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                                                                   Exhibit 10.67


                       THE 1999 EQUITY PARTICIPATION PLAN

                                       OF

                                  LIBBEY INC.

     Libbey Inc., a Delaware corporation, has adopted The 1999 Equity
Participation Plan of Libbey Inc. (the "Plan"), effective May 6, 1999, for the
benefit of its eligible employees.

     The purposes of the Plan are as follows:

          (1) To provide an additional incentive for key Employees (as such
     terms are defined below) to further the growth, development and financial
     success of the Company by personally benefiting through the ownership of
     Company stock and/or rights which recognize such growth, development and
     financial success.

          (2) To enable the Company to obtain and retain the services of key
     Employees considered essential to the long range success of the Company by
     offering them an opportunity to own stock in the Company and/or rights
     which will reflect the growth, development and financial success of the
     Company.

                                   ARTICLE I.

                                  DEFINITIONS

     1.1. General. Wherever the following terms are used in the Plan they shall
have the meanings specified below, unless the context clearly indicates
otherwise.

     1.2. Administrator. "Administrator" shall mean the Committee unless the
Board has assumed the authority for administration of the Plan generally as
provided in Section 10.1.

     1.3. Award. "Award" shall mean an Option, a Restricted Stock award, a
Performance Award, a Dividend Equivalents award, a Deferred Stock award, a Stock
Payment award or a Stock Appreciation Right which may be awarded or granted
under the Plan (collectively, "Awards").

     1.4. Award Agreement. "Award Agreement" shall mean a written agreement
executed by an authorized officer of the Company and the Holder which shall
contain such terms and conditions with respect to an Award as the Administrator
shall determine, consistent with the Plan.

     1.5. Award Limit. "Award Limit" shall mean Seventy Five Thousand (75,000)
shares of Common Stock, as adjusted pursuant to Section 11.3 of the Plan.

     1.6. Board. "Board" shall mean the Board of Directors of the Company.

     1.7. Change in Control.

     (a) any Person (as defined below) is or becomes the Beneficial Owner (as
defined below), directly or indirectly, of securities of the Company
representing twenty percent (20%) or more of the combined voting power of the
Company's then outstanding securities. For purposes of this Agreement, (A) the
term "Person" is used as such term is used in Sections 13(d) and 14(d) of the
Exchange Act; provided, however, that the term shall not include the Company,
any trustee or other fiduciary holding securities under an employee benefit plan
of the Company, and any corporation owned, directly or indirectly, by the
shareholders of the Company, in substantially the same proportions as their
ownership of stock of the Company, and (B) the term "Beneficial Owner" shall
have the meaning given to such term in Rule 13d-3 under the Exchange Act; and
provided, further, that this subsection (a) shall not apply to any Person who is
the Beneficial Owner, directly or indirectly, of securities of the Company
representing twenty percent (20%) or more of the combined voting power of the
Company's then outstanding securities as of the effective date of this Plan so
long
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as such Person does not beneficially own, or increase such beneficial ownership
to, twenty-five percent (25%) or more of the combined voting power of the
Company's then outstanding securities;

     (b) during any period of two (2) consecutive years (not including any
period prior to the execution of this Agreement), individuals who at the
beginning of such period constitute the Board, and any new director (other than
a director designated by a person who has entered into an agreement with the
Company to effect a transaction described in Sections 2(a), (c) or (d)) whose
election by the Board or nomination for election by the Company's shareholders
was approved by a vote of at least two-thirds (2/3) of the directors then still
in office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved (hereinafter
referred to as "Continuing Directors"), cease for any reason to constitute at
least a majority thereof;

     (c) the shareholders of the Company approve a merger or consolidation of
the Company with any other corporation (or other entity), other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 66 2/3% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation;

     (d) the shareholders of the Company approve a plan of complete liquidation
of the Company or an agreement for the sale or disposition by the Company of all
or substantially all of the Company's assets; or

     (e) any Person is or becomes the Beneficial Owner, directly or indirectly,
of securities of the Company representing ten percent (10%) or more of the
combined voting power of the Company's then outstanding securities (a "10%
Owner") and (A) the identity of the Chief Executive Officer of the Company is
changed during the period beginning sixty (60) days before the attainment of the
ten percent (10%) beneficial ownership and ending two (2) years thereafter, or
(B) individuals constituting at least one-third (1/3) of the members of the
Board at the beginning of such period shall cease for any reason to serve on the
Board during the period beginning sixty (60) days before the attainment of the
ten percent (10%) beneficial ownership and ending two (2) years thereafter;
provided, however, that this subsection (e) shall not apply to any Person who is
a 10% Owner as of the effective date of this Plan so long as such Person does
not increase such beneficial ownership by five percent (5%) or more over the
percentage so owned by such Person as of the effective date of the Plan.

     1.8 Code. "Code" shall mean the Internal Revenue Code of 1986, as amended.

     1.9 Committee. "Committee" shall mean the Compensation Committee of the
Board, or another committee or subcommittee of the Board, appointed as provided
in Section 10.1.

     1.10. Common Stock. "Common Stock" shall mean the common stock of the
Company, par value $.01 per share, and any equity security of the Company issued
or authorized to be issued in the future, but excluding any preferred stock and
any warrants, options or other rights to purchase Common Stock.

     1.11. Company. "Company" shall mean Libbey Inc., a Delaware corporation.

     1.12. Deferred Stock. "Deferred Stock" shall mean Common Stock awarded
under Article VIII of the Plan.

     1.13. Dividend Equivalent. "Dividend Equivalent" shall mean a right to
receive the equivalent value (in cash or Common Stock) of dividends paid on
Common Stock, awarded under Article VIII of the Plan.

     1.14. DRO. "DRO" shall mean a 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.

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     1.15. Employee. "Employee" shall mean any officer or other employee (as
defined in accordance with Section 3401(c) of the Code) of the Company, or of
any corporation which is a Subsidiary.

     1.16. Exchange Act. "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.

     1.17. Fair Market Value. "Fair Market Value" of a share of Common Stock as
of a given date shall be (a) the closing price of a share of Common Stock on the
principal exchange on which shares of Common Stock are then trading, if any (or
as reported on any composite index which includes such principal exchange), on
the trading day previous to such date, or if shares were not traded on the
trading day previous to such date, then on the next preceding date on which a
trade occurred, or (b) if Common Stock is not traded on an exchange but is
quoted on NASDAQ or a successor quotation system, the mean between the closing
representative bid and asked prices for the Common Stock on the trading day
previous to such date as reported by NASDAQ or such successor quotation system;
or (c) if Common Stock is not publicly traded on an exchange and not quoted on
NASDAQ or a successor quotation system, the Fair Market Value of a share of
Common Stock as established by the Administrator acting in good faith.

     1.18. Holder. "Holder" shall mean a person who has been granted or awarded
an Award.

     1.19. Incentive Stock Option. "Incentive Stock Option" shall mean an option
which conforms to the applicable provisions of Section 422 of the Code and which
is designated as an Incentive Stock Option by the Administrator.

     1.20. Non-Qualified Stock Option. "Non-Qualified Stock Option" shall mean
an Option which is not designated as an Incentive Stock Option by the
Administrator.

     1.21. Option. "Option" shall mean a stock option granted under Article IV
of the Plan. An Option granted under the Plan shall, as determined by the
Administrator, be either a Non-Qualified Stock Option or an Incentive Stock
Option.

     1.22. Performance Award. "Performance Award" shall mean a cash bonus, stock
bonus or other performance or incentive award that is paid in cash, Common Stock
or a combination of both, awarded under Article VIII of the Plan.

     1.23. Performance Criteria. "Performance Criteria" shall mean the following
business criteria with respect to the Company, any Subsidiary or any division or
operating unit: (a) net income, (b) pre-tax income, (c) operating income, (d)
cash flow, (e) earnings per share, (f) return on equity, (g) return on invested
capital or assets, (h) cost reductions or savings, (i) funds from operations,
(j) appreciation in the fair market value of Common Stock, (k) earnings before
any one or more of the following items: interest, taxes, depreciation or
amortization, (l) performance against operating budget goals, and (m) economic
value added.

     1.24. Plan. "Plan" shall mean The 1999 Equity Participation Plan of Libbey
Inc.

     1.25. Restricted Stock. "Restricted Stock" shall mean Common Stock awarded
under Article VII of the Plan.

     1.26. Rule 16b-3. "Rule 16b-3" shall mean that certain Rule 16b-3 under the
Exchange Act, as such Rule may be amended from time to time.

     1.27. Section 162(m) Participant. "Section 162(m) Participant" shall mean
any key Employee designated by the Administrator as a key Employee whose
compensation for the fiscal year in which the key Employee is so designated or a
future fiscal year may be subject to the limit on deductible compensation
imposed by Section 162(m) of the Code.

     1.28. Securities Act. "Securities Act" shall mean the Securities Act of
1933, as amended.


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     1.29. Stock Appreciation Right. "Stock Appreciation Right" shall mean a
stock appreciation right granted under Article IX of the Plan.

     1.30. Stock Payment. "Stock Payment" shall mean (a) a payment in the form
of shares of Common Stock, or (b) an option or other right to purchase shares of
Common Stock, as part of a deferred compensation arrangement, made in lieu of
all or any portion of the compensation, including without limitation, salary,
bonuses and commissions, that would otherwise become payable to a key Employee
in cash, awarded under Article VIII of the Plan.

     1.31. Subsidiary. "Subsidiary" shall mean any corporation in an unbroken
chain of corporations beginning with the Company if each of the corporations
other than the last corporation in the unbroken chain then owns stock possessing
fifty percent (50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.

     1.32. Substitute Award. "Substitute Award" shall mean an Option granted
under this Plan upon the assumption of, or in substitution for, outstanding
equity awards previously granted by a company or other entity in connection with
a corporate transaction, such as a merger, combination, consolidation or
acquisition of property or stock; provided, however, that in no event shall the
term "Substitute Award" be construed to refer to an award made in connection
with the cancellation and repricing of an Option.

     1.33. Termination of Employment. "Termination of Employment" shall mean the
time when the employee-employer relationship between a Holder and the Company or
any Subsidiary is terminated for any reason, with or without cause, including,
but not by way of limitation, a termination by resignation, discharge, death,
disability or retirement; but excluding (a) terminations where there is a
simultaneous reemployment or continuing employment of a Holder by the Company or
any Subsidiary, (b) at the discretion of the Administrator, terminations which
result in a temporary severance of the employee-employer relationship, and (c)
at the discretion of the Administrator, terminations which are followed by the
simultaneous establishment of a consulting relationship by the Company or a
Subsidiary with the former employee. The Administrator, in its absolute
discretion, shall determine the effect of all matters and questions relating to
Termination of Employment, including, but not by way of limitation, the question
of whether a Termination of Employment resulted from a discharge for good cause,
and all questions of whether a particular leave of absence constitutes a
Termination of Employment; provided, however, that, with respect to Incentive
Stock Options, unless otherwise determined by the Administrator in its
discretion, a leave of absence, change in status from an employee to an
independent contractor or other change in the employee-employer relationship
shall constitute a Termination of Employment if, and to the extent that, such
leave of absence, change in status or other change interrupts employment for the
purposes of Section 422(a)(2) of the Code and the then applicable regulations
and revenue rulings under said Section.

                                  ARTICLE II.

                             SHARES SUBJECT TO PLAN

     2.1. Shares Subject to Plan.

          (a) The shares of stock subject to Awards shall be Common Stock,
     initially shares of the Company's Common Stock, par value $.01 per share.
     The aggregate number of such shares which may be issued upon exercise of
     such Options or rights or upon any such awards under the Plan shall not
     exceed One Million (1,000,000), of which no more than One Hundred Thousand
     (100,000) shares may be issued as Restricted Stock, Performance Awards or
     Deferred Stock or any combination thereof. The shares of Common Stock
     issuable upon exercise of such Options or rights or upon any such awards
     may be either previously authorized but unissued shares or treasury shares.

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          (b) The maximum number of shares which may be subject to Awards,
     granted under the Plan to any individual in any fiscal year shall not
     exceed the Award Limit. To the extent required by Section 162(m) of the
     Code, shares subject to Options which are canceled continue to be counted
     against the Award Limit.

     2.2 Add-back of Options and Other Rights. If any Option, or other right to
acquire shares of Common Stock under any other Award under the Plan, expires or
is canceled without having been fully exercised, or is exercised in whole or in
part for cash as permitted by the Plan, the number of shares subject to such
Option or other right but as to which such Option or other right was not
exercised prior to its expiration, cancellation or exercise may again be
optioned, granted or awarded hereunder, subject to the limitations of Section
2.1. Furthermore, any shares subject to Awards which are adjusted pursuant to
Section 11.3 and become exercisable with respect to shares of stock of another
corporation shall be considered canceled and may again be optioned, granted or
awarded hereunder, subject to the limitations of Section 2.1. Shares of Common
Stock which are delivered by the Holder or withheld by the Company upon the
exercise of any Award under the Plan, in payment of the exercise price thereof
or tax withholding thereon, may again be optioned, granted or awarded hereunder,
subject to the limitations of Section 2.1. If any shares of Restricted Stock are
surrendered by the Holder or repurchased by the Company pursuant to Section 7.4
or 7.5 hereof, such shares may again be optioned, granted or awarded hereunder,
subject to the limitations of Section 2.1. Notwithstanding the provisions of
this Section 2.2, no shares of Common Stock may again be optioned, granted or
awarded if such action would cause an Incentive Stock Option to fail to qualify
as an incentive stock option under Section 422 of the Code.

                                  ARTICLE III.

                               GRANTING OF AWARDS

     3.1. Award Agreement. Each Award shall be evidenced by an Award Agreement.
Award Agreements evidencing Awards intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code shall contain such
terms and conditions as may be necessary to meet the applicable provisions of
Section 162(m) of the Code. Award Agreements evidencing Incentive Stock Options
shall contain such terms and conditions as may be necessary to meet the
applicable provisions of Section 422 of the Code.

     3.2. Provisions Applicable to Section 162(m) Participants.

          (a) The Committee, in its discretion, may determine whether an Award
     is to qualify as performance-based compensation as described in Section
     162(m)(4)(C) of the Code.

          (b) Notwithstanding anything in the Plan to the contrary, the
     Committee may grant any Award to a Section 162(m) Participant, including
     Restricted Stock, the restrictions with respect to which lapse upon the
     attainment of performance goals which are related to one or more of the
     Performance Criteria and any performance or incentive award described in
     Article VIII that vests or becomes exercisable or payable upon the
     attainment of performance goals which are related to one or more of the
     Performance Criteria.

          (c) To the extent necessary to comply with the performance-based
     compensation requirements of Section 162(m)(4)(C) of the Code, with respect
     to any Award granted under Articles VII and VIII which may be granted to
     one or more Section 162(m) Participants, no later than ninety (90) days
     following the commencement of any fiscal year in question or any other
     designated fiscal period or period of service (or such other time as may be
     required or permitted by Section 162(m) of the Code), the Committee shall,
     in writing, (i) designate one or more Section 162(m) Participants, (ii)
     select the Performance Criteria applicable to the fiscal year or other
     designated fiscal period or period of service, (iii) establish the various
     performance targets, in terms of an objective formula or standard, and
     amounts of such Awards, as applicable, which may be earned for such fiscal
     year or other designated fiscal period or period of service and
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     (iv) specify the relationship between Performance Criteria and the
     performance targets and the amounts of such Awards, as applicable, to be
     earned by each Section 162(m) Participant for such fiscal year or other
     designated fiscal period or period of service. Following the completion of
     each fiscal year or other designated fiscal period or period of service,
     the Committee shall certify in writing whether the applicable performance
     targets have been achieved for such fiscal year or other designated fiscal
     period or period of service. In determining the amount earned by a Section
     162(m) Participant, the Committee shall have the right to reduce (but not
     to increase) the amount payable at a given level of performance to take
     into account additional factors that the Committee may deem relevant to the
     assessment of individual or corporate performance for the fiscal year or
     other designated fiscal period or period of service.

          (d) Furthermore, notwithstanding any other provision of the Plan any
     Award which is granted to a Section 162(m) Participant and is intended to
     qualify as performance-based compensation as described in Section
     162(m)(4)(C) of the Code shall be subject to any additional limitations set
     forth in Section 162(m) of the Code (including any amendment to Section
     162(m) of the Code) or any regulations or rulings issued thereunder that
     are requirements for qualification as performance-based compensation as
     described in Section 162(m)(4)(C) of the Code, and the Plan shall be deemed
     amended to the extent necessary to conform to such requirements.

     3.3. Limitations Applicable to Section 16 Persons.

     Notwithstanding any other provision of the Plan, the Plan, and any Award
granted or awarded to any individual who is then subject to Section 16 of the
Exchange Act, shall be subject to any additional limitations set forth in any
applicable exemptive rule under Section 16 of the Exchange Act (including any
amendment to Rule 16b-3 of the Exchange Act) that are requirements for the
application of such exemptive rule. To the extent permitted by applicable law,
the Plan and Awards granted or awarded hereunder shall be deemed amended to the
extent necessary to conform to such applicable exemptive rule.

     3.4. Consideration. In consideration of the granting of an Award under the
Plan, the Holder shall agree, in the Award Agreement, to remain in the employ of
(or, as applicable, to consult for) the Company or any Subsidiary for a period
of at least one year (or such shorter period as may be fixed in the Award
Agreement or by action of the Administrator following grant of the Award) after
the Award is granted.

     3.5. At-Will Employment. Nothing in the Plan or in any Award Agreement
hereunder shall confer upon any Holder any right to continue in the employ of
the Company or any Subsidiary, or shall interfere with or restrict in any way
the rights of the Company and any Subsidiary, which are hereby expressly
reserved, to discharge any Holder at any time for any reason whatsoever, with or
without cause, except to the extent expressly provided otherwise in a written
employment agreement between the Holder and the Company and any Subsidiary.

                                  ARTICLE IV.

                              GRANTING OF OPTIONS

     4.1. Eligibility. Any Employee selected by the Committee pursuant to
Section 4.4(a)(i) shall be eligible to be granted an Option.

     4.2. Disqualification for Stock Ownership. No person may be granted an
Incentive Stock Option under the Plan if such person, at the time the Incentive
Stock Option is granted, owns stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company or any
then existing Subsidiary or parent corporation (within the meaning of Section
422 of the Code) unless such Incentive Stock Option conforms to the applicable
provisions of Section 422 of the Code.

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     4.3. Qualification of Incentive Stock Options. No Incentive Stock Option
shall be granted to any person who is not an Employee.

     4.4. Granting of Options.

          (a) The Committee shall from time to time, in its absolute discretion,
     and subject to applicable limitations of the Plan:

             (i) Determine which Employees are key Employees and select from
        among them (including Employees who have previously received Awards
        under the Plan) those who in its opinion should be granted Options;

             (ii) Subject to the Award Limit, determine the number of shares to
        be subject to such Options granted to the selected key Employees;

             (iii) Subject to Section 4.3, determine whether such Options are to
        be Incentive Stock Options or Non-Qualified Stock Options and whether
        such Options are to qualify as performance-based compensation as
        described in Section 162(m)(4)(C) of the Code; and

             (iv) Determine the terms and conditions of such Options, consistent
        with the Plan; provided, however, that the terms and conditions of
        Options intended to qualify as performance-based compensation as
        described in Section 162(m)(4)(C) of the Code shall include, but not be
        limited to, such terms and conditions as may be necessary to meet the
        applicable provisions of Section 162(m) of the Code.

          (b) Upon the selection of a key Employee to be granted an Option, the
     Committee shall instruct the Secretary of the Company to issue the Option
     and may impose such conditions on the grant of the Option as it deems
     appropriate.

          (c) Any Incentive Stock Option granted under the Plan may be modified
     by the Committee, with the consent of the Holder, to disqualify such Option
     from treatment as an "incentive stock option" under Section 422 of the
     Code.

     4.5. Options in Lieu of Cash Compensation. Options may be granted under the
Plan to Employees in lieu of cash bonuses which would otherwise be payable to
such Employees, pursuant to such policies which may be adopted by the
Administrator from time to time.

                                   ARTICLE V.

                                TERMS OF OPTIONS

     5.1. Option Price. The price per share of the shares subject to each Option
shall not be less than one hundred percent (100%) of the Fair Market Value of a
share of Common Stock on the date the Option is granted and in the case of
Incentive Stock Options granted to an individual then owning (within the meaning
of Section 424(d) of the Code) more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or any Subsidiary or parent
corporation thereof (within the meaning of Section 422 of the Code), such price
shall not be less than one hundred ten percent (110%) of the Fair Market Value
of a share of Common Stock on the date the Option is granted (or the date the
Option is modified, extended or renewed for purposes of Section 424(h) of the
Code).

     5.2. Option Term. The maximum term of each Non-Qualified Stock Option shall
be ten (10) years and one (1) day from the date the Non-Qualified Stock Option
is granted. The maximum term of each Incentive Stock Option shall be ten (10)
years from the date the Incentive Stock Option is granted, or five (5) years
from the date the Incentive Stock Option is granted if the Incentive Stock
Option is granted to an individual then owning (within the meaning of Section
424(d) of the Code) more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or any Subsidiary or parent
corporation thereof (within the meaning of Section 422 of the

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Code). Except as limited by requirements of Section 422 of the Code and
regulations and rulings thereunder applicable to Incentive Stock Options, the
Committee may extend the term of any outstanding Option in connection with any
Termination of Employment of the Holder, or amend any other term or condition of
such Option relating to such a termination.

     5.3. Option Vesting

          (a) The period during which the right to exercise, in whole or in
     part, an Option granted to an Employee vests in the Holder shall be set by
     the Committee and the Committee may determine that an Option may not be
     exercised in whole or in part for a specified period after it is granted;
     provided, however, that, unless the Committee otherwise provides in the
     terms of the Award Agreement or otherwise, no Option shall be exercisable
     by any Holder who is then subject to Section 16 of the Exchange Act within
     the period ending six months and one day after the date the Option is
     granted. At any time after grant of an Option, the Committee may, in its
     sole and absolute discretion and subject to whatever terms and conditions
     it selects, accelerate the period during which an Option granted to an
     Employee vests.

          (b) No portion of an Option which is unexercisable at Termination of
     Employment shall thereafter become exercisable, except as may be otherwise
     provided by the Committee either in the Award Agreement or by action of the
     Committee following the grant of the Option.

          (c) To the extent that the aggregate Fair Market Value of stock with
     respect to which "incentive stock options" (within the meaning of Section
     422 of the Code, but without regard to Section 422(d) of the Code) are
     exercisable for the first time by a Holder during any calendar year (under
     the Plan and all other incentive stock option plans of the Company and any
     parent or subsidiary corporation, within the meaning of Section 422 of the
     Code) of the Company, exceeds $100,000, such Options shall be treated as
     Non-Qualified Options to the extent required by Section 422 of the Code.
     The rule set forth in the preceding sentence shall be applied by taking
     Options into account in the order in which they were granted. For purposes
     of this Section 5.3(c), the Fair Market Value of stock shall be determined
     as of the time the Option with respect to such stock is granted.

     5.5. Substitute Awards.

     Notwithstanding the foregoing provisions of this Article V to the contrary,
in the case of an Option that is a Substitute Award, the price per share of the
shares subject to such Option may be less than the Fair Market Value per share
on the date of grant, provided, that the excess of:

          (a) the aggregate Fair Market Value (as of the date such Substitute
     Award is granted) of the shares subject to the Substitute Award; over

          (b) the aggregate exercise price thereof; does not exceed the excess
     of;

          (c) the aggregate fair market value (as of the time immediately
     preceding the transaction giving rise to the Substitute Award, such fair
     market value to be determined by the Committee) of the shares of the
     predecessor entity that were subject to the grant assumed or substituted
     for by the Company; over

          (d) the aggregate exercise price of such shares.

                                  ARTICLE VI.

                              EXERCISE OF OPTIONS

     6.1. Partial Exercise. An exercisable Option may be exercised in whole or
in part. However, an Option shall not be exercisable with respect to fractional
shares and the Administrator may require that, by the terms of the Option, a
partial exercise be with respect to a minimum number of shares.

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     6.2. Manner of Exercise. All or a portion of an exercisable Option shall be
deemed exercised upon delivery of all of the following to the Secretary of the
Company or his office:

          (a) A written notice complying with the applicable rules established
     by the Administrator stating that the Option, or a portion thereof, is
     exercised. The notice shall be signed by the Holder or other person then
     entitled to exercise the Option or such portion of the Option;

          (b) Such representations and documents as the Administrator, in its
     absolute discretion, deems necessary or advisable to effect compliance with
     all applicable provisions of the Securities Act and any other federal or
     state securities laws or regulations. The Administrator may, in its
     absolute discretion, also take whatever additional actions it deems
     appropriate to effect such compliance including, without limitation,
     placing legends on share certificates and issuing stop-transfer notices to
     agents and registrars;

          (c) In the event that the Option shall be exercised pursuant to
     Section 11.1 by any person or persons other than the Holder, appropriate
     proof of the right of such person or persons to exercise the Option; and

          (d) Full cash payment to the Secretary of the Company for the shares
     with respect to which the Option, or portion thereof, is exercised.
     However, the Administrator, may in its discretion (i) allow a delay in
     payment up to thirty (30) days from the date the Option, or portion
     thereof, is exercised; (ii) allow payment, in whole or in part, through the
     delivery of shares of Common Stock which have been owned by the Holder for
     at least six months, duly endorsed for transfer to the Company with a Fair
     Market Value on the date of delivery equal to the aggregate exercise price
     of the Option or exercised portion thereof; (iii) allow payment, in whole
     or in part, through the surrender of shares of Common Stock then issuable
     upon exercise of the Option having a Fair Market Value on the date of
     Option exercise equal to the aggregate exercise price of the Option or
     exercised portion thereof; (iv) allow payment, in whole or in part, through
     the delivery of property of any kind which constitutes good and valuable
     consideration; (v) allow payment, in whole or in part, through the delivery
     of a full recourse promissory note bearing interest (at no less than such
     rate as shall then preclude the imputation of interest under the Code) and
     payable upon such terms as may be prescribed by the Administrator; (vi)
     allow payment, in whole or in part, through the delivery of a notice that
     the Holder has placed a market sell order with a broker with respect to
     shares of Common Stock then issuable upon exercise of the Option, and that
     the broker has been directed to pay a sufficient portion of the net
     proceeds of the sale to the Company in satisfaction of the Option exercise
     price, provided that payment of such proceeds is then made to the Company
     upon settlement of such sale; or (vii) allow payment through any
     combination of the consideration provided in the foregoing subparagraphs
     (ii), (iii), (iv), (v) and (vi). In the case of a promissory note, the
     Administrator may also prescribe the form of such note and the security to
     be given for such note. The Option may not be exercised, however, by
     delivery of a promissory note or by a loan from the Company when or where
     such loan or other extension of credit is prohibited by law.

     6.3. Conditions to Issuance of Stock Certificates. The Company shall not be
required to issue or deliver any certificate or certificates for shares of stock
purchased upon the exercise of any Option or portion thereof prior to
fulfillment of all of the following conditions:

          (a) The admission of such shares to listing on all stock exchanges on
     which such class of stock is then listed;

          (b) The completion of any registration or other qualification of such
     shares under any state or federal law, or under the rulings or regulations
     of the Securities and Exchange Commission or any other governmental
     regulatory body which the Administrator shall, in its absolute discretion,
     deem necessary or advisable;

<PAGE>   10

          (c) The obtaining of any approval or other clearance from any state or
     federal governmental agency which the Administrator shall, in its absolute
     discretion, determine to be necessary or advisable;

          (d) The lapse of such reasonable period of time following the exercise
     of the Option as the Administrator may establish from time to time for
     reasons of administrative convenience; and

          (e) The receipt by the Company of full payment for such shares,
     including payment of any applicable withholding tax, which in the
     discretion of the Administrator may be in the form of consideration used by
     the Holder to pay for such shares under Section 6.2(d).

     6.4. Rights as Stockholders. Holders shall not be, nor have any of the
rights or privileges of, stockholders of the Company in respect of any shares
purchasable upon the exercise of any part of an Option unless and until
certificates representing such shares have been issued by the Company to such
Holders.

     6.5. Ownership and Transfer Restrictions. The Administrator, in its
absolute discretion, may impose such restrictions on the ownership and
transferability of the shares purchasable upon the exercise of an Option as it
deems appropriate. Any such restriction shall be set forth in the respective
Award Agreement and may be referred to on the certificates evidencing such
shares. The Holder shall give the Company prompt notice of any disposition of
shares of Common Stock acquired by exercise of an Incentive Stock Option within
(a) two years from the date of granting (including the date the Option is
modified, extended or renewed for purposes of Section 424(h) of the Code) such
Option to such Holder or (b) one year after the transfer of such shares to such
Holder.

     6.6. Limitations on Exercise of Options. Holders may be required to comply
with any timing or other restrictions with respect to the settlement or exercise
of an Option, including a window-period limitation, as may be imposed in the
discretion of the Administrator.

                                  ARTICLE VII.

                           AWARD OF RESTRICTED STOCK

     7.1. Eligibility. Subject to the Award Limit and the limitation on the
number of shares available for grant as Restricted Stock set forth in Section
2.1, Restricted Stock may be awarded to any Employee who the Committee
determines is a key Employee and who should receive such an Award.

     7.2. Award of Restricted Stock.

          (a) The Committee may from time to time, in its absolute discretion:

             (i) Determine which Employees are key Employees and select from
        among them (including Employees who have previously received other
        awards under the Plan) as in its opinion should be awarded Restricted
        Stock; and

             (ii) Determine the purchase price, if any, and other terms and
        conditions applicable to such Restricted Stock, consistent with the
        Plan.

          (b) The Committee shall establish the purchase price, if any, and form
     of payment for Restricted Stock; provided, however, that such purchase
     price shall be no less than the par value of the Common Stock to be
     purchased, unless otherwise permitted by applicable state law. In all
     cases, legal consideration shall be required for each issuance of
     Restricted Stock.

          (c) Upon the selection of a key Employee to be awarded Restricted
     Stock, the Committee shall instruct the Secretary of the Company to issue
     such Restricted Stock and may impose such conditions on the issuance of
     such Restricted Stock as it deems appropriate.

     7.3. Rights as Stockholders. Subject to Section 7.4, upon delivery of the
shares of Restricted Stock to the escrow holder pursuant to Section 7.6, the
Holder shall have, unless otherwise provided

<PAGE>   11

by the Committee, all the rights of a stockholder with respect to said shares,
subject to the restrictions in his or her Award Agreement, including the right
to receive all dividends and other distributions paid or made with respect to
the shares; provided, however, that in the discretion of the Committee, any
extraordinary distributions with respect to the Common Stock shall be subject to
the restrictions set forth in Section 7.4.

     7.4. Restriction. All shares of Restricted Stock issued under the Plan
(including any shares received by holders thereof with respect to shares of
Restricted Stock as a result of stock dividends, stock splits or any other form
of recapitalization) shall, in the terms of each individual Award Agreement, be
subject to such restrictions as the Committee shall provide, which restrictions
may include, without limitation, restrictions concerning voting rights and
transferability and restrictions based on duration of employment with the
Company, Company performance and individual performance; provided, however,
that, unless the Committee otherwise provides in the terms of the Award
Agreement or otherwise, no share of Restricted Stock granted to a person subject
to Section 16 of the Exchange Act shall be sold, assigned or otherwise
transferred until at least six months and one day have elapsed from the date on
which the Restricted Stock was issued, and provided, further, that, except with
respect to shares of Restricted Stock granted to Section 162(m) Participants, by
action taken after the Restricted Stock is issued, the Committee may, on such
terms and conditions as it may determine to be appropriate, remove any or all of
the restrictions imposed by the terms of the Award Agreement. Restricted Stock
may not be sold or encumbered until all restrictions are terminated or expire.
If no consideration was paid by the Holder upon issuance, a Holder's rights in
unvested Restricted Stock shall lapse, and such Restricted Stock shall be
surrendered to the Company without consideration, upon Termination of Employment
with the Company; provided, however, except with respect to shares of Restricted
Stock granted to Section 162(m) Participants, the Committee in its sole and
absolute discretion may provide that no such lapse or surrender shall occur in
the event of a Termination of Employment without cause or following any Change
in Control of the Company or because of the Holder's retirement, or otherwise.

     7.5. Repurchase of Restricted Stock. The Committee shall provide in the
terms of each individual Award Agreement that the Company shall have the right
to repurchase from the Holder the Restricted Stock then subject to restrictions
under the Award Agreement immediately upon a Termination of Employment between
the Holder and the Company, at a cash price per share equal to the price paid by
the Holder for such Restricted Stock; provided, however, that, except with
respect to shares of Restricted Stock granted to Section 162(m) Participants,
the Committee in its sole and absolute discretion may provide that no such right
of repurchase shall exist in the event of a Termination of Employment without
cause or following any Change in Control of the Company or because of the
Holder's retirement, death or disability or otherwise.

     7.6. Escrow. The Secretary of the Company or such other escrow holder as
the Committee may appoint shall retain physical custody of each certificate
representing Restricted Stock until all of the restrictions imposed under the
Award Agreement with respect to the shares evidenced by such certificate expire
or shall have been removed.

     7.7. Legend. In order to enforce the restrictions imposed upon shares of
Restricted Stock hereunder, the Committee shall cause a legend or legends to be
placed on certificates representing all shares of Restricted Stock that are
still subject to restrictions under Award Agreements, which legend or legends
shall make appropriate reference to the conditions imposed thereby.

     7.8. Section 83(b) Election. If a Holder makes an election under Section
83(b) of the Code, or any successor section thereto, to be taxed with respect to
the Restricted Stock as of the date of transfer of the Restricted Stock rather
than as of the date or dates upon which the Holder would otherwise be taxable
under Section 83(a) of the Code, the Holder shall deliver a copy of such
election to the Company immediately after filing such election with the Internal
Revenue Service.

<PAGE>   12

                                 ARTICLE VIII.

    PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS, DEFERRED STOCK, STOCK PAYMENTS

     8.1. Eligibility. Subject to the Award Limit, one or more Performance
Awards, Dividend Equivalents, awards of Deferred Stock, and/or Stock Payments
may be granted to any Employee whom the Committee determines is a key Employee
and who should receive such an Award.

     8.2. Performance Awards. Any key Employee selected by the Committee may be
granted one or more Performance Awards. The value of such Performance Awards may
be linked to any one or more of the Performance Criteria or other specific
performance criteria determined appropriate by the Committee, in each case on a
specified date or dates or over any period or periods determined by the
Committee. In making such determinations, the Committee shall consider (among
such other factors as it deems relevant in light of the specific type of award)
the contributions, responsibilities and other compensation of the particular key
Employee.

     8.3. Dividend Equivalents.

          (a) Any key Employee selected by the Committee may be granted Dividend
     Equivalents based on the dividends declared on Common Stock, to be credited
     as of dividend payment dates, during the period between the date a Stock
     Appreciation Right, Deferred Stock or Performance Award is granted, and the
     date such Stock Appreciation Right, Deferred Stock or Performance Award is
     exercised, vests or expires, as determined by the Committee. Such Dividend
     Equivalents shall be converted to cash or additional shares of Common Stock
     by such formula and at such time and subject to such limitations as may be
     determined by the Committee.

          (b) Any Holder of an Option may be granted Dividend Equivalents based
     on the dividends declared on Common Stock, to be credited as of dividend
     payment dates, during the period between the date an Option is granted, and
     the date such Option is exercised, vests or expires, as determined by the
     Committee. Such Dividend Equivalents shall be converted to cash or
     additional shares of Common Stock by such formula and at such time and
     subject to such limitations as may be determined by the Committee.

          (d) Dividend Equivalents granted with respect to Options intended to
     be qualified performance-based compensation for purposes of Section 162(m)
     of the Code shall be payable, with respect to pre-exercise periods,
     regardless of whether such Option is subsequently exercised. Stock
     Payments.

     8.4. Stock Payments Any key Employee selected by the Committee may receive
Stock Payments in the manner determined from time to time by the Committee. The
number of shares shall be determined by the Committee and may be based upon the
Performance Criteria or other specific performance criteria determined
appropriate by the Committee, determined on the date such Stock Payment is made
or on any date thereafter.

     8.5. Deferred Stock. Any key Employee selected by the Committee may be
granted an award of Deferred Stock in the manner determined from time to time by
the Committee. The number of shares of Deferred Stock shall be determined by the
Committee and may be linked to the Performance Criteria or other specific
performance criteria determined to be appropriate by the Committee, in each case
on a specified date or dates or over any period or periods determined by the
Committee. Common Stock underlying a Deferred Stock award will not be issued
until the Deferred Stock award has vested, pursuant to a vesting schedule or
performance criteria set by the Committee. Unless otherwise provided by the
Committee, a Holder of Deferred Stock shall have no rights as a Company
stockholder with respect to such Deferred Stock until such time as the Award has
vested and the Common Stock underlying the Award has been issued.

     8.6. Term. The term of a Performance Award, Dividend Equivalent, award of
Deferred Stock and/or Stock Payment shall be set by the Committee in its
discretion.

<PAGE>   13

     8.7. Exercise or Purchase Price. The Committee may establish the exercise
or purchase price of a Performance Award, shares of Deferred Stock, or shares
received as a Stock Payment; provided, however, that such price shall not be
less than the par value for a share of Common Stock, unless otherwise permitted
by applicable state law.

     8.8. Exercise Upon Termination of Employment. A Performance Award, Dividend
Equivalent, award of Deferred Stock and/or Stock Payment is exercisable or
payable only while the Holder is an Employee; provided, however, that except
with respect to Performance Awards granted to Section 162(m) Participants, that
the Administrator in its sole and absolute discretion may provide that the
Performance Award, Dividend Equivalent, award of Deferred Stock and/or Stock
Payment may be exercised or paid subsequent to a Termination of Employment
without cause, or following a Change in Control of the Company, or because of
the Holder's retirement, death or disability, or otherwise.

     8.9. Form of Payment. Payment of the amount determined under Section 8.2 or
8.3 above shall be in cash, in Common Stock or a combination of both, as
determined by the Committee. To the extent any payment under this Article VIII
is effected in Common Stock, it shall be made subject to satisfaction of all
provisions of Section 6.3.

                                  ARTICLE IX.

                           STOCK APPRECIATION RIGHTS

     9.1. Grant of Stock Appreciation Rights. A Stock Appreciation Right may be
granted to any key Employee selected by the Committee. A Stock Appreciation
Right may be granted (a) in connection and simultaneously with the grant of an
Option, (b) with respect to a previously granted Option, or (c) independent of
an Option. A Stock Appreciation Right shall be subject to such terms and
conditions not inconsistent with the Plan as the Committee shall impose and
shall be evidenced by an Award Agreement.

     9.2. Coupled Stock Appreciation Rights.

          (a) A Coupled Stock Appreciation Right ("CSAR") shall be related to a
     particular Option and shall be exercisable only when and to the extent the
     related Option is exercisable.

          (b) A CSAR may be granted for no more than the number of shares
     subject to the simultaneously or previously granted Option to which it is
     coupled.

          (c) A CSAR shall entitle the Holder (or other person entitled to
     exercise the Option pursuant to the Plan) to surrender to the Company
     unexercised a portion of the Option to which the CSAR relates (to the
     extent then exercisable pursuant to its terms) and to receive from the
     Company in exchange therefor an amount determined by multiplying the
     difference obtained by subtracting the Option exercise price from the Fair
     Market Value of a share of Common Stock on the date of exercise of the CSAR
     by the number of shares of Common Stock with respect to which the CSAR
     shall have been exercised, subject to any limitations the Committee may
     impose.

     9.3. Independent Stock Appreciation Rights.

          (a) An Independent Stock Appreciation Right ("ISAR") shall be
     unrelated to any Option and shall have a term set by the Committee. An ISAR
     shall be exercisable in such installments as the Committee may determine.
     An ISAR shall cover such number of shares of Common Stock as the Committee
     may determine; provided, however, that unless the Committee otherwise
     provides in the terms of the ISAR or otherwise, no ISAR granted to a person
     subject to Section 16 of the Exchange Act shall be exercisable until at
     least six months have elapsed from (but excluding) the date on which the
     Option was granted. The exercise price per share of Common Stock subject to
     each ISAR shall be set by the Committee. An ISAR is exercisable only while
     the Holder is an Employee; provided that the Committee may determine that
     the ISAR may be exercised

<PAGE>   14

     subsequent to Termination of Employment without cause, or following a
     Change in Control of the Company, or because of the Holder's retirement,
     death or disability, or otherwise.

          (b) An ISAR shall entitle the Holder (or other person entitled to
     exercise the ISAR pursuant to the Plan) to exercise all or a specified
     portion of the ISAR (to the extent then exercisable pursuant to its terms)
     and to receive from the Company an amount determined by multiplying the
     difference obtained by subtracting the exercise price per share of the ISAR
     from the Fair Market Value of a share of Common Stock on the date of
     exercise of the ISAR by the number of shares of Common Stock with respect
     to which the ISAR shall have been exercised, subject to any limitations the
     Committee may impose.

     9.4. Payment and Limitations on Exercise.

          (a) Payment of the amounts determined under Section 9.2(c) and
     9.3(b) above shall be in cash, in Common Stock (based on its Fair Market
     Value as of the date the Stock Appreciation Right is exercised) or a
     combination of both, as determined by the Committee. To the extent such
     payment is effected in Common Stock it shall be made subject to
     satisfaction of all provisions of Section 6.3 above pertaining to Options.

          (b) Holders of Stock Appreciation Rights may be required to comply
     with any timing or other restrictions with respect to the settlement or
     exercise of a Stock Appreciation Right, including a window-period
     limitation, as may be imposed at the discretion of the Committee.

                                   ARTICLE X.

                                 ADMINISTRATION

     10.1. Compensation Committee. The Compensation Committee (or another
committee or a subcommittee of the Board assuming the functions of the Committee
under the Plan) shall consist solely of two or more Independent Directors
appointed by and holding office at the pleasure of the Board, each of whom is
both a "non-employee director" as defined by Rule 16b-3 and an "outside
director" for purposes of Section 162(m) of the Code. Appointment of Committee
members shall be effective upon acceptance of appointment. Committee members may
resign at any time by delivering written notice to the Board. Vacancies in the
Committee may be filled by the Board.

     10.2. Duties and Powers of Committee. It shall be the duty of the Committee
to conduct the general administration of the Plan in accordance with its
provisions. The Committee shall have the power to interpret the Plan and the
Award Agreements, and to adopt such rules for the administration,
interpretation, and application of the Plan as are consistent therewith, to
interpret, amend or revoke any such rules and to amend any Award Agreement
provided that the rights or obligations of the Holder of the Award that is the
subject of any such Award Agreement are not affected adversely. Any such grant
or award under the Plan need not be the same with respect to each Holder. Any
such interpretations and rules with respect to Incentive Stock Options shall be
consistent with the provisions of Section 422 of the Code. In its absolute
discretion, the Board may at any time and from time to time exercise any and all
rights and duties of the Committee under the Plan except with respect to matters
which under Rule 16b-3 or Section 162(m) of the Code, or any regulations or
rules issued thereunder, are required to be determined in the sole discretion of
the Committee.

     10.3. Majority Rule; Unanimous Written Consent. The Committee shall act by
a majority of its members in attendance at a meeting at which a quorum is
present or by a memorandum or other written instrument signed by all members of
the Committee.

     10.4. Compensation; Professional Assistance; Good Faith Actions. Members of
the Committee shall receive such compensation for their services as members as
may be determined by the Board. All expenses and liabilities which members of
the Committee incur in connection with the administration of the Plan shall be
borne by the Company. The Committee may, with the approval of the Board, employ
attorneys, consultants, accountants, appraisers, brokers, or other persons. The
Committee, the
<PAGE>   15

Company and the Company's officers and Directors shall be entitled to rely upon
the advice, opinions or valuations of any such persons. All actions taken and
all interpretations and determinations made by the Committee or the Board in
good faith shall be final and binding upon all Holders, the Company and all
other interested persons. No members of the Committee or Board shall be
personally liable for any action, determination or interpretation made in good
faith with respect to the Plan or Awards, and all members of the Committee and
the Board shall be fully protected by the Company in respect of any such action,
determination or interpretation.

     10.5. Delegation of Authority to Grant Awards. The Committee may, but need
not, delegate from time to time some or all of its authority to grant Awards
under the Plan to a committee consisting of one or more members of the Committee
or of one or more officers of the Company; provided, however, that the Committee
may not delegate its authority to grant Awards to individuals (i) who are
subject on the date of the grant to the reporting rules under Section 16(a) of
the Exchange Act, (ii) who are Section 162(m) Participants or (iii) who are
officers of the Company who are delegated authority by the Committee hereunder.
Any delegation hereunder shall be subject to the restrictions and limits that
the Committee specifies at the time of such delegation of authority and may be
rescinded at any time by the Committee. At all times, any committee appointed
under this Section 10.5 shall serve in such capacity at the pleasure of the
Committee.

                                  ARTICLE XI.

                            MISCELLANEOUS PROVISIONS

     11.1. Not Transferable. No Award under the Plan may be sold, pledged,
assigned or transferred in any manner other than by will or the laws of descent
and distribution or, subject to the consent of the Administrator, pursuant to a
DRO, unless and until such Award has been exercised, or the shares underlying
such Award have been issued, and all restrictions applicable to such shares have
lapsed. No Award or interest or right therein shall be liable for the debts,
contracts or engagements of the Holder or his or her successors in interest or
shall be subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be voluntary
or involuntary or by operation of law by 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, except to
the extent that such disposition is permitted by the preceding sentence.

     During the lifetime of the Holder, only he or she may exercise an Option or
other Award (or any portion thereof) granted to him or her under the Plan,
unless it has been disposed of with the consent of the Administrator pursuant to
a DRO. After the death of the Holder, any exercisable portion of an Option or
other Award may, prior to the time when such portion becomes unexercisable under
the Plan or the applicable Award Agreement, be exercised by his or her personal
representative or by any person empowered to do so under the deceased Holder's
will or under the then applicable laws of descent and distribution.
Notwithstanding the foregoing provisions of this Section 11.1, the
Administrator, in its sole discretion, may determine to grant to any Holder an
Award which, by its terms as set forth in the applicable Award Agreement, may be
transferred by the Holder, in writing and with prior written notice to the
Administrator, by gift, without the receipt of any consideration, to a member of
the Holder's immediate family, as defined in Rule 16a-1 under the Exchange Act,
or to a trust for the exclusive benefit of, or any other entity owned solely by,
such members, provided that an Award that has been so transferred shall continue
to be subject to all of the terms and conditions of the Award as applicable to
the original Holder, and the transferee shall execute any and all such documents
requested by the Administrator in connection with the transfer, including
without limitation to evidence the transfer and to satisfy any requirements for
an exemption for the transfer under applicable federal and state securities
laws.

     11.2. Amendment, Suspension or Termination of the Plan. Except as otherwise
provided in this Section 11.2, the Plan may be wholly or partially amended or
otherwise modified, suspended or
<PAGE>   16

terminated at any time or from time to time by the Administrator. However,
without approval of the Company's stockholders given within twelve months before
or after the action by the Administrator, no action of the Administrator may,
except as provided in Section 11.3, increase the limits imposed in Section 2.1
on the maximum number of shares which may be issued under the Plan. No
amendment, suspension or termination of the Plan shall, without the consent of
the Holder, alter or impair any rights or obligations under any Award
theretofore granted or awarded, unless the Award itself otherwise expressly so
provides. No Awards may be granted or awarded during any period of suspension or
after termination of the Plan, and in no event may any Incentive Stock Option be
granted under the Plan after the first to occur of the following events:

          (a) The expiration of ten years from the date the Plan is adopted by
     the Board; or

          (b) The expiration of ten years from the date the Plan is approved by
     the Company's stockholders under Section 11.4.

     11.3. Changes in Common Stock or Assets of the Company, Acquisition or
Liquidation of the Company and Other Corporate Events.

          (a) Subject to Section 11.3(d), in the event that the Administrator
     determines that any dividend or other distribution (whether in the form of
     cash, Common Stock, other securities, or other property), recapitalization,
     reclassification, stock split, reverse stock split, reorganization, merger,
     consolidation, split-up, spin-off, combination, repurchase, liquidation,
     dissolution, or sale, transfer, exchange or other disposition of all or
     substantially all of the assets of the Company, or exchange of Common Stock
     or other securities of the Company, issuance of warrants or other rights to
     purchase Common Stock or other securities of the Company, or other similar
     corporate transaction or event, in the Administrator's sole discretion,
     affects the Common Stock such that an adjustment is determined by the
     Administrator to be appropriate in order to prevent dilution or enlargement
     of the benefits or potential benefits intended to be made available under
     the Plan or with respect to an Award, then the Administrator shall, in such
     manner as it may deem equitable, adjust any or all of

             (i) the number and kind of shares of Common Stock (or other
        securities or property) with respect to which Awards may be granted or
        awarded (including, but not limited to, adjustments of the limitations
        in Section 2.1 on the maximum number and kind of shares which may be
        issued and adjustments of the Award Limit),

             (ii) the number and kind of shares of Common Stock (or other
        securities or property) subject to outstanding Awards, and

             (iii) the grant or exercise price with respect to any Award.

          (b) Subject to Sections 11.3(b)(vii) and 11.3(d), in the event of any
     transaction or event described in Section 11.3(a) or any unusual or
     nonrecurring transactions or events affecting the Company, any affiliate of
     the Company, or the financial statements of the Company or any affiliate,
     or of changes in applicable laws, regulations, or accounting principles,
     the Administrator, in its sole and absolute discretion, and on such terms
     and conditions as it deems appropriate, either by the terms of the Award or
     by action taken prior to the occurrence of such transaction or event and
     either automatically or upon the Holder's request, is hereby authorized to
     take any one or more of the following actions whenever the Administrator
     determines that such action is appropriate in order to prevent dilution or
     enlargement of the benefits or potential benefits intended to be made
     available under the Plan or with respect to any Award under the Plan, to
     facilitate such transactions or events or to give effect to such changes in
     laws, regulations or principles:

             (i) To provide for either the purchase of any such Award for an
        amount of cash equal to the amount that could have been attained upon
        the exercise of such Award or realization of the Holder's rights had
        such Award been currently exercisable or payable or fully vested or

<PAGE>   17

        the replacement of such Award with other rights or property selected by
        the Administrator in its sole discretion;

             (ii) To provide that the Award cannot vest, be exercised or become
        payable after such event;

             (iii) To provide that such Award shall be exercisable as to all
        shares covered thereby, notwithstanding anything to the contrary in
        Section 5.3 or 5.4 or the provisions of such Award;

             (iv) To provide that such Award be assumed by the successor or
        survivor corporation, or a parent or subsidiary thereof, or shall be
        substituted for by similar options, rights or awards covering the stock
        of the successor or survivor corporation, or a parent or subsidiary
        thereof, with appropriate adjustments as to the number and kind of
        shares and prices; and

             (v) To make adjustments in the number and type of shares of Common
        Stock (or other securities or property) subject to outstanding Awards,
        and in the number and kind of outstanding Restricted Stock or Deferred
        Stock and/or in the terms and conditions of (including the grant or
        exercise price), and the criteria included in, outstanding options,
        rights and awards and options, rights and awards which may be granted in
        the future.

             (vi) To provide that, for a specified period of time prior to such
        event, the restrictions imposed under an Award Agreement upon some or
        all shares of Restricted Stock or Deferred Stock may be terminated, and,
        in the case of Restricted Stock, some or all shares of such Restricted
        Stock may cease to be subject to repurchase under Section 7.5 or
        forfeiture under Section 7.4 after such event.

             (vii) Notwithstanding any other provision of the Plan, in the event
        of a Change in Control, each outstanding Award shall, immediately prior
        to the effective date of the Change in Control, automatically become
        fully exercisable for all of the shares of Common Stock at the time
        subject to such rights and may be exercised for any or all of those
        shares as fully vested shares of Common Stock.

             (viii) In the event of any transaction described in
        Section 11.3(a), each outstanding Award shall, immediately prior to the
        effective date of such transaction, automatically become fully
        exercisable for all of the shares of Common Stock at the time subject to
        such rights or fully vested, as applicable, and may be exercised for any
        or all of those shares as fully-vested shares of Common Stock. However,
        an outstanding right shall not so accelerate if and to the extent:
        (i) such right is, in connection with such transaction, either to be
        assumed by the successor or survivor corporation (or parent thereof) or
        to be replaced with a comparable right with respect to shares of the
        capital stock of the successor or survivor corporation (or parent
        thereof) or (ii) the acceleration of exercisability of such right is
        subject to other limitations imposed by the Administrator at the time of
        grant. The determination of comparability of rights under clause
        (i) above shall be made by the Administrator, and its determination
        shall be final, binding and conclusive.

          (c) Subject to Sections 11.3(d), 3.2 and 3.3, the Administrator may,
     in its discretion, include such further provisions and limitations in any
     Award, agreement or certificate, as it may deem equitable and in the best
     interests of the Company.

          (d) With respect to Awards which are granted to Section 162(m)
     Participants and are intended to qualify as performance-based compensation
     under Section 162(m)(4)(C), no adjustment or action described in this
     Section 11.3 or in any other provision of the Plan shall be authorized to
     the extent that such adjustment or action would cause such Award to fail to
     so qualify under Section 162(m)(4)(C), or any successor provisions thereto.
     No adjustment or action described in this Section 11.3 or in any other
     provision of the Plan shall be authorized to the extent that such
     adjustment or action would cause the Plan to violate Section 422(b)(1) of

<PAGE>   18

     the Code. Furthermore, no such adjustment or action shall be authorized to
     the extent such adjustment or action would result in short-swing profits
     liability under Section 16 or violate the exemptive conditions of
     Rule 16b-3 unless the Administrator determines that the Award is not to
     comply with such exemptive conditions. The number of shares of Common Stock
     subject to any Award shall always be rounded to the next whole number.

          (e) Notwithstanding the foregoing, in the event that the Company
     becomes a party to a transaction that is intended to qualify for "pooling
     of interests" accounting treatment and, but for one or more of the
     provisions of this Plan or any Award Agreement, would so qualify, then this
     Plan and any Award Agreement shall be interpreted so as to preserve such
     accounting treatment, and to the extent that any provision of the Plan or
     any Award Agreement would disqualify the transaction from pooling of
     interests accounting treatment (including, if applicable, an entire Award
     Agreement), then such provision shall be null and void. All determinations
     to be made in connection with the preceding sentence shall be made by the
     independent accounting firm whose opinion with respect to "pooling of
     interests" treatment is required as a condition to the Company's
     consummation of such transaction.

          (f) The existence of the Plan, the Award Agreement and the Awards
     granted hereunder shall not affect or restrict in any way the right or
     power of the Company or the shareholders of the Company to make or
     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 Common Stock
     or the rights thereof or which are convertible into or exchangeable for
     Common Stock, 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.

     11.4. Approval of Plan by Stockholders. The Plan will be submitted for the
approval of the Company's stockholders within twelve months after the date of
the Board's initial adoption of the Plan. Awards may be granted or awarded prior
to such stockholder approval, provided that such Awards shall not be exercisable
nor shall such Awards vest prior to the time when the Plan is approved by the
stockholders, and provided further that if such approval has not been obtained
at the end of said twelve-month period, all Awards previously granted or awarded
under the Plan shall thereupon be canceled and become null and void. In
addition, if the Board determines that Awards other than Options or Stock
Appreciation Rights which may be granted to Section 162(m) Participants should
continue to be eligible to qualify as performance-based compensation under
Section 162(m)(4)(C) of the Code, the Performance Criteria must be disclosed to
and approved by the Company's stockholders no later than the first stockholder
meeting that occurs in the fifth year following the year in which the Company's
stockholders previously approved the Performance Criteria.

     11.5. Tax Withholding. The Company shall be entitled to require payment in
cash or deduction from other compensation payable to each Holder of any sums
required by federal, state or local tax law to be withheld with respect to the
issuance, vesting, exercise or payment of any Award. The Administrator may in
its discretion and in satisfaction of the foregoing requirement allow such
Holder to elect to have the Company withhold shares of Common Stock otherwise
issuable under such Award (or allow the return of shares of Common Stock) having
a Fair Market Value equal to the sums required to be withheld.

     11.6. Loans. The Committee may, in its discretion, extend one or more loans
to key Employees in connection with the exercise or receipt of an Award granted
or awarded under the Plan, or the issuance of Restricted Stock or Deferred Stock
awarded under the Plan. The terms and conditions of any such loan shall be set
by the Committee.

     11.7. Forfeiture Provisions. Pursuant to its general authority to determine
the terms and conditions applicable to Awards under the Plan, the Administrator
shall have the right to provide, in the
<PAGE>   19

terms of Awards made under the Plan, or to require a Holder to agree by separate
written instrument, that (a) (i) any proceeds, gains or other economic benefit
actually or constructively received by the Holder upon any receipt or exercise
of the Award, or upon the receipt or resale of any Common Stock underlying the
Award, must be paid to the Company, and (ii) the Award shall terminate and any
unexercised portion of the Award (whether or not vested) shall be forfeited, if
(b)(i) a Termination of Employment occurs prior to a specified date, or within a
specified time period following receipt or exercise of the Award, or (ii) the
Holder at any time, or during a specified time period, engages in any activity
in competition with the Company, or which is inimical, contrary or harmful to
the interests of the Company, as further defined by the Administrator or (iii)
the Holder incurs a Termination of Employment for cause.

     11.8. Effect of Plan Upon Options and Compensation Plans. The adoption of
the Plan shall not affect any other compensation or incentive plans in effect
for the Company or any Subsidiary. Nothing in the Plan shall be construed to
limit the right of the Company (a) to establish any other forms of incentives or
compensation for Employees of the Company or any Subsidiary or (b) to grant or
assume options or other rights or awards otherwise than under the Plan in
connection with any proper corporate purpose including, but not by way of
limitation, the grant or assumption of options in connection with the
acquisition by purchase, lease, merger, consolidation or otherwise, of the
business, stock or assets of any corporation, partnership, limited liability
company, firm or association.

     11.9. Compliance with Laws. The Plan, the granting and vesting of Awards
under the Plan and the issuance and delivery of shares of Common Stock and the
payment of money under the Plan or under Awards granted or awarded hereunder are
subject to compliance with all applicable federal and state laws, rules and
regulations (including but not limited to state and federal securities law and
federal margin requirements) and to such approvals by any listing, regulatory or
governmental authority as may, in the opinion of counsel for the Company, be
necessary or advisable in connection therewith. Any securities delivered under
the Plan shall be subject to such restrictions, and the person acquiring such
securities shall, if requested by the Company, provide such assurances and
representations to the Company as the Company may deem necessary or desirable to
assure compliance with all applicable legal requirements. To the extent
permitted by applicable law, the Plan and Awards granted or awarded hereunder
shall be deemed amended to the extent necessary to conform to such laws, rules
and regulations.

     11.10. Titles. Titles are provided herein for convenience only and are not
to serve as a basis for interpretation or construction of the Plan.

     11.11. Governing Law. The Plan and any agreements hereunder shall be
administered, interpreted and enforced under the internal laws of the State of
Delaware without regard to conflicts of laws thereof.

                                     * * *

     I hereby certify that the foregoing Plan was duly adopted by the Board of
Directors of Libbey, Inc. on March 27, 1999.

     Executed on this 31st day of March, 1999.

                                                      Arthur H. Smith

                                          --------------------------------------
                                                        Secretary