shall
be a surviving corporation, the Committee may grant substituted options under
the provisions of the Plan, pursuant to Section 424 of the Code, replacing old
options granted under a plan of another party to the Merger whose shares or
stock subject to the old options may no longer be issued

 

22

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following the Merger.  The foregoing adjustments and manner of application of
the foregoing provisions shall be determined by the Committee in its sole
discretion.  Any such adjustments may provide for the elimination of any
fractional shares which might otherwise become subject to any Options.

 

11.08.                  No Right to Employment.  No employee or other person
shall have any claim of right to be granted an Award under this Plan. Neither
the Plan nor any action taken hereunder shall be construed as giving any
employee any right to be retained in the employ of the Company or any of its
Subsidiaries.

 

11.09.                  Awards Not Includable for Benefit Purposes.  Payments
received by a Participant pursuant to the provisions of the Plan shall not be
included in the determination of benefits under any pension, group insurance or
other benefit plan applicable to the Participant which is maintained by the
Company or any of its Subsidiaries, except as may be provided under the terms of
such plans or determined by the Board.

 

11.10.                  Governing Law.  All determinations made and actions
taken pursuant to the Plan shall be governed by the laws of the State of
Delaware and construed in accordance therewith.

 

11.11.                  No Strict Construction.  No rule of strict construction
shall be implied against the Company, the Committee, or any other person in the
interpretation of any of the terms of the Plan, any Award granted under the Plan
or any rule or procedure established by the Committee.

 

11.12.                  Compliance with Rule 16b-3.  It is intended that, unless
the Committee determines otherwise, Awards under the Plan be eligible for
exemption under Rule 16b-3.  The Board is authorized to amend the Plan and to
make any such modifications to Award Agreements to comply with Rule 16b-3, as it
may be amended from time to time, and to make any other such amendments or
modifications as it deems necessary or appropriate to better accomplish the
purposes of the Plan in light of any amendments made to Rule 16b-3.

 

11.13.                  Captions.  The captions (i.e., all Section headings)
used in the Plan are for convenience only, do not constitute a part of the Plan,
and shall not be deemed to limit, characterize or affect in any way any
provisions of the Plan, and all provisions of the Plan shall be construed as if
no captions have been used in the Plan.

 

11.14.                  Severability.  Whenever possible, each provision in the
Plan and every Award at any time granted under the Plan shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of the Plan or any Award at any time granted under the Plan shall be
held to be prohibited by or invalid under applicable law, then (a) such
provision shall be deemed amended to accomplish the objectives of the provision
as originally written to the fullest extent permitted by law and

 

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(b) all other provisions of the Plan and every other Award at any time granted
under the Plan shall remain in full force and effect.

 

11.15.                  Amendment and Termination.

 

(a)                                  Amendment.  The Board shall have complete
power and authority to amend the Plan at any time; provided, however, that the
Board shall not, without the requisite affirmative approval of shareholders of
the Company, make any amendment which requires shareholder approval under the
Code or under any other applicable law or rule of any stock exchange which lists
Common Stock or Company Voting Securities. No termination or amendment of the
Plan may, without the consent of the Participant to whom any Award shall
theretofore have been granted under the Plan, adversely affect the right of such
individual under such Award.

 

(b)                                 Termination.  The Board shall have the right
and the power to terminate the Plan at any time. No Award shall be granted under
the Plan after the termination of the Plan, but the termination of the Plan
shall not have any other effect and any Award outstanding at the time of the
termination of the Plan may be exercised after termination of the Plan at any
time prior to the expiration date of such Award to the same extent such Award
would have been exercisable had the Plan not terminated.

 

11.16.                  Special Provision Relating to Certain Stock Issuances.
Notwithstanding anything to the contrary contained in this Plan, shares of
Common Stock authorized to be issued under this Plan may be issued to pay awards
originally made under and satisfy options originally granted under the Allegheny
Teledyne Incorporated 1996 Incentive Plan or any other stock compensation plan
adopted by ATI (an “ATI Plan”), as provided in the Employee Benefits Agreement
dated as of November 12, 1999, between the Company and Allegheny Teledyne
Incorporated.  All shares of Common Stock issued in payment of an award or grant
shall be governed exclusively by the terms of such award or grant under the
applicable ATI Plan, and any terms of this Plan inconsistent therewith shall be
inapplicable to such shares.

 

 

Adopted by Board of Directors on 11/12/99.

Approved by Shareholders on 5/4/00.

Amended by Board of Directors on 11/1/03.

Amended, restated and approved by Board of Directors on 3/9/04 and by
Shareholders on 5/13/04.

 

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