Exhibit 4.3


 


MGP
INGREDIENTS, INC.

STOCK INCENTIVE PLAN OF 2004, as amended


 


Table of Contents


 


	
  Section

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  PURPOSES

  	
  A-2

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  DEFINITIONS

  	
  A-2

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  GRANTS
  OF STOCK INCENTIVES

  	
  A-4

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  STOCK
  SUBJECT TO THE PLAN

  	
  A-5

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  STOCK
  AWARDS

  	
  A-6

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  STOCK
  OPTIONS

  	
  A-6

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  STOCK
  APPRECIATION RIGHTS

  	
  A-7

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  PERFORMANCE
  AWARDS

  	
  A-8

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
  TERMINATION
  OR SUSPENSION OF EMPLOYMENT

  	
  A-9

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
   

  	
  ADJUSTMENT
  PROVISIONS

  	
  A-11

  
	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
   

  	
  CHANGE
  IN CONTROL; SALE OF SUBSIDIARY

  	
  A-11

  
	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
   

  	
  TERM

  	
  A-12

  
	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
   

  	
  ADMINISTRATION

  	
  A-13

  
	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
   

  	
  GENERAL
  PROVISIONS

  	
  A-14

  
	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
   

  	
  AMENDMENT OR DISCONTINUANCE OF PLAN

  	
  A-17

  



 


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MGP
INGREDIENTS, INC.

STOCK INCENTIVE PLAN OF 2004


(as amended)


 


1.                                      PURPOSES.


 


The purpose of this Stock
Incentive Plan of 2004 (the “Plan”) is to aid MGP Ingredients, Inc., a
Kansas corporation (the “Company”), in attracting, retaining, motivating and
rewarding employees  who provide
substantial services to the Company or its Subsidiaries, to provide for
equitable and competitive compensation opportunities, to recognize individual
contributions and reward achievement of Company goals, and to promote the
creation of long-term value for stockholders by closely aligning the interests
of Participants with those of stockholders.


 


2.                                      DEFINITIONS.


 


Unless otherwise required
by the context, the following terms, when used in the Plan, shall have the
meanings set forth in this Section 2:


 


Award Agreement: 
Any written agreement, contract, or other instrument or document
evidencing any Stock Incentive, which may, but need not, be executed or
acknowledged by a Participant.


 


Board of Directors or Board: 
The Board of Directors of the Company.


 


Change in Control:  A
Change in Control shall mean:


 


(i)  The acquisition (other than
from the Company) by any person, entity or “group,” within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act, (excluding, for this purpose, the Company or
its subsidiaries, any employee benefit plan of the Company or its subsidiaries,
trustees of the Cray Family Trust, or any person who acquires Common or
Preferred Stock from Cloud L. Cray, Jr. or from any trust controlled by or
for the benefit of Cloud L. Cray, Jr. prior to or as a result of his
death) of beneficial ownership, (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of at least 30% of the then outstanding
shares of Common Stock and 50% of the then outstanding shares of Preferred
Stock or 30% of the combined voting power of the Company’s then outstanding
voting securities entitled to vote generally in the election of directors; or


 


(ii)  Individuals who, as of the
date hereof, constitute the Board (as of the date hereof the “Incumbent Board”)
cease for any reason to constitute at least a majority of the Board, provided
that any person becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company’s stockholders, was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board (other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual or threatened
election contest relating to the election of the Directors of the Company) shall
be, for purposes of this Plan, considered as though such person were a member
of the Incumbent Board; or


 


(iii)  Approval by the
stockholders of the Company of a reorganization, merger, consolidation, in each
case, with respect to which persons who were the stockholders of the Company
immediately prior to such reorganization, merger or consolidation do not,
immediately thereafter, own collectively as a group more than 50% of the
combined voting power entitled to vote generally in the election of directors
of the reorganized,  merged or
consolidated company’s then outstanding voting securities, or a liquidation or
dissolution of the Company or of the sale of all or substantially all of the
assets of the Company.


 


If any of the events enumerated in clauses (i) through (iii) occur,
the Board shall determine the effective date of the Change in Control resulting
therefrom, for purposes of the Plan.


 


Code: 
The Internal Revenue Code of 1986 as now or hereafter amended.  References to any provision of the Code or regulation
(including a proposed regulation) thereunder shall include any successor
provisions and regulations.


 


Committee: 
The Human Resources and Compensation Committee of the Board of Directors
of the Company or any other committee the Board may subsequently appoint to
administer the Plan pursuant to Section 13 


 


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hereof, each
member of which shall be a Qualified Member. 
No action of the Committee shall be void or deemed to be without
authority due to the failure of any member, at the time the action was taken,
to be a Qualified Member.


 


Common Stock: 
The Common Stock of the Company, no par value, or such other class of
shares or other securities as may be subject to the Plan as the result of an
adjustment made pursuant to the provisions of Section 10.


 


Company: 
MGP Ingredients, Inc., a Kansas corporation.


 


Covered Employee: 
An Eligible Person who is a Covered Employee as specified in Section 14(o).


 


Disability: The inability of a Participant to perform
substantially such Participant’s duties and responsibilities due to a physical
or mental condition that would entitle such Participant to benefits under the
Company’s Long-Term Disability Plan in effect at the time or, if no such plan
is in effect, such condition as would enable the Participant to receive an
award for permanent and total disability from the Social Security
Administration.


 


Eligible Person: A salaried, full-time employee of the
Company or any Subsidiary, including any executive officer (whether or not also
a director of the Company), and any such person who has been offered employment
by the Company or a Subsidiary, provided that such prospective employee may not
receive any payment or exercise any right relating to a Stock Incentive until
such person has commenced employment with the Company or a Subsidiary. An
employee on leave of absence may be considered as still in the employ of the
Company or Subsidiary for purposes of eligibility for participation in the
Plan. For purposes of the Plan, a joint venture in which the Company or a
Subsidiary has a substantial direct or indirect equity investment shall be
deemed a Subsidiary, if so determined by the Committee.  Stock Incentives may be made to Eligible
Persons whether or not they have received prior awards under the Plan or under
any previously adopted plan, and whether or not they are participants in other
benefit plans of the Company or any other Subsidiary.


 


Exchange Act: 
The Securities Exchange Act of 1934, as amended.


 


Executive Officer: 
At any time, an individual who is an executive officer of the Company
within the meaning of Exchange Act Rule 3b-7 as promulgated and
interpreted by the SEC under the Exchange Act, or any successor rule or
regulation thereto as in effect from time to time, or who is an officer of the
Company within the meaning of Exchange Act rule 16a-1(f) as
promulgated and interpreted by the SEC under the Exchange Act, or any successor
rule or regulation thereto as in effect from time to time.


 


Fair Market Value: 
The fair market value of a share of Common Stock on the date as of which
fair market value is to be determined shall be: (a) if the Common Stock is
reported on the NASDAQ National Market System of the National Association of
Securities Dealers, Inc., the last reported sales price of a share of
Common Stock as reported by NASDAQ; or (b) if the Common Stock is listed
on an established securities exchange or exchanges, the highest reported
closing price of a share of Common Stock on such exchange or exchanges.  The fair market value of the Common Stock if
not so reported or listed and the fair market value of any other property on
the date as of which fair market value is to be determined shall mean the fair
market value as determined by the Committee in its sole discretion.


 


Incentive Compensation: 
Bonuses, extra and other compensation payable in addition to a salary or
other base amount, whether contingent or not, whether discretionary or required
to be paid pursuant to an agreement, resolution, arrangement, plan or practice,
and whether payable currently or on a deferred basis, in cash, Common Stock or
other property.


 


Incentive Stock Option:  A
stock option which satisfies the requirements of Section 422 of the
Code.  None of the Options granted under
the Plan is intended to be an Incentive Stock Option.


 


Mature Stock: 
Previously-acquired shares of Common Stock for which the holder thereof
has good title, free and clear of all liens and encumbrances and which such
holder either (i) has held for at least six months or (ii) has
purchased on the open market.


 


Non-Qualified Stock Option:  A
right to purchase Common Stock from the Company that is granted under Section 6
of the Plan.


 


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Option: 
An option to purchase shares of Common Stock or, where the context so
requires, the instrument which evidences such an option.


 


Participant: 
Any Eligible Person selected by the Committee to receive a Stock
Incentive under the Plan.


 


Performance Award: A conditional right, granted to a
Participant under Section 8, to a Stock Award or other Stock Incentive, as
determined by the Committee, based upon performance criteria specified by the
Committee.


 


Plan: 
The Stock Incentive Plan of 2004 herein set forth as the same may from
time to time be amended.


 


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


 


Retirement: Retirement at or after the attainment of
age 62.


 


Stock Appreciation Right:  A
right to receive a number of shares of Common Stock, cash, or a combination of
the two based on the increase in the Fair Market Value of shares of Common
Stock subject to an Option, as set forth in Section 7 of the Plan.


 


Stock Award: 
An issuance or transfer of shares of Common Stock at the time a Stock
Incentive is granted or as soon thereafter as practicable, or an undertaking to
issue or transfer such shares in the future, including, without limitation,
such an issuance, transfer or undertaking with respect to a Stock Incentive
that is contingent, in whole or in part, upon the attainment of a specified
objective or objectives.


 


Stock Incentive:  A
stock incentive granted under the Plan in one of the forms authorized in Section 3.


 


Subsidiary:  A
corporation or other form of business association of which shares (or other
ownership interests) having 50% or more of the voting power are owned or
controlled, directly or indirectly, by the Company.


 


3.                                      GRANTS OF
STOCK INCENTIVES.


 


(a)  Persons
Eligible to Participate.  Subject to
the provisions of the Plan, the Committee may at any time grant Stock
Incentives under the Plan to, and only to, Eligible Persons.


 


(b)  Forms of
Stock Incentives.  Stock Incentives
may be granted in the following forms:


 


(i)  a Stock Award, in accordance
with Section 5, or


 


(ii)  a Stock Option, in
accordance with Section 6, or


 


(iii)  a Stock Appreciation
Right, in accordance with Section 7, or


 


(iv)  a Performance Award in
accordance with Section 8, or


 


(v)  a combination of any of the
foregoing.


 


(c)  Award
Agreements.  Each Stock Incentive
shall be evidenced by a written Award Agreement in a form prescribed by the
Committee that is consistent with this Plan, that shall be delivered to the
Participant and that shall specify the terms and conditions of the Stock
Incentive and any rules applicable thereto.  The Committee may impose on any Stock
Incentive or the exercise thereof, at the date of grant or thereafter (subject
to Section 15(a) ), such additional terms and conditions, not
inconsistent with the provisions of the Plan, as the Committee shall
determine.  The Committee shall retain
full power and discretion with respect to any term or condition of a Stock
Incentive that is not mandatory under the Plan. 
The Committee shall require the payment of lawful consideration for a
Stock Incentive to the extent necessary to satisfy the requirements of the
Kansas General Corporations Act, and may otherwise require payment of
consideration for a Stock Incentive except as limited by the Plan.  Award 


 


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Agreements may be executed on behalf of the Company and the Plan by any
Executive Officer of the Company or such other officer of the Company as the
Committee shall designate.


 


(d)  Amendments
of Award Agreements.  Subject to
the terms of the Plan, the Committee may from time to time authorize the
amendment of outstanding Award Agreements so long as such amendments are
consistent with the Plan; provided, that any such amendment that would
adversely affect the rights of any Participant or any holder or beneficiary of
any Stock Incentive theretofore granted shall not to that extent be effective
without the consent of the affected Participant, holder or beneficiary.  The Committee may not reprice (as defined in Section 15(a))
any Stock Option which has been awarded to a Participant without stockholder
approval.


 


(e)  Timing
of Payment under Stock Incentives; Deferrals.  Subject to the terms of the Plan and any
applicable Award Agreement, payments to be made by the Company or Subsidiary
upon the exercise of an Option or other Stock Incentive or settlement of a
Stock Incentive may be made in a single payment or transfer, in installments,
or on a deferred basis.  Installment or
deferred payments may be required by the Committee (subject to Section 15(a))
or permitted at the election of the Participant on terms and conditions
established by the Committee.


 


4.                                      STOCK
SUBJECT TO THE PLAN.


 


(a)  Number
of Shares Available.                    Subject
to the provisions of clause (b) of this Section 4 and Section 10,
the number of shares of Common Stock that may be issued under the Plan for
Stock Incentives during the term of the Plan is Two Million Six Hundred Eighty
Thousand (2,680,000).


 


(b)  Share
Counting Rules.  If any shares of
Common Stock subject to a Stock Incentive shall not be issued or transferred or
shall cease to be issuable or transferable under such Stock Incentive, or if,
after issuance or transfer, any such shares shall be reacquired by the Company
or Subsidiary because of a Participant’s 
failure to comply with or meet the terms and conditions of a Stock
Incentive, such shares may again be made subject to Stock Incentives; and only
the net additional shares issued upon the exercise or vesting of a Stock
Incentive through the delivery or withholding of shares of Common Stock in
payment of the exercise price or withholding taxes  shall be counted against the number of shares
which are authorized for issuance under this paragraph.  The limitation provided for in this paragraph
shall also be increased by the number of shares subject to any substitute Stock
Incentives granted under Section 14(k). 
Notwithstanding the foregoing, shares shall be deemed to have been
issued pursuant to a Stock Option or Stock Award and shall be charged against
the limitation provided for in this paragraph, whether actually delivered, to
the extent of the number of shares covered by that portion of the related Stock
Option or Stock Award granted under the Plan which is settled by the exercise
of a Stock Appreciation Right or by a cash payment under a Stock Award.  The foregoing notwithstanding, shares shall
not become available under this Section 4(b) in an event that would
constitute a “material amendment” of the Plan subject to stockholder approval
under then applicable NASDAQ Marketplace Rules. 
Because shares will count against the number reserved in Section 4(a) upon
delivery, and subject to the share counting rules under this Section 4(b),
the Committee may determine that Stock Incentives may be outstanding that
relate to a greater number of shares than the aggregate remaining available
under the Plan, so long as Stock Incentives will not result in delivery and
vesting of shares in excess of the number then available under the Plan.


 


(c)  Use of
Treasury and Other Shares.  Subject
to the requirements of applicable Kansas law, authorized but unissued shares of
Common Stock and shares of Common Stock held in the treasury, whether acquired
by the Company specifically for use under the Plan or otherwise, may be used,
as the Board of Directors may from time to time determine, for purposes of the
Plan; provided, however, that any shares acquired or held by the Company for
the purposes of the Plan shall, unless and until transferred to a Participant
in accordance with the terms and conditions of a Stock Incentive, be and at all
times remain treasury shares of the Company, available for any corporate
purpose, irrespective of whether such shares are entered in a special account
for purposes of the Plan.


 


(d)  Certain
Limitations on Grants. 
Notwithstanding any provision herein to the contrary, and subject to
adjustment as provided in Section 10, to the extent necessary for an award
to be qualified performance based compensation under Section 162(m) of
the Code, the maximum aggregate number of shares of Common Stock issuable under
any Stock Incentives awarded to any individual with respect to any fiscal year
of the Company shall be 100,000 shares or equivalents thereof.  In addition, subject to other provisions of
the Plan permitting the expiration of restrictions under certain circumstances,
unless otherwise determined by the Committee the Stock Awards or Performance
Awards granted under Section 5 or 8 will be subject to a vesting period of
one year from the date of grant in the case of such Stock Incentives that are
performance based and three years from the date of grant 


 


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in the case of such Stock Incentives under Section 5 that are not
performance based; provided, however, that such Stock Incentives may vest, in
whole or in part, on an accelerated basis in the event of a Participant’s
death, Disability, Retirement, or in the event of a Change in Control or other
special circumstances, including involuntary termination without cause, in the
sole discretion of the Committee.  In its
discretion, the Committee may provide for vesting periods of longer or shorter
duration that the one or three year periods referred to above. For purposes of
this Section 4(d), (i) a period that precedes the grant of the Stock
Incentive will be treated as part of the vesting or performance period if the
participant has been notified a reasonable time after the commencement of the
period that he or she has the opportunity to earn the Stock Incentive based on
performance and/or continued service, and (ii) vesting over a vesting
period may include periodic vesting over such period if the rate of such
vesting is proportional (or less rapid) throughout such period.


 


5.                                      STOCK
AWARDS.


 


Stock Incentives in the
form of Stock Awards shall be subject to the following provisions:


 


(a)  General.  A Stock Award shall be granted only (i) in
payment of Incentive Compensation that has been earned, (ii) as Incentive
Compensation to be earned, or (iii) a combination of (i) and (ii).


 


(b)  Valuation.  For the purposes of the Plan, in determining
the value of a Stock Award, all shares of Common Stock subject to such Stock
Award shall be valued at not less than 100% of the Fair Market Value of such
shares on the date such Stock Award is granted, regardless of whether or when
such shares are issued or transferred to the Participant and whether or not
such shares are subject to restrictions which affect their value.


 


(c)  Grant.  Shares of Common Stock subject to a Stock
Award may be issued or transferred to a Participant at the time the Stock Award
is granted, or at any time subsequent thereto, or in installments from time to
time, as the Committee shall determine. 
With respect to a Stock Award providing for issuance or transfer of
shares subsequent to the time it is granted, the Committee may provide for
payment to the grantee of amounts equal to the cash dividends which would have
been payable in respect of such shares (as adjusted under Section 10 of
the Plan) if they had been issued or transferred at the time the Stock Award
was granted.  Such payments may be made
in cash, shares of Common Stock or a combination of cash and shares.  Such payments may be made at the time the
shares are issued or transferred, or at the time or times the cash dividends
would have been payable if the shares had been issued or transferred at the
time the Stock Award was granted. A Stock Award may provide that if such
payments are made at the time shares are issued or transferred, there also will
be paid interest on any deferred dividend amounts, with respect to the number
of shares of Common Stock subject to such award, if any.  Any amount payable in shares of Common Stock
under the terms of the Stock Award may be paid in cash on each date on which
delivery of shares would otherwise have been made, in an amount equal to the
Fair Market Value on such date of the shares which would otherwise have been
delivered.


 


(d)  Terms
Relating to Transfer, Payment or Forfeiture.  A Stock Award may contain such other terms
and conditions as the Committee may determine with respect to transfer, payment
or forfeiture of all or any part of the Stock Award.


 


(e)  Other
Terms.  A Stock Award may be subject
to such other terms and conditions, including, without limitation, restrictions
on sale or other disposition of the shares issued or transferred pursuant to
the Stock Award, as the Committee may determine; provided, however, that upon
the issuance or transfer of shares pursuant to a Stock Award, the recipient
shall, with respect to such shares, be and become a stockholder of the Company
fully entitled to receive dividends, to vote and to exercise all other rights
of a stockholder except to the extent otherwise provided in the Stock Award.


 


6.                                      STOCK
OPTIONS.


 


Stock Incentives granted
under the Plan in the form of Stock Options shall be Non-Qualified Stock
Options and shall be subject to the following provisions:


 


(a)  Grant.  Subject to the provisions of the Plan,
including those contained in this Section 6, the Committee shall have the
sole and complete authority to determine the Eligible Persons to whom Options
shall be granted, the number of shares of Common Stock to be covered by each
Option, the option price therefor and the conditions and limitations applicable
to the exercise of the Option.


 


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(b)  Date of
Grant.  The “Date of Grant” of an
Option shall be the date the action of the Committee providing for the grant of
the Option is taken, or such later date as the Committee may provide.  An amendment to the terms of an existing
Option shall not constitute the grant of a new Option except to the extent that
the amendment increases the number of shares subject to the Option other than
as the result of an amendment effected pursuant to the adjustment provisions of
the Plan.


 


(c)  Price.  The price at which shares of Common Stock may
be purchased under an Option (the “Option Price”) shall be specified in the
Option and shall be not less than 100% of the Fair Market Value of such stock
on the Date of Grant of the Option.


 


(d)  Term.  An Option shall be exercisable only during a
term (the “Term of the Option” or “Term”) commencing not sooner than six months
and one day after the Date of Grant of the Option and ending (unless the Option
shall have terminated earlier under other provisions of the Plan) on a date
fixed by the Committee and stated in the Option, which date shall not be later
than the tenth anniversary of the Date of Grant.  If an Option is granted for an original Term
of less than ten years, the Committee may, at any time prior to the expiration
of the Option, extend its Term for a period ending not later than the tenth
anniversary of the Date of Grant of the Option.


 


(e)  Installments.  An Option may provide that it shall be
exercisable in full or in part at any time during the Term of the Option, or
that it shall be exercisable in a specified series of installments.  Unless otherwise provided in the Option,
installments or portions thereof not exercised in earlier periods shall be
cumulative and shall be
available for exercise in later periods. 
The Committee may, by so providing in an Option, require any partial
exercise thereof to be with respect to a specified minimum number of shares.


 


(f)  Exercise.  To the extent that the right to purchase
shares has accrued under an Option, the Option may be exercised from time to
time by the optionee or by a person or persons entitled to exercise the Option,
by delivery to the Company of a written notice, in the manner and in such form
as may be prescribed by the Committee, stating the number of shares with
respect to which the Option is being exercised, and by making provision satisfactory
to the Company for the payment in full of the Option price of the shares prior
to or in connection with the delivery of certificates evidencing the shares. In
this regard, no certificate representing Common Stock shall be delivered until (x) the
full purchase price therefor has been paid (or arrangement made for such
payment to the Company’s satisfaction), either in (A) cash (which includes
certified bank or cashier’s checks or money orders), (B) Mature Stock
having an aggregate Fair Market Value, determined as of the date of exercise,
equal to the aggregate purchase price payable by reason of such exercise, or (C) by
a combination of (A) and (B); and (y) full payment of any withholding
taxes thereon required by the Company to be paid (or arrangements made for such
payment to the Company’s satisfaction). Upon receipt of such notice and
payment, the Company shall deliver to or upon the order of the optionee, or
such other person entitled to exercise the Option, at the corporate
headquarters of the Company, or at such place as shall be mutually acceptable,
a certificate or certificates evidencing such shares.  An Option may not be exercised for fractional
shares of Common Stock. The Committee may, in its discretion and at the request
of the optionee, upon receipt in cash (as described above) of the exercise
price and upon the provision of the amount of any taxes required to be
withheld, issue shares directly to a brokerage firm selected by the optionee to
whom the optionee has submitted an irrevocable notice of exercise in accordance
with Regulation T of the Board of Directors of the Federal Revenue Board.


 


(g)  No
Stockholder Rights Prior to Exercise. 
No person shall have any rights of a stockholder by virtue of an Option
except with respect to shares actually issued to him, and issuance of shares
shall not confer retroactive rights to dividends.


 


7.                                      STOCK
APPRECIATION RIGHTS.


 


(a)  Grant.  Stock Appreciation Rights may be granted in
connection with any Option granted under the Plan, either at the time of the
grant of such Option or at any time thereafter during the term of the
Option.  A grant of Stock Appreciation
Rights shall either be included in the instrument evidencing the Option to
which they relate or evidenced by a separate instrument meeting the requirements
of Section 3 of the Plan.


 


(b)  Settlement.  A person entitled to exercise an Option in
connection with which Stock Appreciation Rights shall have been granted shall
be entitled, at such time or times and subject to such terms and conditions as
may be stated in the granting instrument, to settle all or part of the Option
by requesting the Company to pay, in cancellation of the part of the Option to
be settled, consideration in an amount equal to the number of shares of 


 


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Common Stock subject to the canceled part of the Option times the
amount by which the fair market value of one share on the exercise date exceeds
the Option Price (the “Appreciation”). 
The election shall be made in a written instrument, in form satisfactory
to the Committee, delivered in the manner prescribed in Section 6 for the
exercise of options.


 


(c)  Form of
Consideration.  The form of the
consideration to be paid for the Appreciation shall either be cash, shares of
Common Stock having an aggregate market value on the exercise date equal to the
Appreciation, or a combination of cash and shares.  Such form of consideration shall be specified
either by the Committee or, subject to the approval of the Committee, by the
person exercising the Stock Appreciation Right, provided that such form of
consideration shall in no event include fractional shares of Common Stock.


 


(d)  Other
Terms.  An Option in connection with
which Stock Appreciation Rights are granted may prescribe or limit the period
or periods of time during which the Stock Appreciation Rights may be exercised
as provided in paragraph (b) of this Section 7, and may prescribe
such additional terms and conditions applicable to the exercise of the Stock
Appreciation Rights as may be determined by the Committee and as are consistent
with the Plan.  In no event may Stock
Appreciation Rights be exercised at a time when the Option in connection with
which they were granted is not exercisable.


 


8.                                      PERFORMANCE
AWARDS.


 


(a)  Performance
Awards Generally.  The Committee is
authorized to grant Performance Awards on the terms and conditions specified in
this Section 8.  Performance Awards
may be denominated as a Stock Award or other Stock Incentive (or a combination)
which may be earned or vest upon achievement or satisfaction of performance
conditions specified by the Committee. 
The Committee may use such business criteria and other measures of
performance as it may deem appropriate in establishing any performance
conditions.


 


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


 


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


 


(ii)  Business Criteria.  One or more of the following business
criteria for the Company, on a consolidated basis, and/or for specified Subsidiaries  or other business units of the Company, shall
he used by the Committee in establishing performance goals for such Performance
Awards: (1) net sales; (2) income from operations; (3) income
before taxes; (4) income before interest, taxes, depreciation,
amortization, incentives, service fees and/or extraordinary or special items; (5) net
income or net income per common share (basic or diluted); (6) return on
assets, return on investment, return on capital, or return on equity; (7) cash
flow from operations, free cash flow (cash flow from operations less capital
expenditures) or cash flow return on invested capital; (8) modified
economic (a financial performance measure that calculates the profits that
remain after considering an assumed cost of capital;  (9)   stock price or total
stockholder return; and (10) strategic business criteria, consisting of
one or more objectives based on meeting specified market penetration,
geographic business expansion goals, cost targets, customer satisfaction,
employee satisfaction, management of employment practices and employee
benefits, and goals relating to acquisitions or divestitures of subsidiaries,
affiliates or joint ventures. The targeted level or 


 


A-8

















 


levels of performance
with respect to such business criteria may be established at such levels and in
such terms as the Committee may determine, in its discretion, including in
absolute terms, as a goal relative to performance in prior periods, or as a
goal compared to the performance of one or more comparable companies or an
index covering multiple companies.


 


(iii)  Performance Period;
Timing for Establishing Performance Goals. 
Achievement of performance goals in respect of such Performance Awards
shall be measured over a performance period specified by the Committee. A
performance goal shall be established not later than the earlier of (A) 90
days after the beginning of any performance period applicable to such
Performance Award or (B) the time 25% of such performance period has
elapsed.


 


(c)  Settlement
of Performance Awards; Other Terms. 
Settlement of Performance Awards shall be in Stock Awards or other Stock
Incentives, in the discretion of the Committee. The Committee may, in its
discretion, increase or reduce the amount of a settlement otherwise to be made
in connection with such Performance Awards, but may not exercise discretion to
increase any such amount payable to a Covered Employee in respect of an Award
to Covered Employee subject to Section 8(b).


 


(d)  Written
Determinations.  Determinations by
the Committee as to the establishment of performance goals, the amount
potentially payable in respect of Performance Awards, the level of actual
achievement of the specified performance goals relating to Performance Awards,
and the amount of any final Performance Award shall be recorded in writing in
the case of any Award to Covered Employee intended to qualify under Section 162(m).
Specifically, the Committee shall certify in writing, in a manner conforming to
applicable regulations under Section 162(m), prior to settlement of each
such Performance Award granted to a Covered Employee, that the performance
objective relating to the Performance Award and other material terms of such
Award upon which settlement of the Award was conditioned have been satisfied.


 


9.                                      TERMINATION
OR SUSPENSION OF EMPLOYMENT.


 


The following provisions
shall apply in the event of the Participant’s termination of employment unless
the Committee shall have provided otherwise, either at the time of the grant of
the Stock Incentive or thereafter:


 


(a)  Stock
Options and Stock Appreciation Rights.


 


(i)  Termination of Employment
Other than Due to Death, Disability, Cause or Retirement.  If the Participant’s employment with the
Company or its Subsidiaries is terminated for any reason other than death,
Disability, cause due to misconduct or Retirement, the Participant’s right to
exercise any Stock Option and related Stock Appreciation Right will terminate
one year after the cessation of employment, unless the Option or Right
terminates earlier by its terms or under other provisions of the Plan.  Until the Option or Right terminates, it may
be exercised by the optionee, his estate or legal representatives for all or a
portion of the shares as to which the right of purchase had accrued under the
Plan at the time of cessation of employment, subject to all applicable
conditions and restrictions provided in the Plan and the Option.  In no event shall an Option or Right be
exercisable later than the date of expiration of the term of the Option or
Right, and in no event shall an Option or Right be exercisable for any shares
as to which the right of purchase had not accrued at the time of cessation of
employment.  Employment for the purposes
of this paragraph shall mean continuous full-time salaried employment.  Vacations, sick leaves and any approved
absence on leave shall not constitute a termination of employment or an
interruption of continuous full-time salaried employment.


 


(ii)  Disability or Retirement.  If the Participant’s employment with the
Company or its Subsidiaries is terminated by Disability or Retirement, any
Stock Option or Stock Appreciation Right held by such Participant shall
terminate on the earlier of (i) the third anniversary of such termination
of employment, or (ii) the date the Option or Right would have otherwise
expired by its terms had it not been for such termination of employment.  Until the Option terminates, it may be
exercised by the optionee, his estate or legal representatives, for all or a
portion of the shares as to which the right of purchase had accrued as of the
date of such exercise, subject to all applicable conditions and restrictions
provided in the Plan and the Option or Right. 
In no event shall such Option or Right be exercisable later than the
date of 


 


A-9

















 


expiration of the
term of the Option or Right, and in no event shall such Option or Right be
exercisable for any shares as to which the right of purchase had not accrued at
the time of exercise.


 


(iii)  Death.  If the Participant’s employment with the
Company or its Subsidiaries is terminated by death, and if any  Stock Option or Stock Appreciation Right was
in effect at the time of his death (whether or not its terms had then
commenced), the Option or Right may, until the expiration of one year from the
date of death of the Participant or until the earlier expiration of the term of
the Option or Right, be exercised as and to the extent it could have been
exercised by the Participant had he been living at the time of exercise, by the
legal representatives of the Participant or by any person, persons or entity to
whom his rights under the Option or Right shall have been transferred pursuant
to the provisions of paragraph (h) of Section 14 of the Plan.  Such exercise shall not be limited to the
shares as to which the right of purchase had accrued at the date of death of
the Participant, but shall be subject to all applicable conditions and
restrictions prescribed in the Plan and the Option or Right, including any
installment provision.


 


(iv)  Acceleration and
Extension of Exercisability.  The
Committee may, in its discretion, provide (A) that a Stock Option or Stock
Appreciation Right granted to a Participant may terminate at a date earlier
than that set forth above; (B) that a Stock Option or Stock Appreciation
Right granted to a participant not subject to Section 16 of the Exchange
Act may terminate at a date later than that set forth above, provided such date
shall not be beyond the date the option or right would have expired had it not
been for the termination of the Participant’s employment.


 


(b)  Stock
Awards and Performance Awards that are not designated as an Award to Covered
Employee.  Unless otherwise
determined by the Committee, if the employment of the Participant with the
Company or a Subsidiary terminates by reason of Disability, death, Retirement
or, in the sole discretion of the Committee, involuntary termination of
employment without cause, any restrictions and provisions for forfeiture on
such Participant’s outstanding Stock Awards shall automatically expire, any
performance goals with respect to Performance Awards will be deemed to have
been satisfied at the target level on the date the Committee determines that
the performance goal has been met and the Participant will be entitled to a
prorated award.  Such prorated award will
be equal to the number of Stock Awards or other Stock Incentives that would
have been awarded (in the case of Performance Awards, at the target level)
multiplied by a fraction, the numerator of which shall equal the number of
months such Participant was employed by the Company during the vesting or
performance period, as applicable (fractional months shall be counted as full
months) and the denominator of which shall equal the number of months in the
vesting or performance period, as applicable. Unless the Committee determines
otherwise, if the employment of the Participant with the Company or a
Subsidiary terminates for any other reason, the portion of such award which is
subject to performance goals or other vesting requirement on the effective date
of such Participant’s termination of employment shall be immediately forfeited
and canceled by the Company.


 


(c)  Performance
Awards that are an Award to Covered Employee. Unless otherwise determined
by the Committee, if the employment of the Participant with the Company or a
Subsidiary terminates by reason of Disability or death, any performance goals
with respect to Performance Awards will be deemed to have been satisfied at the
target level on the date the Committee determines that the performance goal has
been met and the Participant will be entitled to a prorated award.  Such prorated award will be equal to the
number of Stock Awards or other Stock Incentives that would have been awarded
at the target level multiplied by a fraction, the numerator of which shall
equal the number of months such Participant was employed by the Company during
the performance period (fractional months shall be counted as full months), and
the denominator of which shall equal the number of months in the performance
period. Unless the Committee determines otherwise, if the employment of the
Participant with the Company or a Subsidiary terminates for any other reason,
the portion of such award which is subject to performance goals on the
effective date of such Participant’s termination of employment shall be
immediately forfeited and canceled by the Company.


 


(d)  Termination
for Cause.  Notwithstanding the other
provisions hereof, a Stock Incentive granted to a Participant shall expire and
the Participant shall thereupon forfeit all rights thereunder if the
Participant is terminated for cause due to the misconduct of the Participant.  The Committee shall, in its sole discretion,
determine whether a termination was for cause due to misconduct.


 


A-10
















 


10.                               ADJUSTMENT
PROVISIONS


 


(a)  Adjustments
to Shares and Price.  In the event
that any large, special and non-recurring dividend or other distribution
(whether in the form of cash or property other than Common Stock),
recapitalization, stock split or reverse stock split, stock dividend,
reorganization, merger, consolidation, spin-off, combination, repurchase, share
exchange, liquidation. dissolution or other similar corporate transaction or
event affects the Common Stock such that an adjustment is determined by the
Committee to be appropriate under the Plan, then the Committee may, in such
manner as it may deem equitable, adjust any or all of (i) the number and
kind of shares of stock which may be delivered in connection with Stock
Incentives granted thereafter; (ii) the number and kind of shares of stock
by which annual per-person Stock Incentive limitations are measured under Section 4(d);
(iii) the number and kind of shares of stock subject to or deliverable in
respect of outstanding Stock Incentives; and (iv) the exercise price,
grant price, purchase price or other terms (including performance goals)
relating to any Stock Incentive or, if deemed appropriate, the Committee may
make provision for a payment of cash or property to the holder of an outstanding
Option (subject to Section 14(n)).The Committee may also determine that
new Stock Incentives be substituted for any unexpired corresponding Stock
Incentives then outstanding, such adjustments to be made in the case of
outstanding Stock Options without an increase in the aggregate purchase
price.  The decision of the Committee
regarding any such adjustment or substitution shall be final, binding and
conclusive.  If any such adjustment would
result in a fractional security being (i) available under this Plan, such
fractional security shall be disregarded, or (ii) subject to an award
under this Plan, the Company shall pay the holder of such award, in connection
with the first vesting, exercise or settlement of such award in whole or in
part occurring after such adjustment, an amount in cash determined by
multiplying (x) the fraction of such security (rounded to the nearest
hundredth) by (y) the excess, if any, of (A) the Fair Market Value on
the vesting, exercise or settlement date over (B) the exercise or base
price, if any, of such award.  The
Company shall be obligated to, and therefore the Committee shall, provide for
such equitable adjustments of outstanding Stock Incentives in order to preserve
the positive intrinsic value of such Stock Incentives, unless in the
circumstances the Participant would be able to realize such intrinsic value in
the absence of an adjustment.


 


(b)  Other
Adjustments.  In addition, the
Committee is authorized to make adjustments in the terms and conditions of, and
the criteria included in, Stock Incentives (including Performance Awards and
performance goals and any hypothetical funding pool relating thereto) in
recognition of unusual or nonrecurring items or events (including, without
limitation, events described in the preceding sentence, as well as acquisitions
and dispositions of businesses and assets) affecting the Company or any
subsidiary or other business unit, or the financial statements of the Company
or any subsidiary, or in response to changes in applicable laws, regulations,
accounting principles, tax rates and regulations or business conditions, or in
view of the Committee’s assessment of the business strategy of the Company, any
subsidiary or business unit thereof, performance of comparable organizations,
economic and business conditions, personal performance of a Participant and any
other circumstances deemed relevant; provided that no such adjustment shall be
authorized or made if and to the extent that the existence of such authority (i) would
cause Options, Stock Appreciation Rights, or Performance Awards granted under Section 8
to Participants designated by the Committee as Covered Employees and intended
to qualify as “performance-based compensation” under Code Section 162(m) and
regulations thereunder to otherwise fail to qualify as “performance-based
compensation” under Code Section 162(m) and regulations thereunder;
or (ii) would cause the Committee to be deemed to have authority to change
the targets, within the meaning of Treasury Regulation 1.162-27(e)(4)(vi), under
the performance goals relating to Options, Stock Appreciation Rights or
Performance Awards granted to Covered Employees and intended to qualify as “performance-based
compensation” under Code Section 162(m) and regulations thereunder.


 


The Committee may also
unilaterally amend outstanding Stock Incentives to remove restrictions or
otherwise change the terms of outstanding Stock Incentives to permit such
incentives to be substituted for comparable incentives to be provided by any
entity which assumes the obligations with respect to such outstanding Stock
Incentives upon terms and conditions approved by the Board of Directors or
Stockholders.


 


(c)  Committee
Action Binding on all Persons.  The
action of the Committee in approving any adjustment or change contemplated by
this Section 10 shall be conclusively deemed to be equitable, appropriate,
fair and/or comparable and shall be binding on all persons holding rights under
the Plan.


 


11.                               CHANGE IN
CONTROL; SALE OF SUBSIDIARY.


 


(a)  Change
in Control.  Unless the Committee
shall otherwise provide in the Award Agreement relating to a Stock Incentive
granted under the Plan, upon the occurrence of a Change in Control:


 


A-11

















 


(i)  Vesting of Stock
Incentive.  Any Stock Incentive
carrying a right to exercise that was not previously exercisable and vested
shall become fully exercisable and vested as of the time of the Change in
Control; and


 


(ii)  Committee Power to
Permit Cash Election.  The Committee
may, in its discretion, determine to extend to any Participant who holds an
Option the right to elect, during the 60-day period immediately following the
Change in Control, in lieu of acquiring the shares of Common Stock covered by
such Option, to receive in cash the excess of the Change in Control Price over
the exercise price of such Option, multiplied by the number of shares of Stock
covered by such Option, and to extend to any Participant who holds other types
of Stock Incentives denominated in shares the right to elect, during the 60-day
period immediately following the Change in Control, in lieu of receiving the
shares of Stock covered by such Stock Incentive, to receive in cash the Change
in Control Price multiplied by the number of shares of Stock covered by such
Stock Incentive.  In addition, the
Committee may provide that Options and Stock Appreciation Rights shall be
subject to a mandatory cash-out in lieu of accelerated vesting.


 


(iii)  Stock Awards.  Any restrictions and provisions for
forfeiture on all outstanding Stock Awards shall automatically expire and
immediately lapse and all such awards shall be immediately and fully vested.


 


(iv)  Performance Awards.  Each Grantee of a Performance Award for a
performance period that has not been completed at the time of the Change in
Control shall be deemed to have earned a  
Performance Award as of the time of such Change in Control equal to such
Participant’s target award opportunity for such Performance Award.


 


(b)  Definition
of “Change in Control Price.”  The “Change
in Control Price” means an amount in cash equal to the higher of (i) the
amount of cash and fair market value of property that is the highest price per
share of Common Stock paid (including extraordinary dividends) in any
transaction triggering the Change in Control or any liquidation of shares
following a sale of substantially all assets of the Company, or (ii) the
highest Fair Market Value per share at any time during the 60-day period
preceding and 60-day period following the Change in Control.


 


(c)  Sale of
Subsidiary. Unless the Committee shall otherwise provide in the Award
Agreement relating to a Stock Incentive granted under the Plan, in the event
that the Company sells or otherwise disposes of substantially all the assets
of, or a majority interest in, a Subsidiary, then any and all Options and Stock
Appreciation Rights granted under the Plan to employees of the affected
Subsidiary shall be immediately exercisable in full, any restrictions and
provisions for forfeiture on all outstanding Stock Awards held by employees of
the affected Subsidiary shall automatically expire and immediately lapse and
all such awards shall be immediately and fully vested, and each employee of the
affected subsidiary who holds a Performance Award for a performance period that
has not been completed at the time of the sale or other disposition shall be
deemed to have earned a Performance Award as of the time of such sale or
disposition equal to such Participant’s target award opportunity for such
Performance Award.


 


(d)  Other
Powers.  The Committee in its
discretion and at any time may take such additional action as it deems
appropriate to address the effect of a Change in Control or the sale or
disposition of a Subsidiary on awards issued under this Plan. Without limitation,
the Committee may determine that any Stock Options or Stock Appreciation Rights
not exercised prior to a Change in Control or the sale or other disposition of
a Subsidiary, or within such period of time thereafter (not to exceed 120 days)
as the Committee shall determine, shall terminate.


 


12.                               TERM.


 


(a)  Effective
Date.  The Plan shall become
effective when approved by the holders of a majority of the shares of the
Company’s Common Stock and by the holders of a majority of the shares of the
Company’s Preferred Stock, present or represented and entitled to vote at a
meeting duly held in accordance with applicable law.


 


(b)  Expiration
Date.  No Stock Incentive shall be
granted under the Plan after October 14, 2014.  Unless otherwise expressly provided in the
Plan or in an applicable Award Agreement, any Stock Incentive granted hereunder
may, and the authority of the Board or the Committee to amend, alter, adjust,
suspend, discontinue, or terminate any such Stock Incentive or to waive any
conditions or rights under any such Stock Incentive shall, continue after the
authority for grant of new Stock Incentive hereunder has been exhausted.


 


A-12

















 


13.                               ADMINISTRATION.


 


(a)  Committee.  The Plan shall be administered by the
Committee which shall consist of not less than three directors of the Company
designated by the Board of Directors; provided, however, that no director shall
be designated as a member of the Committee unless such director shall at the
time of designation be a Qualified Member. 
At anytime that a member of the Committee is not a Qualified Member, any
action of the Committee relating to a Stock Incentive intended by the Committee
to qualify as “performance-based compensation” within the meaning of Code Section 162(m) and
regulations thereunder or intended to be covered by an exemption under Rule 16b-3
under the Exchange Act may be taken by a subcommittee, designated by the
Committee or the Board, composed solely of two or more Qualified Members or may
be taken by the Committee but with each such member who is not a Qualified
Member abstaining or recusing himself or herself from such action, provided
that, upon such abstention or recusal, the Committee remains composed of two or
more Qualified Members.  Such action,
authorized by such a subcommittee or by the Committee upon the abstention or
recusal of such non-Qualified Member(s), shall be the action of the Committee
for purposes of the Plan.  The express
grant of any specific power to the Committee, and the taking of any action by
the Committee, shall not be construed as limiting any power or authority of the
Committee.


 


(b)  Delegation
by the Board.  The Board of
Directors, by adoption of the Plan, delegates to the Committee all of its
authority under the Plan, including the authority to award Stock Incentives,
but excluding the authority to amend or discontinue the Plan.


 


(c)  Authority
of the Committee.


 


(i)  Subject to the terms of the
Plan and applicable law, and in addition to other express powers and
authorizations conferred on the Committee by the Plan, the Committee shall have
full power and authority to: (A) designate Participants; (B) determine
the type or types of Stock Incentive to be granted to an eligible employee; (C) determine
the number of shares of Common Stock to be covered by, or with respect to which
payments, rights, or other matters are to be calculated in connection with,
Stock Incentives; (D) determine the terms and conditions of any Stock
Incentive; (E) determine whether, to what extent, and under what
circumstances Stock Incentives may be settled or exercised in cash, shares of
Common Stock, other securities, other Stock Incentives or other property, or
canceled, forfeited, or suspended; (F) determine whether, to what extent,
and under what circumstances cash, shares of Common Stock, other securities,
other Stock Incentives, other property, and other amounts payable with respect
to a Stock Incentive  shall be deferred
either automatically or at the election of the holder thereof or of the
Committee; (G) interpret and administer the Plan and any instrument or
agreement relating to, or Stock Incentive granted under, the Plan; (H) establish,
amend, suspend, or waive such rules and regulations and appoint such
agents as it shall deem appropriate for the proper administration of the Plan;
and (I) make any other determination and take any other action that the
Committee deems necessary or desirable for the administration of the Plan.


 


(ii)  Unless prohibited by the
Plan, the Committee may, in its sole discretion and for any reason at any time,
take action such that (i) any or all outstanding Stock Options or Stock
Appreciation Right shall become exercisable in part or in full, (ii) all
or a portion of the vesting period applicable to any outstanding Stock Award
shall lapse, (iii) all or a portion of the performance period applicable
to any outstanding Performance Award shall lapse, and (iv) the performance
goals applicable to any outstanding award (if any) shall be deemed to be
satisfied at the maximum or any other level. 
Notwithstanding the foregoing, except as to Committee action in the
event of the Participant’s death or Disability or a Change in Control or as
provided in Section 10, no award designated as an Award to a Covered
Employee may be amended, nor may the Committee exercise any discretionary
authority it may otherwise have under this Plan with respect to an award
designated as an Award to a Covered Employee under this Plan, in any manner to
waive the achievement of the applicable performance goal, or to increase the
amount payable pursuant thereto or the value thereof, or otherwise in a manner
that would cause an award designated as an Award to a Covered Employee to cease
to qualify for the exemption from the limitation on deductibility under Section 162(m) of
the Code.  Notwithstanding that
performance goals may be achieved, the Committee may determine, in its
discretion, whether and the extent to which an award designated as an Award to
a Covered Employee, as defined under Code Section 162(m), will be paid.


 


A-13

















 


(d)  Committee
Discretion Binding.  Unless otherwise
expressly provided in the Plan, all designations, determinations,
interpretations, and other decisions under or with respect to the Plan or any
Stock Incentive 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 the Company, any Subsidiary, any Participant, any holder or beneficiary
of any Stock Incentive, any stockholder and any employee. The Committee’s
determination under the Plan including, without limitation, determination of
the persons to receive awards, the form, amount and type of awards, the terms
and provisions of awards and the written material evidencing such awards, any
amendments to the terms and provisions of any awards, and the granting or
rejecting of applications for delivery of shares of Common Stock need not be
uniform and may be made selectively among otherwise eligible persons whether or
not such persons are similarly situated.


 


(e)  Limitation
of Liability.  The Committee and each member thereof, and
any person acting pursuant to authority delegated by the Committee, shall be
entitled, in good faith, to rely or act upon any report or other information
furnished by any executive officer, other officer or employee of the Company or
a subsidiary or affiliate, the Company’s independent auditors, consultants or
any other agents assisting in the administration of the Plan. Members of the
Committee, any person acting pursuant to authority delegated by the Committee,
and any officer or employee of the Company or a subsidiary or affiliate acting
at the direction or on behalf of the Committee or a delegee shall not be
personally liable for any action or determination taken or made in good faith
with respect to the Plan, and shall, to the extent permitted by law, be fully
indemnified, held harmless  and protected
by the Company with respect to any such action or determination.


 


(f)  Delegation.  Subject to the terms of the Plan and
applicable law, the Committee may delegate to one or more officers or managers
of the Company or any Subsidiary, or to a committee of such officers or
managers, the authority, subject to such terms and limitations as the Committee
shall determine, to grant Stock Incentives to, or to cancel, modify or waive
rights with respect to, or to alter, discontinue, suspend, or terminate Stock
Incentives held by, Participants who are not officers or directors of the
Company for purposes of Section 16 of the Exchange Act, or any successor
section thereto, or who are otherwise not subject to such Section.


 


14.                               GENERAL
PROVISIONS.


 


(a)  No
Rights to Participation or Employment. 
No person shall have any right to participation in this Plan. Nothing in
the Plan or in any instrument executed pursuant thereto shall confer upon any
Participant any right to continue in the employ of the Company or a Subsidiary
or shall affect the right of the Company or of a Subsidiary to terminate the
employment of any Participant with or without cause.


 


(b)  Restrictions
on Shares.  Each Stock Incentive made
hereunder shall be subject to the requirement that if at any time the Company
determines that the listing, registration or qualification of the shares of
Common Stock subject to such Stock Incentive upon any securities exchange or
under any law, or the consent or approval of any governmental body, or the
taking of any other action is necessary or desirable as a condition of, or in
connection with, the vesting, exercise or settlement of such Stock Incentive or
the delivery of shares thereunder, such Stock Incentive shall not vest, be
exercised or settled and such shares shall not be issued or delivered unless
such listing, registration, qualification, consent, approval or other action
shall have been effected or obtained, free of any conditions not acceptable to
the Company.  In addition, the Committee
may condition the grant of a Stock Incentive on compliance with certain listing,
registration or other qualifications applicable to the Stock Incentive under
any law or any obligation to obtain the consent or approval of a governmental
body.  The Company may require that
certificates evidencing shares of Common Stock delivered pursuant to any Stock
Incentive made hereunder bear a legend indicating that the sale, transfer or
other disposition thereof by the holder is prohibited except in compliance with
the Securities Act of 1933, as amended, and the rules and regulations
thereunder.  The Company shall not be
obligated by virtue of any terms and conditions of any Stock Incentive or any
provisions of the Plan to recognize the exercise of a Stock Option or to sell
or issue shares in violation of the Securities Act or the law of any government
having jurisdiction thereof.  Any
postponement or delay by the Company in recognizing the exercise of any Stock
Option or in issuing any shares under a Stock Award or otherwise hereunder
shall not extend the term of a Stock Option nor shorten the term of any
restriction period or vesting period attached to any Stock Award or other award
and neither the Company nor its directors or officers shall have any obligation
or liability to the holder of a Stock Incentive or to any other person with
respect to any shares as to which a Stock Option or other award shall lapse
because of such postponement or as to which issuance under a Stock Award or
other Stock Incentive was delayed.


 


A-14

















 


(c)  No
Rights as Stockholder.  Subject to
the provisions of the applicable Stock Incentive, no Participant (individually
or as a member of a group), and no beneficiary or other person claiming under
or through him, shall have any right, title or interest in or to any shares of
Common Stock allocated or reserved for the purposes of the Plan or subject to
any Stock Incentive, except as to such shares of Common Stock, if any, as shall
have been issued or transferred to him.


 


(d)  Grants
of Awards to Future Employees.  The
Company or a Subsidiary may, with the approval of the Committee, enter into an
agreement or other commitment to grant a Stock Incentive in the future to a
person who is or will be at the time of grant an Eligible Person, and,
notwithstanding any other provision of the Plan, any such agreement or
commitment shall not be deemed the grant of a Stock Incentive until the date on
which the Committee takes action to implement such agreement or commitment,
which date shall for the purpose of the Plan be the date of grant.


 


(e)  Implementation
of Stock Incentives by Subsidiaries. 
In the case of a grant of a Stock Incentive to any employee of a
Subsidiary, such grant may, if the Committee so directs, be implemented by the
Company issuing or transferring the shares, if any, covered by the Stock
Incentive to the Subsidiary, for such lawful consideration as the Committee may
specify, upon the condition or understanding that the Subsidiary will transfer
the shares to the employee in accordance with the terms of the Stock Incentive.
 Notwithstanding any other provision
hereof, such Stock Incentive may be issued by and in the name of the Subsidiary
and shall be deemed granted on the date it is approved by the Committee or on
such later date as the Committee shall specify.


 


(f)  Withholding
and Payment of Taxes.  The Company or
a Subsidiary may make such provisions as it may deem appropriate for the
withholding of any taxes which the Company or Subsidiary determines it is
permitted or required to withhold in connection with any Stock Incentive.  Such provisions may include a requirement
that all or part of the amount of such taxes be paid to the Company or
Subsidiary, in cash, at the time of settlement and may permit the Company to
withhold an amount of cash, if any, which would otherwise be payable to a
Participant, including withholding from wages or other cash compensation or
awards otherwise due to the Participant, under this Plan or otherwise, in the
amount necessary to satisfy any such obligation.  In the discretion of the Committee such
provisions may also permit the payment of such taxes by the Company through the
withholding of shares of Common Stock to be issued under a Stock Incentive,
either on a mandatory or elective basis, or the delivery of shares of Mature
Stock owned by the Participant  (either
actual delivery or by attestation procedures established by the Company), in
any such case having an aggregate Fair Market Value, determined as of the date
the obligation to withhold or pay taxes arises in connection with a Stock Incentive,
not exceeding the Company’s minimum statutory withholding amount, based on the
Company’s minimum statutory withholding rates for federal and state tax
purposes, including payroll taxes, that are applicable to the taxable income
resulting from the Stock Incentive.   Any
fraction of a share of Common Stock which would be required to satisfy such an
obligation shall be disregarded and the remaining amount due shall be paid in
cash by the holder.


 


(g)  Required
Consent to and Notification of Code Section 83(b) Election.  No election under Section 83(b) of
the Code (to include in gross income in the year of transfer the amounts
specified in Code Section 83(b)) or under a similar provision of the laws
of a jurisdiction outside the United States may be made unless expressly
permitted by the terms of the Award Agreement or by action of the Committee in
writing prior to the making of such election. In any case in which a
Participant is permitted to make such an election in connection with a Stock
Incentive, the Participant shall notify the Company of such election within ten
days of filing notice of the election with the Internal Revenue Service or
other governmental authority, in addition to any filing and notification
required pursuant to regulations issued under Code Section 83(b) or
other applicable provision.


 


(h)  Non-transferability.  Except with the Committee’s prior approval, (i) no
Stock Incentive and no rights under a Stock Incentive or under the Plan,
contingent or otherwise, shall, by operation of law or otherwise, be
transferable or assignable or subject to any encumbrance, pledge, hypothecation
or charge of any nature, or to execution, attachment or other legal process,
except that, in the event of the death of the Participant, the Participant’s
rights under the Stock Incentive may pass, as provided by law, to the legal
representatives of the Participant, and such legal representatives may transfer
any rights in respect of such Stock Incentive to the person or persons or
entity (including a trust) entitled thereto under the will of  Participant, or in the case of intestacy,
under the applicable laws relating to intestacy, and (ii) during the life
of a Participant, the Stock Incentive shall be exercisable only by such
Participant.


 


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(i)  Other
Compensation.  Nothing in the Plan is
intended to be a substitute for, or shall preclude or limit the establishment
or continuation of, any other plan, practice or arrangement for the payment of
compensation or fringe benefits to employees generally, or to any class or
group of employees, which the Company or any Subsidiary now has or may
hereafter lawfully put into effect, including, without limitation, any
retirement, pension, profit-sharing, insurance, stock purchase, incentive
compensation or bonus plan.


 


(j)  Place of
Administration.  The place of
administration of the Plan shall conclusively be deemed to be within the State
of Kansas and the validity, construction, interpretation and administration of
the Plan and of any rules and regulations or determinations or decisions
made thereunder, and the rights of any and all persons having or claiming to
have any interest therein or thereunder, shall be governed by and be determined
exclusively and solely in accordance with, the laws of the State of
Kansas.  Without limiting the generality
of the foregoing, the period within which any action arising under or in
connection with the Plan, or any payment or award made or purportedly made
under or in connection therewith, must be commenced, shall be governed by the
laws of the State of Kansas, irrespective of the place where the act or
omission complained of took place and of the residence of any party to such
action and irrespective of the place where the action may be brought.


 


(k)  Substitute
Options.  Stock Incentives may be
granted under the Plan from time to time in substitution for stock incentives
held by employees of other corporations who are about to become employees of
the Company or a Subsidiary as the result of a merger or consolidation of the
employing corporation with the Company or a Subsidiary, or the acquisition by
the Company or a Subsidiary of the assets of the employing corporation, or the
acquisition by the Company or a Subsidiary of stock of the employing
corporation as the result of which it becomes a Subsidiary.  The terms and conditions of the substitute
options so granted may vary from the terms and conditions set forth in this
Plan to such extent as the Committee at the time of grant may deem appropriate
to conform, in whole or in part, to the provisions of the stock incentives in
substitution for which they are granted.


 


(l)  Unfunded
Status of Awards; Creation of Trusts. 
The Plan is intended to constitute an “unfunded” plan for incentive and
deferred compensation. With respect to any payments not yet made to a
Participant or obligation to deliver Common Stock pursuant to a Stock
Incentive, nothing contained in the Plan or any Award Agreement shall give any
such Participant any rights that are greater than those of a general creditor
of the Company; provided that the Committee may authorize the creation of
trusts and deposit therein cash, Common Stock, other Stock Incentives or other
property, or make other arrangements to meet the Company’s obligations under
the Plan. Such trusts or other arrangements shall be consistent with the “unfunded”
status of the Plan unless the Committee otherwise determines with the consent
of each affected Participant.


 


(m)  Payments
in the Event of Forfeitures; Fractional Shares.  If so determined by the Committee, in the
event of a forfeiture of a Stock Incentive with respect to which a Participant
paid cash consideration, the Participant shall be repaid the amount of such
cash consideration. No fractional shares of Stock shall be issued or delivered
pursuant to the Plan or any Stock Incentive. Except as provided in the Plan,
the Committee shall determine whether cash, other Stock Incentives or other
property shall be issued or paid in lieu of such fractional shares or whether
such fractional shares or any rights thereto shall be forfeited or otherwise
eliminated.


 


(n)  Certain
Limitations Relating to Accounting Treatment of Awards.  At
any time that the Company is accounting for Stock Incentives under Accounting
Principles Board Opinion 25 (“APB 25”), the Company intends that, with respect
to such Stock Incentives, the compensation measurement date for accounting
purposes shall occur at the date of grant or the date performance conditions
are met if a Stock Incentive is fully contingent on achievement of performance
goals, unless the Committee specifically determines otherwise.  Therefore, other provisions of the Plan
notwithstanding, in order to preserve this fundamental objective of the Plan,
if any authority granted to the Committee hereunder or any provision of the
Plan or a Stock Incentive agreement would result, under APB 25, in “variable”
accounting or a measurement date other than the date of grant or the date such
performance conditions are met with respect to such Stock Incentives, if the
Committee was not specifically aware of such accounting consequence at the time
such Stock Incentive was granted or provision otherwise became effective, such
authority shall be limited and such provision shall be automatically modified
and reformed to the extent necessary to preserve the accounting treatment of
the award intended by the Committee.  This provision shall cease to be effective if
and at such time as the Company no longer accounts for equity compensation
under APB 25.


 


(o)  Compliance
with Code Section 162(m).  It is
the intent of the Company that Options and Stock Appreciation Rights granted to
Covered Employees and other Stock Incentives designated as “Awards to Covered
Employees” subject to Section 8(b) shall constitute qualified “performance-based
compensation” within the meaning 


 


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of Code Section 162(m) and regulations thereunder.
Accordingly, the terms of Sections 8(b), (c) and (d), including the
definitions of Covered Employee and other terms used therein, shall be
interpreted in a manner consistent with Code Section 162(m) and
regulations thereunder. Because the Committee cannot determine with certainty
whether a given Participant will be a Covered Employee with respect to a fiscal
year that has not yet been completed, the term Covered Employee as used herein
shall mean only a person designated by the Committee as likely to be a Covered
Employee with respect to a specified fiscal year. If any provision of the Plan
or any Award Agreement relating to a Performance Award that is designated as
intended to comply with Code Section 162(m) does not comply or is
inconsistent with the requirements of Code Section 162(m) or
regulations thereunder, such provision shall be construed or deemed amended to
the extent necessary to conform to such requirements, and no provision shall be
deemed to confer upon the Committee or any other person discretion to increase
the amount of compensation otherwise payable in connection with any such award
upon attainment of the applicable performance objectives.


 


(p)  Agreement.  The Committee may condition a Participant’s
right (i) to exercise, vest or settle the award, and (ii) to receive
delivery of shares, on the execution and delivery to the Company of the Award
Agreement and the completion of other requirements, including, but not limited
to, the execution of a non-compete and/or non-solicitation agreement by the
recipient and delivery thereof to the Company. 
Acceptance of, or receipt of the benefit of, a Stock Incentive shall be
conclusively presumed to be assent by the holder to all of the terms and
conditions of the Plan and of the Award Agreement, whether or not signed by the
holder.


 


(q)  Termination
of Employment or Service.  Unless
otherwise determined by the Committee, a Participant employed by an entity that
is a Subsidiary under this Plan shall be deemed to have terminated employment
with or service to the Company for purposes of this Plan on the date that such
entity ceases to be a Subsidiary hereunder.


 


(r)  Designation
of Beneficiary.


 


(i)  If permitted by the
Committee, a Participant may file with the Committee a written designation of
one or more persons as such Participant’s beneficiary or beneficiaries (both
primary and contingent) in the event of the Participant’s death.  To the extent an outstanding Stock Option
granted hereunder is exercisable, such beneficiary or beneficiaries shall be
entitled to exercise such Stock Option to the extent permitted under local law.


 


(ii)  Each beneficiary
designation shall become effective only when filed in writing with the
Committee during the Participant’s lifetime on a form prescribed by the
Committee.  The filing with the Committee
of a new beneficiary designation shall cancel all previously filed beneficiary
designations.


 


(iii)  If a Participant fails to
designate a beneficiary, or if all designated beneficiaries of a Participant
predecease the Participant, then each outstanding Stock Option hereunder held
by such Participant, to the extent exercisable, may be exercised by, and any
Stock Award not yet delivered shall be delivered, exchanged, or paid to, such
Participant’s legal representative.


 


15.                               AMENDMENT OR
DISCONTINUANCE OF PLAN.


 


(a)  Amendment.  The Plan may be amended by the Board of
Directors at any time, provided that without the affirmative vote of the
holders of a majority of the shares of the Company’s Common Stock and the
affirmative vote of the holders of a majority of the Company’s Preferred Stock
present or represented, and entitled to vote at a meeting duly held in
accordance with applicable law, no amendment shall be made which (i) increases
the aggregate number of shares of Common Stock that may be issued or
transferred pursuant to Stock Incentives as provided in Section 4, (ii) amends
the provisions of paragraph (a) of Section 13 with respect to
eligibility  of members of the Committee,
(iii) permits any person who does not meet the eligibility requirements of
the Plan to be granted a Stock Incentive, (iv) amends the provisions of
Sections 5, 6, 7 or 8 to permit shares to be valued or to be optioned at less
than 100% of Fair Market Value or to change the business criteria in Section 8
upon which Performance Awards are based, (v) amends Section 12 to
extend the term of the Plan, or (vi) amends this Section 15.  Any amendment to the Plan shall be submitted
to the Company’s stockholders for approval not later than the earliest annual
meeting for which the record date is after the date of such Board action if
such stockholder approval is required by any federal or state law or regulation
or the rules of any stock exchange or automated quotation system on which
the Common Stock may then be listed or quoted, and the Board may otherwise, in
its discretion, determine to submit other amendments to the Plan to
stockholders for approval. Without the approval of stockholders, the Committee
will not 


 


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amend or replace previously granted Options or Stock Appreciation
Rights in a transaction that constitutes it “repricing.”  For purposes of this plan, a “repricing”
means: (1) amending the terms of an Option or Stock Appreciation Right
after it is granted to lower its exercise price; (2) any other action that
is treated as a repricing under generally accepted accounting principles; and (3) canceling
an Option or Stock Appreciation Right at a time when its strike price is equal
to or greater than the fair market value of the underlying Stock, in exchange
for another Option, Stock Appreciation Right, Stock Award, or other equity,
unless the cancellation and exchange occurs in connection with a merger,
acquisition, spin-off or other similar corporate transaction. A cancellation
and exchange described in clause (3) of the preceding sentence will be
considered a repricing regardless of whether the Option, Stock Award or other
equity is delivered simultaneously with the cancellation, regardless of whether
it is treated as a repricing under generally accepted accounting principles,
and regardless of whether it is voluntary on the part of the Option
holder.  Adjustments to awards under Section 10
will not be deemed “repricings,” however.


 


(b)  Discontinuance.  The Board of Directors may by resolution
adopted by a majority of the entire Board of Directors discontinue the Plan at
any time.


 


(c)  Consents.  No amendment or discontinuance of the Plan by
the Board of Directors or the stockholders of the Company shall adversely
affect, without the consent of the holder thereof, any Stock Incentive theretofore
granted.


 


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