Exhibit (10.42)

# MIDWEST EXPRESS
HOLDINGS, INC. 2003 ALL EMPLOYEE
STOCK OPTION PLAN

1.    
PURPOSE

This
2003 All Employee Stock Option Plan (the Plan) of Midwest Express Holdings,
Inc. (the Corporation) is intended to provide certain employees with an
opportunity to become owners of the Corporation in recognition of their efforts, results
and contributions to the survival and success of the Corporation or of an Affiliate and,
through that ownership interest in the Corporation, to increase their motivation for and
interest in the Corporations or Affiliates long-term success.

2.              EFFECTIVE
DATE

The
Plan was adopted by the Board on August 20, 2003, subject to approval by the shareholders
of the Corporation at a Special Meeting of the Corporations shareholders to be held
in late 2003. The Plan will only be effective if approved by the shareholders and will be
effective as of the date of shareholder approval.

3.              CERTAIN
DEFINITIONS

Affiliate
means any company in which the Corporation owns directly or indirectly 20% or more of the
equity interest (collectively, the Affiliates).

Board
means the Board of Directors of the Corporation.

A
Change in Control shall be deemed to have occurred if the event set
forth in any one of the following paragraphs shall have occurred:

(a)              any
Person (as such term is defined in Section 3(a)(9) of the           Exchange
Act, as modified and used in Sections 13(d) and 14(d) thereof), other           than (i)
the Corporation or any of its subsidiaries, (ii) a trustee or other           fiduciary
holding securities under any employee benefit plan of the Corporation           or any of
its subsidiaries, (iii) an underwriter temporarily holding securities           pursuant
to an offering of such securities or (iv) a corporation owned, directly           or
indirectly, by the shareholders of the Corporation in substantially the same
          proportions as their ownership of stock in the Corporation (Excluded
          Persons), is or becomes the Beneficial Owner (as defined in
          rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
the           Corporation (not including in the securities beneficially owned by such
Person           any securities acquired directly from the Corporation or its Affiliates
after           July 16, 2003 pursuant to express authorization by the Board that refers
to this           exception) representing 25% or more of either the then outstanding
shares of           Common Stock or the combined voting power of the Corporations
then           outstanding voting securities; or

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(b)              the
following individuals cease for any reason to constitute a majority of the
          number of directors then serving: individuals who, on July 16, 2003,
constituted           the Board and any new director (other than a director whose initial
assumption           of office is in connection with an actual or threatened election
contest,           including but not limited to a consent solicitation, relating to the
election of           directors of the Corporation, as such terms are used in Rule 14a-11
of           Regulation 14A under the Exchange Act) whose appointment or election by the
          Board or nomination for election by the Corporations shareholders was
          approved by a vote of at least two-thirds (2/3) of the directors then still in
          office who either were directors on July 16, 2003 or whose appointment,
election           or nomination for election was previously so approved; or

(c)              the
shareholders of the Corporation approve a merger or consolidation of the
          Corporation with any other corporation or approve the issuance of voting
          securities of the Corporation in connection with a merger or consolidation of
          the Corporation (or any direct or indirect subsidiary of the Corporation)
          pursuant to applicable stock exchange requirements, other than (i) a merger or
          consolidation that would result in the voting securities of the Corporation
          outstanding immediately prior to such merger or consolidation continuing to
          represent (either by remaining outstanding or by being converted into voting
          securities of the surviving entity or any parent thereof) at least 50% of the
          combined voting power of the voting securities of the Corporation or such
          surviving entity or any parent thereof outstanding immediately after such
merger           or consolidation, or (ii) a merger or consolidation effected to
implement a           recapitalization of the Corporation (or similar transaction) in
which no Person           (other than an Excluded Person) is or becomes the Beneficial
Owner, directly or           indirectly, of securities of the Corporation (not including
in the securities           beneficially owned by such Person any securities acquired
directly from the           Corporation or its Affiliates after July 16, 2003 pursuant to
express           authorization by the Board that refers to this exception) representing
25% or           more of either the then outstanding shares of Common Stock or the
combined           voting power of the Corporations then outstanding voting
securities; or

(d)              the
shareholders of the Corporation approve a plan of complete liquidation or
          dissolution of the Corporation or an agreement for the sale or disposition by
          the Corporation of all or substantially all of the Corporations assets
(in           one transaction or a series of related transactions within any period of 24
          consecutive months), other than a sale or disposition by the Corporation of all
          or substantially all of the Corporations assets to an entity at least 75%
          of the combined voting power of the voting securities of which are owned by
          Persons in substantially the same proportions as their ownership of the
          Corporation immediately prior to such sale.

Notwithstanding
the foregoing, no Change in Control shall be deemed to have occurred if there
is consummated any transaction or series of integrated transactions immediately following
which the record holders of the Common Stock immediately prior to such transaction or
series of transactions continue to have substantially the same proportionate ownership in
an entity that owns all or substantially all of the assets of the Corporation immediately
following such transaction or series of transactions.

With
respect to Union Participants, if the applicable collective bargaining agreement covering
such Participants contains a different definition of a Change in Control (or term having a
similar effect) at the relevant time, then the Committee may determine that such
definition should apply in lieu of or in addition to the definition used herein with
respect to the Options granted to such Union Participants.

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Code
means the Internal Revenue Code of 1986 and the regulations promulgated thereunder, as
amended from time to time. Any reference to a specific provision of the Code includes any
successor provision thereto.

Committee
means the Compensation Committee of the Board, or such other committee of the Board
appointed by the Board to administer the Plan. With respect to grants made to Participants
who are subject to Section 16(b) of the Exchange Act, the Committee must be a committee
composed solely of two or more non-employee directors as so defined for purposes of Rule
16b-3 under the Exchange Act.

Common
Stock means the common stock, par value $0.01 per share, of the Corporation and
shall include both treasury shares and authorized but unissued shares and shall also
include any security of the Corporation issued in substitution, in exchange for, or in
lieu of the Common Stock.

Convertible
Securities means evidences of indebtedness, Shares or other securities that are
convertible into or exchangeable or exercisable for, with or without payment of additional
consideration, shares of Common Stock, either immediately or upon the arrival of a
specified date or the happening of a specified event (excluding the Corporations
preferred stock purchase rights issued pursuant to that certain Rights Agreement, dated
February 14, 1996, as amended, between the Corporation and American Stock Transfer &
Trust Company and any similar stock purchase rights that the Corporation might authorize
and issue in the future).

Exchange
Act means the Securities Exchange Act of 1934 and the rules and regulations
promulgated thereunder, as amended from time to time. Any reference to a specific
provision of the Exchange Act shall include any successor provision thereto.

Financial
Closing means that the funds committed pursuant to the New Financing have been
received by the Corporation or its subsidiaries or are available for drawdown and all
conditions precedent to drawdown (other than no default occurring after the closing of the
New Financing) shall have been satisfied or waived.

Insider
means a Participant who is required to report to the Securities and Exchange Commission
under Section 16(a) of the Exchange Act.

Market
Price means (a) the closing price of the Common Stock as of the date in
question, or, if no closing price is available on that date, then the closing price on the
immediately preceding business day on which there is a closing price, if such security is
listed or admitted for trading on any domestic national securities exchange, as officially
reported on the principal securities exchange on which the Common Stock is listed; (b) if
not reported as described in clause (a), the closing sale price of the Common Stock
as of the date in question, or, if no closing sale price is available on that date, then
the closing sale price on the immediately preceding business day on which there is a
closing sale price, as reported by The Nasdaq Stock Market, or any similar system of
automated dissemination of quotations of securities prices then in common use, if so
quoted; or (c) if not reported as described in clause (a) or quoted as described in
clause (b), then the Board shall determine in good faith and on a reasonable basis
the applicable Market Price, which determination shall be conclusive.

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New
Financing means any financing arrangement (including credit facilities,
subordinated credit facilities, any indebtedness evidenced by bonds, debentures, notes,
convertible notes, or similar instruments, and investments of equity capital other than
resulting from the conversion of convertible debt securities (unless and to the extent
that such conversion results in the Corporation or its subsidiaries receiving additional
equity consideration)) entered into by the Corporation or its subsidiaries following the
date hereof, but specifically excluding (a) any extensions of three hundred sixty-three
(363) days or less of existing financing arrangements, (b) any refinancings by the
existing creditors under that certain Senior Secured Revolving Credit Agreement, dated
August 31, 2001, as amended (the U.S. Bank Credit Agreement), among the
Corporation, as borrower, the several lenders identified on the signature pages to the
U.S. Bank Credit Agreement and such other lenders as may from time to time become a party
thereto (the Lenders) and U.S. Bank National Association, as agent for the
Lenders, except to the extent that any such refinancing results in an increase of credit
available to the Corporation or its subsidiaries, and then only to the extent of such
increase, or that provides for availability of credit that extends beyond three hundred
sixty-three (363) days from the presently scheduled maturity of the U.S. Bank Credit
Agreement, (c) any increased credit availability that results from Milwaukee County,
Wisconsin providing any credit support for the industrial revenue bonds issued for the
benefit of the Corporation or its subsidiaries, (d) any indebtedness to any aircraft or
equipment vendors for the purchase of goods or services, including any third-party
financing of such amounts, (e) any indebtedness to other trade creditors incurred in the
ordinary course of business, (f) any financing (including any sale-leaseback arrangement)
related to the Corporations corporate headquarters, or any extension or replacement
thereof, or (g) any obligations associated with programs of the Corporation or its
subsidiaries for the pre-purchase of tickets or similar prepayment programs.

Option
means a right to purchase a specified number of shares of Common Stock at a fixed option
price. None of the Options issued under this Plan are intended to qualify under Code
Section 422 or 423.

Option
Agreement means an agreement entered into between the Corporation and a
Participant setting forth the terms and conditions applicable to the Option granted to the
Participant.

Option
Shares means the aggregate number of shares of Common Stock issuable from time
to time upon exercise of an Option, as such number may be increased or decreased pursuant
to Section 7, and shall also mean any other Shares, other securities and/or
other assets otherwise deliverable upon exercise of such Option.

Participant
means each employee of the Corporation or its Affiliates on July 15, 2003 (collectively,
the Participants). Participants shall include both Participants whose terms
and conditions of employment are subject to a collective bargaining agreement between the
Corporation and a Union (collectively, the Union Participants) and
Participants whose terms and conditions are not so subject (collectively, Non-Union
Participants).

Person
means an individual, a corporation, an association, a joint-stock company, a business
trust or other similar organization, a partnership, a limited liability company, a joint
venture, a trust, an unincorporated organization or a government or any agency,
instrumentality or political subdivision thereof.

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Retirement
and Retire means the termination of employment from the Corporation and
its Affiliates on or after the date the Participant (i) is entitled to receive retiree
medical coverage under a retiree medical plan of the Corporation or an Affiliate or (ii)
has attained age 55 (or such lower age, if any, at which the Participant may retire under
a qualified benefit plan covering the Participant) and has been credited with ten vested
years of service under the Midwest Airlines Savings and Investment Plan (or any successor
plan thereto) as of the date of such termination of employment.

Shares
of any Person shall include any and all shares of capital stock, partnership interests,
membership interests, or other shares, interests, participations or other equivalents
(however designated and of any class) in the capital of, or other ownership interests in,
such Person.

Stock
Purchase Rights means any warrants, options or other rights to subscribe for,
purchase or otherwise acquire any shares of Common Stock or any Convertible Securities
(excluding the Corporations preferred stock purchase rights issued pursuant to that
certain Rights Agreement, dated February 14, 1996, as amended, between the Corporation and
American Stock Transfer & Trust Company and any similar stock purchase rights that the
Corporation might authorize and issue in the future), either immediately or upon the
arrival of a specified date or the happening of a specified event.

Total
and Permanent Disability has the same meaning ascribed in the Midwest Express
Airlines, Inc. Employees Long-Term Disability Plan (or any successor plan thereto),
provided the Committee shall make a determination of Total and Permanent Disability for
any Participant hereunder.

Union
means each of the Midwest Air Line Pilots Association, the Skyway Air Line Pilots
Association, and the Midwest Association of Flight Attendants, or any successor thereto.

4.    
ADMINISTRATION

Except
as provided herein, the Plan and all Options shall be administered by the Committee. The
Committee shall have the power to interpret and construe the Plan and any Option
Agreements. The Committee also shall have the power to promulgate rules and other
guidelines in connection with the performance of its obligations, powers and duties under
the Plan, including its duty to administer and construe the Plan and Option Agreements.

To
the extent permitted by applicable law, the Committee may, in its discretion, delegate to
an officer of the Corporation or another committee any or all of the authority and
responsibility of the Committee with respect to the Plan or Options, other than
Participants who are subject to the provisions of Section 16 of the Exchange Act at the
time any such delegated authority or responsibility is exercised. To the extent that the
Committee has delegated such authority and responsibility, all references to the Committee
herein shall include such officer or other committee.

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Within
60 days following the close of each calendar year that the Plan is in operation, the
Committee shall make a report to the Board specifying the employees who received Options
during the prior year, the number of Options granted to the individual employees, and the
status of prior Options.

5.              SHARES
SUBJECT TO THE PLAN

Subject
to adjustment as provided in Section 7, the number of shares of Common Stock
available for issuance under this Plan shall be 1,551,741. The shares of Common Stock
subject to the Plan may consist in whole or in part of authorized but unissued shares or
of treasury shares, as the Board or Committee may determine. Subject to the provisions of
Subsection 6(c), shares subject to Options which become ineligible for purchase
will be available for new grants under the Plan to the extent permitted by Section 16 of
the Exchange Act.

6.              GRANTS
OF OPTIONS

(a)    Selection
of Participants. The Committee shall determine and designate           from time to
time those Non-Union Participants to whom Options are to be           granted, and each
Union shall determine and designate from time to time those           Union Participants
who are represented by such Union to whom Options are to be           granted.

(b)    Grant
of Options. Subject to the terms of the Plan (including the           adjustment
provisions of Section 7), the Committee or Union, as           applicable, shall
determine the number of shares of Common Stock to be optioned           to each
Participant and the dates of grant subject to the following           (provided that
only the Committee, in its sole discretion, may increase           the number of shares
reserved for grants to Union Participants):

(i)              791,853
shares of Common Stock (or such higher number as determined by the           Committee)
are reserved for grants of Options by the Midwest Air Line Pilots           Association
to Participants who are represented by such Union;

(ii)              22,191
shares of Common Stock (or such higher number as determined by the           Committee)
are reserved for grants of Options by the Skyway Air Line Pilots           Association to
Participants who are represented by such Union;

(iii)              117,001
shares of Common Stock (or such higher number as determined by the           Committee)
are reserved for grants of Options by the Midwest Association of           Flight
Attendants to Participants who are represented by such Union; and

(iv)              the
remaining shares of Common Stock reserved pursuant to Section 5 may           be
granted by the Committee to any Participant.

(c)    Re-Grant
of Options. Subject to the terms of the Plan, and any applicable           collective
bargaining agreement terms, on each anniversary of the Plans           effective
date, immediately prior to a Change in Control or on such other           interim date(s)
as the Committee determines, the Committee shall determine the           number of
Options that were forfeited pursuant to Subsections 6(d) and           (f) without
being exercised during the prior year (or such other relevant           period) by
Participants who are represented by each Union. Each Union may then           re-grant
such Options to such Participants represented by the Union, and in such           number,
as the Union determines. All such re-granted Options will be subject to           the
same terms and conditions as the original Option grant.

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(d)    Period
of Option. Each Option shall expire on the earliest to occur of           the
following (except as set forth in any applicable collective bargaining
          agreement):

(i)              August
21, 2013;

(ii)              Unless
otherwise determined by the Committee, the third anniversary of the date           on
which the Participant terminates employment with the Corporation and its
          Affiliates as a result of death or Total and Permanent Disability; or

(iii)              90
days from the date of the Participants termination of employment from           the
Corporation and its Affiliates for any reason other than death, Total and
          Permanent Disability or Retirement.

If a Participant terminates
employment from the Company and its Affiliates as a result of Retirement, the Participant
shall be entitled to retain his or her Options for the full term described in clause
(i).

(e)    
Option Price. Subject to adjustment as provided in Section 7, the
               option price shall be $2.89 per share of Common Stock (the Option
               Price).

(f)    
Exercisability. The Committee or applicable Union shall determine when
               each Option becomes vested and exercisable, provided that Options shall
become                vested and exercisable only as follows: up to one-third of the
Options described                in each clause of Subsection 6(b) may be
exercisable prior to August 21,                2004; up to an additional one-third of the
Options described in each clause of Subsection 6(b) may be exercisable prior to
August 21, 2005; and the                remaining Options described in each clause of Subsection
6(b) may only be                exercisable on and after August 21, 2005. Unless
otherwise determined by the                Committee, if the Participants
employment with the Corporation or an                Affiliate is terminated as a result
of death, Retirement, or Total and Permanent                Disability prior to the date
the Option is fully vested, the Option shall become                fully and immediately
vested and exercisable as of the date of such termination                of employment.
If the Participants employment with the Corporation or an                Affiliate
is terminated for any reason other than death, Retirement, or Total                and
Permanent Disability, the Option shall be exercisable only for those shares
               for which the right to purchase has vested as of the date of such
termination.

(g)    
Exercise after Death or Total and Permanent Disability. Upon a
               Participants death, the Option may be exercised by the person or
persons                to whom such Participants rights under the Option shall pass
by will or by                applicable law or, if no such person has such rights, by his
executor or                administrator, and all references herein or in the Option
Agreement to the                Participant shall mean such person. Upon a Participants
Total and                Permanent Disability, the Option may be exercised by the
personal representative                of the Participant who has appropriate authority
to handle the                Participants affairs.

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(h)    
Option Agreement. The Committee shall cause to be delivered to each
               Participant who receives an Option an Option Agreement evidencing the
granting                of the Option. Subject to the provisions of the Plan, the Option
Agreement shall                be in such form and shall contain such terms and
conditions as the Committee                shall from time to time approve.

(i)    
Termination of Employment. A termination of employment with the
               Corporation or an Affiliate to accept immediate re-employment with the
               Corporation or an Affiliate, or being placed on furlough shall not be
deemed to                be a termination of employment for purposes of the Plan. If a
Participant is                employed by an Affiliate and such entity ceases to be an
Affiliate, the                Participant will be deemed to have terminated employment
from the Corporation                and its Affiliates as of the date the entity ceases
to be an Affiliate.

(j)    
Change in Control. Except as the Committee may otherwise provide prior to
               a Change in Control, and subject to Section 7, in the event of a
Change                in Control, each holder of an Option who is employed by the
Corporation or an                Affiliate at such time shall have the right at any time
thereafter to exercise                the remaining portion of such Option, without
regard to the limitations in Subsection 6(f), at any time during the remaining
period of the Option.

(k)    
Non-transferability. During the Participants lifetime, Options
               shall be exercisable only by such Participant except as provided in Subsection
6(g). Options shall not be transferable other than upon the                Participants
death by will or the laws of descent and distribution.

(l)    
Exercise; Notice Thereof. A Participant may exercise his or her Option to
               the extend vested in the manner specified by the Committee. A Participants
               exercise shall be effective only upon receipt by the Corporation (or its
               designated agent) of a properly completed and timely filed notice of
exercise,                accompanied by payment in full of the Option Price of the shares
being acquired                and any applicable taxes due as a result of such exercise.
Payment of the Option                Price may be made (i) in cash, (ii) by a check
payable to the Corporation, (iii)                at the sole discretion of the Committee,
by tender of shares of Common Stock                that have been held by the Participant
for at least six months or acquired in                the open market to the Corporation
and having a Market Price on the transfer                date equal to the amount payable
to the Corporation, (iv) , at the sole                discretion of the Committee,
through any combination of the foregoing, or (v) at                the sole discretion of
the Committee, by any other method or means as the                Committee may
prescribe. Payment of any taxes due shall be made as provided in Section 10. The
date of exercise shall be deemed to be the date the                Corporation receives
the written notice and payment for the shares being                purchased and
applicable taxes due thereon. A Participant shall have none of the                rights
of a shareholder with respect to shares covered by such Option until the
               Participant becomes the record holder of such shares. Notwithstanding the
               foregoing, the Corporation may cancel or delay the exercise of any Options
if                such exercise would result in the disallowance of a deduction to the
Corporation                under Section 162(m) of the Code.

(m)    
Registration. It is contemplated that the Corporation will register
               shares sold to Participants pursuant to the Plan under the Securities Act
of                1933, as amended (the Securities Act), and the Corporation
may delay                any Option exercise until such effective registration is in
place.

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(n)    
Options for Nonresident Aliens. In the case of any Option awarded to a
               Participant who is not a resident of the United States or who is employed
by an                Affiliate other than an Affiliate that is incorporated, or whose
place of                business is, in a State of the United States, the Committee may
(i) waive or                alter the conditions set forth in Subsections 6(a) through
6(l) to the                extent that such action is necessary to conform such
Option to applicable                foreign law, or (ii) take any action, either before
or after the award of such                Option, which it deems advisable to obtain
approval of such Option by an                appropriate governmental entity; provided,
however, that no action                may be taken hereunder if such action would
(A) increase any benefits accruing                to any Participants under the Plan, (B)
increase the number of securities which                may be issued under the Plan, (C)
modify the requirements for eligibility to                participate in the Plan, or (D)
result in a failure to comply with applicable                provisions of the Securities
Act, the Exchange Act or the Code.

(o)    
Repricing Prohibited. Notwithstanding anything in this Plan to the
               contrary, and except for the adjustments provided in Section 7, the
               Committee may not decrease the Option Price for any outstanding Option
after the                date of grant nor allow a Participant to surrender an
outstanding Option to the                Corporation as consideration for the grant of a
new Option with a lower option                price.

7.    
               ANTI-DILUTION ADJUSTMENTS

(a)    
Adjustments in Case of Subsequent Issuances.

(i)    
               Upon any adjustment of the Option Price of an Option as provided in this
Subsection 7(a), the number of shares subject to a                Participants
Option shall thereafter be adjusted to that number                (calculated to the
nearest 1/100th of a share) obtained by                multiplying the Option
Price in effect immediately prior to such adjustment by                the number of
shares of Common Stock purchasable under the Option in question
               immediately prior to such adjustment and dividing the product thereof by
the                Option Price resulting from such adjustment. Until the later of August
19, 2005                or the date the Corporation has achieved Financial Closing with
respect to New                Financing in the amount of at least $30 million, if and
whenever the Corporation                subsequent to August 19, 2003 shall issue or sell
any of the following                (AdditionalSecurities): (A) any
Common Stock (other than                Common Stock issued pursuant to Convertible
Securities or Stock Purchase Rights                in respect of which an adjustment was
previously made under this Subsection                7(a)) at a price per share
less than the then applicable Option Price or (B)                Convertible Securities
or Stock Purchase Rights (other than in the cases                referred to in Subsection
7(b)) entitling any Person to acquire shares of                Common Stock at a
price per share less than the then applicable Option Price,                then the
Option Price shall be adjusted to that price determined by multiplying                the
then applicable Option Price by a fraction, the numerator of which shall be
               the number of shares of Common Stock actually outstanding immediately
prior to                the issuance of such Additional Securities plus the number of
shares of Common                Stock that the offering price for such Additional
Securities would purchase at                the then applicable Option Price, and the
denominator of which shall be the sum                of the number of shares of Common
Stock actually outstanding immediately prior                to such issuance plus the
number of shares of Common Stock so issued or                issuable. For purposes of
calculating such fraction, all shares of Common Stock                that are issuable
upon conversion, exercise or exchange of those Additional                Securities that
are Convertible Securities or Stock Purchase Rights shall be                deemed
actually outstanding immediately after the issuance of such Convertible
               Securities or Stock Purchase Rights. Subject to Subsection 7(a)(ii),
such                adjustment shall be made whenever such shares of Convertible
Securities or Stock                Purchase Rights are issued. However, if any
Convertible Securities or Stock                Purchase Rights the issuance of which
resulted in an adjustment in the Option                Price pursuant to clause (B) of
this Subsection 7(a)(i) shall expire and                shall not have been
exercised in full, then, subject to Subsection                7(a)(ii), the Option
Price shall immediately upon such expiration be                recomputed and be
increased to the price that it would have been (but reflecting                any other
adjustments in the Option Price made pursuant to the provisions of                this Subsection
7(a) after the issuance of such Convertible Securities or                Stock
Purchase Rights) had the adjustment of the Option Price made upon the
               issuance of such Convertible Securities or Stock Purchase Rights been made
on                the basis of offering for subscription or purchase only that number of
shares of                Common Stock actually purchased upon the exercise of such
Convertible Securities                or Stock Purchase Rights actually exercised.

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(ii)    
               No adjustment in the Option Price shall be required unless the adjustment
would                require an increase or decrease of at least 1% in the then
applicable Option                Price; provided, however, that any
adjustments that by reason of                this Subsection 7(a)(ii) are not
required to be made shall be carried                forward and taken into account in any
subsequent adjustment. All calculations                under this Subsection 7(a)(ii) shall
be made to the nearest cent.

(iii)    
               This Subsection 7(a) shall not apply to the delivery of any of the
               warrants issued by the Corporation in August 2003 (the Warrants),
               the operation of the Warrants or the issuance of Shares pursuant to the
               Warrants.

(b)    
Adjustments in Case of Stock Split, Distributions, etc.

(i)    
               Upon any adjustment of the Option Price of an Option as provided in this
Subsection 7(b)(i) or (ii), the number of shares subject to a
               Participants Option shall thereafter be adjusted to that number
               (calculated to the nearest 1/100th of a share) obtained by multiplying the
               Option Price in effect immediately prior to such adjustment by the number
of                shares of Common Stock purchasable under the Option in question
immediately                prior to such adjustment and dividing the product thereof by
the Option Price                resulting from such adjustment. If and whenever the
Corporation subsequent to                August 19, 2003:

| | (1)    
               declares a dividend upon, or makes any distribution in respect of, any of
its                capital stock, payable in shares of Common Stock, Convertible
Securities or                Stock Purchase Rights, or
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2)    
               splits or otherwise subdivides its outstanding shares of Common Stock into
a                larger number of shares of Common Stock, or
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3)    
               combines its outstanding shares of Common Stock into a smaller number of
shares                of Common Stock,
| | --------------------------------------------------------------------------------------------------------------------------------------

then the Option Price shall be
adjusted to that price determined by multiplying the Option Price in effect immediately
prior to such event by a fraction (A) the numerator of which shall be the total number of
outstanding shares of Common Stock immediately prior to such event, and (B) the
denominator of which shall be the total number of outstanding shares of Common Stock
immediately after such event, treating as outstanding all shares of Common Stock issuable
upon conversions or exchanges of any such Convertible Securities issued in such dividend
or distribution and exercises of any such Stock Purchase Rights issued in such dividend or
distribution. No adjustment in the Option Price shall be required unless the adjustment
would require an increase or decrease of at least 1% in the Option Price then in effect;
provided, however, that any adjustments that by reason of this sentence are
not required to be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Subsection 7(b) shall be made to the
nearest cent.

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(ii)              If
and whenever the Corporation subsequent to August 19, 2003 declares a           dividend
upon, or makes any distribution to all shareholders generally in           respect of,
any of its capital stock, payable in cash, evidences of indebtedness           or assets,
then the Option Price shall be adjusted to that price determined by           multiplying
the Option Price in effect immediately prior to such event by a           fraction (A)
the numerator of which shall be the Market Price on the record date           for the
determination of shareholders entitled to receive the payment less the           then
fair market value (as determined in good faith on a reasonable basis by the
          Board, which determination shall be conclusive) as of such record date of the
          cash, evidences of indebtedness or assets so paid with respect to one share of
          Common Stock and (B) the denominator of which shall be the Market Price per
          share of Common Stock as of such record date; provided, however,
          that if the then fair market value (as determined in good faith by the Board,
          which determination shall be conclusive) so paid with respect to one share of
          Common Stock is equal to or greater than the Option Price per share of Common
          Stock on the record date, then in lieu of the foregoing adjustment, adequate
          provision shall be made so that a Participant shall have the right to receive
          the cash, evidences of indebtedness or assets that such Participant would have
          been entitled to receive had the Option in question been exercised in full
prior           to the record date; and provided further that no adjustment shall
be made           if the Corporation issues or distributes to such Participant the cash,
evidences           of indebtedness or assets that such Participant would have been
entitled to           receive had the Option in question been exercised in full prior to
the record           date. No adjustment in the Option Price shall be required unless the
adjustment           would require an increase or decrease of at least 1% in the Option
Price then in           effect; provided, however, that any adjustments
that by reason of           this sentence are not required to be made shall be carried
forward and taken           into account in any subsequent adjustment. All calculations
under this Subsection 7(b)(ii) shall be made to the nearest cent.

(iii)              If
the terms of both this Subsection 7(b) and Subsection 7(c)          would
apply to a transaction, then the transaction will be subject to Subsection 7(c) and
not this Subsection 7(b).

(c)    Adjustment
in Case of Consolidation, Merger or Reclassification.

(i)              If
and whenever subsequent to August 19, 2003 the Corporation shall effect (A)           any
reorganization or reclassification or recapitalization of the capital stock           of
the Corporation, (B) any consolidation or merger of the Corporation with or
          into another Person whether or not the Corporation is the surviving
corporation,           (C) any share exchange to which the Corporation is a party or (D)
the sale,           transfer or other disposition of all or substantially all of the
property,           assets or business of the Corporation (whether in one transaction or
a series of           transactions) as a result of which holders of Common Stock become
entitled to           receive any Shares or other securities and/or other assets of the
Corporation,           any of its subsidiaries or any other Person (including, without
limitation,           cash) with respect to or in exchange for Common Stock, there shall
thereafter be           deliverable upon the exercise of an Option (until the expiration
of the Option           in question), in lieu of the Option Shares theretofore
deliverable, the highest           number of Shares or other securities and/or other
assets (including, without           limitation, cash) that would have been deliverable
to a Participant had the           Option in question been exercised in full immediately
prior to, and such           Participant participated in, such reorganization,
reclassification or           recapitalization of capital stock, consolidation or merger,
share exchange or           sale and thereafter Subsection 7(a) shall no longer be
of any force or           effect. If the terms of both Subsection 7(b) and this Subsection
          7(c) would apply to a transaction, then the transaction will be subject to
          this Subsection 7(c) and not Subsection 7(b).

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(ii)              The
Corporation shall not consummate any transaction subject to Subsection
          7(c)(i) unless each Person whose Shares, other securities or other assets
          will be issued, delivered or paid to the holders of the Common Stock (other
than           the Corporation), prior to or simultaneously with the consummation of the
          transaction, expressly assumes, by an Option supplement or other document in a
          form substantially similar hereto, executed and delivered to the Participant,
          the obligation to deliver to the Participant such Shares, other securities or
          other assets as, in accordance with the foregoing provisions of this Subsection
7(c), the Participant is entitled to purchase, and all other           obligations
and liabilities under the Option in question, including obligations           and
liabilities in respect of subsequent adjustments that are required under           such
Option.

(iii)              The
above provisions of this Subsection 7(c) shall similarly apply to
          successive reclassifications and changes of Option Shares and to successive
          consolidations, mergers, leases, sales or conveyances, with necessary changes
          being made and respective differences being taken into account.

(d)    Adjustment
in Case of Tender Offer. If the Corporation consummates a           tender or
exchange offer (other than an odd lot offer) to acquire Common Stock           at a price
per share in excess of the Market Price of a share of Common Stock on           the day
immediately following the day on which such tender or exchange offer           expires,
then the Option Price in effect immediately prior to the day on which           such
tender or exchange offer expires shall be adjusted to a price obtained by
          multiplying such Option Price by a fraction of which (i) the denominator shall
          be the Market Price on the day immediately prior to the day on which such
tender           or exchange offer expires and (ii) the numerator shall be the result of
dividing           (A) an amount equal to (1) the product of the number of shares of
Common Stock           outstanding and the Market Price of a share of Common Stock, in
each case           immediately prior to the day on which such tender or exchange offer
expires,           minus (2) the aggregate consideration paid by the Corporation in the
tender or           exchange offer, by (B) the number of shares of Common Stock
outstanding           immediately after the day on which such tender or exchange offer
expires.

(e)    Other
Dilutive Event. If any event or occurrence shall occur that           actually
results in an adjustment under Section 11(a)(ii) or Section 13 of that           certain
Rights Agreement, dated February 14, 1996, as amended, between the           Corporation
and American Stock Transfer & Trust Company or corresponding           provisions
under similar stock purchase rights that the Corporation might           authorize and
issue in the future, and the provisions of this Section 7          are not
strictly applicable, but as to which the failure to make any adjustment           to the
Option Price and/or the number of Shares or other securities or other           assets
subject to an Option or the Plan would adversely affect the purchase           rights or
value represented by the Option in question in accordance with the           essential
intent and principles of this Section 7, then the Corporation           shall
determine the adjustment, if any, on a basis consistent with the essential
          intent and principles established in this Section 7, necessary to
          preserve, without dilution, the purchase rights represented by such Option. If
          such determination involves or is based on a determination of the fair market
          value of any securities or other assets, then such determination shall be made
          by the Board acting in good faith and on a reasonable basis.

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(f)    Adjustment
of Plan Reserve and Limits. If any event described in Subsections 7(a) through (c)
or 7(e) results in an adjustment in the           number of Option Shares subject to
outstanding Options, then the number of           shares of Common Stock reserved for
issuance under Section 5 and the           share limits described in Section
6(b) shall likewise be ratably           adjusted.

(g)    Anti-Dilution
Provisions. After the later of (i) August 19, 2005 or (ii)           the date the
Corporation has achieved Financial Closing with respect to New           Financing in the
amount of at least $30 million, if, as of that date, the           Corporation has issued
or outstanding any Stock Purchase Rights or Convertible           Securities or other
securities (excluding any Options, the Warrants and the           Corporations
preferred stock purchase rights issued pursuant to that           certain Rights
Agreement, dated February 14, 1996, as amended, between the           Corporation and
American Stock Transfer & Trust Company and any similar           stock purchase
rights that the Corporation might authorize and issue in the           future) containing
provisions protecting the holder or holders thereof against           dilution in any
manner more favorable to such holder or holders thereof than           those set forth
herein, then such provisions (or any more favorable portion           thereof) shall be
deemed to be incorporated in this Plan as if fully set forth           herein and, to the
extent inconsistent with any provision of this Plan, shall be           deemed to be
substituted therefor.

8.              EFFECT
ON OTHER PLANS

All
benefits under the Plan shall constitute special compensation and shall not affect the
level of benefits provided to or received by any Participant (or the Participants
estate or beneficiaries) as part of any employee benefit plan of the Corporation or an
Affiliate. The Plan shall not be construed to affect in any way a Participants
rights and obligations under any other plan maintained by the Corporation or an Affiliate
on behalf of employees.

9.              TERM
OF THE PLAN

This
Plan will terminate on the earliest to occur of: (a) August 21, 2013, (b) the date all
shares of Common Stock reserved for issuance under the Plan are so issued, or (c) the date
the Board terminates this Plan pursuant to the provisions of Subsection 10(i).
Notwithstanding the foregoing, the authority of the Committee to administer and amend the
Plan and any Option Agreements will extend beyond the date of the Plans termination.

10.              GENERAL
PROVISIONS

(a)    No
Right of Continued Employment. Neither the establishment of the Plan           nor
the payment of any benefits hereunder nor any action of the Corporation, its
          Affiliates, the Board or the Board of Directors of any Affiliate, or the
          Committee or Union shall be held or construed to confer upon any person any
          legal right to be continued in the employ of the Corporation or its Affiliates,
          and the Corporation and its Affiliates expressly reserve the right to discharge
          any Participant without liability to the Corporation, its Affiliates, the Board
          or the Board of Directors of any Affiliate, or the Committee, except as to any
          rights which may be expressly conferred upon a Participant under the Plan.

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(b)    Binding
Effect. Any decision made or action taken by the Corporation, the           Board or
by the Committee arising out of or in connection with the construction,
          administration, interpretation and effect of the Plan shall be conclusive and
          binding upon all persons. No member of the Board or Committee shall be liable
          for any action taken or determination made in good faith.

(c)    Modification
of Awards. Subject to the requirements of the Plan and any           applicable
collective bargaining requirements, the Committee may modify or amend           any
Option or waive any restrictions or conditions applicable to any Option or           the
exercise thereof, and the terms and conditions applicable to any Options may           at
any time be amended, modified or canceled by mutual agreement between the
          Committee and the Participant or any other persons as may then have an interest
          therein, so long as any amendment or modification does not increase the number
          of shares of Common Stock issuable under the Plan. Action may be taken under
          this Subsection 10(c) notwithstanding expiration of the Plan under Section 9.

(d)    Inalienability
of Benefits and Interest. Except as provided in Subsection 6(g), no benefit
payable or interest in the Plan shall be           subject in any manner to anticipation,
alienation, sale, transfer, assignment,           pledge, encumbrance or charge, and any
such attempted action shall be void and           no such benefit or interest shall be in
any manner liable for or subject to           debts, contracts, liabilities, engagements,
or torts of any Participant or           beneficiary.

(e)    Law
to Govern. All questions pertaining to the construction,           interpretation,
regulation, validity and effect of the provisions of the Plan           shall be
determined in accordance with the internal laws of the state in which           the
Corporation is incorporated at the time of the question.

(f)    Purchase
of Common Stock. The Corporation and its Affiliates may purchase           from time
to time shares of Common Stock in such amounts as they may determine           for
purposes of the Plan. The Corporation and its Affiliates shall have no
          obligation to retain, and shall have the unlimited right to sell or otherwise
          deal with for their own account, any shares of Common Stock purchased pursuant
          to this paragraph.

(g)    Use
of Proceeds. The proceeds received by the Corporation from the sale           of
Common Stock pursuant to the exercise of Options shall be used for general
          corporate purposes.

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(h)    Withholding.
As a condition to the exercise of an Option, the Participant           is required to pay
or otherwise satisfy all withholding taxes as required by           law. At the sole
discretion of the Committee, a Participant may elect to have           any portion of the
federal, state or local income tax withholding required with           respect to an
exercise of an Option satisfied by tendering to the Corporation           shares of
Common Stock that, in the absence of such an election, would have been           issued
to such Participant in connection with such exercise. In the event that           the
Market Price of the shares of Common Stock tendered to satisfy the           withholding
tax required with respect to an exercise (as determined on the date           such shares
are tendered) exceeds the amount of such tax, the excess of such           market value
over the amount of such tax shall be returned to the Participant,           to the extent
possible, in whole shares of Common Stock, and the remainder in           cash. An
election pursuant to this Subsection 10(h) shall be made in           writing and
signed by the Participant on such form as the Committee may           prescribe. An
election pursuant to this Subsection 10(h) is irrevocable.           An Insider
who exercises an Option may satisfy the income tax withholding due in           respect
of such exercise pursuant to this Subsection 10(h) only if the           Insider
also satisfies an exemption under Section 16(b) of the Exchange Act for           such
withholding.

(i)    Amendments;
Termination. Subject to any collective bargaining           requirements, the
Committee may amend this Plan, and the Board may terminate           this Plan, at any
time, subject to the following limitations:

(i)              shareholders
must approve any amendment of this Plan if the Committee determines           such
approval is required by: (A) the Exchange Act, (B) the Code, (C) the
          listing requirements of the New York Stock Exchange or any principal securities
          exchange or market on which the Common Stock is then traded, or (D) any other
          applicable law; and

(ii)              shareholders
must approve any of the following Plan amendments: (A) an amendment           to increase
the number of shares of Common Stock specified in Section 5          (except as
permitted by Section 7); (B) an amendment to Subsection           6(o); or
(C) an amendment to this Subsection 10(i).

(j)    Survival
of Options. Except as provided in Subsections 6(n) and           10(c), no
amendment, alteration, discontinuance, suspension or termination           of the Plan
shall, without the consent of the Participant, adversely change any           of the
rights or obligations under any unexpired Options. Following termination           of the
Plan, all unexpired Options shall continue in force and effect except as           they
may lapse or be terminated by their own terms and conditions.

(k)    Requirements
of Law. The granting of Options and the issuance of shares           under the Plan
are subject to all applicable laws, rules and regulations and to           such approvals
by any governmental agencies or national securities exchanges as           may be
required. Notwithstanding any other provision of this Plan or any Option
          Agreement, the Corporation has no liability to deliver any shares under this
          Plan unless such delivery would comply with all applicable laws and the
          applicable requirements of any securities exchange or similar entity.

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