Document:

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                                                                    Exhibit 10.9

                                                        EXCLUDING REPRESENTATION
                                                  CONCERNING FINANCIAL RESOURCES

                             AGREEMENT AND RELEASE

     THIS AGREEMENT AND RELEASE ("Agreement") is made and entered into on
January 19, 2001 by and between Elektryon, a Nevada corporation with its
principal place of business in Las Vegas, Nevada, and Edwin W. Wheeler
("Wheeler"), an individual, residing in Las Vegas, Nevada.

                                    RECITALS

     Edwin W. Wheeler, along with Phil Meisinger, and Gene Stinson, founded
Engine Corporation of America on March 1, 1994.

     On February 12, 1996, the name of Engine Corporation of America was
changed to Engine World, Inc.

     On May 24, 2000, the name of Engine World, Inc. was changed to Elektryon
(Engine Corporation of America, Engine World, Inc. and Elektryon, Inc. are
hereinafter referred to individually and collectively as the "Company.")

     Wheeler was elected a director, Treasurer and Secretary of the Company on
March 12, 1994, and served as Director, Treasurer, and Secretary of the Company
until December 17, 1999.

     On January 8, 1997, the Company resolved to issue to Wheeler options to
purchase 300,000 shares of the Company's common stock ("common stock") at a
price of $1.00 per share.

     Wheeler acquired from time to time, by purchase or otherwise, an
aggregated of shares of common stock from the Company and Wheeler has
represented to the Company that he currently owns beneficially approximately
1,000,000 (one million) shares of common stock, all of which are held in the
Voting Trust (defined below).

     On February 20, 1999, pursuant to a Compensation/Consulting Agreement
dated that date between the Company and Wheeler, the Company engaged Wheeler as
a consultant to the Board of Directors of the Company to render services and
advice. Wheeler held his position as consultant from February 20, 1999 until
September 10, 2000 when, pursuant to the Termination Agreement dated that date
between the Company and Wheeler, Wheeler's relationship as a consultant to the
Company was severed.

     Wheeler resigned as Treasurer, Secretary, and a Director of the Company on
December 17, 1999. On that same date, pursuant to an Advisory Agreement dated
that date between the Company and Wheeler, the Company engaged Wheeler as an
advisor to assist in ensuring a smooth transition to a new Chief Financial
Officer of the Company. Wheeler held the position as advisor from December 17,
1999 until September 10, 2000 when, pursuant to the Termination Agreement, his
relationship as an advisor to the company was severed.
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     Wheeler placed all of the shares of common stock beneficially owned by him
in a voting trust dated November 11, 2000 (the "Voting Trust") pursuant to a
Voting Agreement dated that date between the Company and Wheeler.

     Between January 10, 2000 and August 20, 2000, Wheeler sold no more than
233,000 shares of his founders common stock for no more than $20.00 per share,
(the "Sale Transactions").

     Wheeler estimates to the Company that approximately $3.9 million
constitutes the total proceeds to Wheeler, his spouse and any person or entity
controlled by either of them or in which either of them has a financial
interest, arising from the sale or transfer of their common stock by any of
them.

     Disputes have arisen between the Company's Board of Directors and Wheeler
regarding Wheeler's activities with respect to the Company.

     Both parties wish to resolve such disputes without the time and expense of
litigation.

         NOW THEREFORE, in consideration of the mutual covenants and in reliance
on the representations contained herein, and for other good and valuable
consideration, the sufficiency of which is hereby acknowledged, the parties
agree as follows:

     1.  COVENANTS NOT TO SUE. The Company covenants not to sue Wheeler
regarding the Sale or transfer of any of his founders stock or for any incident
arising directly or indirectly from Wheelers performance of services to the
Company. This covenant not to sue becomes effective only upon the completion and
fulfillment of Wheeler's obligations under paragraph 2 of this Agreement and
continues in effect only if Wheeler's representations contained in this
agreement are true, correct, and complete and Wheeler complies with his
covenants and agreements set forth in this Agreement. As of the date of this
Agreement, the independent members of the Company's Board of Directors are
unaware of any other claims the Company may have against Wheeler.

     2.  WHEELER'S OBLIGATIONS. In consideration for the foregoing covenant not
to sue, Wheeler agrees to undertake and complete the following not later than
January 30, 2001:

         a.  To Purchase 75,000 shares of common stock at a purchase price of
             $20.00 per share in cash or immediately available funds and to
             place all of such shares into the Voting Trust;

         b.  To contribute 550,000 shares of common stock from the Voting Trust
             to the Company's treasury, at no cost to the Company;

         c.  To agree and acknowledge that all options to purchase shares of
             common stock in which Wheeler or his spouse holds any beneficial
             interest, including without limitation the option to purchase
             300,000 shares of common stock referred to in the Recitals, shall
             be deemed null and void ab initio;

         d.  To sever any and all relationships with the Company in any
             capacity, except in his capacity as the beneficial owner of the
             common stock held in the Voting

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             Trust, and to terminate any agreements or understandings of any
             kind between Wheeler or any affiliate of Wheeler, on one hand, and
             the Company on the other, without any payment by or obligation of
             the Company;

         e.  The parties agree that Wheeler shall be the owner of all furniture,
             fixtures, and equipment now title him to or in the procession of
             Edwin W. Wheeler at his offices at 6565 S. Spencer, Suite 204, Las
             Vegas, NV 89119, in consideration of his prior transfers to the
             company of all computer, furniture, fixtures previously owned by
             him and currently in the procession of the company. Wheeler agrees
             to return any company books and records in his possession or under
             his control.

     3.  COMMUNICATION RESTRICTION. In further consideration for the foregoing
         covenant not to sue, Wheeler agrees not to communicate with any
         director, officer or employee of the Company regarding any matters
         regarding the Company other than is necessary to carry out the terms of
         this Agreement and other than as specifically requested in a writing
         authorized by action of the independent members of the Company's Board
         of Directors.

     4.  EXTENSION OF VOTING AGREEMENT. In further consideration for the
         foregoing covenant not to sue, Wheeler is executing, simultaneously
         with the execution of the Agreement, an extension of the Voting
         Agreement dated November 11, 2000 in the form annexed hereto as
         Exhibit B.

     5.  RELEASE OF THE COMPANY

         a.  In Consideration of this Agreement and the other good and valuable
             consideration provided to Wheeler pursuant hereto, Wheeler hereby
             irrevocably and unconditionally releases, and forever discharges,
             the Company, its affiliated companies, and their respective current
             and former stockholders, officers, directors, employees, agents,
             advisors, benefit funds and administrators (the "Releases"), from
             any and all actions, causes of action, claims, demands, damages,
             rights, remedies and liabilities of whatsoever kind or character,
             in law or equity, whether known or unknown, suspected or
             unsuspected, past or present, that he has ever had, may now have,
             or may later have against any of the Releases, whether or not
             arising out of or related to Wheeler's assignment of intellectual
             property to the Company, employment and those services, or his
             position as a shareholder of the Company (hereinafter referred to
             as "Wheeler's Claims"), from the beginning of time to the date
             hereafter.

         b.  To the fullest extent permitted by law, Wheeler agrees not to lodge
             any complaint in court, or with any federal, state or local agency
             or any other forum, including without limitation arbitration, in
             any jurisdiction, arising out of or related to Wheeler's Claims or
             Wheeler's employment by or performance of services to or on behalf
             of the Company, or any if the other Releases or the termination of
             that employment or other services. Wheeler hereby represents and
             warrants that he has brought no complaint, claim, charge or
             proceeding against any of the Releases in any jurisdiction or

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         forum, nor assisted or encouraged any other person or persons in doing
         so. Wheeler further represents and warrants that he has not in the
         past and will not in the future assign any of Wheeler's Claims to any
         person, corporation or other entity.

     c.  Execution of this Agreement by Wheeler operates as a complete bar and
         defense against any and all of Wheeler's Claims in any charge,
         compliant, action, claim or proceeding against the Company or any of
         the other Releasee, this Agreement may be raised as and shall
         constitute a complete bar to any such action, claim or proceeding and
         the Company, and/or the other Releasees, shall be entitled to and
         shall recover from Wheeler all costs incurred, including without
         limitations attorneys' fees, expenses and costs, in defending against
         any such action, claim or proceeding.

6.   Future Cooperation by Wheeler. Wheeler further covenants and agrees that
     he will make himself available to cooperate with the Company and each
     Releasee in the event that any action, claim or proceeding is brought
     against the Company or any other Releasees as a result of any action or
     non-action by Wheeler or in which Wheeler's conduct is at issue. The
     company agrees to hold Wheeler harmless for any cooperation and agrees to
     pay Wheeler for all expense related to such action.

7.   Confidentiality. The parties and their respective agents and employees
     shall keep this Agreement, and the circumstances giving rise to it,
     strictly confidential unless disclosure is required by law. Wheeler
     acknowledges that the Company may be obligated to make such disclosure
     pursuant to securities laws applicable to it.

8.   Non-Disparagement. Neither party shall disparage the other.

9.   Notice. Any notice or other communication under this Agreement shall be in
     writing and shall be considered given five days after it is mailed by
     registered or certified mail, return receipt requested or in the next
     business day after it is given to a reputable overnight courier or service
     (such as Federal Express) for delivery to the parties at the addresses set
     forth below (or any other address as a party may specify by notice to the
     other, provided, that any such notice shall be effective only upon
     receipt).

As to the company:       Joanne R. Firstenberg
                         Elektryon, Inc.
                         6565 Spencer Street, Suite 206
                         Las Vegas, Nevada 93145
                    With a copy to:
                         Kaye, Scholer, Fierman, Hays & Handler, LLP
                         425 Park Avenue
                         New York, New York 10022
                         Attention: Gregory J. Wallance, Esq.

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     As to Wheeler:      Edwin W. Wheeler
                         PO Box 96507
                         Las Vegas, Nevada, 89193

10.  NON-DISCLOSURE OF PROPRIETARY INFORMATION. Wheeler shall not at any time
     use for any purpose or disclose to any person any trade secrets or other
     confidential or proprietary information of the Company. The parties agree
     that nothing contained herein shall prevent Wheeler from disclosing: (1)
     information required to be disclosed pursuant to compulsory legal process,
     provided that Wheeler shall have first given the Company timely notice of
     such process and an opportunity to contest such disclosure or to take
     appropriate action to minimize the required disclosure; (2) information
     which was in Wheeler's lawful possession, without breach of any person's
     obligations to the Company, at the time of or prior to Wheeler obtaining
     such information from the Company; or (3) Information which is already in
     the public domain, without breach of any person's obligations to the
     Company.

11.  NO ADMISSIONS. Neither this Agreement nor the performance of this
     Agreement is intended to be, and should not be construed as, an admission
     of liability by either party to the other party. Neither party shall offer
     this Agreement as evidence of liability of the other party in any
     litigation, action or proceeding, except in an action seeking to enforce
     the terms of this Agreement or to recover for an alleged breach of the
     Agreement.

12.  REPRESENTATION BY COUNSEL. This Agreement was drafted by the Company and
     its counsel solely as a matter of convenience to the parties, and shall
     not be construed for or against either party for that reason. The parties
     acknowledge that they each have been afforded ample opportunity to review
     and evaluate this Agreement prior to subscribing hereto and that they have
     been represented and assisted by counsel chosen by them for that purpose.
     The parties acknowledge and agree that they enter into this Agreement
     freely and voluntarily, without or coercion of any kind, and as an
     informed and well-reasoned exercise of their respective business
     judgments.

13.  REMEDIES AND ENFORCEMENT. Without limitation as to other available
     remedies, any party hereto may compel specific performance of this
     Agreement. In any action to enforce any promise, covenant, term, or
     provision of this Agreement, the prevailing party shall be entitled to
     recover its reasonable attorneys' fees, expenses, and costs incurred
     therein.

14.  FURTHER COOPERATION TO EFFECTUATE THIS AGREEMENT. The parties to this
     Agreement covenant and agree that, without expanding their substantive
     obligations hereunder, they shall do all acts and execute and obtain all
     documents, to the full extent necessary or appropriate, to implement and
     enforce this Agreement according to its terms.

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15.  BINDING EFFECT. This agreement shall be binding upon the inure to the
     benefit of the parties hereto and their respective heirs, representatives,
     successors and assigns.

16.  COUNTERPARTS. This Agreement may be executed in separate counterparts, each
     of which shall be considered and treated as a complete and original
     document.

17.  CORPORATE POWER/AUTHORIZATION. Each party to this Agreement represents to
     the other that:

               --   Such party has all requisite power and authority, and the
                    legal right, to make, deliver and perform his or its
                    respective obligations under this Agreement,

               --   Such party has taken all necessary action and obtained any
                    requisite consents to authorize execution and delivery of
                    this Agreement and the performance of his or its respective
                    obligations under this Agreement,

               --   This Agreement has been duly executed and delivered on
                    behalf of such party,

               --   Any statement of fact in this Agreement relating to such
                    party constitutes a representation by that party to the
                    other that such fact is true, correct and complete, and

               --   This agreement constitutes the legal, valid, and binding
                    obligations of the party, enforceable against him or it in
                    accordance with its terms.

18.  GOVERNING LAW. The validity of this Agreement, its interpretation and any
     disputes arising from, or relating in any way to, this Agreement or the
     relationship of the parties, shall be governed by the law of the State of
     Nevada without regard to its conflicts of law principles.

19.  ENTIRE AGREEMENT. The Agreement constitutes the entire agreement concerning
     the subject matter hereof between the parties and supersedes any previous
     agreement, memoranda of understanding, negotiations, or representations
     with respect to its subject matter made prior to the date of this
     Agreement. This Agreement may be modified or amended only by written
     agreement executed by Wheeler and the Company.

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
as of the day and year first written above.

                                        ELEKTRYON

                                        By: /s/ M.E. Holstrom    1/22/01
                                            ----------------------------
                                        Title: PRESIDENT
                                               -------------------------

                                        /s/ Edwin W. Wheeler     1/22/01
                                        --------------------------------
                                        Edwin W. Wheeler

                                                                               6<PAGE>   1
                                                                    Exhibit 10.8

                   AMENDED AND RESTATED ON COMMAND CORPORATION
                          1996 KEY EMPLOYEE STOCK PLAN

                  On Command Corporation, a Delaware corporation, has adopted
this Amended and Restated 1996 Key Employee Stock Plan (the "Plan"), effective
as of October 5, 2000, as an amendment and restatement of the On Command
Corporation 1996 Key Employee Stock Plan, originally effective as of October 7,
1996, for the benefit of its eligible employees.

                  The purposes of this Plan are as follows:

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

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

                                   ARTICLE I

                                   DEFINITIONS

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

         1.2 Award Limit. "Award Limit" shall mean 300,000 (Three hundred
thousand) shares of Common Stock.

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

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

         1.5 Committee. "Committee" shall mean the Compensation Committee of the
Board, or a subcommittee of the Board, appointed as provided in Section 9.1.

         1.6 Common Stock. "Common Stock" shall mean the common stock of the
Company, par value $.0l per share, and any equity security of the Company issued
or authorized to be issued in the future, but excluding any warrants, Options or
other rights to purchase Common Stock. Debt securities of the Company
convertible into Common Stock shall be deemed equity securities of the Company.

         1.7 Company. "Company" shall mean On Command Corporation, a Delaware
corporation.
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         1.8 Deferred Stock. Preferred Stock" shall mean Common Stock awarded
under Article VII of this Plan.

         1.9 Director. "Director" shall mean a member of the Board.

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

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

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

         1.13 Fair Market Value. "Fair Market Value" of a share of Common Stock
as of a giver date shall be (i) the mean between the highest and lowest selling
price of a share of common Stock on the principal exchange on which shares of
Common Stock are then trading, if any, on such date, or if shares were not
traded on such date, then on the closest preceding date on which a trade
occurred, or (ii) if Common Stock is not traded on an exchange, the mean between
the closing representative bid and asked prices for the Common Stock on such
date as reported by NASDAQ or, if NASDAQ is not then in existence, by its
successor quotation system; or (iii) if Common Stock is not publicly traded, the
Fair Market Value of a share of Common Stock as established by the Committee
acting in good faith.

         1.14 Grantee. "Grantee" shall mean an Employee granted a Performance
Award, Dividend Equivalent, Stock Payment or Stock Appreciation Right, or an
award of Deferred Stock, under this Plan.

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

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

         1.17 Option. "Option" shall mean a stock Option granted under Article
III of this Plan. An Option granted under this Plan shall, as determined by the
Committee, be either a Non-Qualified Stock Option or an Incentive Stock Option.

         1.18 Optionee. "Optionee" shall mean an Employee granted an Option
under this Plan.

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

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         1.20 Plan. "Plan" shall mean The On Command Corporation 1996 Key
Employee Stock Plan.

         1.21 Restricted Stock. "Restricted Stock" shall mean Common Stock
awarded under Article VI of this Plan.

         1.22 Restricted Stockholder. "Restricted Stockholder" shall mean an
Employee granted an award of Restricted Stock under Article VI of this Plan.

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

         1.24 Stock Appreciation Right. "Stock Appreciation Right" shall mean a
stock appreciation right granted under Article VIII of this Plan.

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

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

         1.27 Termination of Employment. "Termination of Employment" shall mean
the time when the employee-employer relationship between the Optionee, Grantee
or Restricted Stockholder and the Company or any Subsidiary is terminated for
any reason, including, but not by way of limitation, a termination by
resignation, discharge, death, disability or retirement; but excluding (i)
terminations where there is a simultaneous reemployment or continuing employment
of the Optionee, Grantee or Restricted Stockholder by the Company or any
Subsidiary, (ii) at the discretion of the Committee, terminations which result
in a temporary severance of the employee-employer relationship, and (iii) at the
discretion of the Committee, terminations which are followed by the simultaneous
establishment of a consulting relationship by the Company or a Subsidiary with
the former employee. The Committee, in its discretion, shall determine the
effect of all matters and questions relating to Termination of Employment,
including, but not by way of limitation, the question of whether a Termination
of Employment resulted from a discharge for good cause, and all questions of
whether particular leaves of absence constitute Terminations of Employment;
provided, however, that, with respect to Incentive Stock Options, a leave of
absence or other change in the employee-employer relationship shall constitute a
Termination of Employment if, and to the extent that, such leave of absence or
other change interrupts employment for the purposes of Section 422(a)(2) of the
Code and the then applicable regulations and revenue rulings under said Section.
Notwithstanding any other provision of this Plan, the Company or any Subsidiary
has an absolute and unrestricted right to terminate an Employee's employment at
any time for any reason whatsoever, with or

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without cause, except to the extent expressly provided otherwise in writing;
provided that the foregoing shall be subject to Section 10.3 of this Plan.

                                   ARTICLE II

                             SHARES SUBJECT TO PLAN

         2.1 Shares Subject to Plan.

         (a) The shares of stock subject to Options, awards of Restricted Stock,
Performance Awards, Dividend Equivalents, awards of Deferred Stock, Stock
Payments or Stock Appreciation Rights shall be Common Stock, initially shares of
the Company's Common Stock, par value $.01 per share. The aggregate number of
such shares which may be issued upon exercise of such Options or rights or upon
any such awards under the Plan shall not exceed 5,250,000 (Five Million Two
Hundred Fifty Thousand) shares, The shares of Common Stock issuable upon
exercise of such Options or rights or upon any such awards may be either
previously authorized but unissued shares or treasury shares.

         (b) The maximum number of shares which may be subject to Options or
Stock Appreciation Rights granted under the Plan to any individual in any
calendar year shall not exceed the Award Limit. To the extent required by
Section 162(m) of the Code, shares subject to Options which are cancelled
continue to be counted against the Award Limit and if, after grant of an Option,
the price of shares subject to such Option is reduced, the transaction is
treated as a cancellation of the Option and a grant of a new Option and both the
Option deemed to be canceled and the Option deemed to be granted are counted
against the Award Limit. Furthermore, to the extent required by Section 162 (m)
of the Code, if, after grant of a Stock Appreciation Right, the base amount on
which stock appreciation is calculated is reduced to reflect a reduction in the
Fair Market Value of the Company's Common Stock, the transaction is treated as a
cancellation of the Stock Appreciation Right and a grant of a new Stock
Appreciation Right and both the Stock Appreciation Right deemed to be canceled
and the Stock Appreciation Right deemed to be granted are counted against the
Award Limit.

         2.2 Add-back of Options and other Rights. If any Option, or other right
to acquire shares of Common Stock under any other award under this Plan, expires
or is cancelled without having been fully exercised, or is exercised in whole or
in part for cash as permitted by this Plan, the number of shares subject to such
Option or other right but as to which such Option or other right was not
exercised prior to its expiration, cancellation or exercise may again be
Optioned, granted or awarded hereunder, subject to the limitations of Section
2.1. Shares of Common Stock which are delivered by the Optionee or Grantee or
withheld by the Company upon the exercise of any Option or other award under
this Plan, in payment of the exercise price thereof, may again be Optioned,
granted or awarded hereunder, subject to the limitations of Section 2.1. If any
share of Restricted Stock is forfeited by the Grantee or repurchased by the
Company pursuant to Section 6.6 hereof, such share may again be Optioned,
granted or awarded hereunder, subject to the limitations of Section 2.1.

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                                  ARTICLE III

                               GRANTING OF OPTIONS

         3.1 Eligibility. Any Employee selected by the Committee pursuant to
Section 3.4(a)(i) shall be eligible to be granted an Option.

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

         3.3 Qualification of Incentive Stock Options. No Incentive Stock Option
shall be granted unless such Option, when granted, qualifies as an "incentive
stock Option" under Section 4.22 of the Code. No Incentive Stock Option shall be
granted to any person who is not an Employee,

         3.4 Granting of Options.

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

                  (i) Determine which Employees are key Employees and select
         from among them (including Employees who have previously received
         Options or other awards under this Plan) such of them as in its opinion
         should be granted Options;

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

                  (iii) Determine whether such Options are to be Incentive Stock
         Options or Non-Qualified Stock Options and whether such Options are
         intended to qualify as performance-based compensation as described in
         Section 162(m)(4)(C) of the code; and

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

         (b) Upon the selection of a key Employee to be granted an Option, the
Committee shall instruct the Secretary of the Company to issue the Option and
may impose such conditions on the grant of the Option as it deems appropriate.
Without limiting the generality of the preceding sentence, the Committee may, in
its discretion and on such terms as it deems appropriate, require as a condition
on the grant of an Option to an Employee that the Employee

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surrender for cancellation some or all of the unexercised Options, awards of
Restricted Stock or Deferred Stock, Performance Awards, Stock Appreciation
Rights, Dividend Equivalents or Stock Payments or other rights which have been
previously granted to him under this Plan or otherwise. An Option, the grant of
which is conditioned upon such surrender, may have an Option price lower (or
higher) than the exercise price of such surrendered Option or other award, may
cover the same (or a lesser or greater) number of shares as such surrendered
Option or other award, may contain such other terms as the Committee deems
appropriate, and shall be exercisable in accordance with its terms, without
regard to the number of shares, price, exercise period or any other term or
condition of such surrendered Option or other award.

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

                                   ARTICLE IV

                                TERMS OF OPTIONS

         4.1 Option Agreement. Each Option shall be evidenced by a written Stock
Option Agreement, which shall be executed by the Optionee and an authorized
officer of the Company and which shall contain such terms and conditions as the
Committee shall determine, consistent with this Plan. Stock Option Agreements
evidencing Options intended to qualify as performance-based compensation as
described in Section 162(m)(4)(C) of the Code shall contain such terms and
conditions as may be necessary to meet the applicable provisions of Section 162
(m) of the Code. Stock Option Agreements evidencing Incentive Stock Options
shall contain such terms and conditions as may be necessary to meet the
applicable provisions of Section 422 of the Code.

         4.2 Option Price. The price per share of the shares subject to each
Option shall be set by the Committee; provided, however, that such price shall
be no less than the par value of a share of Common Stock and (i) in the case of
Incentive Stock Options and Options intended to qualify as performance-based
compensation as described in Section 162(m)(4)C) of the Code, such price
shall not be less than 100% of the Fair Market Value of a share of Common Stock
on the date the Option is granted and (ii) in the case of Incentive Stock
Options granted to an individual then owning (with in the meaning of Section 424
(d) of the Code) more than 10% of the total combined voting power of all classes
of stock of the Company or any Subsidiary such price shall not be less than 110%
of the Fair Market Value of a share of Common Stock on the date the Option is
granted.

         4.3 Option Term. The term of an Option shall be set by the Committee in
its discretion; provided, however, that, in the case of Incentive Stock Options,
the term shall not be more than ten (10) years from the date the Incentive Stock
Option is granted, or five (5) years from such date if the Incentive Stock
Option is granted to an individual then owning (within the meaning of Section
424(d) of the Code) more than 10% of the total combined voting power of all
classes of stock of the Company or any Subsidiary. Except as limited by
requirements of Section 422 of the Code and regulations and rulings thereunder
applicable to Incentive Stock Options, the Committee may extend the term of any
outstanding Option in connection with any

                                       6
<PAGE>   7
Termination of Employment of the Optionee, or amend any other term or condition
of such Option relating to such a termination.

         4.4 Option Vesting.

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

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

         (c) To the extent that the aggregate Fair Market Value of stock with
respect to which "incentive stock Options" (within the meaning of Section 422 of
the Code, but without regard to Section 422 (d) of the Code) are exercisable for
the first time by an Optionee during any calendar year (under the Plan and all
other incentive stock Option plans of the Company and any Subsidiary) exceeds
$100,000, such Options shall be treated as Non-Qualified Options to the extent
required by Section 422 of the Code. The rule set forth in the preceding
sentence shall be applied by taking Options into account in the order in which
they were granted. For purposes of this Section 4.4(c), the Fair Market Value of
stock shall be determined as of the time the Option with respect to such stock
is granted.

         4.5 Consideration. In consideration of the granting of an Option, the
Optionee shall agree, in the written Stock Option Agreement, to remain in the
employ of the Company or any Subsidiary for a period of at least one year after
the Option is granted. Nothing in this Plan or in any Stock Option Agreement
hereunder shall confer upon any Optionee any right to continue in the employ of
the Company or any Subsidiary, or shall interfere with or restrict in any way
the rights of the Company and any Subsidiary, which are hereby expressly
reserved, to discharge any Optionee at any time for any reason whatsoever, with
or without good cause.

                                   ARTICLE V

                               EXERCISE OF OPTIONS

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

                                       7
<PAGE>   8
         5.2 Manner of Exercise. All or a portion of an exercisable Option shall
be deemed exercised upon delivery of all of the following to the Secretary of
the Company or his office:

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

         (b) Such representations and documents as the Committee or the Board,
in its discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act of 1933, as amended, and any other
federal or state securities laws or regulations. The Committee or Board may, in
its discretion, also take whatever additional actions it deems appropriate to
effect such compliance including, without limitation, placing legends on share
certificates and issuing stop-transfer notices to agents and registrars;

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

         (d) Full cash payment to the Secretary of the Company for the shares
with respect to which the Option, or portion thereof, is exercised. However, at
the discretion of the Committee, the terms of the Option may (i) allow a delay
in payment up to thirty (30) days from the date the Option, or portion thereof,
is exercised; (ii) allow payment, in whole or in part, through the delivery of
shares of Common Stock owned by the Optionee for a period of not less than six
months, duly endorsed for transfer to the Company with a Fair Market Value on
the dare of delivery equal to the aggregate exercise price of the Option or
exercised portion thereof; (iii) allow payment, in whole or in part, through the
delivery of property of any kind which constitutes good and valuable
consideration; (iv) allow payment, in whole or in part, through the delivery of
a full recourse promissory note bearing interest (at no less than such rate as
shall then preclude the imputation of interest under the Code) and payable upon
such terms as may be prescribed by the Committee or the Board; or (v) allow
payment through any combination of the consideration provided in the foregoing
subparagraphs (ii), (iii) and (iv). In the case of a promissory note, the
Committee or the Board may also prescribe the form of such note and the security
to be given for such note. The Option may not be exercised, however, by delivery
of a promissory note or by a loan from the Company when or where such loan or
other extension of credit is prohibited by law.

         5.3 Certain Timing Requirements. At the discretion of the Committee,
shares of Common Stock issuable to the Optionee upon exercise of the Option may
be used to satisfy the Option exercise price or the tax withholding consequences
of such exercise, provided that in the case of persons subject to Section 15 of
the Exchange Act, only (i) during the period beginning on the third business day
following the date of release of the quarterly or annual summary statement of
sales and earnings of the Company and ending on the twelfth business day
following such date or (ii) pursuant to an irrevocable written election by the
Optionee to use shares of Common Stock issuable to the Optionee upon exercise of
the Option to pay all or part

                                       8
<PAGE>   9
of the Option price or the withholding taxes made at least six months prior to
the payment of such Option price or withholding taxes.

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

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

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

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

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

         (e) The receipt by the Company of full payment for such shares,
including payment of any applicable withholding tax.

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

         5.6 Ownership and Transfer Restrictions. The Committee, in its
discretion, may impose such restrictions on the ownership and transferability of
the shares purchasable upon the exercise of an Option as it deems appropriate.
Any such restriction shall be set forth in the respective Stock Option Agreement
and may be referred to on the certificates evidencing such shares. The Committee
may require the Employee to give the Company prompt notice of any disposition of
shares of Common Stock acquired by exercise of an Incentive Stock Option within
(i) two years from the date of granting such Option to such Employee or (ii) one
year after the transfer of such shares to such Employee. The Committee may
direct that the certificates evidencing shares acquired by exercise of an Option
refer to such requirement to give prompt notice of disposition.

                                       9
<PAGE>   10
                                   ARTICLE VI

                            AWARD OF RESTRICTED STOCK

         6.1 Award of Restricted Stock.

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

                  (i) Select from among the key Employees (including Employees
         who have previously received other awards under this Plan) such of them
         as in its opinion should be awarded Restricted Stock; and

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

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

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

         6.2 Restricted Stock Agreement. Restricted Stock shall be issued only
pursuant to a written Restricted Stock Agreement, which shall be executed by the
selected key Employee and an authorized officer of the Company and which shall
contain such terms anal conditions as the Committee shall determine, consistent
with this Plan.

         6.3 Consideration. As consideration for the issuance of Restricted
Stock, in addition to payment of any purchase price, the Restricted Stockholder
shall agree, in the written Restricted Stock Agreement, to remain in the employ
of, or to consult for, the Company or any Subsidiary for a period of at least
one year after the Restricted Stock is issued. Nothing in this Plan or in any
Restricted Stock Agreement hereunder shall confer on any Restricted Stockholder
any right to continue in the employ of the Company or any Subsidiary or shall
interfere with or restrict in any way the rights of the Company and any
Subsidiary, which are hereby expressly reserved, to discharge any Restricted
Stockholder at any time for any reason whatsoever, with or without good cause.

         6.4 Rights as Stockholders. Upon delivery of the shares of Restricted
Stock to the escrow holder pursuant to Section 6.7, the Restricted Stockholder
shall have, unless otherwise provided by the Committee, all the rights of a
stockholder with respect to said shares, subject to the restrictions in his
Restricted Stock Agreement, including the right to receive all dividends and
other distributions paid or made with respect to the shares; provided, however,
that in the discretion of the Committee, any extraordinary distributions with
respect to the Common Stock shall be subject to the restrictions set forth in
Section 6.5.

                                       10
<PAGE>   11
         6.5 Restriction. All shares of Restricted Stock issued under this Plan
(including any shares received by holders thereof with respect to shares of
Restricted Stock as a result or stock dividends, stock splits or any other form
of recapitalization) shall, in the terms of each individual Restricted Stock
Agreement, be subject to such restrictions as the Committee shall provide, which
restrictions may include, without limitation, restrictions concerning voting
rights and transferability and restrictions based on duration of employment with
the Company, Company performance and individual performance; provided, however,
that by a resolution adopted after the Restricted Stock is issued, the Committee
may, on such terms and conditions as it may determine to be appropriate, remove
any or all of the restrictions imposed by the terms of the Restricted Stock
Agreement. Restricted Stock may not be sold or encumbered until all restrictions
are terminated or expire. Unless provided otherwise by the Committee, if no
consideration was paid by the Restricted Stockholder upon issuance, a Restricted
Stockholder's rights in unvested Restricted Stock shall lapse upon Termination
of Employment or, if applicable, upon the termination of his consulting
relationship with the Company.

         6.6 Repurchase of Restricted Stock. The Committee shall provide in the
terms of each individual Restricted Stock Agreement that the Company shall have
the right to repurchase from the Restricted Stockholder the Restricted Stock
then subject to restrictions under the Restricted Stock Agreement immediately
upon a Termination of Employment or, if applicable, upon a termination of any
consulting relationship between the Restricted Stockholder and the Company, at a
cash price per share equal to the price paid by the Restricted Stockholder for
such Restricted Stock; provided, however, that provision may be made that no
such right of repurchase shall exist in the event of a Termination of employment
without cause, or following a change in control of the Company or because of the
Restricted Stockholder's retirement, death or disability, or otherwise.

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

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

                                  ARTICLE VII

                    PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS,
                         DEFERRED STOCK, STOCK PAYMENTS

         7.1 Performance Awards. Any key Employee selected by the Committee may
be granted one or more Performance Awards. The value of such Performance Awards
may be linked to the market value, book value, net profits or other measure of
the value of Common Stock or other specific performance criteria determined
appropriate by the Committee, in each case on a specified date or dates or over
any period or periods determined by the Committee, or

                                       11
<PAGE>   12
may be based upon the appreciation in the market value, book value, net profits
or other measure of the value of a specified number of shares of Common Stock
over a fixed period or periods determined by the Committee. In making such
determinations, the Committee shall consider (among such other factors as it
deems relevant in light of the specific type of award) the contributions,
responsibilities and other compensation of the particular key Employee.

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

         7.3 Stock Payments. Any key Employee selected by the Committee may
receive Stock Payments in the manner determined from time to time by the
Committee. The number of shares shall be determined by the Committee and may be
based upon the Fair Market Value, book value, net profits or other measure of
the value of Common Stock or other specific performance criteria determined
appropriate by the Committee, determined on the date such Stock Payment is made
or on any date thereafter.

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

         7.5 Performance Award Agreement, Dividend Equivalent Agreement,
Deferred Stock Agreement, Stock payment Agreement. Each Performance Award,
Dividend Equivalent, award of Deferred Stock and/or Stock Payment shall be
evidenced by a written agreement, which shall be executed by the Grantee and an
authorized Officer of the Company and which shall contain such terms and
conditions as the Committee shall determine, consistent with this Plan.

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

         7.7 Exercise Upon Termination of Employment. A Performance Award,
Dividend Equivalent, award of Deferred Stock and/or Stock Payment is exercisable
or payable only while the Grantee is an Employee; provided that the Committee
may determine that the

                                       12
<PAGE>   13
Performance Award, Dividend Equivalent, award of Deferred Stock and/or Stock
Payment may be exercised subsequent to Termination of Employment without cause,
or following a change in control of the Company, or because of the Grantee's
retirement, death or disability, or otherwise.

         7.8 Payment on Exercise. Payment of the amount determined under Section
7.1 or 7.2 above shall be in cash, in Common Stock or a combination of both, as
determined by the Committee. To the extent any payment under this Article VII is
effected in Common Stock, it shall be made subject to satisfaction of all
provisions of Section 5.4.

         7.9 Consideration. In consideration of the granting of a Performance
Award, Dividend Equivalent, award of Deferred Stock and/or Stock Payment, the
Grantee shall agree, in a written agreement, to remain in the employ of, or to
consult for, the Company or any Subsidiary for a period of at least one year
after such Performance Award, Dividend Equivalent, award of Deferred Stock
and/or Stock Payment is granted, Nothing in this Plan or in any agreement
hereunder shall confer on any Grantee any right to continue in the employ of the
Company or any Subsidiary or shall interfere with or restrict in any way the
rights of the company and any Subsidiary, which are hereby expressly reserved,
to discharge any Grantee at any time for any reason whatsoever, with or without
good cause.

                                  ARTICLE VIII

                            STOCK APPRECIATION RIGHTS

         8.1 Grant of Stock Appreciation Rights. A Stock Appreciation Right may
be granted to any key Employee selected by the Committee. A Stock Appreciation
Right may be granted (i) in connection and simultaneously with the grant of an
Option, (ii) with respect to a previously granted Option, or (iii) independent
of an Option. A Stock Appreciation Right shall be subject to such terms and
conditions not inconsistent with this Plan as the Committee shall impose and
shall be evidenced by a written Stock Appreciation Right Agreement, which shall
be executed by the Grantee and an authorized officer of the Company. The
Committee, in its discretion, may determine whether a Stock Appreciation Right
is to qualify as performance-based compensation as described in Section
162(m)(4)(C) of the Code and Stock Appreciation Right Agreements evidencing
Stock Appreciation Rights intended to so qualify shall contain such terms and
conditions as may be necessary to meet the applicable provisions of Section 162
(m) of the Code. Without limiting the generality of the foregoing, the Committee
may, in its discretion and on such terms as it deems appropriate, require as a
condition of the grant of a Stock Appreciation Right to an Employee that the
Employee surrender for cancellation some or all of the unexercised Options,
awards of Restricted Stock or Deferred Stock, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments, or other rights
which have been previously granted to him under this Plan or otherwise. A Stock
Appreciation Right, the grant of which is conditioned upon such surrender, may
have an exercise price lower (or higher) than the exercise price of the
surrendered Option or other award, may cover the same (or a lesser or greater)
number of shares as such surrendered Option or other award, may contain such
other terms as the Committee deems appropriate, and shall be exercisable in
accordance with its terms, without regard to the number of shares, price,
exercise period or any other term or condition of such surrendered Option or
other award.

                                       13
<PAGE>   14
         8.2 Coupled Stock Appreciation Rights.

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

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

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

         8.3 Independent Stock Appreciation Rights.

         (a) An Independent Stock Appreciation Right ("ISAR") shall be unrelated
to any Option and shall have a term set by the Committee. An ISAR shall be
exercisable in such installments as the Committee may determine. An ISAR shall
cover such number of shares of Common Stock as the Committee may determine;
provided, however, that unless the Committee otherwise provides in the terms of
the ISAR, no ISAR granted to a person subject to Section 16 of the Exchange Act
shall be exercisable until at least six months have elapsed from (but excluding)
the date on which the Option was granted. The exercise price per share of Common
Stock subject to each ISAR shall be set by the Committee. An ISAR is exercisable
only while the Grantee is an Employee; provided that the Committee may determine
that the ISAR may be exercised subsequent to Termination of Employment without
cause, or following a change in control of the Company, or because of the
Grantee's retirement, death or disability, or otherwise.

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

         8.4 Payment and Limitations on Exercise.

         (a) Payment of the amount determined under Section 8.2 (c) and 8. 3 (b)
above shall be in cash, in Common Stock (based on its Fair Market Value as of
the date the Stock Appreciation Right is exercised) or a combination of both, as
determined by the Committee. To the extent such payment is effected in Common
Stock it shall be made subject to satisfaction of all provisions of Section 5.4
hereinabove pertaining to Options.

                                       14
<PAGE>   15
         (b) Grantees of Stock Appreciation Rights who are subject to Section 16
of the Exchange Act may, in the discretion of the Board or Committee, be
required to comply with any timing or other restrictions under Rule 16b-3
applicable to the settlement or exercise of a Stock Appreciation Right.

         8.5 Consideration. In consideration of the granting of a Stock
Appreciation Right, the Grantee shall agree, in the written Stock Appreciation
Right Agreement, to remain in the employ of, or to consult for, the Company or
any Subsidiary for a period of at least one year after the Stock Appreciation
Right is granted. Nothing in this Plan or in any Stock Appreciation Right
Agreement hereunder shall confer on any Grantee any right to continue in the
employ of the Company or any Subsidiary or shall interfere with or restrict in
any way the rights of the Company and any Subsidiary, which are hereby expressly
reserved, to discharge any Grantee at any time for any reason whatsoever, with
or without good cause,

                                   ARTICLE IX

                                 ADMINISTRATION

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

         9.2 Duties and Powers of Committee. It shall be the duty of the
Committee to conduct the general administration of this Plan in accordance with
its provisions. The Committee shall have the power to interpret this Plan and
the agreements pursuant to which Options, awards of Restricted Stock or Deferred
Stock, Performance Awards, Stock Appreciation Rights, Dividend Equivalents or
Stock Payments are granted or awarded and to adopt such rules for the
administration, interpretation, and application of this Plan as are consistent
therewith and to interpret, amend or revoke any such rules. Any such grant or
award under this Plan need not be the same with respect to each Optionee,
Grantee or Restricted Stockholder. Any such interpretations and rules with
respect to Incentive Stock Options shall be consistent with the provisions of
Section 422 of the Code. In its discretion, the Board may at any time and from
time to time exercise any and all rights and duties of the Committee under this
Plan except with respect to matters which under Rule 16b-3 or Section 162 (m) of
the Code, or any regulations or rules issued thereunder, are required to be
determined in the sole discretion of the Committee.

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

                                       15
<PAGE>   16
         9.4 Compensation; Professional Assistance; Good Faith Actions. Members
of the Committee shall receive such compensation for their services as members
as may be determined by the Board. All expenses and liabilities which members of
the Committee incur in connection with the administration of this Plan shall be
borne by the Company. The Committee may, with the approval of the Board, employ
attorneys, consultants, accountants, appraisers, brokers, or other persons. The
Committee, the Company and the Company's officers and Directors shall be
entitled to rely upon the advice, opinions or valuations of any such persons.
All actions taken and all interpretations and determinations made by the
Committee in good faith shall be final and binding upon all Optionees, Grantees,
Restricted Stockholders, the Company and all other interested persons. No
members of the Committee or Board shall be personally liable for any action,
determination or interpretation made in good faith with respect to this Plan,
Options, awards of Restricted Stock or Deferred Stock, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments, and all members of
the Committee shall be fully protected by the Company in respect of any such
action, determination or interpretation.

                                   ARTICLE X

                            MISCELLANEOUS PROVISIONS

         10.1 Not Transferable. Options, awards of Restricted Stock or Deferred
Stock, Performance Awards, Stock Appreciation Rights, Dividend Equivalents or
Stock Payments under this Plan may not be sold, pledged, assigned, or
transferred in any manner other than by will or the laws of descent and
distribution unless and until such right or award has been exercised, or the
shares underlying such right or award have been issued, and all restrictions
applicable to such shares have lapsed. No Option, award of Restricted Stock or
Deferred Stock, Performance Award, Stock Appreciation Right, Dividend Equivalent
or Stock Payment or interest or right therein shall be liable for the debts,
contracts or engagements of the Optionee, Grantee, Restricted Stockholder or his
successors in interest, or shall be subject co disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or any other means
whether such disposition be voluntary or involuntary or by operation of law, by
judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect.

         During the lifetime of the Optionee or Grantee, only he may exercise an
Option or other right or award (or any portion thereof) granted to him under the
Plan. After the death of the Optionee or Grantee, any exercisable portion of an
Option or other right or award may, prior to the time when such portion becomes
unexercisable under the Plan or the applicable Stock Option Agreement or other
agreement, be exercised by his personal representative or by any person
empowered to do so under the deceased Optionee's or Grantee's will or under the
then applicable laws of descent and distribution.

         10.2 Amendment, Suspension or Termination of this Plan. Unless sooner
terminated under this Section 10.2, the Plan will terminate after the expiration
of ten years from the date the Company's Registration Statement, as amended and
filed in connection with the Company's proposed initial public offering of
Common Stock, is declared or deemed to be effective by the Securities and
Exchange Commission. This Plan may be wholly or partially

                                       16
<PAGE>   17
amended or otherwise modified, suspended or terminated at any time or from time
to time by the Committee, and may be terminated at any time by the Board.
However, without approval of the Company's stockholders given within twelve
months before or after the action by the Committee, no action of the Committee
may, except as provided in Section 10.3, increase the limits imposed in Section
2.1 on the maximum number of shares which may be issued under this Plan or
modify the Award Limit, and no action of the Committee may be taken that would
otherwise require stockholder approval as a matter of applicable law, regulation
or rule. No amendment, suspension or termination of this Plan shall, without the
consent of the holder of Options, Restricted Stock or Deferred Stock awards,
Performance Awards, Stock Appreciation Rights, Dividend Equivalents or Stock
Payments, alter or impair any rights or obligations under any Options, awards of
Restricted Stock or Deferred Stock, Performance Awards, Stock Appreciation
Rights, Dividend Equivalents or Stock Payments theretofore granted or awarded,
unless the award itself otherwise expressly so provides. No Options, Restricted
Stock, Deferred Stock, Performance Awards, Stock Appreciation Rights, Dividend
Equivalents or Stock Payments may be granted or awarded during any period of
suspension or after termination of this Plan, and in no event may any Incentive
Stock Option be granted under this Plan after the first to occur of the
following events:

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

         (b) The expiration of ten years from the date the Plan is approved by
the Company's stockholders under Section 10.5.

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

         (a) Subject to Section 10.3(e), in the event that the Committee
determines that any dividend or other distribution (whether in the form of cash,
Common Stock, other securities, or other property), recapitalization,
reclassification, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase, liquidation,
dissolution, or sale, transfer, exchange or other disposition of all or
substantially all of the assets of the Company, or exchange of Common Stock or
other securities of the Company, issuance of warrants or other rights to
purchase Common Stock or other securities of the Company, or other similar
corporate transaction or event, in the Committee's sole discretion, affects the
Common Stock such that an adjustment is determined by the Committee to be
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan or with respect
to an Option, Restricted Stock award, Performance Award, Stock Appreciation
Right, Dividend Equivalent, Deferred Stock award or Stock Payment, 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 Common Stock (or other
         securities or property) with respect to which Options, Performance
         Awards, Stock Appreciation Rights, Dividend Equivalents or Stock
         Payments may be granted under the Plan, or which may be granted as
         Restricted Stock or Deferred Stock (including, but not limited to,
         adjustments of the limitations in Section 2.1 on the

                                       17
<PAGE>   18
         maximum number and kind of shares which may be issued and adjustments
         of the Award Limit),

                  (ii) the number and kind of shares of Common Stock (or other
         securities or property) subject to outstanding Options, Performance
         Awards, Stock Appreciation Rights, Dividend Equivalents, or Stock
         Payments, and in the number and kind of shares of outstanding
         Restricted Stock or Deferred Stock, and

                  (iii) the grant or exercise price with respect to any Option,
         Performance Award, Stock Appreciation Right, Dividend Equivalent or
         Stock Payment.

         (b) Subject to Section 10.3 (e), in the event of any corporate
transaction or other event described in Section 10.3 (a) which results in shares
of Common Stock being exchanged for or converted into cash, securities
(including securities of another corporation) or other property, the Committee
will have the right to terminate this Plan as of the date of the event or
transaction, in which case all Options, rights and other awards granted under
this Plan shall become the right to receive such cash, securities or other
property, net of any applicable exercise price.

         (c) In the event of any corporate transaction or other event described
in Section 10.3 (a) or any unusual or nonrecurring transactions or events
affecting the Company, any affiliate of the Company, or the financial statements
of the Company or any affiliate, or of changes in applicable laws, regulations,
or accounting principles, the Committee in its discretion is hereby authorized
to take any one or more of the following actions whenever the Committee
determines that such action is appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan or with respect to any Option, right or other award under this
Plan, to facilitate such transactions or events or to give effect to such
changes in laws, regulations or principles:

                  (i) In its sole and absolute discretion, and on such terms and
         conditions as it deems appropriate, the Committee may provide, either
         automatically or upon the Optionee's request, for either the purchase
         of any such Option, Performance Award, Stock Appreciation Right,
         Dividend Equivalent, or Stock Payment, or any Restricted Stock or
         Deferred Stock for an amount of cash equal to the amount that could
         have been attained upon the exercise of such Option, right or award or
         realization of the Optionee's rights had such Option, right or award
         been currently exercisable or payable or the replacement of such
         Option, right or award with other rights or property selected by the
         Committee in its sole discretion;

                  (ii) In its sole and absolute discretion, the committee may
         provide, either by the terms of such Option, Performance Award, Stock
         Appreciation Right, Dividend Equivalent, or Stock Payment, or
         Restricted Stock or Deferred Stock or by action taken prior to the
         occurrence of such transaction or event that it cannot be exercised
         after such event;

                                       18
<PAGE>   19
                  (iii) In its sole and absolute discretion, and on such terms
         and conditions as it deems appropriate, the Committee may provide,
         either by the terms of such Option, Performance Award, Stock
         Appreciation Right, Dividend Equivalent, or Stock Payment, or
         Restricted Stock or Deferred Stock or by action taken prior to the
         occurrence of such transaction or event, that for a specified period of
         time prior to such transaction or event, such Option, right or award
         shall be exercisable as to all shares covered thereby, notwithstanding
         anything to the contrary in (i) Section 4.4 or (ii) the provisions of
         such Option, Performance Award, Stock Appreciation Right, Dividend
         Equivalent, or Stock Payment, or Restricted Stock or Deferred Stock;

                  (iv) In its sole and absolute discretion, and on such terms
         and conditions as it deems appropriate, the Committee may provide,
         either by the terms of such Option, Performance Award, Stock
         Appreciation Right, Dividend Equivalent, or Stock Payment, or
         Restricted Stock or Deferred Stock or by action taken prior to the
         occurrence of such transaction or event, that upon such event, such
         Option, right or award be assumed by the successor corporation, or a
         parent or subsidiary thereof, or shall be substituted for by similar
         Options, rights or awards covering the stock of the successor
         corporation, or a parent or subsidiary thereof, with appropriate
         adjustments as to the number and kind of shares and prices; and

                  (v) In its sole and absolute discretion, and on such terms and
         conditions as it deems appropriate, the Committee may make adjustments
         in the number and type of shares of Common Stock (or other securities
         or property) subject to outstanding Options, Performance Awards, Stock
         Appreciation Rights, Dividend Equivalents, or Stock Payments, and in
         the number and kind of outstanding Restricted Stock or Deferred Stock
         and/or in the terms and conditions of (including the grant or exercise
         price), and the criteria included in, outstanding Options, rights and
         awards and Options, rights and awards which may be granted in the
         future.

                  (vi) In its sole and absolute discretion, and on such terms
         and conditions as it deems appropriate, the Committee may provide,
         either by the terms of a Restricted Stock award or Deferred Stock award
         or by action taken prior to the occurrence of such event that, for a
         specified period of time prior to such event, the restrictions imposed
         under a Restricted Stock Agreement or a Deferred Stock Agreement upon
         some or all shares of Restricted Stock or Deferred Stock may be
         terminated, and, in the case of Restricted Stock, some or all shares of
         such Restricted Stock may cease to be subject to repurchase under
         Section 6.6 after such event.

         (d) Subject to Sections 10.3(e) and 10.8, the Committee may, in its
discretion, include such further provisions and limitations in any Option,
Performance Award, Stock Appreciation Right, Dividend Equivalent, or Stock
Payment, or Restricted Stock or Deferred Stock agreement or certificate, as it
may deem equitable and in the beet interests of the Company.

                                       19
<PAGE>   20
         (e) With respect to Incentive Stock Options and Options and Stock
Appreciation Rights intended to qualify as performance-based compensation under
Section 162(m), no adjustment or action described in this Section 10.3 or in any
other provision of the Plan shall be authorized to the extent that such
adjustment or action would cause the Plan to violate Section 422(b)(1) of the
Code or would cause such Option or stock appreciation right to fail to so
qualify under Section 162(m), as the case may be, or any successor provisions
thereto. Furthermore, no such adjustment or action shall be authorized to the
extent such adjustment or action would violate Section 16 or the exemptive
conditions of Rule 16b-3. The number of shares of Common Stock subject to any
Option, right or award shall always be rounded to the next whole number.

         10.4 Approval of Plan by Stockholders. This Plan will be submitted for
the approval of the Company's stockholders within twelve months after the date
of the Board's initial adOption of this Plan. Options, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments may be granted and
Restricted Stock or Deferred Stock may be awarded prior to such stockholder
approval, provided that such Options, Performance Awards, Stock Appreciation
Rights, Dividend Equivalents or Stock Payments shall not be exercisable and such
Restricted Stock or Deferred Stock shall not vest prior to the time when this
Plan is approved by the stockholders, and provided further that if such approval
has not been obtained at the end of said twelve-month period, all Options,
Performance Awards, Stock Appreciation Rights, Dividend Equivalents or Stock
Payments previously granted and all Restricted Stock or Deferred Stock
previously awarded under this Plan shall thereupon be cancelled and become null
and void.

         10.5 Tax Withholding. The Company shall be entitled to require payment
in cash or deduction from other compensation payable to each Optionee, Grantee
or Restricted Stockholder of any sums required by federal, state or local tax
law to be withheld with respect to the issuance, vesting or exercise of any
Option, Restricted Stock, Deferred Stock, Performance Award, Stock Appreciation
Right, Dividend Equivalent or Stock Payment. Subject to the timing requirements
of Section 5.3, the Committee may in its discretion and in satisfaction of the
foregoing requirement allow such Optionee, Grantee or Restricted Stockholder to
elect to have the Company withhold shares of Common Stock otherwise issuable
under such Option or such other award (or allow the return of shares of Common
Stock) having a Fair Market Value equal to the sums required to be withheld.

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

         10.7 Forfeiture Provisions. Pursuant to its general authority to
determine the terms and conditions applicable to awards under the Plan, the
Committee shall have the right (to the extent consistent with the requirements
of Rule 16b-3) to provide, in the terms of Options or other awards made under
the Plan, or to require the recipient to agree by separate written instrument,
that (a) any proceeds, gains or other economic benefit actually or
constructively received by the recipient upon any receipt or exercise of the
award, or upon the receipt or resale

                                       20
<PAGE>   21
of any Common Stock underlying such award, must be paid to the company, and (b)
the award shall terminate and any unexercised portion of such award (whether or
not vested) shall be forfeited, if (i) a Termination of Employment occurs prior
to a specified date, or within a specified time period following receipt or
exercise of the award, or (ii) the recipient at any time, or during a specified
time period, engages in any activity in competition with the Company, or which
is inimical, contrary or harmful to the interests of the Company, as further
defined by the Committee.

         10.8 Limitations Applicable to Section 16 Persons and Performance-Based
Compensation. Notwithstanding any other provision of this Plan, this Plan, and
any Option, Performance Award, Stock Appreciation Right, Dividend Equivalent or
Stock Payment granted, or Restricted Stock or Deferred Stock awarded, to any
individual who is then subject to Section 16 of the Exchange Act, shall be
subject to any additional limitations set forth in any applicable exemptive rule
under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of
the Exchange Act) that are requirements for the application of such exemptive
rule. To the extent permitted by applicable law, the Plan, Options, Performance
Awards, Stock Appreciation Rights, Dividend Equivalents, Stock Payments,
Restricted Stock and Deferred Stock granted or awarded hereunder shall be deemed
amended to the extent necessary to conform to such applicable exemptive rule.
Furthermore, notwithstanding any other provision of this Plan, any Option or
Stock Appreciation Right intended to qualify as performance-based compensation
as described in Section 162(m)(4)(C) of the Code shall be subject to any
additional limitations set forth in Section 162 (m) of the Code (including any
amendment to Section 152 (m) of the Code) or any regulations or rulings issued
thereunder that are requirements for qualification as performance-based
compensation as described in Section 162(m)(4)(C) of the Code, and this Plan
shall be deemed amended to the extent necessary to conform to such requirements.
Notwithstanding the foregoing, this Section 10.8 shall be subject to the
provisions of Section 10.13 of this Plan.

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

         10.10 Compliance with Laws. This Plan, the granting and vesting of
Options, awards of Restricted Stock or Deferred Stock, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments under this Plan and
the issuance and delivery of shares of Common Stock and the payment of money
under this Plan or under Options, Performance Awards, Stock Appreciation Rights,
Dividend Equivalents or Stock Payments granted or Restricted Stock or Deferred
Stock awarded hereunder are subject to compliance with all applicable federal
and state laws, rules and regulations (including but not limited to state and
federal securities law and federal margin requirements) and to such approvals by
any listing, regulatory or governmental authority as may, in the opinion of
counsel for the Company, be

                                       21
<PAGE>   22
necessary or advisable in connection therewith. Any securities delivered under
this Plan shall be subject to such restrictions, and the person acquiring such
securities shall, if requested by the Company, provide such assurances and
representations to the Company as the Company may deem necessary or desirable to
assure compliance with all applicable legal requirements. To the extent
permitted by applicable law, the Plan, Options, awards of Restricted Stock or
Deferred Stock, Performance Awards, Stock Appreciation Rights, Dividend
Equivalents or Stock Payments granted or awarded hereunder shall be deemed
amended to the extent necessary to conform to such laws, rules and regulations.

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

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

         10.13 Consistency with Other Agreements.

         (a) Notwithstanding any other provision of this Plan, the provision of
this Plan shall be subject to the terms and provisions of the following
agreements: (i) the On Command Corporation Non-Qualified Stock Option Agreement
between On Command Corporation and Robert Kavner dated as of September 11, 1996;
(ii) the On Command Corporation Non-Qualified Stock Option Agreement between On
Command Corporation and Brian A.C. Steel dated as of September 11, 1996; (iii)
the Employment Agreement between On Command Corporation and Robert Kavner dated
as of September 11, 1996; and (iv) the Employment Agreement between On Command
Corporation and Brian A.C. Steel dated as of September 11, 1996.

         (b) Options may be granted under this Plan with terms differing from
those provided in this Plan where such Options are granted in substitution for
stock Options held by employees of other companies who concurrently become
employees of the Company or a Subsidiary as a result of a merger or
consolidation of the other company with, or the acquisition of the property or
stock of the other company by, the Company or any of its Subsidiaries.

                                       22
<PAGE>   23
         I hereby certify that the foregoing Plan was duly adopted by the Board
of Directors of On Command Corporation effective as of October 5, 2000.

         Executed on this October 5, 2000.

                                         ------------------------------
                                               Assistant Secretary

                                       23

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