Exhibit
4.7


STEINWAY
MUSICAL INSTRUMENTS, INC.


2006
STOCK COMPENSATION PLAN


ARTICLE
1


EFFECTIVE
DATE AND PURPOSE 


1.1.                              Effective
Date.  The Plan shall be known as the
“Steinway Musical Instruments, Inc. 2006 Stock Compensation Plan” and shall be
effective as of August 1, 2006 (the “Effective Date”), subject to the approval
of the Plan by the shareholders of Steinway Musical Instruments, Inc. (the “Company”)
within 12 months of the Effective Date in accordance with Sections 162(m) and
422 of the Code and the rules of the New York Stock Exchange.  Any awards made prior to such approval shall
not vest or become exercisable and any applicable restrictions shall not lapse,
in each case as applicable, prior to the time when the Plan is so approved.


1.2.                              Purpose
of the Plan.  The purpose of the Plan
is to further and promote the interests of the Company, its Subsidiaries and
its stockholders by enabling the Company and its Subsidiaries to attract,
retain and motivate directors, employees, consultants and advisors or those who
will become directors, employees, consultants or advisors to the Company, and
to align the interests of those individuals and the Company’s
stockholders.  The Plan is intended to
permit the grant of Awards that constitute Incentive Stock Options,
Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Stock,
Restricted Stock Units or Other Stock Awards.


ARTICLE
2


DEFINITIONS


The following words and
phrases shall have the following meanings unless a different meaning is plainly
required by the context:


“1934 Act”
means the Securities Exchange Act of 1934, as amended.  Reference to a specific section of the 1934
Act or regulation thereunder shall include such section or regulation, any
valid regulation or interpretation promulgated under such section, and any
comparable provision of any future legislation or regulation amending,
supplementing or superseding such section or regulation.


“Affiliate”
means any corporation or any other entity (including, but not limited to,
partnerships and joint ventures) controlled by, in control of, or under common
control with, the Company.


“Award”
means, individually or collectively, a grant under the Plan of Non-Qualified
Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted
Stock, Restricted Stock Units or Other Stock Awards.


“Award
Agreement” means the written agreement setting forth the terms and
conditions applicable to an Award.


“Base Price”
means the price at which a SAR may be exercised with respect to a Share.


“Board”
means the Company’s Board of Directors, as constituted from time to time.


“Change in
Control” of the Company means that Kyle R. Kirkland and Dana D. Messina
collectively do not have, directly or indirectly, voting control of at least
50% of the voting securities of the Company, or any successor thereto, entitled
to vote generally in the election of directors.











“Code”
means the Internal Revenue Code of 1986, as amended. Reference to a specific
section of the Code or regulation thereunder shall include such section or
regulation, any valid regulation or other guidance promulgated under such
section, and any comparable provision of any future legislation or regulation
amending, supplementing or superseding such section or regulation.


“Committee”
means the committee of the Board described in Article 3.


“Covered
Employee” means an Employee who is, or could be, a “covered employee”
within the meaning of Section 162(m) of the Code.


“Employee”
means an employee of the Company, a Subsidiary, or an Affiliate (each an “Employer”)
designated by the Board or the Committee.


“Exercise Price”
means the price at which a Share subject to an Option may be purchased upon the
exercise of the Option.


“Fair Market
Value” means, except as otherwise specified in a particular Award
Agreement, (a) while the Shares are traded on an established national or
regional securities exchange, the closing transaction price of such a Share as
reported by the principal exchange on which such Shares are traded on the date
as of which such value is being determined or, if there were no reported
transaction for such date, on the next preceding date for which a transaction
was reported, (b) if the Shares are not traded on an established national or
regional securities exchange, the average of the bid and ask prices for such a
Share as reported by NASDAQ or a successor quotation system, or (c) if Fair
Market Value cannot be determined under clause (a) or clause (b) above, or if
the Committee determines in its sole discretion that the Shares are too thinly
traded for Fair Market Value to be determined pursuant to clause (a) or clause
(b), the value as determined by the Committee, in its sole discretion, on a
good faith basis.


“Grant Date”
means the date that the Award is granted.


“Immediate
Family” means the Participant’s children, stepchildren, grandchildren,
parents, stepparents, grandparents, spouse, siblings (including half-brothers
and half-sisters), in-laws, and all such relationships arising because of legal
adoption.


“Incentive
Stock Option” means an Option that is designated as an Incentive Stock
Option and is intended by the Committee to meet the requirements of Section 422
of the Code.


“Independent
Contractor” means a person, including, without limitation, a consultant,
engaged by the Company for a specific task, study or project who is not an
Employee.


“Member of the
Board” means an individual who is a member of the Board or of the board of
directors of a Subsidiary or an Affiliate.


“Non-Qualified
Stock Option” means an Option that is not an Incentive Stock Option.


“Option”
means an option to purchase Shares granted pursuant to Article 5.


“Other Stock
Award” means an Award granted pursuant to Article 8 to receive Shares on
the terms specified in any applicable Award Agreement.


“Participant”
means an Employee, Independent Contractor or Member of the Board with respect
to whom an Award has been granted and remains outstanding.


“Performance
Criteria” means the criteria that the Committee selects for purposes of
establishing the Performance Goal or Performance Goals for a Participant for a
Performance Period.  The Performance
Criteria that will be used to establish Performance Goals are limited to the
following: net earnings (either before or after interest, taxes, depreciation
and amortization), economic value-added (as determined by the 











Committee), sales or
revenue, net income (either before or after taxes), operating earnings, cash
flow (including, but not limited to, operating cash flow and free cash flow),
cash flow return on capital, return on net assets, return on stockholders’
equity, return on assets, return on capital, stockholder returns, return on
sales, gross or net profit margin, productivity, expense, margins, operating
efficiency, customer satisfaction, working capital, earnings per share, price per
share of Stock, and market share, any of which may be measured either in
absolute terms or as compared to any incremental increase or as compared to
results of a peer group.  The Committee
shall, within the time prescribed by Section 162(m) of the Code, define in an
objective fashion the manner of calculating the Performance Criteria it selects
to use for such Performance Period for such Participant.


“Performance
Goals” means, for a Performance Period, the goals established in writing by
the Committee for the Performance Period based upon the Performance
Criteria.  Depending on the Performance
Criteria used to establish such Performance Goals, the Performance Goals may be
expressed in terms of overall Company performance or the performance of a
division, business unit, or an individual. 
The Committee shall establish Performance Goals for each Performance
Period prior to, or as soon as practicable after, the commencement of such
Performance Period.  The Committee, in
its discretion, may, within the time prescribed by Section 162(m) of the Code,
adjust or modify the calculation of Performance Goals for such Performance
Period in order to prevent the dilution or enlargement of the rights of
Participants (a) in the event of, or in anticipation of, any unusual or
extraordinary corporate item, transaction, event, or development, or (b) in
recognition of, or in anticipation of, any other unusual or nonrecurring events
affecting the Company, or the financial statements of the Company, or in
response to, or in anticipation of, changes in applicable laws, regulations,
accounting principles, or business conditions.


“Performance
Period” means the designated period during which the Performance Goals must
be satisfied with respect to the Award to which the Performance Goals relate.


“Period of
Restriction” means the period during which Restricted Stock or an RSU is
subject to forfeiture and/or restrictions on transferability.


“Plan”
means this Steinway Musical Instruments, Inc. 2006 Stock Compensation Plan, as
set forth in this instrument and as hereafter amended from time to time.


“Restricted
Stock” means a Stock Award granted pursuant to Article 6 under which the
Shares are subject to forfeiture upon such terms and conditions as specified in
the relevant Award Agreement.


“Qualified
Performance-Based Compensation” means any compensation awarded in
accordance with Article IX that is intended to qualify as “qualified
performance-based compensation” as described in Section 162(m) of the Code.


“Restricted
Stock Unit” or “RSU” means a Stock Award granted pursuant to Article
6 subject to a period or periods of time after which the Participant will
receive Shares if the conditions contained in such Stock Award have been met.


“Rule 16b-3”
means Rule 16b-3 promulgated under the 1934 Act, as amended, and any future
regulation amending, supplementing or superseding such regulation.


“Share”
means the Company’s common stock, par value $0.001 per share or any security
issued by the Company or any successor in exchange or in substitution therefor.


“Stock
Appreciation Right” or “SAR” means an Award granted pursuant to
Article 7, granted alone or in tandem with a related Option which is designated
by the Committee as an SAR.


“Stock Award”
means an Award of Restricted Stock or an RSU pursuant to Article 6.


“Subsidiary(ies)”
means any corporation (other than the Company) in an unbroken chain of 











corporations, including
and beginning with the Company, if each of such corporations, other than the
last corporation in the unbroken chain, owns, directly or indirectly, more than
fifty percent (50%) of the voting stock in one of the other corporations in
such chain.


“Ten Percent
Holder” means an Employee (together with persons whose stock ownership is
attributed to the Employee pursuant to Section 424(d) of the Code) who, at the
time an Option is granted, owns stock representing more than ten percent of the
voting power of all classes of stock of the Company.


ARTICLE
3


ADMINISTRATION



3.1.                              The
Committee.  The Plan shall be
administered by the Option Committee of the Board.  It is intended that each member of the
Committee shall qualify as (a) a “non-employee director” under Rule 16b-3, (b)
an “outside director” under Section 162(m) of the Code and (c) an “independent
director” under the applicable rules of any national securities exchange or
national securities association.  If it
is later determined that one or more members of the Committee do not so
qualify, actions taken by the Committee prior to such determination shall be
valid despite such failure to qualify.


Reference to the
Committee shall refer to the Board if the Option Committee ceases to exist and
the Board does not appoint a successor Committee.


3.2.                              Authority
and Action of the Committee.  It
shall be the duty of the Committee to administer the Plan in accordance with
the Plan’s provisions.  The Committee
shall have all powers and discretion necessary or appropriate to administer the
Plan and to control its operation, including, but not limited to, the power to
(a) determine which Employees, Independent Contractors and Members of the Board
shall be eligible to receive Awards and to grant Awards, (b) prescribe the
form, amount, timing and other terms and conditions of each Award, (c)
interpret the Plan and the Award Agreements, (d) adopt such procedures as it
deems necessary or appropriate to permit participation in the Plan by eligible
Employees, Independent Contractors and Members of the Board, (e) adopt such
rules as it deems necessary or appropriate for the administration,
interpretation and application of the Plan, (f) interpret, amend or revoke any
such procedures or rules, (g) correct any technical defect(s) or technical
omission(s), or reconcile any technical inconsistency(ies), in the Plan and/or
any Award Agreement, (h) accelerate the vesting or payment of any Award, (i)
extend the period during which an Option may be exercisable, and (j) make all
other decisions and determinations that may be required pursuant to the Plan
and/or any Award Agreement or as the Committee deems necessary or advisable to
administer the Plan.


The acts of the Committee
shall be either (a) acts of a majority of the members of the Committee present
at any meeting at which a quorum is present or (b) acts approved in writing by
all of the members of the Committee without a meeting.  A majority of the Committee shall constitute
a quorum.  The Committee’s determinations
under the Plan need not be uniform and may be made selectively among
Participants, whether or not such Participants are similarly situated.  Each member of the Committee is entitled to,
in good faith, rely or act upon any report or other information furnished to
that member by any Employee of the Company or any of its Subsidiaries or
Affiliates, the Company’s independent certified public accountants or any executive
compensation consultant or other professional retained by the Company to assist
in the administration of the Plan.


The Company shall effect
the granting of Awards under the Plan, in accordance with the determinations
made by the Committee, by execution of Award Agreements or other written
agreements and/or other instruments in such form as is approved by the
Committee.


3.3.                              Delegation
by the Committee.  The Committee in
its sole discretion and on such terms and conditions as it may provide may delegate
all or any part of its authority and powers under the Plan to one or more
Members of the Board of the Company and/or officers of the Company; provided,
however, that the Committee may not delegate its authority or power with
respect to (a) the selection for participation in 











this Plan of an officer
or other person subject to Section 16 of the 1934 Act or decisions concerning
the timing, pricing or amount of an Award to such an officer or person or (b)
any Award that is intended to satisfy the requirements applicable to “qualified
performance-based compensation” under Section 162(m) of the Code.


3.4.                              Decisions
Binding.  All determinations,
decisions and interpretations of the Committee, the Board, and any delegate of
the Committee pursuant to the provisions of the Plan or any Award Agreement
shall be final, conclusive, and binding on all persons, and shall be given the
maximum deference permitted by law.


ARTICLE
4


SHARES
SUBJECT TO THE PLAN 


4.1.                              Number
of Shares.  Subject to adjustment as
provided in Section 10.13, the number of  Shares
available for grants of Awards under the Plan shall be 1,000,000 Shares.  Shares awarded under the Plan may be either
authorized but unissued Shares, authorized and issued Shares reacquired
(including Shares reacquired under any of the Prior Plans) and held as treasury
Shares or a combination thereof.  The
payment of dividends or other distributions in Shares in conjunction with
outstanding Awards shall not reduce the Shares available for grants of Awards
under this Section 4.1.  To the extent
permitted by applicable law or exchange rules, Shares issued in assumption of,
or in substitution for, any outstanding awards of any entity acquired in any
form of combination by the Company or any Subsidiary or Affiliate shall not reduce
the Shares available for grants of Awards under this Section 4.1.


4.2                                 Limit
on Individual Awards.  Subject to
adjustment as provided in Section 10.13, the maximum number of Shares with
respect to which (a) Options and SARs, (b) Restricted Stock, RSUs and Other
Stock Awards that vest only if the Participant achieves Performance Goals
established by the Committee in accordance with Section 162(m) of the Code or
(c) any combination of (a) and (b), may be granted during any year to any
person shall be 1,500,000 Shares.


4.3.                              Lapsed
Awards.  To the extent that Shares
subject to an outstanding Option (except to the extent Shares are issued or
delivered by the Company in connection with the exercise of a tandem SAR) or
other Award are not issued or delivered by reason of the expiration,
cancellation, forfeiture or other termination of such Award, then such Shares
shall again be available under this Plan.


ARTICLE
5


STOCK
OPTIONS 


5.1.                              Grant
of Options.  Subject to the
provisions of the Plan, Options may be granted to Participants at such times,
and subject to such terms and conditions, as determined by the Committee in its
sole discretion.  An Award of Options may
include Incentive Stock Options, Non-Qualified Stock Options or a combination
thereof; provided, however, that an Incentive Stock Option may
only be granted to an Employee of the Company or a Subsidiary and no Incentive
Stock Option shall be granted more than ten years after the earlier of (a) the
date this Plan is adopted by the Board or (b) the date this Plan is approved by
the Company’s shareholders.


5.2.                              Award
Agreement.  Each Option shall be
evidenced by an Award Agreement that shall specify the Exercise Price, the
expiration date of the Option, the number of Shares to which the Option
pertains, any conditions to the exercise of all or a portion of the Option, and
such other terms and conditions as the Committee, in its discretion, shall
determine.  The Award Agreement
pertaining to an Option shall designate such Option as an Incentive Stock
Option or a Non-Qualified Stock Option. 
Notwithstanding any such designation, to the extent that the aggregate
Fair Market Value (determined as of the Grant Date) of Shares with respect to
which Options designated as Incentive Stock Options are exercisable for the first
time by a Participant during any calendar year (under this Plan or any other
plan of the Company, or any parent or subsidiary as defined in Section 424 of
the Code) exceeds $100,000, such Options shall constitute Non-Qualified Stock
Options.  For purposes of the preceding
sentence, Incentive Stock Options shall be 











taken into account in the
order in which they are granted.


5.3.                              Exercise
Price.  Subject to the other
provisions of this Section, the Exercise Price with respect to Shares subject
to an Option shall be determined by the Committee in its sole discretion; provided,
however, that the Exercise Price shall be not less than one hundred
percent (100%) of the Fair Market Value of a Share on the Grant Date; and provided
further, that the Exercise Price with respect to an Incentive Stock
Option granted to a Ten Percent Holder shall not be less than one hundred-ten
percent (110%) of the Fair Market Value of a Share on the Grant Date.


5.4.                              Expiration
Dates.  Each Option shall terminate
not later than the expiration date specified in the Award Agreement pertaining
to such Option; provided, however, that the expiration date with
respect to an Option shall not be later than the tenth anniversary of its Grant
Date and the expiration date with respect to an Incentive Stock Option granted
to a Ten Percent Holder shall not be later than the fifth anniversary of its
Grant Date.


5.5.                              Exercisability
of Options. Subject to Section 5.4, Options granted under the Plan shall be
exercisable at such times, and shall be subject to such restrictions and
conditions, as the Committee shall determine in its sole discretion. The
exercise of an Option is contingent upon payment by the Optionee of the amount
sufficient to pay all taxes required to be withheld by any governmental agency.  Such payment may be in any form approved by
the Committee.


5.6.                              Method
of Exercise.  Options shall be
exercised by the Participant’s delivery of a written notice of exercise to the
Chief Financial Officer of the Company (or his or her designee) or such other
person as may be designated from time to time by the Committee, setting forth
the number of Shares with respect to which the Option is to be exercised,
accompanied by full payment of the Exercise Price with respect to each such
Share and an amount sufficient to pay all taxes required to be withheld by any
governmental agency.  The Exercise Price
shall be payable to the Company in full in cash or its equivalent.  The Committee, in its sole discretion, also
may permit exercise (a) by tendering previously acquired Shares which have been
held by the Optionee for at least six months having an aggregate Fair Market
Value at the time of exercise equal to the aggregate Exercise Price of the
Shares with respect to which the Option is to be exercised, or (b) by any other
means which the Committee, in its sole discretion, determines to both provide
legal consideration for the Shares, and to be consistent with the purposes of
the Plan.  As soon as practicable after
receipt of a written notification of exercise and full payment for the Shares
with respect to which the Option is exercised, the Company shall deliver to the
Participant Share certificates (which may be in book entry form) for such
Shares with respect to which the Option is exercised.


5.7.                              Restrictions
on Share Transferability.  Incentive
Stock Options are not transferable, except by will or the laws of descent.  The Committee may impose such additional
restrictions on any Shares acquired pursuant to the exercise of an Option as it
may deem advisable, including, but not limited to, restrictions related to
applicable federal securities laws, the requirements of any national securities
exchange or system upon which Shares are then listed or traded, or any blue sky
or state securities laws.


ARTICLE
6


STOCK
AWARDS 


6.1.                              Grant
of Stock Awards.  Subject to the
provisions of the Plan, Stock Awards may be granted to such Participants at
such times, and subject to such terms and conditions, as determined by the
Committee in its sole discretion.


6.2.                              Stock
Award Agreement.  Each Stock Award
shall be evidenced by an Award Agreement that shall specify the number of
Shares granted, the price, if any, to be paid for the Shares and the Period of
Restriction applicable to a Restricted Stock Award or RSU Award and such other
terms and conditions as the Committee, in its sole discretion, shall determine.


6.3.                              Transferability/Share
Certificates.  Shares subject to an
Award of Restricted Stock may not be 











sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated during a Period of
Restriction.  During the Period of
Restriction, a Restricted Stock Award may be registered in the holder’s name or
a nominee’s name at the discretion of the Company and may bear a legend as
described in Section 6.4.2.  Unless the
Committee determines otherwise, Shares of Restricted Stock shall be held by the
Company as escrow agent during the applicable Period of Restriction, together
with stock powers or other instruments of assignment (including a power of
attorney), each endorsed in blank with a guarantee of signature if deemed
necessary or appropriate by the Company, which would permit transfer to the
Company of all or a portion of the Shares subject to the Restricted Stock Award
in the event such Award is forfeited in whole or part.


6.4.                              Other
Restrictions.  The Committee, in its
sole discretion, may impose such other restrictions on Shares subject to an
Award of Restricted Stock as it may deem advisable or appropriate.


6.4.1.                     General
Restrictions.  The Committee may set
restrictions based upon applicable federal or state securities laws, or any
other basis determined by the Committee in its discretion.


6.4.2.                     Legend on
Certificates.  The Committee, in its
sole discretion, may legend the certificates representing Restricted Stock
during the Period of Restriction to give appropriate notice of such
restrictions.  For example, the Committee
may determine that some or all certificates representing Shares of Restricted
Stock shall bear the following legend: “The sale or other transfer of the
shares of stock represented by this certificate, whether voluntary,
involuntary, or by operation of law, is subject to certain restrictions on
transfer as set forth in the Steinway Musical Instruments, Inc. 2006 Stock
Compensation Plan (the “Plan”), and in a Restricted Stock Agreement (as defined
by the Plan).  A copy of the Plan and
such Restricted Stock Agreement may be obtained from the Chief Financial
Officer of Steinway Musical Instruments, Inc.”


6.5.                              Removal
of Restrictions.  Shares of Restricted
Stock covered by a Restricted Stock Award made under the Plan shall be released
from escrow as soon as practicable after the termination of the Period of
Restriction and, subject to the Company’s right to require payment of any
taxes, a certificate or certificates evidencing ownership of the requisite
number of Shares shall be delivered to the Participant.


6.6.                              Voting
Rights.  During the Period of
Restriction, Participants holding Shares of Restricted Stock granted hereunder
may exercise full voting rights with respect to those Shares, unless otherwise
provided in the Award Agreement.


6.7.                              Dividends
and Other Distributions.  During the
Period of Restriction, Participants holding Shares of Restricted Stock shall be
entitled to receive all dividends and other distributions paid with respect to
such Shares unless otherwise provided in the Award Agreement.  If any such dividends or distributions are
paid in Shares, the Shares shall be deposited with the Company and shall be
subject to the same restrictions on transferability and forfeitability as the
Shares of Restricted Stock with respect to which they were paid.


ARTICLE
7


STOCK
APPRECIATION RIGHTS 


7.1.                              Grant
of SARs.  Subject to the provisions
of the Plan, SARs may be granted to such Participants at such times, and
subject to such terms and conditions, as shall be determined by the Committee
in its sole discretion; provided, however, that any tandem SAR (i.e., a SAR granted in tandem with an
Option) related to an Incentive Stock Option shall be granted at the same time
that such Incentive Stock Option is granted.


7.2.                              Base
Price and Other Terms.  The
Committee, subject to the provisions of the Plan, shall have complete
discretion to determine the terms and conditions of SARs granted under the
Plan.  Without limiting the foregoing,
the Base Price with respect to Shares subject to a tandem SAR shall be the same
as the Exercise Price with respect to the Shares subject to the related Option.


7.3.                              SAR
Agreement.  Each SAR grant shall be
evidenced by an Award Agreement that shall specify 











the Base Price (which
shall not be less than one hundred percent (100%) of the Fair Market Value of a
Share on the Grant Date), the term of the SAR, the conditions of exercise, and
such other terms and conditions as the Committee, in its sole discretion, shall
determine.


7.4.                              Expiration
Dates.  Each SAR shall terminate no
later than the tenth anniversary of its Grant Date; provided, however,
that the expiration date with respect to a tandem SAR shall not be later than
the expiration date of the related Option.


7.5.                              Payment
of SAR Amount.  Unless otherwise
specified in the Award Agreement pertaining to a SAR, a SAR may be exercised
(a) by the Participant’s delivery of a written notice of exercise to the Chief
Financial Officer of the Company (or his or her designee) or such other person
as may be designated from time to time by the Committee setting forth the
number of whole SARs which are being exercised, (b) in the case of a tandem
SAR, by surrendering to the Company any Options which are cancelled by reason
of the exercise of such SAR, and (c) by executing such documents as the Company
may reasonably request.  Except as
otherwise provided in the relevant Award Agreement, upon exercise of a SAR, the
Participant shall be entitled to receive payment from the Company in an amount
determined by multiplying: (i) the amount by which the Fair Market Value of a
Share on the date of exercise exceeds the Base Price specified in the Award
Agreement pertaining to such SAR; by (ii) the number of Shares with respect to
which the SAR is exercised.


7.6.                              Payment
Upon Exercise of SAR.  Payment to a
Participant upon the exercise of the SAR shall be made, as determined by the
Committee in its sole discretion, either (a) in cash, (b) in Shares with a Fair
Market Value equal to the amount of the payment or (c) in a combination
thereof, as set forth in the applicable Award Agreement.


ARTICLE
8


OTHER
STOCK AWARDS


8.1.                            Grant
of Other Stock Awards.  Subject to
the provisions of the Plan, the Committee may develop sub-plans or grant other
equity-based awards (“Other Stock Awards”) on such terms as it may determine,
including, but not limited to, Awards designed to comply with or take advantage
of applicable local laws of jurisdictions outside of the United States.


ARTICLE
9


PERFORMANCE-BASED
AWARDS


9.1.                              Purpose.  The purpose of this Article 9 is to provide
the Committee the ability to qualify Awards as Qualified Performance-Based
Compensation.  If the Committee, in its
discretion, decides to grant to a Covered Employee an Award that is intended to
constitute Qualified Performance-Based Compensation, the provisions of this
Article 9 shall control over any contrary provision contained herein; provided, however, that the Committee may
in its discretion grant Awards to Covered Employees that are based on
Performance Criteria or Performance Goals but that do not satisfy the
requirements of this Article 9.


9.2.                              Applicability.  This Article 9 shall apply only to those
Covered Employees selected by the Committee to receive Awards.  The designation of a Covered Employee as a
Participant for a Performance Period shall not in any manner entitle the
Participant to receive an Award for the relevant Performance Period.  Moreover, designation of a Covered Employee
as a Participant for a particular Performance Period shall not require
designation of such Covered Employee as a Participant in any subsequent
Performance Period and designation of one Covered Employee as a Participant
shall not require designation of any other Covered Employees as a Participant
in such period or in any other period.


9.3.                              Procedures with Respect to Qualified
Performance-Based Awards.  To
the extent necessary to comply with the Qualified Performance-Based
Compensation requirements of Section 162(m)(4)(C) of the 











Code, with respect to any
Award which may be granted to one or more Covered Employees, no later than
ninety (90) days following the commencement of any fiscal year in question or
any other designated fiscal period or period of service (or such other time as
may be required or permitted by Section 162(m) of the Code), the Committee
shall, in writing, (a) designate one or more Covered Employees, (b) select the
Performance Criteria applicable to the Performance Period, (c) establish the
Performance Goals, and amounts of such Awards, as applicable, which may be
earned for such Performance Period, and (d) specify the relationship between
Performance Criteria and the Performance Goals and the amounts of such Awards,
as applicable, to be earned by each Covered Employee for such Performance
Period.  Following the completion of each
Performance Period, the Committee shall certify in writing whether the
applicable Performance Goals have been achieved for such Performance Period.  In determining the amount earned by a Covered
Employee, the Committee shall have the right to reduce or eliminate (but not to
increase) the amount payable at a given level of performance to take into
account additional factors that the Committee may deem relevant to the
assessment of individual or corporate performance for the Performance Period.


9.4.                              Payment of
Qualified Performance-Based Awards.  Unless
otherwise provided in the applicable Award Agreement, a Participant must be
employed by the Company or a Subsidiary on the day a Qualified
Performance-Based Award for such Performance Period is paid to the
Participant.  Furthermore, a Participant
shall be eligible to receive payment pursuant to a Qualified Performance-Based
Award for a Performance Period only if the Performance Goals for such period
are achieved.


9.5.                              Additional Limitations. 
Notwithstanding any other provision of the Plan, any Award which is
granted to a Covered Employee and is intended to constitute Qualified
Performance-Based Compensation shall be subject to any additional limitations
set forth in Section 162(m) of the Code (including any amendment to Section
162(m) of the Code) or any regulations or rulings issued thereunder that are
requirements for qualification as qualified performance-based compensation as
described in Section 162(m)(4)(C) of the Code, and the Plan shall be deemed
amended to the extent necessary to conform to such requirements.


ARTICLE
10


MISCELLANEOUS



10.1.                        No
Effect on Employment or Service. 
Nothing in the Plan shall interfere with or limit in any way the right
of the Company to terminate any Participant’s employment or service at any
time, for any reason and with or without cause.


10.2.                        Participation.  No person shall have the right to be selected
to receive an Award under this Plan, or, having been so selected, to be
selected to receive a future Award.


10.3.                        Indemnification.  Each person who is or shall have been a
member of the Committee, or a Member of the Board, shall be indemnified and
held harmless by the Company against and from (a) any loss, cost, liability, or
expense that may be imposed upon or reasonably incurred by him or her in
connection with or resulting from any claim, action, suit, or proceeding to
which he or she may be a party or in which he or she may be involved by reason
of any good faith action taken or good faith failure to act under the Plan or
any Award Agreement, and (b) from any and all amounts paid by him or her in
settlement thereof, with the Company’s approval, or paid by him or her in
satisfaction of any judgment in any such claim, action, suit, or proceeding
against him or her, provided he or she shall give the Company an opportunity,
at its own expense, to handle and defend the same before he or she undertakes
to handle and defend it on his or her 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 Certificate of Incorporation or By-Laws, by
contract, as a matter of law, or otherwise, or under any power that the Company
may have to indemnify them or hold them harmless.


10.4.                        Successors.  All obligations of the Company under the
Plan, with respect to 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 or assets of the Company.


10.5.                        Beneficiary
Designations.  Subject to the
restrictions in Section 10.6 below, a Participant under the Plan may name a
beneficiary or beneficiaries to whom any vested but unpaid Award shall be paid
in the event of the Participant’s death. 
For purposes of this Section, a beneficiary may include a designated
trust having as its primary beneficiary a family member of a Participant.  Each such designation shall revoke all prior
designations by the Participant and shall be effective only if given in a form
and manner acceptable to the Committee. 
In the absence of any such designation, any vested benefits remaining
unpaid at the Participant’s death shall be paid to the Participant’s estate
and, subject to the terms of the Plan and of the applicable Award Agreement,
any unexercised vested Award may be exercised by the administrator or executor of
the Participant’s estate.


10.6.                        Nontransferability
of Awards.  No Award granted under
the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will, by the laws of descent and distribution; provided,
however, that except as provided by in the relevant Award Agreement, a
Participant may transfer, without consideration, an Award other than an
Incentive Stock Option to one or more members of his or her Immediate Family,
to a trust established for the exclusive benefit of one or more members of his
or her Immediate Family, to a partnership in which all the partners are members
of his or her Immediate Family, or to a limited liability company in which all
the members are members of his or her Immediate Family; provided, further,
that any such Immediate Family, and any such trust, partnership and limited
liability company, shall agree to be and shall be bound by the terms of the
Plan, and by the terms and provisions of the applicable Award Agreement and any
other agreements covering the transferred Awards.  All rights with respect to an Award granted
to a Participant shall be available during his or her lifetime only to the
Participant and may be exercised only by the Participant or the Participant’s
legal representative.


10.7.                        No
Rights as Stockholder.  Except to the
limited extent provided in Sections 6.6 and 6.7, no Participant (nor any
beneficiary) shall have any of the rights or privileges of a stockholder of the
Company with respect to any Shares issuable pursuant to an Award (or exercise
thereof), unless and until certificates representing such Shares shall have
been issued, recorded on the records of the Company or its transfer agents or
registrars, and delivered to the Participant (or beneficiary).


10.8.                        Unfunded
Status.  The Plan is intended to be
an “unfunded” plan for incentive compensation. 
With respect to any payments not yet made to a Participant pursuant to
an Award, nothing contained in the Plan or any Award Agreement shall give the
Participant any rights that are greater than those of a general creditor of the
Company or any Subsidiary.


10.9.                        Withholding
Requirements. Prior to the delivery of any Shares or cash pursuant to an
Award (or exercise thereof), the Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy any federal, state, local and foreign taxes of any kind
(including, but not limited to, the Participant’s FICA obligations) which the
Committee, in its sole discretion, deems necessary to be withheld or remitted
to comply with the Code and/or any other applicable law, rule or regulation
with respect to such Award (or exercise thereof).


10.10.                  Withholding
Arrangements. The Committee, in its sole discretion and pursuant to such
procedures as it may specify from time to time, may permit or require a
Participant to satisfy all or part of the tax withholding obligations in
connection with an Award in any manner determined by the Committee, including
by (a) having the Company withhold otherwise deliverable Shares, or (b)
delivering to the Company already-owned Shares having a Fair Market Value equal
to the amount required to be withheld, provided such Shares have been held by
the Participant for at least six months.


10.11.                  No Corporate
Action Restriction.  The existence of
the Plan, any Award Agreement and/or the Awards granted hereunder shall not
limit, affect or restrict in any way the right or power of the Board or the
shareholders of the Company to effect or authorize any corporate action or
transaction, including, without limitation, (a) any adjustment,
recapitalization, reorganization or other change in the Company’s or any 











Subsidiary’s or Affiliate’s
capital structure or business, (b) any merger, consolidation or change in the
ownership of the Company or any Subsidiary or Affiliate, (c) any issue of
bonds, debentures, capital, preferred or prior preference stocks ahead of or
affecting the Company’s or any Subsidiary’s or Affiliate’s capital stock or the
rights thereof, (d) any dissolution or liquidation of the Company or any
Subsidiary or Affiliate, (e) any sale or transfer of all or any part of the
Company’s or any Subsidiary’s or Affiliate’s assets or business, or (f) any
other corporate act or proceeding by the Company or any Subsidiary or
Affiliate.  No Participant, beneficiary
or any other person shall have any claim against any Member of the Board or the
Committee, the Company or any Subsidiary or Affiliate, or any employees,
officers, shareholders or agents of the Company or any Subsidiary or Affiliate,
as a result of any such action.


10.12.                  Restrictions
on Shares.  Each Award made hereunder
shall be subject to the requirement that if at any time the Company determines
that the listing, registration or qualification of the Shares subject to such
Award upon any securities exchange or under any law, or the consent or approval
of any governmental body, or the taking of any other action is necessary or
desirable as a condition of, or in connection with, the exercise or settlement
of such Award or the delivery of Shares thereunder, such Award shall not be
exercised or settled and such Shares shall not be delivered unless such
listing, registration, qualification, consent, approval or other action shall have
been effected or obtained, free of any conditions not acceptable to the
Company.  The Company may require that
certificates evidencing Shares delivered pursuant to any Award made hereunder
bear a legend indicating that the sale, transfer or other disposition thereof
by the holder is prohibited except in compliance with the Securities Act of
1933, as amended, and the rules and regulations thereunder.  Finally, no Shares shall be issued and
delivered under the Plan, unless the issuance and delivery of those Shares
shall comply with all relevant provisions of gaming laws or regulations and any
registration, approval or action thereunder.


10.13.                  Changes in
Capital Structure.  In the event that
the Board determines that any dividend or other distribution (whether in the
form of cash, Shares, other securities, or other property), recapitalization,
stock split, reverse stock split, reorganization, merger, consolidation,
split-up, spin-off, combination, repurchase, change of control or exchange of
Shares or other securities of the Company, Change in Control, or other
corporate transaction or event (each a “Corporate Event”) affects the Shares
such that an adjustment is determined by the Board, in its sole discretion, to
be necessary or appropriate in order to prevent dilution or enlargement of
benefits or potential benefits intended to be made available under the Plan,
the Board may, in such manner as it in good faith deems equitable, adjust any
or all of (a) the number of Shares or other securities of the Company (or
number and kind of other securities or property) with respect to which Awards
may be granted, (b) the number of Shares or other securities of the Company (or
number and kind of other securities or property) subject to outstanding Awards,
and (c) the Exercise Price or Base Price with respect to any Award, or make
provision for an immediate cash payment to the holder of an outstanding Award
in consideration for the cancellation of such Award.


If the Company
enters into or is involved in any Corporate Event, the Board may, prior to such
Corporate Event and effective upon such Corporate Event, take such action as it
deems appropriate, including, but not limited to, replacing Awards with
substitute awards in respect of the Shares, other securities or other property
of the surviving corporation or any affiliate of the surviving corporation on
such terms and conditions, as to the number of shares, pricing and otherwise,
which shall substantially preserve the value, rights and benefits of any
affected Awards granted hereunder as of the date of the consummation of the
Corporate Event.  Notwithstanding
anything to the contrary in the Plan, if any Corporate Event occurs, the
Company shall have the right, but not the obligation, to cancel each
Participant’s Awards immediately prior to such Corporate Event and to pay to
each affected Participant in connection with the cancellation of such
Participant’s Awards, an amount that the Committee, in its sole discretion, in
good faith determines to be the equivalent value of such Award.


Upon receipt by any
affected Participant of any such substitute awards (or payment) as a result of
any such Corporate Event, such Participant’s affected Awards for which such
substitute awards (or payment) were received shall be thereupon cancelled
without the need for obtaining the consent of any such affected
Participant.  Any actions or
determinations of the Committee under this Section 10.13 need not be uniform as
to all outstanding Awards, nor treat all Participants identically.











ARTICLE 11


AMENDMENT, TERMINATION AND DURATION


11.1.                        Amendment,
Suspension or Termination.  The
Board, in its sole discretion, may amend, suspend or terminate the Plan, or any
part thereof, at any time and for any reason, subject to any requirement of
stockholder approval required by applicable law, rule or regulation, including,
without limitation, Section 422 of the Code, Section 162(m) of the Code and the
rules of the New York Stock Exchange; provided, however, the
Board may amend the Plan and any Award Agreement, including without limitation
retroactive amendments, without shareholder approval as necessary to avoid the
imposition of any taxes under Section 409A of the Code.  Subject to the preceding sentence, the
amendment, suspension or termination of the Plan shall not, without the consent
of the Participant, materially adversely alter or impair any rights or
obligations under any Award theretofore granted to such Participant.  No Award may be granted during any period of
suspension or after termination of the Plan.


11.2.                        Duration
of the Plan. The Plan shall, subject to Section 11.1, terminate ten years
after adoption by the Board, unless earlier terminated by the Board, and no
further Awards shall be granted under the Plan. 
The termination of the Plan shall not affect any Awards granted prior to
the termination of the Plan.


ARTICLE
12


LEGAL
CONSTRUCTION 


12.1.                        Gender
and Number.  Except where otherwise
indicated by the context, any masculine term used herein also shall include the
feminine; the plural shall include the singular and the singular shall include
the plural.


12.2.                        Severability.  In the event any provision of the Plan or of
any Award Agreement shall be held illegal or invalid for any reason, the
illegality or invalidity shall not affect the remaining parts of the Plan or
the Award Agreement, and the Plan and/or the Award Agreement shall be construed
and enforced as if the illegal or invalid provision had not been included.


12.3.                        Requirements
of Law.  The granting of 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 governmental agencies or
national securities exchanges as may be required.


12.4.                        Governing
Law.  The Plan and all Award
Agreements shall be construed in accordance with and governed by the laws of
the State of Delaware, but without regard to its conflict of law provisions.


12.5.                        Captions.  Captions are provided herein for convenience
only, and shall not serve as a basis for interpretation or construction of the
Plan.


12.6.                        Incentive
Stock Options.  Should any Option
granted under this Plan be designated an “Incentive Stock Option,” but fail,
for any reason, to meet the requirements of the Code for such a designation,
then such Option shall be deemed to be a Non-Qualified Stock Option and shall
be valid as such according to its terms.