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EXHIBIT 10.01
 
COLONIAL COMMERCIAL CORP. 2006 STOCK PLAN
 
ARTICLE I
 
General
 
1.1.    Purpose. The purpose of the Colonial Commercial Corp. 2006 Stock Plan,
(the “Plan”), is to provide additional incentive to officers, directors,
employees and others who render services to Colonial Commercial Corp. (the
“Corporation”) and any present or future Subsidiary. It is intended that Awards
granted under the Plan strengthen the desire of such persons to join and remain
in the employ of the Corporation, or otherwise render services to the
Corporation, and stimulate their efforts on behalf of the Corporation.
 
1.2.    Term. No Award shall be granted under the Plan after the close of
business on the day immediately preceding the 10-year anniversary of the
adoption of the plan. Subject to other applicable provisions of the Plan, all
Awards made under the Plan prior to such termination of the Plan shall remain in
effect until such Awards have been satisfied or terminated in accordance with
the Plan and the terms of such Awards.
 
1.3.    Shares Subject to the Plan. Subject to adjustments as provided in
Article IX, the number of shares of Stock that may be delivered, purchased or
used for reference purposes (with respect to SARs or Stock Units) with respect
to Awards granted under the Plan shall be 1,000,000 shares of Common Stock of
Colonial Commercial Corp., (“Stock”). If any Award, or portion of an Award,
under the Plan expires or terminates unexercised, becomes unexercisable or is
forfeited or otherwise terminated, surrendered or canceled as to any shares
without the delivery of shares of Stock or other consideration, the shares
subject to such Award shall thereafter be available for further Awards under the
Plan.
 
1.4.    Subject to adjustments as provided in Article IX, the maximum number of
shares of Stock subject to Awards of any combination that may be granted during
any one fiscal year of the Corporation to any one individual shall be limited to
1,000,000 shares; provided that such number shall be adjusted pursuant to
Article IX, and shares otherwise counted against such number, only in a manner
which will not cause Awards granted under the Plan to fail to qualify as
"performance-based compensation" under Code section 162(m).
 
ARTICLE II 
 
Definitions
 
For purposes of the Plan, the following terms shall be defined as set forth
below.
 
2.1.    Administrator means the Board, the Special Stock Committee or any other
committee which is designated by the Board as the "Administrator."
 
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2.2.    Award means any Stock Options (including ISOs and NSOs), SARs (including
free-standing and tandem SARs), Restricted Stock Awards, Stock Units, or any
combination of the foregoing granted pursuant to the Plan, except, however, when
the term is being used under the Plan with respect to a particular category of
grant in which case it shall only refer to that particular category of grant.
 
2.3.    Board means the Board of Directors of the Corporation.
 
2.4.    Code means the Internal Revenue Code of 1986, as amended.
 
2.5    Fair Market Value means, as of any date,
 
2.5.1    if the Stock is not traded on any over-the-counter market or on a
national securities exchange, the fair market value determined by the Board in
good faith using a reasonable valuation method;
 
2.5.2    if the Stock is traded in the over-the-counter market, based on most
recent closing price for the Stock on the date the calculation thereof shall be
made; or
 
2.5.3    if the Stock is listed on a national securities exchange, based on the
most recent closing price for the Stock of the Corporation on such exchange.
 
2.6.    Grant Agreement means the agreement between the Corporation and the
Participant pursuant to which the Corporation authorizes an Award hereunder.
Each Grant Agreement entered into between the Corporation and a Participant with
respect to an Award granted under the Plan shall contain such provisions,
consistent with the provisions of the Plan, as may be established by the
Administrator.
 
2.7.    Grant Date means the date on which the Administrator formally acts to
grant an Award to a Participant or such other date as the Administrator shall so
designate at the time of taking such formal action.
 
2.8.    ISO means any Stock Option designated and qualified as an "incentive
stock option" as defined in Code section 422.
 
2.9.    NSO means any Option that is not an ISO.
 
2.10.   Option means any option to purchase shares of Stock granted under
Article V.
 
2.11.   Parent means a corporation, whether now or hereafter existing, within
the meaning of the definition of "Parent Corporation" provided in Code section
424(e), or any successor to such definition.
 
2.12.   Participant means any person to whom any Award is granted pursuant to
the Plan.
 
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2.13.   Performance Goals means any one or more of the following performance
criteria, either individually, alternatively or in any combination, and subject
to such modifications or variations as specified by the Administrator, applied
to either the Corporation as a whole or to a business unit or Subsidiary, either
individually, alternatively or in any combination, and measured over a period of
time including any portion of a year, annually or cumulatively over a period of
years, on an absolute basis or relative to a pre-established target, to previous
years' results or to a designated comparison group, in each case as specified by
the Administrator: cash flow; cash flow from operations; earnings (including,
but not limited to, earnings before interest, taxes, depreciation and
amortization); earnings per share, diluted or basic; earnings per share from
continuing operations; net asset turnover; inventory turnover; capital
expenditures; debt; debt reduction; working capital; return on investment;
return on sales; net or gross sales; market share; economic value added; cost of
capital; change in assets; expense reduction levels; productivity; delivery
performance; safety record; stock price; return on equity; total stockholder
return; return on capital; return on assets or net assets; revenue; income or
net income; operating income or net operating income; operating profit or net
operating profit; gross margin, operating margin or profit margin; and
completion of acquisitions, business expansion, product diversification, new or
expanded market penetration and other non-financial operating and management
performance objectives. To the extent consistent with Code section 162(m) and
the regulations promulgated thereunder and unless otherwise determined by the
Administrator at the time the Performance Goals are established, the
Administrator shall, in applying the Performance Goals, exclude the adverse
affect of any of the following events that occur during a performance period:
the impairment of tangible or intangible assets; litigation or claim judgments
or settlements; changes in tax law, accounting principles or other such laws or
provisions affecting reported results; business combinations, reorganizations
and/or restructuring programs that have been approved by the Board; reductions
in force and early retirement incentives; and any extraordinary, unusual,
infrequent or non-recurring items separately identified in the financial
statements and/or notes thereto in accordance with generally accepted accounting
principles.

2.14.   Restricted Stock Award means any Award of shares of restricted Stock
granted pursuant to Article VII of the Plan.
 
2.15.   SAR means a stock appreciation right, as awarded under Article VI.
 
2.16.   Stock means the voting common stock of the Corporation, subject to
adjustments pursuant to the Plan.
 
2.17.   Stock Unit means credits to a bookkeeping reserve account solely for
accounting purposes, where the amount of the credit shall equal the Fair Market
Value of a share of Stock on the Grant Date (unless the Administrator provides
otherwise in the Grant Agreement) and which shall be subsequently increased or
decreased to reflect the Fair Market Value of a share of Stock. Stock Units do
not require segregation of any of the Corporation's assets. Stock Units are
awarded under Article VII.
 
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2.18.   Subsidiary means any corporation or other entity (other than the
Corporation) in any unbroken chain of corporations or other entities, beginning
with the Corporation, if each of the corporations or entities (other than the
last corporation or entity in the unbroken chain) owns stock or other interests
possessing 50% or more of the economic interest or the total combined voting
power of all classes of stock or other interests in one of the other
corporations or entities in the chain.
 
ARTICLE III 
 
Administration
 
3.1.    General. The Plan shall be administered by the Administrator. The
Administrator's determinations under the Plan (including without limitation
determinations of the persons to receive Awards, the form, amount and timing of
such Awards, the terms and provisions of such Awards and the agreements
evidencing same) need not be uniform and may be made by the Administrator
selectively among persons who receive, or are eligible to receive, Awards under
the Plan, whether or not such persons are similarly situated.
 
3.2.    Duties. The Administrator shall have full power and authority to
administer and interpret the Plan and to adopt such rules, regulations,
agreements, guidelines and instruments for the administration of the Plan and
for the conduct of its business as the Administrator deems necessary or
advisable, all within the Administrator's sole and absolute discretion. The
Administrator shall have full power and authority to take all other actions
necessary to carry out the purpose and intent of the Plan, including, but not
limited to, the authority to:
 
3.2.1.    Construe the Plan and any Award under the Plan;
 
3.2.2.    Subject to Section 4.1, select the persons to whom Awards may be
granted and the time or times at which Awards shall be granted;
 
3.2.3.    Determine the number of shares of Stock to be covered by or used for
reference purposes for any Award;
 
3.2.4.    Determine and modify from time to time the terms and conditions,
including restrictions, of any Award (including provisions that would allow for
cashless exercise of Awards and/or reduction in the exercise price of
outstanding Awards) and to approve the form of written instrument evidencing
Awards;
 
3.2.5.    Accelerate the time or times at which an Award becomes vested or when
an Award may be exercised or becomes payable and to waive or accelerate the
lapse, in whole or in part, of any restriction or condition with respect to such
Award, including, but not limited to, any restriction or condition with respect
to the vesting or exercisability of an Award following a Participant's
termination of employment or death;
 
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3.2.6.    Impose limitations on Awards, including limitations on transfer and
repurchase provisions; and
 
3.2.7.    Modify, extend or renew outstanding Awards, or accept the surrender of
outstanding Awards and substitute new Awards.
 
ARTICLE IV 
 
Eligibility and Participation
 
4.1.    Eligibility. The persons eligible to participate in the Plan are
officers, directors, employees of the Corporation or its Subsidiaries and others
who render services to the Corporation or its subsidiaries.
 
ARTICLE V 
 
Stock Options
 
5.1.    General. Subject to the other applicable provisions of the Plan, the
Administrator may from time to time grant to eligible Participants Awards of
ISOs or NSOs. The ISO or NSO Awards granted shall be subject to the following
terms and conditions.
 
5.2.    Grant of Option. The grant of an Option shall be evidenced by a Grant
Agreement, executed by the Corporation and the Participant, describing the
number of shares of Stock subject to the Option, whether the Option is an ISO or
NSO, the Exercise Price of the Option, the vesting period for the Option and
such other terms and conditions that the Administrator deems, in it sole
discretion, to be appropriate, provided that such terms and conditions are not
inconsistent with the Plan.
 
5.3.    Exercise Price. The price per share payable upon the exercise of each
Option (the "Exercise Price") shall be determined by the Administrator and set
forth in the Grant Agreement; provided, however, that in the case of ISOs the
Exercise Price shall not be less than 100% of the Fair Market Value of the
shares on the Grant Date. Notwithstanding the immediately preceding sentence,
the Exercise Price of any ISO granted to a Participant who owns, within the
meaning of Code section 422(b)(6), after application of the attribution rules in
Code section 424(d), more than ten percent (10%) of the total combined voting
power of all classes of shares of the Corporation, or Subsidiary corporations,
shall not be less than 110% of the Fair Market Value of the Stock on the Grant
Date
 
5.4    Payment for shares of Stock upon exercise of an Option, the full payment
of the Exercise Price shall be made:
 
(i)    in cash or
 
(ii)    with the consent of the Administrator and to the extent permitted by it:
 
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(A)    with Stock of the Corporation valued at Fair Market Value on date of
exercise;
 
(B)    with a full recourse interest bearing promissory note of the Participant
secured by a pledge of the shares of Stock received upon exercise of such
Options, and having such other terms and conditions as determined by the
Administrator;
 
(C)    by delivering a properly executed exercise notice together with
irrevocable instructions to a broker to sell shares acquired upon exercise of
the Option and promptly deliver to the Corporation a portion of the proceeds
thereof equal to the Exercise Price; or
 
(D)    any combination or any of the foregoing.
 
5.4.    Payment. Options may be exercised in whole or in part by payment of the
Exercise Price of the shares to be acquired in accordance with the provisions of
the Grant Agreement, and/or such rules and regulations as the Administrator may
prescribe, and/or such determinations, orders, or decisions as the Administrator
may make.
 
5.5.    Terms of Options. The term during which each Option may be exercised
shall be determined by the Administrator; provided, however, that in no event
shall an ISO be exercisable more than ten years from the date it is granted.
 
5.6.    Reload Options. The terms of an Option may provide for the automatic
grant of a new Option Award when the Exercise Price of the Option and/or any
related tax withholding obligation is paid by tendering shares of Stock.
 
5.7.    Restrictions on ISOs. ISO Awards granted under the Plan shall comply in
all respects with Code section 422 and, as such, shall meet the following
additional requirements:
 
5.7.1.    Grant Date. An ISO must be granted within ten (10) years of the
earlier of the Plan's adoption by the Board of Directors or approval by the
Corporation's shareholders but will be an NSO and not an ISO if the Plan is not
approved by shareholders within twelve months from the grant of the option.
 
5.7.2.    Term. The term of an ISO shall not exceed ten (10) years.
Notwithstanding the immediately preceding sentence, the term of any ISO granted
to a Participant who owns, within the meaning of Code section 422(b)(6), after
application of the attribution rules in Code section 424(d), more than ten
percent (10%) of the total combined voting power of all classes of shares of the
Corporation, or Subsidiary corporations, shall not exceed five (5) years.
 
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5.7.3.    Maximum Grant. The aggregate Fair Market Value (determined as of the
Grant Date) of shares of Stock with respect to which all ISOs first become
exercisable by any Participant in any calendar year under this or any other plan
of the Corporation and Subsidiary corporations may not exceed $100,000 or such
other amount as may be permitted from time to time under Code section 422. To
the extent that such aggregate Fair Market Value shall exceed $100,000, or other
applicable amount, such Options shall be treated as NSOs. In such case, the
Corporation may designate the shares of Stock that are to be treated as stock
acquired pursuant to the exercise of an ISO by issuing a separate certificate
for such shares and identifying the certificate as ISO shares in the stock
transfer records of the Corporation.
 
5.7.4.    Participant. ISOs shall only be issued to employees of the
Corporation, or Subsidiary of the Corporation.
 
5.7.5.    Tandem Options Prohibited. An ISO may not be granted in tandem with a
NSO in such a manner that the exercise of one affects a Participant's right to
exercise the other.
 
5.7.6.    Designation. No option shall be an ISO unless so designated by the
Administrator at the time of grant or in the Grant Agreement evidencing such
Option.
 
5.7.7.    Period of Exercise. Any Option which is an ISO shall in all events
lapse unless exercised by the Participant:
 
(i)    prior to the 89th day after the date on which employment terminated, if
termination was other than by reason of death; and
 
(ii)    within a twelve-month period next succeeding the death of the
Participant if termination is by reason of death.
 
5.8.    Exercisability. Options shall be exercisable as provided in the Grant
Agreement.
 
5.9.    Transferability. ISOs shall be non-transferable. Except as provided in
the Grant Agreement, NSOs shall not be assignable or transferable by the
Participant, except by will, or by the laws of descent and distribution.
 
5.10   Code Section 162(m). With respect to any Options intended to qualify as
"performance-based compensation" under Code section 162(m), this Article V
(including the substance of the Performance Goals, the timing of establishment
of the Performance Goals, the adjustment of the Performance Goals and
determination of the Award) shall be implemented by the Administrator in a
manner designed to preserve such Awards as such "performance-based
compensation."
 
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ARTICLE VI 
 
Stock Appreciation Rights
 
6.1.    Award of SARs. Subject to the other applicable provisions of the Plan,
the Administrator may at any time and from time to time grant SARs to eligible
Participants, either on a free-standing basis (without regard to or in addition
to the grant of an Option) or on a tandem basis (related to the grant of an
underlying Option).
 
6.2.    Restrictions on Tandem SARs. ISOs may not be surrendered in connection
with the exercise of a tandem SAR unless the Fair Market Value of the Stock
subject to the ISO is greater than the Exercise Price for such ISO. SARs granted
in tandem with Options shall be exercisable only to the same extent and subject
to the same conditions as the related Options are exercisable. The Administrator
may, in its discretion, prescribe additional conditions to the exercise of any
such tandem SAR.
 
6.3    Base Price. The base price per share of each SAR (the "Base Price") shall
be determined by the Administrator and set forth in the Grant Agreement.
 
6.3.    Amount of Payment Upon Exercise of SARs. A SAR shall entitle the
Participant to receive, subject to the provisions of the Plan and the Grant
Agreement, a payment having an aggregate value equal to the product of (i) the
excess of (A) the Fair Market Value on the exercise date of one share of Stock
over (B) the Base Price per share specified in the Grant Agreement, times (ii)
the number of shares specified by the SAR, or portion thereof, which is
exercised. In the case of exercise of a tandem SAR, such payment shall be made
in exchange for the surrender of the unexercised related Option (or any portions
thereof which the Participant from time to time determines to surrender for this
purpose).
 
6.4.    Form of Payment Upon Exercise of SARs. Payment by the Corporation of the
amount receivable upon any exercise of a SAR may be made by the delivery of
Stock or cash, or any combination of Stock and cash, as determined in the sole
discretion of the Administrator.
 
6.5.    Transferability. SARs shall be transferable only as provided in the
Grant Agreement.
 
6.6    Code Section 162(m). With respect to any SARs intended to qualify as
"performance-based compensation" under Code section 162(m), this Article VI
(including the substance of the Performance Goals, the timing of establishment
of the Performance Goals, the adjustment of the Performance Goals and
determination of the Award) shall be implemented by the Administrator in a
manner designed to preserve such Awards as such "performance-based
compensation."
 
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ARTICLE VII 
 
Restricted Stock and Stock Units
 
7.1.    Grants. Subject to the other applicable provisions of the Plan, the
Administrator may grant Restricted Stock or Stock Units to Participants in such
amounts and for such consideration as may be required by law, as it determines.
Such Awards shall be made pursuant to a Grant Agreement.
 
7.2.    Terms and Conditions. A Restricted Stock Award entitles the recipient to
acquire shares of Stock and a Stock Unit Award entitles the recipient to be paid
the Fair Market Value of the Stock on the exercise date. Stock Units may be
settled in Stock, cash or a combination thereof, as determined by the
Administrator. Restricted Stock Awards and Stock Unit Awards are subject to
vesting periods and other restrictions and conditions as the Administrator may
include in the Grant Agreement.
 
7.3.   Restricted Stock.
 
7.3.1.    The Grant Agreement for each Restricted Stock Award shall specify the
applicable restrictions on such shares of Stock, the duration of such
restrictions, and the times and/or Performance Goals upon which such
restrictions shall lapse with respect to all or a specified number of shares of
Stock that are part of the Award. Notwithstanding the foregoing, the
Administrator may reduce or shorten the duration of any restriction applicable
to any shares of Stock awarded to any Participant under the Plan.
 
7.3.2.    Share certificates with respect to restricted shares of Stock may be
issued at the time of grant of the Restricted Stock Award, subject to forfeiture
if the restrictions do not lapse, or upon lapse of the restrictions. If share
certificates are issued at the time of grant of the Restricted Stock Award, the
certificates shall bear an appropriate legend with respect to the restrictions
applicable to such Restricted Stock Award (as described in Section 11.1) or,
alternatively, the Participant may be required to deposit the certificates with
the Corporation during the period of any restriction thereon and to execute a
blank stock power or other instrument of transfer.
 
7.3.3.    The extent of the Participant's rights as a shareholder with respect
to the Restricted Stock shall be specified in the Grant Agreement.
 
7.4.   Stock Units.
 
7.4.1.    The grant of Stock Units shall be evidenced by a Grant Agreement that
states the number of Stock Units evidenced thereby and the terms and conditions
of such Stock Units, including, but not limited to, any Performance Goals, if
any, that must be satisfied before a Participant earns such Stock Units.
 
7.4.2.    Stock Units may be exercised in the manner described in the Grant
Agreement.
 
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7.4.3.    The extent of the Participant's rights as a shareholder with respect
to the Stock Units shall be specified in the Grant Agreement.
 
7.5.   Transferability. Unvested Restricted Stock Awards or Stock Units may not
be sold, assigned, transferred, pledged or otherwise encumbered or disposed of
except as specifically provided in the Grant Agreement.
 
7.6    Code Section 162(m). With respect to any Restricted Stock Awards or Stock
Units intended to qualify as "performance-based compensation" under Code section
162(m), this Article VII (including the substance of the Performance Goals, the
timing of establishment of the Performance Goals, the adjustment of the
Performance Goals and determination of the Award) shall be implemented by the
Administrator in a manner designed to preserve such Awards as such
"performance-based compensation."
 
ARTICLE VIII 
 
8.1.   Tax Withholding
 
8.1.1.    Subject to subparagraph 8.1.2., as a condition to taking any action
otherwise required under the Plan or any Grant Agreement, the Corporation shall
have the right to require assurance that the Participant will remit to the
Corporation when required an amount sufficient to satisfy federal, state and
local tax withholding requirements. The Administrator may permit such
withholding obligations to be satisfied through cash payment by the Participant,
through the surrender of shares of Stock which the Participant already owns or
through the surrender of shares of Stock to which the Participant is otherwise
entitled under the Plan or through any other method determined by the
Administrator.
 
8.1.2.    If a Participant makes a disposition of shares of Stock acquired upon
the exercise of an ISO within either two (2) years after the Option was granted
or one (1) year after its exercise by the Participant, the Participant shall
promptly notify the Corporation or respond to an inquiry by the Corporation
concerning a disposition and the Corporation shall have the right to require the
Participant to pay to the Corporation an amount sufficient to satisfy federal,
state and local tax withholding requirements.
 
ARTICLE IX 
 
Corporate Transactions
 
9.1.   Adjustments Due to Special Circumstances.
 
9.1.1.    In the event of any change in the capital structure or business of the
Corporation by reason of any stock dividend or extraordinary dividend, stock
split or reverse stock split, recapitalization, reorganization, merger,
consolidation, split-up, combination or exchange of shares, non-cash
distributions with respect to its outstanding Stock, reclassification of the
Corporation's capital stock, any sale or transfer of all or part of the
Corporation's assets or business, or any similar change affecting the
Corporation's capital structure or business or the capital structure of any
business of any subsidiary, as determined by the Administrator, if the
Administrator determines that an adjustment is equitable, then the Administrator
shall adjust the Plan and Awards as it deems necessary or appropriate to prevent
enlargement or dilution of rights, including, without limitation, in: (i) the
number of shares of Stock that can be granted or used for reference purposes
pursuant to the Plan; (ii) the number and kind of shares or other securities
subject to any then outstanding Awards under the Plan; and (iii) the exercise
price, base price, or purchase price applicable to outstanding Awards under the
Plan. The adjustment by the Administrator shall be final, binding and
conclusive.
 
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9.1.2.    The Administrator may cancel outstanding Awards, but not outstanding
Stock or Restricted Stock Awards, in connection with any merger, consolidation
of the Corporation, or any sale or transfer of all or part of the Corporation's
assets or business, or any similar event. The Administrator may determine to pay
no compensation whatsoever for any canceled Awards that are not in-the-money (as
hereinafter defined) or for any canceled Awards to the extent not vested. The
Corporation shall provide payment in cash or other property for the in-the-money
value of the vested portion of Awards that are in-the-money and that are
canceled as aforesaid. Awards are "in-the-money" only to the extent of their
then realizable market value, without taking into account the potential future
increase in the value of the Award (whether under Black-Scholes-type formulas or
otherwise). The opinion by the Administrator of the in-the-money value of any
Award shall be final, binding and conclusive.
 
9.1.3.    Any adjustment of ISOs under this Section 9.1 shall be made only to
the extent not constituting a "modification" within the meaning of Code section
424(h)(3). Further, with respect to Awards intended to qualify as
"performance-based compensation" under Code section 162(m), such adjustments
shall be made only to the extent that the Administrator determines that such
adjustments may be made without causing the Company to be denied a tax deduction
on account of Code section 162(m).
 
9.2.    Substitution of Options. In the event that, by reason of a corporate
merger, consolidation, acquisition of property or stock, separation,
reorganization or liquidation, the Board shall authorize the issuance or
assumption of a stock option or stock options in a transaction to which Code
section 424(a) applies, then, notwithstanding any other provision of the Plan,
the Administrator may grant options upon such terms and conditions as it may
deem appropriate for the purpose of assumption of the old option, or
substitution of a new option for the old option, in conformity with the
provisions of Code section 424(a) and the rules and regulations thereunder, as
they may be amended from time to time.
 
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ARTICLE X 
 
Amendment and Termination
 
Amendment and Termination. The Board may amend, alter, suspend, discontinue, or
terminate the Plan or any portion thereof at any time; provided that no such
amendment, alteration, suspension, discontinuation or termination shall be made
without shareholder approval if such approval is necessary to comply with any
tax or regulatory requirement applicable to the Plan (including as necessary to
prevent the Corporation from being denied a tax deduction on account of Code
section 162(m)); and provided further that any such amendment, alteration,
suspension, discontinuance or termination that would impair the rights of any
Participant or any holder or beneficiary of any Award theretofore granted shall
not to that extent be effective without the consent of the affected Participant,
holder or beneficiary.
 
ARTICLE XI 
 
Miscellaneous
 
11.1.   Restrictive Legends. The Corporation may at any time place legends
referencing any restrictions described in the Grant Agreement and any applicable
federal or state securities law restrictions on all certificates representing
shares of Stock underlying an Award.
 
11.2.   Compliance with Governmental Regulations. Notwithstanding any provision
of the Plan or the terms of any Grant Agreement entered into pursuant to the
Plan, the Corporation shall not be required to issue any shares hereunder prior
to registration of the shares subject to the Plan under the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as amended, if such
registration shall be necessary, or before compliance by the Corporation or any
Participant with any other provisions of either of those acts or of regulations
or rulings of the Securities and Exchange Commission thereunder, or before
compliance with other federal and state laws and regulations and rulings
thereunder, including the rules of any applicable securities exchange or
quotation system.
 
11.3.   No Guarantee of Employment. Participation in this Plan shall not be
construed to confer upon any Participant the legal right to be retained in the
employ of the Corporation or give any person any right to any payment
whatsoever, except to the extent of the benefits provided for hereunder.
 
11.4.   Governing Law. The provisions of this Plan shall be governed by,
construed and administered in accordance with applicable federal law; provided,
however, that to the extent not in conflict with federal law, this Plan shall be
governed by, construed and administered under the laws of New York, other than
its laws respecting choice of law.
 
11.5.   Severability. If any provision of the Plan shall be held invalid, the
remainder of this Plan shall not be affected thereby and the remainder of the
Plan shall continue in force.
 
 
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