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                             SCHOOL SPECIALTY, INC.
                           1998 STOCK INCENTIVE PLAN
 
PURPOSE
 
    SCHOOL SPECIALTY, INC., a Delaware corporation (the "COMPANY"), wishes to
recruit, reward, and retain employees and outside directors. To further these
objectives, the Company hereby sets forth the School Specialty, Inc. 1998 Stock
Incentive Plan (the "PLAN") to provide options ("OPTIONS") or direct grants
("STOCK GRANTS" and, together with the Options, "AWARDS") to employees and
outside directors with respect to shares of the Company's common stock (the
"COMMON STOCK"). The Plan is effective as of the effective date (the "EFFECTIVE
DATE") of the Company's registration under Section 12 of the Securities Exchange
Act of 1934 (the "EXCHANGE ACT") with respect to its initial public offering
("IPO").
 
PARTICIPANTS
 
    All Employees of the Company and any Eligible Subsidiaries are eligible for
Options and Stock Grants under this Plan, as are the directors of the Company
and the Eligible Subsidiaries who are not employees ("ELIGIBLE DIRECTORS").
Eligible employees and directors become "OPTIONEES" when the Administrator
grants them an option under this Plan or "RECIPIENTS" when they receive a direct
grant of Common Stock. (Optionees and recipients are referred to collectively as
"PARTICIPANTS." The term PARTICIPANT also includes, where appropriate, a person
authorized to exercise an Award in place of the original optionee.) The
Administrator may also grant Options or make Stock Grants to consultants and
other service providers.
 
       EMPLOYEE means any person employed as a common law employee of the
       Company or an Eligible Subsidiary.
 
ADMINISTRATOR
 
    The ADMINISTRATOR will be the Compensation Committee of the Board of
Directors of the Company (the "COMPENSATION COMMITTEE"), unless the board
specifies another committee. The Board may also act under the Plan as though it
were the Compensation Committee. The Board of Directors of U.S. Office Products
Company ("U.S. OFFICE PRODUCTS"), directly or through a committee of directors,
may act as Administrator before U.S. Office Products distributes the Common
Stock to U.S. Office Products' stockholders (the "DISTRIBUTION").
 
       The Administrator is responsible for the general operation and
       administration of the Plan and for carrying out its provisions and has
       full discretion in interpreting and administering the provisions of the
       Plan. Subject to the express provisions of the Plan, the Administrator
       may exercise such powers and authority of the Board as the Administrator
       may find necessary or appropriate to carry out its functions. The
       Administrator may delegate its functions (other than those described in
       the GRANTING OF AWARDS section) to officers or other employees of the
       Company.
 
       The Administrator's powers will include, but not be limited to, the power
       to amend, waive, or extend any provision or limitation of any Award. The
       Administrator may act through meetings of a majority of its members or by
       unanimous consent.
 
GRANTING OF AWARDS
 
    Subject to the terms of the Plan, the Administrator will, in its sole
discretion, determine
 
       the participants who receive Awards,
 
       the terms of such Awards,
 
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       the schedule for exercisability or nonforfeitability (including any
       requirements that the participant or the Company satisfy performance
       criteria),
 
       the time and conditions for expiration of the Award, and
 
       the form of payment due upon exercise, if any.
 
    The Administrator's determinations under the Plan need not be uniform and
need not consider whether possible participants are similarly situated.
 
    Options granted to employees may be nonqualified stock options ("NQSOS") or
"incentive stock options" ("ISOS") within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended from time to time (the "CODE"), or the
corresponding provision of any subsequently enacted tax statute. Options granted
to Eligible Directors, including Formula Options, must be NQSOs. The
Administrator will not grant ISOs unless the stockholders either have already
approved the granting of ISOs or give such approval within 12 months after the
grant.
 
    The Administrator may impose such conditions on or charge such price for the
Stock Grants as it deems appropriate.
 
    SUBSTITUTIONS.  The Administrator may also grant awards in substitution for
options or other equity interests held by individuals (i) as a result of their
employment by or services to U.S. Office Products before the Distribution or
(ii) who become Employees of the Company or of an Eligible Subsidiary as a
result of the Company's acquiring or merging with the individual's employer or
acquiring its assets. If necessary to conform the Awards to the interests for
which they are substitutes, the Administrator may grant substitute Awards under
terms and conditions that vary from those the Plan otherwise requires. Awards in
substitution for U.S. Office Products' options in connection with the
Distribution will retain their pre-Distribution exercise schedule and terms
(including Change of Control provisions) and expiration date.
 
DIRECTOR FORMULA OPTIONS
 
    Each Eligible Director will receive a formula stock option ("FORMULA
OPTION") as of the Effective Date with respect to 15,000 shares of Common Stock,
as will each Eligible Director later appointed or elected to the Board (with the
grant made as of the date of his first election or appointment). Each Eligible
Director serving on the Board at each annual meeting of the Company's
shareholders (beginning with the meeting at least six months after the Effective
Date of the IPO) will receive a Formula Option as of that meeting with respect
to 5,000 shares of Common Stock. The Exercise Price for Formula Options will be
the Fair Market Value on the Date of Grant.
 
    EXERCISE SCHEDULE  Unless the Administrator specifies otherwise, each
Formula Option will become exercisable as to 20% of the covered shares on the
first anniversary of its Date of Grant, an additional 30% on the second
anniversary, and the remaining 50% on or after the third anniversary. A Formula
Option will become exercisable in its entirety upon the director's death,
disability, or attainment of age 70. Options will be forfeited to the extent
they are not then exercisable if a director resigns or fails to be reelected as
a director.
 
DATE OF GRANT
 
    The DATE OF GRANT will be the date as of which this Plan or the
Administrator grants an Award to a participant, as specified in the Plan or in
the Administrator's minutes.
 
EXERCISE PRICE
 
    The EXERCISE PRICE is the value of the consideration that a participant must
provide in exchange for one share of Common Stock. The Administrator will
determine the Exercise Price under each Award and may
 
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set the Exercise Price without regard to the Exercise Price of any other Awards
granted at the same or any other time. The Company may use the consideration it
receives from the participant for general corporate purposes.
 
        The Exercise Price per share for NQSOs may not be less than 100% of the
    Fair Market Value of a share on the Date of Grant. If an Option is intended
    to be an ISO, the Exercise Price per share may not be less than 100% of the
    Fair Market Value (on the Date of Grant) of a share of Common Stock covered
    by the Option; PROVIDED, HOWEVER, that if the Administrator decides to grant
    an ISO to someone covered by Sections 422(b)(6) and 424(d) (as a
    more-than-10%-stock-owner), the Exercise Price of the Option must be at
    least 110% of the Fair Market Value (on the Date of Grant).
 
        The Administrator may satisfy any state law requirements regarding
    adequate consideration for Stock Grants by (i) issuing Common Stock held as
    treasury stock or (ii) charging the recipients at least the par value for
    the shares covered by the Stock Grant. The Administrator may designate that
    a recipient may satisfy (ii) either by direct payments or by the
    Administrator's withholding from other payments due to the recipient.
 
    FAIR MARKET VALUE
 
    FAIR MARKET VALUE OF A SHARE OF COMMON STOCK FOR PURPOSES OF THE PLAN WILL
BE DETERMINED AS FOLLOWS:
 
        if the Common Stock trades on a national securities exchange, the
    closing sale price on that date;
 
        if the Common Stock does not trade on any such exchange, the closing
    sale price as reported by the National Association of Securities Dealers,
    Inc. Automated Quotation System ("Nasdaq") for such date;
 
        if no such closing sale price information is available, the average of
    the closing bid and asked prices that Nasdaq reports for such date; or
 
        if there are no such closing bid and asked prices, the average of the
    closing bid and asked prices as reported by any other commercial service for
    such date.
 
    For any date that is not a trading day, the Fair Market Value of a share of
    Common Stock for such date shall be determined by using the closing sale
    price or the average of the closing bid and asked prices, as appropriate,
    for the immediately preceding trading day.
 
    The Fair Market Value will be deemed equal to the IPO price for any Options
    granted as of the date on which the IPO's underwriters price the IPO or
    granted on the following day before trading opens in the Common Stock.
 
EXERCISABILITY
 
        The Administrator will determine the times and conditions for the
    exercise of or purchase under each Award but may not extend the period for
    exercise beyond the tenth anniversary of its Date of Grant (or five years
    for ISOs granted to 10% owners covered by Code Sections 422(b)(6) and
    424(d)).
 
    Awards will become exercisable at such times and in such manner as the
    Administrator determines and the Award agreement, if any, indicates;
    PROVIDED, HOWEVER, that the Administrator may, on such terms and conditions
    as it determines appropriate, accelerate the time at which the participant
    may exercise any portion of an Award or at which restrictions on Stock
    Grants lapse. For Stock Grants, "exercise" refers to acceptance of the Award
    or lapse of restrictions, as appropriate in context.
 
    If the Administrator does not specify otherwise, Options will become
    exercisable and restrictions on Stock Grants will lapse as to one-fourth of
    the covered shares on each of the first four anniversaries of the Date of
    Grant.
 
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    No portion of an Award that is unexercisable at a participant's termination
    of employment will thereafter become exercisable, unless the Award Agreement
    provides otherwise, either initially or by amendment.
 
CHANGE OF CONTROL
 
        Upon a Change of Control (as defined below), all Options held by current
    Employees and directors will become fully exercisable and all restrictions
    on Stock Grants will lapse. A CHANGE OF CONTROL for this purpose means the
    occurrence, after the Company's IPO, of any one or more of the following
    events:
 
       a person, entity, or group (other than the Company, any Company
       subsidiary, any Company benefit plan, or any underwriter temporarily
       holding securities for an offering of such securities) acquires ownership
       of more than 50% of the undiluted total voting power of the Company's
       then-outstanding securities eligible to vote to elect members of the
       Board ("COMPANY VOTING SECURITIES");
 
       consummation of a merger or consolidation of the Company into any other
       entity--unless the holders of the Company Voting Securities outstanding
       immediately before such consummation, together with any trustee or other
       fiduciary holding securities under a Company benefit plan, hold
       securities that represent immediately after such merger or consolidation
       at least 50% of the combined voting power of the then outstanding voting
       securities of either the Company or the other surviving entity or its
       parent; or

       the stockholders of the Company approve (i) a plan of complete
       liquidation or dissolution of the Company or (ii) an agreement for the
       Company's sale or disposition of all or substantially all the Company's
       assets, AND such liquidation, dissolution, sale, or disposition is
       consummated.
 
       Even if other tests are met, a Change of Control has not occurred under
       any circumstance in which the Company files for bankruptcy protection or
       is reorganized following a bankruptcy filing.
 
    The ADJUSTMENT UPON CHANGES IN CAPITAL STOCK provisions will also apply if
    the Change of Control is a SUBSTANTIAL CORPORATE CHANGE (as defined in those
    provisions).
 
LIMITATION ON ISOS
 
        An Option granted to an employee will be an ISO only to the extent that
    the aggregate Fair Market Value (determined at the Date of Grant) of the
    stock with respect to which ISOs are exercisable for the first time by the
    optionee during any calendar year (under the Plan and all other plans of the
    Company and its subsidiary corporations, within the meaning of Code Section
    422(d)), does not exceed $100,000. This limitation applies to Options in the
    order in which such Options were granted. If, by design or operation, the
    Option exceeds this limit, the excess will be treated as an NQSO.
 
METHOD OF EXERCISE
 
    To exercise any exercisable portion of an Award, the participant must:
 
    Deliver a written notice of exercise to the Secretary of the Company (or to
whomever the Administrator designates), in a form complying with any rules the
Administrator may issue, signed by the participant, and specifying the number of
shares of Common Stock underlying the portion of the Award the participant is
exercising;
 
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    Pay the full Exercise Price, if any, by cashier's or certified check for the
shares of Common Stock with respect to which the Award is being exercised,
unless the Administrator consents to another form of payment (which could
include the use of Common Stock); and
 
    Deliver to the Administrator such representations and documents as the
Administrator, in its sole discretion, may consider necessary or advisable.
 
    Payment in full of the Exercise Price need not accompany the written notice
of exercise provided the notice directs that the stock certificates for the
shares issued upon the exercise be delivered to a licensed broker acceptable to
the Company as the agent for the individual exercising the option and at the
time the stock certificates are delivered to the broker, the broker will tender
to the Company cash or cash equivalents acceptable to the Company and equal to
the Exercise Price.
 
    If the Administrator agrees to allow an optionee to pay through tendering
Common Stock to the Company, the individual can only tender stock he has held
for at least six months at the time of surrender. Shares of stock offered as
payment will be valued, for purposes of determining the extent to which the
participant has paid the Exercise Price, at their Fair Market Value on the date
of exercise. The Administrator may also, in its discretion, accept attestation
of ownership of Common Stock and issue a net number of shares upon Option
exercise.
 
AWARD EXPIRATION
 
    No one may exercise an Award more than ten years after its Date of Grant (or
five years, for an ISO granted to a more-than-10% shareholder). Unless the Award
Agreement provides otherwise, either initially or by amendment, no one may
exercise an Award after the first to occur of:
 
    EMPLOYMENT TERMINATION  The 90th day after the date of termination of
employment (other than for death or Disability), where termination of employment
means the time when the employer-employee or other service-providing
relationship between the employee and the Company ends for any reason, including
retirement. Unless the Award Agreement provides otherwise, termination of
employment does not include instances in which the Company immediately rehires a
common law employee as an independent contractor. The Administrator, in its sole
discretion, will determine all questions of whether particular terminations or
leaves of absence are terminations of employment;
 
    DISABILITY  For disability, the earlier of (i) the first anniversary of the
participant's termination of employment for disability and (ii) 30 days after
the participant no longer has a disability, where "DISABILITY" means the
inability to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment that can be expected to
result in death or that has lasted or can be expected to last for a continuous
period of not less than twelve months; or
 
    DEATH  The date 24 months after the participant's death.
 
    If exercise is permitted after termination of employment, the Award will
nevertheless expire as of the date that the former service provider violates any
covenant not to compete in effect between the Company and the former employee.
In addition, an optionee who exercises an Option more than 90 days after
termination of employment with the Company and/or the Eligible Subsidiaries will
only receive ISO treatment to the extent permitted by law, and becoming or
remaining an employee of another related company (that is not an Eligible
Subsidiary) or an independent contractor to the Company will not prevent loss of
ISO status because of the formal termination of employment.
 
    Nothing in this Plan extends the term of an Award beyond the tenth
anniversary of its Date of Grant, nor does anything in this AWARD EXPIRATION
section make an Award exercisable that has not otherwise become exercisable.
 
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AWARD AGREEMENT
 
    Award Agreements will set forth the terms of each Award and will include
such terms and conditions, consistent with the Plan, as the Administrator may
determine are necessary or advisable. To the extent the agreement is
inconsistent with the Plan, the Plan will govern. The Award Agreements may
contain special rules. The Administrator may, but is not required to, issue
agreements for Stock Grants.
 
STOCK SUBJECT TO PLAN
 
    Except as adjusted below under CORPORATE CHANGES, the aggregate number of
shares of Common Stock that may be issued under the Awards (whether ISOs, NQSOs,
or Stock Grants) may not exceed 20% percent of the total number of shares of
Common Stock outstanding, determined immediately after the grant of the Award;

             the maximum number of shares that may be subject to ISOs may not 
             exceed 600,000;

             and the maximum number of shares that may be granted under Awards 
             for a single individual in a calendar year may not exceed 
             1,200,000. (The individual maximum applies only to Awards first 
             made under this Plan and not to Awards made in substitution of a 
             prior employer's options or other incentives, except as Code 
             Section 162(m) otherwise requires.)
 
    The Common Stock will come from either authorized but unissued shares or
from previously issued shares that the Company reacquires, including shares it
purchases on the open market. If any Award expires, is canceled, or terminates
for any other reason, the shares of the Common Stock available under that Award
will again be available for the granting of new Awards (but will be counted
against that calendar year's limit for a given individual).
 
    No adjustment will be made for a dividend or other right for which the
record date precedes the date of exercise.
 
    The participant will have no rights of a stockholder with respect to the
shares of stock subject to an Award except to the extent that the Company has
issued certificates for, or otherwise confirmed ownership of, such shares upon
the exercise of the Award.
 
    The Company will not issue fractional shares pursuant to the exercise of an
Award, but the Administrator may, in its discretion, direct the Company to make
a cash payment in lieu of fractional shares.
 
PERSON WHO MAY EXERCISE
 
    During the participant's lifetime, only the participant or his duly
appointed guardian or personal representative may exercise the Awards. After his
death, his personal representative or any other person authorized under a will
or under the laws of descent and distribution may exercise any then exercisable
portion of an Award. If someone other than the original recipient seeks to
exercise any portion of an Award, the Administrator may request such proof as it
may consider necessary or appropriate of the person's right to exercise the
Award.
 
ADJUSTMENTS UPON CHANGES IN CAPITAL STOCK
 
    Subject to any required action by the Company (which it shall promptly take)
or its stockholders, and subject to the provisions of applicable corporate law,
if, after the Date of Grant of an Award, 

             the outstanding shares of Common Stock increase or decrease or 
             change into or are exchanged for a different number or kind of 
             security because of any recapitalization, reclassification, stock 
             split, reverse stock split, combination of shares, exchange of 
             shares, stock dividend, or other distribution payable in capital 
             stock, or 

             some other increase or decrease in such Common Stock occurs without
             the Company's receiving consideration, the Administrator may make a
             proportionate and appropriate adjustment in the number of shares of
             Common Stock underlying each Award, so that proportionate interest 
             of the participant immediately following such event will, to the 
             extent practicable, be the same as immediately before such event. 
             (This
 
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             adjustment does not apply to Common Stock that the optionee has 
             already purchased nor to Stock Grants that are already 
             nonforfeitable, except to the extent of similar treatment for most
             stockholders.) Unless the Administrator determines another 
             method would be appropriate, any such adjustment to an Award 
             will not change the total price with respect to shares of Common 
             Stock underlying the unexercised portion of the Award but will 
             include a corresponding proportionate adjustment in the Award's 
             Exercise Price.
 
    The Administrator will make a commensurate change to the maximum number and
kind of shares provided in the Stock Subject to Plan section.
 
    Any issue by the Company of any class of preferred stock, or securities
convertible into shares of common or preferred stock of any class, will not
affect, and no adjustment by reason thereof will be made with respect to, the
number of shares of Common Stock subject to any Award or the Exercise Price
except as this ADJUSTMENTS section specifically provides. The grant of an Award
under the Plan will not affect in any way the right or power of the Company to
make adjustments, reclassifications, reorganizations or changes of its capital
or business structure, or to merge or to consolidate, or to dissolve, liquidate,
sell, or transfer all or any part of its business or assets.
 
SUBSTANTIAL CORPORATE CHANGE
 
    Upon a SUBSTANTIAL CORPORATE CHANGE, the Plan and any unexercised Awards
will terminate unless provision is made in writing in connection with such
transaction for 

             the assumption or continuation of outstanding Awards, or 

             the substitution for such options or grants of any options or 
             grants covering the stock or securities of a successor employer 
             corporation, or a parent or subsidiary of such successor, with 
             appropriate adjustments as to the number and kind of shares of 
             stock and prices, in which event the Awards will continue in the 
             manner and under the terms so provided.
 
    Unless the Board determines otherwise, if an Award would otherwise terminate
under the preceding sentence, participants who are then employees or directors
of the Company will have the right, at such time before the consummation of the
transaction causing such termination as the Board reasonably designates, to
exercise any unexercised portions of the Award, whether or not they had
previously become exercisable. However, unless the Board determines otherwise,
the acceleration will not occur if it would render unavailable "pooling of
interest" accounting for any reorganization, merger, or consolidation of the
Company.
 
    A SUBSTANTIAL CORPORATE CHANGE means the 

             dissolution or liquidation of the Company, 

             merger, consolidation, or reorganization of the Company with one 
             or more corporations in which the Company is not the surviving 
             corporation, 

             the sale of substantially all of the assets of the Company to 
             another corporation, or 

             any transaction (including a merger or reorganization in which the
             Company survives) approved by the Board that results in any person
             or entity (other than any affiliate of the Company as defined in 
             Rule 144(a)(1) under the Securities Act, any Company Subsidiary, 
             any Company benefit plan, or any underwriter temporarily holding 
             securities for an offering of such securities) owning 100% of 
             the combined voting power of all classes of stock of the Company.
 
SUBSIDIARY EMPLOYEES
 
    Employees of Company Subsidiaries will be entitled to participate in the
Plan, except as otherwise designated by the Board of Directors or the Committee.
 
    Eligible Subsidiary means each of the Company's Subsidiaries, except as the
Board otherwise specifies. For ISO grants, SUBSIDIARY means any corporation
(other than the Company) in an unbroken chain of corporations beginning with the
Company if, at the time an ISO is granted to a Participant under the Plan, each
corporation (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 another corporation in such chain. For ISO purposes, SUBSIDIARY also
includes a single-member limited liability company included
 
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within the chain described in the preceding sentence. For NQSOs, the Board or
the Administrator can use a different definition of Subsidiary in its
discretion.
 
LEGAL COMPLIANCE
 
    The Company will not issue any shares of Common Stock under an Award until
all applicable requirements imposed by Federal and state securities and other
laws, rules and regulations, and by any applicable regulatory agencies or stock
exchanges, have been fully met. To that end, the Company may require the
participant to take any reasonable action to comply with such requirements
before issuing such shares. No provision in the Plan or action taken under it
authorizes any action that is otherwise prohibited by Federal or state laws.
 
    The Plan is intended to conform to the extent necessary with all provisions
of the Securities Act of 1933 ("SECURITIES ACT") and the Securities Exchange Act
of 1934 and all regulations and rules the Securities and Exchange Commission
issues under those laws. Notwithstanding anything in the Plan to the contrary,
the Administrator must administer the Plan, and Awards may be granted and
exercised, only in a way that conforms to such laws, rules, and regulations. To
the extent permitted by applicable law, the Plan and any Awards will be deemed
amended to the extent necessary to conform to such laws, rules, and regulations.
 
PURCHASE FOR INVESTMENT AND OTHER RESTRICTIONS
 
    Unless a registration statement under the Securities Act covers the shares
of Common Stock a participant receives upon exercise of his Award, the
Administrator may require, at the time of such exercise or receipt of a grant,
that the participant agree in writing to acquire such shares for investment and
not for public resale or distribution, unless and until the shares subject to
the Award are registered under the Securities Act. Unless the shares are
registered under the Securities Act, the participant must acknowledge:
 
        that the shares purchased on exercise of the Award are not so
    registered,
 
        that the participant may not sell or otherwise transfer the shares
    unless
 
           the shares have been registered under the Securities Act in
           connection with the sale or transfer thereof, or
 
           counsel satisfactory to the Company has issued an opinion
           satisfactory to the Company that the sale or other transfer of such
           shares is exempt from registration under the Securities Act, and
 
           such sale or transfer complies with all other applicable laws, rules,
           and regulations, including all applicable Federal and state
           securities laws, rules, and regulations.
 
    Additionally, the Common Stock, when issued upon the exercise of an Award,
will be subject to any other transfer restrictions, rights of first refusal, and
rights of repurchase set forth in or incorporated by reference into other
applicable documents, including the Company's articles or certificate of
incorporation, by-laws, or generally applicable stockholders' agreements.
 
    The Administrator may, in its sole discretion, take whatever additional
actions it deems appropriate to comply with such restrictions and applicable
laws, including placing legends on certificates and issuing stop-transfer orders
to transfer agents and registrars.
 
TAX WITHHOLDING
 
    The participant must satisfy all applicable Federal, state, and local income
and employment tax withholding requirements before the Company will deliver
stock certificates upon the exercise of an Award. The Company may decide to
satisfy the withholding obligations through additional withholding on
 
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salary or wages. If the Company does not or cannot withhold from other
compensation, the participant must pay the Company, with a cashier's check or
certified check, the full amounts required by withholding. Payment of
withholding obligations is due before the Company issues shares with respect to
the Award. If the Administrator so determines, the participant may instead
satisfy the withholding obligations by directing the Company to retain shares
from the Award exercise, by tendering previously owned shares, or by attesting
to his ownership of shares (with the distribution of net shares).
 
TRANSFERS, ASSIGNMENTS, AND PLEDGES
 
    Unless the Administrator otherwise approves in advance in writing for estate
planning or other purposes, an Award may not be assigned, pledged, or otherwise
transferred in any way, whether by operation of law or otherwise or through any
legal or equitable proceedings (including bankruptcy), by the participant to any
person, except by will or by operation of applicable laws of descent and
distribution. If Rule 16b-3 then applies to an Award, the participant may not
transfer or pledge shares of Common Stock acquired under a Stock Grant or upon
exercise of an Option until at least six months have elapsed from (but
excluding) the Date of Grant, unless the Administrator approves otherwise in
advance in writing. The Administrator may, in its discretion, expressly provide
that a participant may transfer his Award without receiving consideration to (i)
members of his immediate family (children, grandchildren, or spouse); (ii)
trusts for the benefit of such family members; or (iii) partnerships where the
only partners are such family members.
 
AMENDMENT OR TERMINATION OF PLAN AND OPTIONS
 
    The Board may amend, suspend, or terminate the Plan at any time, without the
consent of the participants or their beneficiaries; PROVIDED, HOWEVER, that no
amendment will deprive any participant or beneficiary of any previously declared
Award. Except as required by law or by the CORPORATE CHANGES section, the
Administrator may not, without the participant's or beneficiary's consent,
modify the terms and conditions of an Award so as to adversely affect the
participant. No amendment, suspension, or termination of the Plan will, without
the participant's or beneficiary's consent, terminate or adversely affect any
right or obligations under any outstanding Awards.
 
PRIVILEGES OF STOCK OWNERSHIP
 
    No participant and no beneficiary or other person claiming under or through
such participant will have any right, title, or interest in or to any shares of
Common Stock allocated or reserved under the Plan or subject to any Award except
as to such shares of Common Stock, if any, already issued to such participant.
 
EFFECT ON OTHER PLANS
 
    Whether exercising or receiving an Award causes the participant to accrue or
receive additional benefits under any pension or other plan is governed solely
by the terms of such other plan.
 
LIMITATIONS ON LIABILITY
 
    Notwithstanding any other provisions of the Plan, no individual acting as a
director, employee, or agent of the Company shall be liable to any participant,
former participant, spouse, beneficiary, or any other person for any claim,
loss, liability, or expense incurred in connection with the Plan, nor shall such
individual be personally liable because of any contract or other instrument he
executes in such other capacity. The Company will indemnify and hold harmless
each director, employee, or agent of the Company to whom any duty or power
relating to the administration or interpretation of the Plan has been or will be
delegated, against any cost or expense (including attorneys' fees) or liability
(including any sum
 
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paid in settlement of a claim with the Board's approval) arising out of any act
or omission to act concerning
this Plan unless arising out of such person's own fraud or bad faith.
 
NO EMPLOYMENT CONTRACT
 
    Nothing contained in this Plan constitutes an employment contract between
the Company and the participants. The Plan does not give any participant any
right to be retained in the Company's employ, nor does it enlarge or diminish
the Company's right to end the participant's employment.
 
APPLICABLE LAW
 
    The laws of the State of Delaware (other than its choice of law provisions)
govern this Plan and its interpretation.
 
DURATION OF PLAN
 
    Unless the Board extends the Plan's term, the Administrator may not grant
Awards after June 8, 2008. The Plan will then terminate but will continue to
govern unexercised and unexpired Awards.
 
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