Document:

APPENDIX 2

EXHIBIT 10.3   

 

 

 

 

 

 

 

 

2001 STOCK AWARD AND INCENTIVE PLAN

OF

MINERALS TECHNOLOGIES INC.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

	
                               

                              
                              TABLE OF CONTENTS

	 	
                              PAGE

	
                              Purpose
	
                              1

	
                              Definitions
	
                              1

	
                              Administration
	
                              3

	
                              Stock Subject to Plan
	
                              5

	
                              Eligibility; Per-Person Award Limitations
	
                              5

	
                              Specific Terms of Awards
	
                              6

	
                              Performance Awards, Including Annual Incentive
                              Awards
	
                              10

	
                              Certain Provisions Applicable to Awards
	
                              13

	
                              Change in Control
	
                              15

	
                              Additional Award Forfeiture Provisions
	
                              17

	
                              General Provisions
	
                              20

 

 

2001 STOCK AWARD AND INCENTIVE PLAN

OF MINERALS TECHNOLOGIES INC.

  

1.     Purpose..  The purpose of this 2001 Stock Award and Incentive Plan (the "Plan") is to aid Minerals Technologies Inc., a Delaware corporation (the "Company"), in attracting, retaining, motivating and rewarding employees, non-employee directors, and other persons who provide substantial services to the Company or its subsidiaries or affiliates, to provide for equitable and competitive compensation opportunities, to recognize individual contributions and reward achievement of Company goals, and promote the creation of long-term value for stockholders by closely aligning the interests of Participants with those of stockholders.  The Plan authorizes stock-based and cash-based incentives for Participants. 

2.     Definitions..  In addition to the terms defined in Section 1 above and elsewhere in the Plan, the following capitalized terms used in the Plan have the respective meanings set forth in this Section:

    (a)     "Annual Incentive Award" means a type of Performance Award granted to a Participant under Section 7(c) representing a conditional right to receive cash, Stock or other Awards or payments, as determined by the Committee, based on performance in a performance period of one fiscal year or a portion thereof.

    (b)     "Award" means any Option, Restricted Stock, Deferred Stock, Stock granted as a bonus or in lieu of another award, Dividend Equivalent, Other Stock-Based Award, Performance Award or Annual Incentive Award, together with any related right or interest, granted to a Participant under the Plan.

    (c)     "Beneficiary" means the legal representatives of the Participant's estate entitled by will or the laws of descent and distribution to receive the benefits under a Participant's Award upon a Participant's death, provided that, if and to the extent authorized by the Committee, a Participant may be permitted to designate a Beneficiary, in which case the "Beneficiary" instead will be the person, persons, trust or trusts (if any are then surviving) which have been designated by the Participant in his or her most recent written beneficiary designation filed with the Committee to receive the benefits specified under the Participant's Award upon such Participant's death.  Unless otherwise determined by the Committee, any designation of a Beneficiary other than a Participant's spouse shall be subject to the written consent of such spouse.

    (d)     "Board" means the Company's Board of Directors.

    (e)     "Change in Control" and related terms have the meanings specified in Section 9.

    (f)     "Code" means the Internal Revenue Code of 1986, as amended.  References to any provision of the Code or regulation (including a proposed regulation) thereunder shall include any successor provisions and regulations.

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    (g)     "Committee" means the Compensation and Nominating Committee of the Board; provided, however, that, directors appointed or serving as members of the Committee shall not be employees of the Company or any subsidiary or affiliate.  In appointing members of the Committee, the Board will consider whether a member is or will be a Qualified Member, but such members are not required to be Qualified Members at the time of appointment or during their term of service on the Committee.  The full Board may perform any function of the Committee hereunder, in which case the term "Committee" shall refer to the Board.  

    (h)      "Covered Employee" means an Eligible Person who is a Covered Employee as specified in Section 11(j). 

    (i)     "Deferred Stock" means a right, granted to a Participant under Section 6(d), to receive Stock or Other Stock-Based Awards or a combination thereof at the end of a specified deferral period.

    (j)     "Dividend Equivalent" means a right, granted to a Participant under Section 6(f), to receive cash, Stock, other Awards or other property equal in value to all or a specified portion of the dividends paid with respect to a specified number of shares of Stock.

    (k)     "Effective Date" means the effective date specified in Section 11(p).

    (l)     "Eligible Person" has the meaning specified in Section 5.

    (m)     "Exchange Act" means the Securities Exchange Act of 1934, as amended.  References to any provision of the Exchange Act or rule (including a proposed rule) thereunder shall include any successor provisions and rules.

    (n)     "Fair Market Value" means the fair market value of Stock, Awards or other property as determined by the Committee or under procedures established by the Committee.  Unless otherwise determined by the Committee, the Fair Market Value of Stock shall be the average of the high and low sales prices per share of Stock reported on a consolidated basis for securities listed on the principal stock exchange or market on which Stock is traded on the day on which the Award of such Stock is made or, if there is no sale on that day, then on the next day on which a sale is reported.

    (o)     "Incentive Stock Option" or "ISO" means any Option designated as an incentive stock option within the meaning of Code Section 422 or any successor provision thereto and qualifying thereunder.

    (p)     "Option" means a right, granted to a Participant under Section 6(b), to purchase Stock or Other Stock-Based Awards at a specified price during specified time periods.

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    (q)     "Other Stock-Based Awards" means Awards granted to a Participant under Section 6(g).

    (r)     "Participant" means a person who has been granted an Award under the Plan which remains outstanding, including a person who is no longer an Eligible Person.

    (s)     "Performance Award" means a conditional right, granted to a Participant under Sections 6(h) and 7, to receive cash, Stock or other Awards or payments, as determined by the Committee, based upon performance criteria specified by the Committee.  

    (t)     "Preexisting Plan" means the Stock and Incentive Plan of Minerals Technologies Inc. (as amended and restated as of February 22,2001).   

    (u)     "Qualified Member" means a member of the Committee who is a "Non-Employee Director" within the meaning of Rule 16b-3(b)(3) and an "outside director" within the meaning of Regulation 1.162-27 under Code Section 162(m).

    (v)     "Restricted Stock" means Stock granted to a Participant under Section 6(c) which is subject to certain restrictions and to a risk of forfeiture.

    (w)     "Rule 16b-3" means Rule 16b-3, as from time to time in effect and applicable to Participants, promulgated by the Securities and Exchange Commission under Section 16 of the Exchange Act.

    (x)     "Stock" means the Company's Common Stock, par value $0.10 per share, and any other equity securities of the Company that may be substituted or resubstituted for Stock pursuant to Section 11(c).

3.     Administration.

    (a)     Authority of the Committee.  The Plan shall be administered by the Committee, which shall have full and final authority, in each case subject to and consistent with the provisions of the Plan, to select Eligible Persons to become Participants; to grant Awards; to determine the type and number of Awards, the dates on which Awards may be exercised and on which the risk of forfeiture or the deferral period relating to Awards shall lapse or terminate; the acceleration of any such dates, the expiration date of any Award; whether, to what extent, and under what circumstances an Award may be settled, or the exercise price of an Award may be paid, in cash, Stock, other Awards, or other property; and other terms and conditions of, and all other matters relating to, Awards; to prescribe documents evidencing or setting terms of Awards (such Award documents need not be identical for each Participant), amendments thereto, and rules and regulations for the administration of the Plan and amendments thereto; to construe and interpret the Plan and Award documents and correct defects, supply omissions or reconcile inconsistencies therein; and to make all other decisions and determinations as the Committee may deem necessary or advisable for the administration of the Plan.  Decisions of the Committee with respect to the 

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  administration and interpretation of the Plan shall be final, conclusive, and binding upon all persons interested in the Plan, including Participants, Beneficiaries, transferees under Section 11(b), and other persons claiming rights from or through a Participant, and stockholders.  The foregoing notwithstanding, the Board shall perform the functions of the Committee for purposes of granting Awards under the Plan to non-employee directors (authority with respect to other aspects of non-employee director awards is not exclusive to the Board, however).

    (b)     Manner of Exercise of Committee Authority.  At any time that a member of the Committee is not a Qualified Member, (i) any action of the Committee relating to an Award intended by the Committee to qualify as "performance-based compensation" within the meaning of Code Section 162(m) and regulations thereunder may be taken by a subcommittee, designated by the Committee or the Board, composed solely of two or more Qualified Members, and (ii) any action relating to an Award granted or to be granted to a Participant who is then subject to Section 16 of the Exchange Act in respect of the Company may be taken either by such a subcommittee or by the Committee but with each such member who is not a Qualified Member abstaining or recusing himself or herself from such action, provided that, upon such abstention or recusal, the Committee remains composed of two or more Qualified Members.  Such action, authorized by such a subcommittee or by the Committee upon the abstention or recusal of such non-Qualified Member(s), shall be the action of the Committee for purposes of the Plan.  The express grant of any specific power to the Committee, and the taking of any action by the Committee, shall not be construed as limiting any power or authority of the Committee.  The Committee may delegate to officers or managers of the Company or any subsidiary or affiliate, or committees thereof, the authority, subject to such terms as the Committee shall determine, to perform such functions, including administrative functions, as the Committee may determine, to the extent that such delegation will not result in the loss of an exemption under Rule 16b-3(d) for Awards granted to Participants subject to Section 16 of the Exchange Act in respect of the Company and will not cause Awards intended to qualify as "performance-based compensation" under Code Section 162(m) to fail to so qualify.

    (c)     Limitation of Liability.  The Committee and each member thereof, and any person acting pursuant to authority delegated by the Committee, shall be entitled, in good faith, to rely or act upon any report or other information furnished by any executive officer, other officer or employee of the Company or a subsidiary or affiliate, the Company's independent auditors, consultants or any other agents assisting in the administration of the Plan.  Members of the Committee, any person acting pursuant to authority delegated by the Committee, and any officer or employee of the Company or a subsidiary or affiliate acting at the direction or on behalf of the Committee or a delegee shall not be personally liable for any action or determination taken or made in good faith with respect to the Plan, and shall, to the extent permitted by law, be fully indemnified and protected by the Company with respect to any such action or determination.

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4.     Stock Subject to Plan.

    (a)     Overall Number of Shares Available for Delivery.  Subject to adjustment as provided in Section 11(c), the total number of shares of Stock reserved and available for delivery in connection with Awards under the Plan shall be (i) 500,000 shares, plus (ii) the number of shares that, immediately prior to the Effective Date, remain available for issuance under the Preexisting Plan (1,017,268 shares) plus (iii) the number of shares subject to awards under the Preexisting Plan which become available in accordance with Section 4(b) after the Effective Date plus (iv) 15% of the number of shares issued or delivered by the Company during the term of the Plan other than issuances or deliveries under the Plan or other incentive compensation plans of the Company; provided, however, that the total number of shares with respect to which ISOs may be granted shall not exceed the number specified under clause (i) plus the number specified under clause (ii) above; and provided further, that the total number of shares which may be issued and delivered in connection with Awards other than Options shall not exceed 10% of the total number of shares reserved under the Plan.  Any shares of Stock delivered under the Plan shall consist of authorized and unissued shares or treasury shares. 

    (b)     Share Counting Rules.  The Committee may adopt reasonable counting procedures to ensure appropriate counting, avoid double counting (as, for example, in the case of tandem or substitute awards) and make adjustments if the number of shares of Stock actually delivered differs from the number of shares previously counted in connection with an Award.  Shares subject to an Award or an award under the Preexisting Plan that is canceled, expired, forfeited, settled in cash or otherwise terminated without a delivery of shares to the Participant will again be available for Awards, and shares withheld in payment of the exercise price or taxes relating to an Award or Preexisting Plan award and shares equal to the number surrendered in payment of any exercise price or taxes relating to an Award or Preexisting Plan award shall be deemed to constitute shares not delivered to the Participant and shall be deemed to again be available for Awards under the Plan.  In addition, in the case of any Award granted in substitution for an award of a company or business acquired by the Company or a subsidiary or affiliate, shares issued or issuable in connection with such substitute Award shall not be counted against the number of shares reserved under the Plan, but shall be available under the Plan by virtue of the Company's assumption of the plan or arrangement of the acquired company or business.  This Section 4(b) shall apply to the number of shares reserved and available for ISOs only to the extent consistent with applicable regulations relating to ISOs under the Code.

5.     Eligibility; Per-Person Award Limitations..  Awards may be granted under the Plan only to Eligible Persons.  For purposes of the Plan, an "Eligible Person" means an employee of the Company or any subsidiary or affiliate, including any executive officer, a non-employee director of the Company, a consultant or other person who provides substantial services to the Company or a subsidiary or affiliate, and any person who has been offered employment by the Company or a subsidiary or affiliate, provided that such prospective employee may not receive any payment or exercise any right relating to an Award until such person has commenced employment with the Company or a subsidiary or affiliate.  An employee on leave of absence may be considered as still in the employ of the 

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  Company or a subsidiary or affiliate for purposes of eligibility for participation in the Plan.  For purposes of the Plan, a joint venture in which the Company or a subsidiary has a substantial direct or indirect equity investment shall be deemed an affiliate, if so determined by the Committee.  In each calendar year during any part of which the Plan is in effect, an Eligible Person may be granted Awards intended to qualify as "performance-based compensation" under Code Section 162(m) under each of Section 6(b), 6(c), 6(d), 6(e), 6(f), or 6(g) relating to up to his or her Annual Limit (such Annual Limit to apply separately to the type of Award authorized under each specified subsection, except that the limitation applies to Dividend Equivalents under Section 6(f) only if such Dividend Equivalents are granted separately from and not as a feature of another Award).  A Participant's Annual Limit, in any year during any part of which the Participant is then eligible under the Plan, shall equal 500,000 shares plus the amount of the Participant's unused Annual Limit relating to the same type of Award as of the close of the previous year, subject to adjustment as provided in Section 11(c). In the case of an Award which is not valued in a way in which the limitation set forth in the preceding sentence would operate as an effective limitation satisfying Treasury Regulation 1.162-27(e)(4) (including a Performance Award under Section 7 not related to an Award specified in Section 6), an Eligible Person may not be granted Awards authorizing the earning during any calendar year of an amount that exceeds the Participant's Annual Limit, which for this purpose shall equal $3 million plus the amount of the Participant's unused cash Annual Limit as of the close of the previous year (this limitation is separate and not affected by the number of Awards granted during such calendar year subject to the limitation in the preceding sentence).  For this purpose, (i) "earning" means satisfying performance conditions so that an amount becomes payable, without regard to whether it is to be paid currently or on a deferred basis or continues to be subject to any service requirement or other non-performance condition, and (ii) a Participant's Annual Limit is used to the extent an amount or number of shares may be potentially earned or paid under an Award, regardless of whether such amount or shares are in fact earned or paid.

6.     Specific Terms of Awards.

              (a)     General.  Awards may be granted on the terms and conditions set forth in this Section 6.  In addition, the Committee may impose on any Award or the exercise thereof, at the date of grant or thereafter (subject to Section 11(e)), such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall determine, including terms requiring forfeiture of Awards in the event of termination of employment or service by the Participant and terms permitting a Participant to make elections relating to his or her Award.  The Committee shall retain full power and discretion with respect to any term or condition of an Award that is not mandatory under the Plan.  The Committee shall require the payment of lawful consideration for an Award to the extent necessary to satisfy the requirements of the Delaware General Corporation Law, and may otherwise require payment of consideration for an Award except as limited by the Plan.

    (b)     Options.  The Committee is authorized to grant Options to Participants on the following terms and conditions:

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    (i)     Exercise Price.  The exercise price per share of Stock purchasable under an Option (including both ISOs and non-qualified Options) shall be determined by the Committee, provided that such exercise price shall be not less than the Fair Market Value of a share of Stock on the date of grant of such Option, subject to Sections 6(e) and 8(a).

    (ii)     Option Term; Time and Method of Exercise.  The Committee shall determine the term of each Option, provided that in no event shall the term of any ISO exceed a period of ten years from the date of grant.  The Committee shall determine the time or times at which or the circumstances under which an Option may be exercised in whole or in part (including based on achievement of performance goals and/or future service requirements), the methods by which such exercise price may be paid or deemed to be paid and the form of such payment (subject to Section 11(k)), including, without limitation, cash, Stock, other Awards or awards granted under other plans of the Company or any subsidiary or affiliate, or other property (including notes and other contractual obligations of Participants to make payment on a deferred basis, such as through "cashless exercise" arrangements, to the extent permitted by applicable law), and the methods by or forms in which Stock will be delivered or deemed to be delivered in satisfaction of Options to Participants (including deferred delivery of shares representing the Option "profit," at the election of the Participant or as mandated by the Committee, with such deferred shares subject to any vesting, forfeiture or other terms as the Committee may specify).

    (iii)     ISOs.  The terms of any ISO granted under the Plan shall comply in all respects with the provisions of Code Section 422, including but not limited to the requirement that no ISO shall be granted more than ten years after the Effective Date.  

    (iv)     Non-Employee Director Option Grants.  At any time that the Compensation and Nominating Committee grants across-the-board options to employees, Non-Employee Directors shall also be granted options, using the same ratio of number of options granted to amount of compensation as is used in determining options granted to employees in the across-the-board option grant.  For this purpose, the Non-Employee Director's compensation in the prior year shall be used, with any units included in such compensation valued as of the date of their award.

          

    (c)     Restricted Stock.  The Committee is authorized to grant Restricted Stock to Participants on the following terms and conditions:

              (i)     Grant and Restrictions.  In addition to any restrictions imposed by law, Restricted Stock shall be subject to such restrictions on transferability, risk of forfeiture and other restrictions, if any, as the Committee may impose, which restrictions may lapse separately or in combination at such times, under such circumstances (including based on achievement of performance goals and/or future service requirements), in such installments or otherwise and under such 

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            other circumstances as the Committee may determine at the date of grant or thereafter.  Except to the extent restricted under the terms of the Plan and any Award document relating to the Restricted Stock, a Participant granted Restricted Stock shall have all of the rights of a stockholder, including the right to vote the Restricted Stock and the right to receive dividends thereon (subject to any mandatory reinvestment or other requirement imposed by the Committee).

    (ii)     Forfeiture.  Except as otherwise determined by the Committee, upon termination of employment or service during the applicable restriction period, Restricted Stock that is at that time subject to restrictions shall be forfeited and reacquired by the Company; provided that the Committee may provide, by rule or regulation or in any Award document, or may determine in any individual case, that restrictions or forfeiture conditions relating to Restricted Stock will lapse in whole or in part, including in the event of terminations resulting from specified causes.

    (iii)     Certificates for Stock.  Restricted Stock granted under the Plan may be evidenced in such manner as the Committee shall determine.  If certificates representing Restricted Stock are registered in the name of the Participant, the Committee may require that such certificates bear an appropriate legend referring to the terms, conditions and restrictions applicable to such Restricted Stock, that the Company retain physical possession of the certificates, and that the Participant deliver a stock power to the Company, endorsed in blank, relating to the Restricted Stock.

    (iv)     Dividends and Splits.  As a condition to the grant of an Award of Restricted Stock, the Committee may require that any dividends paid on a share of Restricted Stock shall be either (A) paid with respect to such Restricted Stock at the dividend payment date in cash, in kind, or in a number of shares of unrestricted Stock having a Fair Market Value equal to the amount of such dividends, or (B) automatically reinvested in additional Restricted Stock or held in kind, which shall be subject to the same terms as applied to the original Restricted Stock to which it relates, or (C) deferred as to payment, either as a cash deferral or with the amount or value thereof automatically deemed reinvested in shares of Deferred Stock, other Awards or other investment vehicles, subject to such terms as the Committee shall determine or permit a Participant to elect.  Unless otherwise determined by the Committee, Stock distributed in connection with a Stock split or Stock dividend, and other property distributed as a dividend, shall be subject to restrictions and a risk of forfeiture to the same extent as the Restricted Stock with respect to which such Stock or other property has been distributed.

          

    (d)     Deferred Stock.  The Committee is authorized to grant Deferred Stock to Participants, which are rights to receive Stock, other Awards, or a combination thereof at the end of a specified deferral period, subject to the following terms and conditions:

              (i)     Award and Restrictions.  Issuance of Stock will occur upon expiration of the deferral period specified for an Award of Deferred Stock by the Committee (or, if permitted by the Committee, as elected by the Participant).  In addition, Deferred 

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            Stock shall be subject to such restrictions on transferability, risk of forfeiture and other restrictions, if any, as the Committee may impose, which restrictions may lapse at the expiration of the deferral period or at earlier specified times (including based on achievement of performance goals and/or future service requirements), separately or in combination, in installments or otherwise, and under such other circumstances as the Committee may determine at the date of grant or thereafter.  Deferred Stock rights may be satisfied by delivery of Stock, other Awards, or a combination thereof (subject to Section 11(k)), as determined by the Committee at the date of grant or thereafter.

    (ii)     Forfeiture.  Except as otherwise determined by the Committee, upon termination of employment or service during the applicable deferral period or portion thereof to which forfeiture conditions apply (as provided in the Award document evidencing the Deferred Stock), all Deferred Stock that is at that time subject to such forfeiture conditions shall be forfeited; provided that the Committee may provide, by rule or regulation or in any Award document, or may determine in any individual case, that restrictions or forfeiture conditions relating to Deferred Stock will lapse in whole or in part, including in the event of terminations resulting from specified causes.

    (iii)     Dividend Equivalents.  Unless otherwise determined by the Committee, Dividend Equivalents on the specified number of shares of Stock covered by an Award of Deferred Stock shall be either (A) paid with respect to such Deferred Stock at the dividend payment date in cash or in shares of unrestricted Stock having a Fair Market Value equal to the amount of such dividends, or (B) deferred with respect to such Deferred Stock, either as a cash deferral or with the amount or value thereof automatically deemed reinvested in additional Deferred Stock, other Awards or other investment vehicles having a Fair Market Value equal to the amount of such dividends, as the Committee shall determine or permit a Participant to elect. 

          

    (e)     Bonus Stock and Awards in Lieu of Obligations.  The Committee is authorized to grant Stock as a bonus, or to grant Stock or other Awards in lieu of obligations of the Company or a subsidiary or affiliate to pay cash or deliver other property under the Plan or under other plans or compensatory arrangements, subject to such terms as shall be determined by the Committee.

    (f)     Dividend Equivalents.  The Committee is authorized to grant Dividend Equivalents to a Participant, entitling the Participant to receive cash, Stock, other Awards, or other property equivalent  to all or a portion of the dividends paid with respect to a specified number of shares of Stock.  Dividend Equivalents may be awarded on a free-standing basis or in connection with another Award.  The Committee may provide that Dividend Equivalents shall be paid or distributed when accrued or shall be deemed to have been reinvested in additional Stock, Awards, or other investment vehicles, and subject to restrictions on transferability, risks of forfeiture and such other terms as the Committee may specify.

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    (g)     Other Stock-Based Awards.  The Committee is authorized, subject to limitations under applicable law, to grant to Participants such other Awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Stock or factors that may influence the value of Stock, including, without limitation, convertible or exchangeable debt securities, other rights convertible or exchangeable into Stock, purchase rights for Stock, Awards with value and payment contingent upon performance of the Company or business units thereof or any other factors designated by the Committee, and Awards valued by reference to the book value of Stock or the value of securities of or the performance of specified subsidiaries or affiliates or other business units.  The Committee shall determine the terms and conditions of such Awards.  Stock delivered pursuant to an Award in the nature of a purchase right granted under this Section 6(g) shall be purchased for such consideration, paid for at such times, by such methods, and in such forms, including, without limitation, cash, Stock, other Awards, notes, or other property, as the Committee shall determine.  Cash awards, as an element of or supplement to any other Award under the Plan, may also be granted pursuant to this Section 6(g).

    (h)     Performance Awards. Performance Awards, denominated in cash or in Stock or other Awards, may be granted by the Committee in accordance with Section 7.

7.     Performance Awards, Including Annual Incentive Awards.

              (a)     Performance Awards Generally.  The Committee is authorized to grant Performance Awards on the terms and conditions specified in this Section 7.  Performance Awards may be denominated as a cash amount, a number of shares of Stock, or a specified number of other Awards (or a combination of the foregoing) which may be earned upon achievement or satisfaction of performance conditions specified by the Committee.  In addition, the Committee may specify that any other Award shall constitute a Performance Award by conditioning the right of a Participant to exercise the Award or have it settled, and the timing thereof, upon achievement or satisfaction of such performance conditions as may be specified by the Committee. The Committee may use such business criteria and other measures of performance as it may deem appropriate in establishing any performance conditions, and may exercise its discretion to reduce or increase the amounts payable under any Award subject to performance conditions, except as limited under Sections 7(b) and 7(c) in the case of a Performance Award intended to qualify as "performance-based compensation" under Code Section 162(m).

              (b)     Performance Awards Granted to Covered Employees.  If the Committee determines that a Performance Award to be granted to an Eligible Person who is designated by the Committee as likely to be a Covered Employee should qualify as "performance-based compensation" for purposes of Code Section 162(m), the grant, exercise and/or settlement of such Performance Award shall be contingent upon achievement of a preestablished performance goal and other terms set forth in this Section 7(b).  Such Performance Awards shall be subject to the per-person maximum limitation set forth in Section 5.

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                        (i)     Performance Goal Generally.  The performance goal for such Performance Awards shall consist of one or more business criteria and a targeted level or levels of performance with respect to each of such criteria, as specified by the Committee consistent with this Section 7(b).  The performance goal shall be objective and shall otherwise meet the requirements of Code Section 162(m) and regulations thereunder (including Regulation 1.162-27 and successor regulations thereto), including the requirement that the level or levels of performance targeted by the Committee result in the achievement of performance goals being "substantially uncertain."  The Committee may determine that such Performance Awards shall be granted, exercised and/or settled upon achievement of any one performance goal or that two or more of the performance goals must be achieved as a condition to grant, exercise and/or settlement of such Performance Awards.  Performance goals may differ for Performance Awards granted to any one Participant or to different Participants.

    (ii)     Business Criteria.  One or more of the following business criteria for the Company, on a consolidated basis, and/or for specified subsidiaries or affiliates or other business units of the Company shall be used by the Committee in establishing performance goals for such Performance Awards: (1) net sales; (2) earnings from operations, earnings before or after taxes, earnings before or after interest, depreciation, amortization, or extraordinary or special items, (3) net income or net income per common share (basic or diluted); (4) return on assets, return on invested capital, return on total capital, or return on equity; (5) cash flow, free cash flow, cash flow return on investment, or net cash provided by operations; (6) interest expense after taxes; (7) economic value created; (8) operating margin, or profit margin; (9) stock price or total stockholder return; and (10) strategic business criteria, consisting of one or more objectives based on meeting specified market penetration, geographic business expansion goals, cost targets, customer satisfaction, employee satisfaction, management of employment practices and employee benefits, supervision of litigation and information technology, and goals relating to acquisitions or divestitures of subsidiaries, affiliates or joint ventures.  The targeted level or levels of performance with respect to such business criteria may be established at such levels and in such terms as the Committee may determine, in its discretion, including in absolute terms, as a goal relative to performance in prior periods, or as a goal compared to the performance of one or more comparable companies or an index covering multiple companies. 

    (iii)     Performance Period; Timing for Establishing Performance Goals.  Achievement of performance goals in respect of such Performance Awards shall be measured over a performance period of up to one year or more than one year, as specified by the Committee.  A performance goal shall be established not later than the earlier of (A) 90 days after the beginning of any performance period applicable to such Performance Award or (B) the time 25% of such performance period has elapsed. 

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    (iv)     Performance Award Pool.  The Committee may establish a Performance  Award pool, which shall be an unfunded pool, for purposes of measuring performance of the Company in connection with Performance Awards.  The amount of such Performance Award pool shall be based upon the achievement of a performance goal or goals based on one or more of the business criteria set forth in Section 7(b)(ii) during the given performance period, as specified by the Committee in accordance with Section 7(b)(iv).  The Committee may specify the amount of the Performance Award pool as a percentage of any of such business criteria, a percentage thereof in excess of a threshold amount, or as another amount which need not bear a strictly mathematical relationship to such business criteria.

    (v)     Settlement of Performance Awards; Other Terms.  Settlement of such Performance Awards shall be in cash, Stock, other Awards or other property, in the discretion of the Committee.  The Committee may, in its discretion, increase or reduce the amount of a settlement otherwise to be made in connection with such Performance Awards, but may not exercise discretion to increase any such amount payable to a Covered Employee in respect of a Performance Award subject to this Section 7(b).  Any settlement which changes the form of payment from that originally specified shall be implemented in a manner such that the Performance Award and other related Awards do not, solely for that reason, fail to qualify as "performance-based compensation" for purposes of Code Section 162(m).  The Committee shall specify the circumstances in which such Performance Awards shall be paid or forfeited in the event of termination of employment by the Participant or other event (including a Change in Control) prior to the end of a performance period or settlement of such Performance Awards.

          

    (c)     Annual Incentive Awards Granted to Designated Covered Employees.  The Committee may grant an Annual Incentive Award to an Eligible Person who is designated by the Committee as likely to be a Covered Employee.  Such Annual Incentive Award will be intended to qualify as "performance-based compensation" for purposes of Code Section 162(m), and therefore its grant, exercise and/or settlement shall be contingent upon achievement of pre-established performance goals and other terms set forth in this Section 7(c).

              (i)     Grant of Annual Incentive Awards.  Not later than the earlier of 90 days after the beginning of any performance period applicable to such Annual Incentive Award or the time 25% of such performance period has elapsed, the Committee shall determine the Covered Employees who will potentially receive Annual Incentive Awards, and the amount(s) potentially payable thereunder, for that performance period.  The amount(s) potentially payable shall be based upon the achievement of a performance goal or goals based on one or more of the business criteria set forth in Section 7(b)(ii) in the given performance period, as specified by the Committee.  The Committee may designate an annual incentive award pool as the means by which Annual Incentive Awards will be measured, which pool shall conform to the provisions of Section 7(b)(iv).  In such case, the portion of the Annual Incentive Award pool potentially payable to each Covered Employee shall be preestablished by  

12 

          

            the Committee.  In all cases, the maximum Annual Incentive Award of any Participant shall be subject to the limitation set forth in Section 5. 

    (ii)     Payout of Annual Incentive Awards.  After the end of each performance period, the Committee shall determine the amount, if any, of the Annual Incentive Award for that performance period payable to each Participant.  The Committee may, in its discretion, determine that the amount payable to any Participant as a final Annual Incentive Award shall be reduced from the amount of his or her potential Annual Incentive Award, including a determination to make no final Award whatsoever, but may not exercise discretion to increase any such amount.  The Committee shall specify the circumstances in which an Annual Incentive Award shall be paid or forfeited in the event of termination of employment by the Participant or other event (including a Change in Control) prior to the end of a performance period or settlement of such Annual Incentive Award.

          

    (d)     Written Determinations.  Determinations by the Committee as to the establishment of performance goals, the amount potentially payable in respect of Performance Awards and Annual Incentive Awards, the level of actual achievement of the specified performance goals relating to Performance Awards and Annual Incentive Awards, and the amount of any final Performance Award and Annual Incentive Award shall be recorded in writing in the case of Performance Awards intended to qualify under Section 162(m).  Specifically, the Committee shall certify in writing, in a manner conforming to applicable regulations under Section 162(m), prior to settlement of each such Award granted to a Covered Employee, that the performance objective relating to the Performance Award and other material terms of the Award upon which settlement of the Award was conditioned have been satisfied.  

8.     Certain Provisions Applicable to Awards.

    (a)     Stand-Alone, Additional, Tandem, and Substitute Awards.  Awards granted under the Plan may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with, or in substitution or exchange for, any other Award or any award granted under another plan of the Company, any subsidiary or affiliate, or any business entity to be acquired by the Company or a subsidiary or affiliate, or any other right of a Participant to receive payment from the Company or any subsidiary or affiliate.  Awards granted in addition to or in tandem with other Awards or awards may be granted either as of the same time as or a different time from the grant of such other Awards or awards.  Subject to Section 11(k), the Committee may determine that, in granting a new Award, the in-the-money value of any surrendered Award or award may be applied to reduce the exercise price of any Option, or purchase price of any other Award.  

    (b)     Term of Awards.  The term of each Award shall be for such period as may be determined by the Committee, subject to the express limitations set forth in Section 6(b)(ii).

    (c)     Form and Timing of Payment under Awards; Deferrals.  Subject to the terms of the Plan (including Section 11(k)) and any applicable Award document, payments to be 

13

  made by the Company or a subsidiary or affiliate upon the exercise of an Option or other Award or settlement of an Award may be made in such forms as the Committee shall determine, including, without limitation, cash, Stock, other Awards or other property, and may be made in a single payment or transfer, in installments, or on a deferred basis.  The settlement of any Award may be accelerated, and cash paid in lieu of Stock in connection with such settlement, in the discretion of the Committee or upon occurrence of one or more specified events (subject to Section 11(k)).  Installment or deferred payments may be required by the Committee (subject to Section 11(e)) or permitted at the election of the Participant on terms and conditions established by the Committee.  Payments may include, without limitation, provisions for the payment or crediting of reasonable interest on installment or deferred payments or the grant or crediting of Dividend Equivalents or other amounts in respect of installment or deferred payments denominated in Stock.

    (d)     Exemptions from Section 16(b) Liability. With respect to a Participant who is then subject to the reporting requirements of Section 16(a) of the Exchange Act in respect of the Company, the Committee shall use reasonable efforts to implement transactions under the Plan and administer the Plan in a manner that will ensure that each transaction with respect to such a Participant is exempt from liability under Rule 16b-3 or otherwise not subject to liability under Section 16(b)), except that this provision shall not limit sales by such a Participant, and such a Participant may engage in other non-exempt transactions under the Plan.  The Committee may authorize the Company to repurchase any Award or shares of Stock deliverable or delivered in connection with any Award (subject to Section 11(k)) in order to avoid a Participant who is subject to Section 16 of the Exchange Act incurring liability under Section 16(b).  Unless otherwise specified by the Participant, equity securities or derivative securities acquired under the Plan which are disposed of by a Participant shall be deemed to be disposed of in the order acquired by the Participant.

    (e)     Loan Provisions.  With the consent of the Committee, and subject at all times to, and only to the extent, if any, permitted under and in accordance with, laws and regulations and other binding obligations or provisions applicable to the Company, the Company may make, guarantee, or arrange for a loan or loans to a Participant with respect to the exercise of any Option or other payment in connection with any Award, including the payment by a Participant of any or all federal, state, or local income or other taxes due in connection with any Award.  Subject to such limitations, the Committee shall have full authority to decide whether to make a loan or loans hereunder and to determine the amount, terms, and provisions of any such loan or loans, including the interest rate, if any, to be charged in respect of any such loan or loans, whether the loan or loans are to be with or without recourse against the borrower, the terms on which the loan is to be repaid and conditions, if any, under which the loan or loans may be forgiven.

    (f)     Limitation on Vesting of Certain Awards.  Restricted Stock will vest over a minimum period of one year except in the event of a Participant's death, disability, or retirement, or in the event of a Change in Control or other special circumstances.  

14  

9.     Change in Control.

    (a)     Effect of "Change in Control" on Non-Performance Based Awards.  In the event of a "Change in Control," the following provisions shall apply to non-performance based Awards, including Awards as to which performance conditions previously have been satisfied or are deemed satisfied under Section 9(b), unless otherwise provided by the Committee in the Award document:

          

    (i)     All deferral of settlement, forfeiture conditions and other restrictions applicable to Awards granted under the Plan shall lapse and such Awards shall be fully payable as of the time of the Change in Control without regard to deferral and vesting conditions, except to the extent of any waiver by the Participant or other express election to defer beyond a Change in Control and subject to applicable restrictions set forth in Section 11(a); 

    (ii)     Any Award carrying a right to exercise that was not previously exercisable and vested shall become fully exercisable and vested as of the time of the Change in Control and shall remain exercisable and vested for the balance of the stated term of such Award without regard to any termination of employment or service by the Participant other than a termination for "cause" (as defined in any employment or severance agreement between the Company or a subsidiary or affiliate and the Participant then in effect or, if none, as defined by the Committee and in effect at the time of the Change in Control), subject only to applicable restrictions set forth in Section 11(a); and

    (iii)     The Committee may, in its discretion, determine to extend to any Participant who holds an Option the right to elect, during the 60-day period immediately following the Change in Control, in lieu of acquiring the shares of Stock covered by such Option, to receive in cash the excess of the Change in Control Price over the exercise price of such Option, multiplied by the number of shares of Stock covered by such Option, and to extend to any Participant who holds other types of Awards denominated in shares the right to elect, during the 60-day period immediately following the Change in Control, in lieu of receiving the shares of Stock covered by such Award, to receive in cash the Change in Control Price multiplied by the number of shares of Stock covered by such Award.

          

    (b)     Effect of "Change in Control" on Performance-Based Awards.  In the event of a "Change in Control," with respect to an outstanding Award subject to achievement of performance goals and conditions, such performance goals and conditions shall be deemed to be met or exceeded if and to the extent so provided by the Committee in the Award document governing such Award or other agreement with the Participant.

    (c)     Definition of "Change in Control."  A "Change in Control" shall be deemed to have occurred if, after the Effective Date, there shall have occurred any of the following:

15

          

    (i)     Any "person," as such term is used in Section 13(d) and 14(d) of the Exchange Act (other than the Company, any trustee or other fiduciary holding securities under an employee benefit plan of the Company, or any company owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company), acquires voting securities of the Company and immediately thereafter is a "15% Beneficial Owner."  For purposes of this provision, a "15% Beneficial Owner" shall mean a person who is the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 15% or more of the combined voting power of the Company's then-outstanding voting securities; provided that the term "15% Beneficial Owner" shall not include any person who, at all times following such an acquisition of securities, remains eligible to file a Schedule 13G pursuant to Rule 13d-1(b) under the Exchange Act, or remains exempt from filing a Schedule 13D under Section 13(d)(6)(b) of the Exchange Act, with respect to all classes of Company voting securities;

    (ii)     During any period of two consecutive years commencing on or after the Effective Date, individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person (as defined above) who has entered into an agreement with the Company to effect a transaction described in subsections (i), (iii) or (iv) of this definition) 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 (the "Continuing Directors") cease for any reason to constitute at least a majority thereof; 

    (iii)     The shareholders of the Company have approved a merger, consolidation, recapitalization, or reorganization of the Company, or a reverse stock split of any class of voting securities of the Company, or the consummation of any such transaction if shareholder approval is not obtained, other than any such transaction which would result in at least 60% of the combined voting power of the voting securities of the Company or the surviving entity outstanding immediately after such transaction being beneficially owned by persons who together beneficially owned at least 80% of the combined voting power of the voting securities of the Company outstanding immediately prior to such transaction, with the relative voting power of each such continuing holder compared to the voting power of each other continuing holder not substantially altered as a result of the transaction; provided that, for purposes of this paragraph (iii), such continuity of ownership (and preservation of relative voting power) shall be deemed to be satisfied if the failure to meet such 60% threshold (or to substantially preserve such relative voting power) is due solely to the acquisition of voting securities by an employee benefit plan of the Company, such surviving entity or a subsidiary thereof; and provided further, that, if consummation of the corporate transaction referred to in this Section 9(c)(iii) is subject, at the time of such approval by shareholders, to the consent of any government or governmental agency or approval of the shareholders of another entity or other material 

16

          

          

  contingency, no Change in Control shall occur until such time as such consent and approval has been obtained and any other material contingency has been satisfied;

    (iv)     The shareholders of the Company have approved 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 any transaction having a similar effect); provided that, if consummation of the transaction referred to in this Section 9(c)(iv) is subject, at the time of such approval by shareholders, to the consent of any government or governmental agency or approval of the shareholders of another entity or other material contingency, no Change in Control shall occur until such time as such consent and approval has been obtained and any other material contingency has been satisfied; and

    (v)     any other event which the Board of Directors of the Company determines shall constitute a Change in Control for purposes of this Plan; 

          

provided that a Change in Control shall not be deemed to have occurred if, prior to the later of occurrence of the specified event that would otherwise constitute a Change in Control under paragraphs (i) through (iv) hereof or the expiration of seven days after the Company has obtained actual notice that such an event has occurred, the Continuing Directors of the Company then in office, by a majority vote thereof, determine that the occurrence of such specified event shall not be deemed to be a Change in Control hereunder or shall not be deemed to be a Change in Control with respect to a particular Participant.

    (d)     Definition of "Change in Control Price."  The "Change in Control Price" means an amount in cash equal to the higher of (i) the amount of cash and fair market value of property that is the highest price per share paid (including extraordinary dividends) in any transaction triggering the Change in Control or any liquidation of shares following a sale of substantially all assets of the Company, or (ii) the highest Fair Market Value per share at any time during the 60-day period preceding and 60-day period following the Change in Control.

10.     Additional Award Forfeiture Provisions

              (a)     Forfeiture of Options and Other Awards and Gains Realized Upon Prior Option Exercises or Award Settlements.  Unless otherwise determined by the Committee, each Award granted hereunder shall be subject to the following additional forfeiture conditions, to which the Participant, by accepting an Award hereunder, agrees.  If any of the events specified in Section 10(b)(i), (ii), or (iii) occurs (a "Forfeiture Event"), all of the following forfeitures will result:

          

    (i)     The unexercised portion of the Option, whether or not vested, and any other Award not then settled (except for an Award that has not been settled solely due to an elective deferral by the Participant and otherwise is not forfeitable in the event of any termination of service of the Participant) will be immediately forfeited and canceled upon the occurrence of the Forfeiture Event; and 

17 

          

          

    (ii)     The Participant will be obligated to repay to the Company, in cash, within five business days after demand is made therefor by the Company, the total amount of Award Gain (as defined herein) realized by the Participant upon each exercise of an Option or settlement of an Award (regardless of any elective deferral) that occurred on or after (A) the date that is six months prior to the occurrence of the Forfeiture Event, if the Forfeiture Event occurred while the Participant was employed by the Company or a subsidiary or affiliate, or (B) the date that is six months prior to the date the Participant's employment by the Company or a subsidiary or affiliate terminated, if the Forfeiture Event occurred after the Participant ceased to be so employed.  For purposes of this Section, the term "Award Gain" shall mean (i), in respect of a given Option exercise, the product of (X) the Fair Market Value per share of Stock at the date of such exercise (without regard to any subsequent change in the market price of shares) minus the exercise price times (Y) the number of shares as to which the Option was exercised at that date, and (ii), in respect of any other settlement of an Award granted to the Participant, the Fair Market Value of the cash or Stock paid or payable to Participant (regardless of any elective deferral) less any cash or the Fair Market Value of any Stock or property (other than an Award or award which would have itself then been forfeitable hereunder and excluding any payment of tax withholding) paid by the Participant to the Company as a condition of or in connection such settlement.    

          

    (b)     Events Triggering Forfeiture.  The forfeitures specified in Section 10(a) will be triggered upon the occurrence of any one of the following Forfeiture Events at any time during the Participant's employment by the Company or a subsidiary or affiliate or during the one-year period following termination of such employment: 

          

    (i)     The Participant, acting alone or with others, directly or indirectly, prior to a Change in Control, (A) engages, either as employee, employer, consultant, advisor, or director, or as an owner, investor, partner, or stockholder unless the Participant's interest is insubstantial, in any business in an area or region in which the Company conducts business at the date the event occurs, which is directly in competition with a business then conducted by the Company or a subsidiary or affiliate; (B) induces any customer or supplier of the Company or a subsidiary or affiliate, or other company with which the Company or a subsidiary or affiliate has a business relationship, to curtail, cancel, not renew, or not continue his or her or its business with the Company or any subsidiary or affiliate; or (C) induces, or attempts to influence, any employee of or service provider to the Company or a subsidiary or affiliate to terminate such employment or service.  The Committee shall, in its discretion, determine which lines of business the Company conducts on any particular date and which third parties may reasonably be deemed to be in competition with the Company.  For purposes of this Section 10(b)(i), a Participant's interest as a stockholder is insubstantial if it represents beneficial ownership of less than five percent of the outstanding class of stock, and a Participant's interest as an owner, investor, or partner is insubstantial if it represents ownership, as determined by the Committee in its discretion, of less than five percent of the outstanding equity of the entity;

18

          

          

    (ii)     The Participant discloses, uses, sells, or otherwise transfers, except in the course of employment with or other service to the Company or any subsidiary or affiliate, any confidential or proprietary information of the Company or any subsidiary or affiliate, including but not limited to information regarding the Company's current and potential customers, organization, employees, finances, and methods of operations and investments, so long as such information has not otherwise been disclosed to the public or is not otherwise in the public domain, except as required by law or pursuant to legal process, or the Participant makes statements or representations, or otherwise communicates, directly or indirectly, in writing, orally, or otherwise, or takes any other action which may, directly or indirectly, disparage or be damaging to the Company or any of its subsidiaries or affiliates or their respective officers, directors, employees, advisors, businesses or reputations, except as required by law or pursuant to legal process; or

    (iii)     The Participant fails to cooperate with the Company or any subsidiary or affiliate by making himself or herself available to testify on behalf of the Company or such subsidiary or affiliate in any action, suit, or proceeding, whether civil, criminal, administrative, or investigative, or otherwise fails to assist the Company or any subsidiary or affiliate in any such action, suit, or proceeding by providing information and meeting and consulting with members of management of, other representatives of, or counsel to, the Company or such subsidiary or affiliate, as reasonably requested. 

          

    (c)     Agreement Does Not Prohibit Competition or Other Participant Activities.  Although the conditions set forth in this Section 10 shall be deemed to be incorporated into an Award, a Participant is not thereby prohibited from engaging in any activity, including but not limited to competition with the Company and its subsidiaries and affiliates.  Rather, the non-occurrence of the Forfeiture Events set forth in Section 10(b) is a condition to the Participant's right to realize and retain value from his or her compensatory Options and Awards, and the consequence under the Plan if the Participant engages in an activity giving rise to any such Forfeiture Event are the forfeitures specified herein.  The Company and the Participant shall not be precluded by this provision or otherwise from entering into other agreements concerning the subject matter of Section 10(a) and 10(b).

    (d)     Committee Discretion.  The Committee may, in its discretion, waive in whole or in part the Company's right to forfeiture under this Section, but no such waiver shall be effective unless evidenced by a writing signed by a duly authorized officer of the Company.  In addition, the Committee may impose additional conditions on Awards, by inclusion of appropriate provisions in the document evidencing or governing any such Award.     

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11.     General Provisions.

              (a)     Compliance with Legal and Other Requirements.  The Company may, to the extent deemed necessary or advisable by the Committee, postpone the issuance or delivery of Stock or payment of other benefits under any Award until completion of such registration or qualification of such Stock or other required action under any federal or state law, rule or regulation, listing or other required action with respect to any stock exchange or automated quotation system upon which the Stock or other securities of the Company are listed or quoted, or compliance with any other obligation of the Company, as the Committee may consider appropriate, and may require any Participant to make such representations, furnish such information and comply with or be subject to such other conditions as it may consider appropriate in connection with the issuance or delivery of Stock or payment of other benefits in compliance with applicable laws, rules, and regulations, listing requirements, or other obligations.  The foregoing notwithstanding, in connection with a Change in Control, the Company shall take or cause to be taken no action, and shall undertake or permit to arise no legal or contractual obligation, that results or would result in any postponement of the issuance or delivery of Stock or payment of benefits under any Award or the imposition of any other conditions on such issuance, delivery or payment, to the extent that such postponement or other condition would represent a greater burden on a Participant than existed on the 90th day preceding the Change in Control.

              (b)     Limits on Transferability; Beneficiaries.  No Award or other right or interest of a Participant under the Plan shall be pledged, hypothecated or otherwise encumbered or subject to any lien, obligation or liability of such Participant to any party (other than the Company or a subsidiary or affiliate thereof), or assigned or transferred by such Participant otherwise than by will or the laws of descent and distribution or to a Beneficiary upon the death of a Participant, and such Awards or rights that may be exercisable shall be exercised during the lifetime of the Participant only by the Participant or his or her guardian or legal representative, except that Awards and other rights (other than ISOs) may be transferred to one or more transferees during the lifetime of the Participant, and may be exercised by such transferees in accordance with the terms of such Award, but only if and to the extent such transfers are permitted by the Committee, subject to any terms and conditions which the Committee may impose thereon (including limitations the Committee may deem appropriate in order that offers and sales under the Plan will meet applicable requirements of registration forms under the Securities Act of 1933 specified by the Securities and Exchange Commission).  A Beneficiary, transferee, or other person claiming any rights under the Plan from or through any Participant shall be subject to all terms and conditions of the Plan and any Award document applicable to such Participant, except as otherwise determined by the Committee, and to any additional terms and conditions deemed necessary or appropriate by the Committee.

              (c)     Adjustments.  In the event that any large, special and non-recurring dividend or other distribution (whether in the form of cash or property other than Stock), recapitalization, forward or reverse split, Stock dividend, reorganization, merger, 

          20

            consolidation, spin-off, combination, repurchase, share exchange, liquidation, dissolution or other similar corporate transaction or event affects the Stock such that an adjustment is determined by the Committee to be appropriate under the Plan, then the Committee shall, in such manner as it may deem equitable, adjust any or all of (i) the number and kind of shares of Stock which may be delivered in connection with Awards granted thereafter, (ii) the number and kind of shares of Stock by which annual per-person Award limitations are measured under Section 5, (iii) the number and kind of shares of Stock subject to or deliverable in respect of outstanding Awards and (iv) the exercise price, grant price or purchase price relating to any Award or, if deemed appropriate, the Committee may make provision for a payment of cash or property to the holder of an outstanding Option (subject to Section 11(k)).  In addition, the Committee is authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards (including Performance Awards and performance goals and any hypothetical funding pool relating thereto) in recognition of unusual or nonrecurring events (including, without limitation, events described in the preceding sentence, as well as acquisitions and dispositions of businesses and assets) affecting the Company, any subsidiary or affiliate or other business unit, or the financial statements of the Company or any subsidiary or affiliate, or in response to changes in applicable laws, regulations, accounting principles, tax rates and regulations or business conditions or in view of the Committee's assessment of the business strategy of the Company, any subsidiary or affiliate or business unit thereof, performance of comparable organizations, economic and business conditions, personal performance of a Participant, and any other circumstances deemed relevant; provided that no such adjustment shall be authorized or made if and to the extent that the existence of such authority (i) would cause Options, or Performance Awards granted under Section 8 to Participants designated by the Committee as Covered Employees and intended to qualify as "performance-based compensation" under Code Section 162(m) and regulations thereunder to otherwise fail to qualify as "performance-based compensation" under Code Section 162(m) and regulations thereunder, or (ii) would cause the Committee to be deemed to have authority to change the targets, within the meaning of Treasury Regulation 1.162-27(e)(4)(vi), under the performance goals relating to Options granted to Covered Employees and intended to qualify as "performance-based compensation" under Code Section 162(m) and regulations thereunder.

              (d)     Tax Provisions.    

          
                        (i)     Withholding.  The Company and any subsidiary or affiliate is authorized to withhold from any Award granted, any payment relating to an Award under the Plan, including from a distribution of Stock, or any payroll or other payment to a Participant, amounts of withholding and other taxes due or potentially payable in connection with any transaction involving an Award, and to take such other action as the Committee may deem advisable to enable the Company and Participants to satisfy obligations for the payment of withholding taxes and other tax obligations relating to any Award.  This authority shall include authority to withhold or receive Stock or other property and to make cash payments in respect thereof in satisfaction of a Participant's withholding obligations, either on a mandatory or elective basis in the discretion of the Committee.   Other provisions of the Plan notwithstanding, only the 

                    21

          

          
                      minimum amount of Stock deliverable in connection with an Award necessary to satisfy statutory withholding requirements will be withheld.

                        (ii)     Required Consent to and Notification of Code Section 83(b) Election.  No election under Section 83(b) of the Code (to include in gross income in the year of transfer the amounts specified in Code Section 83(b)) or under a similar provision of the laws of a jurisdiction outside the United States may be made unless expressly permitted by the terms of the Award document or by action of the Committee in writing prior to the making of such election.  In any case in which a Participant is permitted to make such an election in connection with an Award, the Participant shall notify the Company of such election within ten days of filing notice of the election with the Internal Revenue Service or other governmental authority, in addition to any filing and notification required pursuant to regulations issued under Code Section 83(b) or other applicable provision.

                        (iii)     Requirement of Notification Upon Disqualifying Disposition Under Code Section 421(b).  If any Participant shall make any disposition of shares of Stock delivered pursuant to the exercise of an Incentive Stock Option under the circumstances described in Code Section 421(b) (relating to certain disqualifying dispositions), such Participant shall notify the Company of such disposition within ten days thereof.

          

              (e)     Changes to the Plan.  The Board may amend, suspend or terminate the Plan or the Committee's authority to grant Awards under the Plan without the consent of stockholders or Participants; provided, however, that any amendment to the Plan shall be submitted to the Company's stockholders for approval not later than the earliest annual meeting for which the record date is after the date of such Board action if such stockholder approval is required by any federal or state law or regulation or the rules of any stock exchange or automated quotation system on which the Stock may then be listed or quoted or if such amendment would materially increase the number of shares reserved for issuance and delivery under the Plan or materially increase the benefits to Participants under the Plan, and the Board may otherwise, in its discretion, determine to submit other amendments to the Plan to stockholders for approval; and provided further, that, without the consent of an affected Participant, no such Board action may materially and adversely affect the rights of such Participant under any outstanding Award.  Without the approval of stockholders, the Committee will not amend or replace previously granted Options in a transaction that constitutes a "repricing," as such term is used in Instruction 3 to Item 402(b)(2)(iv) of Regulation S-K, as promulgated by the Securities and Exchange Commission.  With regard to other terms of Awards, the Committee shall have no authority to waive or modify any such Award term after the Award has been granted to the extent the waived or modified term would be mandatory under the Plan for any Award newly granted at the date of the waiver or modification.

              (f)     Right of Setoff.  The Company or any subsidiary or affiliate may, to the extent permitted by applicable law, deduct from and set off against any amounts the Company or a subsidiary or affiliate may owe to the Participant from time to time, including amounts 

          22

            payable in connection with any Award, owed as wages, fringe benefits, or other compensation owed to the Participant, such amounts as may be owed by the Participant to the Company, including but not limited to amounts owed under Section 10(a), although the Participant shall remain liable for any part of the Participant's payment obligation not satisfied through such deduction and setoff.  By accepting any Award granted hereunder, the Participant agrees to any deduction or setoff under this Section 11(f).

              (g)     Unfunded Status of Awards; Creation of Trusts.  The Plan is intended to constitute an "unfunded" plan for incentive and deferred compensation.  With respect to any payments not yet made to a Participant or obligation to deliver Stock pursuant to an Award, nothing contained in the Plan or any Award shall give any such Participant any rights that are greater than those of a general creditor of the Company; provided that the Committee may authorize the creation of trusts and deposit therein cash, Stock, other Awards or other property, or make other arrangements to meet the Company's obligations under the Plan.  Such trusts or other arrangements shall be consistent with the "unfunded" status of the Plan unless the Committee otherwise determines with the consent of each affected Participant.

              (h)     Nonexclusivity of the Plan.  Neither the adoption of the Plan by the Board nor its submission to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board or a committee thereof to adopt such other incentive arrangements, apart from the Plan, as it may deem desirable, including incentive arrangements and awards which do not qualify under Code Section 162(m), and such other arrangements may be either applicable generally or only in specific cases.

              (i)     Payments in the Event of Forfeitures; Fractional Shares.  Unless otherwise determined by the Committee, in the event of a forfeiture of an Award with respect to which a Participant paid cash consideration, the Participant shall be repaid the amount of such cash consideration.  No fractional shares of Stock shall be issued or delivered pursuant to the Plan or any Award.  The Committee shall determine whether cash, other Awards or other property shall be issued or paid in lieu of such fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.

              (j)     Compliance with Code Section 162(m).  It is the intent of the Company that Options granted to Covered Employees and other Awards designated as Awards to Covered Employees subject to Section 7 shall constitute qualified "performance-based compensation" within the meaning of Code Section 162(m) and regulations thereunder, unless otherwise determined by the Committee at the time of allocation of an Award.  Accordingly, the terms of Sections 7(b), (c), and (d), including the definitions of Covered Employee and other terms used therein, shall be interpreted in a manner consistent with Code Section 162(m) and regulations thereunder.  The foregoing notwithstanding, because the Committee cannot determine with certainty whether a given Participant will be a Covered Employee with respect to a fiscal year that has not yet been completed, the term Covered Employee as used herein shall mean only a person designated by the Committee as likely to be a Covered Employee with respect to a specified fiscal year.  If any provision of the Plan or any Award document relating to a Performance Award that is designated as 

          23

            intended to comply with Code Section 162(m) does not comply or is inconsistent with the requirements of Code Section 162(m) or regulations thereunder, such provision shall be construed or deemed amended to the extent necessary to conform to such requirements, and no provision shall be deemed to confer upon the Committee or any other person discretion to increase the amount of compensation otherwise payable in connection with any such Award upon attainment of the applicable performance objectives.

              (k)     Certain Limitations Relating to Accounting Treatment of Awards.  Other provisions of the Plan notwithstanding, the Committee's authority under the Plan (including under Sections 8(c), 8(d), 11(c) and 11(d)) is limited to the extent necessary to ensure that any Option or other Award of a type that the Committee has intended to be subject to fixed accounting with a measurement date at the date of grant or the date performance conditions are satisfied under APB 25 shall not become subject to "variable" accounting solely due to the existence of such authority, unless the Committee specifically determines that the Award shall remain outstanding despite such "variable" accounting.  In addition, other provisions of the Plan notwithstanding, (i) if any right under this Plan would cause a transaction to be ineligible for pooling-of-interests accounting that would, but for the right hereunder, be eligible for such accounting treatment, such right shall be automatically adjusted so that pooling-of-interests accounting shall be available, including by substituting Stock or cash having a Fair Market Value equal to any cash or Stock otherwise payable in respect of any right to cash which would cause the transaction to be ineligible for pooling-of-interests accounting, and (ii) if the authority of the Continuing Directors to determine that an event shall not constitute a Change in Control or other authority under Section 9(c) would cause a transaction to be ineligible for pooling-of-interests accounting that would, but for such authority, be eligible for such accounting treatment, such authority shall be limited to the extent necessary so that such transaction would be eligible for pooling-of-interests accounting.

              (l)     Governing Law.  The validity, construction, and effect of the Plan, any rules and regulations relating to the Plan and any Award document shall be determined in accordance with the laws of the State of Delaware, without giving effect to principles of conflicts of laws, and applicable provisions of federal law.

              (m)     Awards to Participants Outside the United States.  The Committee may modify the terms of any Award under the Plan made to or held by a Participant who is then resident or primarily employed outside of the United States in any manner deemed by the Committee to be necessary or appropriate in order that such Award shall conform to laws, regulations, and customs of the country in which the Participant is then resident or primarily employed, or so that the value and other benefits of the Award to the Participant, as affected by foreign tax laws and other restrictions applicable as a result of the Participant's residence or employment abroad shall be comparable to the value of such an Award to a Participant who is resident or primarily employed in the United States.  An Award may be modified under this Section 11(m) in a manner that is inconsistent with the express terms of the Plan, so long as such modifications will not contravene any applicable law or regulation or result in actual liability under Section 16(b) for the Participant whose Award is modified.

          24

              (n)     Limitation on Rights Conferred under Plan.  Neither the Plan nor any action taken hereunder shall be construed as (i) giving any Eligible Person or Participant the right to continue as an Eligible Person or Participant or in the employ or service of the Company or a subsidiary or affiliate, (ii) interfering in any way with the right of the Company or a subsidiary or affiliate to terminate any Eligible Person's or Participant's employment or service at any time, (iii) giving an Eligible Person or Participant any claim to be granted any Award under the Plan or to be treated uniformly with other Participants and employees, or (iv) conferring on a Participant any of the rights of a stockholder of the Company unless and until the Participant is duly issued or transferred shares of Stock in accordance with the terms of an Award or an Option is duly exercised.  Except as expressly provided in the Plan and an Award document, neither the Plan nor any Award document shall confer on any person other than the Company and the Participant any rights or remedies thereunder.

              (o)     Severability; Entire Agreement.  If any of the provisions of this Plan or any Award document is finally held to be invalid, illegal or unenforceable (whether in whole or in part), such provision shall be deemed modified to the extent, but only to the extent, of such invalidity, illegality or unenforceability, and the remaining provisions shall not be affected thereby; provided, that, if any of such provisions is finally held to be invalid, illegal, or unenforceable because it exceeds the maximum scope determined to be acceptable to permit such provision to be enforceable, such provision shall be deemed to be modified to the minimum extent necessary to modify such scope in order to make such provision enforceable hereunder.  The Plan and any Award documents contain the entire agreement of the parties with respect to the subject matter thereof and supersede all prior agreements, promises, covenants, arrangements, communications, representations and warranties between them, whether written or oral with respect to the subject matter thereof.

              (p)     Plan Effective Date and Termination.  The Plan shall become effective if, and at such time as, the stockholders of the Company have approved it by the affirmative votes of the holders of a majority of the voting securities of the Company present, or represented, and entitled to vote on the subject matter at a duly held meeting of stockholders.  Unless earlier terminated by action of the Board of Directors, the Plan will remain in effect until such time as no Stock remains available for delivery under the Plan and the Company has no further rights or obligations under the Plan with respect to outstanding Awards under the Plan.

25EXHIBIT 10.19

                                SNAP2 CORPORATION
                               10641 Justin Drive
                             Des Moines, Iowa 50322
                     Tel: (515) 331-0560 Fax: (515) 331-3901
                                    ("SNAP2")

               IN-FLIGHT ENTERTAINMENT SOFTWARE LICENSE AGREEMENT

Customer: British Airways, Waterside (HCA3) PO Box 365 Harmondsworth UB7 0GB

Contact: Jane Dormer,  Commercial  Manager,  BA Enterprises,  tel +44 (0)20 8738
         5794, fax +44 (0)20 8738 9942, jane.a.dormer@britishairways.com

SNAP2  hereby  grants  Customer,  and  Customer  hereby  accepts  from SNAP2,  a
non-exclusive and non-transferable  right to use the computer programs described
in Section 1 below (the  "Products")  on the  designated  hardware  described in
Section 2 below (the  "Designated  Hardware"),  for the term  specified  herein,
subject to the terms and conditions specified below.

                          GENERAL TERMS AND CONDITIONS

1. PRODUCTS

"Products"  means (i) the  machine-readable  object code version of the computer
programs  described in the Product  Schedule,  whether embedded on disc, tape or
other media, for use on the computer platform  specified in the Product Schedule
(the "Software"),  (ii) the published user manuals and documentation  that SNAP2
makes  generally  available  for the Software (the  "Documentation"),  (iii) the
fixes,  updates,  upgrades or new versions of the Software or Documentation that
SNAP2 may provide to Customer under this Agreement (the "Enhancements") and (iv)
any  copy  of the  Software,  Documentation  or  Enhancements.  Nothing  in this
Agreement  will  entitle  Customer to receive the source code of the Software or
Enhancements, in whole or in part.

2. DESIGNATED HARDWARE

"Designated  Hardware" means the hardware equipment  installed in the designated
aircraft,  each  as  specified  in  the  Product  Schedule,  and  any  upgrades,
modifications  or alterations to the same which do not require and changes to be
made to the  Products.  Customer  may use the Products as described in Section 3
only on the  Designated  Hardware while it possesses and operates the Designated
Hardware.  Any other use or transfer of the Products will require  SNAP2's prior
approval,  which (i) shall not be unreasonably  withheld or delayed and (ii) may
be subject to additional charges should any revision to the Products be required
as a result of the alternative +use or transfer.

3. USE

Customer may use the Products only in and for Customer's  own internal  purposes
in providing in-flight entertainment to its passengers. Customer will not permit
any other person to use the Products, whether on a timesharing or other multiple
user arrangement. Customer may install the Software or Enhancements on a network
or other  multi-user  computer system  specified in the Product Schedule and use
the  Designated  Hardware  to provide  file  services  to  Customer's  in-flight
entertainment  consoles,  up to the number of seats or aircraft specified in the
Product  Schedule.  Customer  may make a reasonable  number of back-up  archival
copies  of  the  Software  and   Enhancements.   Customer  will   reproduce  all
confidentiality  and proprietary notices on

<PAGE>

each of these copies and maintain an accurate  record of the location of each of
these copies.  Customer  will not  otherwise  copy,  translate,  modify,  adapt,
decompile,  disassemble or reverse  engineer the Products,  except as and to the
extent  expressly  authorized  by applicable  law or with the prior  approval of
SNAP2.

4. PAYMENT

Customer will pay to SNAP2 the License Fee specified in the Product Schedule and
by the date specified in the Product Schedule. The License Fee is based upon the
total  number of seats or aircraft  that may access an  in-flight  entertainment
console. Any increase in usage may be subject to additional charges. All amounts
specified in the Product  Schedule are exclusive of any applicable  use,  sales,
service,  property or other taxes or  contributions,  which Customer will pay in
addition  to the amount  due and  payable.  If,  under  local law or  applicable
treaty,  Customer is required to  withhold  any tax on such  payments,  then the
amount of the payment will be  automatically  increased  to totally  offset such
tax, so that the amount actually remitted to SNAP2, net of all taxes, equals the
amount invoiced or otherwise due.  Customer will promptly furnish SNAP2 with the
official receipt of payment of these taxes to the appropriate taxing authority.

5. SHIPMENT

SNAP2 will, at its own cost, ship the Products from its distribution center to a
mutually  agreed  third  party in the United  States,  subject to delays  beyond
SNAP2's  control.  Should Customer desire shipment outside of the United States,
then SNAP2 will select the method of shipment for Customer's  account and obtain
all  licenses  required  to export  the  Products  from the  country  of origin.
Customer  shall pay or reimburse  SNAP2 for the cost of shipment of the Products
to the port of entry at Customer's country of domicile. Customer will (i) obtain
all licenses required to import the Products into its country of domicile,  (ii)
clear the Products  through local  customs and (iii) pay all customs  duties and
other charges assessed on such  importations,  if applicable.  Risk of loss will
pass to Customer upon arrival of the Products at the port of entry in Customer's
country of domicile.

6. MAINTENANCE AND SUPPORT

(a)  Maintenance.  During the warranty period  specified in Section 7(a),  SNAP2
will provide Customer,  at no additional charge, with the fixes and updates that
SNAP2 may make generally available as part of its standard  maintenance services
(the  "Updates").  Customer  may elect to  continue  receiving  Updates  for the
remainder of the Term (as defined in Section  12(a))  after the Warranty  Period
(the "Maintenance Period"), as long as the Agreement is in effect.

(b) "Hot-Line"  Support.  During the Warranty Period and any Maintenance  Period
for which  Customer has paid,  SNAP2 will  provide  Customer,  at no  additional
charge, with advice, consultation and assistance to use the Product and diagnose
and correct problems that Customer may encounter (the "Hot-Line Support"). SNAP2
will offer the Hot-Line Support  remotely by telephone,  fax or other electronic
communication during its business hours, 8:00 am to 5:00 pm C.S.T. Customer will
bear all telephone and other  expenses that it may incur in connection  with the
Hot-Line  Support.  SNAP2 may offer  on-site  support to Customer at  additional
charges.

Hot-Line Contact Information:

     Contact::    Tony Hoffman
     Address:     SNAP2 Corp.
                  10641 Justin Drive
                  Des Moines, IA 50322
     Phone:       (515) 331-0560 ext. 228
     Fax:         (515) 331-3901
     Email:       tonyh@snaptwo.com

(c)  Limitation.  The Updates will not include any upgrade or new version of the
Products that SNAP2 decides, in its sole discretion, to make generally available
to its  customer  base as a  separately  priced  item.  This Section will not be
interpreted  to require  SNAP2 to (i) develop and release  Enhancements  or (ii)
customize  the   Enhancements  to  operate  in  conjunction  with  any  Customer
Modification  or  otherwise  satisfy  Customers'   particular  requests.  If  an
Enhancement  replaces the prior  version of the Product,  Customer  will destroy
such prior version upon installing the Enhancement.

                                       2
<PAGE>

7. WARRANTIES AND REMEDIES

(a) Limited  Warranty.  SNAP2  warrants  that (i) the  Software  will conform to
SNAP2's  published  specifications  in effect on the date of delivery,  (ii) the
Software   will  perform   substantially   as  described  in  the   accompanying
Documentation for 90 days from the first aircraft embodiment of the Product, and
(iii) from the date of  delivery  of the  Product by SNAP2,  the  Products  will
record,  store,  process and present calendar dates falling on or after December
31, 1999 in the same manner and with  substantially  the same  functionality  as
such Products record,  store,  process and present calendar dates falling before
December 31, 1999,  (iv) it will perform any  maintenance  and support  services
pursuant to Section 6 with reasonable care and skill,  and (v) that the Products
are the same as those that have been seen and approved by the Customer  prior to
delivery.  Customer  acknowledges  that  (i)  the  use of the  Products  will be
uninterrupted  and error-free,  so far as is  commercially  practicable and (ii)
this limited  warranty will be not apply in case of any Customer  Modifications.
Customer  further  acknowledges  that  (i) the  License  Fee and  other  charges
contemplated under this Agreement are based on the limited warranty, disclaimers
and limitation of liability specified in Sections 7, 8 and 9.

(b)  Remedies.  In case of breach of warranty  or any other duty  related to the
quality  of the  Products,  SNAP2 or its  representative  will,  at its own cost
within  14  days,   correct  or  replace  any  defective  Software  or,  if  not
practicable,  SNAP2 will accept the return of the defective  Software and refund
to Customer (i) the amount  actually paid to SNAP2 for the  defective  Software,
less  depreciation  based on a 5-year straight line depreciation  schedule,  and
(ii) a pro rata share of any  maintenance  fees that  Customer  actually paid to
SNAP2 for the  period  that such  Software  was not  usable and (iii) any direct
costs incurred by the Customer.

(c) Limitations.  The warranty  provided in this Section 7 will not apply to the
extent  that the  breach of  warranty  or Product  defect is not  brought to the
attention of SNAP2 during the applicable  warranty period or arSNAP2 as a result
of (i) failure to properly  install or use the  Product in  accordance  with its
documentation,  (ii) failure of the operating  environment or hardware  failure,
(iii)  modification of the Products other than by SNAP2, (iv) failure to install
an Update  provided  to the  Customer  by SNAP2  within 14 days that  would have
eliminated the defect,  (v) use of the Products with ambiguous date related data
or in a Year 2000 non-compliant operating environment or (vi) the combination of
the Products with other items not provided by SNAP2, but if the breach would not
have  occurred  from  use of the  Product  alone  with the  Designated  Hardware
existing as of the date of this  Agreement  provided that SNAP2 has not approved
the combination of the Product with the said other items.

(d) Disclaimer.  EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, ALL WARRANTIES,
CONDITIONS,  REPRESENTATIONS,  INDEMNITIES  AND  GUARANTEES  WITH RESPECT TO THE
PRODUCTS, WHETHER EXPRESS OR IMPLIED, INCLUDING PRIOR ORAL OR WRITTEN STATEMENTS
BY  SNAP2,  ITS  AGENTS  OR  OTHERWISE  ARE  HEREBY  OVERRIDDEN,   EXCLUDED  AND
DISCLAIMED.

8. INDEMNITY

(a) Indemnity.  If an action is brought against Customer claiming that a Product
infringes a presently  issued  patent,  or a copyright or trade  secret,  or any
other IPR whatsoever  SNAP2 will defend Customer at SNAP2's expense and, subject
to this Section and Section 9, pay the damages and costs finally awarded against
the Customer in the infringement action, but only if (i) Customer notifies SNAP2
within 14 days in writing upon learning  that the claim might be asserted,  (ii)
SNAP2 has sole control over the defense of the claim and any negotiation for its
settlement or compromise subject to the Customer having final approval regarding
the content of any press release or other public  statement  regarding any claim
and (iii) Customer  provides SNAP2 with full  cooperation in the  investigation,
defense and settlement of such claim as SNAP2 may reasonably require,  providing
that Customer shall be reimbursed  all of its reasonable out of pocket  expenses
incurred as a result.

(b) Alternative  Remedy. If a claim described in Section 8(a) may be or has been
asserted,  Customer will permit  SNAP2,  at SNAP2's  option and expense,  to (i)
procure  the right to continue  using the  Product,  (ii)  replace or modify the
Product to eliminate the infringement  while providing  functionally  equivalent
performance or only if

                                       3
<PAGE>

the remedies  specified in (i) and (ii) are unavailable to SNAP2 on commercially
reasonable terms,  (iii) accept the return of the Product and refund to Customer
the amount actually paid to SNAP2 for such Product, less depreciation based on a
5-year  straight-line  depreciation  schedule  and  a  pro  rata  share  of  any
maintenance  fees that Customer  actually paid to SNAP2 for the period that such
Product was not usable.

(c) Limitation.  SNAP2 shall have no indemnity obligation to Customer under this
Section if the infringement  claim results from (i) a correction or modification
of the Product not  provided by SNAP2,  such as a Customer  Modification  unless
approved by SNAP2 in writing,  (ii) the failure to install an Update provided to
Customer by SNAP2  within 14 days or (iii) the  combination  of the Product with
other items not provided by SNAP2,  unless the infringement  would have occurred
from use of the Product alone or unless SNAP2 specifically approved in writing.

9. NO CONSEQUENTIAL DAMAGES

UNDER  NO  CIRCUMSTANCES   WILL  SNAP2  OR  ITS  LICENSORS  BE  LIABLE  FOR  ANY
CONSEQUENTIAL,  INDIRECT,  SPECIAL,  PUNITIVE  OR  INCIDENTAL  DAMAGES  OR  LOST
PROFITS,  WHETHER  FORESEEABLE OR  UNFORESEEABLE,  BASED ON CUSTOMER'S CLAIMS OR
THOSE OF ITS PASSENGERS (INCLUDING, BUT NOT LIMITED TO, CLAIMS FOR LOSS OF DATA,
GOODWILL,  USE  OF  MONEY  OR  USE  OF  THE  PRODUCTS,  INTERRUPTION  IN  USE OR
AVAILABILITY  OF DATA,  STOPPAGE OF OTHER WORK OR  IMPAIRMENT OF OTHER ASSETS OR
EQUIPMENT),  ARISING  OUT OF BREACH OR FAILURE  OF EXPRESS OR IMPLIED  WARRANTY,
BREACH OF CONTRACT,  MISREPRESENTATION,  NEGLIGENCE, STRICT LIABILITY IN TORT OR
OTHERWISE. IN NO EVENT WILL THE AGGREGATE LIABILITY WHICH SNAP2 OR ITS LICENSORS
MAY INCUR IN ANY ACTION OR PROCEEDING  EXCEED THE TOTAL AMOUNT  ACTUALLY PAID BY
CUSTOMER FOR THE SPECIFIC PRODUCT THAT DIRECTLY CAUSED THE DAMAGE.  THIS SECTION
WILL NOT APPLY  ONLY WHEN AND TO THE EXTENT  THAT  APPLICABLE  LAW  SPECIFICALLY
REQUIRES LIABILITY, DESPITE THE FOREGOING EXCLUSION AND LIMITATION.

10. OWNERSHIP

All  trademarks,  service marks,  patents,  copyrights,  trade secrets and other
proprietary  rights  in or  related  to the  Products  are and will  remain  the
exclusive  property  of  SNAP2 or its  licensors,  whether  or not  specifically
recognized or perfected under applicable law.  Customer will not take any action
that  jeopardizes  SNAP2's or its licensor's  proprietary  rights or acquire any
right in the  Products,  except the limited use rights  specified  in Section 3.
SNAP2  or  its  licensor   will  own  all  rights  in  any  copy,   translation,
modification,  adaptation or derivation of the Products,  excluding any Customer
Modification which the Customer shall own or other improvement or development of
the Products.

11. CONFIDENTIALITY

(a)  Confidentiality.   Customer  acknowledges  that  the  Products  incorporate
confidential and proprietary information developed or acquired by or licensed to
SNAP2. Customer will take all reasonable  precautions necessary to safeguard the
confidentiality  of the  Products,  including  (i) those  taken by  Customer  to
protect  Customer's own  confidential  information and (ii) those which SNAP2 or
its authorized representative may reasonably request from time to time. Customer
will not allow the removal or defacement of any  confidentiality  or proprietary
notice placed on the Products so far as reasonably  practicle.  The placement of
copyright  notices on these items will not  constitute  publication or otherwise
impair their confidential nature.

(b) Disclosure. Customer will not disclose, in whole or in part, any item of the
Products that has been designated as  confidential to any individual,  entity or
other person, except (i) to those of Customer's employees or consultants who (i)
require access for  Customer's  authorized use of the Products and (ii) agree to
comply with the use and non-disclosure  restrictions  applicable to the Products
under this  Agreement.  Customer  shall cause any employee or consultant who has
access  to the  source  code  of  the  Software  to  expressly  acknowledge  its
confidential  and  proprietary  nature.  If an  unauthorized  use or  disclosure
occurs, Customer will immediately

                                       4
<PAGE>

notify  SNAP2 as soon as the Customer is aware and may, at the  Customer's  sole
discretion,  take such steps as the  Customer  decides to assist SNAP2 to remedy
and / or stop such unauthorized use or disclosure.

(c) Limitation. Customer will have no confidentiality obligation with respect to
any portion of the Products  that (i) Customer knew or  independently  developed
before  receiving the Products  under this  Agreement,  (ii)  Customer  lawfully
obtained from a third party under no confidentiality  obligation or (iii) became
available  to the  public  other  than as a  result  of any act or  omission  by
Customer or any of Customer's employees or consultants.

12. TERM AND TERMINATION

(a) Term.  This agreement  will become  effective as of the date set forth below
and  continue in effect for an initial  term of 12 months (the  "Term"),  unless
otherwise   terminated   pursuant  to  Section   12(b).   This   Agreement  will
automatically  renew for additional terms of 12 months each year,  unless either
party  provides the other with written  notice of its  intention not to renew at
least 45 days prior to the expiration of the Term or any renewal thereof.

(b) Termination for Convenience.  Customer may terminate this Agreement, without
right to refund, by notifying SNAP2 of such termination.

(c)  Termination   for  Cause.   Either  party  may  terminate  this  Agreement,
immediately   upon  notice  to  the  other   party  and   without   judicial  or
administrative  resolution, if the other party or any of its employees or agents
breach any term or condition  hereof and such breach is not cured within 60 days
after receipt of notice specifying the breach and demanding its cure;  provided,
however, that a cure period shall be applicable to a breach of Sections 10 or 11
only if such breach is, in the non-breaching party's opinion, reasonably capable
of cure.  This Agreement will  terminate  automatically  if either party becomes
insolvent  or  enters  into  bankruptcy,  suspension  of  payments,  moratorium,
reorganization  or any other proceeding that relates to insolvency or protection
of creditors' rights. Upon the termination of this Agreement for any reason, all
rights granted to Customer  hereunder will cease, and Customer will promptly (i)
purge the  Software and  Enhancements  from the  Designated  Hardware and all of
Customer's other computer  systems,  storage media and other files, (ii) destroy
the Products and all copies  thereof and (iii)  deliver to SNAP2 a letter signed
by an officer of Customer which  certifies that Customer has complied with these
termination obligations. Upon termination of this Agreement by Customer pursuant
to Section  12(c),  SNAP2 shall refund to Customer the  pro-rated  amount of the
then-paid  license  fee  or  maintenance  fee  for  the  remaining  term  of the
Agreement.  The  provisions  of  Sections  7, 8, 9, 10, and 11 will  survive the
termination of this Agreement.

13. INSPECTION

During  the  term of this  Agreement,  SNAP2  or its  representative  may,  upon
reasonable  prior notice to Customer,  inspect the files,  computer  processors,
equipment,  aircraft and  facilities of Customer  during normal working hours to
verify  Customer's  compliance  with  this  Agreement.   While  conducting  such
inspection,  SNAP2 or its representative  will be entitled to copy any item that
Customer may possess in violation of this Agreement.

14. ASSIGNMENT

Customer shall not assign,  delegate or otherwise transfer this Agreement or any
of its rights or obligations hereunder without SNAP2's prior approval.

The Customer has the right to immediately terminate the Agreement within 30 days
of  written  notice at its sole  discretion  in the event  that  SNAP2  assigns,
delegate  or  otherwise  transfer  this  Agreement  or  any  of  its  rights  or
obligations hereunder.

15.  EXPORT CONTROLS

Customer  acknowledges that the Products and all related technical  information,
documents  and materials are subject to export  controls  under the U.S.  Export
Administration  Regulations.  Customer  will (i) comply  strictly with all legal
requirements  established under these controls,  (ii) cooperate fully with SNAP2
in any official or unofficial audit or inspection that relates to these controls
and (iii) not export, re-export, divert or transfer, directly or indirectly, any
such item or direct products thereof to Cuba, Iran, Iraq, Libya, North Korea,

                                       5
<PAGE>

Sudan,  Syria or any  country  that is  embargoed  by  Executive  order,  unless
Customer  has  obtained the prior  written  authorization  of SNAP2 and the U.S.
Commerce  Department.  Upon  notice to  Customer,  SNAP2 may modify this list to
conform to changes in the U.S. Export Administration Regulations.

16. MISCELLANEOUS

All notices or approvals  required or  permitted  under this  Agreement  must be
given in  writing.  Any waiver or  modification  of this  Agreement  will not be
effective  unless executed in writing and signed by the parties.  This Agreement
will bind the parties'  successors-in-interest.  This Agreement will be governed
by and  interpreted in accordance  with the laws of the State of New York U.S.A.
The parties hereby exclude  application of the U.N.  Convention on Contracts for
the International Sale of Goods from this Agreement and any transaction  between
them  related  thereto.  If any  provision  of  this  Agreement  is  held  to be
unenforceable, in whole or in part, such holding will not affect the validity of
the other provisions of this Agreement,  unless either party in good faith deems
the  unenforceable  provision  to be  essential,  in which  case such  party may
terminate this Agreement  effective  immediately upon notice to the other party.
Any press release or other public  statement  regarding this Agreement  shall be
mutually  agreed  between the parties.  Either party may use the other's name in
its  advertising  collateral,  subject to the prior approval of the other party,
which may be granted or withheld at that party's sole discretion. This Agreement
constitutes   the  complete  and  entire   statement  of  all   conditions   and
representations  of the agreement between SNAP2 and Customer with respect to its
subject matter and supersedes all prior writings or understandings.

                                       6
<PAGE>

 THIS AGREEMENT IS NOT EFFECTIVE UNTIL SIGNED ON BEHALF OF BOTH PARTIES.

 SNAP2 Corporation                             British Airways
---------------------------------       ----------------------------------------
        ("SNAP2")                              ("Customer")

By:      /S/  Mark Malinak           By:    /S/  Jane A. Dormer
   ------------------------------       ----------------------------------------
            (Signature)                              (Signature)

Name:        Mark Malinak            Name:          Jane Dormer
     ----------------------------         --------------------------------------

Title:          VP Sales             Title:   Commercial Manager
      ---------------------------          -------------------------------------

Date:  4/16/01 (16th April 2001)     Date:        9th April 2001
     ----------------------------         --------------------------------------

                                       7
<PAGE>

PRODUCT SCHEDULE

Software:  SNAP2 Travel Kit Game Suite  consists of the  following 10 games:- of
ten (10) of the following games:

     1. Solitaire
     2. Black Jack
     3. Backgammon
     4. Othello
     5. Tetris
     6. Zero G
     7. Trivia Game
     8. Professional Gold Digger
     9. Noughts and Crosses
     10. Twins Cafe Match

Computer Platform:         Rockwell Collins TES Core D

Designated Hardware (S/N): Rockwell Collins TES

Designated Aircraft:       110 aircraft

Cabin Deployment:          First/Business/World Traveller Plus cabin deployment

AnnualLicense Fee:         See schedule below, all pricing in U.S. dollars

                SNAP2 TravelKit Game Suite Pricing (U.S. dollars)

[Confidential Treatment has been requested for this portion of this Exhibit]

                                Product Services

[Confidential Treatment has been requested for this portion of this Exhibit]

                                       8
<PAGE>

Translation of Games
The  following 17 games have been ported to Rockwell  Collins TES.  Customer may
substitute any game from the current list, while Agreement is in effect, subject
to  additional  SNAP2  translation  fees  and all IFE OEM  integration  fees and
restrictions.

<TABLE>
<CAPTION>
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        Game Title
----------------------------------------------------------------------------------------------------

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                                  English   French    German    Japanese     Portuguese      Spanish
----------------------------------------------------------------------------------------------------
<C>     <S>                          <C>       <C>       <C>       <C>            <C>           <C>
1       Backgammon                   X         X         X         X              X             X
----------------------------------------------------------------------------------------------------
2       Blackjack                    X         X         X         X              X             X
----------------------------------------------------------------------------------------------------
3       Othello                      X         X         X         X              X             X
----------------------------------------------------------------------------------------------------
4       Solitaire                    X         X         X         X              X             X
----------------------------------------------------------------------------------------------------
5       Tetris                       X         X         X         X              X             X
----------------------------------------------------------------------------------------------------
6       Twins Cafe Match Game        X         X         X         X              X             X
----------------------------------------------------------------------------------------------------
7       Zero G                       X         X         X         X              X             X
----------------------------------------------------------------------------------------------------
8       Hangman                      X         X         X                        X             X
----------------------------------------------------------------------------------------------------
9       Trivia Game                  X         X         X                        X             X
----------------------------------------------------------------------------------------------------
10      Professional Gold Digger     X         X
----------------------------------------------------------------------------------------------------
11      Draw Poker                   X         X
----------------------------------------------------------------------------------------------------
12      Crossword                    X
----------------------------------------------------------------------------------------------------
13      Chinese Solitaire            X
----------------------------------------------------------------------------------------------------
14      Tic-Tac-Toe / Noughts        X
        and Crosses
----------------------------------------------------------------------------------------------------
15      Slots                        X
----------------------------------------------------------------------------------------------------
16      Keno                         X
----------------------------------------------------------------------------------------------------
17      Noisy Farm                   X
----------------------------------------------------------------------------------------------------
</TABLE>

                                       9

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