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                                                                     EXHIBIT 4.1

                             NABORS INDUSTRIES LTD.
                            2003 EMPLOYEE STOCK PLAN

SECTION 1.  PURPOSE OF PLAN.

            The name of this plan is the Nabors Industries Ltd. 2003 Employee
Stock Plan (the "Plan"). The purpose of the Plan is to provide additional
incentive to those officers and employees of the Company and its Subsidiaries
and Affiliates whose contributions are essential to the growth and success of
the Company's business, in order to strengthen the commitment of such persons to
the Company and its Subsidiaries and Affiliates, motivate such persons to
faithfully and diligently perform their responsibilities and attract and retain
competent and dedicated persons whose efforts will result in the long-term
growth and profitability of the Company and its Subsidiaries and Affiliates. To
accomplish such purposes, the Plan provides that the Company may grant Incentive
Stock Options, Nonqualified Stock Options, Stock Appreciation Rights, Restricted
Stock, Restricted Stock Units, and Stock Bonuses. The Plan is intended to permit
awards that satisfy the requirements of section 162(m) of the Code and shall be
interpreted in a manner consistent with the requirements thereof.

SECTION 2.  DEFINITIONS.

            For purposes of the Plan, in addition to terms defined elsewhere in
the Plan, the following terms shall be defined as set forth below:

            (a) "Administrator" means the Board, or if and to the extent the
Board does not administer the Plan, the Committee, in accordance with Section 3
hereof.

            (b) "Affiliate" means any corporation or other entity, more than 50%
of the voting power of the outstanding voting securities of which is owned by
the Company, its Subsidiaries, or any other Affiliate.

            (c) "Award" means an award of Incentive Stock Options, Nonqualified
Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock
Units, or Stock Bonus under the Plan.

            (d) "Award Agreement" means, with respect to any Award, the written
agreement between the Company and the Participant setting forth the terms and
conditions of the Award.

            (e) "Board" means the Board of Directors of the Company.

            (f) "Change in Capitalization" means any increase, reduction, or
change or exchange of Shares for a different number or kind of shares or other
securities or property by reason of a reclassification, recapitalization,
merger, amalgamation, consolidation, reorganization, issuance of warrants or
rights, stock dividend, stock split or reverse stock split, combination or
exchange of shares, repurchase of shares, change in corporate structure or
otherwise; or any other corporate action, such as declaration of a special
dividend, that affects the capitalization of the Company.

            (g) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, or any successor thereto.

            (h) "Committee" means any committee or subcommittee the Board may
appoint to administer the Plan. If at any time or to any extent the Board shall
not administer the Plan, then the functions of the Administrator specified in
the Plan shall be exercised by the Committee. Unless otherwise determined by the
Board, the composition of the Committee shall at all times consist solely of
persons who are (i) "Nonemployee Directors" as defined in Rule 16b-3 issued
under the Exchange Act, and (ii) "outside directors" as defined in section
162(m) of the Code.

            (i) "Common Shares" means the common shares, par value $0.001 per
share, of the Company.

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            (j) "Company" means Nabors Industries Ltd., a Bermuda exempt company
(or any successor corporation).

            (k) "Disability" means (1) any physical or mental condition that
would qualify a Participant for a disability benefit under any long-term
disability plan maintained by the Company (or by the Subsidiary or Affiliate by
which he is employed); (2) when used in connection with the exercise of an
Incentive Stock Option following termination of employment, disability within
the meaning of section 22(e)(3) of the Code; or (3) such other condition as may
be determined in the sole discretion of the Administrator to constitute
Disability.

            (l) "Eligible Recipient" means an employee or officer of the Company
or of any Subsidiary or Affiliate, and in the case of awards of Restricted
Stock, shall include nonemployee directors of the Company.

            (m) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time.

            (n) "Exercise Price" means the per share price at which a holder of
an Option may purchase the Shares issuable upon exercise of the Option.

            (o) "Fair Market Value" of a Common Share as of a particular date
shall mean (1) the closing sale price reported for such share on the national
securities exchange or national market system on which such share is principally
traded on such date (or, if there were no trades on such date, on the most
recently preceding day on which there was a sale), or (2) if the Common Shares
are not then listed on a national securities exchange or national market system,
or the value of such shares is not otherwise determinable, such value as
determined by the Administrator in good faith in its sole discretion.

            (p) "Freestanding SAR" means an SAR that is granted independently of
any Options, as described Section 11 hereof.

            (q) "Immediate Family" means any child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law or sister-in-law, including adoptive
relationships of the Participant; trusts for the benefit of such immediate
family members; or partnerships in which such immediate family members are the
only partners.

            (r) "Incentive Stock Option" shall mean an Option that is an
"incentive stock option" within the meaning of section 422 of the Code, or any
successor provision, and that is designated by the Administrator as an Incentive
Stock Option.

            (s) "Nonqualified Stock Option" means any Option that is not an
Incentive Stock Option, including any Option that provides (as of the time such
Option is granted) that it will not be treated as an Incentive Stock Option.

            (t) "Option" means an Incentive Stock Option, a Nonqualified Stock
Option, or either or both of them, as the context requires.

            (u) "Participant" means any Eligible Recipient selected by the
Administrator, pursuant to the Administrator's authority in Section 3 hereof, to
receive grants of Options or Stock Appreciation Rights or awards of Restricted
Stock, Restricted Stock Units, or Stock Bonus. A Participant who receives the
grant of an Option is sometimes referred to herein as "Optionee."

            (v) "Performance Goal" shall mean one or more of the following
business criteria applied to a Participant and/or a business unit or the Company
and/or a Subsidiary: (i) income before federal taxes and net interest expense;
(ii) achievement of specific and measurable operational objectives in the areas
of rig operating costs, accident records, and employee turnover; (iii) working
capital, generally defined to include receivables, inventories and controllable
current liabilities, measured either in absolute dollars or relative to sales;
(iv) earnings growth, revenues, expenses, share price, market share, return on
assets, return on capital, equity or investment, regulatory compliance,
satisfactory internal or external audits, improvement of financial ratings, or
achievement of balance sheet, income statement or cash flow objectives; (v)
adjusted cash flows or

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adjusted income derived from operating activities; and/or (vi) a percentage of
cash flow in excess of a percentage of shareholders' average book equity.

            (w) "Restricted Stock Unit" means the right to receive a Share or
the Fair Market Value of a Share in cash granted pursuant to Section 9 hereof.

            (x) "Restricted Stock" means Shares subject to certain restrictions
granted pursuant to Section 8 hereof.

            (y) "Shares" means Common Shares and the common equity of any
successor security.

            (z) "Stock Appreciation Right" or "SAR" means an Award, granted
alone or in connection with a related Option, designated as an SAR, pursuant to
Section 11 hereof.

            (aa) "Stock Bonus" means the right to receive a Share granted
pursuant to Section 10 hereof.

            (bb) "Subsidiary" means any corporation (other than the Company) in
an unbroken chain of corporations beginning with the Company, if each of the
corporations (other than the last corporation) in the unbroken chain owns stock
possessing more than 50% of the total combined voting power of all classes of
stock in one of the other corporations in the chain.

            (cc) "Tandem SAR" means an SAR that is granted in connection with a
related Option pursuant to Section 11 hereof, the exercise of which shall
require forfeiture of the right to purchase a Share under the related Option
(and when a Share is purchased under the Option, the Tandem SAR shall similarly
be canceled).

SECTION 3.  ADMINISTRATION.

            (a) The Plan shall be administered by the Board or, at the Board's
sole discretion, by the Committee, which shall serve at the pleasure of the
Board. Pursuant to the terms of the Plan, the Administrator shall have the power
and authority, without limitation:

                  (i) to select those Eligible Recipients who shall be
      Participants;

                  (ii) to determine in an Award Agreement whether and to what
      extent Options or Stock Appreciation Rights or awards of Restricted Stock,
      Restricted Stock Units, or Stock Bonus are to be granted hereunder to
      Participants;

                  (iii) to determine in an Award Agreement the number of Shares
      to be covered by each Award granted hereunder;

                  (iv) to determine in an Award Agreement the terms and
      conditions, not inconsistent with the terms of the Plan, of each Award
      granted hereunder;

                  (v) to determine the terms and conditions, not inconsistent
      with the terms of the Plan, which shall govern all written instruments
      evidencing Options or Stock Appreciation Rights or awards of Restricted
      Stock, Restricted Stock Units, or Stock Bonus granted hereunder;

                  (vi) to adopt, alter and repeal such administrative rules,
      guidelines and practices governing the Plan as it shall from time to time
      deem advisable; and

                  (vii) to interpret the terms and provisions of the Plan and
      any Award issued under the Plan (and any Award Agreement relating
      thereto), and to otherwise supervise the administration of the Plan.

            (b) All decisions made by the Administrator pursuant to the
provisions of the Plan shall be final, conclusive and binding on all persons,
including the Company and the Participants. No member of the Board or the
Committee, nor any officer or employee of the Company acting on behalf of the
Board or the

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Committee, shall be personally liable for any action, determination, or
interpretation taken or made in good faith with respect to the Plan, and all
members of the Board or the Committee and each and any officer or employee of
the Company acting on their behalf shall, to the extent permitted by law, be
fully indemnified and protected by the Company in respect of any such action,
determination or interpretation.

            (c) The Administrator in its discretion may condition entitlement to
an Award in whole or in part on the attainment of one or more Performance Goals.
The Administrator shall establish any such Performance Goal not later than 90
days after the commencement of the period of service to which the Award relates
if the period equals or exceeds one year (or if the period is shorter, 25% of
such period of service), and once granted, the Administrator shall not have
discretion to increase the amount payable under such Award, provided, however,
that whether or not an Award is intended to constitute qualified performance
based compensation within the meaning of section 162(m) of the Code, the
Administrator shall have the authority to make appropriate adjustments in
Performance Goals under an Award to reflect the impact of extraordinary items
not reflected in such Performance Goals. For purposes of the Plan, extraordinary
items shall be defined as (1) any profit or loss attributable to acquisitions or
dispositions of stock or assets, (2) any changes in accounting standards that
may be required or permitted by the Financial Accounting Standards Board or
adopted by the Company after the goal is established, (3) all items of gain,
loss or expense for the year related to restructuring charges for the Company,
(4) all items of gain, loss or expense for the year determined to be
extraordinary or unusual in nature or infrequent in occurrence or related to the
disposal of a segment of a business, (5) all items of gain, loss or expense for
the year related to discontinued operations as defined in APB Opinion No. 30 or
FAS No. 144, and (6) such other items as may be prescribed by section 162(m) of
the Code and the Treasury Regulations thereunder as may be in effect from time
to time, and any amendments, revisions or successor provisions and any changes
thereto.

            (d) Subject to section 162(m) of the Code and except as required by
Rule 16b-3 under the Exchange Act with respect to grants of Awards to
individuals who are subject to section 16 of the Exchange Act, or as otherwise
required for compliance with Rule 16b-3 under the Exchange Act or other
applicable law, the Administrator may delegate all or any part of its authority
under the Plan to an employee, employees or committee of employees of the
Company or any Subsidiary.

            (e) If at any time (whether before or after termination of
employment) a majority of either the Board or the Committee determines that a
Participant has engaged in fraud, embezzlement, theft, commission of a felony,
dishonesty, or any other conduct inimical to the Company, either the Board or
the Committee (as the case may be) may provide for the immediate forfeiture of
any Award held by the Participant, whether or not then vested. Any determination
by the Board or Committee (as the case may be) under this subsection (e) shall
be final, conclusive and binding on all persons.

SECTION 4.  SHARES RESERVED FOR ISSUANCE UNDER THE PLAN.

            (a) There shall be reserved and available for issuance under the
Plan 3,500,000 Common Shares. The grant of any Restricted Stock Units or SARs
that may be settled only in cash shall not reduce the number of Common Shares
with respect to which Awards may be granted pursuant to the Plan.

            (b) To the extent that (i) an Option expires or is otherwise
cancelled or terminated without being exercised as to the underlying Shares,
(ii) any Shares subject to any award of Stock Appreciation Rights, Restricted
Stock, Restricted Stock Unit, or Stock Bonus are forfeited, (iii) payment for an
Option upon exercise is made with Shares owned by the Optionee for at least six
months on the date of surrender or (iv) Shares are withheld from payment of an
Award in satisfaction of any federal, state or local tax withholding
requirements, such Shares shall again be available for issuance in connection
with future Awards granted under the Plan.

            (c) The aggregate number of Shares with respect to which Awards
(including Awards payable in cash but denominated in Common Shares, i.e.,
cash-settled Restricted Stock Units or SARs) may be granted to any individual
Participant during any calendar year shall not exceed 1,500,000.

SECTION 5.  EQUITABLE ADJUSTMENTS.

            In the event of any Change in Capitalization, an equitable
substitution or proportionate adjustment shall be made in (i) the aggregate
number and/or kind of common shares or other property reserved

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for issuance under the Plan, (ii) the kind, number and/or option price of shares
or other property subject to outstanding Options and Stock Appreciation Rights
granted under the Plan, and (iii) the kind, number and/or purchase price of
shares or other property subject to outstanding awards of Restricted Stock, and
Restricted Stock Units granted under the Plan, in each case as may be determined
by the Administrator, in its sole discretion. Such other equitable substitutions
or adjustments shall be made as may be determined by the Administrator, in its
sole discretion. Without limiting the generality of the foregoing, in connection
with a Change in Capitalization, the Administrator may provide, in its sole
discretion, for the cancellation of any outstanding Awards in exchange for
payment in cash or other property of the Fair Market Value of the Shares covered
by such Awards reduced, in the case of Options, by the Exercise Price thereof,
and in the case of Stock Appreciation Rights, by the grant price thereof, or by
any other applicable purchase price.

SECTION 6.  ELIGIBILITY.

            The Participants under the Plan shall be selected from time to time
by the Administrator, in its sole discretion, from among Eligible Recipients.
The Administrator shall have the authority to grant to any Eligible Recipient
Incentive Stock Options, Nonqualified Stock Options, Stock Appreciation Rights,
Restricted Stock, Restricted Stock Units, or a Stock Bonus.

SECTION 7.  OPTIONS.

            (a) General. Options may be granted alone or in addition to other
Awards granted under the Plan. Any Option granted under the Plan shall be
evidenced by an Award Agreement in such form as the Administrator may from time
to time approve. The provisions of each Option need not be the same with respect
to each Participant. Participants who are granted Options shall enter into an
Award Agreement with the Company, in such form as the Administrator shall
determine, which Award Agreement shall set forth, among other things, the
Exercise Price of the Option, the term of the Option and provisions regarding
exercisability of the Option granted thereunder. The Options granted under the
Plan may be of two types: (i) Incentive Stock Options and (ii) Nonqualified
Stock Options. To the extent that any Option does not qualify as an Incentive
Stock Option, it shall constitute a separate Nonqualified Stock Option. More
than one Option may be granted to the same Participant and be outstanding
concurrently hereunder. Options granted under the Plan shall be subject to the
terms and conditions set forth in paragraphs (b)-(i) of this Section 7 and shall
contain such additional terms and conditions, not inconsistent with the terms of
the Plan, as the Administrator shall deem desirable.

            (b) Exercise Price. The per share Exercise Price of Shares
purchasable under an Option shall be determined by the Administrator in its sole
discretion at the time of grant but shall not be less than 100% of the Fair
Market Value per Share on such date (or, in the case of Incentive Stock Options,
110% of the Fair Market Value per Share on such date if, on such date, the
Eligible Recipient owns (or is deemed to own under the Code) stock possessing
more than 10% (a "Ten Percent Owner") of the total combined voting power of all
classes of shares of the Company or its Subsidiaries).

            (c) Option Term. The term of each Option shall be fixed by the
Administrator, but no Option shall be exercisable more than ten years after the
date such Option is granted. If the Eligible Participant is a Ten Percent Owner,
an Incentive Stock Option may not be exercisable after the expiration of five
years from the date such Incentive Stock Option is granted.

            (d) Exercisability. Options shall be exercisable at such time or
times and subject to such terms and conditions, including the attainment of
preestablished Performance Goals or other corporate or individual performance
goals, as shall be determined by the Administrator in its sole discretion. The
Administrator may also provide that any Option shall be exercisable only in
installments.

            (e) Method of Exercise. Options may be exercised in whole or in part
by giving written notice of exercise to the Company specifying the number of
Shares to be purchased, accompanied by payment in full of the aggregate Exercise
Price of the Shares so purchased in cash or its equivalent, as determined by the
Administrator. As determined by the Administrator, in its sole discretion,
payment in whole or in part may also be made (i) by means of any properly
executed broker-assisted exercise procedure, subject to approval by the
Administrator, (ii) in the form of unrestricted Shares already owned by the
Optionee for at least six months on the date of surrender to the extent the
Shares have a Fair Market Value on the date of surrender equal to the aggregate
option price of the Shares as to which such Option shall be exercised, provided
that, in the case of an

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Incentive Stock Option, the right to make payment in the form of already owned
Shares may be authorized only at the time of grant, or (iii) any combination of
the foregoing.

            (f) Rights as Shareholder. An Optionee shall have no rights to
dividends or any other rights of a shareholder with respect to the Shares
subject to the Option until the Optionee has given written notice of exercise,
has paid in full for such Shares, and has satisfied the requirements of Section
15 hereof.

            (g) Nontransferability of Options. The Optionee shall not be
permitted to sell, transfer, pledge or assign any Option other than by will and
the laws of descent and distribution and all Options shall be exercisable during
the Participant's lifetime only by the Participant, in each case, except as set
forth in the following two sentences. During an Optionee's lifetime, the
Administrator may, in its discretion, permit the transfer, assignment or other
encumbrance of an outstanding Option if such Option is a Nonqualified Stock
Option or an Incentive Stock Option that the Administrator and the Participant
intend to change to a Nonqualified Stock Option. Subject to the approval of the
Administrator and to any conditions that the Administrator may prescribe, an
Optionee may, upon providing written notice to the Company, elect to transfer
any or all Options described in the preceding sentence (i) to members of his or
her Immediate Family, provided that no such transfer by any Participant may be
made in exchange for consideration, or (ii) by instrument to an inter vivos or
testamentary trust in which the Options are to be passed to beneficiaries upon
the death of the Participant.

            (h) Termination of Employment or Service. Except as otherwise
provided in an Award Agreement, if a Participant's employment with the Company
or any Subsidiary or Affiliate terminates for any reason, all outstanding
Options granted to such Participant shall expire on the date of such termination
(whether or not then vested or exercisable). Notwithstanding the foregoing, no
Option shall be exercisable after the expiration of its term.

            (i) Limitation on Incentive Stock Options. To the extent that the
aggregate Fair Market Value of Shares with respect to which Incentive Stock
Options are exercisable for the first time by an Optionee during any calendar
year under the Plan and any other stock option plan of the Company or any
Subsidiary or Affiliate shall exceed $100,000, such Options shall be treated as
Nonqualified Stock Options. Such Fair Market Value shall be determined as of the
date on which each such Incentive Stock Option is granted.

SECTION 8.  RESTRICTED STOCK.

            (a) General. Awards of Restricted Stock may be issued either alone
or in addition to other Awards granted under the Plan and shall be evidenced by
an Award Agreement. The Administrator shall determine the Eligible Recipients to
whom, and the time or times at which, Awards of Restricted Stock shall be made;
the number of Shares to be awarded; the price, if any, to be paid by the
Participant for the acquisition of Restricted Stock; and the Restricted Period
(as defined in Section 8(d)) applicable to awards of Restricted Stock. The
provisions of the awards of Restricted Stock need not be the same with respect
to each Participant.

            (b) Purchase Price. The price per Share, if any, that a Recipient
must pay for Shares purchasable under an award of Restricted Stock shall be
determined by the Administrator in its sole discretion at the time of grant.

            (c) Awards and Certificates. The prospective recipient of an Award
of Restricted Stock shall not have any rights with respect to any such Award,
unless and until such recipient has executed an Award Agreement evidencing the
Award and delivered a fully executed copy thereof to the Company, within such
period as the Administrator may specify after the award date. Each Participant
who is granted an award of Restricted Stock shall be issued a share certificate
in respect of such shares of Restricted Stock, which certificate shall be
registered in the name of the Participant and shall bear an appropriate legend
referring to the terms, conditions, and restrictions applicable to any such
Award, provided that the Company may require that the share certificates
evidencing Restricted Stock granted hereunder be held in the custody of the
Company until the restrictions thereon shall have lapsed, and that, as a
condition of any award of Restricted Stock, the Participant shall have delivered
a stock power, endorsed in blank, relating to the Shares covered by such Award.

            (d) Nontransferability. Any Award of Restricted Stock granted
pursuant to this Section 8 shall be subject to the restrictions on
transferability set forth in this paragraph (d). During such period as may

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be set by the Administrator in the Award Agreement (the "Restricted Period"),
the Participant shall not be permitted to sell, transfer, pledge, hypothecate or
assign Shares of Restricted Stock awarded under the Plan except by will or the
laws of descent and distribution. The Administrator may also impose such other
restrictions and conditions, including the attainment of preestablished
Performance Goals or other corporate or individual performance goals, on
Restricted Stock as it determines in its sole discretion. The Restricted Period
shall be not less than three years, provided that the Restricted Period may be
shorter (but not less than one year) if vesting of the Restricted Stock is
conditioned upon the attainment of preestablished Performance Goals or other
corporate or individual performance goals. However, in no event shall the
Restricted Period end with respect to a Restricted Stock Award prior to the
satisfaction by the Participant of any liability arising under Section 15
hereof. Any attempt to dispose of any Restricted Stock in contravention of any
such restrictions shall be null and void and without effect.

            (e) Rights as a Shareholder. Except as provided in Section 8(c) and
(d), the Participant shall possess all incidents of ownership with respect to
Shares of Restricted Stock during the Restricted Period, including the right to
receive or reinvest dividends with respect to such Shares (except that the
Administrator may provide in its discretion that any dividends paid in property
other than cash shall be subject to the same restrictions as those that apply to
the underlying Restricted Stock) and to vote such Shares. Certificates for
unrestricted Shares shall be delivered to the Participant promptly after, and
only after, the Restricted Period shall expire without forfeiture in respect of
such awards of Restricted Stock except as the Administrator, in its sole
discretion, shall otherwise determine.

            (f) Termination of Employment. The rights of Participants granted an
Award of Restricted Stock upon termination of employment with the Company or any
Subsidiary or Affiliate for any reason during the Restricted Period shall be set
forth in the Award Agreement governing such Award.

SECTION 9.  RESTRICTED STOCK UNITS

            (a) Vesting. At the time of the grant of Restricted Stock Units, the
Administrator may impose such restrictions or conditions to the vesting of such
Restricted Stock Units as it, in its sole discretion, deems appropriate, to be
contained in the Award Agreement, including the attainment of preestablished
Performance Goals or other corporate or individual performance goals. The
Administrator may divide such Restricted Stock Units into classes and assign
different vesting conditions for each class. Provided that all conditions to the
vesting of a Restricted Stock Unit are satisfied, and except as provided in
Section 9(c), upon the satisfaction of all vesting conditions with respect to a
Restricted Stock Unit, such Restricted Stock Unit shall vest. The provisions of
the awards of Restricted Stock Units need not be the same with respect to each
Participant.

            (b) Benefit Upon Vesting. Upon the vesting of a Restricted Stock
Unit, the Participant shall be entitled to receive, within 30 days of the date
on which such Restricted Stock Unit vests, an amount in cash or, in the
Company's sole discretion, in Common Shares with a Fair Market Value equal to
the sum of (1) the Fair Market Value of a Common Share on the date on which such
Restricted Stock Unit vests and (2) the aggregate amount of cash dividends paid
with respect to a Common Share during the period commencing on the date on which
the Restricted Stock Unit was granted and terminating on the date on which such
Share vests. Notwithstanding the foregoing provisions of this Section 9, if a
Restricted Stock Unit is to be settled in Common Shares, the Restricted Stock
Unit shall vest not earlier than three years from the date of grant, provided
that the Restricted Stock Unit may vest earlier (but not less than one year from
the date of grant) if vesting of the Restricted Stock Unit is conditioned upon
the attainment of preestablished Performance Goals or other corporate or
individual performance goals.

            (c) Termination of Employment. The rights of Participants granted a
Restricted Stock Unit upon termination of employment with the Company or any
Subsidiary or Affiliate for any reason before the Restricted Stock Unit vests
shall be set forth in the Award Agreement governing such Award.

SECTION 10. STOCK BONUS AWARDS

            In the event that the Administrator grants a Stock Bonus, a
certificate for the Common Shares constituting such Stock Bonus shall be issued
in the name of the Participant to whom such grant was made and delivered to such
Participant as soon as practicable after the date on which such Stock Bonus is
payable. The Fair Market Value of the Shares subject to a Stock Bonus shall not
exceed the salary or cash bonus otherwise

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payable to the Participant on the date of grant, and the Stock Bonus shall be in
lieu of an amount of the Participant's salary or cash bonus equal to such Fair
Market Value.

SECTION 11. STOCK APPRECIATION RIGHTS.

            (a) Grant of SARs. Subject to the terms and conditions of the Plan,
SARs may be granted to Participants at any time and from time to time as shall
be determined by the Administrator in its sole discretion. The Administrator may
grant Freestanding SARs, Tandem SARs, or any combination of these forms of SAR.
The Administrator in its sole discretion shall determine the number of SARs
granted to each Participant (subject to Section 4 hereof) and, consistent with
the provisions of the Plan, the terms and conditions pertaining to such SARs,
including any conditions relating to the attainment of preestablished
Performance Goals or other corporate or individual performance goals as may be
determined by the Administrator in its sole discretion. The provisions of the
awards of SARs need not be the same with respect to each Participant.

            (b) Grant Price. The grant price of a Freestanding SAR shall be not
less than the Fair Market Value of a Share on the date of grant of the SAR. The
grant price of Tandem SARs shall equal the Exercise Price of the related Option.

            (c) Exercise of Tandem SARs. Tandem SARs may be exercised for all or
part of the Shares subject to the related Option upon the surrender of the right
to exercise the equivalent portion of the related Option. A Tandem SAR may be
exercised only with respect to the Shares for which its related Option is then
exercisable. Notwithstanding any other provision of this Plan to the contrary,
with respect to a Tandem SAR granted in connection with an Incentive Stock
Option: (i) the Tandem SAR shall expire no later than the expiration of the
underlying Incentive Stock Option; (ii) the value of the payout with respect to
the Tandem SAR may be for no more than one hundred percent (100%) of the
difference between the Exercise Price of the underlying Incentive Stock Option
and the Fair Market Value of the Shares subject to the underlying Incentive
Stock Option at the time the Tandem SAR is exercised; and (iii) the Tandem SAR
may be exercised only when the Fair Market Value of the Shares subject to the
Incentive Stock Option exceeds the Exercise Price of the Incentive Stock Option.

            (d) Exercise of Freestanding SARs. Freestanding SARs may be
exercised upon whatever terms and conditions the Administrator, in its sole
discretion, imposes upon them.

            (e) SAR Agreement. Each SAR grant shall be evidenced by an Award
Agreement that shall specify the grant price, the term of the SAR, and such
other provisions as the Administrator shall determine.

            (f) Term of SARs. The term of an SAR granted under the Plan shall be
determined by the Administrator, in its sole discretion; provided, however, that
such term shall not exceed ten (10) years.

            (g) Payment of SAR Amount. Upon exercise of an SAR, a Participant
shall be entitled to receive payment from the Company in an amount determined by
multiplying:

                  (i) the difference between the Fair Market Value of a Share on
      the date of exercise over the grant price; by

                  (ii) the number of Shares with respect to which the SAR is
      exercised.

At the discretion of the Administrator, the payment upon SAR exercise may be in
cash, in Shares of equivalent value, or in some combination thereof. The
Administrator's determination regarding the form of SAR payout shall be set
forth in the Award Agreement pertaining to the grant of the SAR.

SECTION 12. EFFECT OF CHANGE IN CONTROL.

            The Administrator in its discretion may provide that, upon the
occurrence of a change in control (as such term may be defined in an Award
Agreement) or upon termination of employment under specified circumstances
during a specified period following such a change in control, all as specified
in the applicable Award Agreement, all outstanding Shares of Restricted Stock,
and Restricted Stock Units granted to a Participant which have not theretofore
vested shall immediately vest and all restrictions on such Shares and

<PAGE>

Units shall immediately lapse, and each Option and Stock Appreciation Right
granted to a Participant and outstanding at such time shall become fully and
immediately exercisable.

SECTION 13. AMENDMENT AND TERMINATION.

            (a) The Board may amend, alter or discontinue the Plan, but (i) no
amendment, alteration, or discontinuation shall be made that would impair the
rights of a Participant under any Award theretofore granted without such
Participant's consent, and (ii) any amendment shall be subject to approval of
shareholders if it (A) materially increases the benefits accruing to
Participants under the Plan, (B) materially increases the number of Shares that
may be issued under the Plan, or (C) materially modifies the requirements for
participation in the Plan. Unless the Board determines otherwise, the Board
shall obtain approval of shareholders of the Company for any amendment that
would require such approval in order to satisfy the requirements of section
162(m) of the Code, section 422 of the Code, stock exchange rules or other
applicable law.

            (b) The Administrator may amend the terms of any Award theretofore
granted, prospectively or retroactively, but (i) unless approved by the
shareholders of the Company, no such amendment shall (A) accelerate the date on
which any Option or SAR granted under the Plan becomes exercisable or (B)
accelerate the lapse of restrictions, or waive any condition imposed hereunder,
with respect to any Restricted Stock, Restricted Stock Units, or Stock Bonus,
and (ii) subject to Section 4 of Plan, no such amendment shall impair the rights
of any Participant without his or her consent.

            (c) Notwithstanding the foregoing provisions of this Section 13, any
decrease in the Exercise Price of any outstanding Option (whether effected by
amendment to the Plan or an Award Agreement) shall be subject to the approval of
the shareholders of the Company.

SECTION 14. UNFUNDED STATUS OF PLAN.

            The Plan is intended to constitute an "unfunded" plan for incentive
compensation. With respect to any payments not yet made to a Participant by the
Company, nothing contained herein shall give any such Participant any rights
that are greater than those of a general creditor of the Company.

SECTION 15. WITHHOLDING TAXES.

            (a) Whenever cash is to be paid pursuant to an Award, the Company
(or Subsidiary or Affiliate, as the case may be) shall have the right to deduct
therefrom an amount sufficient to satisfy any federal, state and local tax
withholding requirements related thereto. Whenever Shares are to be delivered
pursuant to an Award, the Company (or Subsidiary or Affiliate, as the case may
be) shall have the right to require the Participant to remit to the Company (or
Subsidiary or Affiliate, as the case may be) in cash an amount sufficient to
satisfy any federal, state and local tax withholding requirements related
thereto. With the approval of the Administrator, a Participant may satisfy the
foregoing requirement by electing to have the Company withhold from delivery
Shares or by delivering Shares already owned by the Participant for at least six
months, in each case, having a value equal to the minimum amount of tax required
to be withheld. Such shares shall be valued at their Fair Market Value on the
date of which the amount of tax to be withheld is determined. Fractional share
amounts shall be settled in cash. Such an election may be made with respect to
all or any portion of the shares to be delivered pursuant to an Award.

            (b) If the Participant makes a disposition, within the meaning of
section 424(c) of the Code and regulations promulgated thereunder, of any Share
or Shares issued to such Participant pursuant to such Participant's exercise of
an Incentive Stock Option, and such disposition occurs within the two-year
period commencing on the day after the date of grant or within the one-year
period commencing on the day after the date of exercise, such Participant shall,
within ten (10) days of such disposition, notify the Company (or Subsidiary or
Affiliate, as the case may be) thereof and thereafter immediately deliver to the
Company (or Subsidiary or Affiliate, as the case may be) any amount of federal,
state or local income taxes and other amounts which the Company (or Subsidiary
or Affiliate, as the case may be) informs the Participant the Company (or
Subsidiary or Affiliate, as the case may be) is required to withhold.

<PAGE>

SECTION 16. GENERAL PROVISIONS.

            (a) Shares shall not be issued pursuant to the exercise of any Award
granted hereunder unless the exercise of such Award and the issuance and
delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act and the requirements of any stock exchange upon which
the Common Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance. The Company
shall be under no obligation to effect the registration pursuant to the
Securities Act of 1933, as amended, of any interests in the Plan or any Common
Shares to be issued hereunder or to effect similar compliance under any state
laws.

            (b) All certificates for Shares delivered under the Plan shall be
subject to such stock-transfer orders and other restrictions as the
Administrator may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Common Shares may then be listed, and any applicable federal or state
securities law, and the Administrator may cause a legend or legends to be placed
on any such certificates to make appropriate reference to such restrictions. The
Administrator may require, as a condition of the issuance and delivery of
certificates evidencing Shares pursuant to the terms hereof, that the recipient
of such Shares make such agreements and representations as the Administrator, in
its sole discretion, deems necessary or desirable.

            (c) Nothing contained in the Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to shareholder
approval, if such approval is required; and such arrangements may be either
generally applicable or applicable only in specific cases. The adoption of the
Plan shall not confer upon any Eligible Recipient any right to continued
employment or service with the Company or any Subsidiary or Affiliate, as the
case may be, nor shall it interfere in any way with the right of the Company or
any Subsidiary or Affiliate to terminate the employment or service of an
Eligible Recipient at any time.

            (d) No fractional Common Shares shall be issued or delivered
pursuant to the Plan. The Administrator shall determine whether cash, other
Awards, or other property shall be issued or paid in lieu of such fractional
shares or whether such fractional shares or any rights thereto shall be
forfeited or otherwise eliminated.

            (e) If any provision of the Plan is held to be invalid or
unenforceable, the other provisions of the Plan shall not be affected but shall
be applied as if the invalid or unenforceable provision had not been included in
the Plan.

            (f) The Plan and all Awards shall be governed by the laws of the
State of Delaware without regard to its principles of conflict of laws.

            (g) Awards may be granted under the Plan from time to time in
substitution for awards held by employees, directors or service providers of
other corporations who are about to become employees of the Company or a
Subsidiary or Affiliate as the result of a merger or consolidation of the
employing corporation with the Company or Subsidiary or Affiliate, or the
acquisition by the Company or a Subsidiary or Affiliate of the assets of the
employing corporation, or the acquisition by the Company or a Subsidiary or
Affiliate of the shares of the employing corporation, as the result of which it
becomes a Subsidiary or Affiliate under the Plan. The terms and conditions of
the Awards so granted may vary from the terms and conditions set forth in this
Plan at the time of such grant as the Administrator may deem appropriate to
conform, in whole or in part, to the provisions of the awards in substitution
for which they are made.

SECTION 17. SHAREHOLDER APPROVAL; EFFECTIVE DATE OF PLAN.

            The Plan shall be effective as of the date of its approval by the
Company's shareholders.

SECTION 18. TERM OF PLAN.

            No Award shall be granted pursuant to the Plan on or after the tenth
anniversary of the date the Plan is approved by the Company's shareholders, but
Awards theretofore granted may extend beyond that date.