Exhibit 10.1

AMENDED AND RESTATED
1998 INCENTIVE PLAN
of
LENNOX INTERNATIONAL INC.

          1. Plan. This Amended and Restated 1998 Incentive Plan of Lennox
International Inc. (the “Plan”) is an amendment and restatement of the 1998
Incentive Plan of Lennox International Inc. (the “Existing Plan”), which amended
and restated the Lennox International Inc. 1994 Stock Option and Restricted
Stock Plan, which was adopted by Lennox International Inc. to reward certain
corporate officers and employees of Lennox International Inc. and its
Subsidiaries (as herein defined) by providing them stock options and other stock
and cash incentives, and which replaced and incorporated certain provisions of
the Company’s then-existing incentive plans. Upon the Amendment Effective Date
(as hereinafter defined), the Existing Plan shall be amended and restated in its
entirety as set forth herein.

          2. Objectives. This Plan is designed to attract and retain employees
of the Company and its Subsidiaries, to attract and retain qualified directors
of the Company, to attract and retain consultants and other independent
contractors, to encourage the sense of proprietorship of such employees,
directors and independent contractors and to stimulate the active interest of
such persons in the development and financial success of the Company and its
Subsidiaries. These objectives are to be accomplished by making Awards (as
hereinafter defined) under this Plan and thereby providing Participants (as
hereinafter defined) with a proprietary interest in the growth and performance
of the Company.

          3. Definitions. As used herein, the terms set forth below shall have
the following respective meanings:

          “Amendment Effective Date” has the meaning set forth in paragraph 20
hereof.

          “Annual Management Incentive Awards” has the meaning set forth in
paragraph 7(a)(v)(C) hereof.

          “Authorized Officer” means the Chairman of the Board or the Chief
Executive Officer of the Company (or any other senior officer of the Company to
whom either of them shall delegate the authority to execute any Award
Agreement).

          “Award” means an Employee Award, a Director Award or an Independent
Contractor Award.

          “Award Agreement” means any Employee Award Agreement, Director Award
Agreement or Independent Contractor Award Agreement.

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

          “Cash Award” means an award denominated in cash.

          “Code” means the Internal Revenue Code of 1986, as amended from time
to time.

          “Committee” means the Compensation Committee of the Board or such
other committee of the Board as is designated by the Board to administer the
Plan.

 

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          “Common Stock” means the Common Stock, par value $.01 per share, of
the Company.

          “Company” means Lennox International Inc., a Delaware corporation.

          “Director” means an individual serving as a member of the Board.

          “Director Award” means the grant of any Nonqualified Stock Option,
SAR, Stock Award, Cash Award, Performance Award, Performance Units, Restricted
Stock, Stock Units or any other award to which the Committee may deem
appropriate to meet the objectives of the Plan, whether granted singly, in
combination or in tandem, to a Nonemployee Director pursuant to such applicable
terms, conditions and limitations as the Committee may establish in order to
fulfill the objectives of the Plan.

          “Director Award Agreement” means a written agreement between the
Company and a Nonemployee Director setting forth the terms, conditions and
limitations applicable to a Director Award.

          “Disability” means, with respect to a Nonemployee Director, the
inability to perform the duties of a Director for a continuous period of more
than three months by reason of any medically determinable physical or mental
impairment.

          “Dividend Equivalents” means, with respect to Stock Units or shares of
Restricted Stock that are to be issued at the end of the Restriction Period, an
amount equal to all dividends and other distributions (or the economic
equivalent thereof) that are payable to stockholders of record during the
Restriction Period on a like number of shares of Common Stock.

          “Employee” means an employee of the Company or any of its Subsidiaries
and an individual who has agreed to become an Employee of the Company or any of
its Subsidiaries and actually becomes such an Employee within the following six
months.

          “Employee Award” means the grant of any Option, SAR, Stock Award, Cash
Award, Performance Award, Performance Units, Restricted Stock, Stock Units,
Annual Management Incentive Awards or any other award to which the Committee may
deem appropriate to meet the objectives of the Plan, whether granted singly, in
combination or in tandem, to an Employee pursuant to such applicable terms,
conditions and limitations as the Committee may establish in order to fulfill
the objectives of the Plan.

          “Employee Award Agreement” means a written agreement between the
Company and an Employee setting forth the terms, conditions and limitations
applicable to an Employee Award.

          “Exchange Act” means the Securities Exchange Act of 1934, as amended.

          “Fair Market Value” means a price that is based on the opening,
closing, actual, high, low, or average selling prices of a share of Common Stock
on the New York Stock Exchange (NYSE) or other established stock exchange (or
exchanges) on the applicable date, the preceding trading day, the next
succeeding trading day, or an average of trading days, as determined by the
Committee in its discretion. Such definition of Fair Market Value shall be
specified in the Award Agreement and may differ depending on whether Fair Market
Value is in reference to the grant, exercise, vesting, or settlement or payout
of an Award. If, however, the accounting standards used to account for equity
awards granted to Participants are substantially modified subsequent to

 

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the Effective Date of the Plan, the Committee shall have the ability to
determine an Award’s Fair Market Value based on relevant facts and
circumstances. If shares of Common Stock are not traded on an established stock
exchange, Fair Market Value shall be determined by the Committee based on
objective criteria.

          “Grant Price” means the price at which a Participant may exercise his
or her right to receive cash or Common Stock, as applicable, under the terms of
an Award.

          “Incentive Option” means an Option that is intended to comply with the
requirements set forth in Section 422 of the Code.

          “Independent Contractor” means a person other than an Employee or a
Nonemployee Director providing bona fide services to the Company or any of its
Subsidiaries as a consultant or advisor, as applicable, provided that such
person is a natural person and that such services are not in connection with the
offer or sale of securities in a capital-raising transaction and do not directly
or indirectly promote or maintain a market for any securities of the Company.

          “Independent Contractor Award” means the grant of any Nonqualified
Stock Option, SAR, Stock Award, Cash Award, Performance Award, Performance
Units, Restricted Stock, Stock Units or any other award to which the Committee
may deem appropriate to meet the objectives of the Plan, whether granted singly,
in combination or in tandem, to an Independent Contractor pursuant to such
applicable terms, conditions and limitations as the Committee may establish in
order to fulfill the objectives of the Plan.

          “Independent Contractor Award Agreement” means a written agreement
between the Company and an Independent Contractor setting forth the terms,
conditions and limitations applicable to an Independent Contractor Award.

          “Nonemployee Director” has the meaning set forth in paragraph 4(b)
hereof.

          “Nonqualified Stock Option” means an Option that is not an Incentive
Option.

          “Option” means a right to purchase a specified number of shares of
Common Stock at a specified price.

          “Participant” means an Employee, Director or Independent Contractor to
whom an Award has been made under this Plan.

          “Performance Award” means an Award awarded pursuant to this Plan to a
Participant that is subject to the attainment of one or more Performance Goals.

          “Performance Goal” means one or more standards established by the
Committee, to determine in whole or in part whether a Performance Award shall be
earned. A Performance Goal may include, but not be limited to, one or more of
the following: cash flow; ratio of debt to debt plus equity; earnings before
taxes; earnings before interest and taxes; earnings before interest, taxes,
depreciation and amortization; earnings per share; operating earnings; economic
value added; ratio of operating earnings to capital spending; free cash flow;
net profit; net sales; sales growth; working capital ratio; stock price; return
on net assets, equity or stockholders’ equity; or total return to stockholders.

 

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          “Performance Shares” means an award in the form of common stock to
Participants upon the attainment of long-term Performance Goals and other terms
and conditions specified by the Committee.

          “Performance Units” means an award in the form of a payment in cash to
Participants upon the attainment of long-term Performance Goals and other terms
and conditions specified by the Committee.

          “Qualified Performance Award” means a Performance Award made to an
Employee that is intended to qualify as qualified performance-based compensation
under Section 162(m) of the Code, as described in paragraph 7(a)(v)(B) of the
Plan.

          “Restricted Stock” means any Common Stock that is restricted or
subject to forfeiture provisions.

          “Restriction Period” means a period of time beginning as of the date
upon which an Award of Restricted Stock or Stock Units is made pursuant to this
Plan and ending as of the date upon which the Common Stock subject to such Award
is no longer restricted or subject to forfeiture provisions.

          “SAR” means a right to receive a payment, in cash or Common Stock,
equal to the excess of the Fair Market Value or other specified valuation of a
specified number of shares of Common Stock on the date the stock appreciation
right is exercised over a specified strike price, in each case, as determined by
the Committee.

          “Stock Award” means an award in the form of whole shares of Common
Stock or Stock Units, including an Award of Restricted Stock.

          “Stock Units” means a unit evidencing the right to receive in
specified circumstances a share of Common Stock or portion or multiple thereof
which may be restricted or subject to forfeiture provisions.

          “Subsidiary” means (i) in the case of a corporation, any corporation
of which the Company directly or indirectly owns shares representing more than
50% of the combined voting power of the shares of all classes or series of
capital stock of such corporation which have the right to vote generally on
matters submitted to a vote of the stockholders of such corporation, and (ii) in
the case of a partnership or other business entity not organized as a
corporation, any such business entity of which the Company directly or
indirectly owns more than 50% of the voting, capital or profits interests
(whether in the form of partnership interests, membership interests or
otherwise), and (iii) any other corporation, partnership or other entity that is
a “subsidiary” of the Company within the meaning of Rule 405 promulgated by the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
and (iv) at the discretion of the Committee, in the case of a corporation, any
other corporation which the Company directly or indirectly owns shares
representing less than 50% of the combined voting power of the shares of all
classes or series of capital stock of such corporation which have the right to
vote generally on matters submitted to a vote of the stockholders of such
corporation, and (v) at the discretion of the Committee, in the case of any
partnership or other business entity not organized as a corporation, any such
business entity of which the Company directly or indirectly owns less than 50%
of the voting, capital or profits interests (whether in the form of partnership
interests, membership interests or otherwise).

 

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          4. Eligibility.

          (a) Employees. All Employees are eligible for Employee Awards under
this Plan.

          (b) Directors. Directors eligible for Director Awards under this Plan
are those who are not Employees of the Company or any of its Subsidiaries
(“Nonemployee Directors”).

          (c) Independent Contractors. Independent Contractors eligible for
Independent Contractor Awards under this Plan are those Independent Contractors
providing services to, or who will provide services to, the Company or any of
its Subsidiaries.

          5. Common Stock Available for Awards. Subject to the provisions of
paragraph 13 hereof, there shall be available for Awards under this Plan granted
or payable wholly or partly in Common Stock (including rights or Options that
may be exercised for or settled in Common Stock) an aggregate of 24,254,706
shares, of which 22,094,706 shares are available for Awards to Employees and
Independent Contractors and 2,160,000 shares are available for Awards to
Nonemployee Directors; provided, however, that, with respect to Awards made
under this Plan after December 31, 2004, no more than 4,280,385 shares shall be
available for Stock Awards, Stock Unit Awards or Restricted Stock or Unit Awards
(including such Awards made in the form of Performance Awards) to Employees,
Nonemployee Directors or Independent Contractors. All of the shares authorized
for issuance to Employees and Independent Contractors may be issued pursuant to
Incentive Options granted to Employees, Nonqualified Stock Options granted to
Employees or Independent Contractors or any combination thereof. The number of
shares of Common Stock that are the subject to Awards under this Plan or the
Existing Plan, which are cancelled, terminated, forfeited, expire unexercised,
and, except for Awards of Options or SARs, are settled in cash in lieu of Common
Stock, or are exchanged for a consideration that does not involve Common Stock,
will immediately become available for Awards under this Plan. Effective as of
April 15, 2005, no further awards shall be made under any prior plans.
Additionally, the number of shares of Common Stock that are the subject of
Awards under this Plan, that are forfeited or terminated, expire unexercised,
and, except for Awards of Options or SARs, are settled in cash in lieu of Common
Stock or in a manner such that all or some of the shares covered by an Award are
not issued to a Participant or are exchanged for Awards that do not involve
Common Stock, shall not be counted against the aggregate Plan maximum or any
sublimit set forth in this paragraph 5 and shall again immediately become
available for Awards hereunder. The number of Shares reserved for issuance under
the Plan shall be reduced only to the extent that Shares of Common Stock are
actually issued in connection with the exercise or settlement of an Award;
provided, however, that the number of Shares reserved for issuance shall be
reduced by the total number of Options or SARs exercised. Under the Plan,
subject to Paragraph 7(d)(vi) herein, no Participant may be granted in any
calendar year (i) Options relating to more than 1,000,000 shares, (ii) Stock
Awards relating to more than 500,000 shares of Common Stock, (iii) SARs relating
to more than 1,000,000 shares, or (iv) Cash Awards resulting in payments in
excess of $5,000,000. The shares reserved for issuance and the limitation set
forth above shall be subject to adjustment in accordance with Section 13 hereof.
If the Grant Price or other purchase price of any Option or other Award granted
under the Plan or the Existing Plan is satisfied by tendering shares of Common
Stock to the Company, or if the tax withholding obligation resulting from the
settlement of any such Option or other Award is satisfied by tendering or
withholding shares of Common Stock, only the number of shares of Common Stock
issued net of the shares of Common Stock tendered or withheld shall be deemed
delivered for purposes of determining usage of shares against the maximum number
of shares of Common Stock available for delivery under the Plan or any sublimit
set forth above. Shares of Common Stock delivered under the Plan as an Award or
in settlement, of an Award issued or made (a) upon the assumption, substitution,
conversion or replacement of outstanding awards under a plan or arrangement of
an entity acquired in a merger or other acquisition or (b) as a post-transaction
grant under such a plan or arrangement of an acquired entity shall not reduce or
be counted against the maximum number of shares

 

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of Common Stock available for delivery under the Plan, to the extent that the
exemption for transactions in connection with mergers and acquisitions from the
stockholder approval requirements of the New York Stock Exchange for equity
compensation plan applies. The Committee may from time to time adopt and observe
such rules and procedures concerning the counting of shares against the Plan
maximum as it may deem appropriate, including rules more restrictive than those
set forth above to the extent necessary to satisfy the requirements of any
national stock exchange on which the Common Stock is listed or any applicable
regulatory requirement. The Board and the appropriate officers of the Company
are authorized to take from time to time whatever actions are necessary, and to
file any required documents with governmental authorities, stock exchanges and
transaction reporting systems to ensure that shares of Common Stock are
available for issuance pursuant to Awards.

          6. Administration.

          (a) This Plan shall be administered by the Committee.

          (b) Subject to the provisions hereof, the Committee shall have full
and exclusive power and authority to administer this Plan and to take all
actions that are specifically contemplated hereby or are necessary or
appropriate in connection with the administration hereof. The Committee shall
also have full and exclusive power to interpret this Plan and to adopt such
rules, regulations and guidelines for carrying out this Plan as it may deem
necessary or proper. The Committee may, in its discretion, provide for the
extension of the exercisability of an Award, accelerate the vesting or
exercisability of an Award, eliminate or make less restrictive any restrictions
contained in an Award, waive any restriction or other provision of this Plan or
an Award or otherwise amend or modify an Award in any manner that is either
(i) not adverse to the Participant to whom such Award was granted or (ii)
consented to by such Participant. Notwithstanding anything herein to the
contrary, without the prior approval of the Company’s stockholders, Options
issued under the Plan will not be repriced, replaced, or regranted through
cancellation or by decreasing the exercise price of a previously granted Option.
The Committee may make an award to an individual who it expects to become an
Employee of the Company or any of its Subsidiaries within the next six months,
with such award being subject to the individual actually becoming an Employee
within such time period, and subject to such other terms and conditions as may
be established by the Committee. The Committee may correct any defect or supply
any omission or reconcile any inconsistency in this Plan or in any Award in the
manner and to the extent the Committee deems necessary or desirable to further
the Plan purposes. Any decision of the Committee in the interpretation and
administration of this Plan shall lie within its sole and absolute discretion
and shall be final, conclusive and binding on all parties concerned.

          (c) Each person who is or shall have been a member of the Board, or a
Committee appointed by the Board, or an officer of the Company to whom authority
was delegated in accordance with the Plan shall be indemnified and held harmless
by the Company against and from any loss, cost, liability, or expense that may
be imposed upon or reasonably incurred by him or her in connection with or
resulting from any claim, action, suit, or proceeding to which he or she may be
a party or in which he or she may be involved by reason of any action taken or
failure to act under the Plan and against and from any and all amounts paid by
him or her in settlement thereof, with the Company’s approval, or paid by him or
her in satisfaction of any judgment in any such action, suit, or proceeding
against him or her, provided he or she shall give the Company an opportunity, at
its own expense, to handle and defend the same before he or she undertakes to
handle and defend it on his or her own behalf, unless such loss, cost liability,
or expense is a result of his or her own willful misconduct or except as
expressly provided by statute.

 

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          7. Awards.

          (a) Awards under the Plan shall consist of Options, Stock Appreciation
Rights, Stock Awards, Cash Awards, Restricted Stock, Restricted Stock Units,
Performance Stock, Performance Units, or Annual Management Incentive Awards. The
Committee shall determine the type or types of Awards to be made under this Plan
and shall designate from time to time the Participants who are to be the
recipients of such Awards. Each Award may be embodied in an Award Agreement,
which shall contain such terms, conditions and limitations as shall be
determined by the Committee in its sole discretion and shall be signed by the
Participant to whom the Award is made and by an Authorized Officer for and on
behalf of the Company. Awards may consist of those listed in this paragraph 7
hereof and may be granted singly, in combination or in tandem. Awards may also
be made in combination or in tandem with, in replacement of (subject to
paragraph 11), or as alternatives to, grants or rights under this Plan or any
other plan of the Company or any of its Subsidiaries, including the plan of any
acquired entity. An Award may provide for the grant or issuance of additional,
replacement or alternative Awards upon the occurrence of specified events,
including the exercise of the original Award granted to a Participant. All or
part of an Award may be subject to conditions established by the Committee,
which may include, but are not limited to, continuous service with the Company
and its Subsidiaries, achievement of specific business objectives, items
referenced to in clause (v) below, and other comparable measurements of
performance. Upon resignation, termination, death, disability or retirement of
an Employee, any unexercised, deferred, unvested or unpaid Employee Awards shall
be treated as set forth in the applicable Employee Award Agreement or as
otherwise specified by the Committee. Upon resignation, termination, death or
disability of an Independent Contractor, any unexercised, deferred, unvested or
unpaid Independent Contractor Awards shall be treated as set forth in the
applicable Independent Contractor Award Agreement or as otherwise specified by
the Committee. Upon resignation, termination, death, Disability or retirement of
a Nonemployee Director, all unvested Director Awards shall be treated as set
forth in the applicable Director Award Agreement or as otherwise specified by
the Committee.

          (i) Stock Option. An Employee Award may be in the form of an Option.
An Option awarded pursuant to this Plan may consist of an Incentive Option or a
Nonqualified Option. The Grant Price of an Incentive Option shall be not less
than the Fair Market Value of the Common Stock subject to such Incentive Option
on the date of grant. The Grant Price of a Nonqualified Option shall be not less
than the Fair Market Value of the Common Stock subject to such Nonqualified
Stock Option on the date of grant. Options may not include provisions that
“reload” the Option upon exercise. Subject to the foregoing provisions, the
terms, conditions and limitations applicable to any Options awarded pursuant to
this Plan, including the term of any Options and the date or dates upon which
they become exercisable, shall be determined by the Committee.

          (ii) Stock Appreciation Right. An Employee Award may be in the form of
a SAR. The terms, conditions and limitations applicable to any SAR awarded
pursuant to this Plan, including the term of any SAR and the date or dates upon
which they become exercisable, shall be determined by the Committee.

          (iii) Stock Award, Restricted Stock and Stock Units. An Employee Award
may be in the form of a Stock Award, Restricted Stock or Stock Units. The terms,
conditions and limitations applicable to any such Awards granted pursuant to
this Plan shall be determined by the Committee; provided that any Restricted
Stock Award shall have a minimum Restriction Period of one year from the date of
grant, provided that the

 

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Committee may provide for earlier vesting by reason of death, disability,
retirement or change in control.

          (iv) Cash Award. An Employee Award may be in the form of a Cash Award.
The terms, conditions and limitations applicable to any Cash Awards granted
pursuant to this Plan shall be determined by the Committee.

          (v) Performance Award. Without limiting the type or number of Awards
that may be made under the other provisions of this Plan, an Employee Award may
be in the form of a Performance Award. The terms, conditions and limitations
applicable to any Performance Award granted to Participants pursuant to this
Plan shall be determined by the Committee, subject to the limitations set forth
below. Any Stock Award granted as an Employee Award which is a Performance Award
shall have a minimum Restriction Period of one year from the date of grant,
provided that the Committee may provide for earlier vesting upon a termination
of employment by reason of death, disability, retirement or change in control.
The Committee shall set Performance Goals in its discretion which, depending on
the extent to which they are met, will determine the value and/or amount of
Performance Awards that will be paid out to the Participant and/or the portion
of an Award that may be exercised.

          (A) Nonqualified Performance Awards. Performance Awards granted to
Employees that are not intended to qualify as qualified performance-based
compensation under Section 162(m) of the Code, or that are Options or SARs,
shall be based on achievement of such goals and be subject to such terms,
conditions and restrictions as the Committee or its delegate shall determine.

          (B) Qualified Performance Awards. A Qualified Performance Award shall
be paid, vested or otherwise deliverable solely on account of the attainment of
one or more pre-established, objective Performance Goals established by the
Committee prior to the earlier to occur of (x) 90 days after the commencement of
the period of service to which the Performance Goal relates and (y) the lapse of
25% of the period of service (as scheduled in good faith at the time the goal is
established), and in any event while the outcome is substantially uncertain. A
Performance Goal is objective if a third party having knowledge of the relevant
facts could determine whether the goal is met. Such a Performance Goal may be
based on one or more business criteria that apply to the individual, one or more
business units, divisions, segments or sectors of the Company, or the Company as
a whole, and if so desired by the Committee, by comparison with a peer group of
companies. Unless otherwise stated, such a Performance Goal need not be based
upon an increase or positive result under a particular business criterion and
could include, for example, maintaining the status quo or limiting economic
losses (measured, in each case, by reference to specific business criteria). In
interpreting Plan provisions applicable to Qualified Performance Awards, it is
the intent of the Plan to conform with the standards of Section 162(m) of the
Code and Treasury Regulation § 1.162-27(e)(2)(i), as to grants to those
Participants whose compensation is, or likely to be, subject to Section 162(m)
of the Code, and the Committee in establishing such goals and interpreting the
Plan shall be guided by such provisions. Prior to the payment of any
compensation based on the achievement of Performance Goals, the Committee must
certify in writing that applicable Performance Goals and any of

 

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the material terms thereof were, in fact, satisfied. Subject to the foregoing
provisions, the terms, conditions and limitations applicable to any Qualified
Performance Awards made pursuant to this Plan shall be determined by the
Committee.

          (C) Annual Management Incentive Awards. As one form of Qualified
Performance Award, the Committee may designate Participants who are eligible to
receive a monetary payment in any calendar year based upon Performance Goals for
the Company (“Annual Management Incentive Awards”). Within the first 90 Days of
each fiscal year of the Company, the Committee shall establish (i) Performance
Goals for the Company for such fiscal year (the “Performance Period”) and
(ii) target awards (“Target Awards”) that correspond to the Performance Goals.
The Committee shall, promptly after the date on which the necessary financial or
other information for a particular Performance Period becomes available, certify
in writing whether any Performance Goal has been achieved and, if so, the
highest Performance Target that has been achieved, all in a manner required by
Section 162(m) of the Code. If any Performance Target has been achieved, the
Award, determined for each Participant with reference to the Target Award that
corresponds to the highest Performance Target achieved for such Performance
Period shall have been earned, except that the Committee may, in its sole
discretion, reduce the amount of any Award to reflect the Committee’s assessment
of the Participant’s individual performance, to reflect the failure of the
Participant to remain in the continuous employ of the Company or its
Subsidiaries, or for any other reason. Such Awards shall become payable in cash
as promptly as practicable thereafter.

          (b) As of December 31, 2004, certain awards consisting of options on
8,257,642 shares of Common Stock (the “Existing Options”) have been granted
under the Existing Plan or its predecessor as in effect from time to time. As of
the Amendment Effective Date, each Existing Option shall continue to be
outstanding and the shares of Common Stock that are the subject of such Existing
Options shall be subject to adjustment in accordance with paragraph 13 and to
the other provisions of the Plan.

          (c) The Committee shall have the sole responsibility and authority to
determine the type or types of Independent Contractor Awards to be made under
this Plan and may make any such Awards as could be made to an Employee, other
than Incentive Options.

          (d) The Committee may grant Director Awards to the Nonemployee
Directors of the Company from time to time in accordance with this
Paragraph 7(d). Each Director Award may, in the discretion of the Committee, be
embodied in a Director Award Agreement, which shall contain such terms,
conditions and limitations as shall be determined by the Committee in its sole
discretion and, if required by the Committee, shall be signed by the Nonemployee
Director to whom the Director Award is granted and signed for and on behalf of
the Company.

          (i) Stock Option. A Director Award may be in the form of a
Nonqualified Stock Option. The Grant Price of the Option shall be not less than
the Fair Market Value of the Common Stock subject to such Option on the date of
grant. Options may not include provisions that “reload” the option upon
exercise. Subject to the foregoing provisions, the terms, conditions and
limitations applicable to any Options awarded to Nonemployee Directors pursuant
to this Plan, including the Grant Price, the term of the

 

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Options, the number of shares subject to the Option and the date or dates upon
which they become exercisable, shall be determined by the Committee.

          (ii) Stock Appreciation Right. A Director Award may be in the form of
a SAR. The terms, conditions and limitations applicable to any SAR awarded to
Nonemployee Directors pursuant to this Plan, including the term of any SAR and
the date or dates upon which they become exercisable, shall be determined by the
Committee.

          (iii) Stock Award, Restricted Stock and Stock Units. A Director Award
may be in the form of a Stock Award, Restricted Stock or Stock Units. The terms,
conditions and limitations applicable to any such Director Award granted to
Nonemployee Directors pursuant to this Plan shall be determined by the
Committee; provided that any Restricted Stock Award shall have a minimum
Restriction Period of one year from the date of grant, provided that the
Committee may provide for earlier vesting by reason of death, Disability,
retirement or change in control.

          (iv) Cash Award. A Director Award may be in the form of a Cash Award.
The terms, conditions and limitations applicable to any Cash Awards granted
pursuant to this Plan shall be determined by the Committee.

          (v) Performance Award. Without limiting the type or number of Director
Awards that may be made under the other provisions of this Plan, a Director
Award may be in the form of a Performance Award. The terms, conditions and
limitations applicable to any Performance Award granted to Nonemployee Directors
pursuant to this Plan shall be determined by the Committee, subject to the
limitations set forth below. Any Stock Award granted as a Director Award which
is a Performance Award shall have a minimum Restriction Period of one year from
the date of grant, provided that the Committee may provide for earlier vesting
by reason of death, Disability, retirement or change in control. The Committee
shall set Performance Goals in its discretion which, depending on the extent to
which they are met, will determine the value and/or amount of Performance Awards
that will be paid out to the Nonemployee Director and/or the portion of an Award
that may be exercised.

          (A) Nonqualified Performance Awards. Performance Awards granted to
Nonemployee Directors that are not intended to qualify as qualified
performance-based compensation under Section 162(m) of the Code, or that are
Options or SARs, shall be based on achievement of such goals and be subject to
such terms, conditions and restrictions as the Committee or its delegate shall
determine.

          (vi) Notwithstanding anything to the contrary contained in this Plan,
no Nonemployee Director may be granted, during any calendar year, Director
Awards consisting of more than 40,000 shares of Common Stock; provided, however,
that a non-employee Vice Chairman of the Board may be granted Director Awards
that are up to three times that amount; provided, further, that a non-employee
Chairman of the Board may be granted during any calendar year Director Awards
that are up to five times that amount.

 

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          8. Payment of Awards.

          (a) General. Payment of Awards may be made in the form of cash or
Common Stock, or a combination thereof, and may include such restrictions as the
Committee shall determine, including, in the case of Common Stock, restrictions
on transfer and forfeiture provisions. If payment of an Award is made in the
form of Restricted Stock, the applicable Award Agreement relating to such shares
shall specify whether the underlying shares are to be issued at the beginning or
end of the Restriction Period. In the event that shares of Restricted Stock are
to be issued at the beginning of the Restriction Period, the certificates
evidencing such shares (to the extent that such shares are so evidenced) shall
contain appropriate legends and restrictions that describe the terms and
conditions of the restrictions applicable thereto. In the event that shares of
Restricted Stock are to be issued at the end of the Restricted Period, the right
to receive such shares shall be evidenced by book entry registration or in such
other manner as the Committee may determine.

          (b) Deferral. With the approval of the Committee amounts payable in
respect of Awards may be deferred and paid either in the form of installments or
as a lump-sum payment. The Committee may permit selected Participants to elect
to defer payments of some or all types of Awards or any other compensation
otherwise payable by the Company in accordance with procedures established by
the Committee and may provide that such deferred compensation may be payable in
shares of Common Stock. Any deferred payment pursuant to an Award, whether
elected by the Participant or specified by the Award Agreement or the terms of
the Award or by the Committee, may be forfeited if and to the extent that the
Award Agreement or terms of the Award provides.

          (c) Dividends, Earnings and Interest. Rights to dividends or Dividend
Equivalents may be extended to and made part of any Award consisting of shares
of Common Stock or units denominated in shares of Common Stock, subject to such
terms, conditions and restrictions as the Committee may establish. The Committee
may also establish rules and procedures for the crediting of interest or other
earnings on deferred cash payments and Dividend Equivalents for Awards
consisting of shares of Common Stock or units denominated in shares of Common
Stock.

          (d) Substitution of Awards. Subject to paragraphs 6(b), 11 and 13
hereof, at the discretion of the Committee, an Employee or Independent
Contractor may be offered an election to substitute an Award for another Award
or Awards of the same or different type.

          9. Stock Option Exercise. The Grant Price shall be paid in full at the
time of exercise in cash or, if permitted by the Committee and elected by the
optionee, the optionee may purchase such shares by means of tendering Common
Stock or surrendering another Award, including Restricted Stock, valued at Fair
Market Value on the date of exercise, or any combination thereof. The Committee
shall determine acceptable methods for Participants to tender Common Stock or
other Awards; provided that any Common Stock that is or was the subject of an
Award may be so tendered only if it has been held by the Participant for six
months unless otherwise determined by the Committee. The Committee may provide
for procedures to permit the exercise or purchase of such Awards by use of the
proceeds to be received from the sale of Common Stock issuable pursuant to an
Award. Unless otherwise provided in the applicable Award Agreement, in the event
shares of Restricted Stock are tendered as consideration for the exercise of an
Option, a number of the shares issued upon the exercise of the Option, equal to
the number of shares of Restricted Stock used as consideration therefore, shall
be subject to the same restrictions as the Restricted Stock so submitted as well
as any additional restrictions that may be imposed by the Committee. The
Committee may adopt additional rules and procedures regarding the exercise of

 

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Options from time to time, provided that such rules and procedures are not
inconsistent with the provisions of this paragraph.

          10. Taxes. The Company or its designated third party administrator
shall have the right to deduct applicable taxes from any Employee Award payment
and withhold, at the time of delivery or vesting of cash or whole shares of
Common Stock under this Plan, an appropriate amount of cash or number of shares
of Common Stock or a combination thereof for payment of taxes or other amounts
required by law or to take such other action as may be necessary in the opinion
of the Company to satisfy all obligations for withholding of such taxes or other
amounts. The Committee may also permit withholding to be satisfied by the
transfer to the Company of whole shares of Common Stock theretofore owned by the
holder of the Employee Award with respect to which withholding is required. If
shares of Common Stock are used to satisfy tax withholding, such shares shall be
valued based on the Fair Market Value when the tax withholding is required to be
made.

          11. Amendment, Modification, Suspension or Termination of the Plan.
The Board may amend, modify, suspend or terminate this Plan for the purpose of
meeting or addressing any changes in legal requirements or for any other purpose
permitted by law, except that (i) no amendment or alteration that would
adversely affect the rights of any Participant under any Award previously
granted to such Participant shall be made without the consent of such
Participant and (ii) no amendment or alteration shall be effective prior to its
approval by the stockholders of the Company to the extent such approval is
required by applicable legal requirements or the applicable requirements of any
securities exchange on which the Company’s Common Stock is listed.

          12. Assignability. Unless otherwise determined by the Committee and
provided in the Award Agreement or the terms of the Award, no Award or any other
benefit under this Plan shall be assignable or otherwise transferable except by
will, by beneficiary designation or the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined by the Code or Title
I of the Employee Retirement Income Security Act, or the rules thereunder. In
the event that a beneficiary designation conflicts with an assignment by will,
the beneficiary designation will prevail. The Committee may prescribe and
include in applicable Award Agreements or the terms of the Award other
restrictions on transfer. Any attempted assignment of an Award or any other
benefit under this Plan in violation of this paragraph 12 shall be null and
void.

          13. Adjustments.

          (a) The existence of outstanding Awards shall not affect in any manner
the right or power of the Company or its stockholders to make or authorize any
or all adjustments, recapitalizations, reorganizations or other changes in the
capital stock of the Company or its business or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or prior preference
stock (whether or not such issue is prior to, on a parity with or junior to the
existing Common Stock) or the dissolution or liquidation of the Company, or any
sale or transfer of all or any part of its assets or business, or any other
corporate act or proceeding of any kind, whether or not of a character similar
to that of the acts or proceedings enumerated above.

          (b) In the event of any corporate event or transaction (including, but
not limited to, a change in the shares of the Company or the capitalization of
the Company) such as a merger, consolidation, reorganization, recapitalization,
separation, stock dividend, stock split, reverse stock split, split up,
spin-off, or other distribution of stock or property of the Company, combination
of shares, exchange of shares, dividend in kind, or other like change in capital
structure or distribution (including cash dividends that the Board determines
are not in the ordinary course of business but excluding normal cash dividends)
to stockholders of the

 

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Company, or any similar corporate event or transaction, the Board, in its sole
discretion, in order to prevent dilution or enlargement of Participants’ rights
under the Plan, shall substitute or adjust, in an equitable manner, as
applicable, the number and kind of shares that may be issued under the Plan, the
number and kind of shares subject to outstanding Awards, the Grant Price
applicable to outstanding Awards, the Award limits, and other value
determinations applicable to outstanding Awards.

          14. Restrictions. No Common Stock or other form of payment shall be
issued with respect to any Award unless the Company shall be satisfied based on
the advice of its counsel that such issuance will be in compliance with
applicable federal and state securities laws. Certificates evidencing shares of
Common Stock delivered under this Plan (to the extent that such shares are so
evidenced) may be subject to such stop transfer orders and other restrictions as
the Committee may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, any securities exchange
or transaction reporting system upon which the Common Stock is then listed or to
which it is admitted for quotation and any applicable federal or state
securities law. The Committee may cause a legend or legends to be placed upon
such certificates (if any) to make appropriate reference to such restrictions.

          15. Unfunded Plan. Insofar as it provides for Awards of cash, Common
Stock or rights thereto, this Plan shall be unfunded. Although bookkeeping
accounts may be established with respect to Participants under this Plan, any
such accounts shall be used merely as a bookkeeping convenience, including
bookkeeping accounts established by a third party administrator retained by the
Company to administer the Plan. The Company shall not be required to segregate
any assets for purposes of this Plan or Awards hereunder, nor shall the Company,
the Board or the Committee be deemed to be a trustee of any benefit to be
granted under this Plan. Any liability or obligation of the Company to any
Participant with respect to an Award under this Plan shall be based solely upon
any contractual obligations that may be created by this Plan and any Award
Agreement or the terms of the Award, and no such liability or obligation of the
Company shall be deemed to be secured by any pledge or other encumbrance on any
property of the Company. Neither the Company nor the Board nor the Committee
shall be required to give any security or bond for the performance of any
obligation that may be created by this Plan.

          16. Governing Law. This Plan and all determinations made and actions
taken pursuant hereto, to the extent not otherwise governed by mandatory
provisions of the Code or the securities laws of the United States, shall be
governed by and construed in accordance with the laws of the State of Delaware.

          17. Non-United States Participants. The Committee may grant Awards to
persons outside the United States under such terms and conditions as may, in the
judgment of the Committee, be necessary or advisable to comply with the laws of
the applicable foreign jurisdiction and, to that end, may establish sub-plans,
modified option exercise procedures and other terms and procedures.
Notwithstanding the above, the Committee may not take any actions hereunder, and
no Awards shall be granted, that would violate the Exchange Act, the Code, any
securities law, any governing statute, or any other applicable law.

          18. Right to Employment. Nothing in the Plan or an Award Agreement
shall interfere with or limit in any way the right of the Company to terminate
any Participant’s employment or other service relationship at any time, or
confer upon any Participant any right to continue in the capacity in which he or
she is employed or otherwise serves the Company.

          19. Successors. All obligations of the Company under the Plan with
respect to Awards granted hereunder shall be binding on any successor to the
Company, whether the existence of such

 

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successor is the result of a direct or indirect purchase, merger, consolidation,
or otherwise, of all or substantially all of the business and/or assets of the
Company.

          20. Effectiveness. The Existing Plan shall be amended and restated in
its entirety as set forth herein as of the effective date of the Board action
approving this Plan, subject only to approval of the Plan by the stockholders of
the Company (the “Amendment Effective Date”). No new Awards may be granted after
the tenth anniversary of the Amendment Effective Date.

          21. Code Section 409A. Notwithstanding anything in this Plan to the
contrary, if any Plan provision or Award under the Plan would result in the
imposition of an additional tax under Code Section 409A and related regulations
and Treasury pronouncements (“Section 409A”), that Plan provision or Award will
be reformed to avoid imposition of the additional tax and no action taken to
comply with Section 409A shall be deemed to adversely affect the Participant’s
rights to an Award.