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Exhibit 4.1


                       AMERICAN ENVIRONMENTAL ENERGY, INC.
                               2008 INCENTIVE PLAN


                                    SECTION 1

                         GENERAL PROVISIONS RELATING TO
                     PLAN GOVERNANCE, COVERAGE AND BENEFITS

1.1 PURPOSE

         The purpose of the 2008 Incentive Plan (the "PLAN") is to foster and
promote the long-term financial success of American Environmental Energy, Inc.
(the "COMPANY") and its Subsidiaries and to increase stockholder value by: (a)
encouraging the commitment of selected key Employees, Consultants and Outside
Directors, (b) motivating superior performance of key Employees, Consultants and
Outside Directors by means of long-term performance related incentives, (c)
encouraging and providing key Employees, Consultants and Outside Directors with
a program for obtaining ownership interests in the Company which link and align
their personal interests to those of the Company's stockholders, (d) attracting
and retaining key Employees, Consultants and Outside Directors by providing
competitive incentive compensation opportunities, and (e) enabling key
Employees, Consultants and Outside Directors to share in the long-term growth
and success of the Company.

         The Plan provides for payment of various forms of incentive
compensation. It is not intended to be a plan that is subject to the Employee
Retirement Income Security Act of 1974, as amended (ERISA). The Plan will be
interpreted, construed and administered consistent with its status as a plan
that is not subject to ERISA.

         Subject to approval by the Company's stockholders pursuant to SECTION
7.1, the Plan will be effective as of May 1, 2008 (the "EFFECTIVE DATE"), The
Plan will remain in effect, subject to the right of the Board to amend or
terminate the Plan at any time pursuant to SECTION 7.7, until all Shares subject
to the Plan have been purchased or acquired according to its provisions.
However, in no event may an Incentive Award be granted under the Plan after the
expiration of ten (10) years from the Effective Date.

1.2 DEFINITIONS

         The following terms shall have the meanings set forth below:

         (a) APPRECIATION. The difference between the option exercise price per
share of the Nonstatutory Stock Option to which a Tandem SAR relates and the
Fair Market Value of a share of Common Stock on the date of exercise of the
Tandem SAR.

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         (b) AUTHORIZED OFFICER. The Chairman of the Board, the CEO or any other
senior officer of the Company to whom either of them delegate the authority to
execute any Incentive Agreement for and on behalf of the Company. No officer or
director shall be an Authorized Officer with respect to any Incentive Agreement
for himself.

         (c) BOARD. The Board of Directors of the Company.

         (d) CAUSE. When used in connection with the termination of a Grantee's
Employment, shall mean the termination of the Grantee's Employment by the
Company or any Subsidiary by reason of (i) the conviction of the Grantee by a
court of competent jurisdiction as to which no further appeal can be taken of a
crime involving moral turpitude or a felony; (ii) the proven commission by the
Grantee of a material act of fraud upon the Company or any Subsidiary, or any
customer or supplier thereof; (iii) the misappropriation of any funds or
property of the Company or any Subsidiary, or any customer or supplier thereof;
(iv) the willful, continued and unreasonable failure by the Grantee to perform
the material duties assigned to him that is not cured to the reasonable
satisfaction of the Company within 30 days after written notice of such failure
is provided to Grantee by the Board or CEO (or by another officer of the Company
or a Subsidiary who has been designated by the Board or CEO for such purpose);
(v) the knowing engagement by the Grantee in any direct and material conflict of
interest with the Company or any Subsidiary without compliance with the
Company's or Subsidiary's conflict of interest policy, if any, then in effect;
or (vi) the knowing engagement by the Grantee, without the written approval of
the Board or CEO, in any material activity which competes with the business of
the Company or any Subsidiary or which would result in a material injury to the
business, reputation or goodwill of the Company or any Subsidiary.

         (e) CEO. The Chief Executive Officer of the Company.

         (f) CODE. The Internal Revenue Code of 1986, as amended, and the
regulations and other authority promulgated thereunder by the appropriate
governmental authority. References herein to any provision of the Code shall
refer to any successor provision thereto.

         (g) COMMITTEE. A committee appointed by the Board consisting of at
least one member as appointed by the Board to administer the Plan. However, if
the Company becomes a Publicly Held Corporation, the Plan shall be administered
by a committee appointed by the Board consisting of not less than two directors
who (i) fulfill the "non-employee director" requirements of Rule 16b-3 under the
Exchange Act and who is certified by the Board as an independent director and
(ii) fulfill the "outside director" requirements of Section 162(m) of the Code.
In either case, the Committee may be the compensation committee of the Board, or
any subcommittee of the compensation committee, provided that the members of the
Committee satisfy the requirements of the previous provisions of this paragraph.

         The Board shall have the power to fill vacancies on the Committee
arising by resignation, death, removal or otherwise. The Board, in its sole
discretion, may bifurcate the powers and duties of the Committee among one or

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more separate committees, or retain all powers and duties of the Committee in a
single Committee. The members of the Committee shall serve at the discretion of
the Board.

         Notwithstanding the preceding paragraphs of this SECTION 1.2(G), the
term "Committee" as used in the Plan with respect to any Incentive Award for an
Outside Director shall refer to the entire Board. In the case of an Incentive
Award for an Outside Director, the Board shall have all the powers and
responsibilities of the Committee hereunder as to such Incentive Award, and any
actions as to such Incentive Award may be acted upon only by the Board (unless
it otherwise designates in its discretion). When the Board exercises its
authority to act in the capacity as the Committee hereunder with respect to an
Incentive Award for an Outside Director, it shall so designate with respect to
any action that it undertakes in its capacity as the Committee.

         (h) COMMON STOCK. The common stock of the Company, $0.001 par value per
share, and any class of common stock into which such common shares may hereafter
be converted, reclassified or recapitalized.

         (i) COMPANY. American Environmental Energy, Inc., a corporation
organized under the laws of the State of California, and any successor in
interest thereto

         (j) CONSULTANT. An independent agent, consultant, attorney, an
individual who has agreed to become an Employee within the next six months, or
any other individual who is not an Outside Director or employee of the Company
(or any Parent or Subsidiary) and who, in the opinion of the Committee, (i) is
in a position to contribute to the growth or financial success of the Company
(or any Parent or Subsidiary), (ii) is a natural person and (iii) provides bona
fide services to the Company (or any Parent or Subsidiary), which services are
not in connection with the offer or sale of securities in a capital raising
transaction, and do not directly or indirectly promote or maintain a market for
the Company's securities.

         (k) CHANGE IN CONTROL. Any of the events described in and subject to
SECTION 6.7

         (l) COVERED EMPLOYEE. A named executive officer who is one of the group
of covered employees, as defined in Section 162(m) of the Code and Treasury
Regulation ss. 1.162-27(c) (or its successor), during any such period that the
Company is a Publicly Held Corporation.

         (m) DEFERRED STOCK. Shares of Common Stock to be issued or transferred
to a Grantee under an Other Stock-Based Award granted pursuant to SECTION 5 at
the end of a specified deferral period, as set forth in the Incentive Agreement
pertaining thereto.

         (n) DISABILITY. As determined by the Committee in its discretion
exercised in good faith, a physical or mental condition of the Employee that
would entitle him to payment of disability income payments under the Company's
long term disability insurance policy or plan for employees, as then effective,
if any; or in the event that the Grantee is not covered, for whatever reason,
under the Company's long-term disability insurance policy or plan, "Disability"

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means a permanent and total disability as defined in Section 22(e)(3) of the
Code. A determination of Disability may be made by a physician selected or
approved by the Committee and, in this respect, the Grantee shall submit to any
reasonable examination by such physician upon request.

         (o) EMPLOYEE. Any employee of the Company (or any Parent or Subsidiary)
within the meaning of Section 3401(c) of the Code who, in the opinion of the
Committee, is in a position to contribute to the growth, development or
financial success of the Company (or any Parent or Subsidiary), including,
without limitation, officers who are members of the Board.

         (p) EMPLOYMENT. Employment by the Company (or any Parent or
Subsidiary), or by any corporation issuing or assuming an Incentive Award in any
transaction described in Section 424(a) of the Code, or by a parent corporation
or a subsidiary corporation of such corporation issuing or assuming such
Incentive Award, as the parent-subsidiary relationship shall be determined at
the time of the corporate action described in Section 424(a) of the Code. In
this regard, neither the transfer of a Grantee from Employment by the Company to
Employment by any Parent or Subsidiary, nor the transfer of a Grantee from
Employment by any Parent or Subsidiary to Employment by the Company, shall be
deemed to be a termination of Employment of the Grantee. Moreover, the
Employment of a Grantee shall not be deemed to have been terminated because of
an approved leave of absence from active Employment on account of temporary
illness, authorized vacation or granted for reasons of professional advancement,
education, health, government service, or military leave, or during any period
required to be treated as a leave of absence by virtue of any applicable
statute, Company personnel policy or agreement. Whether an authorized leave of
absence shall constitute termination of Employment hereunder shall be determined
by the Committee in its discretion.

         Unless otherwise provided in the Incentive Agreement, the term
"Employment" for purposes of the Plan is also defined to include (i)
compensatory or advisory services performed by a Consultant for the Company (or
any Parent or Subsidiary) and (ii) membership on the Board by an Outside
Director. Notwithstanding the foregoing, with respect to an Incentive Award that
is deferred compensation subject to Code Section 409A a termination of
Employment shall be determined by the Committee under the "separation from
service" requirements under Code Section 409A.

         (q) EXCHANGE ACT. The Securities Exchange Act of 1934, as amended

         (r) FAIR MARKET VALUE. If the Company is not a Publicly Held
Corporation at the time a determination of the Fair Market Value of the Common
Stock is required to be made hereunder, the determination of Fair Market Value
for purposes of the Plan shall be made by the Committee in its discretion

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exercised in good faith, and to the extent any Incentive Award is intended to be
exempt from Code Section 409A, consistent with Code Section 409A as it shall
determine. In this respect, the Committee may rely on such financial data,
appraisals, valuations, experts, and other sources as, in its sole and absolute
discretion, it deems advisable under the circumstances.

     If the Company is a Publicly Held Corporation, the Fair Market Value of one
share of Common Stock on the date in question is deemed to be (i) the closing
sales price on the immediately preceding business day of a share of Common Stock
as reported on the New York Stock Exchange or other principal securities
exchange on which Shares are then listed or admitted to trading, or (ii) the
closing sales price for a Share on the date of grant as quoted on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ"), (iii)
if not quoted on NASDAQ, the average of the closing bid and asked prices for a
Share as quoted by the National Quotation Bureau's "Pink Sheets" or the National
Association of Securities Dealers' OTC Bulletin Board System, or (iv) any other
method permitted by Code Section 409A as determined by the Committee in its
discretion and consistently applied. If there was no public trade of Common
Stock on the date in question, Fair Market Value shall be determined by
reference to the last preceding date on which such a trade was so reported.

         (s) GRANTEE. Any Employee, Consultant or Outside Director who is
granted an Incentive Award under the Plan.

         (t) IMMEDIATE FAMILY. With respect to a Grantee, the Grantee's child,
stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse,
sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships.

         (u) INCENTIVE AWARD. A grant of an award under the Plan to a Grantee,
including any Nonstatutory Stock Option, Incentive Stock Option, Reload Option,
Stock Appreciation Right, Restricted Stock Award, Performance Unit, Performance
Share, or Other Stock-Based Award, as well as any Supplemental Payment.

         (v) INCENTIVE AGREEMENT. The written agreement entered into between the
Company and the Grantee setting forth the terms and conditions pursuant to which
an Incentive Award is granted under the Plan, as such agreement is further
defined in SECTION 6.1(A).

         (w) INCENTIVE STOCK OPTION OR ISO. A Stock Option granted by the
Committee to an Employee under SECTION 2 which is designated by the Committee as
an Incentive Stock Option and intended to qualify as an Incentive Stock Option
under Section 422 of the Code.

         (x) INDEPENDENT SAR. A Stock Appreciation Right described in SECTION
2.5.

         (y) INSIDER. If the Company is a Publicly Held Corporation, an
individual who is, on the relevant date, an officer, director or ten percent
(10%) beneficial owner of any class of the Company's equity securities that is
registered pursuant to Section 12 of the Exchange Act, all as defined under
Section 16 of the Exchange Act.


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         (z) NONSTATUTORY STOCK OPTION. A Stock Option granted by the Committee
to a Grantee under SECTION 2 that is not designated by the Committee as an
Incentive Stock Option.

         (aa) OPTION PRICE. The exercise price at which a Share may be purchased
by the Grantee of a Stock Option.

         (bb) OTHER STOCK-BASED AWARD. An award granted by the Committee to a
Grantee under SECTION 5.1 that is valued in whole or in part by reference to, or
is otherwise based upon, Common Stock and payable in Common Stock, cash or other
consideration.

         (cc) OUTSIDE DIRECTOR. A member of the Board who is not, at the time of
grant of an Incentive Award, an employee of the Company or any Parent or
Subsidiary within the meaning of 16b-3 under the Exchange Act.

         (dd) PARENT. Any corporation (whether now or hereafter existing) which
constitutes a "parent" of the Company, as defined in Section 424(e) of the Code.

         (ee) PERFORMANCE-BASED EXCEPTION. The performance-based exception from
the tax deductibility limitations of Section 162(m) of the Code, as prescribed
in Code ss. 162(m) and Treasury Regulation ss. 1.162-27(e) (or its successor),
which is applicable during such period that the Company is a Publicly Held
Corporation.

         (ff) PERFORMANCE PERIOD. A period of time determined by the Committee
over which performance is measured for the purpose of determining a Grantee's
right to and the payment value of any Performance Unit, Performance Share or
Other Stock-Based Award.

         (gg) PERFORMANCE SHARE OR PERFORMANCE UNIT. An Incentive Award
representing a contingent right to receive cash or shares of Common Stock (which
may be Restricted Stock) at the end of a Performance Period and which, in the
case of Performance Shares, is denominated in Common Stock, and, in the case of
Performance Units, is denominated in cash values.

         (hh) PLAN. American Environmental Energy, Inc. 2008 Incentive Plan, as
set forth herein and as it may be further amended from time to time.

         (ii) PUBLICLY HELD CORPORATION. A corporation issuing any class of
common equity securities required to be registered under Section 12 of the
Exchange Act.

         (jj) RESTRICTED STOCK. Shares of Common Stock issued or transferred to
a Grantee pursuant to SECTION 3.

         (kk) RESTRICTED STOCK AWARD. An authorization by the Committee to issue
or transfer Restricted Stock to a Grantee.


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         (ll) RESTRICTION PERIOD. The period of time determined by the Committee
and set forth in the Incentive Agreement during which the transfer of Restricted
Stock by the Grantee is restricted.

         (mm) RETIREMENT. The voluntary termination of Employment from the
Company or any Parent or Subsidiary constituting retirement for age on any date
after the Employee attains the normal retirement age of 65 years, or such other
age as may be designated by the Committee in the Employee's Incentive Agreement.

         (nn) SHARE. A share of the Common Stock of the Company.

         (oo) SHARE POOL. The number of shares authorized for issuance under
SECTION 1.4, as adjusted for awards and payouts under SECTION 1.5 and as
adjusted for changes in corporate capitalization under SECTION 6.5.

         (pp) SPREAD. The difference between the exercise price per Share
specified in any Independent SAR grant and the Fair Market Value of a Share on
the date of exercise of the Independent SAR.

         (qq) STOCK APPRECIATION RIGHT OR SAR. A Tandem SAR described in SECTION
2.4 or an Independent SAR described in SECTION 2.5.

         (rr) STOCK OPTION OR OPTION. Pursuant to SECTION 2, (i) an Incentive
Stock Option granted to an Employee, or (ii) a Nonstatutory Stock Option granted
to an Employee, Consultant or Outside Director, whereunder such option the
Grantee has the right to purchase Shares of Common Stock. In accordance with
Section 422 of the Code, only an Employee may be granted an Incentive Stock
Option.

         (ss) SUBSIDIARY. Any corporation (whether now or hereafter existing)
which constitutes a "subsidiary" of the Company, as defined in Section 424(f) of
the Code.

         (tt) SUPPLEMENTAL PAYMENT. Any amount, as described in SECTIONS 2.7,
3.4 AND/OR 4.2, that is dedicated to payment of income taxes which are payable
by the Grantee resulting from an Incentive Award.

         (uu) TANDEM SAR. A Stock Appreciation Right that is granted in
connection with a related Stock Option pursuant to SECTION 2.4, the exercise of
which shall require forfeiture of the right to purchase a Share under the
related Stock Option (and when a Share is purchased under the Stock Option, the
Tandem SAR shall similarly be canceled).


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1.3 PLAN ADMINISTRATION

         (a) AUTHORITY OF THE COMMITTEE. Except as may be limited by law and
subject to the provisions herein, the Committee shall have full power to (i)
select Grantees who shall participate in the Plan; (ii) determine the sizes,
duration and types of Incentive Awards; (iii) determine the terms and conditions
of Incentive Awards and Incentive Agreements; (iv) determine whether any Shares
subject to Incentive Awards will be subject to any restrictions on transfer; (v)
construe and interpret the Plan and any Incentive Agreement or other agreement
entered into under the Plan; and (vi) establish, amend, or waive rules for the
Plan's administration. Further, the Committee shall make all other
determinations which may be necessary or advisable for the administration of the
Plan including, without limitation, correcting any defect, supplying any
omission or reconciling any inconsistency in the Plan or Incentive Agreement.
The determination of the Committee shall be final and binding on all persons.

         (b) MEETINGS. The Committee shall designate a chairman from among its
members who shall preside at all of its meetings, and shall designate a
secretary, without regard to whether that person is a member of the Committee,
who shall keep the minutes of the proceedings and all records, documents, and
data pertaining to its administration of the Plan. Meetings shall be held at
such times and places as shall be determined by the Committee and the Committee
may hold telephonic meetings. The Committee may take any action otherwise proper
under the Plan by the affirmative vote, taken with or without a meeting, of a
majority of its members. The Committee may authorize any one or more of their
members or any officer of the Company to execute and deliver documents on behalf
of the Committee.

         (c) DECISIONS BINDING. All determinations and decisions made by the
Committee shall be made in its discretion pursuant to the provisions of the
Plan, and shall be final, conclusive and binding on all persons including the
Company, its shareholders, Employees, Grantees, and their estates and
beneficiaries. The Committee's decisions and determinations with respect to any
Incentive Award need not be uniform and may be made selectively among Incentive
Awards and Grantees, whether or not such Incentive Awards are similar or such
Grantees are similarly situated.

         (d) MODIFICATION OF OUTSTANDING INCENTIVE AWARDS. Subject to the
stockholder approval requirements of SECTION 7.7 if applicable, the Committee
may, in its discretion, provide for the extension of the exercisability of an
Incentive Award, accelerate the vesting or exercisability of an Incentive Award,
eliminate or make less restrictive any restrictions contained in an Incentive
Award, waive any restriction or other provisions of an Incentive Award, or
otherwise amend or modify an Incentive Award in any manner that is either (i)
not adverse to the Grantee to whom such Incentive Award was granted or (ii)
consented to by such Grantee. With respect to an Incentive Award that is an
incentive stock option (as described in Section 422 of the Code), no adjustment
to such option shall be made to the extent constituting a "modification" within
the meaning of Section 424(h)(3) of the Code unless otherwise agreed to by the
optionee in writing.


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         (e) DELEGATION OF AUTHORITY. The Committee may delegate to designated
officers or other employees of the Company any of its duties and authority under
the Plan pursuant to such conditions or limitations as the Committee may
establish from time to time; provided, however, the Committee may not delegate
to any person the authority to (i) grant Incentive Awards, or (ii), if the
Company is a Publicly Held Corporation, take any action which would contravene
the requirements of Rule 16b-3 under the Exchange Act or the Performance-Based
Exception under Section 162(m) of the Code.

         (f) EXPENSES OF COMMITTEE. The Committee may employ legal counsel,
including, without limitation, independent legal counsel and counsel regularly
employed by the Company, and other agents as the Committee may deem appropriate
for the administration of the Plan. The Committee may rely upon any opinion or
computation received from any such counsel or agent. All expenses incurred by
the Committee in interpreting and administering the Plan, including, without
limitation, meeting expenses and professional fees, shall be paid by the
Company.

         (g) SURRENDER OF PREVIOUS INCENTIVE AWARDS. The Committee may, in its
absolute discretion, grant Incentive Awards to Grantees on the condition that
such Grantees surrender to the Committee for cancellation such other Incentive
Awards (including, without limitation, Incentive Awards with higher exercise
prices) as the Committee directs. Incentive Awards granted on the condition
precedent of surrender of outstanding Incentive Awards shall not count against
the limits set forth in SECTION 1.4 until such time as such previous Incentive
Awards are surrendered and cancelled.

         (h) INDEMNIFICATION. Each person who is or was a member of the
Committee, or of the Board, shall be indemnified by the Company against and from
any damage, loss, liability, cost and expense that may be imposed upon or
reasonably incurred by him in connection with or resulting from any claim,
action, suit, or proceeding to which he may be a party or in which he may be
involved by reason of any action taken or failure to act under the Plan
(including such indemnification for a person's own, sole, concurrent or joint
negligence or strict liability), except for any such act or omission
constituting willful misconduct or gross negligence. Such person shall be
indemnified by the Company for all amounts paid by him in settlement thereof,
with the Company's approval, or paid by him in satisfaction of any judgment in
any such action, suit, or proceeding against him, provided he shall give the
Company an opportunity, at its own expense, to handle and defend the same before
he undertakes to handle and defend it on his own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification to
which such persons may be entitled under the Company's Articles of Incorporation
or Bylaws, as a matter of law, or otherwise, or any power that the Company may
have to indemnify them or hold them harmless.

1.4 SHARES OF COMMON STOCK AVAILABLE FOR INCENTIVE AWARDS


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         Subject to adjustment under SECTION 6.5, there shall be available for
Incentive Awards that are granted wholly or partly in Common Stock (including
rights or Stock Options that may be exercised for or settled in Common Stock) a
number of Shares of Common Stock which shall equal, from time to time, the
GREATER of (i) fifteen percent (15%) of the number of issued and outstanding
Shares as of the first day of the then-current fiscal quarter of the Company, or
(ii) five million (5,000,000) Shares. The number of Shares of Common Stock that
are the subject of Incentive Awards under this Plan, shall be adjusted as
provided in Section 1.5 and shall again immediately become available for
Incentive Awards hereunder; provided, however, the aggregate number of Shares
which may be issued upon exercise of ISOs shall in no event exceed five million
(5,000,000) Shares (subject to adjustment pursuant to SECTION 6.5). The
Committee may from time to time adopt and observe such procedures concerning the
counting of Shares against the Plan maximum as it may deem appropriate.

         During any period that the Company is a Publicly Held Corporation, the
following rules shall apply to grants of Incentive Awards:

         (a) Subject to adjustment as provided in SECTION 6.5, the maximum
aggregate number of Shares of Common Stock (including Stock Options, SARs,
Restricted Stock, Performance Units and Performance Shares paid out in Shares,
or Other Stock-Based Awards paid out in Shares) that may be granted in any
calendar year pursuant to any Incentive Award held by any individual Employee
shall be seven hundred fifty thousand (750,000) Shares.

         (b) The maximum aggregate cash payout (including SARs, Performance
Units and Performance Shares paid out in cash, or Other Stock-Based Awards paid
out in cash) with respect to Incentive Awards granted in any calendar year which
may be made to any individual Employee shall be one million dollars
($1,000,000).

         (c) With respect to any Stock Option or Stock Appreciation Right
granted to an Employee that is canceled or repriced, the number of Shares
subject to such Stock Option or Stock Appreciation Right shall continue to count
against the maximum number of Shares that may be the subject of Stock Options or
Stock Appreciation Rights granted to such Employee to the extent required by and
in accordance with Section 162(m) of the Code.

         (d) The limitations of subsections (a), (b) and (c) above shall be
construed and administered so as to comply with the Performance-Based Exception.

1.5 SHARE POOL ADJUSTMENTS FOR AWARDS AND PAYOUTS

         The following Incentive Awards and payouts shall reduce, on a one Share
for one Share basis, the number of Shares authorized for issuance under the
Share Pool:

         (a) Stock Option;


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         (b) SAR (except a Tandem SAR);

         (c) Restricted Stock;

         (d) A payout of a Performance Share in Shares;

         (e) A payout of a Performance Unit in Shares; and

         (f) A payout of an Other Stock-Based Award in Shares.

         The following transactions shall restore, on a one Share for one Share
basis, the number of Shares authorized for issuance under the Share Pool:

         (a) A Payout of a SAR, Tandem SAR, Restricted Stock Award, or Other
Stock-Based Award in the form of cash;

         (b) A cancellation, termination, expiration, forfeiture, or lapse for
any reason (with the exception of the termination of a Tandem SAR upon exercise
of the related Stock Option, or the termination of a related Stock Option upon
exercise of the corresponding Tandem SAR) of any Shares subject to an Incentive
Award;

         (c) Payment of an Option Price with previously acquired Shares;
provided, however, that the Share Pool shall not be increased by the number of
Shares withheld (which would otherwise be acquired on the exercise) as payment
of the Option Price or for tax withholding; and

         (d) Payment or the withholding of Shares for taxes or the purchase
price for Shares under a Restricted Stock Award.

1.6 COMMON STOCK AVAILABLE

         The Common Stock available for issuance or transfer under the Plan
shall be made available from Shares now or hereafter (a) held in the treasury of
the Company, (b) authorized but unissued shares, or (c) shares to be purchased
or acquired by the Company. No fractional shares shall be issued under the Plan;
payment for fractional shares shall be made in cash.

1.7 PARTICIPATION

         (a) ELIGIBILITY. The Committee shall from time to time designate those
Employees, Consultants and/or Outside Directors, if any, to be granted Incentive
Awards under the Plan, the type of Incentive Awards granted, the number of
Shares, Stock Options, rights or units, as the case may be, which shall be
granted to each such person, and any other terms or conditions relating to the
Incentive Awards as it may deem appropriate to the extent consistent with the
provisions of the Plan. A Grantee who has been granted an Incentive Award may,
if otherwise eligible, be granted additional Incentive Awards at any time. With

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respect to Nonstatutory Stock Options or SARs intended to be excluded from the
requirements of Code Section 409A, Incentive Awards of Nonstatutory Stock
Options or SARs may only be made to Grantees if the Incentive Award would be for
"service recipient stock" within the meaning of Code Section 409A, as determined
by the Committee.

         (b) INCENTIVE STOCK OPTION ELIGIBILITY. No Consultant or Outside
Director shall be eligible for the grant of any Incentive Stock Option. In
addition, no Employee shall be eligible for the grant of any Incentive Stock
Option who owns or would own immediately before the grant of such Incentive
Stock Option, directly or indirectly, stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company,
or any Parent or Subsidiary. This restriction does not apply if, at the time
such Incentive Stock Option is granted, the Incentive Stock Option exercise
price is at least one hundred and ten percent (110%) of the Fair Market Value on
the date of grant and the Incentive Stock Option by its terms is not exercisable
after the expiration of five (5) years from the date of grant. For the purpose
of the immediately preceding sentence, the attribution rules of Section 424(d)
of the Code shall apply for the purpose of determining an Employee's percentage
ownership in the Company or any Parent or Subsidiary. This paragraph shall be
construed consistent with the requirements of Section 422 of the Code.

1.8 TYPES OF INCENTIVE AWARDS

         The types of Incentive Awards under the Plan are Stock Options, Stock
Appreciation Rights and Supplemental Payments as described in SECTION 2,
Restricted Stock and Supplemental Payments as described in SECTION 3,
Performance Units, Performance Shares and Supplemental Payments as described in
SECTION 4, Other Stock-Based Awards and Supplemental Payments as described in
SECTION 5, or any combination of the foregoing.

1.9 OTHER COMPENSATION PROGRAMS

         The existence and terms of the Plan shall not limit the authority of
the Board or Company or any Company affiliate in compensating directors, Outside
Directors, Employees or Consultants of the Company, in such other forms and
amounts, including compensation pursuant to any other plans or programs
(including but not limited to bonus programs) as may be currently in effect or
adopted in the future, as it may determine from time to time.

1.10 REPRICING PROHIBITED

         Except in connection with a corporate transaction involving the Company
(including, without limitation, any stock dividend, stock split, extraordinary
cash dividend, recapitalization, reorganization, merger, consolidation,
split-up, spin-off, combination, or exchange of shares), the terms of
outstanding Incentive Awards may not be amended to reduce the exercise price of
outstanding Options or SARs or cancel outstanding Options or SARS in exchange

                                       12
<PAGE>

for cash, other Incentive Awards or Options or SARs with an exercise price that
is less than the exercise price of the original Options or SARs without
stockholder approval.


                                    SECTION 2

                   STOCK OPTIONS AND STOCK APPRECIATION RIGHTS

2.1 GRANT OF STOCK OPTIONS

         The Committee is authorized to grant (a) Nonstatutory Stock Options to
Employees, Consultants and/or Outside Directors and (b) Incentive Stock Options
to Employees only, in accordance with the terms and conditions of the Plan, and
with such additional terms and conditions, not inconsistent with the Plan, as
the Committee shall determine in its discretion. Successive grants may be made
to the same Grantee whether or not any Stock Option previously granted to such
person remains unexercised.

2.2 STOCK OPTION TERMS

         (a) WRITTEN AGREEMENT. Each grant of a Stock Option shall be evidenced
by a written Incentive Agreement. Among its other provisions, each Incentive
Agreement shall set forth the extent to which the Grantee shall have the right
to exercise the Stock Option following termination of the Grantee's Employment.
Such provisions shall be determined in the discretion of the Committee, shall be
included in the Grantee's Incentive Agreement, need not be uniform among all
Stock Options issued pursuant to the Plan.

         (b) NUMBER OF SHARES. Each Stock Option shall specify the number of
Shares of Common Stock to which it pertains.

         (c) EXERCISE PRICE. The exercise price per Share of Common Stock under
each Stock Option shall be determined by the Committee; provided, however, that
such exercise price shall not be less than 100% of the Fair Market Value per
Share on the date the Stock Option is granted (110% in the case of an Incentive
Stock Option for 10% or greater shareholders pursuant to SECTION 1.7(B)). Each
Stock Option shall specify the method of exercise which shall be consistent with
the requirements of SECTION 2.3(A).

         (d) TERM. In the Incentive Agreement, the Committee shall fix the term
of each Stock Option (which shall be not more than ten (10) years from the date
of grant for ISO or SAR grants; five (5) years for ISO grants to 10% or greater
shareholders pursuant to SECTION 1.7(B)). In the event no term is fixed, such
term shall be ten (10) years from the date of grant.

         (e) EXERCISE. The Committee shall determine the time or times at which
a Stock Option may be exercised in whole or in part. Each Stock Option may
specify the required period of continuous Employment and/or the performance

                                       13
<PAGE>

objectives to be achieved before the Stock Option or portion thereof will become
exercisable. Each Stock Option, the exercise of which, or the timing of the
exercise of which, is dependent, in whole or in part, on the achievement of
designated performance objectives, may specify a minimum level of achievement in
respect of the specified performance objectives below which no Stock Options
will be exercisable and a method for determining the number of Stock Options
that will be exercisable if performance is at or above such minimum but short of
full achievement of the performance objectives. All such terms and conditions
shall be set forth in the Incentive Agreement.

         (f) $100,000 ANNUAL LIMIT ON INCENTIVE STOCK OPTIONS. Notwithstanding
any contrary provision in the Plan, to the extent that the aggregate Fair Market
Value (determined as of the time the Incentive Stock Option is granted) of the
Shares of Common Stock with respect to which Incentive Stock Options are
exercisable for the first time by any Grantee during any single calendar year
(under the Plan and any other stock option plans of the Company and its
Subsidiaries or Parent) exceeds the sum of $100,000, such Incentive Stock Option
shall be treated as a Nonstatutory Stock Option to the extent in excess of the
$100,000 limit, and not an Incentive Stock Option, but all other terms and
provisions of such Stock Option shall remain unchanged. This paragraph shall be
applied by taking Incentive Stock Options into account in the order in which
they were granted and shall be construed in accordance with Section 422(d) of
the Code. In the absence of such regulations or other authority, or if such
regulations or other authority require or permit a designation of the Options
which shall cease to constitute Incentive Stock Options, then such Incentive
Stock Options, only to the extent of such excess, shall automatically be deemed
to be Nonstatutory Stock Options but all other terms and conditions of such
Incentive Stock Options, and the corresponding Incentive Agreement, shall remain
unchanged.

2.3 STOCK OPTION EXERCISES

         (a) METHOD OF EXERCISE AND PAYMENT. Stock Options shall be exercised by
the delivery of a signed written notice of exercise to the Company as of a date
set by the Company in advance of the effective date of the proposed exercise.
The notice shall set forth the number of Shares with respect to which the Option
is to be exercised, accompanied by full payment for the Shares.

         The Option Price upon exercise of any Stock Option shall be payable to
the Company in full either: (i) in cash or its equivalent, or (ii) subject to
prior approval by the Committee in its discretion, by tendering previously
acquired Shares having an aggregate Fair Market Value at the time of exercise
equal to the Option Price (provided that the Shares which are tendered must have
been held by the Grantee for at least six (6) months prior to their tender to
satisfy the Option Price), or (iii) subject to prior approval by the Committee
in its discretion, by withholding Shares which otherwise would be acquired on
exercise having an aggregate Fair Market Value at the time of exercise equal to
the total Option Price, or (iv) subject to prior approval by the Committee in
its discretion, by a combination of (i), (ii), and (iii) above. Any payment in
Shares shall be effected by the surrender of such Shares to the Company in good

                                       14
<PAGE>

form for transfer and shall be valued at their Fair Market Value on the date
when the Stock Option is exercised. Unless otherwise permitted by the Committee
in its discretion, the Grantee shall not surrender, or attest to the ownership
of, Shares in payment of the Option Price if such action would cause the Company
to recognize compensation expense (or additional compensation expense) with
respect to the Stock Option for financial reporting purposes. In no event will
the Committee allow the Option Price to be paid with a form of consideration,
including, but not limited to, a loan to an Employee, if such form of
consideration would violate the Sarbanes-Oxley Act of 2002 as determined by the
Committee in its discretion.

         The Committee, in its discretion, also may allow the Option Price to be
paid with such other consideration as shall constitute lawful consideration for
the issuance of Shares (including, without limitation, effecting a "cashless
exercise" with a broker of the Option), subject to applicable securities law
restrictions and tax withholdings, or by any other means which the Committee
determines to be consistent with the Plan's purpose and applicable law. A
"cashless exercise" of an Option is a procedure by which a broker provides the
funds to the Grantee to effect an Option exercise, to the extent consented to by
the Committee in its discretion. At the direction of the Grantee, the broker
will either (i) sell all of the Shares received when the Option is exercised and
pay the Grantee the proceeds of the sale (minus the Option Price, withholding
taxes and any fees due to the broker) or (ii) sell enough of the Shares received
upon exercise of the Option to cover the Option Price, withholding taxes and any
fees due the broker and deliver to the Grantee (either directly or through the
Company) a stock certificate for the remaining Shares. Dispositions to a broker
effecting a cashless exercise are not exempt under Section 16 of the Exchange
Act (if the Company is a Publicly Held Corporation).

         The Committee, in its discretion, may also allow an Option to be
exercised by a broker-dealer acting on behalf of the Grantee if (i) the
broker-dealer has received from the Grantee a duly endorsed Incentive Agreement
evidencing such Option and instructions signed by the Grantee requesting the
Company to deliver the shares of Common Stock subject to such Option to the
broker-dealer on behalf of the Grantee and specifying the account into which
such shares should be deposited, (ii) adequate provision has been made with
respect to the payment of any withholding taxes due upon such exercise, and
(iii) the broker-dealer and the Grantee have otherwise complied with Section
220.3(e)(4) of Regulation T, 12 CFR Part 220 (or its successor).

         As soon as practicable after receipt of a written notification of
exercise and full payment, the Company shall deliver, or cause to be delivered,
to or on behalf of the Grantee, in the name of the Grantee or other appropriate
recipient, Share certificates for the number of Shares purchased under the Stock
Option. Such delivery shall be effected for all purposes when the Company or a
stock transfer agent of the Company shall have deposited such certificates in
the United States mail, addressed to Grantee or other appropriate recipient.

         Subject to SECTION 6.2, during the lifetime of a Grantee, each Option
granted to him shall be exercisable only by the Grantee (or his legal guardian
in the event of his Disability) or by a broker-dealer acting on his behalf

                                       15
<PAGE>

pursuant to a cashless exercise under the foregoing provisions of this SECTION
2.3(A).

         (b) RESTRICTIONS ON SHARE TRANSFERABILITY. The Committee may impose
such restrictions on any grant of Stock Options or on any Shares acquired
pursuant to the exercise of a Stock Option as it may deem advisable, including,
without limitation, restrictions under (i) any stockholders' agreement, buy/sell
agreement, stockholders' agreement, right of first refusal, non-competition, and
any other agreement between the Company and any of its securities holders or
employees, (ii) any applicable federal securities laws, (iii) the requirements
of any stock exchange or market upon which such Shares are then listed and/or
traded, or (iv) any blue sky or state securities law applicable to such Shares.
Any certificate issued to evidence Shares issued upon the exercise of an
Incentive Award may bear such legends and statements as the Committee shall deem
advisable to assure compliance with federal and state laws and regulations.

         Any Grantee or other person exercising an Incentive Award may be
required by the Committee to give a written representation that the Incentive
Award and the Shares subject to the Incentive Award will be acquired for
investment and not with a view to public distribution; provided, however, that
the Committee, in its sole discretion, may release any person receiving an
Incentive Award from any such representations either prior to or subsequent to
the exercise of the Incentive Award.

         (c) NOTIFICATION OF DISQUALIFYING DISPOSITION OF SHARES FROM INCENTIVE
STOCK OPTIONS. Notwithstanding any other provision of the Plan, a Grantee who
disposes of Shares of Common Stock acquired upon the exercise of an Incentive
Stock Option by a sale or exchange either (i) within two (2) years after the
date of the grant of the Incentive Stock Option under which the Shares were
acquired or (ii) within one (1) year after the transfer of such Shares to him
pursuant to exercise, shall promptly notify the Company of such disposition, the
amount realized and his adjusted basis in such Shares.

         (d) PROCEEDS OF OPTION EXERCISE. The proceeds received by the Company
from the sale of Shares pursuant to Stock Options exercised under the Plan shall
be used for general corporate purposes.

2.4 STOCK APPRECIATION RIGHTS IN TANDEM WITH NONSTATUTORY STOCK OPTIONS

         (a) GRANT. The Committee may, at the time of grant of a Nonstatutory
Stock Option, or at any time thereafter during the term of the Nonstatutory
Stock Option, grant Stock Appreciation Rights with respect to all or any portion
of the Shares of Common Stock covered by such Nonstatutory Stock Option. A Stock
Appreciation Right in tandem with a Nonstatutory Stock Option is referred to
herein as a "TANDEM SAR."

         (b) GENERAL PROVISIONS. The terms and conditions of each Tandem SAR
shall be evidenced by an Incentive Agreement. The Option Price per Share of a
Tandem SAR shall be fixed in the Incentive Agreement and shall not be less than

                                       16
<PAGE>

one hundred percent (100%) of the Fair Market Value of a Share on the grant date
of the Nonstatutory Stock Option to which it relates.

         (c) EXERCISE. A Tandem SAR may be exercised at any time the
Nonstatutory Stock Option to which it relates is then exercisable, but only to
the extent such Nonstatutory Stock Option is exercisable, and shall otherwise be
subject to the conditions applicable to such Nonstatutory Stock Option. When a
Tandem SAR is exercised, the Nonstatutory Stock Option to which it relates shall
terminate to the extent of the number of Shares with respect to which the Tandem
SAR is exercised. Similarly, when a Nonstatutory Stock Option is exercised, the
Tandem SARs relating to the Shares covered by such Nonstatutory Stock Option
exercise shall terminate. Any Tandem SAR which is outstanding on the last day of
the term of the related Nonstatutory Stock Option shall be automatically
exercised on such date for cash, without the need for any action by the Grantee,
to the extent of any Appreciation.

         (d) SETTLEMENT. Upon exercise of a Tandem SAR, the holder shall
receive, for each Share with respect to which the Tandem SAR is exercised, an
amount equal to the Appreciation. The Appreciation shall be payable in cash,
Common Stock, or a combination of both, as specified in the Incentive Agreement
(or in the discretion of the Committee if not so specified). The Appreciation
shall be paid within 30 calendar days of the exercise of the Tandem SAR. The
number of Shares of Common Stock which shall be issuable upon exercise of a
Tandem SAR shall be determined by dividing (1) by (2), where (1) is the number
of Shares as to which the Tandem SAR is exercised multiplied by the Appreciation
in such shares and (2) is the Fair Market Value of a Share on the exercise date.

2.5 STOCK APPRECIATION RIGHTS INDEPENDENT OF NONSTATUTORY STOCK OPTIONS

         (a) GRANT. The Committee may grant Stock Appreciation Rights
independent of Nonstatutory Stock Options ("INDEPENDENT SARS").

         (b) GENERAL PROVISIONS. The terms and conditions of each Independent
SAR shall be evidenced by an Incentive Agreement. The exercise price per share
of Common Stock shall be not less than one hundred percent (100%) of the Fair
Market Value of a Share of Common Stock on the date of grant of the Independent
SAR. The term of an Independent SAR shall be determined by the Committee.

         (c) EXERCISE. Independent SARs shall be exercisable at such time and
subject to such terms and conditions as the Committee shall specify in the
Incentive Agreement for the Independent SAR grant.

         (d) SETTLEMENT. Upon exercise of an Independent SAR, the holder shall
receive, for each Share specified in the Independent SAR grant, an amount equal
to the Spread. The Spread shall be payable in cash, Common Stock, or a
combination of both, in the discretion of the Committee or as specified in the
Incentive Agreement. The Spread shall be paid within 30 calendar days of the

                                       17
<PAGE>

exercise of the Independent SAR. The number of Shares of Common Stock which
shall be issuable upon exercise of an Independent SAR shall be determined by
dividing (1) by (2), where (1) is the number of Shares as to which the
Independent SAR is exercised multiplied by the Spread in such Shares and (2) is
the Fair Market Value of a Share on the exercise date.

2.6 RELOAD OPTIONS

     At the discretion of the Committee, the Grantee may be granted under an
Incentive Agreement, replacement Stock Options under the Plan that permit the
Grantee to purchase an additional number of Shares equal to the number of
         previously owned Shares surrendered by the Grantee to pay for all or a
portion of the Option Price upon exercise of his Stock Options. The terms and
conditions
of such replacement Stock Options shall be set forth in the Incentive Agreement.

2.7 SUPPLEMENTAL PAYMENT ON EXERCISE OF NONSTATUTORY STOCK OPTIONS OR STOCK
APPRECIATION RIGHTS

         The Committee, either at the time of grant or as of the time of
exercise of any Nonstatutory Stock Option or Stock Appreciation Right, may
provide in the Incentive Agreement for a Supplemental Payment by the Company to
the Grantee with respect to the exercise of any Nonstatutory Stock Option or
Stock Appreciation Right. The Supplemental Payment shall be in the amount
specified by the Committee, which amount shall not exceed the amount necessary
to pay the federal and state income tax payable with respect to both the
exercise of the Nonstatutory Stock Option and/or Stock Appreciation Right and
the receipt of the Supplemental Payment, assuming the holder is taxed at either
the maximum effective income tax rate applicable thereto or at a lower tax rate
as deemed appropriate by the Committee. The Committee shall have the discretion
to grant Supplemental Payments that are payable solely in cash or Supplemental
Payments that are payable in cash, Common Stock, or a combination of both, as
determined by the Committee at the time of payment.

                                    SECTION 3

                                RESTRICTED STOCK

3.1 AWARD OF RESTRICTED STOCK

         (a) GRANT. In consideration of the performance of Employment by any
Grantee who is an Employee, Consultant or Outside Director, Shares of Restricted
Stock may be awarded under the Plan by the Committee with such restrictions
during the Restriction Period as the Committee may designate in its discretion,
any of which restrictions may differ with respect to each particular Grantee.
Restricted Stock shall be awarded for no additional consideration or such

                                       18
<PAGE>

additional consideration as the Committee may determine, which consideration may
be less than, equal to or more than the Fair Market Value of the shares of
Restricted Stock on the grant date. The terms and conditions of each grant of
Restricted Stock shall be evidenced by an Incentive Agreement.

         (b) IMMEDIATE TRANSFER WITHOUT IMMEDIATE DELIVERY OF RESTRICTED STOCK.
Unless otherwise specified in the Grantee's Incentive Agreement, each Restricted
Stock Award shall constitute an immediate transfer of the record and beneficial
ownership of the Shares of Restricted Stock to the Grantee in consideration of
the performance of services as an Employee, Consultant or Outside Director, as
applicable, entitling such Grantee to all voting and other ownership rights in
such Shares.

         As specified in the Incentive Agreement, a Restricted Stock Award may
limit the Grantee's dividend rights during the Restriction Period in which the
shares of Restricted Stock are subject to a "substantial risk of forfeiture"
(within the meaning given to such term under Code Section 83) and restrictions
on transfer. In the Incentive Agreement, the Committee may apply any
restrictions to the dividends that the Committee deems appropriate. Without
limiting the generality of the preceding sentence, if the grant or vesting of
Shares of Restricted Stock granted to a Covered Employee, if applicable, is
designed to comply with the requirements of the Performance-Based Exception, the
Committee may apply any restrictions it deems appropriate to the payment of
dividends declared with respect to such Shares of Restricted Stock, such that
the dividends and/or the Shares of Restricted Stock maintain eligibility for the
Performance-Based Exception. In the event that any dividend constitutes a
derivative security or an equity security pursuant to the rules under Section 16
of the Exchange Act, if applicable, such dividend shall be subject to a vesting
period equal to the remaining vesting period of the Shares of Restricted Stock
with respect to which the dividend is paid.

         Shares awarded pursuant to a grant of Restricted Stock may be evidenced
in a manner as the Committee shall deem appropriate, including without
limitation book entry, Shares issued in the name of the Grantee and held,
together with a stock power endorsed in blank, by the Committee or Company (or
their delegates), or in trust or in escrow pursuant to an agreement satisfactory
to the Committee, as determined by the Committee, until such time as the
restrictions on transfer have expired or the Committee may provide for the
transfer of the Shares of the Restricted Stock to a transfer agent on behalf of
the Grantee pursuant to terms as determined by the Committee to maintain the
restricted status of the Shares until vested. If the Company issues a stock
certificate, registered in the name of the Grantee to whom such Shares of
Restricted Stock were granted, evidencing such Shares, the Company shall not
cause to be issued such a stock certificate unless it has received a stock power
duly endorsed in blank with respect to such Shares. Each such stock certificate
shall bear the following legend or any other legend approved by the Company:

THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF STOCK REPRESENTED
HEREBY ARE SUBJECT TO THE RESTRICTIONS, TERMS AND CONDITIONS (INCLUDING
FORFEITURE AND RESTRICTIONS AGAINST TRANSFER) CONTAINED IN THE AMERICAN
ENVIRONMENTAL ENERGY, INC. 2008 INCENTIVE PLAN AND AN INCENTIVE AGREEMENT

                                       19
<PAGE>

ENTERED INTO BETWEEN THE REGISTERED OWNER OF SUCH SHARES AND AMERICAN
ENVIRONMENTAL ENERGY, INC. A COPY OF THE PLAN AND INCENTIVE AGREEMENT ARE ON
FILE IN THE CORPORATE OFFICES OF AMERICAN ENVIRONMENTAL ENERGY, INC.

         Such legend shall not be removed from the certificate evidencing such
Shares of Restricted Stock until such Shares vest pursuant to the terms of the
Incentive Agreement.


3.2 RESTRICTIONS

         (a) FORFEITURE OF RESTRICTED STOCK. Restricted Stock awarded to a
Grantee may be subject to the following restrictions until the expiration of the
Restriction Period: (i) a restriction that constitutes a "substantial risk of
forfeiture" (as defined in Code Section 83), or a restriction on
transferability; (ii) unless otherwise specified by the Committee in the
Incentive Agreement, the Restricted Stock that is subject to restrictions which
are not satisfied shall be forfeited and all rights of the Grantee to such
Shares shall terminate; and (iii) any other restrictions that the Committee
determines in advance are appropriate, including, without limitation, rights of
repurchase or first refusal in the Company or provisions subjecting the
Restricted Stock to a continuing substantial risk of forfeiture in the hands of
any transferee. Any such restrictions shall be set forth in the particular
Grantee's Incentive Agreement.

         (b) REMOVAL OF RESTRICTIONS. The Committee, in its discretion, shall
have the authority to remove any or all of the restrictions on the Restricted
Stock if it determines that, by reason of a change in applicable law or another
change in circumstance arising after the grant date of the Restricted Stock,
such action is appropriate.

3.3 LAPSE OF RESTRICTIONS

         Upon the lapse of the forfeiture restrictions as set forth in the
Incentive Agreement, the unrestricted Shares shall be evidenced in such manner
as determined by the Committee and shall be issued to the Grantee promptly after
the restrictions have lapsed in a manner as determined by the Committee in its
sole discretion.

3.4 SUPPLEMENTAL PAYMENT ON VESTING OF RESTRICTED STOCK

         The Committee, either at the time of grant or vesting of Restricted
Stock, may provide for a Supplemental Payment by the Company to the holder in an
amount specified by the Committee, which amount shall not exceed the amount
necessary to pay the federal and state income tax payable with respect to both
the vesting of the Restricted Stock and receipt of the Supplemental Payment,
assuming the Grantee is taxed at either the maximum effective income tax rate
applicable thereto or at a lower tax rate as deemed appropriate by the
Committee. The Committee shall have the discretion to grant Supplemental
Payments that are payable solely in cash or Supplemental Payments that are

                                       20
<PAGE>

payable in cash, Common Stock, or a combination of both, as determined by the
Committee at the time of payment.

                                    SECTION 4

                    PERFORMANCE UNITS AND PERFORMANCE SHARES

4.1 PERFORMANCE BASED AWARDS

         (a) GRANT. The Committee is authorized to grant Performance Units and
Performance Shares to selected Grantees who are Employees, Outside Directors or
Consultants. Each grant of Performance Units and/or Performance Shares shall be
evidenced by an Incentive Agreement in such amounts and upon such terms as shall
be determined by the Committee. The Committee may make grants of Performance
Units or Performance Shares in such a manner that more than one Performance
Period is in progress concurrently. For each Performance Period, the Committee
shall establish the number of Performance Units or Performance Shares and their
contingent values which may vary depending on the degree to which performance
criteria established by the Committee are met.

         (b) PERFORMANCE CRITERIA. The Committee may establish performance goals
applicable to Performance Shares or Performance Units based upon criteria in one
or more of the following categories: (i) performance of the Company as a whole,
(ii) performance of a segment of the Company's business, and (iii) individual
performance. Performance criteria for the Company shall relate to the
achievement of predetermined financial objectives for the Company and its
Subsidiaries on a consolidated basis. Performance criteria for a segment of the
Company's business shall relate to the achievement of financial and operating
objectives of the segment for which the Grantee is accountable.

         Examples of performance criteria shall include one or more of the
following pre-tax or after-tax profit levels, including: earnings per share,
earnings before interest and taxes, earnings before interest, taxes,
depreciation and amortization, net operating profits after tax, and net income;
total stockholder return; return on assets, equity, capital or investment; cash
flow and cash flow return on investment; economic value added and economic
profit; growth in earnings per share; levels of operating expense, maintenance
expenses or measures of customer satisfaction and customer service as determined
from time to time including the relative improvement therein; stock price
performance, sales, costs, production volumes, or reserves added. Individual
performance criteria shall relate to a Grantee's overall performance, taking
into account, among other measures of performance, the attainment of individual
goals and objectives. The performance criteria may differ among Grantees. The
performance criteria need not be based on an increase or positive result and may
include for example, maintaining the status quo or limiting economic loss.

                                       21
<PAGE>

         At the beginning of each Performance Period, the Committee shall (i)
establish for such Performance Period specific financial or non-financial
performance objectives that the Committee believes are relevant to the Company's
business objectives; (ii) determine the value of a Performance Unit or the
number of Shares under a Performance Share grant relative to performance
objectives; and (iii) notify each Grantee in writing of the established
performance objectives and, if applicable, the minimum, target, and maximum
value of Performance Units or Performance Shares for such Performance Period.

         (c) MODIFICATION. If an Incentive Award is intended to meet the
Performance Based Exception, the performance criteria shall preclude discretion
to increase the amount of compensation payable upon attainment of the goal or
other modification of the criteria except as permitted under Code Section
162(m).

         (d) PAYMENT. The basis for payment of Performance Units or Performance
Shares for a given Performance Period shall be the achievement of those
performance objectives determined by the Committee at the beginning of the
Performance Period as specified in the Grantee's Incentive Agreement. If minimum
performance is not achieved for a Performance Period, no payment shall be made
and all contingent rights shall cease. If minimum performance is achieved or
exceeded, the value of a Performance Unit or Performance Share may be based on
the degree to which actual performance exceeded the preestablished minimum
performance standards. The amount of payment shall be determined by multiplying
the number of Performance Units or Performance Shares granted at the beginning
of the Performance Period times the final Performance Unit or Performance Share
value. Payments shall be made, in the discretion of the Committee as specified
in the Incentive Agreement, solely in cash or Common Stock, or a combination of
cash and Common Stock, following the close of the applicable Performance Period.

         (e) SPECIAL RULE FOR COVERED EMPLOYEES. No later than the ninetieth
(90th) day following the beginning of a Performance Period (or twenty-five
percent (25%) of the Performance Period) the Committee shall establish
performance criteria as described in SECTION 4.1 applicable to Performance
Shares or Performance Units awarded to Employees in such a manner as shall
permit payments with respect thereto to qualify for the Performance-Based
Exception, if applicable. If a Performance Unit or Performance Share granted to
an Employee is intended to comply with the Performance-Based Exception, the
Committee in establishing performance goals shall comply with Treasury
Regulation ss. l.162-27(e)(2) (or its successor). As soon as practicable
following the Company's determination of the Company's financial results for any
Performance Period, the Committee shall certify in writing: (i) whether the
Company achieved its minimum performance for the objectives for the Performance
Period, (ii) the extent to which the Company achieved its performance objectives
for the Performance Period, (iii) any other terms that are material to the grant
of Performance Awards, and (iv) the calculation of the payments, if any, to be
paid to each Grantee for the Performance Period.


                                       22
<PAGE>

4.2 SUPPLEMENTAL PAYMENT ON VESTING OF PERFORMANCE UNITS OR PERFORMANCE SHARES

         The Committee, either at the time of grant or at the time of vesting of
Performance Units or Performance Shares, may provide for a Supplemental Payment
by the Company to the Grantee in an amount specified by the Committee, which
amount shall not exceed the amount necessary to pay the federal and state income
tax payable with respect to both the vesting of such Performance Units or
Performance Shares and receipt of the Supplemental Payment, assuming the Grantee
is taxed at either the maximum effective income tax rate applicable thereto or
at a lower tax rate as seemed appropriate by the Committee. The Committee shall
have the discretion to grant Supplemental Payments that are payable in cash,
Common Stock, or a combination of both, as determined by the Committee at the
time of payment.


                                    SECTION 5

                            OTHER STOCK-BASED AWARDS

5.1 GRANT OF OTHER STOCK-BASED AWARDS

         Other Stock-Based Awards may be awarded by the Committee to selected
Grantees that are denominated or payable in, valued in whole or in part by
reference to, or otherwise related to, Shares of Common Stock, as deemed by the
Committee to be consistent with the purposes of the Plan and the goals of the
Company. Other types of Stock-Based Awards include, without limitation, Deferred
Stock, purchase rights, Shares of Common Stock awarded which are not subject to
any restrictions or conditions, convertible or exchangeable debentures, other
rights convertible into Shares, Incentive Awards valued by reference to the
value of securities of or the performance of a specified Subsidiary, division or
department, and settlement in cancellation of rights of any person with a vested
interest in any other plan, fund, program or arrangement that is or was
sponsored, maintained or participated in by the Company or any Parent or
Subsidiary. As is the case with other Incentive Awards, Other Stock-Based Awards
may be awarded either alone or in addition to or in tandem with any other
Incentive Awards.

5.2 OTHER STOCK-BASED AWARD TERMS

         (a) WRITTEN AGREEMENT. The terms and conditions of each grant of an
Other Stock-Based Award shall be evidenced by an Incentive Agreement.

         (b) PURCHASE PRICE. Except to the extent that an Other Stock-Based
Award is granted in substitution for an outstanding Incentive Award or is
delivered upon exercise of a Stock Option, the amount of consideration required
to be received by the Company shall be either (i) no consideration other than
services actually rendered (in the case of authorized and unissued shares) or to
be rendered, or (ii) in the case of an Other Stock-Based Award in the nature of
a purchase right, consideration (other than services rendered or to be rendered)
at least equal to 50% of the Fair Market Value of the Shares covered by such

                                       23
<PAGE>

grant on the date of grant (or such percentage higher than 50% that is required
by any applicable tax or securities law). To the extent that the Company is a
Publicly Held Corporation and that a stock appreciation right is intended to
qualify for the Performance-Based Exception or to the extent it is intended to
be exempt from Code Section 409A, the exercise price per share of Common Stock
shall not be less than one hundred percent (100%) of Fair Market Value of a
share of Common Stock on the date of the grant of the stock appreciation right.

         (c) PERFORMANCE CRITERIA AND OTHER TERMS. In its discretion, the
Committee may specify such criteria, periods or goals for vesting in Other
Stock-Based Awards and payment thereof to the Grantee as it shall determine; and
the extent to which such criteria, periods or goals have been met shall be
determined by the Committee. All terms and conditions of Other Stock-Based
Awards shall be determined by the Committee and set forth in the Incentive
Agreement. The Committee may also provide for a Supplemental Payment similar to
such payment as described in SECTION 4.2.

         (d) PAYMENT. Other Stock-Based Awards may be paid in Shares of Common
Stock or other consideration related to such Shares, in a single payment or in
installments on such dates as determined by the Committee, all as specified in
the Incentive Agreement.

         (e) DIVIDENDS. The Grantee of an Other Stock-Based Award may be
entitled to receive, currently or on a deferred basis, dividends or dividend
equivalents with respect to the number of Shares covered by the Other
Stock-Based Award, only if so determined by the Committee and set forth in a
separate Incentive Agreement. The Committee may also provide in such Incentive
Agreement that such amounts (if any) shall be deemed to have been reinvested in
additional Shares of Common Stock.

                                    SECTION 6

                    PROVISIONS RELATING TO PLAN PARTICIPATION


6.1 PLAN CONDITIONS

         (a) INCENTIVE AGREEMENT. Each Grantee to whom an Incentive Award is
granted shall be required to enter into an Incentive Agreement with the Company,
in such a form as is provided by the Committee. The Incentive Agreement shall
contain specific terms as determined by the Committee, in its discretion, with
respect to the Grantee's particular Incentive Award. Such terms need not be
uniform among all Grantees or any similarly-situated Grantees. The Incentive
Agreement may include, without limitation, vesting, forfeiture and other
provisions particular to the particular Grantee's Incentive Award, as well as,
for example, provisions to the effect that the Grantee (i) shall not disclose
any confidential information acquired during Employment with the Company, (ii)
shall abide by all the terms and conditions of the Plan and such other terms and
conditions as may be imposed by the Committee, (iii) shall not interfere with

                                       24
<PAGE>

the employment or other service of any employee, (iv) shall not compete with the
Company or become involved in a conflict of interest with the interests of the
Company, (v) shall forfeit an Incentive Award if terminated for Cause, (vi)
shall not be permitted to make an election under Section 83(b) of the Code when
applicable, and (vii) shall be subject to any other agreement between the
Grantee and the Company regarding Shares that may be acquired under an Incentive
Award including, without limitation, a stockholders' agreement, buy-sell
agreement, or other agreement restricting the transferability of Shares by
Grantee. An Incentive Agreement shall include such terms and conditions as are
determined by the Committee, in its discretion, to be appropriate with respect
to any individual Grantee. The Incentive Agreement shall be signed by the
Grantee to whom the Incentive Award is made and by an Authorized Officer.

         (b) NO RIGHT TO EMPLOYMENT. Nothing in the Plan or any instrument
executed pursuant to the Plan shall create any Employment rights (including
without limitation, rights to continued Employment) in any Grantee or affect the
right of the Company to terminate the Employment of any Grantee at any time
without regard to the existence of the Plan.

         (c) SECURITIES REQUIREMENTS. The Company shall be under no obligation
to effect the registration pursuant to the Securities Act of 1933 of any Shares
of Common Stock to be issued hereunder or to effect similar compliance under any
state laws. Notwithstanding anything herein to the contrary, the Company shall
not be obligated to cause to be issued or delivered any certificates evidencing
Shares pursuant to the Plan unless and until the Company is advised by its
counsel that the issuance and delivery of such certificates is in compliance
with all applicable laws, regulations of governmental authorities, and the
requirements of any securities exchange on which Shares are traded. The
Committee may require, as a condition of the issuance and delivery of
certificates evidencing Shares of Common Stock pursuant to the terms hereof,
that the recipient of such Shares make such covenants, agreements and
representations, and that such certificates bear such legends, as the Committee,
in its discretion, deems necessary or desirable.

         If the Shares issuable on exercise of an Incentive Award are not
registered under the Securities Act of 1933, the Company may imprint on the
certificate for such Shares the following legend or any other legend which
counsel for the Company considers necessary or advisable to comply with the
Securities Act of 1933:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED ("ACT"), OR THE SECURITIES LAWS OF ANY
STATE. THE SECURITIES MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR
PURSUANT TO ANY APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH
ACT AND SUCH LAWS OR PURSUANT TO A WRITTEN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.


                                       25
<PAGE>

6.2 TRANSFERABILITY

         Incentive Awards granted under the Plan shall not be transferable or
assignable other than: (a) by will or the laws of descent and distribution or
(b) pursuant to a qualified domestic relations order (as defined by Section
414(p) of the Code, "QDRO"; provided, however, that Incentive Stock Options may
be transferred pursuant to QDRO only if the Incentive Agreement expressly
permits such transfer and provided further, however, only with respect to
Incentive Awards consisting of Nonstatutory Stock Options, the Committee may, in
its discretion, authorize all or a portion of the Nonstatutory Stock Options to
be granted on terms which permit transfer by the Grantee to (i) the members of
the Grantee's Immediate Family, (ii) a trust or trusts for the exclusive benefit
of Immediate Family members, (iii) a partnership in which such Immediate Family
members are the only partners, or (iv) any other entity owned solely by
Immediate Family members; provided that (A) there may be no consideration for
any such transfer, (B) the Incentive Agreement pursuant to which such
Nonstatutory Stock Options are granted must be approved by the Committee, and
must expressly provide for transferability in a manner consistent with this
SECTION 6.2, and (C) subsequent transfers of transferred Nonstatutory Stock
Options shall be prohibited except in accordance with clauses (a) and (b)
(above) of this sentence. Following any permitted transfer, the Nonstatutory
Stock Option shall continue to be subject to the same terms and conditions as
were applicable immediately prior to transfer, provided that the term "Grantee"
shall be deemed to refer to the transferee. The events of termination of
employment, as set out in SECTION 6.6 and in the Incentive Agreement, shall
continue to be applied with respect to the original Grantee, and the Incentive
Award shall be exercisable by the transferee only to the extent, and for the
periods, specified in the Incentive Agreement.

         Except as may otherwise be permitted under the Code, in the event of a
permitted transfer of a Nonstatutory Stock Option hereunder, the original
Grantee shall remain subject to withholding taxes upon exercise. In addition,
the Company and the Committee shall have no obligation to provide any notices to
any Grantee or transferee thereof, including, for example, notice of the
expiration of an Incentive Award following the original Grantee's termination of
employment.

         The designation by a Grantee of a beneficiary of an Incentive Award
shall not constitute transfer of the Incentive Award. No transfer by will or by
the laws of descent and distribution shall be effective to bind the Company
unless the Committee has been furnished with a copy of the deceased Grantee's
enforceable will or such other evidence as the Committee deems necessary to
establish the validity of the transfer. Any attempted transfer in violation of
this SECTION 6.2 shall be void and ineffective. All determinations under this
SECTION 6.2 shall be made by the Committee in its discretion.


                                       26
<PAGE>

6.3 RIGHTS AS A STOCKHOLDER

         (a) NO STOCKHOLDER RIGHTS. Except as otherwise provided in SECTION
3.1(B) for grants of Restricted Stock, a Grantee of an Incentive Award (or a
permitted transferee of such Grantee) shall have no rights as a stockholder with
respect to any Shares of Common Stock until the issuance of a stock certificate
for such Shares.

         (b) REPRESENTATION OF OWNERSHIP. In the case of the exercise of an
Incentive Award by a person or estate acquiring the right to exercise such
Incentive Award by reason of the death or Disability of a Grantee, the Committee
may require reasonable evidence as to the ownership of such Incentive Award or
the authority of such person and may require such consents and releases of
taxing authorities as the Committee may deem advisable.

6.4 LISTING AND REGISTRATION OF SHARES OF COMMON STOCK

         The exercise of any Incentive Award granted hereunder shall only be
effective at such time as counsel to the Company shall have determined that the
issuance and delivery of Shares of Common Stock pursuant to such exercise is in
compliance with all applicable laws, regulations of governmental authorities and
the requirements of any securities exchange on which Shares of Common Stock are
traded. The Committee may, in its discretion, defer the effectiveness of any
exercise of an Incentive Award in order to allow the issuance of Shares of
Common Stock to be made pursuant to registration statement or an exemption from
registration or other methods for compliance available under federal or state
securities laws. The Committee shall inform the Grantee in writing of its
decision to defer the effectiveness of the exercise of an Incentive Award.
During the period that the effectiveness of the exercise of an Incentive Award
has been deferred, the Grantee may, by written notice to the Committee, withdraw
such exercise and obtain the refund of any amount paid with respect thereto.

6.5 CHANGE IN STOCK AND ADJUSTMENTS

         (a) CHANGES IN LAW OR CIRCUMSTANCES. Subject to SECTION 6.7 (which only
applies in the event of a Change in Control), in the event of any change in
applicable law or any change in circumstances which results in or would result
in any dilution of the rights granted under the Plan, or which otherwise
warrants an equitable adjustment because it interferes with the intended
operation of the Plan, then, if the Committee should so determine, in its
absolute discretion, that such change equitably requires an adjustment in the
number or kind of shares of stock or other securities or property theretofore
subject, or which may become subject, to issuance or transfer under the Plan or
in the terms and conditions of outstanding Incentive Awards, such adjustment
shall be made in accordance with such determination. Such adjustments may
include changes with respect to (i) the aggregate number of Shares that may be
issued under the Plan, (ii) the number of Shares subject to Incentive Awards,
and (iii) the Option Price or other price per Share for outstanding Incentive
Awards. Any adjustment under this paragraph of an outstanding Incentive Stock
Option shall be made only to the extent not constituting a "modification" within
the meaning of Section 424(h)(3) of the Code or with respect to any Incentive
Award to the extent it does not result in deferred compensation under Code

                                       27
<PAGE>

Section 409A unless otherwise agreed to by the Grantee in writing. The Committee
shall give notice to each applicable Grantee of such adjustment which shall be
effective and binding.

         (b) EXERCISE OF CORPORATE POWERS. The existence of the Plan or
outstanding Incentive Awards hereunder shall not affect in any way the right or
power of the Company or its stockholders to make or authorize any or all
adjustments, recapitalization, reorganization or other changes in the Company's
capital structure or its business or any merger or consolidation of the Company,
or any issue of bonds, debentures, preferred or prior preference stocks ahead of
or affecting the Common Stock or the rights thereof, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding whether of a
similar character or otherwise.

         (c) RECAPITALIZATION OF THE COMPANY. Subject to SECTION 6.7 (which only
applies in the event of a Change in Control), if while there are Incentive
Awards outstanding, the Company shall effect any subdivision or consolidation of
Shares of Common Stock or other capital readjustment, the payment of a stock
dividend, stock split, combination of Shares, recapitalization or other increase
or reduction in the number of Shares outstanding, without receiving compensation
therefor in money, services or property, then the number of Shares available
under the Plan and the number of Incentive Awards which may thereafter be
exercised shall (i) in the event of an increase in the number of Shares
outstanding, be proportionately increased and the Option Price or Fair Market
Value of the Incentive Awards awarded shall be proportionately reduced; and (ii)
in the event of a reduction in the number of Shares outstanding, be
proportionately reduced, and the Option Price or Fair Market Value of the
Incentive Awards awarded shall be proportionately increased. The Committee shall
take such action and whatever other action it deems appropriate, in its
discretion, so that the value of each outstanding Incentive Award to the Grantee
shall not be adversely affected by a corporate event described in this
subsection (c). Notwithstanding the foregoing adjustments pursuant to this
paragraph shall be made only if permitted and in accordance with Code Sections
424 and 409A to the extent applicable to an Incentive Award unless otherwise
consented to in writing by the Grantee.

         (d) ISSUE OF COMMON STOCK BY THE COMPANY. Except as hereinabove
expressly provided in this SECTION 6.5 and subject to SECTION 6.7 in the event
of a Change in Control, the issue by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, for cash or
property, or for labor or services, either upon direct sale or upon the exercise
of rights or warrants to subscribe therefor, or upon any conversion of shares or
obligations of the Company convertible into such shares or other securities,
shall not affect, and no adjustment by reason thereof shall be made with respect
to, the number of, or Option Price or Fair Market Value of, any Incentive Awards
then outstanding under previously granted Incentive Awards; provided, however,
in such event, outstanding Shares of Restricted Stock shall be treated the same
as outstanding unrestricted Shares of Common Stock.


                                       28
<PAGE>

         (e) ASSUMPTION UNDER THE PLAN OF OUTSTANDING STOCK OPTIONS.
Notwithstanding any other provision of the Plan, the Committee, in its absolute
discretion, may authorize the assumption and continuation under the Plan of
outstanding and unexercised stock options or other types of stock-based
incentive awards that were granted under a stock option plan (or other type of
stock incentive plan or agreement) that is or was maintained by a corporation or
other entity that was merged into, consolidated with, or whose stock or assets
were acquired by, the Company as the surviving corporation. Any such action
shall be upon such terms and conditions as the Committee, in its discretion, may
deem appropriate, including provisions to preserve the holder's rights under the
previously granted and unexercised stock option or other stock-based incentive
award, such as, for example, retaining the treatment as a Stock Option. Any such
assumption and continuation of any such previously granted and unexercised
incentive award shall be treated as an outstanding Incentive Award under the
Plan and shall thus count against the number of Shares reserved for issuance
pursuant to SECTION 1.4. In addition, any Shares issued by the Company through
the assumption or substitution of outstanding grants from an acquired company
shall reduce the Shares available for grants under SECTION 1.4.

         (f) ASSUMPTION OF INCENTIVE AWARDS BY A SUCCESSOR. Subject to the
accelerated vesting and other provisions of SECTION 6.7 that apply in the event
of a Change in Control, in the event of a Corporate Event (defined below), each
Grantee shall be entitled to receive, in lieu of the number of Shares subject to
Incentive Awards, such shares of capital stock or other securities or property
as may be issuable or payable with respect to or in exchange for the number of
Shares which Grantee would have received had he exercised the Incentive Award
immediately prior to such Corporate Event, together with any adjustments
(including, without limitation, adjustments to the Option Price and the number
of Shares issuable on exercise of outstanding Stock Options). For this purpose,
Shares of Restricted Stock shall be treated the same as unrestricted outstanding
Shares of Common Stock. A "CORPORATE EVENT" means any of the following: (i) a
dissolution or liquidation of the Company, (ii) a sale of all or substantially
all of the Company's assets, (iii) a merger, consolidation or combination
involving the Company (other than a merger, consolidation or combination (A) in
which the Company is the continuing or surviving corporation and (B) which does
not result in the outstanding Shares being converted into or exchanged for
different securities, cash or other property, or any combination thereof), or
(iv) if so determined by the Committee, any other "corporate transaction" as
defined in Code Sections 424 or Code Section 409A. The Committee shall take
whatever other action it deems appropriate to preserve the rights of Grantees
holding outstanding Incentive Awards.

         Notwithstanding the previous paragraph of this SECTION 6.5(F), but
subject to the accelerated vesting and other provisions of SECTION 6.7 that
apply in the event of a Change in Control, in the event of a Corporate Event
(described in the previous paragraph), the Committee, in its discretion, shall
have the right and power to:

                  (i) cancel, effective immediately prior to the occurrence of
the Corporate Event, each outstanding Incentive Award (whether or not then
exercisable) and, in full consideration of such cancellation, pay to the Grantee

                                       29
<PAGE>

an amount in cash equal to the excess of (A) the value, as determined by the
Committee, of the property (including cash) received by the holders of Common
Stock as a result of such Corporate Event over (B) the exercise price of such
Incentive Award, if any; provided, however, this subsection (i) shall be
inapplicable to an Incentive Award granted within six (6) months before the
occurrence of the Corporate Event but only if the Grantee is an Insider and such
disposition is not exempt under Rule 16b-3 (or other rules preventing liability
of the Insider under Section 16(b) of the Exchange Act) and, in that event, the
provisions hereof shall be applicable to such Incentive Award after the
expiration of six (6) months from the date of grant; or

                  (ii) provide for the exchange or substitution of each
Incentive Award outstanding immediately prior to such Corporate Event (whether
or not then exercisable) for another award with respect to the Common Stock or
other property for which such Incentive Award is exchangeable and, incident
thereto, make an equitable adjustment as determined by the Committee, in its
discretion, in the Option Price or exercise price of the Incentive Award, if
any, or in the number of Shares or amount of property (including cash) subject
to the Incentive Award; or

                  (iii) provide for assumption of the Plan and such outstanding
Incentive Awards by the surviving entity or its parent.

         The Committee, in its discretion, shall have the authority to take
whatever action it deems to be necessary or appropriate to effectuate the
provisions of this SUBSECTION (F).

6.6 TERMINATION OF EMPLOYMENT, DEATH, DISABILITY AND RETIREMENT

         (a) TERMINATION OF EMPLOYMENT. Unless otherwise expressly provided in
the Grantee's Incentive Agreement, if the Grantee's Employment is terminated for
any reason other than due to his death, Disability, Retirement or for Cause, any
non-vested portion of any Stock Option or other applicable Incentive Award at
the time of such termination shall automatically expire and terminate and no
further vesting shall occur after the termination date. In such event, except as
otherwise expressly provided in his Incentive Agreement, the Grantee shall be
entitled to exercise his rights only with respect to the portion of the
Incentive Award that was vested as of his termination of Employment date for a
period that shall end on the earlier of (i) the expiration date set forth in the
Incentive Agreement or (ii) ninety (90) days after the date of his termination
of Employment (three (3) months for Incentive Stock Options).

         (b) TERMINATION OF EMPLOYMENT FOR CAUSE. Unless otherwise expressly
provided in the Grantee's Incentive Agreement, in the event of the termination
of a Grantee's Employment for Cause, all vested and non-vested Stock Options and
other Incentive Awards granted to such Grantee shall immediately expire, and
shall not be exercisable to any extent, as of 12:01 a.m. (CST) on the date of
such termination of Employment.


                                       30
<PAGE>

         (c) RETIREMENT. Unless otherwise expressly provided in the Grantee's
Incentive Agreement, upon the termination of Employment due to the Retirement of
any Employee who is a Grantee:

                  (i) any non-vested portion of any outstanding Option or other
Incentive Award shall immediately terminate and no further vesting shall occur;
and

                  (ii) any vested Option or other Incentive Award shall expire
on the earlier of (A) the expiration date set forth in the Incentive Agreement
for such Incentive Award; or (B) the expiration of (1) six months after the date
of his termination of Employment due to Retirement in the case of any Incentive
Award other than an Incentive Stock Option or (2) three months after his
termination date in the case of an Incentive Stock Option.

         (d) DISABILITY OR DEATH. Unless otherwise expressly provided in the
Grantee's Incentive Agreement, upon termination of Employment as a result of the
Grantee's Disability or death:

                  (i) any nonvested portion of any outstanding Option or other
applicable Incentive Award shall immediately terminate upon termination of
Employment and no further vesting shall occur; and

                  (ii) any vested Incentive Award shall expire on the earlier of
either (A) the expiration date set forth in the Incentive Agreement or (B) the
one year anniversary date of the Grantee's termination of Employment date.

     In the case of any vested Incentive Stock Option held by an Employee
following termination of Employment, notwithstanding the definition of
"Disability" in SECTION 1.2, whether the Employee has incurred a "Disability"
for purposes of determining the length of the Option exercise period following
termination of Employment under this SUBSECTION (D) shall be determined by
reference to Section 22(e)(3) of the Code to the extent required by Section
422(c)(6) of the Code. The Committee shall determine whether a Disability for
purposes of this subsection (d) has occurred.

         (e) CONTINUATION. Subject to the conditions and limitations of the Plan
and applicable law and regulation in the event that a Grantee ceases to be an
Employee, Outside Director or Consultant, as applicable, for whatever reason,
the Committee and Grantee may mutually agree with respect to any outstanding
Option or other Incentive Award then held by the Grantee (i) for an acceleration
or other adjustment in any vesting schedule applicable to the Incentive Award,
(ii) for a continuation of the exercise period following termination for a
longer period than is otherwise provided under such Incentive Award, or (iii) to
any other change in the terms and conditions of the Incentive Award. In the
event of any such change to an outstanding Incentive Award, a written amendment
to the Grantee's Incentive Agreement shall be required.


                                       31
<PAGE>

6.7  CHANGE IN CONTROL

         Notwithstanding any contrary provision in the Plan, in the event of a
Change in Control (as defined below), the following actions shall automatically
occur as of the day immediately preceding the Change in Control date unless
expressly provided otherwise in the individual Grantee's Incentive Agreement:

         (a) all of the Stock Options and Stock Appreciation Rights then
outstanding shall become 100% vested and immediately and fully exercisable;

         (b) all of the restrictions and conditions of any Restricted Stock and
any Other Stock-Based Awards then outstanding shall be deemed satisfied, and the
Restriction Period with respect thereto shall be deemed to have expired, and
thus each such Incentive Award shall become free of all restrictions and fully
vested; and

         (c) all of the Performance Shares, Performance Units and any Other
Stock-Based Awards shall become fully vested, deemed earned in full, and
promptly paid within thirty (30) days to the affected Grantees without regard to
payment schedules and notwithstanding that the applicable performance cycle,
retention cycle or other restrictions and conditions have not been completed or
satisfied.

         For all purposes of this Plan, a "CHANGE IN CONTROL" of the Company
means the occurrence of any one or more of the following events:

         (a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a "PERSON")) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of fifty percent (50%) or more of either (i) the then outstanding
shares of common stock of the Company (the "OUTSTANDING COMPANY STOCK") or (ii)
the combined voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors (the
"OUTSTANDING COMPANY VOTING SECURITIES"); provided, however, that the following
acquisitions shall not constitute a Change in Control: (i) any acquisition
directly from the Company or any Subsidiary, (ii) any acquisition by the Company
or any Subsidiary or by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any Subsidiary, or (iii) any acquisition by any
corporation pursuant to a reorganization, merger, consolidation or similar
business combination involving the Company (a "MERGER"), if, following such
Merger, the conditions described in clauses (i) and (ii) SECTION 6.7(C) (below)
are satisfied;

         (b) Individuals who, as of the Effective Date, constitute the Board of
Directors of the Company (the "INCUMBENT BOARD") cease for any reason to
constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the Effective Date whose election,
or nomination for election by the Company's shareholders, was approved by a vote
of at least a majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of either an actual or threatened

                                       32
<PAGE>

election contest (as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than the Board;

         (c) Approval by the shareholders of the Company of a Merger, unless
immediately following such Merger, (i) substantially all of the holders of the
Outstanding Company Voting Securities immediately prior to Merger beneficially
own, directly or indirectly, more than 50% of the common stock of the
corporation resulting from such Merger (or its parent corporation) in
substantially the same proportions as their ownership of Outstanding Company
Voting Securities immediately prior to such Merger and (ii) at least a majority
of the members of the board of directors of the corporation resulting from such
Merger (or its parent corporation) were members of the Incumbent Board at the
time of the execution of the initial agreement providing for such Merger;

         (d) The sale or other disposition of all or substantially all of the
assets of the Company, unless immediately following such sale or other
disposition, (i) substantially all of the holders of the Outstanding Company
Voting Securities immediately prior to the consummation of such sale or other
disposition beneficially own, directly or indirectly, more than 50% of the
common stock of the corporation acquiring such assets in substantially the same
proportions as their ownership of Outstanding Company Voting Securities
immediately prior to the consummation of such sale or disposition, AND (ii) at
least a majority of the members of the board of directors of such corporation
(or its parent corporation) were members of the Incumbent Board at the time of
execution of the initial agreement or action of the Board providing for such
sale or other disposition of assets of the Company;

         (e) The adoption of any plan or proposal for the liquidation or
dissolution of the Company; or

         (f) Any other event that a majority of the Board, in its sole
discretion, determines to constitute a Change in Control hereunder.

         Notwithstanding the occurrence of any of the foregoing events set out
in this SECTION 6.7 which would otherwise result in a Change in Control, the
Board may determine in its discretion, if it deems it to be in the best interest
of the Company, that an event or events otherwise constituting or reasonably
leading to a Change in Control shall not be deemed a Change in Control
hereunder. Such determination shall be effective only if it is made by the Board
prior to the occurrence of an event that otherwise would be, or reasonably lead
to, a Change in Control, or after such event only if made by the Board a
majority of which is composed of directors who were members of the Board
immediately prior to the event that otherwise would be, or reasonably lead to, a
Change in Control.


                                       33
<PAGE>

6.8  FINANCING

         To the extent permitted by the Sarbanes-Oxley Act of 2002 and other
applicable law, the Company may extend and maintain, or arrange for and
guarantee, the extension and maintenance of financing to any Grantee to purchase
Shares pursuant to exercise of an Incentive Award upon such terms as are
approved by the Committee in its discretion.

                                    SECTION 7

                                     GENERAL

7.1  EFFECTIVE DATE AND GRANT PERIOD

         This Plan is adopted by the Board effective as of the Effective Date,
subject to the approval of the stockholders of the Company within twelve (12)
months from the Effective Date. Incentive Awards may be granted under the Plan
at any time prior to receipt of such stockholder approval; provided, however, if
the requisite stockholder approval is not obtained within the permissible time
frame then any Incentive Awards granted hereunder shall automatically become
null and void and of no force or effect. No Incentive Award may be granted under
the Plan after ten (10) years from the Effective Date.

7.2  FUNDING AND LIABILITY OF COMPANY

         No provision of the Plan shall require the Company, for the purpose of
satisfying any obligations under the Plan, to purchase assets or place any
assets in a trust or other entity to which contributions are made, or otherwise
to segregate any assets. In addition, the Company shall not be required to
maintain separate bank accounts, books, records or other evidence of the
existence of a segregated or separately maintained or administered fund for
purposes of the Plan. Although bookkeeping accounts may be established with
respect to Grantees who are entitled to cash, Common Stock or rights thereto
under the Plan, any such accounts shall be used merely as a bookkeeping
convenience. The Company shall not be required to segregate any assets that may
at any time be represented by cash, Common Stock or rights thereto. The Plan
shall not be construed as providing for such segregation, nor shall the Company,
the Board or the Committee be deemed to be a trustee of any cash, Common Stock
or rights thereto. Any liability or obligation of the Company to any Grantee
with respect to an Incentive Award shall be based solely upon any contractual
obligations that may be created by this Plan and any Incentive Agreement, and no
such liability or obligation of the Company shall be deemed to be secured by any
pledge or other encumbrance on any property of the Company. Neither the Company,
the Board nor the Committee shall be required to give any security or bond for
the performance of any obligation that may be created by the Plan.


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<PAGE>

7.3  WITHHOLDING TAXES

         (a) TAX WITHHOLDING. The Company shall have the power and the right to
deduct or withhold, or require a Grantee to remit to the Company, an amount
sufficient to satisfy federal, state, and local taxes, domestic or foreign,
required by law or regulation to be withheld with respect to any taxable event
arising as a result of the Plan or an Incentive Award hereunder. Upon the lapse
of restrictions on Restricted Stock, the Committee, in its discretion, may elect
to satisfy the tax withholding requirement, in whole or in part, by having the
Company withhold Shares having a Fair Market Value on the date the tax is to be
determined equal to the minimum withholding taxes which could be imposed on the
transaction as determined by the Committee.

         (b) SHARE WITHHOLDING. With respect to tax withholding required upon
the exercise of Stock Options or SARs, upon the lapse of restrictions on
Restricted Stock, or upon any other taxable event arising as a result of any
Incentive Awards, Grantees may elect, subject to the approval of the Committee
in its discretion, to satisfy the withholding requirement, in whole or in part,
by having the Company withhold Shares having a Fair Market Value on the date the
tax is to be determined equal to the minimum withholding taxes which could be
imposed on the transaction as determined by the Committee. All such elections
shall be made in writing, signed by the Grantee, and shall be subject to any
restrictions or limitations that the Committee, in its discretion, deems
appropriate.

         (c) INCENTIVE STOCK OPTIONS. With respect to Shares received by a
Grantee pursuant to the exercise of an Incentive Stock Option, if such Grantee
disposes of any such Shares within (i) two years from the date of grant of such
Option or (ii) one year after the transfer of such shares to the Grantee, the
Company shall have the right to withhold from any salary, wages or other
compensation payable by the Company to the Grantee an amount sufficient to
satisfy federal, state and local tax withholding requirements attributable to
such disqualifying disposition.

         (d) LOANS. To the extent permitted by the Sarbanes-Oxley Act of 2002
and other applicable law, the Committee may provide for loans, on either a short
term or demand basis, from the Company to a Grantee who is an Employee or
Consultant to permit the payment of taxes required by law.

7.4  NO GUARANTEE OF TAX CONSEQUENCES

         Neither the Company nor the Committee makes any commitment or guarantee
that any federal, state or local tax treatment will apply or be available to any
person participating or eligible to participate hereunder.

7.5  DESIGNATION OF BENEFICIARY BY GRANTEE

         Each Grantee may, from time to time, name any beneficiary or
beneficiaries (who may be named contingently or successively) to whom any
benefit under the Plan is to be paid in case of his death before he receives any
or all of such benefit. Each such designation shall revoke all prior
designations by the same Grantee, shall be in a form prescribed by the
Committee, and will be effective only when filed by the Grantee in writing with
the Committee during the Grantee's lifetime. In the absence of any such

                                       35
<PAGE>


designation, benefits remaining unpaid at the Grantee's death shall be paid to
the Grantee's estate.

7.6  DEFERRALS

         The Committee may permit a Grantee to defer such Grantee's receipt of
the payment of cash or the delivery of Shares that would, otherwise be due to
such Grantee by virtue of the lapse or waiver of restrictions with respect to
Restricted Stock, or the satisfaction of any requirements or goals with respect
to Performance Units, Performance Shares or Other Stock-Based Awards. If any
such deferral election is permitted, the Committee shall, in its discretion,
establish rules and procedures for such payment deferrals to the extent required
for tax deferral of compensation under the Code.

7.7  AMENDMENT AND TERMINATION

         The Board shall have the power and authority to terminate or amend the
Plan at any time; provided, however, the Board shall not, without the approval
of the stockholders of the Company within the time period required by applicable
law, (a) except as provided in SECTION 6.5, increase the maximum number of
Shares which may be issued under the Plan pursuant to SECTION 1.4, (b) amend the
requirements as to the class of Employees eligible to purchase Common Stock
under the Plan, (c) extend the term of the Plan, or, if the Company is a
Publicly Held Corporation (i) increase the maximum limits on Incentive Awards to
Employees as set for compliance with the Performance-Based Exception or (ii)
decrease the authority granted to the Committee under the Plan in contravention
of Rule 16b-3 under the Exchange Act.

         No termination, amendment, or modification of the Plan shall adversely
affect in any material way any outstanding Incentive Award previously granted to
a Grantee under the Plan, without the written consent of such Grantee or other
designated holder of such Incentive Award.

         In addition, to the extent that the Committee determines that (a) the
listing for qualification requirements of any national securities exchange or
quotation system on which the Company's Common Stock is then listed or quoted,
if applicable, or (b) the Code (or regulations promulgated thereunder), require
stockholder approval in order to maintain compliance with such listing
requirements or to maintain any favorable tax advantages or qualifications, then
the Plan shall not be amended in such respect without approval of the Company's
stockholders.

7.8  REQUIREMENTS OF LAW

         (a) GOVERNMENTAL ENTITIES AND SECURITIES EXCHANGES. The granting of
Incentive Awards and the issuance of Shares under the Plan shall be subject to
all applicable laws, rules, and regulations, and to such approvals by any

                                       36
<PAGE>

governmental agencies or national securities exchanges as may be required. The
Committee may in its discretion refuse to issue or transfer any Shares or other
consideration under an Incentive Award if it determines that the issuance or
transfer of such Shares or other consideration might violate applicable laws
including, but not limited to, compliance with black out periods required
pursuant to applicable law or Company policies. Certificates evidencing shares
of Common Stock delivered under this Plan (to the extent that such shares are so
evidenced) may be subject to such stop transfer orders and other restrictions as
the Committee may deem advisable under the rules and regulations of the
Securities and Exchange Commission, any securities exchange or transaction
reporting system upon which the Common Stock is then listed or to which it is
admitted for quotation, and any applicable federal or state securities law, if
applicable. The Committee may cause a legend or legends to be placed upon such
certificates (if any) to make appropriate reference to such restrictions.

         (b) SECURITIES ACT RULE 701. If no class of the Company's securities is
registered under Section 12 of the Exchange Act, then unless otherwise
determined by the Committee, grants of Incentive Awards to "Rule 701 Grantees"
(as defined below) and issuances of the underlying shares of Common Stock, if
any, on the exercise or conversion of such Incentive Awards are intended to
comply with all applicable conditions of Securities Act Rule 701 ("Rule 701"),
including, without limitation, the restrictions as to the amount of securities
that may be offered and sold in reliance on Rule 701, so as to qualify for an
exemption from the registration requirements of the Securities Act. Any
ambiguities or inconsistencies in the construction of an Incentive Award or the
Plan shall be interpreted to give effect to such intention. In accordance with
Rule 701, each Grantee shall receive a copy of the Plan on or before the date an
Incentive Award is granted to him, as well as the additional disclosure required
by Rule 701(e) if the aggregate sales price or amount of securities sold during
any consecutive 12-month period exceeds $5,000,000 as determined under Rule
701(e). If Rule 701 (or any successor provision) is amended to eliminate or
otherwise modify any of the requirements specified in Rule 701, then the
provisions of this SUBSECTION 7.8(B) shall be interpreted and construed in
accordance with Rule 701 as so amended. For purposes of this SUBSECTION 7.8(B),
as determined in accordance with Rule 701, "Rule 701 Grantees" shall mean any
Grantee other than a director of the Company, the Company's chairman, chief
executive officer, president, chief financial officer, controller and any vice
president of the Company, and any other key employee of the Company who
generally has access to financial and other business related information and
possesses sufficient sophistication to understand and evaluate such information.

7.9  RULE 16B-3 SECURITIES LAW COMPLIANCE FOR INSIDERS

         If the Company is a Publicly Held Corporation, transactions under the
Plan with respect to Insiders are intended to comply with all applicable
conditions of Rule 16b-3 under the Exchange Act. Any ambiguities or
inconsistencies in the construction of an Incentive Award or the Plan shall be
interpreted to give effect to such intention, and to the extent any provision of

                                       37
<PAGE>

the Plan or action by the Committee fails to so comply, it shall be deemed null
and void to the extent permitted by law and deemed advisable by the Committee in
its discretion.

7.10  COMPLIANCE WITH CODE SECTION 162(M) FOR PUBLICLY HELD CORPORATION

         If the Company is a Publicly Held Corporation, unless otherwise
determined by the Committee with respect to any particular Incentive Award, it
is intended that the Plan shall comply fully with the applicable requirements so
that any Incentive Awards subject to Section 162(m) that are granted to Covered
Employees shall qualify for the Performance-Based Exception, except for grants
of Nonstatutory Stock Options with an Option Price set at less than the Fair
Market Value of a Share on the date of grant. If any provision of the Plan or an
Incentive Agreement would disqualify the Plan or would not otherwise permit the
Plan or Incentive Award to comply with the Performance-Based Exception as so
intended, such provision shall be construed or deemed to be amended to conform
to the requirements of the Performance-Based Exception to the extent permitted
by applicable law and deemed advisable by the Committee; provided, however, no
such construction or amendment shall have an adverse effect on the prior grant
of an Incentive Award or the economic value to a Grantee of any outstanding
Incentive Award.

7.11  SUCCESSORS TO COMPANY

         All obligations of the Company under the Plan with respect to Incentive
Awards granted hereunder shall be binding on any successor to the Company,
whether the existence of such successor is the result of a direct or indirect
purchase, merger, consolidation, or otherwise, of all or substantially all of
the business and/or assets of the Company.

7.12  MISCELLANEOUS PROVISIONS

         (a) No Employee, Consultant, Outside Director, or other person shall
have any claim or right to be granted an Incentive Award under the Plan. Neither
the Plan, nor any action taken hereunder, shall be construed as giving any
Employee, Consultant, or Outside Director any right to be retained in the
Employment or other service of the Company or any Parent or Subsidiary.

         (b) The expenses of the Plan shall be borne by the Company.

         (c) By accepting any Incentive Award, each Grantee and each person
claiming by or through him shall be deemed to have indicated his acceptance of
the Plan.

         (d) No Shares of Common Stock shall be issued hereunder unless counsel
for the Company is then reasonably satisfied that such issuance will be in
compliance with federal and state securities laws, if applicable.


                                       38
<PAGE>

7.13  SEVERABILITY

         In the event that any provision of this Plan shall be held illegal,
invalid or unenforceable for any reason, such provision shall be fully
severable, but shall not affect the remaining provisions of the Plan, and the
Plan shall be construed and enforced as if the illegal, invalid, or
unenforceable provision was not included herein.

7.14  GENDER, TENSE AND HEADINGS

         Whenever the context so requires, words of the masculine gender used
herein shall include the feminine and neuter, and words used in the singular
shall include the plural. Section headings as used herein are inserted solely
for convenience and reference and constitute no part of the interpretation or
construction of the Plan.

7.15   GOVERNING LAW

         The Plan shall be interpreted, construed and constructed in accordance
with the laws of the State of Delaware without regard to its conflicts of law
provisions, except as may be superseded by applicable laws of the United States.

7.16  CODE SECTION 409A

         To the extent that any Incentive Award is deferred compensation subject
to Code Section 409A, as determined by the Committee, the Incentive Agreement
shall comply with the requirements of Code Section 409A in a manner as
determined by the Committee in its sole discretion including, but not limited
to, using the more restrictive definition of Change in Control as provided in
Code Section 409A to the extent that it is more restrictive than as defined in
the Plan, using the more restrictive definition of Disability or disabled as
provided in Code Section 409A and specifying a time and form of payment
schedule. In addition if any Incentive Award constitutes deferred compensation
under Section 409A of the Code (a "SECTION 409A PLAN"), then the Incentive Award
shall be subject to the following requirements, if and to the extent required to
comply with Code Section 409A, and as determined by the Committee and specified
in the Incentive Agreement:

         (a) Payments under the Section 409A Plan may not be made earlier than
(i) the Grantee's separation from service, (ii) the date the Grantee becomes
disabled, (iii) the Grantee's death, (iv) a specified time (or pursuant to a
fixed schedule) specified in the Incentive Agreement at the date of the deferral
of such compensation, (v) a change in the ownership or effective control of the
corporation, or in the ownership of a substantial portion of the assets of the
corporation, or (vi) the occurrence of an unforeseeable emergency;


                                       39
<PAGE>

         (b) The time or schedule for any payment of the deferred compensation
may not be accelerated, except to the extent provided in applicable Treasury
Regulations or other applicable guidance issued by the Internal Revenue Service;

         (c) Any elections with respect to the deferral of such compensation or
the time and form of distribution of such deferred compensation shall comply
with the requirements of Section 409A(a)(4) of the Code; and

         (d) In the case of any Grantee who is specified employee, a
distribution on account of a separation from service may not be made before the
date which is six months after the date of the Grantee's separation from service
(or, if earlier, the date of the Grantee's death).

         For purposes of the foregoing, the terms "SEPARATION FROM SERVICE" and
"SPECIFIED EMPLOYEE", all shall be defined in the same manner as those terms are
defined for purposes of Section 409A of the Code, and the limitations set forth
herein shall be applied in such manner (and only to the extent) as shall be
necessary to comply with any requirements of Section 409A of the Code that are
applicable to the Incentive Award as determined by the Committee.


                                    * * * * *


                                       40
<PAGE>


         The foregoing American Environmental Energy, Inc. 2008 Incentive Plan
was adopted by the Board of Directors of the Company on May 1, 2008 and by the
Shareholders of the Company on ________ __, 2008.


                                         AMERICAN ENVIRONMENTAL ENERGY, INC.


                                         /s/ Brent A. Brewer
                                         -------------------------------------
                                         Name: Brent A. Brewer
                                         Title: CEO