exh10-7.htm


     

    
      

      

    

     

     

    TEXAS
PETROCHEMICALS INC.

     

    2004
STOCK AWARDS PLAN

     

    As
Amended and Restated Effective March 23, 2006

     

    I.

     

    PURPOSE

     

    The
purpose of the Texas Petrochemicals Inc. 2004 Stock Awards Plan (the “Plan”) is
to provide a means through which Texas Petrochemicals Inc. (the “Company”), a
Delaware corporation and its Subsidiaries, may attract able persons to the
Company and to provide a means whereby those Employees, officers and directors
of the Company upon whom the responsibilities of the successful administration
and management of the Company rest, and whose present and potential
contributions to the welfare of the Company are of importance, can acquire and
maintain stock ownership, thereby strengthening their concern for the welfare of
the Company and their desire to remain in its employ or service.  A
further purpose of the Plan is to provide such Employees, officers and directors
of the Company with additional incentive and reward opportunities designed to
enhance the profitable growth of the Company.  The Plan is a broad
based plan that provides for grants of Incentive Stock Options, Nonqualified
Stock Options, Stock Appreciation Rights, Restricted Stock Awards, Performance
Awards, Phantom Stock Awards, or any combination of the foregoing, as is best
suited to the circumstances of the particular Employee, officer or director of
the Company, as provided herein.  The Plan is hereby amended and
restated effective March 23, 2006 (“the Restatement Effective
Date”).  Any Awards made prior to the Restatement Effective Date shall
be subject to the terms and conditions of the Plan as in effect on the date of
such Award.

     

    II.

     

    DEFINITIONS

     

    The
following definitions shall be applicable throughout the Plan unless
specifically modified by any paragraph:

     

    (a)           “Affiliate” means any parent
or Subsidiary of the Major Holders.

     

    (b)           “Award” means, individually
or collectively, any Option, Restricted Stock Award, Phantom Stock Award,
Performance Award or Stock Appreciation Right.

     

    (c)           “Award Agreement” means a
written agreement between the Company and a Holder with respect to any
Award.

     

    (d)           “Board” means the Board of
Directors of Texas Petrochemicals Inc.

     

    (e)           “Board Resolution” means a
copy of a resolution having been duly adopted by the Board in accordance with
the terms of the Company’s by-laws and to be in full force and effect on such
adopted date.

     


    
      
         


      

      
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    (f)           “Cause” shall mean the term
as defined in any written employment agreement between the Company and the
Participant.  To the extent that there is no such agreement, “Cause”
shall mean the Participant’s conviction of, or plea of guilty or no contest to,
any felony (or equivalent under applicable law) or a misdemeanor that results in
a material economic injury to the Company.

     

    (g)           “Change in Control”
means:

     

    (i)           a
transaction in which any “person” (as such term is defined in Section 3(a)(9) of
the Exchange Act and is used in Sections 13(d)(3) and 14(d)(2) of the Exchange
Act) or group of persons acting together within the meaning of Section 13(d)(3)
of the Exchange Act (other than and excluding any of the Major Holders acting
alone, or in concert with each other, their respective Affiliates or others),
becomes the direct or indirect beneficial owner of fifty percent (50%) or more
of the Company’s Voting Stock; provided, however, that (x)
there shall not be a “Change in Control” unless the Major Holders beneficially
own, directly or indirectly, in the aggregate, a lesser percentage of the
Company’s Voting Stock than such other person, and do not have the right or
ability, in the aggregate, by voting power, contract, or otherwise, to elect or
designate for election, a majority of the Board and (y) the Board may at any
time prior to such transaction provide by Board Resolution that this
subparagraph (i) shall not apply if such acquiring person is a corporation or
other entity and a majority of the board of directors of the acquiring person
(or other board or committee performing similar functions) immediately after the
transaction consists of individuals who constituted a majority of the Board
immediately prior to the acquisition of such fifty percent (50%) or more of the
Company’s Voting Stock.  For purposes of subparagraph (i)(x) (A) such
other person shall be deemed to beneficially own any Voting Stock of a specified
entity held by a parent entity, if such other person is the beneficial owner,
directly or indirectly, of more than 50% of the parent entity’s Voting Stock,
and the Major Holders beneficially own, directly or indirectly, in the
aggregate, a lesser percentage of the total voting power of the parent entity’s
Voting Stock than such other person, and do not have the right or ability, in
the aggregate, by voting power, contract or otherwise, to elect, or designate
for election, a majority of the parent entity’s board of directors (or other
board or committee performing similar functions) and (B) the Major Holders shall
be deemed to beneficially own any Voting Stock of an entity held by any other
parent entity, so long as the Major Holders beneficially own, directly or
indirectly, in the aggregate, a majority of the parent entity’s Voting
Stock;

     

    (ii)           a
transaction involving a merger or consolidation of the Company with or into
another person or the merger of another person with or into the Company, other
than:

     

    (A)           a
merger effecting a re-incorporation of the Company in another state or any other
merger or a consolidation in which the shareholders or other equity owners of
the surviving person and their proportionate interests therein immediately after
the merger or consolidation are substantially identical to the shareholders of
the Company and their proportionate interests therein immediately prior to the
merger or consolidation, or

     


    
      
         


      

      
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    (B)           a
transaction following which the holders of securities that represented 100% of
the Voting Stock of the Company immediately prior to such transaction own,
directly or indirectly, at least a majority of the Voting Stock of the surviving
person immediately after such transaction in substantially the same proportion
that such holders held the Voting Stock of the Company immediately prior to such
transaction

     

    following
which the Company is not the surviving person, or survives only as a subsidiary
of another person in a transaction in which the shareholders of the parent of
the Company and their proportionate interests therein immediately after the
transaction are not substantially identical to the shareholders of the Company
and their proportionate interests therein immediately prior to the transaction;
provided, however, that the
Board may at any time prior to such a merger or consolidation provide by
resolution that the foregoing provisions of the preceding half-sentence
(beginning with the word “following” and ending with the word “transaction”)
shall not apply if a majority of the board of directors of such parent (or other
board or committee performing similar functions if the parent is not a
corporation) immediately after the transaction consists of individuals who
constituted a majority of the Board immediately prior to the transaction;
or

     

    (iii)           a
sale of all or substantially all the assets of the Company to another person,
other than the Major Holders, or any of them.

     

    (h)           “Change in Control Value”
means (i) the per share price offered to stockholders of the Company in
any such merger, consolidation, reorganization, sale of assets or dissolution
transaction, (ii) the price per share offered to stockholders of the Company in
any tender offer or exchange offer whereby a Change in Control takes place, or
(iii) if such Change in Control occurs other than pursuant to clause (i) or (ii)
of this paragraph (h), the Fair Market Value per share of the shares for which
Awards are exercisable, as determined by a Board Resolution, whichever is
applicable.  In the event that the consideration offered to
stockholders of the Company consists of anything other than cash, the Board
shall determine by a Board Resolution the fair cash equivalent of the portion of
the consideration offered which is other than cash.

     

    (i)           “Code” means the Internal
Revenue Code of 1986, as amended.  Reference in the Plan to any
section of the Code shall be deemed to include any amendments or successor
provisions to any section and any regulations under such section.

     

    (j)           “Committee” means any
Committee to which the Board has delegated some or all of its powers and
authority under the Plan.

     

    (k)           “Continuous Service” means
the Holder’s service as an officer, Employee, or director with the Company or
any Subsidiary that is not interrupted or terminated.  The Holder’s
Continuous Service shall not be deemed to have terminated merely because of a
change in the capacity in which the Holder renders service to the Company as an
officer, Employee, or director or a change in the entity for which the Holder
renders such service; provided, however,
that there is no interruption or termination of the Holder’s Continuous
Service other than an approved leave of absence.  The Board may
determine whether Continuous Service shall be considered
interrupted.

     

    (l)           “Company” means Texas
Petrochemicals Inc.

     


    
      
         


      

      
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    (m)           “Covered Employee” means such
person described in Section 162(m)(3) of the Code.

     

    (n)           “Current Market Price” means
on any date on which the Stock is listed on any national securities exchange or
on the NASDAQ Stock Market, (the average of the Quoted Prices for the five
consecutive Trading Days selected by the Committee commencing not more than 20
Trading Days before, and ending not later than, the earlier of (x) the date in
question and (y) in the case of any computation under Paragraph XII (d) or XII
(e), the day before the “ex” date for the issuance or distribution requiring
such computation; provided, however,
that if the “ex” date for any event (other than the issuance or
distribution requiring such computation) that requires an adjustment to the
Exercise Price pursuant to Paragraph XII(a), XII(b), XII(d), or XII(e) occurs on
or after the 20th Trading Day prior to the day in question and prior to the “ex”
date for the issuance or distribution requiring such computation, the Quoted
Price for each Trading Day prior to the “ex” date for such other event shall be
adjusted by multiplying such Quoted Price by the same fraction by which the
Exercise Price is so required to be adjusted pursuant to Paragraph XII(a),
XII(b), XII(d), or XII(e) as applicable, as a result of such other
event.

     

    (o)            “Effective Date” means the
date set forth in Paragraph III(a).

     

    (p)           “Employee” means any person
in an employment relationship with the Company or Parent or
Subsidiaries.

     

    (q)           “Equity Interest” means, (i)
with respect to any Person that is a corporation, any and all shares, interests,
participations or other equivalents (however designated and whether or not
voting) of corporate stock, including each class of common stock and preferred
stock of such Person and all options, warrants or other rights to purchase or
acquire any of the foregoing; and (ii) with respect to any Person that is not a
corporation, any and all partnership, membership or other equity interests of
such Person, and all options, warrants or other rights to purchase or acquire
any of the foregoing

     

    (r)           “ex date” means:

     

    
      	
               
      

            	
              (i)

            	
              when
      used with respect to any issuance or distribution, the first date on which
      the Stock trades regular way on the relevant exchange or in the relevant
      market from which the Quoted Price was obtained without the right to
      receive such issuance or
distribution;

            


    

     

    
      	
               
      

            	
              (ii)

            	
              when
      used with respect to any subdivision or combination of shares of Stock,
      the first date on which the Stock trades regular way on the relevant
      exchange or in the relevant market after the time at which such
      subdivision or combination becomes effective;
or

            


    

     

    
      	
               
      

            	
              (iii)

            	
              when
      used with respect to any tender offer, the first date on which the Stock
      trades regular way on the relevant exchange or in the relevant market
      after the Expiration Time of such tender
offer.

            


    

     

    (s)           “Exchange Act” means the
Securities Exchange Act of 1934, as amended.

     


    
      
         


      

      
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    (t)           “Excluded Dividend” means any
Property Dividend or any dividend or distribution of rights or warrants referred
to in Paragraph XU(f) that is paid or made in cash out of earnings or earned
surplus, determined in accordance with GAAP.

     

    (u)           “Exercise Price” means the
exercise price per share of Stock under any Award, subject to adjustment as
provided in Paragraph XII.

     

    (v)           “Expiration Time” means the
period of time set forth in Paragraph XII(e).

     

    (w)           “Fair Market Value” means as
of any specified date, (i) the Current Market Price or (ii) if the Stock is not
then listed on any national securities exchange or on the NASDAQ Stock Market,
the fair value as determined by the Board in good faith, as evidenced by a Board
Resolution.  The Board may, but shall have no obligation to, engage
one or more appraisers in making its determination of Fair Market Value under
clause (ii). The Fair Market Value as determined by the Board under clause (ii)
may be higher or lower than any such appraisal.

     

    (x)           “Forfeiture Restrictions”
means the restrictions set forth in Paragraph IX(a).

     

    (y)           “GAAP” means generally
accepted accounting principles set forth in the opinions and pronouncements of
the Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as have been
approved by a significant segment of the accounting profession, which are in
effect from time to time.

     

    (z)           “Holder” means an Employee,
officer or director who has been granted an Award.

     

    (aa)           “Incentive Stock Option”
means an option to purchase Stock that is designated as an incentive
stock option within the meaning of Section 422 of the Code.

     

    (bb)           “Major Holders” means
Castlerigg Master Investments Ltd., RCG Carpathia Master Fund, Ltd. and Mellon
HBV SPV LLC, and any investment fund managed by the same investment advisor of
any such Major Holder.

     

    (cc)           “Nonqualified Stock Option”
means an option granted under Paragraph VII of the Plan to purchase Stock
which does not constitute an Incentive Stock Option.

     

    (dd)           “Option” means an Award
granted under Paragraph VII of the Plan and includes both Incentive Stock
Options and Nonqualified Stock Options.

     

    (ee)           “Option Agreement” means an
Award Agreement with respect to an Option.

     

    (ff)           “Ownership Interest” means
any shares of capital stock of the Company and any other security of the Company
or any successor thereto into which any shares of capital stock of the Company
are converted or for which any shares of capital stock of the Company are
exchanged.

     


    
      
         


      

      
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    (gg)           “Parent” means, for purposes
of the grant of Incentive Stock Options, a parent of the Company (if any) which
qualifies as a “parent corporation” within the meaning of Section 424(e) of the
Code.

     

    (hh)           “Performance Award” means an
Award granted under Paragraph X of the Plan.

     

    (ii)           “Performance Award Agreement”
means an Award Agreement with respect to a Performance
Award.

     

    (jj)           “Performance Goals” means or
may be expressed in terms of any of the following business criteria: revenue,
earnings before interest, taxes, depreciation and amortization (“EBITDA”),
operating income, pre- or after-tax income, cash available for distribution,
cash available for distribution per share, net earnings, earnings per share,
return on equity, return on assets, share price performance, improvements in the
Company’s attainment of expense levels, and implementing or completion of
critical projects, or improvement in cash flow (before or after
tax).  A Performance Goal may be measured over a Performance Period on
a periodic, annual, cumulative or average basis and may be established on a
corporate-wide basis or established with respect to one or more operating units,
divisions, subsidiaries, acquired businesses, minority investments, partnerships
or joint ventures.

     

    (kk)           “Performance Objectives”
means the level or levels of performance required to be attained with
respect to specified Performance Goals in order that a Holder shall become
entitled to specified rights in connection with an Award of performance
shares.  The Board may provide for adjustments to performance to
eliminate the effects of charges for restructuring, extraordinary items,
discontinued operations, other non-recurring charges, the cumulative effects of
accounting changes, each as defined in GAAP, that occur during a Performance
Period, in each case, to preserve the economic intent of any Award.

     

    (ll)           “Performance Period” means
the one-year period that shall commence July 1 of each year, or such other
longer period designated by the Committee, during which performance will be
measured in order to determine a Holder’s entitlement to receive payment of an
Award.

     

    (mm)                      “Person” means any
individual, corporation, partnership, joint venture, association, joint-stock
company, trust, unincorporated organization or government or any agency or
political subdivision thereof or other entity.

     

    (nn)           “Phantom Stock” means shares
of Stock granted under Paragraph XI of the Plan.

     

    (oo)           “Phantom Stock Award” means
an Award of Phantom Stock.

     

    (pp)           “Phantom Stock Award Agreement”
means an Award Agreement with respect to a Phantom Stock
Award.

     

    (qq)           “Plan” means the Texas
Petrochemicals Inc. 2004 Stock Awards Plan, as amended from time to
time.

     

    (rr)           “Property Dividend” means any
payment by the Company to holders of its Stock of any dividend, or any other
distribution by the Company to such holders of any shares of

     


    
      
         


      

      
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    Equity
Interests of the Company, evidences of indebtedness of the Company, cash or
other assets (including rights, warrants or other securities (of the Company or
any other Person)), other than any dividend or distribution (i) upon a merger or
consolidation or sale to which Paragraph XIII applies or (ii) of any Stock
referred to in Paragraph XII(b).

     

    (ss)           “Purchased Shares” has the
meaning set forth in Paragraph XII.

     

    (tt)           “Quoted Price” means, on any
Trading Day, with respect to any security, the last reported sales price regular
way or, in case no such reported sale takes place on such Trading Day, the
average of the reported closing bid and asked prices regular way, in either case
on the New York Stock Exchange or, if such security is not listed or admitted to
trading on such exchange, on the principal national securities exchange on which
such security is listed or admitted to trading or, if not listed or admitted to
trading on any national securities exchange, on the National Association of
Securities Dealers Automated Quotations National Market System.

     

    (uu)           “Restatement Effective Date”
means the date set forth in Paragraph I of the Plan.

     

    (vv)           “Restricted Stock” means
shares of Stock granted under Paragraph IX of the Plan.

     

    (ww)                      “Restricted Stock Agreement”
means an Award Agreement with respect to a Restricted Stock
Award.

     

    (xx)           “Restricted Stock Award”
means an Award granted under Paragraph IX of the Plan.

     

    (yy)           “Rule 16b-3” means SEC Rule
16b-3 promulgated under the Exchange Act, as such may be amended from time to
time, and any successor rule, regulation or statute fulfilling the same or a
similar function.

     

    (zz)           “SEC” means the Securities
and Exchange Commission.

     

    (aaa)                      “Section 162(m)” means
Section 162(m) of the Code and the regulations promulgated
thereunder.

     

    (bbb)                      “Spread” means, in the case
of a Stock Appreciation Right, an amount equal to the excess, if any, of the
Fair Market Value of a share of Stock on the date such right is exercised (or
deemed exercised pursuant to Section 409A of the Code) over the exercise price
of such Stock Appreciation Right.

     

    (ccc)                      “Stock” means the common
stock, $0.01 par value, of the Company.

     

    (ddd)                      “Stock Appreciation Right”
means an Award granted under Paragraph VIII of the Plan.

     

    (eee)                      “Stock Appreciation Rights
Agreement” means an Award Agreement with respect to an Award of Stock
Appreciation Rights.

     

    (fff)           “Subsequent Awards” means the
Awards defined under Paragraph VI.

     


    
      
         


      

      
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    (ggg)                      “Subsidiaries” means any
subsidiary entity of the Company selected by the Board, provided, that, with respect to
Incentive Stock Options, it shall mean any subsidiary of the Company that
qualifies as a “subsidiary corporation” within the meaning of Section 424(f) of
the Code.

     

    (hhh)                      “Trading Day” means each
Monday, Tuesday, Wednesday, Thursday and Friday, other than any day on which
securities are not traded on the applicable securities exchange or in the
applicable securities market.

     

    (iii)           “Voting Stock” means of a
person all classes of capital stock or other interest, including partnership
interests, of such person then outstanding and normally entitled, without regard
to the occurrence of any contingency, to vote in the election of directors,
managers or trustees thereof.

     

    III.

     

    EFFECTIVE
DATE AND DURATION OF THE PLAN

     

    (a)           Effective
Date.  The Plan was originally effective on December 15, 2004
(the “Effective Date”) and approved by the Company’s stockholders on January 6,
2005.  The Plan, as amended and restated, shall be effective on the
Restatement Effective Date, subject to stockholder approval in accordance with
applicable state law within one year of the Restatement Effective
Date.  Unless the Company determines to submit Paragraph X of the Plan
and the definition of Performance Goal to the Company’s stockholders at the
first stockholder meeting that occurs in the fifth year following the year in
which the Plan was last approved by stockholders (or any earlier meeting
designated by the Board), in accordance with the requirements of Section 162(m),
and such stockholder approval is obtained, then no further Performance Awards
shall be made to Covered Employees under Paragraph X after the date of such
annual meeting, but the remainder of the Plan shall continue in
effect.

     

    (b)           Duration of the
Plan.  The Plan will expire on the sixth anniversary of the
Effective Date, and no Awards may be granted on or after the sixth anniversary
of the Effective Date; provided, however, that any
Award granted prior to such sixth anniversary shall remain outstanding in
accordance with its terms.

     

    IV.

     

    ADMINISTRATION

     

    (a)           General
Administration.  The Plan shall be administered by the Board
provided, however, that to the
extent required by law, specific responsibilities shall be delegated to the
Committee.

     

    (b)           Delegation to
Committee.  Subject to applicable law, the Board may delegate
any of its power and authority under the Plan to a Committee or Committees of
two (2) or more members of the Board, and the term “Committee” shall apply to
any person or persons to whom such authority has been delegated.  If
the Board appoints a Committee, it shall have only those powers the Board has
delegated to it.  Such powers may include the power to delegate to
a

     


    
      
         


      

      
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    subcommittee
or to officers and employees of the Company any of the administrative powers the
Board has delegated to the Committee.  If the Board delegates some or
all of its power and authority to one or more Committees or subcommittees, any
references in this Plan to the Board shall be deemed to be to the Committee(s)
or subcommittee(s), but only to the extent of the delegation.  The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.

     

    (c)           Committee
Composition.  Notwithstanding the foregoing, if the Company has
a class of equity securities registered under Section 12 of the Exchange Act,
the Committee shall include at least two “non-employee directors” (as defined
under Ru1e 16b-3 promulgated under the Exchange Act) to permit the Awards and
subsequent transactions contemplated hereunder to comply with Rule
16b-3.  Further, only a Committee comprising two or more “outside
directors,” (within the meaning of Section 162(m)) may grant Awards that are
subject to Section 162(m).  Committee members shall also meet the
requirements of the rules of any exchange or national market system upon which
the Stock is listed.

     

    (d)           Effect of Board’s
Decision.  All determinations, interpretations and
constructions made by the Board in good faith shall not be subject to review by
any person and shall be final, binding and conclusive on all
persons.  Members of the Board and any officer or employee of the
Company acting at the direction or on behalf of the Board shall not be
personally liable for any action or determination taken or made in good faith
with respect to the Plan.  Such persons shall, to the extent permitted
by law, be fully indemnified by the Company with respect to any such action or
determination.

     

    (e)           Powers of
Board.  The Board shall have the power, subject to, and within
the limitations of, the express provisions of the Plan:

     

    
      	
               
      

            	
              (i)

            	
              To
      determine from time to time which of the persons eligible under the Plan
      shall be granted Awards; when and how each Award shall be granted; what
      type or combination of types of Award shall be granted; the provisions of
      each Award granted (which need not be identical), including the time or
      times when a person shall be permitted to receive Stock pursuant to an
      Award; and the number of shares of Stock with respect to which an Award
      shall be granted to each such
person.

            


    

     

    
      	
               
      

            	
              (ii)

            	
              To
      construe and interpret the Plan and Awards granted under it, and to
      establish, amend and revoke rules and regulations for its
      administration.  The Board, in the exercise of this power, may
      correct any defect, omission or inconsistency in the Plan or in any Award
      Agreement, in a manner and to the extent it shall deem necessary or
      expedient to make the Plan fully
effective.

            


    

     

    
      	
               
      

            	
              (iii)

            	
              To
      provide for the extension of the exercisability of an Award, accelerate
      the vesting or exercisability of an Award, eliminate or make less
      restrictive any restrictions applicable to an Award, waive any restriction
      or other provision of this Plan (insofar as such provision relates to
      Awards) or an Award or otherwise amend or modify an Award in any manner
      that

            


    

     


    
      
         


      

      
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    is either
(i) not adverse to the Holder to whom such Award was granted or (ii) consented
to by such Holder;

     

    
      	
               
      

            	
              (iv)

            	
              Generally,
      to exercise such powers and to perform such acts as the Board deems
      necessary or expedient to promote the best interests of the Company which
      are not in conflict with the provisions of the
  Plan.

            


    

     

    V.

     

    GRANT OF
OPTIONS, STOCK APPRECIATION RIGHTS,

    RESTRICTED
STOCK AWARDS, PERFORMANCE AWARDS

    AND
PHANTOM STOCK AWARDS; SHARES SUBJECT TO THE PLAN

     

    (a)           Stock Grant and Award
Limits.  The Board may from time to time grant and the
Committee may recommend to the Board, from time to time, the grant of Awards to
one or more Employees, officers and directors determined by it to be eligible
for participation in the Plan in accordance with the provisions of Paragraph
VI.  Subject to Paragraph XII, the total of number of shares
(irrespective of class) set aside for issuance under the Plan is
2,613,317.  Subject to Paragraph XII, up to 1,331,722 shares in the
aggregate may be issued as Options or Stock Appreciation Rights, or any
combination thereof, under the Plan and up to 1,281,595 shares in the aggregate
may be issued pursuant to Restricted Stock Awards, Performance Awards or Phantom
Stock Awards under the Plan.  The maximum number of shares of Stock
that may be the subject of all Awards granted to an Employee in anyone calendar
year period may not exceed 600,000, subject to Paragraph XII.  With
respect to any Award paid in cash under the Plan, the number of shares of Stock
having an aggregate Fair Market Value equal to the value of such cash Award
shall be deducted from the total number of shares set aside for issuance under
the Plan.

     

    (b)           Lapse of
Awards.  Shares of Stock shall be deemed to have been issued
under the Plan only to the extent actually issued and delivered pursuant to an
Award.  To the extent that an Award lapses or the rights of its Holder
terminate or are relinquished, any shares of Stock subject to such Award shall
again be available for grant pursuant to an Award, except that if an Award is
paid in cash, the number of shares underlying such Award shall not be available
for new Awards under the Plan.

     

    (c)           Stock
Offered.  The Stock to be offered pursuant to the grant of an
Award may be authorized but issued Stock or Stock previously issued and
outstanding and reacquired by the Company.

     

    VI.

     

    ELIGIBILITY

     

    Awards
may be granted only to persons who, at the time of grant, are Employees,
officers or directors; provided, however,
that only Employees of the Company or any Parent or Subsidiary may be
granted an Incentive Stock Option.  The maximum number and composition
of all Awards granted under the Plan shall be subject to the limitations set
forth in Paragraph V(a).

     


    
      
         


      

      
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      VII.

    

     

    STOCK
OPTIONS

     

    (a)           Option
Period.  The term of each Option shall be as specified by the
Board at the date of grant; provided, however, that if not
otherwise determined by the Board and provided for in an Award Agreement, the
term of each Option shall be six years from the date of grant and each Option
shall vest ratably over five years.

     

    (b)           Special Limitations on
Incentive Stock Options.  No more than 1,331,722 shares of
Stock (irrespective of class) may be issued pursuant to Incentive Stock
Options.  Only Employees may receive grants of Incentive Stock
Options.  The term of an Incentive Stock Option shall not exceed ten
years from the date of grant. To the extent that the aggregate Fair Market Value
of shares of Stock with respect to which Options designated as Incentive Stock
Options first become exercisable by a Holder in any calendar year (under this
and all other plans of the Company, its Parent or any Subsidiaries) exceeds
$100,000, such excess Options shall be treated as Nonqualified Stock
Options.  For purposes of determining whether the $100,000 is
exceeded, the Fair Market Value of the shares subject to an Incentive Stock
Option shall be determined as of the date of grant.  In reducing the
number of Options treated as Incentive Stock Options to meet the $100,000 limit,
the most recently granted Options shall be reduced first.  No
Incentive Stock Option shall be granted to an individual if, at the time the
Option is granted, such individual owns Stock possessing more than 10% of the
total combined voting power of all classes of Stock of the Company and its
Parent and Subsidiaries, within the meaning of Section 422(b)(6) of the Code,
unless (i) at the time such Option is granted the Option price is at least
110% of the Fair
Market Value of the Stock subject to the Option and (ii) such Option by its
terms is not exercisable after the expiration of five years from the date of
grant.

     

    (c)           Option Agreement.  Each Option
shall be evidenced by an Option Agreement in such form and containing such
provisions not inconsistent with the provisions of the Plan as the Board from
time to time shall approve, including, without limitation, provisions to qualify
an Incentive Stock Option under Section 422 of the Code.  The Option
price must be paid in full at the time of each exercise in one or a combination
of the following methods (to the extent authorized and approved by the Board or
set forth in the applicable Option Agreement): (i) cash or immediately available
funds (including wire transfer, personal check, cashier’s check, postal or
express money order or bank draft) or (ii) with shares of Stock already owned by
the Holder for at least six months prior to the exercise (or whatever period as
maybe required to avoid a change to earnings for financial accounting
purposes).  Additionally, in the discretion of the Board, payment for
any shares of Stock subject to an Option may also be made by a “cashless
exercise” which shall include the following: delivering a properly executed
exercise notice to the Company, together with a copy of irrevocable instructions
to a broker to deliver promptly to the Company the amount of sale or loan
proceeds necessary to pay the purchase price, and, if requested, the amount of
any federal, state, local or foreign withholding taxes.  To facilitate
the foregoing “cashless exercise,” the Company may enter into agreements for
coordinated procedures with one or more brokerage firms.  The terms
and conditions of the respective Option Agreements need not be
identical.  Option Agreements may also include, without limitation,
provisions relating to (i) vesting of Awards, (ii) tax matters (including
provisions covering

     


    
      
         


      

      
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    applicable
wage withholding requirements), and (iii) any other matters, not inconsistent
with the terms and provisions of this Plan.

     

    (d)           Treatment of Options Upon
Termination of Continuous Service.  Upon a Holder’s termination
of Continuous Service, all unvested Options shall terminate as of the date of
termination of Continuous Service with the Company.

     

    (e)           Exercise Price and
Payment.  The price at which a share of Stock may be purchased
upon exercise of an Option shall be an amount that is not less than the Fair
Market Value of Stock subject to an Option on the date the Option is granted,
subject to adjustment as provided in Paragraph XII.  The Option or
portion thereof may be exercised by delivery of an irrevocable written notice of
exercise to the Company.  The purchase price of the Option or portion
thereof shall be paid in full in the manner set forth in the applicable Option
Agreement.

     

    (f)           Stockholder Rights and
Privileges.  The Holder shall be entitled to all the privileges
and rights of a stockholder only with respect to such shares of Stock as have
been purchased under the Option and for which certificates of stock have been
registered in the Holder’s name.

     

    (g)           Options and Stock
Appreciation Rights in Substitution for Stock Options Granted by Other
Corporations.  Options and Stock Appreciation Rights may be
granted under the Plan from time to time in substitution for stock options held
by individuals who become Employees as a result of a merger or consolidation of
their employer with the Company, or the acquisition by the Company of the assets
of such employer, or the acquisition by the Company of stock of such employer
with the result that such employer becomes a Subsidiary.

     

    (h)           Prohibition on
Repricing.  No Option granted hereunder shall be amended to
reduce the Option Price under such Option, or surrendered in exchange for a
replacement Option having a lower purchase price per share; provided, however, that this
Paragraph VII (i) shall not restrict or prohibit any adjustment or other action
taken pursuant to Paragraph XII.

     

    VIII.

     

    STOCK
APPRECIATION RIGHTS

     

    (a)           Stock Appreciation
Rights.  A Stock Appreciation Right is the right to receive an
amount equal to the Spread with respect to a share of Stock upon the exercise of
such Stock Appreciation Rights.  Stock Appreciation Rights may be
granted in connection with the grant of an Option, in which case the Option
Agreement will provide that exercise of Stock Appreciation Rights will result in
the surrender of the right to purchase the shares under the Option as to which
the Stock Appreciation Rights were exercised.  Alternatively, Stock
Appreciation Rights may be granted independently of Options in which case each
Award of Stock Appreciation Rights shall be evidenced by a Stock Appreciation
Rights Agreement.  The Board, or such other person as designated by
the Board, shall designate the portion of Options that will be subject to
treatment as Stock Appreciation Rights under the Plan.  The Spread
with respect to Stock Appreciation Rights shall be payable in cash, provided, however, that the
Stock Appreciation Rights Agreement may specify that the Spread may be payable
in cash, shares of Stock with a Fair Market Value equal to the Spread or in a
combination of cash and shares of Stock, at the election

     


    
      
         


      

      
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    of the
Board.  With respect to Stock Appreciation Rights that are subject to
Section 16 of the Exchange Act, however, the Board shall, except as provided in
Paragraph XII retain discretion (i) to determine the form in which payment of
Stock Appreciation Rights will be made (i.e., cash, securities or any
combination thereof) and (ii) to approve an election by a Holder to receive cash
in full or partial settlement of Stock Appreciation Rights.

     

    (b)           Treatment of Stock
Appreciation Rights Upon Termination of Continuous
Service.  Upon a Holder’s termination of Continuous Service,
all unvested Stock Appreciation Rights shall terminate as of the date of
termination of Continuous Service with the Company.

     

    (c)           Other Terms and
Conditions.  At the time of such Award, the Board may, in its
sole discretion, prescribe additional terms, conditions or restrictions relating
to Stock Appreciation Rights, including, but not limited to, rules pertaining to
termination of employment or the cessation of performing services to the Company
(by retirement, disability, death or otherwise) of a Holder prior to the
expiration of such Stock Appreciation Rights.  Such additional terms,
conditions or restrictions shall be set forth in the Stock Appreciation Rights
Agreement made in conjunction with the Award.  Such Stock Appreciation
Rights Agreements may also include, without limitation, provisions relating to
(i) vesting of Awards, (ii) tax matters (including provisions covering
applicable wage withholding requirements), and (iii) any other matters not
inconsistent with the terms and provisions of this Plan, that the Board shall in
its sole discretion determine, provided, however, that unless
otherwise determined by the Board and provided in a Stock Appreciation Rights
Agreement, the term of an Award of Stock Appreciation Rights shall not exceed
six years from the date of grant and Stock Appreciation Rights shall vest
ratably over five years.  The terms and conditions of the respective
Stock Appreciation Rights Agreements need not be identical.

     

    (d)           Exercise
Price.  The exercise price of each Stock Appreciation Right
shall be determined by the Board, but such exercise price (i) shall not be less
than the Fair Market Value of a share of Stock on the date the Stock
Appreciation Right is granted (or such greater exercise price as may be required
if such Stock Appreciation Right is granted in connection with an Incentive
Stock Option that must have an exercise price equal to 110% of the Fair Market
Value of the Stock on the date of grant pursuant to Paragraph VII), and (ii)
shall be subject to adjustment as provided in Paragraph XII.

     

    IX.

     

    RESTRICTED
STOCK AWARDS

     

    (a)           Forfeiture Restrictions to
be Established by the Board.  Shares of Stock that are the
subject of a Restricted Stock Award shall be subject to restrictions on
disposition by the Holder and an obligation of the Holder to forfeit and
surrender the shares to the Company under certain circumstances (the “Forfeiture
Restrictions”).  The Forfeiture Restrictions shall be determined by
the Board in its sole discretion.  The Board may provide that the
Forfeiture Restrictions shall lapse upon either (i) the attainment of
Performance Objectives, or (ii) the Holder’s Continuous Service for a specified
period of time, or (iii) a combination of any two of the factors listed in
clauses (i) and (ii) of this sentence, or other factors set forth in the
Restricted Stock Agreement.  Each Restricted Stock Award may have
different Forfeiture Restrictions, in

     


    
      
         


      

      
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    the
discretion of the Board; provided, however, that unless
otherwise determined by the Board and provided in a Restricted Stock Agreement,
all Restricted Stock Awards shall vest ratably over a period of five
years.  The Forfeiture Restrictions applicable to a particular
Restricted Stock Award shall not be changed except as permitted by Paragraph
XII.

     

    (b)           Other Terms and
Conditions.  Stock awarded pursuant to a Restricted Stock Award
shall be represented by a stock certificate registered in the name of the Holder
of such Restricted Stock Award.  The Holder shall have the right to
receive dividends with respect to Stock subject to a Restricted Stock Award, to
vote Stock subject thereto and to enjoy all other stockholder rights, except
that (i) the Holder shall not be entitled to delivery of the stock certificate
until the Forfeiture Restrictions shall have expired, (ii) the Company shall
retain custody of the certificate evidencing such Stock until the Forfeiture
Restrictions shall have expired, (iii) the Holder may not sell, transfer,
pledge, exchange, hypothecate or otherwise dispose of the Stock until the
Forfeiture Restrictions shall have expired, and (iv) a breach of the terms and
conditions established by the Board pursuant to the Restricted Stock Agreement
shall cause a forfeiture of the Restricted Stock Award.

     

    (c)           Treatment of Restricted
Stock Awards Upon Termination of Continuous Service.  Upon a
Holder’s termination of Continuous Service with the Company, a Holder shall
forfeit any and all shares of Restricted Stock to which Forfeiture Restrictions
at the time are applicable as of the date of termination of Continuous Service
with the Company.

     

    (d)           Payment for Restricted
Stock.  The Board shall determine the amount and form of any
payment for Stock received pursuant to a Restricted Stock Award; provided, however, that in the
absence of such a determination, a Holder shall not be required to make any
payment for Stock received pursuant to a Restricted Stock Award, except to the
extent otherwise required by law.  To the extent the Holder is subject
to any tax liability as a result of a Restricted Stock Award, the Holder may
offer as payment for such tax liability shares of Stock, the value of which
shall in whole or in part satisfy such tax liability.

     

    (e)           Agreements.  At
the time any Award is made under this Paragraph IX, the Company and the Holder
shall enter into a Restricted Stock Agreement setting forth each of the matters
as the Board may determine to be appropriate.  The Board may, in its
sole discretion, prescribe additional terms, conditions or restrictions relating
to Restricted Stock Awards.

     

    X.

     

    PERFORMANCE
AWARDS

     

    (a)           Delegation to
Committee.  At any time on or after the Company qualifies as a
“publicly held corporation” as defined in Section 162(m) and the applicable
regulations, all decisions with respect to Performance Awards to Covered
Employees must be made by a Committee of two or more “outside directors” as set
forth in 162(m) and the applicable regulations, and such a Committee must grant
to Covered Employees all Options and Stock Appreciation Rights intended to be
“performance-based” under Section 162(m).  For the avoidance of doubt,
prior to such time that the Company qualifies as a “publicly held

     


    
      
         


      

      
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    corporation,”
all Awards granted hereunder shall be made by the Board, and any reference in
this Paragraph X to the Committee shall be deemed to be a reference to the
Board.

     

    (b)           Performance
Awards.  The Committee shall grant Performance Awards in the
form of actual shares of Stock, Phantom Stock or Restricted Stock.  In
the event that a share certificate is issued in respect of Performance Awards,
such certificate shall be registered in the name of the Holder,
but shall be held by the Company until the time the performance shares are
earned.  In addition, the Committee may make cash bonuses to Holders
based on the Performance Objectives described herein; such cash bonuses shall be
subject to the provisions of Paragraph V(a).  The Performance
Objectives and the length of the Performance Period shall be determined by the
Committee.  The Committee shall determine in its sole discretion
whether Performance Awards shall be granted in the form of Stock, Phantom Stock
or Restricted Stock or shall be paid in cash, Stock, or a combination of cash
and Stock.

     

    (c)           Performance Award
Limits.  Each Performance Award shall have a maximum value
established by the Committee at the time of grant of such Award; provided, however, that no
Covered Employee may be granted a Performance Award in any calendar year during
the Performance Period where the value of such award exceeds the Fair Market
Value of 600,000 shares of Stock, subject to Paragraph XII (or, to the extent
the Performance Awards are paid in cash, the maximum dollar amount of any such
Award shall be the equivalent cash value based on Fair Market Value of such
number of shares of Stock on the last day of the Performance
Period).

     

    (d)           Performance
Measures.  A Performance Award shall be awarded to an Employee,
officer or director of the Company contingent upon future performance of the
Employee, officer or director of the Company or any Subsidiaries, or division or
department thereof by or in which he is employed or for which he performs
services during the Performance Period.  The Committee shall establish
the performance measures applicable to such performance prior to the beginning
of the Performance Period but subject to such later revisions as the Committee
shall deem appropriate to reflect significant unforeseen events or
changes.  The performance measures established by the Committee may be
based on (i) the price of a share of Stock, (ii) the Company’s earnings per
share, (iii) the Company’s revenue or EBITDA, (iv) the revenue or EBITDA of a
business unit of the Company designated by the Committee, (v) the return on
stockholder’s equity achieved by the Company, (vi) the Company or business
unit’s pre-tax cash flow from operations, or (vii) a combination of such
factors.

     

    (e)           Performance
Objectives.  The Committee shall establish the Performance
Objective for each Performance Award, consisting of one or more business
criteria permitted as Performance Goals hereunder, one or more levels of
performance with respect to each such criteria, and the amount or amounts
payable or other rights that the Holder will be entitled to upon achievement of
such levels of performance.  The Performance Objective shall be
established by the Committee prior to, or reasonably promptly following the
inception of, a Performance Period but, to the extent required by Section
162(m), by no later than the earlier of the date that is ninety (90) days after
the commencement of the Performance Period or the day prior to the date on which
twenty-five percent of the Performance Period has elapsed.  More than
one Performance Goal may be incorporated in a Performance Objective, in which
case achievement with respect to each Performance Goal may be assessed
individually or in combination with each other.  The Committee may, in
connection with the establishment of

     


    
      
         


      

      
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    Performance
Objectives for a Performance Period, establish a matrix setting forth the
relationship between performance of two or more Performance Goals and the amount
of the Performance Award payable for that Performance Period.  The
level or levels of performance specified with respect to a Performance Goal may
be established in absolute terms, as objectives relative to performance in prior
periods, as an objective compared to the performance of one or more comparable
companies or an index covering multiple companies, or otherwise as the Committee
may determine.  Performance Objectives shall be objective and shall
otherwise meet the requirements of Section 162(m).  Performance
Objectives may differ for Performance Awards granted to any one Holder or to
different Holders.  A Performance Award to a Holder who is a Covered
Employee shall (unless the Committee determines otherwise) provide that in the
event of the Holder’s termination of Continuous Service prior to the end of the
Performance Period for any reason, such Performance Award will be payable only
(i) if the applicable Performance Objectives are achieved, (ii) to the extent,
if any, as the Committee shall determine or (iii) as otherwise provided in the
Performance Award Agreement at the time granted.

     

    (f)           Certification.  Following
the completion of each Performance Period, the Committee shall certify in
writing, in accordance with the requirements of Section 162(m), whether the
Performance Objectives and other material terms of the Performance Award have
been achieved or met.  Unless the Committee determines otherwise,
Performance Awards shall not be settled until the Committee has made the
certification specified under this Section X(f).

     

    (g)           Awards
Criteria.  In determining the value of Performance Awards, the
Committee shall take into account an Employee’s, officer’s or director’s
responsibility level, performance, potential, other Awards and such other
considerations as it deems appropriate.

     

    (h)           Adjustments.  The
Committee may, in its discretion, reduce or eliminate the amount of payment with
respect to the Performance Award to a Covered Employee, notwithstanding the
achievement of specified Performance Objectives; provided, however, that no such
adjustment shall be made which would adversely affect a Holder following a
Change in Control.

     

    (i)           Payment.  Following
the end of the Performance Period, the Holder of a Performance Award shall be
entitled to receive payment of an amount, not exceeding the maximum value of the
Performance Award, based on the achievement of the performance measures for such
Performance Period, as determined by the Committee.  Payment of a
Performance Award may be made in cash, Stock or a combination thereof, as
determined by the Committee.  Payment shall be made in a lump sum or
in installments as prescribed by the Committee.  Any payment to be
made in Stock shall be based on the Fair Market Value of the Stock on the
payment date.  If a payment of cash is to be made on a deferred basis,
the Committee shall establish whether interest shall be credited, the rate
thereof and any other terms and conditions applicable thereto in accordance with
Paragraph XV(n).

     

    (j)           Treatment of Performance
Awards Upon Termination of Continuous Service.  A Performance
Award shall terminate if the Holder does not remain continuously in the employ
of the Company or fails to perform services for the Company at all times during
the applicable Performance Period.

     


    
      
         


      

      
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    (k)           Agreements.  At
the time any Award is made under this Paragraph X, the Company and the Holder
shall enter into a Performance Award Agreement setting forth each of the matters
contemplated hereby and, in addition, such matters set forth in Paragraph X(b)
as the Committee may determine to be appropriate.  The terms and
provisions of the respective agreements need not be identical.

     

    XI.

     

    PHANTOM
STOCK AWARDS

     

    (a)           Phantom Stock
Awards.  Phantom Stock Awards are rights to receive shares of
Stock (or cash in an amount equal to the Fair Market Value thereof), or rights
to receive an amount equal to any appreciation in the Fair Market Value of Stock
(or portion thereof) over a specified period of time, upon either (i) the
attainment of Performance Objectives or (ii) the Holder’s Continuous Service for
a specified period of time, or (iii) a combination of any two of the factors
listed in clauses (i) and (ii) of this sentence, or other factors set forth in
the Phantom Stock Award.  Each Phantom Stock Award shall have a
maximum value established by the Board at the time of such Award.

     

    (b)           Award
Period.  The Board shall establish, with respect to and at the
time of each Phantom Stock Award, a period over which or the event upon which
the Award shall vest with respect to the Holder, provided, however, that unless
subject to a performance-based vesting schedule under Paragraph X, or unless
otherwise determined by the Board and provided in a Phantom Stock Award
Agreement, each Phantom Stock Award shall vest ratably over a period of five
years.

     

    (c)           Awards
Criteria.  In determining the value of Phantom Stock Awards,
the Board shall take into account an Employee’s, officer’s or director’s
responsibility level, performance, potential, other Awards and such other
considerations as it deems appropriate.

     

    (d)           Payment.  Following
the end of the vesting period for a Phantom Stock Award, the Holder of a Phantom
Stock Award shall be entitled to receive payment of an amount, not exceeding the
maximum value of the Phantom Stock Award, based on the then vested value of the
Award.  Payment of a Phantom Stock Award may be made in cash, Stock or
a combination thereof as determined by the Board.  Payment shall be
made in a lump sum or in installments as prescribed by the Board in its sole
discretion.  Any payment to be made in Stock shall be based on the
Fair Market Value of the Stock on the payment date.  Cash dividend
equivalents may be paid during or after the vesting period with respect to a
Phantom Stock Award, as determined by the Board.  If a payment of cash
is to be made on a deferred basis, the Board shall establish whether interest
shall be credited, the rate thereof and any other terms and conditions
applicable thereto in accordance with Paragraph XV(n).

     

    (e)           Treatment of Phantom Stock
Awards Upon Termination of Continuous Service. Unless
otherwise provided in the Phantom Stock Award Agreement, a Phantom Stock Award
shall terminate if the Holder does not remain continuously in the employ of the
Company or fails to perform services for the Company at all times during the
applicable vesting period.

     


    
      
         


      

      
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    (f)           Agreements.  At
the time any Award is made under this Paragraph XI, the Company and the Holder
shall enter into a Phantom Stock Award Agreement setting forth each of the
matters contemplated hereby and, in addition, such matters set forth in
Paragraph IX(b) as the Board may determine to be appropriate.  The
terms and provisions of the respective agreements need not be
identical.

     

    XII.

     

    RECAPITALIZATION
OR REORGANIZATION

     

    (a)           Subdivisions and
Combinations.  In the event the Company, shall at any time,
effect a subdivision (by stock split or otherwise) of the outstanding shares of
Stock into a greater number of shares of Stock (other than (x) a subdivision
upon a merger or consolidation or sale to which Paragraph XIII shall apply or
(y) a stock split effected by means of a stock dividend or distribution to which
Paragraph XII(b)(i) below applies), then in each such event the Exercise Price
in effect at the opening of business on the day after the date upon which such
subdivision becomes effective shall be proportionately
decreased.  Conversely, if the Company shall, at any time or from time
to time, effect a combination (by any reverse stock split or otherwise) of the
outstanding shares of Stock into a smaller number of shares of Stock (other than
a combination upon a merger or consolidation or sale to which Paragraph XIII
applies), then and in each such event the Exercise Price in effect at the
opening of business on the day after the date upon which such combination
becomes effective shall be proportionally increased.  Any adjustment
under this Paragraph XII(a) shall become effective immediately after the opening
of business on the day after the date upon which the subdivision or combination
becomes effective.

     

    (b)           Common Stock
Dividends.  In the event the Company shall, at any time or from
time to time after the grant date of any Award, make or issue to the holders of
its Stock a dividend or distribution payable in, or otherwise make or issue a
dividend or other distribution on any class of its Equity Interests payable in,
shares of Stock (other than a dividend or distribution upon a merger or
consolidation or sale to which Paragraph XIII applies), then and in each such
event the Exercise Price in effect at the opening of business on the day after
the date for the determination of the holders entitled to receive such dividend
or distribution shall be decreased by multiplying such Exercise Price by a
fraction (not to be greater than 1):

     

    
      	
               
      

            	
              (i)

            	
              the
      numerator of which shall be the total number of shares of Stock issued and
      outstanding at the close of business on such date for determination;
      and

            


    

     

    
      	
               
      

            	
              (ii)

            	
              the
      denominator of which shall be the total number of shares of Stock issued
      and outstanding at the close of business on such date for determination
      plus the number of shares of Stock issuable in payment of such dividend or
      distribution.

            


    

     

    (c)           Reclassifications.  A
reclassification of the Stock (other than any such reclassification in
connection with a merger or consolidation or sale to which Paragraph XIII
applies) into shares of Stock and shares of any other class of stock shall be
deemed:

     


    
      
         


      

      
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    (i)           a
distribution by the Company to the holders of its Stock of such shares of such
other class of stock for the purposes and within the meaning of Paragraph XII(d)
below (and the effective date of such reclassification shall be deemed to be
“the date for the determination of the holders entitled to receive such dividend
or distribution” for the purposes and within the meaning of Paragraph XII(d);
and

     

    
      	
               
      

            	
              (ii)

            	
              if
      the outstanding shares of Stock shall be changed into a larger or smaller
      number of shares of Stock as a part of such reclassification, such change
      shall be deemed a subdivision or combination, as the case may be, of the
      outstanding shares of Stock for the purposes and within the meaning of
      Paragraph XII(a) above (and the effective date of such reclassification
      shall be deemed to be “the date upon which such subdivision becomes
      effective” or “the date upon which such combination becomes effective”, as
      applicable, for the purposes and within the meaning of Paragraph
      XII(a)).

            


    

     

    (d)           Property
Dividends.  In the event the Company shall, at any time or from
time to time, make or issue a dividend or distribution to a holder of its Stock
a Property Dividend (other than (x) an Excluded Dividend or (y) any dividend or
distribution of any rights or warrants referred to in Paragraph XII(e)), then
and in each such event the Exercise Price in effect immediately prior to the
close of business on the date for the determination of the holders of Stock
entitled to receive such dividend or distribution shall be decreased by
multiplying such Exercise Price by a fraction (not to be greater than
1):

     

    
      	
               
      

            	
              (i)

            	
              the
      numerator of which shall be the Fair Market Value per share of Stock on
      such date for determination minus the portion applicable to one share of
      Stock of the fair market value (as determined in good faith by the Board,
      whose determination shall be conclusive and evidenced by a Board
      Resolution) of such Property Dividend so distributed;
  and

            


    

     

    
      	
               
      

            	
              (ii)

            	
              the
      denominator of which shall be such Fair Market Value per share of Stock on
      such date for determination.

            


    

     

    If the
Board determines the fair market value of any Property Dividend for purposes of
this Paragraph XII(d) by reference to the actual or when issued trading market
for any securities comprising such Property Dividend, it must in doing so
consider, to the extent applicable, the prices in such market over the same
period used in computing the Current Market Price.

     

    (e)           Distributions of
Warrants.  In the event the Company shall, at any time or from
time to time, make or issue any warrants or other rights to subscribe for or
purchase any shares of Common Stock (other than a distribution of such warrants
or rights upon a merger or consolidation or sale to which Paragraph XIII
applies), which are exercisable for a period of not more than 60 days from the
issuance thereof, and the consideration per share for which shares of Stock may
at any time thereafter be issuable pursuant to such warrants or other rights
shall be less than the Current Market Price on the date of issuance, then and in
each such event the Exercise Price at the opening of business on the day after
such date for determination shall be decreased by multiplying such Exercise
Price by a fraction (not to be greater than 1):

     


    
      
         


      

      
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    (i)           the
numerator of which shall be the number of shares of Stock outstanding at the
close of business on such date for determination plus the number of shares of
Stock that the minimum consideration received and receivable by the Company for
the issuance of such maximum number of shares of Stock pursuant to the terms of
such warrants or other rights would purchase at such Current Market Price;
and

     

    
      	
               
      

            	
              (ii)

            	
              the
      denominator of which shall be the number of shares of Stock outstanding at
      the close of business on such date for determination plus the maximum
      number of shares of Stock issuable pursuant to all such warrants or other
      rights.

            


    

     

    Any
adjustment under Paragraph XII(e) shall, subject to Paragraph XII(h)(iv), become
effective immediately after the opening of business on the day after the date
for the determination of the holders of shares of Stock entitled to receive such
dividend or distribution.  Rights or warrants issued by the Company to
all holders of Stock entitling the holders thereof to subscribe for or purchase
shares of Stock, which rights or warrants (A) are deemed to be transferred with
such shares of Stock, (B) are not exercisable and (C) are also issued in respect
of future issuances of Stock, in each case in clauses (A) through (C) until the
occurrence of a specified event or events, shall for purposes of this Paragraph
XII(e) and Paragraph XII(d) not be deemed distributed until the occurrence of
the earliest such event.

     

    (f)           Superseding
Adjustment.  In the event at any time after any adjustment of
the number of shares of Stock for which any Award is exercisable shall have been
made pursuant to Paragraph XII(e) on the basis of the distribution of warrants
or other rights or after any new adjustment of the number of shares of Stock for
which any Award is exercisable shall have been made pursuant to this Paragraph
XII(f), such warrants or rights shall expire, and all or a portion of such
warrants or rights shall not have been exercised, then, and in each such case,
upon the election of the Company, such previous adjustment in respect of such
warrants or rights which have expired without exercise shall be rescinded and
annulled and the shares of Stock that were deemed for purposes of the
computations set forth in Paragraph XII(e) to have been issued by virtue of such
adjustment in respect of such warrants or rights shall no longer be deemed to
have been issued.

     

    (g)           Adjustment of Number of
Shares.  Upon each adjustment in the Exercise Price pursuant to
Paragraphs XII(a), XII(b), XII(c), XII(d), or XII (e), the number of shares of
Stock purchasable or receivable under outstanding Awards upon payment of the
applicable Exercisable Price shall be adjusted, to the nearest whole share, to
the product obtained by multiplying the number of shares of Stock so purchasable
or receivable immediately prior to such adjustment in the Exercise Price by a
fraction (i) the numerator of which shall be the Exercise Price immediately
prior to such adjustment, and (ii) the denominator of which shall be the
Exercise Price immediately after such adjustment.

     

    (h)           Other Provisions Applicable
to Adjustments.  The following provisions shall be applicable
to the making of adjustments to the Conversion Price under this Paragraph
XII:

     

    
      	
               
      

            	
              (i)

            	
              Treasury
      Stock.  The dividend or distribution of any issued shares of
      Stock owned or held by or for the account of the Company shall be deemed
      a

            


    

     


    
      
         


      

      
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    dividend
or distribution of shares of Stock for purposes of this Paragraph
XII.  The Company shall not make or issue any dividend or distribution
on shares of Stock held in the treasury of the Company.  For the
purposes of this Paragraph XII, the number of shares of Stock at any time
outstanding shall not include shares held in the treasury of the Company but
shall include shares issuable in respect of scrip certificates issued in lieu of
fractions of shares of Stock.

     

    
      	
               
      

            	
              (ii)

            	
              When
      Adjustments Are to be Made.  The adjustments required by
      Paragraph XII shall be made whenever and as often as any specified event
      requiring an adjustment shall occur, except that no adjustment of the
      Exercise Price that would otherwise be required shall be made unless and
      until such adjustment either by itself or with other adjustments not
      previously made increases or decreases the Exercise Price immediately
      prior to the making of such adjustment by at least 1%.  Any
      adjustment representing a change of less than such minimum amount (except
      as aforesaid) shall be carried forward and made as soon as such
      adjustment, together with other adjustments required by Paragraph XII and
      not previously made, would result in such minimum
    adjustment.

            


    

     

    
      	
               
      

            	
              (iii)

            	
              Fractional
      Interests.  In computing adjustments under this Paragraph XII,
      fractional interests in Stock shall be taken into account to the nearest
      share.

            


    

     

    
      	
               
      

            	
              (iv)

            	
              Compliance
      with Governmental Requirements.  Before taking any action that
      would cause an adjustment reducing the Exercise Price below the then par
      value of any of the shares of Stock, the Company will take any corporate
      action that may be necessary in order that the Company may validly and
      legally issue fully paid and non-assessable shares of such Stock at such
      adjusted Exercise Price.

            


    

     

    (i)           Notice of
Adjustments.  Upon the occurrence of an adjustment pursuant to
Paragraph XII, the Company at its expense shall promptly:

     

    
      	
               
      

            	
              (i)

            	
              compute
      such adjustments in accordance with the terms hereof;
  and

            


    

     

    
      	
               
      

            	
              (ii)

            	
              after
      such adjustments become effective, deliver to all Holders notice in
      accordance with requirements under Paragraph XV(I) setting forth such
      adjustments (including the kind and amount of securities, cash or other
      property for which the Awards shall be exercisable and the Exercise Price)
      and showing in detail the facts upon which such adjustment is
      based.

            


    

     

    (j)           The
existence of the Plan, the Award Agreements and the Awards granted hereunder
shall not affect or restrict in any way the right or power of the Company, the
Board or the shareholders of the Company to make, declare, payor authorize any
adjustment, recapitalization, reorganization or other change in the Company’s
capital structure or its business, any merger or consolidation of the Company,
any issue of stock or of options, warrants or rights to purchase stock or of
bonds, debentures, preferred or prior preference stocks whose rights are
superior to or affect the Stock or the rights thereof or which are convertible
into or

     


    
      
         


      

      
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    exchangeable
for Stock, or any Property Dividend or the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of its assets or business,
or any other corporate act or proceeding, whether of a similar character or
otherwise.

     

    (k)           Except
as hereinbefore expressly provided in this Paragraph XII, the issuance by the
Company of shares of stock of any other class of Equity Interests or securities
convertible into shares of stock of any other class of Equity Interests, for
cash, property, labor or services, upon direct sale, upon the exercise of rights
or warrants to subscribe therefore, or upon conversion of shares or obligations
of the Company convertible into such shares or other securities, and in any case
whether or not for fair value, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number of shares of Stock subject to
Awards theretofore granted or the Exercise Price, if applicable.

     

    XIII.

     

    CHANGE IN
CONTROL

     

    (a)           Upon
the occurrence of a Change in Control, all outstanding Awards shall immediately
vest and become exercisable or satisfiable, as
applicable.  Notwithstanding the foregoing, the Board may also
determine, in its discretion, the following:  (i) except in the case
of Option Awards, that upon the occurrence of a Change in Control, each Award
shall terminate within a specified number of days after notice to the Holder,
and such Holder shall receive, with respect to each share of Stock subject to
such Award, cash in an amount equal to the excess, if any, of the Change in
Control Value over the Exercise Price, if any or (ii) in the case of Option
Awards, but only if a
Holder’s Option Agreement does not provide otherwise, the Board may act to
effect one or more of the following alternatives with respect to outstanding
Options, which may vary among individual Holders and which may vary among
Options held by any individual Holder:  (1) determine a limited period
of time for the exercise of such Options on or before a specified date (before
or after such Change in Control) after which specified date all unexercised
Options and all rights of Holders thereunder shall terminate, (2) require the
mandatory surrender to the Company by selected Holders of some or all of the
outstanding Options held by such Holders (irrespective of whether such Options
are then exercisable under the provisions of the Plan) as of a date, before or
after such Change in Control, specified by the Board, in which event the Board
shall thereupon cancel such Options and the Company shall pay to each Holder an
amount of cash per share equal to the excess, if any, of the Change in Control
Value of the shares subject to such Option over the Exercise Price(s) under such
Options for such shares, (3) make such adjustments to Options then outstanding
as the Board deems appropriate to reflect such Change in Control (provided, however, that the
Board may determine in its sole discretion that no adjustment is necessary to
Options then outstanding) or (4) provide that thereafter upon any exercise of an
Option theretofore granted the Holder shall be entitled to purchase under such
Option, in lieu of the number of shares of Stock then covered by such Option,
the number and class of Equity Interests or other securities or property
(including, without limitation, cash) to which the Holder would have been
entitled pursuant to the terms of the agreement of merger, consolidation or sale
of assets and dissolution if, immediately prior to such merger, consolidation or
sale of assets and dissolution the Holder had been the holder of record of the
number of shares of Stock then covered by such Option.  The provisions
contained in this subparagraph (a) shall be inapplicable to an Award granted
within six (6) months before the occurrence of a Change in

     


    
      
         


      

      
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    Control,
but only if (x) the Holder of such Award is subject to the reporting
requirements of Section 16(a) of the Exchange Act and (y) such provisions (even
after preapproval by the Board pursuant to Rule 16b-3) would create a matching
transaction under Section 16(b) of the Exchange Act with respect to such
Holder.  The provisions contained in this subparagraph (a) shall
not alter any rights or terminate any rights of the Holder to further payments
pursuant to any other agreement with the Company following a Change in
Control.  The Board may, in its sole discretion, include such further
provisions and limitation in any agreement documenting such Awards as it may
deem equitable and in the best interest of the Company.

     

    (b)           Any
adjustment provided for in subparagraph (a) above shall be subject to any
required stockholder action.

     

    XIV.

     

    AMENDMENT
AND TERMINATION OF THE PLAN

     

    (a)           The
Board in its discretion may terminate the Plan at any time with respect to any
shares for which Awards have not theretofore been granted.  Subject to
the limitations in the Plan, the Board shall have the right to alter or amend
the Plan or any part thereof from time to time; provided that no
change in any Award theretofore granted may be made which would impair the
rights of the Holder without the consent of the Holder (unless such change is
required in order to cause the benefits under the Plan to qualify as
performance-based compensation within the meaning of Section 162(m) and
applicable interpretive authority thereunder); and provided, further, that the
Board may not, without approval of the stockholders, amend the Plan
to:

     

    
      	
               
      

            	
              (i)

            	
              increase
      the maximum number of shares which may be issued on exercise or surrender
      of an Award, except as provided in Paragraph
  XII;

            


    

     

    
      	
               
      

            	
              (ii)

            	
              change
      the class of any Employee, officer or director eligible to receive Awards
      or materially increase the benefits accruing to any Employee, officer, or
      director under the Plan;

            


    

     

    
      	
               
      

            	
              (iii)

            	
              extend
      the maximum period during which Awards may be granted under the
      Plan;

            


    

     

    
      	
               
      

            	
              (iv)

            	
              modify
      materially the requirements as to eligibility for participation in the
      Plan; or

            


    

     

    
      	
               
      

            	
              (v)

            	
              decrease
      any authority granted to the Committee in contravention of Rule 16b-3 or
      Section 162(m).

            


    

     

    XV.

     

    MISCELLANEOUS

     

    (a)           Representations.  The
Board may require each Holder purchasing or acquiring shares pursuant to an
Award under the Plan to represent to and agree with the Company in

     


    
      
         


      

      
        23

        
          

        

      

      
         


      

    


    writing
that such Holder is acquiring the shares for investment and without a view to
distribution thereof.

     

    (b)           Forfeiture.  Notwithstanding
anything in the Plan to the contrary and unless otherwise specifically provided
in an Award Agreement, in the event a Holder or former Holder is terminated for
Cause, the Board may cancel any outstanding Award granted to such Holder or
former Holder, in whole or in part, whether or not vested.  Such
cancellation shall be effective as of the date specified by the
Board.  Except in the case of Performance Awards granted under
Paragraph X and as provided in Paragraph XIII, each Award shall be forfeited and
cancelled upon a termination of the Holder’s Continuous Service for any reason,
to the extent that such Award has not become vested (for prior Continuous
Service) in 20% installments on each anniversary of the Award’s grant date, and
any vested Award shall cease to be exercisable (if applicable) no later than the
first anniversary of the Holder’s termination of Continuous Service for any
reason.

     

    (c)           No Right to an
Award.  Neither the adoption of the Plan by the Company nor any
action of the Board shall be deemed to give an Employee, officer or director any
right to be granted an Award to purchase Stock, a right to a Stock Appreciation
Right, a Restricted Stock Award, a Performance Award or a Phantom Stock Award or
any of the rights hereunder except as may be evidenced by an Award or by an
Option Agreement, Stock Appreciation Rights Agreement, Restricted Stock
Agreement, Performance Award Agreement or Phantom Stock Award Agreement on
behalf of the Company, and then only to the extent and on the terms and
conditions expressly set forth therein.

     

    (d)           No Employment or Service
Rights Conferred.  Nothing contained in the Plan shall (i)
confer upon any Employee, officer or director any right with respect to
continuation of employment or service with the Company or (ii) interfere in any
way with the right of the Company to terminate his or her employment or service
at any time, with or without cause.

     

    (e)           Other
Laws.  The Company shall not be obligated to issue any shares
of Stock pursuant to any Award granted under the Plan at any time when the
shares covered by such Award have not been registered under the Securities Act
of 1933 and such other state and federal laws, rules or regulations as the Board
deems applicable and, in the opinion of legal counsel for the Company, there is
no exemption from the registration requirements of such laws, rules or
regulations available for the issuance and sale of such shares.  No
fractional shares of Stock shall be delivered, nor shall any cash in lieu of
fractional shares be paid.

     

    (f)           Withholding.  The
Company shall have the right to deduct in connection with all Awards any taxes
required by law to be withheld and to require any payments required to enable it
to satisfy its withholding obligations.  Upon (i) disposition of
shares of Stock acquired pursuant to the exercise of an Incentive Stock Option
granted pursuant to the Plan within two (2) years of the grant of the Incentive
Stock Option or within one (1) year after exercise of the Incentive Stock
Option, or (ii) exercise of a Nonqualified Stock Option (or an Incentive Stock
Option treated as a Nonqualified Stock Option), or the vesting or payment of any
other Award under the Plan, or (iii) under any other circumstances determined by
the Board in its sole discretion, the Company shall have the right to require
any Holder, and such Holder by accepting the Awards granted under the Plan
agrees, to pay to the Company the amount of any taxes which

     


    
      
         


      

      
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    the
Company shall be required to withhold with respect thereto.  In the
event of clauses (i), (ii) or (iii), with the consent of the Board, at its sole
discretion, such Holder may elect to have the Company withhold shares of Stock
having a Fair Market Value equal to the amount of the withholding tax obligation
as determined by the Company; provided, however, that no
shares of Stock are withheld with a value exceeding the minimum amount of tax
required to be withheld by law.  Such shares so delivered to satisfy
the minimum withholding obligation may be either shares withheld by the Company
upon the exercise of the Option or other shares.  At the Board’s sole
discretion, a Holder may elect to have additional taxes withheld and satisfy
such withholding with cash or shares of Stock held for at least six (6) months
prior to exercise if, in the opinion of the Company’s outside accountants, doing
so would not result in a charge against earnings.

     

    (g)           No Restriction on Corporate
Action.  Nothing contained in the Plan shall be construed to
prevent the Company from taking any corporate action which is deemed by the
Company to be appropriate or in its best interest, whether or not such action
would have an adverse effect on the Plan or any Award made under the
Plan.  No Employee, officer or director beneficiary or other person
shall have any claim against the Company as a result of any such
action.

     

    (h)           Restrictions on
Transfer.  An Award shall not be transferable otherwise than by
will or the laws of descent and distribution or pursuant to a “qualified
domestic relations order” as defined by the Code or Title I of the Employee
Retirement Income Security Act of 1974, as amended, or the rules thereunder, and
shall be exercisable during the Holder’s lifetime only by such Holder or the
Holder’s guardian or legal representative.  Except as otherwise
provided herein, no Award or interest or right therein or part thereof shall be
liable for the debts, contracts, or engagements of the Holder or his or her
successors in interest or shall be subject to the disposition by transfer,
alienation, anticipation, pledge, encumbrances, assignment or any other means
whether such disposition be voluntary or involuntary or by operation of law,
judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect.  However, the Board may, in its
discretion, provide in an Option Agreement (other than with respect to an
Incentive Stock Option) that the Option right granted to the individual may be
transferred (in whole or in part and shall be subject to such terms and
conditions as the Board may impose thereon, including, without limitation, the
approval by the Company of the form of transfer agreement) by the individual to
(i) the spouse, children, grandchildren and/or the direct descendents of the
individual (“Immediate Family Members”), (ii) a partnership in which such
Immediate Family Members and, if applicable, the individual are the only
partners, or (iii) any other person or entity otherwise permitted by the
Board.  Following transfer, any such transferred Option rights shall
continue to be subject to the same terms and conditions as were applicable to
the Option rights immediately prior to transfer; provided, however, that no
transferred Option rights shall be exercisable unless arrangements satisfactory
to the Company have been made to satisfy any tax withholding obligations the
Company may have with respect to the Option rights.

     

    (i)           Rule
16b-3.  It is intended that any grant of an Award (and
subsequent transactions contemplated thereby) made to a person subject to
Section 16 of the Exchange Act meet all of the requirements of Rule 16b-3 and
that the Plan conform to the extent necessary with all provisions of the
Securities Act of 1933, as amended and the Exchange Act and any and
all

     


    
      
         


      

      
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    regulations
and rules promulgated by the SEC, to the extent the Company or any Holder is
subject to the provisions thereof.  Notwithstanding anything herein to
the contrary, the Plan shall be administered and Awards shall be granted and may
be exercised, only in such a manner as to conform to such laws, rules and
regulations.  If this Plan or any such Award does not comply with Rule
16b-3, or any other laws, rules and regulations, then to the extent permitted by
law, the Plan and such Award shall be construed or deemed amended to the extent
necessary to comply with Rule 16b-3 or such other laws, rules and
regulations.

     

    (j)           Section
162(m).  If the Plan is subject to Section 162(m), it is
intended that the Plan comply fully with and meet all the requirements of
Section 162(m) so that Options, Stock Appreciation Rights and Performance Awards
hereunder shall constitute “performance-based” compensation within the meaning
of Section 162(m).  If any provision of the Plan would disqualify the
Plan or would not otherwise permit the Plan to comply with Section 162(m) as so
intended, such provision shall be construed or deemed amended to conform to the
requirements or provisions of Section 162(m); provided, however, that no such
construction or amendment shall have an adverse effect on the economic value to
a Holder of any Award previously granted hereunder.  The Board may,
without stockholder or grantee approval (unless otherwise required under
applicable law to be effective), amend the Plan or the relevant Award agreement
retroactively or prospectively to the extent it determines necessary in order to
comply with any subsequent clarification of Section 162(m) required to preserve
the Company’s Federal income tax deduction for compensation paid pursuant to any
such Award, and no such amendment will be made if such amendment would
disqualify any Options, Stock Appreciation Rights or Performance Awards as
“performance based compensation” under Section 162(m).

     

    (k)           Unfunded
Status.  The Plan is intended to constitute an “unfunded plan”
for incentive compensation and nothing contained in the Plan shall give any
Holder any rights that are greater than those of a general unsecured creditor of
the Company.  The Company shall not be required to establish any
special or separate fund or to make any other segregation of funds or assets to
assure the payment of any Award.

     

    (l)           Governing
Law.  This Plan shall be construed in accordance with the laws
of the State of Delaware.

     

    (m)           Notice to
Holders.  To the extent that the Plan requires the Company to
give notice to any Holder, such notice shall be sufficiently given (unless
otherwise expressly provided), if in writing and mailed, first class postage
prepaid, to each Holder affected by such event, at his most current address as
it appears on record with the Company, no later than the latest date, and no
earlier than the earliest date, prescribed for giving such notice under the
Plan.  Where the Plan provide for notice in any manner, such notice
may be waived in writing by either party entitled to receive such notice either
before, or after the event and such waiver shall be the equivalent of such
notice.

     

    (n)           Section 409A.
Notwithstanding anything in this Plan to the contrary, if any Plan provision or
Award under the Plan, or any deferral permitted under the Plan, would result in
the imposition of an applicable tax under Section 409A of the Code and related
regulations and United States Department of Treasury pronouncements (“Section
409A”), that Plan provision or Award will be reformed, and that deferral
provision will be structured, to avoid imposition of the

     


    
      
         


      

      
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    applicable
tax and no action taken to comply with Section 409A shall be deemed to adversely
affect the Holder’s rights to an Award.

     

    IN WITNESS WHEREOF, the Company has
caused this Plan to be executed on this 23rd day of March, 2006.

     

    TEXAS PETROCHEMICALS INC.

     

    


     

    By:           /s/
Charles W. Shaver

    Charles W. Shaver

    Title:       Chief
Executive Officer/President

     

    



    
      
         


      

      
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