Document:

Exhibit 10(r)

                              EMPLOYMENT AGREEMENT

      This Agreement is entered into as of May 12, 2005 by and between Albany
International Corp. (the "Company") and Joseph G. Morone ("Executive").

      1.    Duties and Scope of Employment.

            (a) Positions and Duties. Commencing on the Effective Date,
Executive will serve as President of the Company, reporting to the Company's
Chief Executive Officer. Commencing on January 1, 2006, Executive will serve as
President and Chief Executive Officer, reporting to the Company's Board of
Directors (the "Board"). The Effective Date will be such date during the period
from July 1, 2005 through September 1, 2005 as Executive shall designate by at
least ten days' notice to the Chief Executive Officer of the Company. The period
during which Executive is employed by the Company under this Agreement is
referred to herein as the "Employment Term". During the Employment Term,
Executive will render such business and professional services in the performance
of his duties, consistent with Executive's position within the Company, as may
reasonably be assigned to him by the Chief Executive Officer, prior to January
1, 2006, and by the Board after such date.

            (b) Obligations. During the Employment Term, Executive will devote
Executive's full business efforts to the Company and will use good faith efforts
to discharge Executive's obligations under this Agreement to the best of
Executive's ability. For the duration of the Employment Term, Executive agrees
not to serve as a director for any for-profit entity or organization or actively
engage in any employment, occupation, or consulting activity for any direct or
indirect remuneration without the prior approval of the Board, in its sole
discretion; provided, however, that Executive may, without the approval of the
Board, (i) serve in any capacity with any civic, educational, or charitable
organization, and (ii) continue to serve on the Board of Directors of Transworld
Entertainment Corporation (and committees of such Board); in each case, provided
such services do not interfere with Executive's obligations to the Company.

      2.    Term of Agreement; At-Will Employment. Executive and the Company
agree that Executive's employment with the Company constitutes "at-will"
employment. Executive and the Company acknowledge that, subject to the
provisions of Sections 5, 6, 7 and 8 of this Agreement, Executive's employment
relationship with the Company may be terminated at any time, upon written notice
to the other party, with or without good cause, at the option either of the
Company or Executive.

      3.    Compensation.

            (a) Base Salary. Commencing on the Effective Date, the Company will
pay Executive an annual salary of $600,000 as compensation for his services
(such annual salary, as is then effective, to be referred to herein as "Base
Salary"). The Base Salary will be paid periodically in accordance with the
Company's normal payroll practices and be subject to standard and customary
withholdings. Executive's salary will be subject to review by the Compensation
Committee of the Board, or any successor thereto (the "Committee"), at least
annually, and adjustments will be made in the discretion of the Committee.

            (b) Annual Bonus. Executive will be eligible for a cash bonus for
2005 under the Company's existing annual cash bonus program for senior
management, to be determined and paid during early 2006. Under this program,
Executive's 2005 target bonus will be equal to 50% of his actual 2005 base
compensation, pro-rated for the portion of the year during which he is actually
employed. (For example, if the Effective Date is September 1, 2005, the target
amount would be $100,000 [50% of $600,000 x 4/12] ). The Compensation Committee
of the Company's Board of

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Directors has determined that 2005 senior management bonuses will be based on
Company performance with respect to operating income, share of market and
management of inventories and accounts receivable. The Committee retains the
right to exercise its discretion, after the end of 2005, as in prior years, to
determine to what extent the cash bonuses of Executive and the other executive
officers are earned, and reserves the right to take individual performance
factors into account, and to employ subjective and objective criteria. Executive
will be eligible thereafter to participate in any annual executive cash bonus
program, as the same may be amended, modified or terminated by the Company, in
accordance with its terms. Target bonuses in future periods will be at the
discretion of the Compensation Committee.

            (c) Restricted Stock Units. Executive will receive, as of the
Effective Date, a grant of 30,000 stock units under the Company's Restricted
Stock Unit Plan, pursuant to the form of Restricted Stock Unit Award attached to
this Agreement as Exhibit A.

            (d) Initial Payment. On the Effective Date, Executive will receive a
one-time cash payment (the "Initial Payment") in the amount of $425,000 which
amount shall be reduced by any amount paid or payable to Executive with respect
to the "Deferred Compensation Agreement" between Executive and Bentley College.

            (e) Relocation. Executive will be entitled to benefits provided
pursuant to the Company's Relocation Policy, a copy of which has been provided
to the Executive.

            (f) Perquisites. Executive will be eligible to receive such
perquisites as are from time-to-time made generally available to senior
executives of the Company. Such perquisites currently include financial planning
assistance from AYCO and subsidies for country-club membership, but do not
include Company cars.

      4.    Employee Benefits and Policies. Executive will be entitled to two
weeks of vacation with pay during the remainder of 2005, and thereafter will be
entitled to four weeks of vacation per calendar year, unless the Company's
then-current vacation policy applicable to executive officers provides for a
greater period. In addition, Executive will be eligible to participate in all of
the Company's employee benefit plans, policies, and arrangements that are
applicable to other executive officers of the Company (including, without
limitation, 401(k), health care, vision, dental, life insurance and disability),
as such plans, policies, and arrangements may exist from time to time.

      5.    Termination of Employment. In the event Executive's employment with
the Company terminates for any reason, Executive will be entitled to any (a)
unpaid Base Salary accrued to the effective date of termination, (b) unpaid but
earned and accrued annual cash bonus for the portion of the year in which the
termination of employment occurs and for any completed prior year for which the
annual cash bonus has not been paid, (c) pay for accrued but unused vacation to
which the Executive is entitled calculated in accordance with the Company's
vacation policy, (d) benefits or compensation required to be provided after
termination pursuant to, and in accordance with the terms of, any employee
benefit plans, policies or arrangements applicable to Executive, (e)
unreimbursed business expenses incurred prior to termination and required to be
reimbursed to Executive pursuant to the Company's policy, and (f) any rights to
indemnification to which Executive may be entitled under the Company's Articles
of Incorporation, Bylaws, or separate indemnification agreement, as applicable.
In addition, if the termination is by the Company without Cause, Executive will
be entitled to the amounts and benefits specified in Section 6.

      6.    Severance. If Executive's employment is terminated by the Company
without Cause, Executive will receive an amount equal to twice the Base Salary
of Executive at the time of termination, payable in 24 equal monthly
installments. Executive's right to receive payments under this Section is
contingent upon Executive's continuing compliance with the provisions of
Sections 7 and 8 of this

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Agreement and upon the Executive's having executed and delivered to the Company
a release of any and all claims relating to his termination. Executive will not
be required to mitigate the amount of payments under this Section 6, nor will
any earnings that Executive may receive from any other source reduce any such
payments. For purposes of this Section,

            (a) Termination "by the Company" shall not include termination as
      the result of death or Disability.

            (b) "Cause" shall be deemed to exist if a majority of the members of
      the Board determine that the Executive has (i) caused substantial harm to
      the Company with intent to do so or as a result of gross negligence in the
      performance of his duties; (ii) not made a good faith effort to carry out
      his duties; (iii) wrongfully and substantially enriched himself at the
      expense of the Company; or (iv) been convicted of a felony.

            (c) "Disability" shall be deemed to exist if (i) by reason of mental
      or physical illness the Executive has not performed his or her duties for
      a period of six consecutive months; and (ii) the Executive does not return
      to the performance of his duties within thirty days after written notice
      is given by Company that the Executive has been determined by the Board of
      Directors to be "Disabled" under the Company's long term disability
      policy.

      7.    Confidential Information. Executive agrees that all aspects of the
Company's business, products, prospects, plans and strategies that have not been
publicly disclosed, including, but not limited to, the identities, needs and
preferences of its customers, internal business operations and pricing
information, manufacturing know-how, technical attributes of products and any
and all other trade secrets (collectively, "Confidential Information"), are
confidential and secret, shall be maintained in confidence and not disclosed to
any third party, and shall remain the exclusive property of the Company. Any
Confidential Information may be used by the Executive solely to discharge his
obligations hereunder, and shall not be used for any other purpose, including,
without limitation, for any purpose whatsoever following termination of
Executive's employment. All Confidential Information in tangible form that is
provided to the Executive shall be returned by the Executive to the Company
within 30 days of any termination of employment, together with a statement
certifying: (1) that Executive has returned all Confidential Information in his
possession, (2) that Executive has at all times maintained the confidential
nature of the Confidential Information, and (3) that Executive confirms his
continuing obligations of confidentiality under this Agreement following such
termination.

      8.    Non-disparagement. During the Employment Term, and for twenty-four
months thereafter, Executive will not knowingly disparage, criticize or
otherwise make any derogatory statements regarding the Company, its directors or
its officers. The foregoing restriction will not apply to any truthful
statements made in response to a subpoena or other compulsory legal process.

      9.    Board Membership. Upon the termination of Executive's employment for
any reason, Executive will be deemed to have resigned from any seat on the Board
(and from any seats on the boards, and from any offices of, subsidiaries) held
at such time, voluntarily, without any further required action by the Executive,
as of the end of the Employment Term. Executive, at the Board's request, will
execute any documents necessary to reflect his resignation.

      10.   Assignment. This Agreement will be binding upon and inure to the
benefit of (a) the heirs, executors, and legal representatives of Executive upon
Executive's death, and (b) any successor of the Company. Any such successor of
the Company will be deemed substituted for the Company under the terms of this
Agreement for all purposes. For this purpose, "successor" means any person,
firm, corporation, or other business entity which at any time, whether by
purchase, merger, or otherwise, directly or indirectly acquires all or
substantially all of the assets or business of the Company. None of the rights
of Executive to receive any form of compensation payable pursuant to this
Agreement may be

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assigned or transferred except by will or the laws of descent and distribution.
Any other attempted assignment, transfer, conveyance, or other disposition of
Executive's right to compensation or other benefits will be null and void.

      11.   Notices. All notices, requests, demands, and other communications
called for hereunder will be in writing and will be deemed given (a) on the date
of delivery if delivered personally, (b) one (1) day after being sent overnight
by a well established commercial overnight service, or (c) four (4) days after
being mailed by registered or certified mail, return receipt requested, prepaid
and addressed to the parties or their successors at the following addresses, or
at such other addresses as the parties may later designate in writing:

            If to the Company:

            Attn: Lead Director
            Albany International Corp.
            1373 Broadway
            Menands, NY 12204

            If to the Executive:

            at the last residential address known by the Company.

      12.   Severability. If any provision hereof becomes or is declared by a
court of competent jurisdiction to be illegal, unenforceable, or void, this
Agreement will continue in full force and effect without said provision.

      13.   Arbitration. The Parties agree that any and all disputes arising out
of the terms of this Agreement, Executive's employment by the Company,
Executive's service as an officer or director of the Company, or Executive's
compensation and benefits, their interpretation, and any of the matters herein
released, will be subject to binding arbitration in New York, New York under the
American Arbitration Association's National Rules for the Resolution of
Employment Disputes. The Parties agree that the prevailing party in any
arbitration will be entitled to injunctive relief in any court of competent
jurisdiction to enforce the arbitration award. The Parties hereto agree to waive
their right to have any dispute between them resolved in a court of law by a
judge or jury. This paragraph will not prevent either party from seeking
injunctive relief (or any other provisional remedy) from any court having
jurisdiction over the Parties and the subject matter of their dispute relating
to Executive's obligations under this Agreement.

      14.   Integration. This Agreement, together with the Exhibit, represents
the entire agreement and understanding between the parties as to the subject
matter herein and supersedes all prior or contemporaneous agreements whether
written or oral. No waiver, alteration, or modification of any of the provisions
of this Agreement will be binding unless in a writing that is signed by duly
authorized representatives of the parties hereto, provided that any benefits or
compensation provided to Executive pursuant to the terms of any plan, program,
policy, or arrangement may be amended or terminated by the Company at any time,
in accordance with the terms of such plan, program, policy or arrangement. In
entering into this Agreement, no party has relied on or made any representation,
warranty, inducement, promise or understanding that is not in this Agreement.
Executive acknowledges that Executive is not subject to any contract, obligation
or understanding (whether written or not) that would in any way restrict the
performance of Executive's duties as set forth in this Agreement.

      15.   Waiver of Breach. The waiver of a breach of any term or provision of
this Agreement, which must be in writing, will not operate as or be construed to
be a waiver of any other previous or subsequent breach of this Agreement.

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<PAGE>

      16.   Survival. The Company's and Executive's obligations under Section 6
and, to the extent provided in Section 6, the Executive's obligations under
Sections 7 and 8, will survive the termination of this Agreement.

      17.   Headings. All captions and Section headings used in this Agreement
are for convenient reference only and do not form a part of this Agreement.

      18.   Tax Withholding. All payments made pursuant to this Agreement will
be subject to withholding of applicable taxes.

      19.   Governing Law. This Agreement will be governed by the laws of the
State of New York.

      20.   Acknowledgment. Executive acknowledges that he has had the
opportunity to obtain legal advice with respect to this Agreement, has had
sufficient time to read, and has carefully read and fully understands all the
provisions of this Agreement, and is knowingly and voluntarily entering into
this Agreement.

      21.   Counterparts. This Agreement may be executed in counterparts, and
each counterpart will have the same force and effect as an original and will
constitute an effective, binding agreement on the part of each of the
undersigned.

      IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by a duly authorized officer, as of the day and year
written below.

COMPANY:

ALBANY INTERNATIONAL CORP.

/s/ Frank R. Schmeler                                         Date: May 12, 2005
------------------------------------
Frank R. Schmeler
Chief Executive Officer and Chairman
of the Board of Directors

EXECUTIVE:

/s/ Joseph G. Morone                                          Date: May 12, 2005
------------------------------------
Joseph G. Morone

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                                    EXHIBIT A

                         RESTRICTED UNIT AWARD AGREEMENT

                                 pursuant to the

                           ALBANY INTERNATIONAL CORP.
                         2003 RESTRICTED STOCK UNIT PLAN

                                    * * * * *

Participant:  Executive

Award Date:   _________, 2005

Number of Restricted Units Awarded:  30,000

                                    * * * * *

      THIS AWARD AGREEMENT, dated as of the Award Date specified above, is
entered into by and between Albany International Corp. (the "Company"), and the
Participant specified above, pursuant to the Albany International Corp. 2003
Restricted Stock Unit Plan, as in effect and as amended from time to time (the
"Plan"); and

      WHEREAS, as an incentive to encourage the Participant to remain in the
employ of the Company and its subsidiaries by affording the Participant a
greater interest in the success of the Company and its subsidiaries, the Company
desires to grant the Participant the Restricted Units provided herein;

      WHEREAS, the Participant desires to obtain such Restricted Units on the
terms and conditions provided for herein;

      NOW, THEREFORE, in consideration of the premises, the mutual covenants
herein set forth and other good and valuable considerations receipt of which is
hereby acknowledged, the Company and the Participant agree as follows:

      1. Incorporation By Reference; Plan Document Receipt. This Award Agreement
is subject in all respects to the terms and provisions of the Plan (including,
without limitation, any amendments thereto adopted at any time and from time to
time and which are expressly intended to apply to the grant of the Restricted
Units provided for herein), all of which terms and provisions are made a part of
and incorporated in this Award Agreement as if they were expressly set forth
herein. Any capitalized term not defined in this Award Agreement shall have the
same meaning as is ascribed thereto in the Plan. The Participant hereby
acknowledges receipt of a true copy of the Plan and that the Participant has
read the Plan carefully and fully understands its content. In the event of a
conflict between the terms of this Award Agreement and the terms of the Plan,
the terms of the Plan shall control.

      2. Award of Restricted Units; Credit to Restricted Unit Account. The
Company hereby grants to the Participant, as of the Award Date specified above,
the number of Restricted Units specified above. The Company shall record such
Restricted Units in the Participant's Restricted Unit Account.

<PAGE>

      3. Amendment and Waiver. Neither this Award Agreement nor any provision
hereof may be amended, modified, changed, discharged, terminated or waived
orally, by any course of dealing or purported course of dealing or by any other
means except (a) in the case of an amendment, modification, change or waiver
that does not impair the rights of the Participant with respect to outstanding
Restricted Units, written notice to the Participant or (b) an agreement in
writing signed by the Company and the Participant. No such written notice of
agreement shall extend to or affect any provision of this Award Agreement not
expressly amended, modified, changed, discharged, terminated or waived or impair
any right consequent on such a provision. The waiver of or failure to enforce
any breach of this Award Agreement shall not be deemed to be a waiver of or
acquiescence in any other breach hereof.

      4. Notices. Any notice required or permitted under this Award Agreement
shall be in writing and shall be deemed properly given:

      4.1 in the case of notice to the Company, if delivered in person to the
Secretary of the Company, or mailed to the Company to the attention of the
Secretary by registered mail (return receipt requested) at P.O. Box 1907,
Albany, New York 12201, or at such other address as the Company may from time to
time hereafter designate by written notice to the Participant; and

      4.2 in the case of notice to the Participant, if delivered to him or her
in person, or mailed to him or her by registered mail (return receipt requested)
at

                      [insert notice address of Executive]

or at such other address as the Participant may from time to time hereafter
designate by written notice to the Company.

      5. Governing Law. This Award Agreement shall be governed by and construed
in accordance with the laws of the State of New York.

      6. Binding Agreement; Assignment. This Award Agreement shall inure to the
benefit of, be binding upon, and be enforceable by the Company and its
successors and assigns. The Participant shall not assign any part of this Award
Agreement without the prior express written consent of the Company.

      7. Counterparts. This Award Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same instrument.

      8. Headings. The titles and headings of the various sections of this Award
Agreement have been inserted for convenience of reference only and shall not be
deemed to be a part of this Award Agreement.

      9. Further Assurances. Each party hereto shall do and perform (or shall
cause to be done and performed) all such further acts and shall execute and
deliver all such other agreements, certificates, instruments and documents as
any other party hereto reasonably may request in order to carry out the intent
and accomplish the purposes of this Award Agreement and the Plan and the
consummation of the transactions contemplated thereunder.

      10. Severability. The invalidity or unenforceability of any provisions of
this Award Agreement in any jurisdiction shall not affect the validity, legality
or enforceability of the remainder of

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this Award Agreement in such jurisdiction or the validity, legality or
enforceability of any provision of this Award Agreement in any other
jurisdiction, it being intended that all rights and obligations of the parties
hereunder shall be enforceable to the fullest extent permitted by law.

      11. Acceptance of Restricted Units. Unless, within 45 days following the
date of this Award Agreement, the Company has received written notice from the
Participant rejecting the Restricted Units, this Award Agreement shall be deemed
to have been accepted by the Participant and shall constitute a legal and
binding agreement between the Participant and the Company.

      IN WITNESS WHEREOF, the Company has duly executed this Award Agreement as
of the Award Date specified above.

                                       ALBANY INTERNATIONAL CORP.

                                       By:
                                          --------------------------------------
                                       Name:  Frank R. Schmeler
                                       Title: Chairman & Chief Executive Officer

                                       3Exhibit 10(m)(viii)

                 ALBANY INTERNATIONAL CORP. 2005 INCENTIVE PLAN

          (As Approved by the Board of Directors on February 18, 2005)
                  (As Approved by Shareholders on May 12, 2005)

1. Purpose of the Plan

      This Albany International Corp. 2005 Incentive Plan is intended to promote
the interests of Albany International Corp. (including any successor thereto by
way of merger, consolidation or reorganization, the "Company") and its
shareholders by providing the employees of the Company and its subsidiaries, who
are largely responsible for the management, growth and protection of the
business of the Company, with incentives and rewards to encourage them to
continue in the service of the Company. The Plan is designed to meet this goal
by providing such employees with a proprietary interest in pursuing the
long-term growth, profitability and financial success of the Company.

2. Definitions

      As used in the Plan, the following definitions apply to the terms
indicated below:

      a) "Board of Directors" means the Board of Directors of the Company.

      b) "Business Day" means any day other than a Saturday, a Sunday or a day
on which banks in the City of New York are authorized or obligated by Law to
close.

      c) "Change in Control" shall be deemed to have occurred if (i) whether as
a result of a merger, consolidation, going-private transaction or any other
event, the shares of Common Stock are no longer traded on an "exchange" within
the meaning of the Exchange Act for a period of more than ten consecutive days
on which there is trading generally in securities on such exchange; (ii) the
stockholders 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 (iii) Permitted Shareholders no
longer are the "beneficial owners" (as defined in Rule 13d-3 under the Exchange
Act) of securities of the Company representing in the aggregate at least 40% of
the combined voting power of the Company's then outstanding securities; provided
that, no such event shall be deemed a Change of Control if contrary to the
change of control provisions of Section 409A of the Code.

      d) "Code" means the Internal Revenue Code of 1986, as amended from time to
time.

      e) "Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.

      f) "Committee" means the Compensation Committee of the Board of Directors.

      g) "Common Stock" means the Company's Class A Common Stock, $.001 par
value per share, or any other security into which such stock shall be changed
pursuant to the adjustment provisions of Section 10 of the Plan.

<PAGE>

      h) "Company" means Albany International Corp. and any successor thereto by
way of merger, consolidation or reorganization.

      i) "Covered Employee" means a Participant who at the time of reference is
a "covered employee" as defined in Code Section 162(m) and the regulations
promulgated under Code Section 162(m), or any successor statute.

      j) "Director" means a member of the Board of Directors who is not at the
time of reference an employee of the Company.

      k) "Exchange Act" means the Securities Exchange Act of 1934, as amended.

      l) "Fair Market Value" means, with respect to a share of Common Stock, as
of the applicable date of determination, the fair market value of a share of
Common Stock as determined by the Committee in its absolute discretion.

      m) "Incentive Award" means an Option, SAR, Other Stock-Based Award or
Other Incentive Award granted to a Participant pursuant to the terms of the
Plan.

      n) "Option" means a stock option to purchase shares of Common Stock
granted to a Participant pursuant to Section 6.

      o) "Other Incentive Award" means other Incentive Awards that are not
equity-based or equity related granted to a Participant pursuant to Section 8.
An Other Incentive Award may or may not be Performance-Based Compensation.

      p) "Other Stock-Based Award" means an equity or equity-related award
granted to a Participant pursuant to Section 8. An Other Stock-Based Award may
or may not be Performance-Based Compensation.

      q) "Participant" means an employee of the Company or a Subsidiary of the
Company who is eligible to participate in the Plan and to whom one or more
Incentive Awards have been granted pursuant to the Plan and, following the death
of any such employee, his or her successors, heirs, executors and
administrators, as the case may be.

      r) "Performance-Based Compensation" means compensation that satisfies the
requirements of Section 162(m) of the Code for deductibility of remuneration
paid to Covered Employees.

      s) "Performance Committee" means such committee or subcommittee of the
Board of Directors as shall be designated by the Board of Directors or the
Committee from time to time to administer the Plan and exercise such discretion
and authority under the Plan as is necessary to satisfy the requirements of
Section 162(m) of the Code for Performance-Based Compensation.

      t) "Performance Measures" means such measures as are described in Section
9 on which performance goals are based in order to qualify certain Incentive
Awards granted hereunder as Performance-Based Compensation.

      u) "Performance Period" means the period of time during which the
performance goals must be met in order to determine the degree of payout and/or
vesting with respect to an Incentive Award that is intended to qualify as
Performance-Based Compensation.

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<PAGE>

      v) "Permitted Shareholders" means (a) J. Spencer Standish, (b) any of J.
Spencer Standish's descendants or legatees, (c) any executor, personal
representative or spouse of J. Spencer Standish or any of his descendants, (d)
any corporation, trust or other entity holding voting stock of the Company as to
which one or more of the Persons identified in the foregoing clauses (a) through
(c) have Control, (e) any trust as to which Persons so identified in clauses (a)
through (c) above hold at least 85% of the beneficial interest in the income and
principal of the trust disregarding the interests of the contingent remaindermen
and (f) any 401(k) or employee stock ownership plan for the benefit of employees
of the Company.

      w) "Person" means a "person" as such term is used in Section 13(d) and
14(d) of the Exchange Act.

      x) "Plan" means this 2005 Incentive Plan, as it may be amended from time
to time.

      y) "SAR" means a stock appreciation right granted to a Participant
pursuant to Section 7.

      z) "Securities Act" means the Securities Act of 1933, as amended.

      aa) "Subsidiary" means as to any Person, any other Person (i) of which
such Person directly or indirectly owns, securities or other equity interests
representing 50% or more of the aggregate voting power or (ii) of which such
Person possesses the right to designate or elect, or has designated, 50% or more
of the directors or Persons holding similar positions.

3. Stock Subject to the Plan

      (a) In General

      Subject to adjustment as provided in Section 10 as well as otherwise in
this Section 3, the aggregate number of shares of Common Stock that may be
issued pursuant to Incentive Awards granted under this Plan shall be (a) 500,000
plus (b) such additional number of shares as the Board of Directors shall, from
time to time subsequent to January 1, 2006 and during the term of the Plan,
determine; provided that the number of shares so added by the Board of Directors
shall not exceed, in any one calendar year, 500,000; and provided, further, that
the total number of shares of Common Stock then available for issuance under
this Plan shall not exceed 1,000,000 at any time.

      For purposes of the preceding paragraph, shares of Common Stock issuable
pursuant to Incentive Awards shall only be counted as used to the extent they
are actually issued and delivered to a Participant (or such Participant's
permitted transferees as provided in the instrument or agreement evidencing such
Incentive Award) pursuant to the Plan. For purposes of clarification, in
accordance with the preceding sentence if an Incentive Award is settled for cash
or if shares of Common Stock are withheld to pay the exercise price of an Option
or to satisfy any tax withholding requirement in connection with an Incentive
Award, only the shares issued (if any), net of the shares withheld, will be
deemed delivered for purposes of determining the number of shares of Common
Stock that are available for issuance under the Plan. In addition, if shares of
Common Stock are issued subject to conditions which may result in the
forfeiture, cancellation or return of such shares to the Company, any portion of
the shares forfeited, cancelled or returned shall be treated as not issued
pursuant to the Plan. In addition, if shares of Common Stock owned by a
Participant (or such Participant's permitted transferees as provided in the
instrument or agreement evidencing such Incentive Award) are tendered (either
actually or through attestation) to the Company in payment of any obligation in
connection with an Incentive Award, the number of shares tendered shall be added
to the number of shares of Common Stock that are available for issuance under
the Plan. In addition, if the Company uses cash received by the Company in
payment of the exercise price or purchase price in connection with any Incentive
Award granted pursuant to the Plan to repurchase

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<PAGE>

shares of Common Stock from any Person, the shares so repurchased will be added
to the aggregate number of shares available for delivery under the Plan. For
purposes of the preceding sentence, shares of Common Stock repurchased by the
Company shall be deemed to have been repurchased using such funds only to the
extent that such funds have actually been previously received by the Company and
that the Company promptly designates in its books and records that such
repurchase was paid for with such funds. Shares of Common Stock covered by
Incentive Awards granted pursuant to the Plan in connection with the assumption,
replacement, conversion or adjustment of outstanding equity-based awards in the
context of a corporate acquisition or merger (within the meaning of Section
303A.08 of the New York Stock Exchange Listed Company Manual) shall not count as
used under the Plan for purposes of this Section 3.

      Subject to adjustment as provided in Section 10, the maximum number of
shares of Common Stock that may be delivered in any fiscal year of the Company
pursuant to Incentive Awards granted under the Plan to any single Participant
shall not exceed 200,000 shares and the maximum cash payment made in any fiscal
year of the Company pursuant to Incentive Awards granted under the Plan to any
single Participant shall not exceed $3,000,000, in each case prorated on a daily
basis for any fiscal year of the Company that is shorter than 365 days.

      (b) Prohibition on Substitutions and Repricings

      In no event shall any repricing (within the meaning of US generally
accepted accounting practices or any applicable stock exchange rule) of
Incentive Awards issued under the Plan be permitted at any time under any
circumstances, in each case unless the shareholders of the Company expressly
approve such substitution or repricing.

4. Administration of the Plan

      The Plan shall be administered by a Committee of the Board of Directors
and, to the extent necessary to satisfy the requirements of Section 162(m) of
the Code for Performance-Based Compensation, by one or more Performance
Committees. Each Performance Committee so appointed shall consist of two or more
persons, all of whom qualify as "outside directors" within the meaning of
Section 162(m) of the Code. As used in the Plan, references to the "Committee"
shall be deemed to refer to a Performance Committee to the extent that the
action contemplated by the provision in which such reference occurs would be
required to be taken by a Performance Committee in order to satisfy the
requirements of Section 162(m) of the Code for Performance-Based Compensation.

      The Committee shall, consistent with the terms of the Plan, from time to
time designate those who shall be granted Incentive Awards under the Plan and
the amount, type and other terms and conditions of such Incentive Awards. All of
the powers and responsibilities of the Committee under the Plan may be delegated
by the Committee, in writing, to any subcommittee thereof.

      The Committee shall have full discretionary authority to administer the
Plan, including discretionary authority to interpret and construe any and all
provisions of the Plan and the terms of any Incentive Award (and any agreement
evidencing any Incentive Award) granted thereunder and to adopt and amend from
time to time such rules and regulations for the administration of the Plan as
the Committee may deem necessary or appropriate. Without limiting the generality
of the foregoing, (i) the Committee shall determine whether an authorized leave
of absence, or absence in military or government service, shall constitute
termination of employment and (ii) the employment of a Participant with the
Company shall be deemed to have terminated for all purposes of the Plan if such
person is employed by or provides services to a Person that is a Subsidiary of
the Company and such Person ceases to be a Subsidiary of the Company, unless the
Committee determines otherwise. Decisions of the Committee shall be final,
binding and conclusive on all parties.

                                       4
<PAGE>

      On or after the date of grant of an Incentive Award under the Plan, the
Committee may (i) accelerate the date on which any such Incentive Award becomes
vested, exercisable or transferable, as the case may be, (ii) extend the term of
any such Incentive Award, including, without limitation, extending the period
following a termination of a Participant's employment during which any such
Incentive Award may remain outstanding, (iii) waive any conditions to the
vesting, exercisability or transferability, as the case may be, of any such
Incentive Award or (iv) provide for the payment of dividends or dividend
equivalents with respect to any such Incentive Award, except as otherwise
proscribed by applicable law.

      In addition to such other rights of indemnification as they may have as
directors, as members of the Committee or otherwise, the members of the
Committee shall be indemnified by the Company against the reasonable expenses,
including attorneys' fees, actually and necessarily incurred in connection with
the defense of any action, suit or proceeding, or in connection with an appeal
therein, to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan or any Incentive
Award granted hereunder and against all amounts paid by them in settlement
thereof (provided such settlement is approved by independent legal counsel
selected by the Company) or paid by them in satisfaction of a judgment in any
such action, suit or proceeding, except in relation to matters as to which it
shall be adjudged in such action, suit or proceeding that such Committee member
is liable for negligence or misconduct in the performance of his or her duties;
provided that within sixty days after institution of any such action, suit or
proceeding, a Committee member shall in writing offer the Company the
opportunity, at its own expense, to handle and defend the same.

5. Eligibility

      The Persons who shall be eligible to receive Incentive Awards pursuant to
the Plan shall be those key employees responsible for the management, growth and
protection of the business of the Company, as determined by the Committee from
time to time in its sole discretion. All Incentive Awards granted under the Plan
shall be evidenced by a separate written agreement entered into by the Company
and the recipient of such Incentive Award.

6. Options

      The Committee may from time to time grant Options. Subject to the
provisions of the Plan, the Committee shall have authority, within its absolute
discretion:

      (a)   to determine which of the key employees of the Company and its
            Subsidiaries shall be granted Options;

      (b)   to determine the time or times when Options shall be granted and the
            number of shares to be subject to each Option;

      (c)   to determine the exercise price of the Common Stock subject to each
            Option, which shall not be less than 100% of the Fair Market Value
            of the Common Stock on the date of grant;

      (d)   to determine the Fair Market Value of the Common Stock on the date
            of grant of an Option;

      (e)   to determine the term of each Option, which shall not continue for
            more than twenty years from the date of grant of the Option, and to
            accelerate the expiration of the term of an Option;

      (f)   to determine the time or times when each Option shall be exercisable
            and to accelerate at any time the time or times when an outstanding
            Option shall be exercisable, provided that no Option may be
            exercisable before the first anniversary of its date of grant;

                                       5
<PAGE>

      (g)   to accept, as full or partial payment of the exercise price and/or
            any taxes to be withheld by the Company upon exercise of any Option,
            shares of Common Stock tendered by the Participant or requested by
            the Participant to be withheld from the shares to be delivered upon
            such exercise, and to determine the value of the shares so tendered
            or withheld;

      (h)   to determine, to the extent permitted by law, the status under the
            Internal Revenue Code of any Option granted under the Plan,
            including, without limitation, whether the option shall be treated
            as an "incentive stock option" within the meaning of the Code;

      (i)   to determine the effect on any Option of the termination of the
            employment of the Participant, of any conduct or activity of the
            Participant, or of any Change in Control;

      (j)   to determine the extent to which Options granted under the Plan
            shall be assignable or transferable; and

      (k)   to prescribe from time to time the form or forms of the instruments
            evidencing Options granted under the Plan.

7. Stock Appreciation Rights

      (a) Terms

      The Committee may from time to time grant SARs. Subject to the provisions
of the Plan, the Committee shall have authority, within its absolute discretion:

            (i) to determine which of the key employees of the Company and its
      Subsidiaries shall be granted SARs;

            (ii) to determine whether SARs are granted on a stand-alone basis or
      in tandem with an Option, whether contemporaneously with or after the
      grant of the Options to which they relate;

            (iii) to determine whether SARs may be settled in shares of Common
      Stock, in cash, or in some combination of Common Stock or cash;

            (iv) to determine the time or times when SARs shall be granted and
      the number of shares for which they are exercisable;

            (v) to determine the exercise price of each SAR, which shall not be
      less than 100% of the Fair Market Value of the Common Stock on the date of
      grant, provided, however that the exercise price of a SAR that is tandem
      to an Option and that is granted after the grant of such Option may have
      an exercise price less than 100% of the Fair Market Value of a share of
      Common Stock on the date on which such SAR is granted provided that such
      exercise price is at least equal to the exercise price of the related
      Option;

            (vi) to determine the Fair Market Value of the Common Stock on the
      date of grant of a SAR;

                                       6
<PAGE>

            (vii) to determine the term of each SAR, which shall not continue
      for more than twenty years from the date of grant of the SAR, and to
      accelerate the expiration of the term of a SAR;

            (viii) to determine the time or times when each SAR shall be
      exercisable and to accelerate at any time the time or times when an
      outstanding SAR shall be exercisable, provided that no SAR may be
      exercisable before the first anniversary of its date of grant;

            (ix) to accept, as full or partial payment of any taxes to be
      withheld by the Company upon exercise of any SAR that is to be settled in
      shares of Common Stock, shares of Common Stock tendered by the Participant
      or requested by the Participant to be withheld from the shares to be
      delivered upon such exercise, and to determine the value of the shares so
      tendered or withheld;

            (x) to determine the effect on any SAR of the termination of the
      employment of the Participant, of any conduct or activity of the
      Participant, or of any Change in Control;

            (xi) to determine the extent to which SARs granted under the Plan
      shall be assignable or transferable; and

            (xii) to prescribe from time to time the form or forms of the
      instruments evidencing SARs granted under the Plan.

      (b) Benefit Upon Exercise

      Unless otherwise provided in the instrument or agreement evidencing such
SAR, the exercise of an SAR with respect to any number of shares of Common Stock
shall entitle the Participant to (i) a cash payment, for each such share, equal
to the excess of (A) the Fair Market Value of a share of Common Stock on the
effective date of such exercise over (B) the per share exercise price of the
SAR, (ii) the issuance or transfer to the Participant of the greatest number of
whole shares of Common Stock which on the date of the exercise of the SAR have
an aggregate Fair Market Value equal to such excess or (iii) a combination of
cash and shares of Common Stock in amounts equal to such excess; in each case,
as and to the extent provided in the instrument or agreement evidencing such
SAR.

      (c) Exercise of Tandem SARs

      The exercise with respect to a number of shares of Common Stock of an SAR
granted in tandem with an Option shall cause the immediate cancellation of the
Option with respect to the same number of shares. The exercise with respect to a
number of shares of Common Stock of an Option to which a tandem SAR relates
shall cause the immediate cancellation of the SAR with respect to an equal
number of shares.

8. Other Awards

      (a) Other Stock-Based Awards

      The Committee may grant equity-based or equity-related awards not
otherwise described herein in such amounts and subject to such terms and
conditions as the Committee shall determine. Without limiting the generality of
the preceding sentence, each such Other Stock-Based Award may (i) involve the
transfer of actual shares of Common Stock to Participants, either at the time of
grant or thereafter, or payment in cash or otherwise of amounts based on the
value of shares of Common Stock, (ii) be subject

                                       7
<PAGE>

to performance-based and/or service-based conditions, (iii) be in the form of
phantom stock, restricted stock, restricted stock units, performance shares, or
share-denominated performance units and (iv) be designed to comply with
applicable laws of jurisdictions other than the United States. Other Stock-Based
Awards that are intended to qualify as Performance-Based Compensation shall also
be subject to Section 9 of the Plan.

      (b) Other Incentive Awards

      The Committee may grant other Incentive Awards that are not equity-based
or equity related, in such amounts as the Committee shall determine. Subject to
the terms of the Plan, the Committee shall have the authority, within its
absolute discretion, to determine the terms and conditions of such Incentive
Awards, including, without limitation, the Performance Measures, if any,
relating to such Incentive Awards and the length of any Performance Periods.
Other Incentive Awards that are intended to qualify as Performance-Based
Compensation shall also be subject to Section 9 of the Plan.

9. Performance-Based Compensation

      (a) Performance Measures and Periods

      The performance goals upon which the payment or vesting of any Incentive
Award (other than Options and SARs) to a Covered Employee that is intended to
qualify as Performance-Based Compensation depends shall relate to one or more of
the following Performance Measures, each of which may be based on absolute
standards, ratios, or comparisons: revenue; net sales; cost of goods sold;
operating income; operating cash flow; net income; marginal contribution;
interest income; interest expense; earnings per share; return on sales; return
on assets; return on equity; return on invested capital; working capital; market
share; inventory; accounts receivable; costs of goods sold; selling and/or
general expenses; technical and/or research expenses; net income or earnings
before any or all of interest, taxes, depreciation, amortization and non-cash
charges; other income or expense; income before income taxes; shareholders'
equity; cash provided by operating activities; and Consolidated EBITDA,
Consolidated Tangible Net Worth and Leverage Ratio, each as defined in the
Company's Revolving Credit Facility Agreement dated January 8, 2004 (a copy of
which is filed as an exhibit to the Company's Annual Report of Form 10-K for the
year ended December 31, 2004).

      Performance Periods may be less than, equal to or longer than one fiscal
year of the Company and may be overlapping. Within 90 days after the beginning
of a Performance Period, and in any case before 25% of the Performance Period
has elapsed, the Committee shall establish (a) performance goals and objectives
for the Company for such Performance Period, (b) target awards for each
Participant, and (c) schedules or other objective methods for determining the
applicable performance percentage to be applied to each such target award.

      The measurement of any Performance Measure(s) may exclude the impact of
charges for restructurings, discontinued operations, extraordinary items, and
other unusual or non-recurring items, and the cumulative effects of accounting
changes, each as defined by generally accepted accounting principles or as
identified in the Company's audited financial statements, including the notes
thereto, as well as (a) severance costs or charges, (b) equipment relocation
costs or charges, or (c) equipment write-off or write-down costs or charges. Any
Performance Measure(s) may be used to measure the performance of the Company or
a Subsidiary as a whole or any business unit of the Company or any Subsidiary or
any combination thereof, as the Committee may deem appropriate, or any of the
above Performance Measures as compared to the performance of a group of
comparator companies, or a published index that the Committee, in its sole
discretion, deems appropriate.

                                       8
<PAGE>

      Nothing in this Section 9 is intended to limit the Committee's discretion
to adopt conditions or goals that relate to performance other than the
Performance Measures with respect to any Incentive Award (x) that is not
intended to qualify as Performance-Based Compensation, or (y) in the case of an
Incentive Award that is intended to qualify as Performance-Based Compensation,
where such goals, measures or conditions are used only to decrease the amount
payable pursuant to such Incentive Award. In addition, the Committee may,
subject to the terms of the Plan, amend previously granted Incentive Awards in a
way that disqualifies them as Performance-Based Compensation.

      (b) Committee Discretion

      With respect to any Performance Period, the Committee shall not have
discretion to change the performance goals, increase the amount of a potential
award, or modify any other provision after the time permitted to set such goals
under the requirements of Section 162(m) in any way that would cause such
compensation to be not Performance-Based Compensation, unless the Committee
intends that such compensation be disqualified as Performance-Based
Compensation.

      In the event that the requirements of Section 162(m) and the regulations
thereunder change to permit Committee discretion to alter the Performance
Measures without obtaining shareholder approval of such changes, the Committee
shall have sole discretion to make such changes without obtaining shareholder
approval.

10. Adjustment Upon Changes in Common Stock

      Notwithstanding any other provision of the Plan, in the event of any
change in the outstanding shares of Common Stock by reason of a stock dividend,
recapitalization, merger, consolidation, split-up, combination or exchange of
shares or the like, the aggregate number and class of shares for which options
may be granted under the Plan, the number and class of shares covered by or
issuable pursuant to Incentive Awards granted under the Plan and the value of
any outstanding Incentive Awards may be (but are not required to be)
appropriately adjusted by the Committee, whose determination shall be
conclusive. No fractional shares shall be issued under the Plan and any
fractional shares resulting from computations pursuant to this Section shall be
eliminated from the Incentive Award.

11. Rights as a Stockholder

      No person shall have any rights as a stockholder with respect to any
shares of Common Stock covered by or relating to any Incentive Award granted
pursuant to the Plan until the date of the issuance of a stock certificate with
respect to such shares. Except as otherwise expressly provided in Section 10
hereof, no adjustment of any Incentive Award shall be made for dividends or
other rights for which the record date occurs prior to the date such stock
certificate is issued.

12. No Special Employment Rights; No Right to Incentive Award

      (a) Nothing contained in the Plan or any Incentive Award shall confer upon
any Participant any right with respect to the continuation of his or her
employment by or service to the Company or interfere in any way with the right
of the Company at any time to terminate such employment or to increase or
decrease the compensation of the Participant from the rate in existence at the
time of the grant of an Incentive Award.

      (b) No person shall have any claim or right to receive an Incentive Award
hereunder. The Committee's granting of an Incentive Award to a Participant at
any time shall neither require the Committee to grant an Incentive Award to such
Participant or any other Participant or other person at any

                                       9
<PAGE>

time nor preclude the Committee from making subsequent grants to such
Participant or any other Participant or other person.

13. Securities Matters

      (a) The Company shall be under no obligation to effect the registration
pursuant to the Securities Act of any shares of Common Stock to be issued
hereunder or to effect similar compliance under any state laws. Notwithstanding
anything herein to the contrary, the Company shall not be obligated to cause to
be issued or delivered any certificates evidencing shares of Common Stock
pursuant to the Plan unless and until it is advised by its counsel that the
issuance and delivery of such certificates is in compliance with all applicable
laws, regulations of governmental authority and the requirements of any
securities exchange on which shares of Common Stock are traded. The Committee
may require, as a condition to the issuance and delivery of certificates
evidencing shares of Common Stock pursuant to the terms hereof, that the
recipient of such shares make such covenants, agreements and representations,
and that such certificates bear such legends, as the Committee deems necessary
or desirable.

      (b) The exercise of any Option granted hereunder shall only be effective
at such time as counsel to the Company shall have determined that the issuance
and delivery of shares of Common Stock pursuant to such exercise is in
compliance with all applicable laws, regulations of governmental authority and
the requirements of any securities exchange on which shares of Common Stock are
traded. The Company may, in its sole discretion, defer the effectiveness of an
exercise of an Option hereunder or the issuance or transfer of shares of Common
Stock pursuant to any Incentive Award to ensure compliance under federal or
state securities laws. The Company shall inform the Participant in writing of
its decision to defer the effectiveness of the exercise of an Option or the
issuance or transfer of shares of Common Stock pursuant to any Incentive Award.
During the period that the effectiveness of the exercise of an Option has been
deferred, the Participant may, by written notice, withdraw such exercise and
obtain the refund of any amount paid with respect thereto.

14. Withholding Taxes

      (a) Cash Remittance

      Whenever shares of Common Stock are to be issued upon the exercise of an
Option or the grant or vesting of an Incentive Award, the Company shall have the
right to require the Participant to remit to the Company in cash an amount
sufficient to satisfy federal, state and local withholding tax requirements, if
any, attributable to such exercise, grant or vesting prior to the delivery of
any certificate or certificates for such shares or the effectiveness of the
lapse of such restrictions. In addition, upon the exercise or settlement of any
Incentive Award in cash, the Company shall have the right to withhold from any
cash payment required to be made pursuant thereto an amount sufficient to
satisfy the federal, state and local withholding tax requirements, if any,
attributable to such exercise or settlement.

15. Amendment or Termination of the Plan

      The Board of Directors may at any time suspend or discontinue the Plan or
revise or amend it in any respect whatsoever; provided, however, that without
approval of the shareholders no revision or amendment shall, except as provided
in Section 10 hereof, (i) increase the number of shares of Common Stock that may
be issued under the Plan or (ii) materially modify the requirements as to
eligibility for participation in the Plan. Nothing herein shall restrict the
Committee's ability to exercise its discretionary authority hereunder pursuant
to Section 4 hereof, which discretion may be exercised without amendment to the
Plan. No action hereunder may, without the consent of a Participant, reduce the
Participant's rights

                                       10
<PAGE>

under any previously granted and outstanding Incentive Award. Nothing herein
shall limit the right of the Company to pay compensation of any kind outside the
terms of the Plan.

16. No Obligation to Exercise

      The grant to a Participant of an Option, SAR or other Incentive Award that
requires exercise before benefits are distributed or paid, shall impose no
obligation upon such Participant to exercise such Option, SAR or other Incentive
Award.

17. Transfers Upon Death

      Except as otherwise provided in the instrument evidencing such award, upon
the death of a Participant, or upon the transfer of an Incentive Award in the
manner (if any) permitted pursuant to the instrument evidencing such award,
outstanding Incentive Awards granted to such Participant may be exercised by the
executors or administrators of the Participant's estate or by any person or
persons who shall have acquired such right to exercise by will, by the laws of
descent and distribution, or by such permitted transfer. No transfer of any
Incentive Award, or the right to exercise any Incentive Award, shall be
effective to bind the Company unless the Committee shall have been furnished
with (a) written notice thereof and with a copy of any will, deed of transfer
and/or such evidence as the Committee may deem necessary to establish the
validity of the transfer and (b) an agreement by the transferee to comply with
all the terms and conditions of the Incentive Award that are or would have been
applicable to the Participant and to be bound by the acknowledgements made by
the Participant in connection with the grant of the Incentive Award.

18. Expenses and Receipts

      The expenses of the Plan shall be paid by the Company. Any proceeds
received by the Company in connection with any Incentive Award will be used for
general corporate purposes.

19. Governing Law

      The Plan and the rights of all persons under the Plan shall be construed
and administered in accordance with the laws of the State of New York without
regard to its conflict of law principles.

20. Effective Date and Term of Plan

      The Plan was adopted by the Board of Directors on February 18, 2005,
subject to the approval of the Plan by the shareholders of the Company. No
grants may be made under the Plan after February 18, 2015.

                                       11

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