Exhibit 10.2


    Exhibit
      10.2

    


    MATRIA
      HEALTHCARE, INC.

    


    2004
      STOCK INCENTIVE PLAN

    


    


    1. Establishment,
      Purpose, and Definitions.

    


    (a) Matria
      Healthcare, Inc. (the “Company”) hereby adopts the Matria Healthcare, Inc. 2004
      Stock Incentive Plan (the “Plan”).

    


    (b) The
      purpose of the Plan is to allow the Company to attract and retain eligible
      individuals (as defined in Section 5 below) and to provide incentives to such
      individuals for their services, increased efforts, and successful achievements
      on behalf of or in the interests of the Company and its Affiliates and to
      maximize the rewards due them for those efforts and achievements. The Plan
      provides employees (including officers and directors who are employees) of
      the
      Company and of its Affiliates an opportunity to purchase shares of common stock,
      $0.01 par value per share, of the Company (the “Stock”) pursuant to options
      which may qualify as incentive stock options (referred to as “incentive stock
      options”) under Section 422 of the Internal Revenue Code of 1986, as amended
      (the “Code”), and employees, officers, independent contractors, and consultants
      of the Company and of its Affiliates an opportunity to purchase shares of Stock
      pursuant to options which are not described in Sections 422 or 423 of the Code
      (referred to as “non-qualified stock options”). The Plan also provides for the
      sale or bonus grant of Stock to eligible individuals in connection with the
      performance of services for the Company or its Affiliates. Finally, the Plan
      authorizes the grant of stock appreciation rights (“SARs”), either separately or
      in tandem with stock options, entitling holders to cash compensation measured
      by
      appreciation in the value of the Stock.

    


    (c) The
      term
“Affiliate” as used in the Plan means parent or subsidiary corporations of the
      Company, as defined in Sections 424(e) and (f) of the Code (but substituting
      “the Company” for “employer corporation”), including parents or subsidiaries of
      the Company that become such after adoption of the Plan.

    


    2. Administration
      of the Plan.

    


    (a) The
      Plan
      shall be administered by the Board of Directors of the Company (the “Board”).
      Subject to Section 2(f) below, the Board may delegate the responsibility for
      administering the Plan to a committee, under such terms and conditions as the
      Board shall determine (the “Committee”). To the extent necessary to exempt
      transactions under the Plan from Section 16(b): (i) the Committee shall consist
      of at least (a) two (2) members of the Board or (b) such lesser number of
      members of the Board as permitted by Rule 16b-3; and (ii) each member of the
      Committee shall be a Non-Employee Director (as defined in Rule 16b-3), or grants
      and awards under the Plan to persons subject to Section 16 of the Exchange
      Act
      (“Insiders”) shall be determined by a subcommittee 


    
      
        
        

      

      
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    consisting
      solely of Non-Employee Directors or by the full Board. Members of the Committee
      shall serve at the pleasure of the Board. The Committee shall select one of
      its
      members as chair of the Committee and shall hold meetings at such times and
      places as it may determine. A majority of the Committee shall constitute a
      quorum, and acts of the Committee at which a quorum is present, or acts reduced
      to or approved in writing by all members of the Committee, shall be the valid
      acts of the Committee. If the Board does not delegate administration of the
      Plan
      to the Committee, then each reference in this Plan to the “Committee” shall be
      construed to refer to the Board.

    


    (b) The
      Committee shall determine which eligible individuals (as defined in Section
      5
      below) shall be granted options under the Plan, the timing of such grants,
      the
      terms thereof (including any restrictions on the Stock, and the number of shares
      subject to such options.

    


    (c) The
      Committee shall also determine which eligible individuals (as defined in Section
      5 below) shall be granted or issued SARs or Stock (other than pursuant to the
      exercise of options) under the Plan, the timing of such grants or issuances,
      the
      terms thereof (including any restrictions and the consideration, if any, to
      be
      paid therefor), and the number of shares or SARs to be granted.

    


    (d) The
      Committee may amend the terms of any outstanding option or SAR granted under
      this Plan, but any amendment that would adversely affect the holder’s rights
      under an outstanding option or SAR shall not be made without the holder’s
      written consent. The Committee may, with the holder’s written consent, cancel
      any outstanding option or SAR or accept any outstanding option or SAR in
      exchange for a new option, SAR, or Stock under the Plan on such terms determined
      by the Committee. The Committee also may amend any stock purchase agreement
      or
      stock bonus agreement relating to sales or bonuses of Stock under the Plan,
      but
      any amendment that would adversely affect the individual’s rights to the Stock
      shall not be made without his or her written consent. Notwithstanding the
      foregoing, without the prior approval of the Company’s shareholders sufficient
      to approve the Plan in the first instance: the Committee shall not reprice
      any
      option by lowering the option exercise price of a previously granted award,
      or
      by cancellation of outstanding options with subsequent replacement, or regrant
      of options with lower exercise prices.

    


    (e) The
      Committee shall have the sole authority, in its absolute discretion, to adopt,
      amend, and rescind such rules and regulations as, in its opinion, may be
      advisable in the administration of the Plan, to construe and interpret the
      Plan,
      the rules and regulations, and the instruments evidencing options, SARs, or
      Stock granted or issued under the Plan, and to make all other determinations
      deemed necessary or advisable for the administration of the Plan. All decisions,
      determinations, and interpretations of the Committee shall be binding on all
      participants.

    


    (f) Notwithstanding
      the foregoing provisions of this Section 2, grants of options or SARs or Stock
      to any “Covered Employee,” as such term is defined by Section 162(m) of the
      Code, shall be made only by a subcommittee of the Committee which, in



    
      
        
        

      

      
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    addition
      to meeting other applicable requirements of this Section 2, is composed solely
      of two (2) or more outside directors within the meaning of Section 162(m) of
      the
      Code and the regulations thereunder (the “Subcommittee”), to the extent
      necessary to qualify such grants as “performance-based compensation” under
      Section 162(m) of the Code and the regulations thereunder. In the case of grants
      to Covered Employees, references to the “Committee” shall be deemed to be
      references to the Subcommittee, as specified above.

    


    3. Fair
      Market Value.
      Where
      this Plan uses the term “fair market value” in connection with the Stock, such
      fair market value shall be determined by the Committee as follows:

    


    (a) If
      the
      Stock is listed on any established stock exchange or a national market system,
      including, without limitation, the NASDAQ National Market, its fair market
      value
      shall be the closing selling price for such stock on the principal securities
      exchange or national market system on which the Stock is at the time listed
      for
      trading. If there are no sales of Stock on that date, then the closing selling
      price for the Stock on the next preceding day for which such closing price
      is
      quoted shall be determinative of fair market value; or

    


    (b) If
      the
      Stock is not traded on an exchange or national market system, its fair market
      value shall be determined in good faith by the Committee, and such determination
      shall be conclusive and binding on all persons.

    


    4. Stock
      Subject to the Plan.

    


    (a) Subject
      to adjustment pursuant to Section 4(c) below, the aggregate number of shares
      of
      Stock available for issuance under the Plan and during the life of the Plan
      shall be 250,000 shares of Stock.

    


    (b) To
      the
      extent any shares of Stock covered by an option are not delivered to an optionee
      because the option is surrendered, forfeited, canceled or for any other reason
      ceases to be exercisable in whole or in part or the shares of Stock are not
      delivered because the Option is used to satisfy the applicable tax withholding
      obligation, such shares shall continue to be available under the Plan and shall
      not be deemed to have been delivered for purposes of determining the maximum
      number of shares of Stock available for delivery under the Plan. If the exercise
      price of any option granted under the Plan is satisfied by tendering shares
      of
      Stock to the Company, only the number of shares of Stock issued net of the
      shares of Stock tendered shall be deemed delivered for purposes of determining
      the maximum number of shares of Stock available for delivery under the Plan.
      Any
      shares of Stock forfeited to the Company pursuant to the terms of agreements
      evidencing sales or bonus grants under the Plan shall not be deemed to have
      been
      delivered for purposes of determining the maximum number of shares of Stock
      available for delivery under the Plan.

    


    (c) If
      there
      is any change in the Stock through merger, consolidation, reorganization,
      recapitalization, reincorporation, stock split, stock dividend (in excess of
      


    
      
        
        

      

      
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    two
      percent (2%)), or other change in the corporate structure of the Company,
      appropriate adjustments shall be made by the Committee in order to preserve
      but
      not to increase the benefits to the outstanding options, SARs and stock purchase
      or stock bonus awards under the Plan, including adjustments to the aggregate
      number and kind of shares subject to the Plan, or to outstanding stock purchase
      or stock bonus agreements, or SAR agreements, and the number and kind of shares
      and the price per share subject to outstanding options.

    


    5. Eligible
      Individuals.
      Individuals who shall be eligible to have granted to them options, SARs, or
      Stock under the Plan shall be such employees, officers, independent contractors,
      and consultants of the Company or an Affiliate as the Committee, in its
      discretion, shall designate from time to time. Notwithstanding the foregoing,
      only employees of the Company or an Affiliate (including officers and directors
      who are bona fide employees) shall be eligible to receive incentive stock
      options.

    


    6. Terms
      and Conditions of Options and SARs.

    


    (a) Each
      option granted pursuant to the Plan will be evidenced by a written stock option
      agreement executed by the Company and the person to whom such option is
      granted.

    


    (b) The
      Committee shall determine the term of each option granted under the Plan;
      provided, however, that the term of an incentive stock option shall not be
      for
      more than ten (10) years and that, in the case of an incentive stock option
      granted to a person possessing more than ten percent (10%) of the combined
      voting power of the Company or an Affiliate, the term of each incentive stock
      option shall be no more than five (5) years.

    


    (c) In
      the
      case of incentive stock options, the aggregate fair market value (determined
      as
      of the time such option is granted) of the Stock with respect to which incentive
      stock options are exercisable for the first time by an eligible employee in
      any
      calendar year (under this Plan and any other plans of the Company or its
      Affiliates) shall not exceed $100,000. If the aggregate fair market value of
      stock with respect to which incentive stock options are exercisable by an
      optionee for the first time during any calendar year exceeds $100,000, such
      options shall be treated as non-qualified options to the extent required by
      Section 422 of the Code. The rule set forth in the preceding sentence shall
      be
      applied by taking options into account in the order in which they were
      granted.

    


    (d) The
      exercise price of each option shall be not less than the per share fair market
      value of the Stock subject to such option on the date the option is granted.
      Notwithstanding the foregoing, (i) in the case of an incentive stock option
      granted to a person possessing more than ten percent (10%) of the combined
      voting power of the Company or an Affiliate, the exercise price shall be not
      less than one hundred ten percent (110%) of the fair market value of the Stock
      on the date the option is granted; and (ii) in 


    
      
        
        

      

      
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    the
      case
      of an option granted to a Covered Employee, the exercise price shall be not
      less
      than the per share fair market value of the Stock subject to such option on
      the
      date the option is granted. The exercise price of an option or SAR shall be
      subject to adjustment to the extent provided in Section 4(c) above, but, in
      the
      case of a grant to a Covered Employee, only to the extent such adjustment does
      not cause the grant to fail to qualify as “performance-based compensation”
within the meaning of Section 162(m) of the Code and the regulations
      thereunder.

    


    (e) The
      Committee may, under such terms and conditions as it deems appropriate,
      authorize the issuance of SARs evidenced by a written SAR agreement (which,
      in
      the case of tandem options, may be part of the option agreement to which the
      SAR
      relates) executed by the Company and the person to whom the SARs are granted.
      The SAR agreement shall specify the term for the SARs covered thereby, the
      cash
      amount payable or securities issuable upon exercise of the SAR, and contain
      such
      other terms, provisions, and conditions consistent with this Plan, as may be
      determined by the Committee.

    


    (f) Payment
      of the purchase price and any withholding amounts pursuant to Section 11 upon
      the exercise of any option or SAR granted under this Plan shall be made in
      cash
      or by optionee’s personal check, a certified check, a bank draft, or a postal or
      express money order payable to the order of the Company in lawful money of
      the
      United States; provided, however, that the Committee, in its sole discretion,
      may permit an optionee to pay the option price and any such withholding amounts
      in whole or in part (i) with shares of Stock owned by the optionee (provided
      that any shares of stock tendered for payment shall have been owned for a period
      of six (6) months, or such other period as in the opinion of the Committee
      shall
      be sufficient to avoid an accounting compensation charge with respect to the
      shares used to pay the option price); (ii) by delivery on a form prescribed
      by
      the Committee of an irrevocable direction to a securities broker approved by
      the
      Committee to sell shares of Stock and deliver all or a portion of the proceeds
      to the Company in payment for the Stock; (iii) by delivery of the optionee’s
      promissory note with such recourse, interest, security, and redemption
      provisions as the Committee in its discretion determines appropriate(provided,
      however, no promissory note may be accepted from an optionee that would be
      in
      violation of the Sarbanes Oxley Act of 2002 or any other federal or state law);
      or (iv) in any combination of the foregoing. Any Stock used to exercise options
      shall be valued at its fair market value on the date of the exercise of the
      option.

    


    (g) In
      the
      event that the exercise price is satisfied by shares withheld from the shares
      of
      Stock otherwise deliverable to the optionee, the Committee may issue the
      optionee an additional option, with terms identical to the option agreement
      under which the option was exercised, entitling the optionee to purchase
      additional shares of Stock equal to the number of shares so withheld but at
      an
      exercise price equal to the fair market value of the Stock on the grant date
      of
      the new option. Such additional option shall be subject to the provisions of
      Section 6(i) below.


    
      
        
        

      

      
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    (h) The
      stock
      option agreement or SAR agreement may contain such other terms, provisions,
      and
      conditions consistent with this Plan, as may be determined by the Committee.
      If
      an option, or any part thereof, is intended to qualify as an incentive stock
      option, the stock option agreement shall contain those terms and conditions
      which are necessary to qualify it.

    


    (i) The
      maximum number of shares of Stock with respect to which SARs or options to
      acquire Stock may be granted, or sales or bonus grants of Stock may be made,
      to
      any individual per calendar year under this Plan shall not exceed 100,000 shares
      (which number may be increased without shareholder approval to reflect
      adjustments under Section 4(c) above, to the extent such adjustment, in the
      case
      of a grant to a Covered Employee, does not cause the grant to fail to qualify
      as
“performance-based compensation” within the meaning of Section 162(m) of the
      Code and the regulations thereunder). To the extent required to cause options
      granted to Covered Employees to qualify as “performance-based compensation”
under Section 162(m) of the Code and the regulations thereunder, in applying
      the
      foregoing limitation with respect to an employee, if any option is canceled,
      the
      canceled option shall continue to count against the maximum number of shares
      for
      which options may be granted to the employee under this Section 6(i). For this
      purpose, the repricing of an option shall be treated as a cancellation of the
      existing option and the grant of a new option to the extent required by Section
      162(m) of the Code or the regulations thereunder. The preceding sentence shall
      also apply in the case of an SAR, if, after the award is made, the base amount
      on which stock appreciation is calculated is reduced to reflect a reduction
      in
      the fair market value of the Stock.

    


    7. Terms
      and Conditions of Stock Purchases and Bonuses.

    


    (a) Each
      sale
      or bonus grant of Stock pursuant to the Plan will be evidenced by a written
      stock purchase agreement or stock bonus agreement, as applicable, executed
      by
      the Company and the person to whom such stock is sold or granted.

    


    (b) The
      stock
      purchase agreement or stock bonus agreement may contain such other terms,
      provisions, and conditions consistent with this Plan, as may be determined
      by
      the Committee, including, not by way of limitation, the consideration, if any,
      to be paid for the Stock, restrictions on transfer, forfeiture provisions,
      repurchase provisions, and vesting provisions. Notwithstanding the foregoing,
      the restriction period applicable to restricted stock awards shall be at least
      one (1) year in the case of performance-based restricted stock awards and at
      least three (3) years in the case of all other restricted stock
      awards.

    


    (c) Stock
      bonuses granted to officers and directors shall be expressly in lieu of salary
      or cash bonus.

    


    8. Use
      of Proceeds.
      Cash
      proceeds realized from the exercise of options granted under the Plan or from
      other sales of Stock under the Plan shall constitute general 


    
      
        
        

      

      
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    funds
      of
      the Company.

    


    9. Amendment,
      Suspension, or Termination of the Plan.

    


    (a) The
      Board
      may at any time amend, suspend, or terminate the Plan as it deems advisable;
      provided that such amendment, suspension, or termination complies with all
      applicable requirements of state and federal law, including any applicable
      requirement that the Plan or an amendment to the Plan be approved by the
      shareholders, and provided further that, except as provided in Section 4(c)
      above and Section 15 below, the Board shall in no event amend the Plan in the
      following respects without the approval of shareholders then sufficient to
      approve the Plan in the first instance:

    


    (i) to
      increase the maximum number of shares of Stock provided in Section 6(i) above,
      with respect to which restricted stock, SARs, or options to acquire Stock may
      be
      granted to any Covered Employee per calendar year under the Plan;
      or

    


    (ii) to
      materially increase the number of shares of Stock available under the Plan,
      or
      to increase the number of shares of Stock available for grant of incentive
      stock
      options under the Plan; or

    


    (iii) to
      materially modify the eligibility requirements for participation in the Plan
      or
      the class of employees eligible to receive options under the Plan, or to change
      the designation or class of persons eligible to receive incentive stock options
      under the Plan; or

    


    (iv) to
      permit
      repricing of options by lowering the option exercise price of a previously
      granted award, or by cancellation of outstanding options with subsequent
      replacement, or regrants of options with lower exercise prices; or

    


    (v) to
      otherwise materially increase the benefits to participants.

    


    (b) No
      option
      or SAR may be granted nor may any Stock be issued (other than upon exercise
      of
      outstanding options) under the Plan during any suspension or after the
      termination of the Plan, and no amendment, suspension, or termination of the
      Plan shall, without the affected individual’s consent, alter or impair any
      rights or obligations under any option or SAR previously granted under the
      Plan.
      The Plan shall terminate with respect to the grant of incentive stock options
      on
      the tenth anniversary of the date of adoption of the Plan, unless previously
      terminated by the Board pursuant to this Section 9.

    


    10. Assignability.
      No
      option or SAR granted pursuant to this Plan shall be transferable by the holder
      except to the extent provided in the option agreement or the SAR agreement
      covering the option or the SAR. Stock subject to a stock purchase agreement
      or a
      stock bonus agreement shall be transferable only as provided in such agreement.
      Notwithstanding the foregoing, if required by the Code, each incentive stock
      


    
      
        
        

      

      
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    option
      under the Plan shall be transferable by the optionee only by will or the laws
      of
      descent and distribution, and, during the optionee’s lifetime, be exercisable
      only by the optionee.

    


    11. Withholding
      Taxes.
      No Stock
      shall be granted or sold under the Plan to any individual, and no option or
      SAR
      may be exercised, until the individual has made arrangements acceptable to
      the
      Committee for the satisfaction of federal, state, and local income and
      employment tax withholding obligations, including, without limitation,
      obligations incident to the receipt of Stock under the Plan, the lapsing of
      restrictions applicable to such Stock, the failure to satisfy the conditions
      for
      treatment as incentive stock options under the applicable tax law, or the
      receipt of cash payments.

    


    12. Restrictions
      on Transfer of Shares.
      The
      Committee may require that the Stock acquired pursuant to the Plan be subject
      to
      such restrictions and agreements regarding sale, assignment, encumbrances,
      or
      other transfer as are in effect among the shareholders of the Company at the
      time such Stock is acquired, as well as to such other restrictions as the
      Committee shall deem appropriate.

    


    13. Change
      in Control.

    


    (a) For
      purposes of this Section 13, a “Change in Control” shall be deemed to occur
      upon:

    


    (i) the
      direct or indirect acquisition by any person or related group of persons (other
      than an acquisition from or by the Company or by a Company-sponsored employee
      benefit plan) of beneficial ownership (within the meaning of Rule 13d-3 of
      the
      Exchange Act of securities possessing more than fifty percent (50%) of the
      total
      combined voting power of the Company’s outstanding Stock;

    


    (ii) a
      change
      in the composition of the Board over a period of thirty-six (36) months or
      less,
      such that a majority of the Board members (rounded up to the next whole number)
      ceases, by reason of one or more contested elections for Board membership or
      by
      one or more actions by written consent of shareholders, to be comprised of
      individuals who either (A) have been Board members continuously since the
      beginning of such period, or (B) have been elected or nominated for election
      as
      Board members during such period by at least a majority of the Board members
      described in clause (A) who were still in office at the time such election
      or
      nomination was approved by the Board.

    


    (b) For
      purposes of this Section 13, a “Corporate Transaction” shall be deemed to occur
      upon any of the following transactions to which the Company is a
      party:

    


    (i) approval
      by the Company’s shareholders of a merger or consolidation in which the Company
      is not the surviving entity, except for a transaction the principal purpose
      of
      which is to change the state in which the Company is
      incorporated;


    
      
        
        

      

      
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    (ii) approval
      by the Company’s shareholders of the sale, transfer, or other disposition of all
      or substantially all of the assets of the Company (including the capital stock
      of the Company’s subsidiary corporations) in connection with a complete
      liquidation or dissolution of the Company; or 

    


    (iii) approval
      by the Company’s shareholders of any reverse merger in which the Company is the
      surviving entity but in which securities possessing more than fifty percent
      (50%) of the total combined voting power of the Company’s outstanding securities
      are transferred to a person or persons different from those who held such
      securities immediately prior to such merger.

    


    (c) In
      its
      discretion, the Committee may provide in any stock option, SAR, Stock bonus,
      or
      Stock purchase agreement (or in an amendment thereto) evidencing an option,
      SAR,
      Stock bonus, or Stock purchase agreement hereunder that, in the event of any
      Corporate Transaction or an event giving rise to a Change in Control, any
      outstanding options or SARs covered by such an agreement shall be fully vested,
      non-forfeitable, and become exercisable, and that any restricted Stock covered
      by such an agreement shall be released from restrictions on transfer and
      repurchase or forfeiture rights, as of the date of the Change in Control or
      Corporate Transaction. However, the Committee may provide in any such agreement
      that, in the case of a Corporate Transaction, the Committee may determine that
      an outstanding option will not be so accelerated if and to the extent, (i)
      such
      option is either to be assumed by the successor or parent thereof or to be
      replaced with a comparable option to purchase shares of the capital stock of
      the
      successor corporation or parent thereof; or (ii) such option is to be replaced
      with a cash incentive program of the successor corporation that preserves the
      option spread existing at the time of the Corporate Transaction and provides
      for
      subsequent payment in accordance with the same vesting schedule applicable
      to
      such option.

    


    (d) If
      the
      Committee determines to incorporate a Change in Control or Corporate Transaction
      acceleration provision in any option or SAR agreement hereunder, the agreement
      shall provide that, (i) in the event of a Change in Control or Corporate
      Transaction described in clauses (a)(i), (a)(ii), and (b)(iii) of Section 13
      above, the option or SAR shall remain exercisable for the remaining term of
      the
      option or SAR; and (ii) in the event of a Corporate Transaction described in
      clauses (i) or (ii) of Section 13(b) above, the option or SAR shall terminate
      as
      of the effective date of the Corporate Transaction described therein, unless
      such option or SAR is assumed by a successor corporation in the event of a
      Corporate Transaction described in clause (i) of Section 13(b). If an option
      or
      SAR is assumed in the event of a Corporate Transaction described in clause
      (i)
      of Section 13(b) above, the option or SAR shall remain exercisable for the
      remaining term of the option or SAR. In no event shall any option or SAR under
      the Plan be exercised after the expiration of the term provided for in the
      related stock option agreement or SAR agreement pursuant to Section 6(b) or
      (e).

    


    (e) The
      Committee may provide in any option or SAR agreement hereunder that should
      the
      Company dispose of its equity holding in any subsidiary effected by, (i)



    
      
        
        

      

      
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    merger
      or
      consolidation involving that subsidiary; (ii) the sale of all or distribution
      of
      substantially all of the assets of that subsidiary; or (iii) the Company’s sale
      of or distribution to shareholders of substantially all of the outstanding
      capital stock of such subsidiary (“Subsidiary Disposition”) while a holder of
      the option or SAR is engaged in the performance of services for the affected
      subsidiary corporation, then such option or SAR shall, immediately prior to
      the
      effective date of such Subsidiary Disposition, become fully exercisable with
      respect to all of the shares at the time represented by such option or SAR
      and
      may be exercised with respect to any or all of such shares. Any such option
      or
      SAR shall remain exercisable until the expiration or sooner termination of
      the
      term of the option or SAR.

    


    14. Shareholder
      Approval.
      Continuance of the Plan shall be subject to approval by the shareholders of
      the
      Company within twelve (12) months before or after the date the Plan is adopted.
      Any incentive stock options granted hereunder and any options, SARs, or Stock
      granted to Covered Employees hereunder shall become effective only upon such
      shareholder approval. The Committee may grant incentive stock options or may
      grant options, SARs, or Stock to Covered Employees under the Plan prior to
      such
      shareholder approval, but until shareholder approval is obtained, no such option
      or SAR shall be exercisable and no such Stock grant shall be effective. In
      the
      event that such shareholder approval is not obtained within the period provided
      above, all options, SARs, or Stock grants previously granted above shall
      terminate. If such shareholder approval is obtained at a duly held shareholders’
meeting, the Plan must be approved by a majority of the votes cast at such
      shareholders’ meeting at which a quorum, representing a majority of all
      outstanding voting stock of the Company, is, either in person or by proxy,
      present and voting on the Plan. If such shareholder approval is obtained by
      written consent, it must be obtained by the written consent of the holders
      of a
      majority of all outstanding voting stock of the Company. However, approval
      at a
      meeting or by written consent may be obtained to a lesser degree of shareholder
      approval if the Board determines, in its discretion after consultation with
      the
      Company’s legal counsel, that such a lesser degree of shareholder approval will
      comply with all applicable laws and will not adversely affect the qualification
      of the Plan under either Section 162(m) or 422 of the Code.

    


    15. Rule
      16b-3 Compliance.

    


    (a) With
      respect to Insiders, transactions under the Plan are intended to comply with
      all
      applicable conditions of Rule 16b-3. To the extent any provision of 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. Moreover,
      in
      the event the Plan does not include a provision required by Rule 16b-3 to be
      stated therein as a condition to exemption from Section 16(b) of the Exchange
      Act, such provision (other than one relating to eligibility requirements or
      the
      price and amount of awards) shall be deemed automatically to be incorporated
      by
      reference into the Plan insofar as transactions with Insiders are
      concerned.

    


    (b) If,
      subsequent to the Board’s adoption of the Plan, Rule 16b-3 is amended to delete
      any of the Rule 16b-3 conditions or requirements addressed by the provisions
      of



    
      
        
        

      

      
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    the
      Plan,
      the Board may amend the Plan without shareholder approval (unless such approval
      is required by Rule 16b-3, as so amended) to delete or otherwise amend any
      such
      provisions no longer required for grants of options, SARs, and Stock under
      the
      Plan to Insiders to be exempt from Section 16(b) liability under the Exchange
      Act.

    


    16. The
      Right of the Company to Terminate Employment.
      No
      provision in the Plan or any Option shall confer upon any Optionee any right
      to
      continue in the employment of the Company or an Affiliate or to interfere in
      any
      way with the right of the Company or an Affiliate to terminate his employment
      at
      any time.