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                                                                    EXHIBIT 10.5

                             PIPER JAFFRAY COMPANIES
                          2003 LONG-TERM INCENTIVE PLAN

SECTION 1. PURPOSE

         The purpose of the Plan is to promote the interests of the Company and
its stockholders by giving the Company a competitive advantage in attracting,
retaining and motivating employees, officers, consultants and Directors capable
of assuring the future success of the Company, to offer such persons incentives
that are directly linked to the profitability of the Company's businesses and
increases in stockholder value, and to afford such persons an opportunity to
acquire a proprietary interest in the Company.

SECTION 2. DEFINITIONS

         As used in the Plan, the following terms shall have the meanings set
forth below.

         (a)      "Affiliate" means any entity that, directly or indirectly
through one or more intermediaries, is controlled by, controlling or under
common control with the Company.

         (b)      "Award" means any Stock Option, Stock Appreciation Right,
Restricted Stock, Restricted Stock Unit, Performance Award, Dividend Equivalent,
Other Stock Grant, Other Stock-Based Award or Tax Offset Bonus granted under the
Plan.

         (c)      "Award Agreement" means any written agreement, contract or
other instrument or document evidencing any Award granted under the Plan. Each
Award Agreement shall be subject to the applicable terms and conditions of the
Plan and any other terms and conditions (not inconsistent with the Plan)
determined by the Committee.

         (d)      "Board" means the Board of Directors of the Company.

         (e)      "Code" means the Internal Revenue Code of 1986, as amended
from time to time, and any regulations promulgated thereunder.

         (f)      "Change in Control" has the meaning set forth in Section 7.

         (g)      "Committee" means a committee of Directors designated by the
Board to administer the Plan, which initially shall be the Compensation
Committee of the Board. The Committee shall be comprised of not less than such
number of Directors as shall be required to permit Awards granted under the Plan
to qualify under Rule 16b-3 and Section 162(m) of the Code, and each member of
the Committee shall be an Outside Director.

         (h)      "Company" means Piper Jaffray Companies, a Delaware
corporation.

         (i)      "Covered Employee" means a Participant designated prior to the
grant of Restricted Stock, Restricted Stock Units or Performance Awards by the
Committee who is or may be a "covered employee" within the meaning of Section
162(m)(3) of the Code in the year in which any such Award is expected to be
taxable to such Participant.

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         (j) "Director" means a member of the Board, including any Outside
Director.

         (k) "Dividend Equivalent" means any right granted under Section 6(e) of
the Plan.

         (l) "Effective Date" has the meaning set forth in Section 11 of the
Plan.

         (m) "Eligible Individual" means any employee, officer, Director or
consultant providing services to the Company or any Affiliate, and prospective
employees and consultants who have accepted offers of employment or consultancy
from the Company or any Affiliate, whom the Committee determines to be an
Eligible Individual.

         (n) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.

         (o) "Exercise Price" has the meaning set forth in Section 6(a) of the
Plan.

         (p) "Fair Market Value" means, with respect to any property (including,
without limitation, any Shares or other securities), the fair market value of
such property determined by such methods or procedures as shall be established
from time to time by the Committee. Notwithstanding the foregoing and except as
otherwise provided by the Committee, the Fair Market Value of a Share as of a
given date shall be the closing sales price for one Share on the New York Stock
Exchange or such other national securities market or exchange as may at the time
be the principal market for the Shares, or if the Shares were not traded on such
national securities market or exchange on such date, then on the next preceding
date on which the Shares are traded, all as reported by such source as the
Committee may select.

         (q) "Incentive Stock Option" means any Stock Option granted under
Section 6(a) of the Plan that is designated as, and intended to qualify as, an
"incentive stock option" within the meaning of Section 422 of the Code.

         (r) "Non-Qualified Stock Option" means any Stock Option granted under
Section 6(a) of the Plan that is not an Incentive Stock Option.

         (s) "Outside Director" means any Director who qualifies as an "outside
director" within the meaning of Section 162(m) of the Code and as a
"non-employee director" within the meaning of Rule 16b-3.

         (t) "Participant" means an Eligible Individual designated to be granted
an Award under the Plan.

         (u) "Performance Award" means any right granted under Section 6(d) of
the Plan.

         (v) "Performance Goals" means the performance goals established by the
Committee in connection with the grant of an Award. In the case of Qualified
Performance-Based Awards, (i) such goals shall be based on the attainment of
specified levels of one or more of the following measures with respect to the
Company or such subsidiary, division or department of the Company for or within
which the Participant performances services: revenue growth; earnings before
interest, taxes, depreciation, and amortization; earnings before interest and
taxes; operating income; pre- or after- tax income; earnings per share; cash
flow; cash flow per share;

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return on equity; return on invested capital; return on assets; economic value
added (or an equivalent metric); share price performance; total shareholder
return; improvement in or attainment of expense levels; improvement in or
attainment of working capital levels and (ii) such Performance Goals shall be
set by the Committee within the time period prescribed by Section 162(m) of the
Code and related regulations. Such Performance Goals also may be based upon the
attaining of specified levels of Company performance under one or more of the
measures described above relative to the performance of other companies.

         (w) "Plan" means this Piper Jaffray Companies 2003 Long-Term Incentive
Plan, as set forth herein and as hereinafter amended from time to time.

         (x) "Qualified Performance-Based Award" means an Award of Restricted
Stock, Restricted Stock Units or Performance Awards designated as such by the
Committee at the time of grant, based upon a determination that (i) the
recipient is or may be a Covered Employee in the year in which the Company would
expect to be able to claim a tax deduction with respect to such Restricted Stock
or Performance Awards and (ii) the Committee wishes such Award to qualify for
the Section 162(m) Exemption.

         (y) "Restricted Stock" means any Share granted under Section 6(c) of
the Plan.

         (z) "Restricted Stock Unit" means any unit granted under Section 6(c)
of the Plan evidencing the right to receive a Share (or a cash payment equal to
the Fair Market Value of a Share) at some future date.

         (aa) "Rule 16b-3" means Rule 16b-3, as promulgated by the Securities
and Exchange Commission under Section 16(b) of the Exchange Act, as amended from
time to time.

         (bb) "Section 162(m) Exemption" means the exemption from the limitation
on deductibility imposed by Section 162(m) of the Code that is set forth in
Section 162(m)(4)(C) of the Code.

         (cc) "Share" or "Shares" means a share or shares of common stock, par
value $.01 per share, of the Company.

         (dd) "Stock Appreciation Right" means any right granted under Section
6(b) of the Plan.

         (ee) "Stock Option" means an Incentive Stock Option or a Non-Qualified
Stock Option.

SECTION 3. ADMINISTRATION

         (a) Power and Authority of the Committee. The Plan shall be
administered by the Committee, except with respect to Awards to non-employee
Directors, which shall be administered by the Nominating and Governance
Committee. All references to the "Committee" with respect to grants to
non-employee Directors shall refer to the Nominating and Governance Committee.
Subject to the terms of the Plan and to applicable law, the Committee shall have
full power and authority to:
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                  (i)      designate Participants;

                  (ii)     determine whether and to what extent any type (or
         types) of Award is to be granted hereunder;

                  (iii)    determine the number of Shares to be covered by (or
         the method by which payments or other rights are to be determined in
         connection with) each Award;

                  (iv)     determine the terms and conditions of any Award or
         Award Agreement;

                  (v)      subject to Section 9 hereof, amend the terms and
         conditions of any Award or Award Agreement and accelerate the vesting
         and/or exercisability of any Stock Option or waive any restrictions
         relating to any Award; provided, however, that (A) except for
         adjustments pursuant to Section 4(c) of the Plan, in no event may any
         Stock Option granted under this Plan be (x) amended to decrease the
         Exercise Price thereof, (y) cancelled in conjunction with the grant of
         any new Stock Option with a lower Exercise Price, or (z) otherwise
         subject to any action that would be treated, for accounting purposes,
         as a "repricing" of such Stock Option, unless such amendment,
         cancellation, or action is approved by the stockholders of the Company
         to the extent required by applicable law and stock exchange rules and
         (B) the Committee may not adjust upwards the amount payable to a
         Covered Employee with respect to a Qualified Performance-Based Award or
         waive or alter the Performance Goals associated therewith in a manner
         that would violate Section 162(m) of the Code.

                  (vi)     determine whether, to what extent and under what
         circumstances the exercise price of Awards may be paid in cash, Shares,
         other securities, other Awards or other property, or canceled,
         forfeited or suspended;

                  (vii)    determine whether, to what extent and under what
         circumstances cash, Shares, other securities, other Awards, other
         property and other amounts payable with respect to an Award under the
         Plan shall be deferred either automatically or at the election of the
         holder thereof or the Committee;

                  (viii)   interpret and administer the Plan and any instrument
         or agreement, including an Award Agreement, relating to the Plan;

                  (ix)     adopt, alter, suspend, waive or repeal such rules,
         guidelines and practices and appoint such agents as it shall deem
         advisable or appropriate for the proper administration of the Plan; and

                  (x)      make any other determination and take any other
         action that the Committee deems necessary or desirable for the
         administration of the Plan.

Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations and other decisions under or with respect to the
Plan or any Award or Award Agreement shall be within the sole discretion of the
Committee, may be made at any time and shall be final, conclusive and binding
upon all persons, including without limitation, the Company, its Affiliates,
subsidiaries, shareholders, Eligible Individuals and any holder or beneficiary
of any Award.

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         (b)      Action by the Committee; Delegation. Except to the extent
prohibited by applicable law or the applicable rules of a stock exchange, the
Committee may delegate all or any part of its duties and powers under the Plan
to one or more persons, including Directors or a committee of Directors, subject
to such terms, conditions and limitations as the Committee may establish in its
sole discretion; provided, however, that the Committee shall not delegate its
powers and duties under the Plan (i) with regard to officers or directors of the
Company or any Affiliate who are subject to Section 16 of the Exchange Act or
(ii) in a manner that would cause an Award designated as a Qualified
Performance-Based Award not to qualify for, or to cease to qualify for, the
Section 162(m) Exemption; and provided, further, that any such delegation may be
revoked by the Committee at any time.

         (c)      Power and Authority of the Board. Notwithstanding anything to
the contrary contained herein, except to the extent that the grant or exercise
of such authority would cause any Award or transaction to become subject to (or
lose an exemption under) the short-swing profit recovery provisions of Section
16 of the Exchange Act or cause an Award designated as a Qualified
Performance-Based Award not to qualify for, or to cease to qualify for, the
Section 162(m) Exemption, the Board may, at any time and from time to time,
without any further action of the Committee, exercise the powers and duties of
the Committee under the Plan. To the extent that any permitted action taken by
the Board conflicts with action taken by the Committee, the Board action shall
control.

SECTION 4. SHARES AVAILABLE FOR AWARDS

         (a)      Shares Available. Subject to adjustment as provided in Section
4(c) of the Plan, the aggregate number of Shares that may be issued under the
Plan shall be 2,000,000. Shares that may be issued under the Plan may be
authorized but unissued Shares or Shares re-acquired and held in treasury.
Notwithstanding the foregoing, (i) the number of Shares available for granting
Incentive Stock Options under the Plan shall not exceed 500,000, subject to
adjustment as provided in Section 4(c) of the Plan and subject to the provisions
of Section 422 or 424 of the Code or any successor provision, and (ii) the
number of Shares available for granting Restricted Stock and Restricted Stock
Units shall not exceed 2,000,000, subject to adjustment as provided in Section
4(c) of the Plan.

         (b)      Accounting for Awards. For purposes of this Section 4, if an
Award entitles the holder thereof to receive or purchase Shares, the number of
Shares covered by such Award or to which such Award relates shall be counted on
the date of grant of such Award against the aggregate number of Shares available
for granting Awards under the Plan. Any Shares that are used by a Participant as
full or partial payment to the Company of the purchase price relating to an
Award, including in connection with the satisfaction of tax obligations relating
to an Award, shall again be available for granting Awards (other than Incentive
Stock Options) under the Plan. In addition, if any Shares covered by an Award or
to which an Award relates are not purchased or are forfeited, or if an Award
otherwise terminates without delivery of any Shares, then the number of Shares
counted against the aggregate number of Shares available under the Plan with
respect to such Award, to the extent of any such forfeiture or termination,
shall again be available for granting Awards under the Plan.

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         (c)      Adjustments. In the event of any change in corporate
capitalization (including, but not limited to, a change in the number of Shares
outstanding), such as a stock split or a corporate transaction, such as any
merger, consolidation, separation, including a spin-off, or other distribution
of stock or property of the Company (including any extraordinary cash or stock
dividend), any reorganization (whether or not such reorganization comes within
the definition of such term in Section 368 of the Code) or any partial or
complete liquidation of the Company, the Committee or Board may make such
substitution or adjustments in the aggregate number and kind of shares reserved
for issuance under the Plan, and the maximum limitation upon Stock Options and
Stock Appreciation Rights and other Awards to be granted to any Participant, in
the number, kind and Exercise Price of shares subject to outstanding Stock
Options and Stock Appreciation Rights, in the number and kind of shares subject
to other outstanding Awards granted under the Plan and/or such other equitable
substitution or adjustments as it may determine to be appropriate in its sole
discretion (including, without limitation, the provision of an amount in cash in
consideration for any such Awards); provided, however, that the number of shares
subject to any Award shall always be a whole number. Without limiting the
generality of the foregoing, in connection with any Disaffiliation of a
subsidiary of the Company, the Committee shall have the authority to arrange for
the assumption or replacement of Awards with new awards based on shares of the
affected subsidiary or by an affiliate of an entity that controls the subsidiary
following the Disaffiliation. For purposes hereof, "Disaffiliation" of a
subsidiary shall mean the subsidiary's ceasing to be a subsidiary of the Company
for any reason (including, without limitation, as a result of a public offering,
spinoff, sale or other distribution or transfer by the Company of the stock of
the subsidiary).

         (d)      Award Limitations. No more than 1,000,000 shares of Common
Stock may be subject to Qualified Performance-Based Awards granted to any
Eligible Individual in any fiscal year of the Company.

SECTION 5. ELIGIBILITY

         Any Eligible Individual shall be eligible to be designated a
Participant. In determining which Eligible Individuals shall receive an Award
and the terms of any Award, the Committee may take into account the nature of
the services rendered by the respective Eligible Individuals, their present and
potential contributions to the success of the Company or such other factors as
the Committee, in its discretion, shall deem relevant. Notwithstanding the
foregoing, Incentive Stock Options may be granted only to full-time or part-time
employees (which term as used herein includes, without limitation, officers and
Directors who also are employees), and an Incentive Stock Option shall not be
granted to an employee of an Affiliate unless such Affiliate also is a
"subsidiary corporation" of the Company within the meaning of Section 424(f) of
the Code or any successor provision.

SECTION 6. AWARDS

         (a)      Stock Options. The Committee is hereby authorized to grant
Stock Options (which may be Non-Qualified Stock Options or Incentive Stock
Options) to Eligible Individuals with the following terms and conditions and
with such additional terms and conditions not inconsistent with the provisions
of the Plan as the Committee shall determine:

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                  (i)      Exercise Price. The purchase price per Share
         purchasable under a Stock Option (the "Exercise Price") shall be
         determined by the Committee; provided, however, that, unless otherwise
         determined by the Committee, such Exercise Price shall not be less than
         100% of the Fair Market Value of a Share on the date of grant of such
         Stock Option.

                  (ii)     Option Term. The term of each Stock Option shall be
         fixed by the Committee at the time of grant, but in no event shall be
         more than 10 years from the date of grant.

                  (iii)    Time and Method of Exercise. The Committee shall
         determine the time or times at which a Stock Option may be exercised in
         whole or in part and the method or methods by which, and the form or
         forms (including, without limitation, cash Shares, other securities,
         other Awards or other property, or any combination thereof, having a
         Fair Market Value on the exercise date equal to the applicable Exercise
         Price) in which, payment of the Exercise Price with respect thereto may
         be made or deemed to have been made.

                  (iv)     Incentive Stock Options. The Committee may designate
         Stock Options as Non-Qualified Stock Options or as Incentive Stock
         Options. Any Incentive Stock Option authorized under the Plan shall
         contain such provisions as the Committee shall deem advisable, but
         shall in all events be consistent with and contain all provisions
         required in order to qualify the Stock Option as an Incentive Stock
         Option. To the extent that any Stock Option is not designated as an
         Incentive Stock Option or even if so designated does not qualify as an
         Incentive Stock Option on or subsequent to its grant date, it shall
         constitute a Non-Qualified Stock Option.

         (b)      Stock Appreciation Rights. The Committee is hereby authorized
to grant Stock Appreciation Rights to Eligible Individuals subject to the terms
of the Plan. Each Stock Appreciation Right granted under the Plan shall confer
on the holder upon exercise the right to receive, as determined by the
Committee, cash or a number of Shares equal to the excess of (A) the Fair Market
Value of one Share on the date of exercise (or, if the Committee shall so
determine, at any time during a specified period before or after the date of
exercise) over (B)the grant price of the Stock Appreciation Right as determined
by the Committee, which grant price shall not be less than 100% of the Fair
Market Value of one Share on the date of grant of the Stock Appreciation Right,
unless otherwise determined by the Committee. Subject to the terms of the Plan,
the grant price, term, methods of exercise, dates of exercise, methods of
settlement and any other terms and conditions (including conditions or
restrictions on the exercise thereof) of any Stock Appreciation Right shall be
as determined by the Committee, provided, that in no event shall the term of a
Stock Appreciation Right be longer than ten years.

         (c)      Restricted Stock and Restricted Stock Units. The Committee is
hereby authorized to grant Restricted Stock and Restricted Stock Units to
Eligible Individuals with the following terms and conditions and with such
additional terms and conditions not inconsistent with the provisions of the Plan
as the Committee shall determine:

                  (i)      Restrictions. Shares of Restricted Stock and
         Restricted Stock Units shall be subject to such restrictions as the
         Committee may impose (including, without limitation, limitation on
         transfer, forfeiture conditions, limitation on the right to vote a

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         Share of Restricted Stock or the right to receive any dividend or other
         right or property with respect thereto), which restrictions may lapse
         separately or in combination at such time or times, in such
         installments or otherwise as the Committee may deem appropriate. The
         grant or vesting of Restricted Stock and Restricted Stock Units may be
         performance-based or time-based or both. Restricted Stock and
         Restricted Stock Units may be Qualified Performance-Based Awards, in
         which event the grant or vesting, as applicable, of such Restricted
         Stock or Restricted Stock Units shall be conditioned upon the
         attainment of Performance Goals.

                  (ii)     Stock Certificates; Delivery of Shares.

                           (A)      Any Restricted Stock granted under the Plan
                  shall be evidenced in such manner as the Committee may deem
                  appropriate, including book-entry registration or issuance of
                  one or more stock certificates. Any certificate issued in
                  respect of shares of Restricted Stock shall be registered in
                  the name of such Participant and shall bear an appropriate
                  legend referring to the applicable Award Agreement and
                  possible forfeiture of such shares of Restricted Stock. The
                  Committee may require that the certificates evidencing such
                  shares be held in custody by the Company until the
                  restrictions thereon shall have lapsed and that, as a
                  condition of any Award of Restricted Stock, the Participant
                  shall have delivered a stock power, endorsed in blank,
                  relating to the Shares covered by such Award.

                           (B)      In the case of Restricted Stock Units, no
                  Shares or other property shall be issued at the time such
                  Awards are granted. Upon the lapse or waiver of restrictions
                  and the restricted period relating to Restricted Stock Units
                  (or at such later time as may be determined by the Committee),
                  Shares or other cash or property shall be issued to the holder
                  of the Restricted Stock Units and evidenced in such manner as
                  the Committee may deem appropriate, including book-entry
                  registration or issuance of one or more stock certificates.

                  (iii)    Forfeiture. Except as otherwise determined by the
         Committee, upon a Participant's termination of employment (as
         determined under criteria established by the Committee) during the
         applicable restriction period, all applicable Shares of Restricted
         Stock and Restricted Stock Units at such time subject to restriction
         shall be forfeited and reacquired by the Company; provided, however,
         that the Committee may, when it finds that a waiver would be in the
         best interest of the Company, waive in whole or in part any or all
         remaining restrictions with respect to Shares of Restricted Stock or
         Restricted Stock Units.

         (d)      Performance Awards. The Committee is hereby authorized to
grant Performance Awards to Eligible Individuals subject to the terms of the
Plan. A Performance Award granted under the Plan (i) may be denominated or
payable in cash, Shares (including, without limitation, Restricted Stock and
Restricted Stock Units), other securities, other Awards or other property and
(ii) shall confer on the holder thereof the right to receive payments, in whole
or in part, upon the achievement of such performance goals during such
performance periods as the Committee shall establish. Subject to the terms of
the Plan, the performance goals to be achieved during any performance period,
the length of any performance period, the amount of any Performance

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Award granted, the amount of any payment or transfer to be made pursuant to any
Performance Award and any other terms and conditions of any Performance Award
shall be determined by the Committee. The Committee may, prior to or at the time
of the grant, designate Performance Awards as Qualified Performance-Based
Awards, in which event it shall condition the settlement thereof upon the
attainment of Performance Goals. Performance Awards denominated in cash that are
payable to any individual Participant with respect to any calendar year will be
limited to a maximum of $5,000,000.

         (e)      Dividend Equivalents. The Committee is hereby authorized to
grant Dividend Equivalents to Eligible Individuals under which the Participant
shall be entitled to receive payments (in cash, Shares, other securities, other
Awards or other property as determined in the discretion of the Committee)
equivalent to the amount of cash dividends paid by the Company to holders of
Shares with respect to a number of Shares determined by the Committee. Subject
to the terms of the Plan, such Dividend Equivalents may have such terms and
conditions as the Committee shall determine.

         (f)      Other Stock Grants. The Committee is hereby authorized,
subject to the terms of the Plan, to grant to Eligible Individuals Shares
without restrictions thereon as are deemed by the Committee to be consistent
with the purpose of the Plan.

         (g)      Other Stock-Based Awards. The Committee is hereby authorized
to grant to Eligible Individuals, subject to the terms of the Plan, such other
Awards that are denominated or payable in, valued in whole or in part by
reference to, or otherwise based on or related to, Shares (including, without
limitation, securities convertible into Shares), as are deemed by the Committee
to be consistent with the purpose of the Plan. Shares or other securities
delivered pursuant to a purchase right granted under this Section 6(g) shall be
purchased for such consideration, which may be paid by such method or methods
and in such form or forms (including, without limitation, cash, Shares, other
securities, other Awards or other property or any combination thereof), as the
Committee shall determine, the value of which consideration, as established by
the Committee, shall not be less than 100% of the Fair Market Value of such
Shares or other securities as of the date such purchase right is granted, unless
otherwise determined by the Committee.

         (h)      Tax Offset Bonus. The Committee may grant to a Participant, at
the time of granting an Award or at any time thereafter, the right to receive a
cash payment in an amount specified by the Committee, to be paid at such time or
times (if ever) as the Award results in compensation income to the Participant,
for the purpose of assisting the Participant to pay the resulting taxes, all as
determined by the Committee and on such other terms and conditions as the
Committee shall determine (a "Tax Offset Bonus").

         (i)      General.

                  (i)      Consideration for Awards. Awards may be granted for
         no cash consideration or for any cash or other consideration as
         determined by the Committee and required by applicable law.

                  (ii)     Awards May Be Granted Separately or Together. Awards
         may, in the discretion of the Committee, be granted either alone or in
         addition to, in tandem with or

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         in substitution for any other Award or any award granted under any plan
         of the Company or any Affiliate. Awards granted in addition to or in
         tandem with other Awards or in addition to or in tandem with awards
         granted under any such other plan of the Company or any Affiliate may
         be granted either at the same time as or at a different time from the
         grant of such other Awards or awards.

                  (iii)    Forms of Payment Under Awards. Subject to the terms
         of the Plan, payments or transfers to be made by the Company or an
         Affiliate upon the grant, exercise or settlement of an Award may be
         made in such form or forms as the Committee shall determine (including,
         without limitation, cash, Shares, promissory notes (provided, however,
         that the acceptance of such notes does not conflict with Section 402 of
         the Sarbanes-Oxley Act of 2002), other securities, other Awards or
         other property or any combination thereof), and may be made in a single
         payment or transfer, in installments or on a deferred basis, in each
         case in accordance with rules and procedures established by the
         Committee. Such rules and procedures 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 with respect to installment or deferred payments.

                  (iv)     Limits on Transfer of Awards. No Award (other than
         Other Stock Grants) and no right under any such Award shall be
         transferable by a Participant otherwise than by will or by the laws of
         descent and distribution and the Company shall not be required to
         recognize any attempted assignment of such rights by any Participant;
         provided, however, that, if so determined by the Committee, a
         Participant may, in the manner established by the Committee, designate
         a beneficiary or beneficiaries to exercise the rights of the
         Participant and receive any property distributable with respect to any
         Award upon the death of the Participant; and provided, further, that,
         if so determined by the Committee, a Participant may transfer a
         Non-Qualified Stock Option to any Family Member (as such term is
         defined in the General Instructions to Form S-8 (or successor to such
         Instructions or such Form)) at any time that such Participant holds
         such Stock Option, whether directly or indirectly or by means of a
         trust or partnership or otherwise, provided that the Participant may
         not receive any consideration for such transfer, the Family Member may
         not make any subsequent transfers other than by will or by the laws of
         descent and distribution and the Company receives written notice of
         such transfer. Except as otherwise determined by the Committee, each
         Award (other than an Incentive Stock Option) or right under any such
         Award shall be exercisable during the Participant's lifetime only by
         the Participant or, if permissible under applicable law, by the
         Participant's guardian or legal representative. Except as otherwise
         determined by the Committee, no Award (other than an Incentive Stock
         Option) or right under any such Award may be pledged, alienated,
         attached or otherwise encumbered, and any purported pledge, alienation,
         attachment or other encumbrance thereof shall be void and unenforceable
         against the Company or any Affiliate.

                  (v)      Term of Awards. Subject to Section 6(a)(ii) of the
         Plan, the term of each Award shall be for such period as may be
         determined by the Committee.

                  (vi)     Restrictions. All Shares or other securities
         delivered under the Plan pursuant to any Award or the exercise thereof
         shall be subject to such stop transfer orders

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         and other restrictions as the Committee may deem advisable under the
         Plan, applicable federal or state securities laws and regulatory
         requirements, and the Committee may direct appropriate stop transfer
         orders and cause other legends to be placed on the certificates for
         such Shares or other securities to reflect such restrictions.

SECTION 7. CHANGE IN CONTROL

         (a)      Impact of Event. Notwithstanding any other provision of the
Plan to the contrary, unless otherwise provided by the Committee in any Award
Agreement, in the event of a Change in Control:

         (i)      Any Stock Options and Stock Appreciation Rights outstanding as
of the date of such Change in Control, and which are not then exercisable and
vested, shall become fully exercisable and vested.

         (ii)     The restrictions and deferral limitations applicable to any
Restricted Stock and Restricted Stock Units shall lapse, and such Restricted
Stock and Restricted Stock Units shall become free of all restrictions and
become fully vested.

         (iii)    All Performance Awards shall be considered to be earned and
payable in full, and any deferral or other restriction shall lapse and such
Performance Awards shall be settled in cash or Shares, as determined by the
Committee, as promptly as is practicable.

         (iv)     All restrictions on other Awards shall lapse and such Awards
shall become free of all restrictions and become fully vested.

         (b)      Definition of Change in Control. For purposes of the Plan, a
"Change in Control" shall mean the happening of any of the following events:

         (i)      An acquisition 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
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either (1) the then outstanding shares of common
stock of the Company (the "Outstanding Company Common Stock") or (2) 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"); excluding, however, the following: (1) Any
acquisition directly from the Company, other than an acquisition by virtue of
the exercise of a conversion privilege unless the security being so converted
was itself acquired directly from the Company, (2) Any acquisition by the
Company, (3) Any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any entity controlled by the Company,
or (4) Any acquisition pursuant to a transaction which complies with clauses
(1), (2) and (3) of subsection (iii) of this Section 7(b); or

         (ii)     A change in the composition of the Board such that the
individuals who, as of the Effective Date, constitute the Board (such Board
shall be hereinafter referred to as the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board; provided, however, for purposes
of this Section 7(b), that any individual who becomes a member of the Board
subsequent to the Effective Date, whose election, or nomination for election by
the

<PAGE>

Company's shareholders, was approved by a vote of at least a majority of those
individuals who are members of the Board and who were also members of the
Incumbent Board (or deemed to be such pursuant to this proviso) shall be
considered as though such individual were a member of the Incumbent Board; but,
provided, further, that 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 Board shall
not be so considered as a member of the Incumbent 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 ("Corporate Transaction"); excluding, however, such a Corporate
Transaction pursuant to which (1) all or substantially all of the individuals
and entities who are the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately prior
to such Corporate Transaction will beneficially own, directly or indirectly,
more than 50% of, respectively, the 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 Corporate Transaction (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) in substantially the same proportions as their ownership,
immediately prior to such Corporate Transaction, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, as the case may be, (2)
no Person (other than the Company, any employee benefit plan (or related trust)
of the Company or such corporation resulting from such Corporate Transaction)
will beneficially own, directly or indirectly, 20% or more of, respectively, the
outstanding shares of common stock of the corporation resulting from such
Corporate Transaction or the combined voting power of the outstanding voting
securities of such corporation entitled to vote generally in the election of
directors except to the extent that such ownership existed prior to the
Corporate Transaction, and (3) individuals who were members of the Incumbent
Board will constitute at least a majority of the members of the board of
directors of the corporation resulting from such Corporate Transaction; or

         (iv)     The approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.

SECTION 8. INCOME TAX WITHHOLDING

         No later than the date as of which an amount first becomes includible
in the gross income of a Participant for federal income tax purposes with
respect to any Award under the Plan, the Participant shall pay to the Company,
or make arrangements satisfactory to the Company regarding the payment of, any
federal, state, local or foreign taxes of any kind required by law to be
withheld with respect to such amount. The obligations of the Company under the
Plan shall be conditional on such payment or arrangements, and the Company and
its Affiliates shall, to the extent permitted by law, be entitled to take such
action and establish such procedures as it deems appropriate to withhold or
collect all applicable payroll, withholding, income or other taxes from such
Participant. In order to assist a Participant in paying all or a portion of the
federal, state, local and foreign taxes to be withheld or collected upon
exercise or receipt of (or the lapse of restrictions relating to) an Award, the
Committee, in its discretion and subject to such additional

<PAGE>

terms and conditions as it may adopt, may permit the Participant to satisfy such
tax obligation by (i) electing to have the Company withhold a portion of the
Shares or other property otherwise to be delivered upon exercise or receipt of
(or the lapse of restrictions relating to) such Award with a Fair Market Value
equal to the amount of such taxes or (ii) delivering to the Company Shares or
other property other than Shares issuable upon exercise or receipt of (or the
lapse of restrictions relating to) such Award with a Fair Market Value equal to
the amount of such taxes, provided that, in either case, not more than the
legally required minimum withholding may be settled with Shares. Any such
election must be made on or before the date that the amount of tax to be
withheld is determined.

SECTION 9. AMENDMENT AND TERMINATION

         (a)      Amendments to the Plan. The Board may amend, alter, suspend,
discontinue or terminate the Plan at any time; provided, however, that,
notwithstanding any other provision of the Plan or any Award Agreement, without
the approval of the stockholders of the Company, no amendment, alteration,
suspension, discontinuation or termination shall be made that, absent such
approval:

                  (i)      requires stockholder approval under the rules or
         regulations of the New York Stock Exchange, any other securities
         exchange or the National Association of Securities Dealers, Inc. that
         are applicable to the Company;

                  (ii)     increases the number of Shares authorized under the
         Plan as specified in Section 4(a) of the Plan; or

                  (iii)    without such stockholder approval, would cause the
         Company to be unable, under the Code, to grant Incentive Stock Options
         under the Plan.

         (b)      Amendments to Awards. The Committee may waive any conditions
of or rights of the Company under any outstanding Award, prospectively or
retroactively. Except as otherwise provided herein or in an Award Agreement, the
Committee may not amend, alter, suspend, discontinue or terminate any
outstanding Award, prospectively or retroactively, if such action would
adversely affect the rights of the holder of such Award, without the consent of
the Participant or holder or beneficiary thereof or such amendment would cause a
Qualified Performance-Based Award to cease to qualify for the Section 162(m)
Exemption.

         (c)      Correction of Defects, Omissions and Inconsistencies. The
Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent it shall
deem desirable to carry the Plan into effect.

SECTION 10. GENERAL PROVISIONS

         (a)      No Rights to Awards. No Eligible Individual or other person
shall have any claim to be granted any Award under the Plan, and there is no
obligation for uniformity of treatment of Eligible Individuals or holders or
beneficiaries of Awards under the Plan. The terms and conditions of Awards need
not be the same with respect to any Participant or with respect to different
Participants.

<PAGE>

         (b)      Award Agreements. No Participant will have rights under an
Award granted to such Participant unless and until an Award Agreement shall have
been duly executed on behalf of the Company and, if requested by the Company,
signed by the Participant. In the event that any provision of an Award Agreement
conflicts with or is inconsistent in any respect with the terms of the Plan as
set forth herein or subsequently amended, the terms of the Plan shall control.

         (c)      No Rights of Stockholders. Except with respect to Shares of
Restricted Stock as to which the Participant has been granted the right to vote,
neither a Participant nor the Participant's legal representative shall be, or
have any of the rights and privileges of, a stockholder of the Company with
respect to any Shares issuable to such Participant upon the exercise or payment
of any Award, in whole or in part, unless and until such Shares have been issued
in the name of such Participant or such Participant's legal representative
without restrictions thereto.

         (d)      No Limit on Other Compensation Plans or Arrangements. Nothing
contained in the Plan shall prevent the Company or any Affiliate from adopting
or continuing in effect other or additional compensation arrangements, and such
arrangements may be either generally applicable or applicable only in specific
cases.

         (e)      No Right to Employment. The Plan shall not constitute a
contract of employment, and adoption of the Plan or the grant of an Award shall
not be construed as giving a Participant the right to be retained as an employee
of the Company or an Affiliate, or a non-employee Director to be retained as a
Director, nor shall it affect in any way the right of the Company or an
Affiliate to terminate such employment at any time, with or without cause. In
addition, the Company or an Affiliate may at any time dismiss a Participant from
employment free from any liability or any claim under the Plan or any Award,
unless otherwise expressly provided in the Plan or in any Award Agreement.

         (f)      Governing Law. The Plan and all Awards granted and actions
taken thereunder shall be governed by and construed in accordance with the laws
of the State of Delaware, without reference to principles of conflict of laws
thereof.

         (g)      Severability. If any provision of the Plan or any Award is or
becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction
or would disqualify the Plan or any Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to
applicable laws, or if it cannot be so construed or deemed amended without, in
the determination of the Committee, materially altering the purpose or intent of
the Plan or the Award, such provision shall be stricken as to such jurisdiction
or Award, and the remainder of the Plan or any such Award shall remain in full
force and effect.

         (h)      Application to Participants Outside the United States. In the
event an Award is granted to a Participant who is employed or providing services
outside the United States and who is not compensated from a payroll maintained
in the United States, the Committee may, in its sole discretion, modify the
provisions of the Plan as they pertain to such individual to comply with
applicable foreign law.

         (i)      No Trust or Fund Created. Neither the Plan nor any Award shall
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the

<PAGE>
Company or any Affiliate and an Eligible Individual or any other person. To the
extent that any person acquires a right to receive payments from the Company or
any Affiliate pursuant to an Award, such right shall be no greater than the
right of any unsecured general creditor of the Company or any Affiliate.

         (j)      Other Benefits. No compensation or benefit awarded to or
realized by any Participant under the Plan shall be included for the purpose of
computing such Participant's compensation under any compensation-based
retirement, disability, or similar plan of the Company unless required by law or
otherwise provided by such other plan.

         (k)      No Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the Committee shall determine
whether cash shall be paid in lieu of any fractional Shares or whether such
fractional Shares or any rights thereto shall be canceled, terminated or
otherwise eliminated.

         (l)      Headings. Headings are given to the Sections and subsections
of the Plan solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.

         (m)      Section 16 Compliance; Section 162(m) Administration. The Plan
is intended to comply in all respects with Rule 16b-3 or any successor
provision, as in effect from time to time, and in all events the Plan shall be
construed in accordance with the requirements of Rule 16b-3. If any Plan
provision does not comply with Rule 16b-3 as hereafter amended or interpreted,
the provision shall be deemed inoperative. The Board, in its absolute
discretion, may bifurcate the Plan so as to restrict, limit or condition the use
of any provision of the Plan with respect to persons who are officers or
directors subject to Section 16 of the Exchange Act without so restricting,
limiting or conditioning the Plan with respect to other Eligible Individuals.
The Company intends that all Stock Options and Stock Appreciation Rights granted
under the Plan to individuals who are or who the Committee believes will be
Covered Employees will constitute "qualified performance-based compensation"
within the meaning of Section 162(m) of the Code.

         (n)      Conditions Precedent to Issuance of Shares. Shares shall not
be issued pursuant to the exercise or payment of the Exercise Price or purchase
price relating to an Award unless such exercise or payment and the issuance and
delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended from time to time, the Exchange Act, the rules and regulations
promulgated thereunder, the requirements of any applicable stock exchange and
the Delaware General Corporation Law. As a condition to the exercise or payment
of the Exercise Price or purchase price relating to such Award, the Company may
require that the person exercising or paying the Exercise Price or purchase
price represent and warrant that the Shares are being purchased only for
investment and without any present intention to sell or distribute such Shares
if, in the opinion of counsel for the Company, such a representation and
warranty is required by law.

SECTION 11. EFFECTIVE DATE OF PLAN

         Upon its adoption by the Board, the Plan shall be submitted for
approval by the stockholders of the Company and shall be effective as of the
date of such approval (the "Effective Date").

<PAGE>

SECTION 12. TERM OF THE PLAN

         The Plan will terminate on the tenth anniversary of the Effective Date
or any earlier date of discontinuation or termination established pursuant to
Section 9 of the Plan. However, unless otherwise expressly provided in the Plan
or in an applicable Award Agreement, any Award theretofore granted may extend
beyond such date, and the authority of the Committee provided for hereunder with
respect to the Plan and any Awards, and the authority of the Board to amend the
Plan, shall extend beyond the termination of the Plan.