Exhibit 10.1


BLYTH, INC. 2003 LONG-TERM INCENTIVE PLAN


SECTION 1.    PURPOSE.  The purposes of the Blyth, Inc. 2003
Long-Term Incentive Plan (the “Plan”) are to encourage Directors and selected
employees of Blyth, Inc., a Delaware corporation (the “Company”), and its
Affiliates to acquire a proprietary and vested interest in the growth and
performance of the Company, to generate an increased incentive to contribute to
the Company’s future success and prosperity, thus enhancing the value of the
Company for the benefit of stockholders, and to enhance the ability of the
Company and its Affiliates to attract and retain individuals of exceptional
talent upon whom, in large measure, the sustained progress, growth and
profitability of the Company depends.


SECTION 2.    DEFINITIONS.  As used in the Plan, the following terms shall have the meanings
set forth below:


(a)   “Affiliate” shall mean (i) any Person that
directly, or through one or more intermediaries, controls, or is controlled by,
or is under common control with, the Company or (ii) any entity in which the
Company has a significant equity interest, as determined by the Committee.


(b)   “Award” shall mean any Option, Stock
Appreciation Right, Restricted Stock Award, Performance Share, Performance
Unit, dividend equivalent, Other Stock Unit Award or any other right, interest
or option relating to Shares or other property granted pursuant to the
provisions of the Plan.


(c)   “Award Agreement” shall mean any written
agreement, contract or other instrument or document evidencing any Award
granted by the Committee hereunder, which may, but need not, be executed or
acknowledged by both the Company and the Participant.


(d)   “Board” shall mean the Board of Directors
of the Company.


(e)   “Cause” shall mean, unless otherwise
provided by the Committee, (1) “Cause” as defined in any Individual Agreement
to which the Participant is a party, or (2) if there is no such Individual
Agreement or, if it does not define Cause, any of the following on the part of
the Participant: an intentional failure to perform assigned duties; willful
misconduct in the course of the Participant’s employment; breach of a fiduciary
duty involving personal profit; or acts or omissions of personal dishonesty,
any of which results in material loss to the Company or any of its Subsidiaries
or Affiliates. The Committee shall, unless otherwise provided in an Individual
Agreement with the Participant, have the sole discretion to determine whether
“Cause” exists, and its determination shall be final.


(f)   “Change in Control” shall mean (i) in the
case of an Employee, (A) a reorganization, merger or consolidation (a
“Corporate Transaction”) in which the Company is not the surviving corporation;
(B) a sale, lease, exchange or other transfer (in one transaction or in a
series of related transactions) of all or substantially all of the assets of
the Company to another person or entity (an “Asset Sale”); or (C) approval by
the stockholders of the Company of a complete liquidation or dissolution of the
Company, or (ii) in the case of a Director, (A) any 


 

















 


Corporate Transaction in
which the Company is not the continuing or surviving corporation or pursuant to
which Shares are converted into cash, securities or other property, other than
a merger of the Company in which the holders of the Shares immediately prior to
the merger have the same proportionate ownership of common stock of the
surviving corporation immediately after the merger, (B) any Asset Sale; (C)
approval by the stockholders of the Company of a complete liquidation or
dissolution of the Company, (D) any person (as such term is used in Sections
13(d) and 14(d)(2) of the Exchange Act, but excluding Robert B. Goergen and/or
any person controlled by Robert B Goergen and/or his affiliates, heirs, estate,
legal representative and/or beneficiaries), shall become the beneficial owner
(within the meaning of Rule 13d-3 under the Exchange Act) of 30% or more of the
outstanding Shares; or (E) during any period of two consecutive years,
individuals who at the beginning of such period constitute the entire Board
shall cease for any reason to constitute a majority thereof unless the
election, or the nomination for election by the Company’s stockholders, of each
new director was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of the period;
provided, however, that in the case of any Director, a Change in Control shall
not be deemed to have occurred unless, within one year after the occurrence of
an event described in Section 2(f)(ii), such Director shall have ceased for any
reason to be a member of the Board.


(g)   “Code” shall mean the Internal Revenue Code
of 1986, as amended from time to time, and any successor thereto.


(h)   “Committee” shall mean the Compensation
Committee of the Board, or any successor to such committee, composed of no
fewer than two directors, each of whom is a Non-Employee Director and an
“outside director” within the meaning of Section 162(m) of the Code, or any
successor provision thereto.


(i)   “Company” shall mean Blyth, Inc., a
Delaware corporation.


(j)   “Corporate Transaction” shall have the
meaning ascribed thereto in Section 2(f)(i)(A).


(k)   “Covered Employee” shall mean a “covered
employee” within the meaning of Section 162(m)(3) of the Code, or any successor
provision thereto.


(l)   “Director” shall mean a director of the
Company who has not been, during the immediately preceding 12-month period, an
officer or employee of the Company or any Subsidiary.


(m)   “Employee” shall mean any employee of the
Company or any Affiliate.  Unless
otherwise determined by the Committee in its sole discretion, for purposes of
the Plan, (1) an Employee shall be considered to have terminated employment or
services and to have ceased to be an Employee if his or her employer ceases to
be an Affiliate, even if he or she continues to be employed by such employer
and (2) temporary absences from employment because of illness, vacation or an
approved leaves of absence and transfers among the Company and its Subsidiaries
and Affiliates shall not be considered terminations of employment or services.


(n)  
“Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended.


 


2

















 


(o)   “Fair Market Value” shall mean, with
respect to any property, the market value of such property determined by such
methods or procedures as shall be established from time to time by the
Committee.  Unless otherwise determined
by the Committee, the Fair Market Value of Shares as of any date shall be the
average of the high and low trading prices for the Shares as reported on the
New York Stock Exchange (or on any national securities exchange on the Shares
are then listed) for that date or, if no such prices are reported for that
date, the average of the high and low trading prices on the next preceding date
for which such prices were reported.


(p)   “Family Member” shall mean any child,
stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse,
sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law or sister-in-law, including adoptive
relationships, any person sharing the Participant’s household (other than a
tenant or employee), a trust in which these persons have more than fifty
percent of the beneficial interest, a foundation in which these persons (or the
Participant) control the management of assets, and any other entity in which
these persons (or the Participant) own more than fifty percent of the voting
interests.


(q)   “Incentive Stock Option” shall mean an
Option granted under Section 6 that is intended to meet the requirements of
Section 422 of the Code or any successor provision thereto.


(r)   “Individual Agreement” shall mean a written
employment or consulting agreement between the Participant and the Company or
an Affiliate.


(s)   “Non-Employee Director” shall have the
meaning set forth in Rule 16b-3(b)(3) promulgated under the Exchange Act, or
any successor definition adopted by the Securities and Exchange Commission.


(t)   “Nonstatutory Stock Option” shall mean an
Option granted under Section 6 that is not intended to be an Incentive Stock
Option.


(u)   “Option” shall mean any right granted to a
Participant under the Plan allowing such Participant to purchase Shares at such
price or prices and during such period or periods as the Committee shall
determine.


(v)   “Other Stock Unit Award” shall mean any
right granted to a Participant by the Committee pursuant to Section 10.


(w)   “Participant” shall mean a Director or an
Employee who is selected by the Committee to receive an Award under the Plan.


(x)   “Performance Award” shall mean any Award of
Performance Shares or Performance Units pursuant to Section 9.


(y)   “Performance Period” shall mean that period
established by the Committee at the time any Performance Award is granted or at
any time thereafter during which any performance goals specified by the
Committee with respect to such Award are to be measured.


(z)  
“Performance Share” shall mean any grant pursuant to Section 9 of a unit
valued by reference to a designated number of Shares, which value may be paid
to the Participant by 


 


3

















 


delivery of such property as
the Committee shall determine, including, without limitation, cash, Shares,
other property, or any combination thereof, upon achievement of such
performance goals during the Performance Period as the Committee shall
establish at the time of such grant or thereafter.


(aa)   “Performance Unit” shall mean any grant
pursuant to Section 9 of a unit valued by reference to a designated amount of
property other than Shares, which value may be paid to the Participant by
delivery of such property as the Committee shall determine, including, without limitation,
cash, Shares, other property, or any combination thereof, upon achievement of
such performance goals during the Performance Period as the Committee shall
establish at the time of such grant or thereafter.


(bb)   “Person” shall mean any individual,
corporation, partnership, association, limited liability company, joint-stock
company, trust, unincorporated organization or government or political
subdivision thereof.


(cc)   “Qualified Performance-Based Award” shall
have the meaning set forth in


Section 13.


(dd)   “Restricted Stock” shall mean any Share
issued with the restriction that the holder may not sell, transfer, pledge or
assign such Share and with such other restrictions as the Committee, in its
sole discretion, may impose (including, without limitation, any restriction on
the right to vote such Share, and the right to receive any cash dividends),
which restrictions may lapse separately or in combination at such time or
times, in installments or otherwise, as the Committee may deem appropriate.


(ee)   “Restricted Stock Award” shall mean an
award of Restricted Stock under


Section 8.


(ff)   “Section 162(m) Exemption” shall have the
meaning set forth in Section 13.


(gg)   “Shares” shall mean the shares of common
stock of the Company, par value $0.02 per share.


(hh)   “Stock Appreciation Right” shall mean any
right granted to a Participant pursuant to Section 7 to receive, upon exercise
by the Participant, the excess of (i) the Fair Market Value of one Share on the
date of exercise or, if the Committee shall so determine in the case of any
such right other than one related to any Incentive Stock Option, at any time
during a specified period before the date of exercise over (ii) the grant price
of the right on the date of grant, or if granted in connection with an
outstanding Option on the date of grant of the related Option, as specified by
the Committee in its sole discretion, which, except in the case of Substitute
Awards or in connection with an adjustment provided in Section 4(c), shall not
be less than the Fair Market Value of one Share on such date of grant of the
right or the related Option, as the case may be.  Any payment by the Company in respect of such right may be made
in cash, Shares, other property, or any combination thereof, as the Committee,
in its sole discretion, shall determine.


4

















 


(ii)   “Subsidiary” shall mean any corporation
(other than the Company) in an unbroken chain of corporations beginning with
the Company if, at the time of the granting of the Award, each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain.


(jj)   “Substitute Awards” shall mean Awards
granted or Shares issued by the Company in assumption of, or in substitution or
exchange for, awards previously granted, or the right or obligation to make
future awards, by a company acquired by the Company or with which the Company
combines.


SECTION 3.    ADMINISTRATION.


(a)   The Plan shall be administered by the
Committee.  The Committee shall have
full power and authority, subject to such orders or resolutions not
inconsistent with the provisions of the Plan as may from time to time be
adopted by the Board, to:


(1)           select the Employees of the Company
and its Affiliates of the Company to whom Awards may from time to time be
granted hereunder;


(2)           determine the type or types of Award
to be granted to each Employee hereunder;


(3)           determine the number of Shares to be
covered by each Award granted to an Employee hereunder;


(4)           determine the terms and conditions of
any Award granted to an Employee hereunder (including, but not limited to, the
option price, any vesting condition, restriction or limitation (which may be
related to the performance of the Participant, the Company or any Subsidiary or
Affiliate) and any vesting acceleration or forfeiture waiver regarding any
Award and the Shares relating thereto, based on such factors as the Committee
shall determine;


(5)           determine whether, to what extent and
under what circumstances Awards may be settled in cash, Shares or other
property or canceled or suspended;


(6)           to modify, amend or adjust the terms
and conditions of any Award, at any time or from time to time, including but
not limited to performance goals;


(7)           determine whether, to what extent,
and under what circumstances cash, Shares, other property and other amounts
payable with respect to an Award made under the Plan shall be deferred either
automatically or at the election of the Participant;


(8)           interpret and administer the Plan and
any instrument or agreement entered into under the Plan;


(9)           establish such rules and regulations
and appoint such agents as it shall deem appropriate for the proper
administration of the Plan; and


5

















 


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


(b)   Decisions of the Committee shall be final,
conclusive and binding on all Persons, including the Company, any Participant,
any stockholder and any Employee of the Company or any Affiliate.  A majority of the members of the Committee
may determine its actions and fix the time and place of its meetings.


(c)   Any authority granted to the Committee may
also be exercised by the full Board, 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) Section 16(b) of the Exchange Act or
cause an Award designated as a Qualified Performance-Based Award to not qualify
for, or cease to qualify for, the Section 162(m) Exemption.  To the extent that any permitted action
taken by the Board conflicts with any action taken by the Committee, the Board
action shall control.


(d)   The Committee may delegate to a committee
of one or more directors of the Company or, to the extent permitted by Delaware
law, to one or more officers or a committee of officers the right to grant
Awards to Employees who are not officers or directors of the Company.


(e)   Notwithstanding the foregoing or anything
else to the contrary in the Plan, any action or determination by the Committee
specifically affecting or relating to an Award to a  Director shall be approved and ratified by the full Board.


SECTION 4.    SHARES SUBJECT TO THE PLAN.


(a)   Subject to adjustment as provided in
Section 4(d), a total of 2,300,000 Shares shall be authorized for issuance under
the Plan; provided that if any Shares subject to an Award or to an award under
the Company’s Amended and Restated 1994 Employee Stock Option Plan or the
Amended and Restated 1994 Stock Option Plan for Non-Employee Directors (the
“Prior Plan”) are forfeited or if any Award or award under the Prior Plan based
on Shares is settled for cash, or expires or otherwise is terminated without
issuance of such Shares, the Shares subject to such Award shall, to the extent
of such cash settlement, forfeiture or termination, again be available for
Awards under the Plan.  In the event
that any Option or other Award granted hereunder is exercised through the
tendering of Shares (either actually or by attestation) or in the event that
withholding tax liabilities arising from such Option or other Award are
satisfied by the tendering of Shares or by the withholding of Shares by the
Company, only the number of Shares issued net of the Shares tendered or
withheld shall be counted for purposes of determining the maximum number of
Shares available for issuance under the Plan. 
In the event that any option or award granted under the Prior Plan is
exercised through the tendering of Shares or in the event that withholding tax
liabilities arising from such options or awards are satisfied by the tendering
of Shares or the withholding of Shares by the Company, the Shares so tendered
or withheld shall again be available for Awards under the Plan.  Shares reacquired by the Company on the open
market using the cash proceeds received by the Company from the exercise of
Options granted under the Plan or options granted under the Prior Plan that are
exercised after the effective date of the Plan shall be available for Awards
under the Plan.  In addition, Substitute
Awards shall not 


6

















 


reduce the Shares authorized
for issuance under the Plan or authorized for grant to a Participant in any
calendar year.


(b)   Any Shares issued hereunder may consist, in
whole or in part, of authorized and unissued Shares, treasury Shares or Shares
purchased in the open market or otherwise.


(c)   Subject to adjustment as provided in
Section 4(d), (1) the number of Shares that may be issued pursuant to Options
intended to qualify as Incentive Stock Options shall be 2,300,000 and (2) the
maximum number of Shares that may be issued under the Plan pursuant to Awards
other than Options and Stock Appreciation Rights shall be 575,000.


(d)   In the event of any change in corporate
capitalization, such as a stock dividend, stock split or reverse stock split,
or an extraordinary corporate transaction, such as any merger, reorganization,
consolidation, recapitalization, spin-off, separation or other distribution of
stock or property of the Company, 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 may
make such substitution or adjustments to reflect such change or transaction in
(i) the aggregate number and kind of shares reserved for issuance Awards under
the Plan (including specific limits applicable to Incentive Stock Options,
Restricted Stock Awards, Performance Awards, Other Stock Unit Awards and other
types of Awards), (ii) the limitation upon Options, Stock Appreciation Rights,
Restricted Stock Awards, Performance Awards and Performance Units to be granted
to any Participant in any specific period, to the extent such adjustment does
not cause any Qualified Performance-Based Award to fail to qualify for the
Section 162(m) Exemption, (iii) the number, kind and grant price of shares
subject to outstanding Options and Stock Appreciation Rights, (iv) the number
and kind of shares subject to other outstanding Awards granted under the Plan,
and/or such other equitable manner, in each case, as it may determine to be
appropriate in its sole discretion; provided, however, that the
number of Shares subject to any Award shall always be a whole number.


SECTION 5.    ELIGIBILITY.  Any Employee or  Director
shall be eligible to be selected as a Participant; provided, however,
that pursuant to Section 422 of the Code, Incentive Stock Options shall only be
awarded to employees of the Company and its Subsidiaries or “parent
corporation” (within the meaning of Section 424(f) of the Code).


SECTION 6.    STOCK OPTIONS.  Options may be granted hereunder to Participants either alone or
in addition to other Awards granted under the Plan.  Any Option granted under the Plan shall be evidenced by an Award
Agreement in such form as the Committee may from time to time approve.  Any such Option shall be subject to the
following terms and conditions and to such additional terms and conditions, not
inconsistent with the provisions of the Plan, as the Committee shall deem
desirable:


(a)   OPTION PRICE.


(1)           The purchase price per Share
purchasable under an Option shall be determined by the Committee in its sole
discretion on or before the date of grant; provided, however,
that except in the case of Substitute Awards or in connection with an 


 


7

















 


adjustment provided for
in Section 4(d), such purchase price of an Option shall not be less than the
Fair Market Value of a Share on the date of grant.


(2)           Except for adjustments pursuant to
Section 4(d) (relating to the adjustment of Shares), the purchase price for any
outstanding Option granted under the Plan may not be decreased after the date
of grant nor may an outstanding Option granted under the Plan be surrendered to
the Company as consideration for the grant of a new Option with a lower price.


(b)   OPTION PERIOD.  The term of each Option shall be fixed by the Committee in its
sole discretion and set forth in the Award Agreement; provided that no
Option shall be exercisable after the expiration of ten years from the date the
Option is granted.


(c)   EXERCISABILITY.  Options shall be exercisable at such time or times as determined
by the Committee at the time of grant (except as otherwise permitted under
Section 3(a)) or as set forth in Section 12.


(d)   METHOD OF EXERCISE.  Subject to the other provisions of the Plan,
any vested and exercisable Option may be exercised by the Participant in whole
or in part, at any time during the Option term, by giving written notice of
exercise to the Company specifying the number of Shares subject to the Option
to be purchased.  Such notice shall be
accompanied by payment in full of the purchase price by certified to bank check
or such other instrument as the Company may accept.


(1)           If approved by the Committee,
payment, in full or in part, may be made in the form of unrestricted Shares (by
delivery of such Shares or by attestation) already owned by the Participant of
the same class as the Shares subject to the Option based on the Fair Market Value
of the Shares on the date the Option is exercised; provided, however,
that in the case of an Incentive Stock Option, the right to make a payment in
the form of already owned Shares of the same class as the Shares subject to the
Option may be authorized only at the time the Option is granted; and provided,
further, that such already owned Shares have been held by the Participant
unencumbered for at least six months (or any shorter period sufficient to avoid
a charge to the Company’s earnings for financial reporting purposes).


(2)           Payment in full or in part may also
be made by delivering a properly executed exercise notice to the Company,
together with a copy of irrevocable instructions to a broker to deliver
promptly to the Company the amount of sale proceeds necessary to pay the
purchase price and, if requested, reduced by the amount of any federal, state,
local or foreign withholding and employment taxes, unless otherwise determined
by the Committee.  To facilitate the
foregoing, the Company may enter into agreements for coordinated procedures
with one or more brokerage firms.


(3)           In addition, if approved by the
Committee, payment in full or in part may also be made by instructing the
Committee to withhold a number of such Shares having a Fair Market Value on the
date of exercise equal to the aggregate exercise price of such Option (or
applicable portion thereof).


8

















 


(4)           No Shares shall be issued until full
payment therefor has been made.  Except
as otherwise provided in Sections 3(a)(7), 15(g) and 15(i), an optionee shall
have all of the rights of a shareholder of the Company holding the Shares
subject to such Option (including, if applicable, the right to vote the Shares
and the right to receive dividends), when the optionee has given written notice
of exercise, has paid in full for such Shares and, if requested by the Company,
has given the representation described in Section 14(i).


(e)   FORM OF SETTLEMENT.  In its sole discretion, the Committee may
provide, at the time of grant, that the Shares to be issued upon an Option’s
exercise shall be in the form of Restricted Stock or other similar securities,
or may reserve the right so to provide after the time of grant.


SECTION 7.    STOCK APPRECIATION RIGHTS.  Stock Appreciation Rights may be granted hereunder to
Participants either alone or in addition to other Awards granted under the Plan
and may, but need not, relate to a specific Option granted under Section
6.  The provisions of Stock Appreciation
Rights need not be the same with respect to each recipient.  Any Stock Appreciation Right related to a
Nonstatutory Stock Option may be granted at the same time such Option is
granted or at any time thereafter before exercise or expiration of such
Option.  Any Stock Appreciation Right
related to an Incentive Stock Option must be granted at the same time such
Option is granted.  In the case of any
Stock Appreciation Right related to any Option, the Stock Appreciation Right or
applicable portion thereof shall terminate and no longer be exercisable upon
the termination or exercise of the related Option, except that a Stock
Appreciation Right granted with respect to less than the full number of Shares
covered by a related Option shall not be reduced until the exercise or termination
of the related Option exceeds the number of Shares not covered by the Stock
Appreciation Right.  Any Option related
to any Stock Appreciation Right shall no longer be exercisable to the extent
the related Stock Appreciation Right has been exercised.  The Committee may impose such conditions or
restrictions on the exercise of any Stock Appreciation Right, as it shall deem
appropriate; provided that a Stock Appreciation Right, it shall not have a term
of greater than ten years.


SECTION 8.    RESTRICTED STOCK.


(a)   ISSUANCE. 
A Restricted Stock Award shall be subject to restrictions imposed by the
Committee during a period of time specified by the Committee (the “Restriction
Period”).  Restricted Stock Awards may
be issued hereunder to Participants, for no cash consideration or for such
minimum consideration as may be required by applicable law, either alone or in
addition to other Awards granted under the Plan.  The provisions of Restricted Stock Awards need not be the same
with respect to each recipient.  Except  with respect to Restricted Stock awarded
in lieu of bonuses or other  similar  awards, Restricted Stock Awards shall vest
over a minimum period of three years from the date of grant.


(b)   REGISTRATION.  Any Restricted Stock issued hereunder may be evidenced in such
manner, as the Committee, in its sole discretion, shall deem appropriate,
including, without limitation, book entry registration or issuance of a stock
certificate or certificates.  In the event
any stock certificates are issued in respect of shares of Restricted Stock
awarded under the Plan, such certificates shall be registered in the name of
the Participant and shall bear an appropriate 


9

















 


legend referring to the
terms, conditions and restrictions applicable to such Award.  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 the Award.


(c)   FORFEITURE.  Except as otherwise determined by the Committee at the time of
grant or thereafter, upon termination of employment or services for any reason
during the Restriction Period, all Shares of Restricted Stock still subject to
restriction shall be forfeited by the Participant and reacquired by the
Company.  Unrestricted Shares, evidenced
in such manner as the Committee shall deem appropriate, shall be issued to the
grantee promptly after expiration of the period of forfeiture, as determined or
modified by the Committee.


SECTION 9.    PERFORMANCE AWARDS.  Performance Awards may be issued hereunder to Participants, for
no cash consideration or for such minimum consideration as may be required by
applicable law, either alone or in addition to other Awards granted under the
Plan.  The performance criteria to be
achieved during any Performance Period and the length of the Performance Period
shall be determined by the Committee upon the grant of each Performance
Award.  Except as provided in Section
12, Performance Awards will be distributed only after the end of the relevant
Performance Period.  Performance Awards
may be paid in cash, Shares, other property, or any combination thereof, in the
sole discretion of the Committee at the time of payment.  The performance levels to be achieved for
each Performance Period and the amount of the Award to be distributed shall be
conclusively determined by the Committee. 
Performance Awards may be paid in a lump sum or in installments
following the close of the Performance Period or, in accordance with procedures
established by the Committee, on a deferred basis.


SECTION 10.    OTHER
STOCK UNIT AWARDS.


(a)   STOCK AND ADMINISTRATION.  Other Awards of Shares and other Awards that
are valued in whole or in part by reference to, or are otherwise based on,
Shares or other property (“Other Stock Unit Awards”) may be granted hereunder
to Participants, either alone or in addition to other Awards granted under the
Plan, and such other Stock Unit Awards shall also be available as a form of
payment in the settlement of other Awards granted under the Plan.  Other Stock Unit Awards may be paid in
Shares, cash or any other form of property, as the Committee shall
determine.  Subject to the provisions of
the Plan, the Committee shall have sole and complete authority to determine the
Employees of the Company and its Affiliates to whom and the time or times at
which such Awards shall be made, the number of Shares to be granted pursuant to
such Awards, and all other conditions of the Awards.  The provisions of Other Stock Unit Awards need not be the same
with respect to each recipient.


(b)   TERMS AND CONDITIONS.  Shares (including securities convertible
into Shares) subject to Awards granted under this Section 10 may be issued for
no cash consideration or for such minimum consideration as may be required by
applicable law.  Shares (including
securities convertible into Shares) purchased pursuant to a purchase right
awarded under this Section 10 shall be purchased for such consideration as the
Committee shall determine in its sole discretion, which, except in the case of
Substitute Awards, shall not be less than the Fair Market Value of such Shares
or other securities as of the date such purchase right is awarded.


10

















 


SECTION 11.
   DIRECTOR AWARDS


(a)   ELIGIBILITY; GRANTS.  Each Director who is elected to office for
the first time after March 1, 1994 shall automatically be a Participant.
Options will be granted in the following manner: (1) each Director who is
elected to office for the first time after January 31, 2002 shall automatically
be granted an Option to acquire 10,000 Shares under the Plan, effective as of
the date of such election; and (2) commencing with the annual meeting of the
Company’s stockholders to be held in June, 2003, each Director shall, on the
date of each such annual meeting, automatically be granted an Option to acquire
5,000 Shares under the Plan provided that such Director (a) has been in office
for at least six months at the time of such annual meeting and (b) will remain
in office following such annual meeting.


(b)   OPTION AGREEMENT.  Each Option granted under the Plan shall be evidenced by an Award
Agreement, which Award Agreements may but need not be identical and which shall
(1) comply with and be subject to the terms and conditions of the Plan and (2)
provide that the Director agrees to continue to serve as a director of the
Company during the term for which he or she was elected. Any Agreement may
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Board.


(c)   OPTION EXERCISE PRICE.  The purchase price per Share for an Option
granted under the Plan shall be the Fair Market Value (as hereinafter defined)
of a Share on the date on which such Option is granted or, if such date is not
a business day on which the Shares are traded, the next immediately preceding
trading day (the “Pricing Date”).


(d)   TIME AND MANNER OF EXERCISE OF OPTION


(1)           Each Option granted under Section
11(a)(1) shall become exercisable as follows: 50% of such Option shall become
exercisable on the first anniversary of the date of grant and 50% of such
Option shall become exercisable on the second anniversary of the date of grant.


(2)           Each Option granted under Sections
11(a)(2) shall become exercisable in full on the earlier of the first
anniversary of the date of grant or the date of the next annual meeting of the
Company to occur after the date of grant.


(3)           Options granted to Directors may be
exercised pursuant to the procedures set forth in Section 6(d).


(4)           Upon exercise of the Option, delivery
of a certificate for fully paid and non-assessable Shares shall be made at the
principal office of the Company to the person or persons exercising the Option
as soon as practicable (but in no event more than 30 days) after the date of
receipt of the notice of exercise by the Company, or at such time, place and
manner as may be agreed upon by the Company and the person or persons
exercising the Option.


(e)   TERM OF OPTIONS.  Each Option shall expire 10 years from the date of grant, but
shall be subject to earlier termination as follows:


11

















 


(1)           In the event of the death of a
Director, any Option granted to such Director may be exercised, to the extent
exercisable on the date of death pursuant to Section 11(a), by the estate of
such Director, or by any person or persons who acquired the right to exercise
such Option by will or by the laws of descent and distribution. Such Option may
be exercised at any time within 12 months after the date of death of such
Director or prior to the date on which the Option expires by its terms,
whichever is earlier.


(2)           In the event that a Director ceases
to be a director of the Company, other than by reason of his or her death, the
Option granted to such Director may be exercised, to the extent exercisable on
the date the Director ceases to be a director, for a period of 365 days after
such date, or prior to the date on which the Option expires by its terms,
whichever is earlier.


SECTION 12.    CHANGE IN CONTROL PROVISIONS.  Subject to Section 12(f) and notwithstanding
any other provision of the Plan to the contrary, unless the Committee shall
determine otherwise at the time of grant with respect to a particular Award, in
the event of a Change in Control:


(a)
any Options and Stock Appreciation Rights outstanding as of the date such
Change in Control is determined to have occurred, and which are not then
exercisable and vested, shall become fully exercisable and vested to the full
extent of the original grant;


(b)
the restrictions and deferral limitations applicable to any Restricted Stock
shall lapse, and such Restricted Stock shall become free of all restrictions
and limitations and become fully vested and transferable to the full extent of
the original grant;


(c)
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 immediately settled or distributed; and


(d)
the restrictions and deferral limitations and other conditions applicable to
any Other Stock Unit Awards or any other Awards shall lapse, and such Other
Stock Unit Awards or such other Awards shall become free of all restrictions,
limitations or conditions and become fully vested and transferable to the full
extent of the original grant.


(e)
The Committee may also make additional adjustments and/or settlements of
outstanding Awards as it deems appropriate and consistent with the Plan’s
purposes, including, without limitation, terminating fully-vested Options and
Stock Appreciation Rights immediately following a Change in Control (after
providing an opportunity for Participants to exercise such Awards) and/or
canceling an Option or Stock Appreciation Right if the price paid in connection
with such Change in Control is less than the grant price of such Award.


(f)
Notwithstanding the foregoing, if in the event of a Corporate Transaction or an
Asset Sale (in each case, that constitutes a Change in Control) in which the
successor company assumes or replaces an Option, Stock Appreciation Right,
Restricted Stock Award, Performance Award, or Other Stock Unit Award that is
held by an Employee, then each outstanding Option, Stock Appreciation Right,
Restricted Stock Award, Performance Award, or Other Stock Unit Award so assumed
or replaced shall not be accelerated as described above (unless otherwise 


 


12

















 


provided in the underlying
Award Agreement).  For the purposes of
this Section 12(f), an Award shall be considered assumed or replaced if
following such Change in Control the award confers the right to purchase or
receive, for each Share subject to the Award immediately prior to such Change
in Control, the consideration (whether stock, cash or other securities or
property) received in such Change in Control by holders of Shares for each
Share held on the effective date of the transaction (and if holders were
offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares); provided, however,
that if such consideration received in such Change in Control is not solely
common stock of the successor company, the Committee may, with the consent of
the successor company, provide that the consideration to be received with
respect to the Award, for each Share subject thereto, will be solely common
stock of the successor company substantially equal in fair market value to the
per share consideration received by holders of Shares in such Change in
Control.  The determination of such
substantial equality of value of consideration shall be made by the Committee
in its sole discretion and its determination shall be conclusive and binding.


SECTION 13.    CODE SECTION 162(m)
PROVISIONS.


(a)   Notwithstanding any other provision of the
Plan, if the Committee determines at the time Restricted Stock, a Performance
Award or an Other Stock Unit Award is granted to a Participant who is then an
officer that such Participant is, or is likely to be as of the end of the tax
year in which the Company would claim a tax deduction in connection with such
Award, a Covered Employee, then the Committee may provide that this Section 13
is applicable to such Award.


(b)   If Restricted Stock, a Performance Award or
an Other Stock Unit Award is subject to this Section 13, then the lapsing of restrictions
thereon and the distribution of cash, Shares or other property pursuant
thereto, as applicable, shall be subject to the achievement of one or more
objective performance goals established by the Committee, which shall be based
on the attainment of specified levels of one or any combination of the
following:  revenue, profit or cash
generation targets on an absolute and per share basis (including, but not
limited to, (1) earnings before interest and taxes, (2) earnings before
interest, taxes depreciation and amortization, (3) operating income, (4)
earnings per share, (5) cash flow, (6) gross margin percent and (7) operating
income as a percent of sales), market share targets, profitability targets as
measured through return ratios, such as return on average equity, return on net
assets employed, return on capital employed and total shareholder returns.  Such performance goals also may be based on
the achievement of specified levels of Company performance (or performance of
an applicable Affiliate or division of the Company) under one or more of the
measures described above relative to the performance of other corporations or
an index covering multiple companies. 
The measurement of performance goals may exclude impact of charges for
restructurings, discontinued operations, extraordinary items and other unusual
or non-recurring items, and the cumulative effects of accounting changes, each
as defined by generally accepted accounting principles.  Such performance goals shall be set by the
Committee within the time period prescribed by, and shall otherwise comply with
the requirements of, Section 162(m) of the Code, or any successor provision
thereto, and the regulations thereunder.


(c)   Notwithstanding any provision of the Plan
other than Section 12, with respect to any Restricted Stock, Performance Award
or Other Stock Unit Award that is subject to this 


13

















 


Section 13, the Committee
may adjust downwards, but not upwards, the amount payable pursuant to such
Award, and the Committee may not waive the achievement of the applicable
performance goals except in the case of the death or disability of the
Participant.


(d)   The Committee shall have the power to
impose such other restrictions on Awards subject to this Section 13 (“Qualified
Performance-Based Awards”) as it may deem necessary or appropriate to ensure
that such Awards satisfy all requirements for “performance-based compensation”
within the meaning of Section 162(m)(4)(C) of the Code, or any successor
provision thereto (the “Section 162(m) Exemption”).


(e)   Notwithstanding any provision of the Plan
other than Section 4(c), no Participant may be granted Options or Stock
Appreciation Rights during any three-year period with respect to more than
500,000 Shares, or Restricted Stock or Performance Awards subject to this
Section 13 that are denominated in Shares, in any three-year period with
respect to more than 250,000 Shares, and the maximum dollar value payable with
respect to Performance Units and/or Other Stock Unit Awards that are valued
with reference to property other than Shares and granted to any Participant in
any performance period is $1,000,000 times the number of years in such
performance period.


(f)   Except as provided in Section 13, the Committee
shall be authorized to make adjustments in performance award criteria or in the
terms and conditions of other Awards in recognition of changes in applicable
laws, regulations or accounting principles. 
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 it into effect. 
In the event that the Company shall assume outstanding employee benefit
awards or the right or obligation to make future such awards in connection with
the acquisition of or combination with another corporation or business entity,
the Committee may, in its discretion, make such adjustments in the terms of
Awards under the Plan as it shall deem appropriate.


SECTION 14.
   AMENDMENTS AND TERMINATION.


The Board may amend, alter, or discontinue
the Plan, but no amendment alteration or discontinuation shall be made which
would impair the rights of an optionee under a Stock Option or a recipient of a
Stock Appreciation Right, Restricted Stock Award, Performance Unit Award or
other stock-based Award theretofore granted without the optionee’s or
recipient’s consent, except such an amendment made to comply with applicable
law, stock exchange rules or accounting rules. In addition, no such amendment
shall be made without the approval of the Company’s stockholders to the extent
such approval is required by applicable law or stock exchange rules; provided,
however, that stockholder approval shall be required for any amendment (i)
which increases the maximum number of Shares for which Awards may be granted
under the Plan (subject, however, to the provisions of Section 4(d) hereof),
(ii) amends the provisions of Section 6(a)(2) (relating to Option repricing),
(iii) extends the period during which Stock Options may be granted beyond the
times originally prescribed, (iv) changes the persons eligible to participate
in the Plan, or (v) materially increases the benefits accruing to Participants
under the Plan.


14

















 


SECTION 15.    GENERAL PROVISIONS.


(a)   No Award, and no Shares
subject to Awards that have not been issued or as to which any applicable
restriction, performance or deferral period has not lapsed, may be sold,
assigned, transferred, pledged or otherwise encumbered, except by will or by
the laws of descent and distribution; provided, however, that, if
so determined by the Committee, a Participant may, in the manner established by
the Committee, designate a beneficiary to exercise the rights of the
Participant with respect to any Award upon the death of the Participant.  Each 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.  Notwithstanding the foregoing, and subject
to Section 422 of the Code, the Committee, in its sole discretion, may permit a
Participant to assign or transfer an Award to a Family Member; provided,
however, that an Award so assigned or transferred shall be subject to
all the terms and conditions of the Plan and the instrument evidencing the
Award.


(b)   No Employee or Participant shall have any
claim to be granted any Award under the Plan, and there is no obligation for
uniformity of treatment of Employees or Participants under the Plan.


(c)   The prospective recipient of any Award
under the Plan shall not, with respect to such Award, be deemed to have become
a Participant, or to have any rights with respect to such Award, until and unless
such recipient shall have executed an agreement or other instrument evidencing
the Award and delivered a copy thereof to the Company, and otherwise complied
with the then applicable terms and conditions.


(d)   Nothing in the Plan or any Award granted
under the Plan shall be deemed to constitute an employment or service contract
or confer or be deemed to confer on any Participant any right to continue in
the employ or service of, or to continue any other relationship with, the
Company or any Affiliate or limit in any way the right of the Company or any
Affiliate to terminate a Participant’s employment or service or other
relationship at any time, with or without cause.  For purposes of clarification, Awards granted under the Plan
shall not guarantee employment or service for the length of any portion of the
vesting schedule of any Award.


(e)   The Committee shall have full power and
authority to determine whether an outstanding Awards to any Participant shall
be canceled if the Participant, without the consent of the Company, while
employed by the Company or after termination of such employment or service,
establishes a relationship with a competitor of the Company or engages in
activity that is materially in conflict with or adverse to the interest of the
Company, as determined by the Company.


(f)   The Company shall be authorized to withhold
from any Award granted or payment due under the Plan the amount of withholding
taxes due in respect of an Award or payment hereunder and to take such other
action as may be necessary in the opinion of the Company to satisfy all
obligations for the payment of such taxes. 
The Committee shall be authorized to establish procedures for election
by Participants to satisfy such obligation for the payment of such taxes by delivery
of or transfer of Shares to the Company (up to the employer’s minimum required
tax withholding rate to the extent the Participant has owned the surrendered
Shares for 


15

















 


less than six months if such
a limitation is necessary to avoid a charge to the Company for financial
reporting purposes), or by directing the Company to retain Shares (up to the
employer’s minimum required tax withholding rate) otherwise deliverable in
connection with the Award.


(g)   The Committee shall be authorized to
establish procedures pursuant to which the payment of any Award may be
deferred.  Subject to the provisions of
the Plan and any Award Agreement, the recipient of an Award (including, without
limitation, any deferred Award) may, if so determined by the Committee, be
entitled to receive, currently or on a deferred basis, cash dividends, or cash
payments in amounts equivalent to cash dividends on Shares (“dividend
equivalents”) with respect to the number of Shares covered by the Award, as
determined by the Committee, in its sole discretion, and the Committee may
provide that such amounts (if any) shall be deemed to have been reinvested in
additional Shares or otherwise reinvested.


(h)   Except as otherwise required in any
applicable Award Agreement or by the terms of the Plan, recipients of Awards
under the Plan shall not be required to make any payment or provide
consideration other than the rendering of services.


(i)   The Committee may require each person
purchasing or receiving Shares pursuant to an Award to represent to and agree
with the Company in writing that such person is acquiring the Shares without a
view to the distribution thereof.  The
certificates for such Shares may include any legend which the Committee deems
appropriate to reflect any restrictions on transfer.  Notwithstanding any other provision of the Plan or agreements
made pursuant thereto, the Company shall not be required to issue or deliver
any certificate or certificates for Shares under the Plan prior to fulfillment
of all of the following conditions:


(1)           listing or approval for listing upon
notice of issuance of such Shares on the New York Stock Exchange, or such other
securities exchange as may at the time be the principal market for the Shares;


(2)           any registration or other
qualification of such Shares under any state of federal law or regulation, or
the maintaining in effect of any such registration or other qualification which
the Committee shall, in its absolute discretion upon the advice of counsel,
deem necessary or advisable;


(3)           obtaining any other consent,
approval, or permit from any state or federal governmental agency which the
Committee shall, in its absolute discretion after receiving the advice of
counsel, determine to be necessary or advisable.


(j)   Nothing contained in the Plan shall prevent
the Board from adopting other or additional compensation arrangements, subject
to stockholder approval if such approval is required; and such arrangements may
be either generally applicable or applicable only in specific cases.


(k)   The validity, construction and effect of
the Plan and any rules and regulations relating to the Plan shall be determined
in accordance with the laws of the State of Delaware and applicable federal
law.


16

















 


(l)   If any provision of the Plan is or becomes
or is deemed 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 construed or deemed amended without, in the
determination of the Committee, materially altering the intent of the Plan, it
shall be stricken and the remainder of the Plan shall remain in full force and
effect.


(m)   Awards may be granted to Participants who
are foreign nationals or employed outside the United States, or both, on such
terms and conditions different from those applicable to Awards to Employees
employed in the United States as may, in the judgment of the Committee, be
necessary or desirable in order to recognize differences in local law or tax
policy.  The Committee also may impose
conditions on the exercise or vesting of Awards in order to minimize the
Company’s obligation with respect to tax equalization for Employees on
assignments outside their home country.


(n)   It is presently intended that the Plan
constitute an “unfunded” plan for incentive and deferred compensation.  The Committee may authorize the creation or
trusts or other arrangements to meet the obligations created under the Plan to
deliver Shares or make payments; provided, however, that unless
the Committee otherwise determines, the existence of such trusts or other
arrangements is consistent with the “unfounded” status of the Plan.


(o)   In the case of a grant of an Award to any
Employee of a Subsidiary of the Company, the Company may, if the Committee so
directs, issue or transfer the Shares, if any, covered by the Award to the
Subsidiary, for such lawful consideration as the Committee may specify, upon
the condition or understanding the Subsidiary will transfer the Shares to the
employee in accordance with the terms of the Award specified by the Committee
pursuant to the provisions of the Plan. 
All Shares underlying Awards that are forfeited or canceled should
revert to the Company.


SECTION 16.
   EFFECTIVE DATE OF PLAN.  The Plan shall be effective as of June 4, 2003, subject to the
approval of at least a majority of the outstanding Shares.


SECTION 17.
   TERM OF PLAN.  The Plan will terminate on the tenth anniversary  of the effective date of the Plan.  Awards outstanding under the Plan as of such
date shall not be affected or impaired by the termination of the Plan.


17