Exhibit 10.1

 

 

J. L. HALSEY CORPORATION

2005 EQUITY-BASED COMPENSATION PLAN

 

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TABLE OF CONTENTS

 

1.

 

Purpose

 

 

 

 

 

2.

 

Definitions

 

 

 

 

 

3.

 

Administration.

 

 

 

 

 

 

 

(a)

Authority of the Committee

 

 

 

(b)

Manner of Exercise of Committee Authority

 

 

 

(c)

Limitation of Liability

 

 

 

 

 

4.

 

Stock Subject to Plan.

 

 

 

 

 

 

 

(a)

Overall Number of Shares Available for Delivery

 

 

 

(b)

Application of Limitation to Grants of Awards

 

 

 

(c)

Availability of Shares Not Delivered under Awards

 

 

 

(d)

Stock Offered

 

 

 

 

 

5.

 

Eligibility; Per Person Award Limitations

 

 

 

 

 

6.

 

Specific Terms of Awards

 

 

 

 

 

 

 

(a)

General

 

 

 

(b)

Options

 

 

 

(c)

Stock Appreciation Rights

 

 

 

(d)

Restricted Stock

 

 

 

(e)

Phantom Stock

 

 

 

(f)

Bonus Stock and Awards in Lieu of Obligations

 

 

 

(g)

Dividend Equivalents

 

 

 

(h)

Other Stock-Based Awards

 

 

 

 

 

7.

 

Certain Provisions Applicable to Awards.

 

 

 

 

 

 

 

(a)

Stand-Alone, Additional, Tandem, and Substitute Awards

 

 

 

(b)

Term of Awards

 

 

 

(c)

Form and Timing of Payment under Awards; Deferrals

 

 

 

(d)

Exemptions from Section 16(b) Liability

 

 

 

(e)

Non-Competition Agreement

 

 

 

 

 

8.

 

Performance and Annual Incentive Awards.

 

 

 

 

 

 

 

(a)

Performance Conditions

 

 

 

(b)

Performance Awards Granted to Designated Covered Employees

 

 

 

(c)

Annual Incentive Awards Granted to Designated Covered Employees

 

 

 

(d)

Written Determinations

 

 

 

(e)

Status of Section 8(b) and Section 8(c) Awards under Section 162(m) of the Code

 

 

 

 

 

9.

 

Recapitalization or Reorganization.

 

 

 

 

 

 

 

(a)

Existence of Plans and Awards

 

 

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(b)

Subdivision or Consolidation of Shares

 

 

 

(c)

Corporate Restructuring

 

 

 

(d)

Change in Control Price

 

 

 

(e)

Non-Option Awards

 

 

 

(f)

Additional Issuances

 

 

 

(g)

Restricted Stock Awards

 

 

 

 

 

10.

 

General Provisions.

 

 

 

 

 

 

 

(a)

Transferability.

 

 

 

(b)

Taxes

 

 

 

(c)

Changes to this Plan and Awards

 

 

 

(d)

Limitation on Rights Conferred under Plan

 

 

 

(e)

Unfunded Status of Awards

 

 

 

(f)

Nonexclusivity of this Plan

 

 

 

(g)

Payments in the Event of Forfeitures; Fractional Shares

 

 

 

(h)

Severability

 

 

 

(i)

Governing Law

 

 

 

(j)

Conditions to Delivery of Stock

 

 

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J. L. HALSEY CORPORATION

2005 EQUITY-BASED COMPENSATION PLAN

 

1.                                      Purpose.  The purpose of the J. L.
Halsey Corporation 2005 Equity-Based Compensation Plan (the “Plan”) is to
provide a means through which J. L. Halsey Corporation, a Delaware corporation
(the “Company”), and its subsidiaries (including any companies it may acquire)
may attract and retain able persons as employees, directors and consultants of
the Company and to provide a means whereby those persons upon whom the
responsibilities of the successful administration and management of the Company
rest, and whose present and potential contributions to the welfare of the
Company are of importance, can acquire and maintain stock ownership, or awards
the value of which is tied to the performance of the Company’s stock, thereby
strengthening their concern for the welfare of the Company and their desire to
remain in its employ.  A further purpose of this Plan is to provide such
employees and directors with additional incentive and reward opportunities
designed to enhance the profitable growth of the Company.  Accordingly, this
Plan primarily provides for granting Incentive Stock Options, options which do
not constitute Incentive Stock Options, Restricted Stock Awards, Stock
Appreciation Rights, Phantom Stock Awards or any combination of the foregoing,
as is best suited to the circumstances of the particular individual as provided
herein.

 

2.                                      Definitions.  For purposes of this Plan,
the following terms shall be defined as set forth below, in addition to such
terms defined in Section 1 hereof:

 

(a)                                  “Annual Incentive Award” means a
conditional right granted to a Participant under Section 8(c) hereof to receive
a cash payment, Stock or other Award, unless otherwise determined by the
Committee, after the end of a specified fiscal year.

 

(b)                                 “Award” means any Option, SAR (including
Limited SAR), Restricted Stock Award, Phantom Stock Award, Stock granted as a
bonus or in lieu of another award, Dividend Equivalent, Other Stock-Based Award,
Performance Award or Annual Incentive Award, together with any other right or
interest granted to a Participant under this Plan.

 

(c)                                  “Beneficiary” means one or more persons,
trusts or other entities which have been designated by a Participant in his or
her most recent written beneficiary designation filed with the Committee to
receive the benefits specified under this Plan upon such Participant’s death or
to which Awards or other rights are transferred if and to the extent permitted
under Section 10(a) hereof.  If, upon a Participant’s death, there is no
designated Beneficiary or surviving designated Beneficiary, then the term
Beneficiary means the persons, trusts or other entities entitled by will or the
laws of descent and distribution to receive such benefits.

 

(d)                                 “Beneficial Owner” shall have the meaning
ascribed to such term in Rule 13d-3 under the Exchange Act and any successor to
such Rule.

 

(e)                                  “Board” means the Company’s Board of
Directors.

 

(f)                                    “Business Day” means any day other than a
Saturday, a Sunday, or a day on which banking institutions in the state of
Delaware are authorized or obligated by law or executive order to close.

 

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(g)                                 “Change in Control” means the occurrence of
any of the following events:

 

(i)                                     The agreement to acquire or a tender
offer that is accepted for beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) by any individual, entity or
group (within the meaning of section 13(d)(3) or 14(d)(2) of the Exchange Act)
(a “Person”), of 50% or more of either (x) the then outstanding shares of Stock
(the “Outstanding Stock”) or (y) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the
election of directors (the “Outstanding Company Voting Securities”); provided,
however, that for purposes of this subsection (i), the following acquisitions
shall not constitute a Change in Control:  (A) any acquisition directly from the
Company, (B) any acquisition by the Company, (C) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company, (D) any acquisition by any corporation
pursuant to a transaction which complies with clauses (A), (B) and (C) of
paragraph (iii) below; or

 

(ii)                                  Individuals who constitute the Incumbent
Board cease for any reason to constitute at least a majority of the Board; or

 

(iii)                               Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all of the
assets of the Company or an acquisition of assets of another corporation (a
“Business Combination”), in each case, unless, following such Business
Combination, (A) the Outstanding Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination represent or are converted into
or exchanged for securities which represent or are convertible into more than
50% 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, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Company, or all or
substantially all of the Company’s assets either directly or through one or more
subsidiaries), (B) no Person (excluding any employee benefit plan (or related
trust) of the Company or the corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then outstanding voting securities of such corporation except to the extent that
such ownership of the Company existed prior to the Business Combination and
(C) at least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination; or

 

(iv)                              Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all of the
assets of the Company (a “Business Combination”), unless, following such
Business Combination, the Outstanding Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination represent or are
converted into or exchanged for securities which represent or are convertible
into more than 50% 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, as the case may be, of the
corporation resulting from such Business Combination

 

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(including, without limitation, a corporation which as a result of such
transaction owns the Company, or all or substantially all of the Company’s
assets either directly or through one or more subsidiaries); or

 

(v)                                 Approval by the stockholders of the Company
of a complete liquidation or dissolution of the Company.

 

(h)                                 “Change in Control Price” means the amount
calculated in accordance with Section 9 of this Plan.

 

(i)                                     “Code” means the Internal Revenue Code
of 1986, as amended from time to time, including regulations thereunder and
successor provisions and regulations thereto.

 

(j)                                     “Committee” means a committee of two or
more directors designated by the Board to administer this Plan; provided,
however, that, unless otherwise determined by the Board, the Committee shall
consist solely of two or more directors, each of whom shall be (i) a
“nonemployee director” within the meaning of Rule 16b-3 under the Exchange Act,
and (ii) an “outside director” as defined under section 162(m) of the Code,
unless administration of this Plan by “outside directors” is not then required
in order to qualify for tax deductibility under section 162(m) of the Code.

 

(k)                                  “Covered Employee” means an Eligible Person
who is a Covered Employee as specified in Section 8(e) of this Plan.

 

(l)                                     “Dividend Equivalent” means a right,
granted to a Participant under Section 6(g), to receive cash, Stock, other
Awards or other property equal in value to dividends paid with respect to a
specified number of shares of Stock, or other periodic payments.

 

(m)                               “Effective Date” means May 6, 2005.

 

(n)                                 “Eligible Person” means all officers and
employees, or prospective officers and employees, of the Company or of any
Subsidiary, and other persons who provide services to the Company or any of its
Subsidiaries, including directors of the Company.  An employee on leave of
absence may be considered as still in the employ of the Company or a Subsidiary
for purposes of eligibility for participation in this Plan.

 

(o)                                 “Exchange Act” means the Securities Exchange
Act of 1934, as amended from time to time, including rules thereunder and
successor provisions and rules thereto.

 

(p)                                 “Executive Officer” means an executive
officer of the Company as defined under the Exchange Act.

 

(q)                                 “Fair Market Value” means, for a particular
day:

 

(i)                                     if shares of Stock of the same class are
listed or admitted to unlisted trading privileges on any national or regional
securities exchange at the date of determining the Fair Market Value, then the
last reported sale price, regular way, on the composite tape of that exchange on
that business day or, if no such sale takes place on that

 

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business day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to unlisted trading
privileges on that securities exchange or, if no such closing prices are
available for that day, the last reported sale price, regular way, on the
composite tape of that exchange on the last business day before the date in
question; or

 

(ii)                                  if shares of Stock of the same class are
not listed or admitted to unlisted trading privileges as provided in
subparagraph (i) and if sales prices for shares of Stock of the same class in
the over-the-counter market are reported by the OTC Bulletin Board (“OTCBB”)
National Market System as of the date of determining the Fair Market Value, then
the last reported sales price so reported on that business day or, if no such
sale takes place on that business day, the average of the high bid and low asked
prices so reported or, if no such prices are available for that day, the last
reported sale price so reported on the last business day before the date in
question; or

 

(iii)                               if shares of Stock of the same class are not
listed or admitted to unlisted trading privileges as provided in subparagraph
(i) and sales prices for shares of Stock of the same class are not reported by
the OTCBB National Market System (or a similar system then in use) as provided
in subparagraph (ii), and if bid and asked prices for shares of Stock of the
same class in the over-the-counter market are reported by OTCBB (or, if not so
reported, by the National Quotation Bureau Incorporated) as of the date of
determining the Fair Market Value, then the average of the high bid and low
asked prices on that business day or, if no such prices are available for that
day, the average of the high bid and low asked prices on the last business day
before the date in question; or

 

(iv)                              if shares of Stock of the same class are not
listed or admitted to unlisted trading privileges as provided in subparagraph
(i) and sales prices or bid and asked prices therefor are not reported by OTCBB
(or the National Quotation Bureau Incorporated) as provided in subparagraph
(ii) or subparagraph (iii) as of the date of determining the Fair Market Value,
then the value determined in good faith by the Committee, which determination
shall be conclusive for all purposes; or

 

(v)                                 if shares of Stock of the same class are
listed or admitted to unlisted trading privileges as provided in subparagraph
(i) or sales prices or bid and asked prices therefor are reported by OTCBB (or
the National Quotation Bureau Incorporated) as provided in subparagraph (ii) or
subparagraph (iii) as of the date of determining the Fair Market Value, but the
volume of trading is so low that the Board of Directors determines in good faith
that such prices are not indicative of the fair value of the Stock, then the
value determined in good faith by the Committee, which determination shall be
conclusive for all purposes notwithstanding the provisions of subparagraphs (i),
(ii) or (iii).

 

For purposes of valuing Incentive Stock Options, the Fair Market Value of Stock
shall be determined without regard to any restriction other than one that, by
its terms, will never lapse.

 

(r)                                    “Incentive Stock Option” or “ISO” means
any Option intended to be and designated as an incentive stock option within the
meaning of section 422 of the Code or any successor provision thereto.

 

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(s)                                  “Incumbent Board” shall mean individuals
who constitute the Board as of the Effective Date and any other individual who
becomes a director of the Company after that date and whose election or
appointment by the Board or nomination for election by the Company’s
stockholders was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal of directors
or other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Incumbent Board.

 

(t)                                    “Limited SAR” means a right granted to a
Participant under Section 6(c) hereof.

 

(u)                                 “Option” means a right, granted to a
Participant under Section 6(b) hereof, to purchase Stock or other Awards at a
specified price during specified time periods.

 

(v)                                 “Other Stock-Based Awards” means Awards
granted to a Participant under Section 6(h) hereof.

 

(w)                               “Participant” means a person who has been
granted an Award under this Plan which remains outstanding, including a person
who is no longer an Eligible Person.

 

(x)                                   “Performance Award” means a right, granted
to a Participant under Section 8 hereof, to receive Awards based upon
performance criteria specified by the Committee.

 

(y)                                 “Person” means any person or entity of any
nature whatsoever, specifically including an individual, a firm, a company, a
corporation, a partnership, a limited liability company, a trust or other
entity; a Person, together with that Person’s Affiliates and Associates (as
those terms are defined in Rule 12b-2 under the Exchange Act), and any Persons
acting as a partnership, limited partnership, joint venture, association,
syndicate or other group (whether or not formally organized), or otherwise
acting jointly or in concert or in a coordinated or consciously parallel manner
(whether or not pursuant to any express agreement), for the purpose of
acquiring, holding, voting or disposing of securities of the Company with such
Person, shall be deemed a single “Person.”

 

(z)                                   “Phantom Stock” means a right, granted to
a Participant under Section 6(e) hereof, to receive Stock, cash or a combination
thereof at the end of a specified deferral period.

 

(aa)                            “Qualified Member” means a member of the
Committee who is a “Non-Employee Director” within the meaning of
Rule 16b-3(b)(3) and an “outside director” within the meaning of regulation
1.162-27 under section 162(m) of the Code.

 

(bb)                          “Restricted Stock” means Stock granted to a
Participant under Section 6(d) hereof, that is subject to certain restrictions
and to a risk of forfeiture.

 

(cc)                            “Rule 16b-3” means Rule 16b-3, promulgated by
the Securities and Exchange Commission under section 16 of the Exchange Act, as
from time to time in effect and applicable to this Plan and Participants.

 

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(dd)                          “Securities Act” means the Securities Act of 1933
and the rules and regulations promulgated thereunder, or any successor law, as
it may be amended from time to time.

 

(ee)                            “Stock” means the Company’s Common Stock, par
value $.01 per share, and such other securities as may be substituted (or
resubstituted) for Stock pursuant to Section 9.

 

(ff)                                “Stock Appreciation Rights” or “SAR” means a
right granted to a Participant under Section 6(c) hereof.

 

(gg)                          “Subsidiary” means with respect to any Person, any
corporation or other entity of which a majority of the voting power of the
voting equity securities or equity interest is owned, directly or indirectly, by
that Person.

 

3.                                      Administration.

 

(a)                                  Authority of the Committee.  This Plan
shall be administered by the Committee except to the extent the Board elects, in
order to comply with Rule 16b-3 or for any other reason, to administer this
Plan, in which case references herein to the “Committee” shall be deemed to
include references to the “Board.”  Subject to the express provisions of the
Plan and Rule 16b-3, the Committee shall have the authority, in its sole and
absolute discretion, to (i) adopt, amend, and rescind administrative and
interpretive rules and regulations relating to the Plan; (ii) determine the
Eligible Persons to whom, and the time or times at which, Awards shall be
granted; (iii) determine the amount of cash and the number of shares of Stock,
Stock Appreciation Rights, Phantom Stock Rights, or Restricted Stock Awards, or
any combination thereof, that shall be the subject of each Award; (iv) determine
the terms and provisions of each Award agreement (which need not be identical),
including provisions defining or otherwise relating to (A) the term and the
period or periods and extent of exercisability of the Options, (B) the extent to
which the transferability of shares of Stock issued or transferred pursuant to
any Award is restricted, (C) the effect of termination of employment of a
Participant on the Award, and (D) the effect of approved leaves of absence
(consistent with any applicable regulations of the Internal Revenue Service);
(v) accelerate the time of exercisability of any Option that has been granted;
(vi) construe the respective Award agreements and the Plan; (vii) make
determinations of the Fair Market Value of the Stock pursuant to the Plan;
(viii) delegate its duties under the Plan to such agents as it may appoint from
time to time, provided that the Committee may not delegate its duties with
respect to making Awards to, or otherwise with respect to Awards granted to,
Eligible Persons who are subject to section 16(b) of the Exchange Act or
section 162(m) of the Code; (ix) subject to ratification by the Board,
terminate, modify, or amend the Plan; and (x) make all other determinations,
perform all other acts, and exercise all other powers and authority necessary or
advisable for administering the Plan, including the delegation of those
ministerial acts and responsibilities as the Committee deems appropriate. 
Subject to Rule 16b-3 and section 162(m) of the Code, the Committee may correct
any defect, supply any omission, or reconcile any inconsistency in the Plan, in
any Award, or in any Award agreement in the manner and to the extent it deems
necessary or desirable to carry the Plan into effect, and the Committee shall be
the sole and final judge of that necessity or desirability.  The determinations
of the Committee on the matters referred to in this Section 3(a) shall be final
and conclusive.

 

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(b)                                 Manner of Exercise of Committee Authority. 
At any time that a member of the Committee is not a Qualified Member, any action
of the Committee relating to an Award granted or to be granted to a Participant
who is then subject to section 16 of the Exchange Act in respect of the Company,
or relating to an Award intended by the Committee to qualify as
“performance-based compensation” within the meaning of section 162(m) of the
Code and regulations thereunder, may be taken either (i) by a subcommittee,
designated by the Committee, composed solely of two or more Qualified Members,
or (ii) by the Committee but with each such member who is not a Qualified Member
abstaining or recusing himself or herself from such action; provided, however,
that, upon such abstention or recusal, the Committee remains composed solely of
two or more Qualified Members.  Such action, authorized by such a subcommittee
or by the Committee upon the abstention or recusal of such non-Qualified
Member(s), shall be the action of the Committee for purposes of this Plan.  Any
action of the Committee shall be final, conclusive and binding on all persons,
including the Company, its subsidiaries, stockholders, Participants,
Beneficiaries, and transferees under Section 10(a) hereof or other persons
claiming rights from or through a Participant.  The express grant of any
specific power to the Committee, and the taking of any action by the Committee,
shall not be construed as limiting any power or authority of the Committee.  The
Committee may delegate to officers or managers of the Company or any Subsidiary,
or committees thereof, the authority, subject to such terms as the Committee
shall determine, to perform such functions, including administrative functions,
as the Committee may determine, to the extent that such delegation will not
result in the loss of an exemption under Rule 16b-3(d)(1) for Awards granted to
Participants subject to section 16 of the Exchange Act in respect of the Company
and will not cause Awards intended to qualify as “performance-based
compensation” under section 162(m) of the Code to fail to so qualify.  The
Committee may appoint agents to assist it in administering this Plan.

 

(c)                                  Limitation of Liability.  The Committee and
each member thereof shall be entitled to, in good faith, rely or act upon any
report or other information furnished to him or her by any officer or employee
of the Company or a Subsidiary, the Company’s legal counsel, independent
auditors, consultants or any other agents assisting in the administration of
this Plan.  Members of the Committee and any officer or employee of the Company
or a Subsidiary acting at the direction or on behalf of the Committee shall not
be personally liable for any action or determination taken or made in good faith
with respect to this Plan, and shall, to the fullest extent permitted by law, be
indemnified and held harmless by the Company with respect to any such action or
determination.

 

4.                                      Stock Subject to Plan.

 

(a)                                  Overall Number of Shares Available for
Delivery.  Subject to adjustment in a manner consistent with any adjustment made
pursuant to Section 9, the total number of shares of Stock reserved and
available for delivery in connection with Awards under this Plan shall not
exceed 13,200,000 shares.

 

(b)                                 Application of Limitation to Grants of
Awards.  No Award may be granted if (i) the number of shares of Stock to be
delivered in connection with such Award  exceeds (ii) the number of shares of
Stock remaining available under this Plan minus the number of shares of Stock
issuable in settlement of or relating to then-outstanding Awards.  The Committee
may adopt reasonable counting procedures to ensure appropriate counting, avoid

 

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double counting (as, for example, in the case of tandem or substitute awards)
and make adjustments if the number of shares of Stock actually delivered differs
from the number of shares previously counted in connection with an Award.

 

(c)                                  Availability of Shares Not Delivered under
Awards.  Shares of Stock subject to an Award under this Plan that expire or are
canceled, forfeited, settled in cash or otherwise terminated without a delivery
of shares to the Participant, including (i) the number of shares withheld in
payment of any exercise or purchase price of an Award or taxes relating to
Awards, and (ii) the number of shares surrendered in payment of any exercise or
purchase price of an Award or taxes relating to any Award, will again be
available for Awards under this Plan, except that if any such shares could not
again be available for Awards to a particular Participant under any applicable
law or regulation, such shares shall be available exclusively for Awards to
Participants who are not subject to such limitation.

 

(d)                                 Stock Offered.  The shares to be delivered
under the Plan shall be made available from (i) authorized but unissued shares
of Stock, (ii) Stock held in the treasury of the Company, or (iii) previously
issued shares of Stock reacquired by the Company, including shares purchased on
the open market, in each situation as the Board or the Committee may determine
from time to time at its sole option.

 

5.                                      Eligibility; Per Person Award
Limitations.  Awards may be granted under this Plan only to Eligible Persons. 
In each fiscal year or 12-month period, as applicable, during any part of which
this Plan is in effect, a Covered Employee may not be granted (a) Awards
relating to more than 6,000,000 shares of Stock, subject to adjustment in a
manner consistent with any adjustment made pursuant to Section 9 or (b) in the
case of Awards not related to shares of Stock Awards with a value at the time of
payment in excess of $5,000,000.

 

6.                                      Specific Terms of Awards.

 

(a)                                  General.  Awards may be granted on the
terms and conditions set forth in this Section 6.  In addition, the Committee
may impose on any Award or the exercise thereof, at the date of grant or
thereafter (subject to Section 10(c)), such additional terms and conditions, not
inconsistent with the provisions of this Plan, as the Committee shall determine,
including terms requiring forfeiture of Awards in the event of termination of
employment by the Participant and terms permitting a Participant to make
elections relating to his or her Award.  The Committee shall retain full power
and discretion to accelerate, waive or modify, at any time, any term or
condition of an Award that is not mandatory under this Plan; provided, however,
that the Committee shall not have any discretion to accelerate, waive or modify
any term or condition of an Award that is intended to qualify as
“performance-based compensation” for purposes of section 162(m) of the Code if
such discretion would cause the Award to not so qualify.  Except in cases in
which the Committee is authorized to require other forms of consideration under
this Plan, or to the extent other forms of consideration must be paid to satisfy
the requirements of the Delaware General Corporation Law, no consideration other
than services may be required for the grant (but not the exercise) of any Award.

 

(b)                                 Options.  The Committee is authorized to
grant Options to Participants on the following terms and conditions:

 

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(i)                                     Exercise Price.  Each Option agreement
shall state the exercise price per share of Stock (the “Exercise Price”);
provided, however, that the Exercise Price per share of Stock subject to an
Incentive Stock Option shall not be less than the greater of (A) the par value
per share of the Stock or (B) 100% of the Fair Market Value per share of the
Stock on the date of grant of the Option or in the case of an individual who
owns stock possessing more than 10 percent of the total combined voting power of
all classes of stock of the Corporation or its parent or any Subsidiary 110% of
the Fair Market Value per share of the Stock on the date of grant, and the
exercise price per share of Stock subject to an Option other than an Incentive
Stock Option shall not be less than the par value per share of the Stock (but
may be less than the Fair Market Value of a share of the Stock on the date of
grant).

 

(ii)                                  Time and Method of Exercise.  The
Committee shall determine the time or times at which or the circumstances under
which an Option may be exercised in whole or in part (including based on
achievement of performance goals and/or future service requirements), the
methods by which such exercise price may be paid or deemed to be paid, the form
of such payment, including without limitation cash, Stock, other Awards or
awards granted under other plans of the Company or any Subsidiary, or other
property (including notes or other contractual obligations of Participants to
make payment on a deferred basis), and the methods by or forms in which Stock
will be delivered or deemed to be delivered to Participants, including, but not
limited to, the delivery of Restricted Stock subject to Section 6(d).  In the
case of an exercise whereby the Exercise Price is paid with Stock, such Stock
shall be valued as of the date of exercise.

 

(iii)                               ISOs.  The terms of any ISO granted under
this Plan shall comply in all respects with the provisions of section 422 of the
Code.  Anything in this Plan to the contrary notwithstanding, no term of this
Plan relating to ISOs (including any SAR in tandem therewith) shall be
interpreted, amended or altered, nor shall any discretion or authority granted
under this Plan be exercised, so as to disqualify either this Plan or any ISO
under section 422 of the Code, unless the Participant has first requested the
change that will result in such disqualification.  ISOs shall not be granted
more than ten years after the earlier of the adoption of this Plan or the
approval of this Plan by the Company’s stockholders.  Notwithstanding the
foregoing, the Fair Market Value of shares of Stock subject to an ISO and the
aggregate Fair Market Value of shares of stock of any parent or Subsidiary
corporation (within the meaning of sections 424(e) and (f) of the Code) subject
to any other incentive stock option (within the meaning of section 422 of the
Code)) of the Company or a parent or Subsidiary corporation (within the meaning
of sections 424(e) and (f) of the Code) that first becomes purchasable by a
Participant in any calendar year may not (with respect to that Participant)
exceed $100,000, or such other amount as may be prescribed under section 422 of
the Code or applicable regulations or rulings from time to time.  As used in the
previous sentence, Fair Market Value shall be determined as of the date the
incentive stock options is granted.  Failure to comply with this provision shall
not impair the enforceability or exercisability of any Option, but shall cause
the excess amount of shares to be reclassified in accordance with the Code.

 

(c)                                  Stock Appreciation Rights.  The Committee
is authorized to grant SARs to Participants on the following terms and
conditions:

 

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(i)                                     Right to Payment.  An SAR shall confer
on the Participant to whom it is granted a right to receive, upon exercise or
settlement thereof, the excess of (A) the Fair Market Value of one share of
Stock on the date of exercise or settlement (or, in the case of a “Limited SAR,”
the Fair Market Value determined by reference to the Change in Control Price, as
defined under Section 2(h) hereof) over (B) the grant price of the SAR as
determined by the Committee.

 

(ii)                                  Rights Related to Options.  A Stock
Appreciation Right granted pursuant to an Option shall entitle a Participant,
upon exercise or settlement, to surrender that Option or any portion thereof, to
the extent unexercised or not settled, and to receive payment of an amount
computed pursuant to Subsection 6(c)(ii)(B).  That Option shall then cease to be
exercisable or settleable to the extent surrendered.  Stock Appreciation Rights
granted in connection with an Option shall be subject to the terms of the Award
agreement governing the Option, which shall comply with the following provisions
in addition to those applicable to Options:

 

(A)                              A Stock Appreciation Right granted in
connection with an Option shall be exercisable or settleable only at such time
or times and only to the extent that the related Option is exercisable and shall
not be transferable except to the extent that the related Option is
transferable.

 

(B)                                Upon the exercise or settlement of a Stock
Appreciation Right related to an Option, a Participant shall be entitled to
receive payment from the Company of an amount determined by multiplying:

 

(1)                                  the difference obtained by subtracting the
exercise price of a share of Stock specified in the related Option from the Fair
Market Value of a share of Stock on the date of exercise or settlement of the
Stock Appreciation Right, by

 

(2)                                  the number of shares as to which that Stock
Appreciation Right has been exercised or settled.

 

(iii)                               Right Without Option.  A Stock Appreciation
Right granted independent of an Option shall be exercisable or settleable as
determined by the Committee and set forth in the Award agreement governing the
Stock Appreciation Right, which Award agreement shall comply with the following
provisions:

 

(A)                              Each Award agreement shall state the total
number of shares of Stock to which the Stock Appreciation Right relates.

 

(B)                                Each Award agreement shall state the time at
which the Stock Appreciation Right will vest, the time the Stock Appreciation
Right will be settled, or the time or periods in which the right to exercise the
Stock Appreciation Right or a portion thereof shall vest and the number of
shares of Stock for which the right to exercise the Stock Appreciation Right
shall vest at each such time or period.

 

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(C)                                Each Award agreement shall state the date at
which the Stock Appreciation Rights shall expire if not previously exercised or
settled.

 

(D)                               Each Stock Appreciation Right shall entitle a
Participant, upon exercise or settlement thereof, to receive payment of an
amount determined by multiplying:

 

(1)                                  the difference obtained by subtracting the
Fair Market Value of a share of Stock on the date of grant of the Stock
Appreciation Right from the Fair Market Value of a share of Stock on the date of
exercise or settlement of that Stock Appreciation Right, by

 

(2)                                  the number of shares as to which the Stock
Appreciation Right has been exercised or settled.

 

(iv)                              Terms.  The Committee shall determine at the
date of grant or thereafter, the time or times at which and the circumstances
under which an SAR may be exercised or settled in whole or in part (including
based on achievement of performance goals and/or future service requirements),
the method of exercise, method of settlement, form of consideration payable in
settlement, method by or forms in which Stock will be delivered or deemed to be
delivered to Participants, whether or not an SAR shall be in tandem or in
combination with any other Award, and any other terms and conditions of any
SAR.  Limited SARs that may only be exercised in connection with a Change in
Control or other event as specified by the Committee may be granted on such
terms, not inconsistent with this Section 6(c), as the Committee may determine. 
SARs and Limited SARs may be either freestanding or in tandem with other Awards.

 

(d)                                 Restricted Stock.  The Committee is
authorized to grant Restricted Stock to Participants on the following terms and
conditions:

 

(i)                                     Grant and Restrictions.  Restricted
Stock shall be subject to such restrictions on transferability, risk of
forfeiture and other restrictions, if any, as the Committee may impose, which
restrictions may lapse separately or in combination at such times, under such
circumstances (including based on achievement of performance goals and/or future
service requirements), in such installments or otherwise, as the Committee may
determine at the date of grant or thereafter.  Except to the extent restricted
under the terms of this Plan and any Award agreement relating to the Restricted
Stock, a Participant granted Restricted Stock shall have all of the rights of a
stockholder, including the right to vote the Restricted Stock and the right to
receive dividends thereon (subject to any mandatory reinvestment or other
requirement imposed by the Committee).  During the restricted period applicable
to the Restricted Stock, the Restricted Stock may not be sold, transferred,
pledged, hypothecated, margined or otherwise encumbered by the Participant.

 

(ii)                                  Forfeiture.  Except as otherwise
determined by the Committee, upon termination of employment during the
applicable restriction period, Restricted Stock that is at that time subject to
restrictions shall be forfeited and reacquired by the Company; provided that the
Committee may provide, by rule or regulation or in any Award agreement, or may

 

11

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determine in any individual case, that restrictions or forfeiture conditions
relating to Restricted Stock shall be waived in whole or in part in the event of
terminations resulting from specified causes, and the Committee may in other
cases waive in whole or in part the forfeiture of Restricted Stock.

 

(iii)                               Certificates for Stock.  Restricted Stock
granted under this Plan may be evidenced in such manner as the Committee shall
determine.  If certificates representing Restricted Stock are registered in the
name of the Participant, the Committee may require that such certificates bear
an appropriate legend referring to the terms, conditions and restrictions
applicable to such Restricted Stock, that the Company retain physical possession
of the certificates, and that the Participant deliver a stock power to the
Company, endorsed in blank, relating to the Restricted Stock.

 

(iv)                              Dividends and Splits.  As a condition to the
grant of an Award of Restricted Stock, the Committee may require or permit a
Participant to elect that any cash dividends paid on a share of Restricted Stock
be automatically reinvested in additional shares of Restricted Stock or applied
to the purchase of additional Awards under this Plan.  Unless otherwise
determined by the Committee, Stock distributed in connection with a Stock split
or Stock dividend, and other property distributed as a dividend, shall be
subject to restrictions and a risk of forfeiture to the same extent as the
Restricted Stock with respect to which such Stock or other property has been
distributed.

 

(e)                                  Phantom Stock.  The Committee is authorized
to grant Phantom Stock to Participants, which are rights to receive Stock, cash,
or a combination thereof at the end of a specified deferral period, subject to
the following terms and conditions:

 

(i)                                     Award and Restrictions.  Satisfaction of
an Award of Phantom Stock shall occur upon expiration of the deferral period
specified for such Phantom Stock by the Committee (or, if permitted by the
Committee, as elected by the Participant).  In addition, Phantom Stock shall be
subject to such restrictions (which may include a risk of forfeiture) as the
Committee may impose, if any, which restrictions may lapse at the expiration of
the deferral period or at earlier specified times (including based on
achievement of performance goals and/or future service requirements), separately
or in combination, in installments or otherwise, as the Committee may
determine.  Phantom Stock may be satisfied by delivery of Stock, cash equal to
the Fair Market Value of the specified number of shares of Stock covered by the
Phantom Stock, or a combination thereof, as determined by the Committee at the
date of grant or thereafter.

 

(ii)                                  Forfeiture.  Except as otherwise
determined by the Committee, upon termination of employment during the
applicable deferral period or portion thereof to which forfeiture conditions
apply (as provided in the Award agreement evidencing the Phantom Stock), all
Phantom Stock that is at that time subject to deferral (other than a deferral at
the election of the Participant) shall be forfeited; provided that the Committee
may provide, by rule or regulation or in any Award agreement, or may determine
in any individual case, that restrictions or forfeiture conditions relating to
Phantom Stock shall be waived in whole or in part in the event of terminations
resulting from specified causes, and the Committee may in other cases waive in
whole or in part the forfeiture of Phantom Stock.

 

12

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(iii)                               Dividend Equivalents.  Unless otherwise
determined by the Committee at date of grant, Dividend Equivalents on the
specified number of shares of Stock covered by an Award of Phantom Stock shall
be either (A) paid with respect to such Phantom Stock on the dividend payment
date in cash or in shares of unrestricted Stock having a Fair Market Value equal
to the amount of such dividends, or (B) deferred with respect to such Phantom
Stock and the amount or value thereof automatically deemed reinvested in
additional Phantom Stock, other Awards or other investment vehicles, as the
Committee shall determine or permit the Participant to elect.

 

(f)                                    Bonus Stock and Awards in Lieu of
Obligations.  The Committee is authorized to grant Stock as a bonus, or to grant
Stock or other Awards in lieu of obligations to pay cash or deliver other
property under this Plan or under other plans or compensatory arrangements,
provided that, in the case of Participants subject to section 16 of the Exchange
Act, the amount of such grants remains within the discretion of the Committee to
the extent necessary to ensure that acquisitions of Stock or other Awards are
exempt from liability under section 16(b) of the Exchange Act.  Stock or Awards
granted hereunder shall be subject to such other terms as shall be determined by
the Committee.  In the case of any grant of Stock to an officer of the Company
or a Subsidiary in lieu of salary or other cash compensation, the number of
shares granted in place of such compensation shall be reasonable, as determined
by the Committee.

 

(g)                                 Dividend Equivalents.  The Committee is
authorized to grant Dividend Equivalents to a Participant, entitling the
Participant to receive cash, Stock, other Awards, or other property equal in
value to dividends paid with respect to a specified number of shares of Stock,
or other periodic payments.  Dividend Equivalents may be awarded on a
free-standing basis or in connection with another Award.  The Committee may
provide that Dividend Equivalents shall be paid or distributed when accrued or
shall be deemed to have been reinvested in additional Stock, Awards, or other
investment vehicles, and subject to such restrictions on transferability and
risks of forfeiture, as the Committee may specify.

 

(h)                                 Other Stock-Based Awards.  The Committee is
authorized, subject to limitations under applicable law, to grant to
Participants such other Awards that may be denominated or payable in, valued in
whole or in part by reference to, or otherwise based on, or related to, Stock,
as deemed by the Committee to be consistent with the purposes of this Plan,
including without limitation convertible or exchangeable debt securities, other
rights convertible or exchangeable into Stock, purchase rights for Stock, Awards
with value and payment contingent upon performance of the Company or any other
factors designated by the Committee, and Awards valued by reference to the book
value of Stock or the value of securities of or the performance of specified
subsidiaries.  The Committee shall determine the terms and conditions of such
Awards.  Stock delivered pursuant to an Award in the nature of a purchase right
granted under this Section 6(h) shall be purchased for such consideration, paid
for at such times, by such methods, and in such forms, including, without
limitation, cash, Stock, other Awards, or other property, as the Committee shall
determine.  Cash awards, as an element of or supplement to any other Award under
this Plan, may also be granted pursuant to this Section 6(h).

 

13

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7.                                      Certain Provisions Applicable to Awards.

 

(a)                                  Stand-Alone, Additional, Tandem, and
Substitute Awards.  Awards granted under this Plan may, in the discretion of the
Committee, be granted either alone or in addition to, in tandem with, or in
substitution or exchange for, any other Award or any award granted under another
plan of the Company, any Subsidiary, or any business entity to be acquired by
the Company or a Subsidiary, or any other right of a Participant to receive
payment from the Company or any Subsidiary.  Such additional, tandem and
substitute or exchange Awards may be granted at any time.  If an Award is
granted in substitution or exchange for another Award, the Committee shall
require the surrender of such other Award in consideration for the grant of the
new Award.  In addition, Awards may be granted in lieu of cash compensation,
including in lieu of cash amounts payable under other plans of the Company or
any Subsidiary, in which the value of Stock subject to the Award is equivalent
in value to the cash compensation (for example, Phantom Stock or Restricted
Stock), or in which the exercise price, grant price or purchase price of the
Award in the nature of a right that may be exercised is equal to the Fair Market
Value of the underlying Stock minus the value of the cash compensation
surrendered (for example, Options granted with an exercise price “discounted” by
the amount of the cash compensation surrendered).

 

(b)                                 Term of Awards.  The term of each Award
shall be for such period as may be determined by the Committee; provided that in
no event shall the term of any Option or SAR exceed a period of ten years (or
such shorter term as may be required in respect of an ISO under section 422 of
the Code).

 

(c)                                  Form and Timing of Payment under Awards;
Deferrals.  Subject to the terms of this Plan and any applicable Award
agreement, payments to be made by the Company or a Subsidiary upon the exercise
of an Option or other Award or settlement of an Award may be made in such forms
as the Committee shall determine, including without limitation cash, Stock,
other Awards or other property, and may be made in a single payment or transfer,
in installments, or on a deferred basis.  The settlement of any Award may be
accelerated, and cash paid in lieu of Stock in connection with such settlement,
in the discretion of the Committee or upon occurrence of one or more specified
events (in addition to a Change in Control).  Installment or deferred payments
may be required by the Committee (subject to Section 10(c) of this Plan,
including the consent provisions thereof in the case of any deferral of an
outstanding Award not provided for in the original Award agreement) or permitted
at the election of the Participant on terms and conditions established by the
Committee.  Payments may include, without limitation, provisions for the payment
or crediting of reasonable interest on installment or deferred payments or the
grant or crediting of Dividend Equivalents or other amounts in respect of
installment or deferred payments denominated in Stock.  Any deferral shall only
be allowed as is provided in a separate deferred compensation plan adopted by
the Company.  This Plan shall not constitute an “employee benefit plan” for
purposes of section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended.

 

(d)                                 Exemptions from Section 16(b) Liability.  It
is the intent of the Company that the grant of any Awards to or other
transaction by a Participant who is subject to section 16 of the Exchange Act
shall be exempt from section 16 pursuant to an applicable exemption (except for
transactions acknowledged in writing to be non-exempt by such Participant).

 

14

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Accordingly, if any provision of this Plan or any Award agreement does not
comply with the requirements of Rule 16b-3 as then applicable to any such
transaction, such provision shall be construed or deemed amended to the extent
necessary to conform to the applicable requirements of Rule 16b-3 so that such
Participant shall avoid liability under section 16(b).

 

(e)                                  Non-Competition Agreement.  Each
Participant to whom an Award is granted under this Plan may be required to agree
in writing as a condition to the granting of such Award not to engage in conduct
in competition with the Company or any of its subsidiaries for a period after
the termination of such Participant’s employment with the Company and its
subsidiaries as determined by the Committee.

 

8.                                      Performance and Annual Incentive Awards.

 

(a)                                  Performance Conditions.  The right of a
Participant to exercise or receive a grant or settlement of any Award, and the
timing thereof, may be subject to such performance conditions as may be
specified by the Committee.  The Committee may use such business criteria and
other measures of performance as it may deem appropriate in establishing any
performance conditions, and may exercise its discretion to reduce or increase
the amounts payable under any Award subject to performance conditions, except as
limited under Sections 8(b) and 8(c) hereof in the case of a Performance Award
or Annual Incentive Award intended to qualify under section 162(m) of the Code.

 

(b)                                 Performance Awards Granted to Designated
Covered Employees.  If the Committee determines that a Performance Award to be
granted to an Eligible Person who is designated by the Committee as likely to be
a Covered Employee should qualify as “performance-based compensation” for
purposes of section 162(m) of the Code, the grant, exercise and/or settlement of
such Performance Award may be contingent upon achievement of preestablished
performance goals and other terms set forth in this Section 8(b).

 

(i)                                     Performance Goals Generally.  The
performance goals for such Performance Awards shall consist of one or more
business criteria or individual performance criteria and a targeted level or
levels of performance with respect to each of such criteria, as specified by the
Committee consistent with this Section 8(b).  Performance goals shall be
objective and shall otherwise meet the requirements of section 162(m) of the
Code and regulations thereunder (including Treasury Regulation §1.162-27 and
successor regulations thereto), including the requirement that the level or
levels of performance targeted by the Committee result in the achievement of
performance goals being “substantially uncertain.”  The Committee may determine
that such Performance Awards shall be granted, exercised, and/or settled upon
achievement of any one performance goal or that two or more of the performance
goals must be achieved as a condition to grant, exercise and/or settlement of
such Performance Awards.  Performance goals may differ for Performance Awards
granted to any one Participant or to different Participants.

 

(ii)                                  Business and Individual Performance
Criteria

 

(A)                              Business Criteria.  One or more of the
following business criteria for the Company, on a consolidated basis, and/or for
specified subsidiaries or

 

15

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business or geographical units of the Company (except with respect to the total
stockholder return and earnings per share criteria), shall be used by the
Committee in establishing performance goals for such Performance Awards: 
(1) earnings per share; (2) increase in revenues; (3) increase in cash flow;
(4) increase in cash flow return; (5) return on net assets, return on assets,
return on investment, return on capital, or return on equity; (6) economic value
added; (7) operating margin or contribution margin; (8) net income; pretax
earnings; pretax earnings before interest, depreciation and amortization; pretax
operating earnings after interest expense and before incentives, service fees,
and extraordinary or special items; or operating income; (9) total stockholder
return; (10) debt reduction; and (11) any of the above goals determined on an
absolute or relative basis or as compared to the performance of a published or
special index deemed applicable by the Committee including, but not limited to,
the Standard & Poor’s 500 Stock Index or a group of comparable companies.  One
or more of the foregoing business criteria shall also be exclusively used in
establishing performance goals for Annual Incentive Awards granted to a Covered
Employee under Section 8(c) hereof.

 

(B)                                Individual Performance Criteria.  The grant,
exercise and/or settlement of Performance Awards may also be contingent upon
individual performance goals established by the Committee.  If required for
compliance with section 162(m) of the Code, such criteria shall be approved by
the stockholders of the Company.

 

(iii)                               Performance Period; Timing for Establishing
Performance Goals.  Achievement of performance goals in respect of such
Performance Awards shall be measured over a performance period of up to ten
years, as specified by the Committee.  Performance goals shall be established
not later than 90 days after the beginning of any performance period applicable
to such Performance Awards, or at such other date as may be required or
permitted for “performance-based compensation” under section 162(m) of the Code.

 

(iv)                              Performance Award Pool.  The Committee may
establish a Performance Award pool, which shall be an unfunded pool, for
purposes of measuring performance of the Company in connection with Performance
Awards.  The amount of such Performance Award pool shall be based upon the
achievement of a performance goal or goals based on one or more of the criteria
set forth in Section 8(b)(ii) hereof during the given performance period, as
specified by the Committee in accordance with Section 8(b)(iii) hereof.  The
Committee may specify the amount of the Performance Award pool as a percentage
of any of such criteria, a percentage thereof in excess of a threshold amount,
or as another amount which need not bear a strictly mathematical relationship to
such criteria.

 

(v)                                 Settlement of Performance Awards; Other
Terms.  After the end of each performance period, the Committee shall determine
the amount, if any, of (A) the Performance Award pool, and the maximum amount of
potential Performance Award payable to each Participant in the Performance Award
pool, or (B) the amount of potential Performance Award otherwise payable to each
Participant.  Settlement of such Performance Awards shall be in cash, Stock,
other Awards or other property, in the discretion of the Committee.  The
Committee may, in its discretion, reduce the amount of a settlement otherwise to
be made in connection with such Performance Awards, but may not exercise
discretion to increase any such amount payable to a Covered Employee in respect
of a Performance Award subject to this

 

16

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Section 8(b).  The Committee shall specify the circumstances in which such
Performance Awards shall be paid or forfeited in the event of termination of
employment by the Participant prior to the end of a performance period or
settlement of Performance Awards.

 

(c)                                  Annual Incentive Awards Granted to
Designated Covered Employees.  If the Committee determines that an Annual
Incentive Award to be granted to an Eligible Person who is designated by the
Committee as likely to be a Covered Employee should qualify as
“performance-based compensation” for purposes of section 162(m) of the Code, the
grant, exercise and/or settlement of such Annual Incentive Award shall be
contingent upon achievement of preestablished performance goals and other terms
set forth in this Section 8(c).

 

(i)                                     Annual Incentive Award Pool.  The
Committee may establish an Annual Incentive Award pool, which shall be an
unfunded pool, for purposes of measuring performance of the Company in
connection with Annual Incentive Awards.  The amount of such Annual Incentive
Award pool shall be based upon the achievement of a performance goal or goals
based on one or more of the business criteria set forth in
Section 8(b)(ii) hereof during the given performance period, as specified by the
Committee in accordance with Section 8(b)(iii) hereof.  The Committee may
specify the amount of the Annual Incentive Award pool as a percentage of any of
such business criteria, a percentage thereof in excess of a threshold amount, or
as another amount which need not bear a strictly mathematical relationship to
such business criteria.

 

(ii)                                  Potential Annual Incentive Awards.  Not
later than the end of the 90th day of each fiscal year, or at such other date as
may be required or permitted in the case of Awards intended to be
“performance-based compensation” under section 162(m) of the Code, the Committee
shall determine the Eligible Persons who will potentially receive Annual
Incentive Awards, and the amounts potentially payable thereunder, for that
fiscal year, either out of an Annual Incentive Award pool established by such
date under Section 8(c)(i) hereof or as individual Annual Incentive Awards.  In
the case of individual Annual Incentive Awards intended to qualify under
section 162(m) of the Code, the amount potentially payable shall be based upon
the achievement of a performance goal or goals based on one or more of the
business criteria set forth in Section 8(b)(ii) hereof in the given performance
year, as specified by the Committee; in other cases, such amount shall be based
on such criteria as shall be established by the Committee.  In all cases, the
maximum Annual Incentive Award of any Participant shall be subject to the
limitation set forth in Section 5 hereof.

 

(iii)                               Payout of Annual Incentive Awards.  After
the end of each fiscal year, the Committee shall determine the amount, if any,
of (A) the Annual Incentive Award pool, and the maximum amount of potential
Annual Incentive Award payable to each Participant in the Annual Incentive Award
pool, or (B) the amount of potential Annual Incentive Award otherwise payable to
each Participant.  The Committee may, in its discretion, determine that the
amount payable to any Participant as a final Annual Incentive Award shall be
increased or reduced from the amount of his or her potential Annual Incentive
Award, including a determination to make no final Award whatsoever, but may not
exercise discretion to increase any such amount in the case of an Annual
Incentive Award intended to qualify under section 162(m) of the Code.  The
Committee shall specify the circumstances in which an Annual Incentive Award
shall be paid or

 

17

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forfeited in the event of termination of employment by the Participant prior to
the end of a fiscal year or settlement of such Annual Incentive Award.

 

(d)                                 Written Determinations.  All determinations
by the Committee as to the establishment of performance goals, the amount of any
Performance Award pool or potential individual Performance Awards and as to the
achievement of performance goals relating to Performance Awards under
Section 8(b), and the amount of any Annual Incentive Award pool or potential
individual Annual Incentive Awards and the amount of final Annual Incentive
Awards under Section 8(c), shall be made in writing in the case of any Award
intended to qualify under section 162(m) of the Code.  The Committee may not
delegate any responsibility relating to such Performance Awards or Annual
Incentive Awards.

 

(e)                                  Status of Section 8(b) and
Section 8(c) Awards under Section 162(m) of the Code.  It is the intent of the
Company that Performance Awards and Annual Incentive Awards under Sections
8(b) and 8(c) hereof granted to persons who are designated by the Committee as
likely to be Covered Employees within the meaning of section 162(m) of the Code
and regulations thereunder (including Treasury Regulation §1.162-27 and
successor regulations thereto) shall, if so designated by the Committee,
constitute “performance-based compensation” within the meaning of section 162(m)
of the Code and regulations thereunder.  Accordingly, the terms of Sections
8(b), (c), (d) and (e), including the definitions of Covered Employee and other
terms used therein, shall be interpreted in a manner consistent with
section 162(m) of the Code and regulations thereunder.  The foregoing
notwithstanding, because the Committee cannot determine with certainty whether a
given Participant will be a Covered Employee with respect to a fiscal year that
has not yet been completed, the term Covered Employee as used herein shall mean
only a person designated by the Committee, at the time of grant of Performance
Awards or an Annual Incentive Award, who is likely to be a Covered Employee with
respect to that fiscal year.  If any provision of this Plan as in effect on the
date of adoption or any agreements relating to Performance Awards or Annual
Incentive Awards that are designated as intended to comply with section 162(m)
of the Code does not comply or is inconsistent with the requirements of
section 162(m) of the Code or regulations thereunder, such provision shall be
construed or deemed amended to the extent necessary to conform to such
requirements.

 

9.                                      Recapitalization or Reorganization.

 

(a)                                  Existence of Plans and Awards.  The
existence of this Plan and the Awards granted hereunder shall not affect in any
way the right or power of the Board or the stockholders of the Company to make
or authorize any adjustment, recapitalization, reorganization or other change in
the Company’s capital structure or its business, any merger or consolidation of
the Company, any issue of debt or equity securities ahead of or affecting Stock
or the rights thereof, the dissolution or liquidation of the Company or any
sale, lease, exchange or other disposition of all or any part of its assets or
business or any other corporate act or proceeding.

 

(b)                                 Subdivision or Consolidation of Shares.  The
terms of an Award and the number of shares of Stock authorized pursuant to
Section 4 for issuance under the Plan shall be subject to adjustment from time
to time, in accordance with the following provisions:

 

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(i)                                     If at any time, or from time to time,
the Company shall subdivide as a whole (by reclassification, by a Stock split,
by the issuance of a distribution on Stock payable in Stock, or otherwise) the
number of shares of Stock then outstanding into a greater number of shares of
Stock, then (A) the maximum number of shares of Stock available for the Plan as
provided in Section 4 shall be increased proportionately, and the kind of shares
or other securities available for the Plan shall be appropriately adjusted,
(B) the number of shares of Stock (or other kind of shares or securities) that
may be acquired under any Award shall be increased proportionately, and (C) the
price (including the exercise price) for each share of Stock (or other kind of
shares or securities) subject to then outstanding Awards shall be reduced
proportionately, without changing the aggregate purchase price or value as to
which outstanding Awards remain exercisable or subject to restrictions.

 

(ii)                                  If at any time, or from time to time, the
Company shall consolidate as a whole (by reclassification, reverse Stock split,
or otherwise) the number of shares of Stock then outstanding into a lesser
number of shares of Stock, (A) the maximum number of shares of Stock available
for the Plan as provided in Section 4 shall be decreased proportionately, and
the kind of shares or other securities available for the Plan shall be
appropriately adjusted, (B) the number of shares of Stock (or other kind of
shares or securities) that may be acquired under any Award shall be decreased
proportionately, and (C) the price (including the exercise price) for each share
of Stock (or other kind of shares or securities) subject to then outstanding
Awards shall be increased proportionately, without changing the aggregate
purchase price or value as to which outstanding Awards remain exercisable or
subject to restrictions.

 

(iii)                               Whenever the number of shares of Stock
subject to outstanding Awards and the price for each share of Stock subject to
outstanding Awards are required to be adjusted as provided in this Section 9(b),
the Committee shall promptly prepare a notice setting forth, in reasonable
detail, the event requiring adjustment, the amount of the adjustment, the method
by which such adjustment was calculated, and the change in price and the number
of shares of Stock, other securities, cash, or property purchasable subject to
each Award after giving effect to the adjustments.  The Committee shall promptly
give each Participant such a notice.

 

(iv)                              Adjustments under Subsections 9(b)(i) and
(ii) shall be made by the Committee, and its determination as to what
adjustments shall be made and the extent thereof shall be final, binding, and
conclusive.  No fractional interest shall be issued under the Plan on account of
any such adjustments.

 

(c)                                  Corporate Restructuring.  If the Company
recapitalizes, reclassifies its capital stock, or otherwise changes its capital
structure (a “recapitalization”), the number and class of shares of Stock
covered by an Option theretofore granted shall be adjusted so that such Option
shall thereafter cover the number and class of shares of stock and securities to
which the holder would have been entitled pursuant to the terms of the
recapitalization if, immediately prior to the recapitalization, the holder had
been the holder of record of the number of shares of Stock then covered by such
Option and the share limitations provided in Sections 4 and 5 shall be adjusted
in a manner consistent with the recapitalization.  Upon a Change in Control the
Committee, acting in its sole discretion without the consent or approval of any
holder, shall effect one or more of the following alternatives, which may vary
among individual holders and

 

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which may vary among Options held by any individual holder: (1) accelerate the
time at which Options then outstanding may be exercised so that such Options may
be exercised in full for a limited period of time on or before a specified date
(before or after such Change in Control) fixed by the Committee, after which
specified date all unexercised Options and all rights of holders thereunder
shall terminate, (2) require the mandatory surrender to the Company by selected
holders of some or all of the outstanding Options held by such holders
(irrespective of whether such Options are then exercisable under the provisions
of this Plan) as of a date, before or after such Change in Control, specified by
the Committee, in which event the Committee shall thereupon cancel such Options
and pay to each holder an amount of cash per share equal to the excess, if any,
of the amount calculated in Section 9(d) (the “Change in Control Price”) of the
shares subject to such Option over the exercise price(s) under such Options for
such shares, or (3) make such adjustments to Options then outstanding as the
Committee deems appropriate to reflect such Change in Control; provided,
however, that the Committee may determine in its sole discretion that no
adjustment is necessary to Options then outstanding; provided, further, that the
right to make such adjustments shall include, but not be limited to, the
modification of an Option such that the holder of the Option shall be entitled
to purchase or receive (in lieu of the total shares that the holder would
otherwise be entitled to purchase or receive under the Option (the “Total
Shares”)), the number of shares of stock, other securities, cash or property to
which the Total Shares would have been entitled to in connection with the Change
in Control, at an aggregate exercise price equal to the exercise price that
would have been payable if the Total Shares had been purchased upon the exercise
of the Option immediately before the consummation of the Change in Control.

 

(d)                                 Change in Control Price.  The “Change in
Control Price” shall equal the amount determined in clause (i), (ii), (iii),
(iv) or (v), whichever is applicable, as follows:  (i) the per share price
offered to holders of the same class of Stock of the Company in any such merger
or consolidation, (ii) the per share value of the Stock immediately before the
Change in Control without regard to assets sold in the Change in Control and
assuming the Company has received the consideration paid for the assets in the
case of a sale of the assets, (iii) the amount distributed per share of Stock in
a dissolution transaction, (iv) the price per share offered to holders of the
same class of Stock of the Company in any tender offer or exchange offer whereby
a Change in Control takes place, or (v) if such Change in Control occurs other
than pursuant to a tender or exchange offer, the fair market value per share of
the shares into which such Options being surrendered are exercisable, as
determined by the Committee as of the date determined by the Committee to be the
date of cancellation and surrender of such Options.  In the event that the
consideration offered to stockholders of the Company in any transaction
described in this Section 9(d) or Section 9(c) above consists of anything other
than cash, the Committee shall determine the fair cash equivalent of the portion
of the consideration offered which is other than cash.

 

(e)                                  Non-Option Awards.  In the event of changes
in the outstanding Stock by reason of recapitalization, reorganizations,
mergers, consolidations, combinations, exchanges or other relevant changes in
capitalization occurring after the date of the grant of any Award and not
otherwise provided for by this Section 9, any outstanding Awards and any
agreements evidencing such Awards shall be subject to adjustment by the
Committee at its discretion as to the number and price of shares of Stock or
other consideration subject to such Awards.  In the event of any such change in
the outstanding Stock, the aggregate number of shares available

 

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under this Plan may be appropriately adjusted by the Committee, whose
determination shall be conclusive.

 

(f)                                    Additional Issuances.  Except as
hereinbefore expressly provided, the issuance by the Company of shares of stock
of any class or securities convertible into shares of stock of any class, for
cash, property, labor or services, upon direct sale, upon the exercise of rights
or warrants to subscribe therefor, or upon conversion of shares or obligations
of the Company convertible into such shares or other securities, and in any case
whether or not for fair value, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number of shares of Stock subject to
Awards theretofore granted or the purchase price per share, if applicable.

 

(g)                                 Restricted Stock Awards.  Plan provisions to
the contrary notwithstanding, with respect to any Restricted Stock Awards
outstanding at the time a Change in Control as described in Section 2(g) occurs,
the Committee may, in its discretion and as of a date determined by the
Committee, fully vest any or all Stock awarded to the holder pursuant to such
Restricted Stock Award and then outstanding and, upon such vesting, all
restrictions applicable to such Restricted Stock Award shall terminate as of
such date.  Any action by the Committee pursuant to this Section 9(g) may vary
among individual holders and may vary among the Restricted Stock Awards held by
any individual holder.

 

10.                               General Provisions.

 

(a)                                  Transferability.

 

(i)                                     Permitted Transferees.  The Committee
may, in its discretion, permit a Participant to transfer all or any portion of
an Option, Stock Appreciation Right, Phantom Stock Award or Restricted Stock
Award (if such Restricted Stock Award does not require the transfer of
consideration by the Participant or the holder other than usual and customary
service) after the Company’s initial registration of the Stock under
section 12(b) or 12(g) of the Exchange Act, or authorize all or a portion of
such Awards to be granted to an Eligible Person to be on terms which permit
transfer by such Participant; provided that, in either case the transferee or
transferees must be any child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law,
including adoptive relationships, in each case with respect to the Participant,
any person sharing the Participant’s household (other than a tenant or employee
of the Company), a trust in which these persons have more than fifty percent of
the beneficial interest, a foundation in which these persons (or the
Participant) control the management of assets, and any other entity in which
these persons (or the Participant) own more than fifty percent of the voting
interests (collectively, “Permitted Transferees”); provided further that, (X)
there may be no consideration for any such transfer and (Y) subsequent transfers
of Awards transferred as provided above shall be prohibited except subsequent
transfers back to the original holder of the Award and transfers to other
Permitted Transferees of the original holder.  Agreements evidencing Awards with
respect to which such transferability is authorized at the time of grant must be
approved by the Committee, and must expressly provide for transferability in a
manner consistent with this Subsection 10(a)(i).

 

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(ii)                                  Qualified Domestic Relations Orders.  An
Option, Stock Appreciation Right, Phantom Stock Award or Restricted Stock Award
(if such Restricted Stock Award does not require the transfer of consideration
by the Participant or the holder other than usual and customary service) after
the Company’s initial registration of the Stock under section 12(b) or 12(g) of
the Exchange Act, may be transferred, to a Permitted Transferee, pursuant to a
domestic relations order entered or approved by a court of competent
jurisdiction upon delivery to the Company of written notice of such transfer and
a certified copy of such order.

 

(iii)                               Other Transfers.  Except as expressly
permitted by Subsections 10(a)(i) and 10(a)(ii), Awards shall not be
transferable other than by will or the laws of descent and distribution except
that in the Committee’s discretion a Stock Appreciation Right, Phantom Stock
Award (if such Stock Appreciation Right or Phantom Stock Award is not
exercisable for Stock and not subject to the Participant’s or holder’s
discretion as to the timing or method of payment) or Restricted Stock Award (if
such Restricted Stock Award does not require the transfer of consideration by
the Participant or the holder other than usual and customary service) may be
transferable, however, not for consideration.  Notwithstanding anything to the
contrary in this Section 10, an Incentive Stock Option shall not be transferable
other than by will or the laws of descent and distribution.

 

(iv)                              Effect of Transfer.  Following the transfer of
any Award as contemplated by Subsections 10(a)(i), 10(a)(ii) and 10(a)(iii),
(A) such Award shall continue to be subject to the same terms and conditions as
were applicable immediately prior to transfer, provided that the term
“Participant” shall be deemed to refer to the Permitted Transferee, the
recipient under a qualified domestic relations order, the estate or heirs of a
deceased Participant, or other transferee, as applicable, to the extent
appropriate to enable the Participant to exercise the transferred Award in
accordance with the terms of this Plan and applicable law and (B) the provisions
of the Award relating to exercisability hereof shall continue to be applied with
respect to the original Participant and, following the occurrence of any such
events described therein the Awards shall be exercisable by the Permitted
Transferee, the recipient under a qualified domestic relations order, the estate
or heirs of a deceased Participant, or other transferee, as applicable, only to
the extent and for the periods that would have been applicable in the absence of
the transfer.

 

(v)                                 Procedures and Restrictions.  Any
Participant desiring to transfer an Award as permitted under Subsections
10(a)(i), 10(a)(ii) or 10(a)(iii) shall make application therefor in the manner
and time specified by the Committee and shall comply with such other
requirements as the Committee may require to assure compliance with all
applicable securities laws.  The Committee shall not give permission for such a
transfer if (A) it would give rise to short-swing liability under
section 16(b) of the Exchange Act or (B) it may not be made in compliance with
all applicable federal, state and foreign securities laws.

 

(vi)                              Registration.  To the extent the issuance to
any Permitted Transferee of any shares of Stock issuable pursuant to Awards
transferred as permitted in this Section 10(a) is not registered pursuant to the
effective registration statement of the Company generally covering the shares to
be issued pursuant to this Plan to initial holders of Awards, the Company shall
not have any obligation to register the issuance of any such shares of Stock to
any such transferee.

 

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(b)                                 Taxes.  The Company and any Subsidiary is
authorized to withhold from any Award granted, or any payment relating to an
Award under this Plan, including from a distribution of Stock, amounts of
withholding and other taxes due or potentially payable in connection with any
transaction involving an Award, and to take such other action as the Committee
may deem advisable to enable the Company and Participants to satisfy obligations
for the payment of withholding taxes and other tax obligations relating to any
Award.  This authority shall include authority to withhold or receive Stock or
other property and to make cash payments in respect thereof in satisfaction of a
Participant’s tax obligations, either on a mandatory or elective basis in the
discretion of the Committee.

 

(c)                                  Changes to this Plan and Awards.  The Board
may amend, alter, suspend, discontinue or terminate this Plan or the Committee’s
authority to grant Awards under this Plan without the consent of stockholders or
Participants, except that any amendment or alteration to this Plan, including
any increase in any share limitation, shall be subject to the approval of the
Company’s stockholders not later than the annual meeting next following such
Board action if such stockholder approval is required by any federal or state
law or regulation or the rules of any stock exchange or automated quotation
system on which the Stock may then be listed or quoted, and the Board may
otherwise, in its discretion, determine to submit other such changes to this
Plan to stockholders for approval; provided that, without the consent of an
affected Participant, no such Board action may materially and adversely affect
the rights of such Participant under any previously granted and outstanding
Award.  The Committee may waive any conditions or rights under, or amend, alter,
suspend, discontinue or terminate any Award theretofore granted and any Award
agreement relating thereto, except as otherwise provided in this Plan; provided
that, without the consent of an affected Participant, no such Committee action
may materially and adversely affect the rights of such Participant under such
Award.

 

(d)                                 Limitation on Rights Conferred under Plan. 
Neither this Plan nor any action taken hereunder shall be construed as
(i) giving any Eligible Person or Participant the right to continue as an
Eligible Person or Participant or in the employ or service of the Company or a
Subsidiary, (ii) interfering in any way with the right of the Company or a
Subsidiary to terminate any Eligible Person’s or Participant’s employment or
service at any time, (iii) giving an Eligible Person or Participant any claim to
be granted any Award under this Plan or to be treated uniformly with other
Participants and employees, or (iv) conferring on a Participant any of the
rights of a stockholder of the Company unless and until the Participant is duly
issued or transferred shares of Stock in accordance with the terms of an Award.

 

(e)                                  Unfunded Status of Awards.  This Plan is
intended to constitute an “unfunded” plan for certain incentive awards.

 

(f)                                    Nonexclusivity of this Plan.  Neither the
adoption of this Plan by the Board nor its submission to the stockholders of the
Company for approval shall be construed as creating any limitations on the power
of the Board or a committee thereof to adopt such other incentive arrangements
as it may deem desirable, including incentive arrangements and awards which do
not qualify under section 162(m) of the Code.  Nothing contained in this Plan
shall be construed to prevent the Company or any Subsidiary from taking any
corporate action which is deemed by the Company or such Subsidiary to be
appropriate or in its  best interest, whether or not such action would have an
adverse effect on this Plan or any Award made under this Plan.

 

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No employee, beneficiary or other person shall have any claim against the
Company or any Subsidiary as a result of any such action.

 

(g)                                 Payments in the Event of Forfeitures;
Fractional Shares.  Unless otherwise determined by the Committee, in the event
of a forfeiture of an Award with respect to which a Participant paid cash or
other consideration to the Company in exchange for such Award, the Participant
shall be repaid the amount of such cash or other consideration.  No fractional
shares of Stock shall be issued or delivered pursuant to this Plan or any
Award.  The Committee shall determine whether cash, other Awards or other
property shall be issued or paid in lieu of such fractional shares or whether
such fractional shares or any rights thereto shall be forfeited or otherwise
eliminated.

 

(h)                                 Severability.  If any provision of this Plan
is held to be illegal or invalid for any reason, the illegality or invalidity
shall not affect the remaining provisions hereof, but such provision shall be
fully severable and the Plan shall be construed and enforced as if the illegal
or invalid provision had never been included herein.  If any of the terms or
provisions of this Plan or any Award agreement conflict with the requirements of
Rule 16b-3 (as those terms or provisions are applied to Eligible Persons who are
subject to section 16(b) of the Exchange Act) or section 422 of the Code (with
respect to Incentive Stock Options), then those conflicting terms or provisions
shall be deemed inoperative to the extent they so conflict with the requirements
of Rule 16b-3 (unless the Board or the Committee, as appropriate, has expressly
determined that the Plan or such Award should not comply with Rule 16b-3) or
section 422 of the Code.  With respect to Incentive Stock Options, if this Plan
does not contain any provision required to be included herein under section 422
of the Code, that provision shall be deemed to be incorporated herein with the
same force and effect as if that provision had been set out at length herein;
provided, further, that, to the extent any Option that is intended to qualify as
an Incentive Stock Option cannot so qualify, that Option (to that extent) shall
be deemed an Option not subject to section 422 of the Code for all purposes of
the Plan.

 

(i)                                     Governing Law.  All questions arising
with respect to the provisions of the Plan and Awards shall be determined by
application of the laws of the State of Delaware, without giving effect to any
conflict of law provisions thereof, except to the extent Delaware law is
preempted by federal law.  The obligation of the Company to sell and deliver
Stock hereunder is subject to applicable federal and state laws and to the
approval of any governmental authority required in connection with the
authorization, issuance, sale, or delivery of such Stock.

 

(j)                                     Conditions to Delivery of Stock. 
Nothing herein or in any Award granted hereunder or any Award agreement shall
require the Company to issue any shares with respect to any Award if that
issuance would, in the opinion of counsel for the Company, constitute a
violation of the Securities Act or any similar or superseding statute or
statutes, any other applicable statute or regulation, or the rules of any
applicable securities exchange or securities association, as then in effect.  At
the time of any exercise of an Option or Stock Appreciation Right, or at the
time of any grant of a Restricted Stock Award, the Company may, as a condition
precedent to the exercise of such Option or Stock Appreciation Right or vesting
of any Restricted Stock Award, require from the Participant (or in the event of
his death, his legal representatives, heirs, legatees, or distributees) such
written representations, if any, concerning the holder’s intentions with regard
to the retention or disposition of the shares of Stock being acquired

 

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pursuant to the Award and such written covenants and agreements, if any, as to
the manner of disposal of such shares as, in the opinion of counsel to the
Company, may be necessary to ensure that any disposition by that holder (or in
the event of the holder’s death, his legal representatives, heirs, legatees, or
distributees) will not involve a violation of the Securities Act or any similar
or superseding statute or statutes, any other applicable state or federal
statute or regulation, or any rule of any applicable securities exchange or
securities association, as then in effect.  No Option or Stock Appreciation
Right shall be exercisable and no restriction on any Restricted Stock Award
shall lapse with respect to a Participant unless and until the holder thereof
shall have paid cash or property to, or performed services for, the Company or
any of its Subsidiaries that the Committee believes is equal to or greater in
value than the par value of the Stock subject to such Award.

 

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