Document:

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                                      -1-

                                                                   Exhibit 10.17

                            AGREEMENT OF EMPLOYMENT

     THIS EMPLOYMENT AGREEMENT ("Agreement"), as of April 9, 2000 by and among
INDEPENDENT WIRELESS ONE CORPORATION, a Delaware Corporation ("IWO"), IWO
Holdings Inc., a Delaware Corporation ("Holdings" and together with IWO the
"Corporation") and, STEVEN M. NIELSEN, residing at 2405 Squak Mountain Loop, SW,
Issaquah, Washington 98027, hereinafter called the ("Employee").

                                    RECITALS
                                    --------

     WHEREAS, the Corporation desires to induce and secure the employment of the
Employee as Chief Financial Officer and Employee desires to be so employed by
the Corporation, beginning as of May 1, 2000.  ("Effective Date")

                                   AGREEMENTS
                                   ----------

     1.  Employment and Term.  Subject to the provisions for earlier termination
         -------------------
and extension as hereinafter provided in Paragraph 7 below, the Corporation
hereby employs the Employee and the Employee agrees to serve the Corporation for
a term commencing upon the Effective Date and extending until December 31, 2002.

     2.  Duties of Employee.
         ------------------

         (a) The Employee shall serve as Chief  Financial Officer of the
Corporation, and of any subsidiary or affiliated corporation if elected by the
appropriate Board of Directors, and shall perform such duties as are appropriate
to such office and not inconsistent therewith as may be assigned to him by the
Chief Executive Officer of the Corporation.

         (b)   So long as this Agreement shall continue in effect, the Employee
               shall devote substantially his full business time and energies to
               the business and affairs of the Corporation, and to any
               subsidiary or affiliate of the Corporation as directed by the
               Corporation, and use his best efforts, skills and abilities to
               promote its interests.
<PAGE>

                                      -2-

     3.   Compensation.
          ------------

          (a) Basic Salary.  The Corporation will pay the Employee during the
              ------------
term hereof for all services to be rendered hereunder a basic salary at the rate
of two hundred thousand dollars ($200,000) per annum from the Effective Date
through December 31, 2000; two hundred five thousand dollars ($205,000) per
annum from January 1, 2001 through December 31, 2001; and two hundred ten
thousand dollars ($210,000) per annum from January 1, 2002 to December 31, 2002.
The foregoing basic salary shall be paid in such regular installments as are
applied generally to salary period payments to other employees of the
Corporation, but in no event less than twice monthly.

          (b) Cash Bonus Compensation.  As an added inducement for the Employee
              -----------------------
to use his best efforts to enhance the business of the Corporation, the
Corporation shall pay to the Employee, as additional compensation hereunder, an
annual cash bonus in the following amount and subject to the following terms and
conditions:

              (i)  for and in respect of each fiscal year (or partial fiscal
                   year) of the Corporation during the term of Employee's
                   employment by the Corporation whether or not such employment
                   is under this Agreement or any extension hereof, commencing
                   with the portion of the fiscal year beginning January 1,
                   2000, which succeeds the Effective Date hereof, amounts,
                   payable as provided below, equal to up to 100% of the basic
                   compensation ("Annual Bonus") described in subparagraph (a)
                   above. Such bonus shall be payable pro rata to Employee to
                   the extent, and only to the extent, that business plan
                   targets (including by way of example only, such targets as
                   Earnings Before Interest, Taxes, Depreciation and
                   Amortization ("EBITDA"), revenue, and/or target service
                   levels) and individual management performance targets (as
                   both such business plan and individual performance targets
                   have been developed by the Corporation's Chief Executive
                   Officer and Board of Directors in consultation with Employee
                   and issued within forty-five (45) days after the commencement
                   of the relevant fiscal year of the Corporation (or portion
                   thereof) have been exceeded or met by at least 75% of target
                   with respect to the relevant fiscal year (or portion of the
                   relevant fiscal year) of the Corporation and not to exceed
                   100% of the Annual Bonus; and
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                                      -3-

              (ii) Employee must be employed full-time on the last day of the
                   applicable period for which the cash bonus is paid to
                   receive the bonus.

          (c) Other Emoluments and Benefits.  The Employee shall be entitled to
              -----------------------------
participate in all rights and benefits for which he shall be eligible under any
stock option plan, bonus, participation or extra compensation plans, pensions,
dental, vision, life, and disability group insurance or other benefits which the
Corporation  may provide for its executive employees generally from time to time
during the term of this Agreement.  Employee shall also be entitled to:

               (i)  A computer and appropriate peripherals, a wireless
                    telephone (tolls and charges paid), leased vehicle for
                    business use, an allowance of three hundred dollars
                    ($300.00) per month during the period prior to availability
                    of such leased vehicle to defray the costs of the use of an
                    automobile for business purposes only; and

               (ii) For the period extending from the Effective Date until the
                    earlier of the date Employee acquires a new residence in the
                    vicinity of Albany, New York, or one hundred twenty (120)
                    days after the date hereof, the Corporation will lease on
                    Employee's behalf an executive residential quarters at a
                    cost no greater than One-Thousand Five Hundred Dollars
                    ($1,500.00) per month.

             (iii)  Relocation money of approximately $100,000 pursuant to the
                    Relocation and Expense Agreement entered into by the
                    Employee and the Corporation as of the date hereof. Such
                    Agreement is incorporated herein as Exhibit A.
                                                        ----------
          (d) Vacation.  Employee shall be entitled annually to 248 hours of
              --------
time-off from the Employee Paid Time Off Pool as such computation is customarily
administered by the Corporation.  Time-off not used during the calendar year or
partial calendar year in which earned may be carried forward to subsequent
calendar years or partial calendar years ("Carry Forward Time").  However,
Employee may not carry over more than 40 hours of Carry Forward Time in any one
year and may not aggregate more than 160 hours of Carry Forward Time in total.
All time off is subject to approval by the CEO and in no event shall annual
vacation exceed 4 weeks.
<PAGE>

                                      -4-

          (e) Stock Incentive Plan.  In addition to the basic compensation and
              --------------------
cash bonus compensation provided herein, Employee shall be entitled during the
term of his employment to participate in the Management Stock Incentive Plan of
the Corporation, dated as of December 20, 1999, and  pursuant thereto has been
granted certain options pursuant to a Stock Option Agreement entered into
between the Employee and the Corporation as of the date hereof.  Such Agreement
is incorporated herein as Exhibit B.
                          ---------

     4.        Expenses.  The Corporation shall provide Employee with a
               --------
Corporate credit card, and further shall pay or reimburse the Employee for all
reasonable traveling and other expenses incurred or paid by the Employee in
connection with the performance of his services under this Agreement upon
presentation of expense statements or vouchers and any such other supporting
information in such form as the Corporation may from time to time request;
provided, however, that the amount available for such traveling and other
expenses shall be consistent with general corporate policy guidelines
established by the Corporation.

     5.        Payment.  Expenses, benefits and allowances due Employee
               -------
hereunder shall be paid not later than thirty (30) days following Employee's
entitlement to same, which, in the case of expenses, shall commence with the
Employee's request for reimbursement.  Employee bonuses shall be paid within
forty-five (45) days following year end.

      6.       Restrictive Covenants.  In consideration of payment to Employee
               ---------------------
of the compensation specified in Paragraph 3 above, Employee hereby covenants
and agrees as follows:

          (a) Employee shall treat either as trade secrets or as confidential or
as proprietary information of the Corporation (i) any data or information
acquired during the course of or as a result of his employment, which is not
otherwise available to Employee except by reason of his employment, including
but not limited to such items as reports or findings from tests, investigative
studies, consultations or the like, methodology, proposals, systems, programs or
marketing techniques, and strategies developed by but not generally released by
the Corporation or peculiar to the business of any customer or client of the
Corporation and all particularized information relating thereto; (ii) names or
lists of the Corporation's clients or information, data or services

made available to such clients not made public by the Corporation and non-public
information relating to the operating methods or plans or requirements of any
customer or client of the Corporation; and (iii) any other data or information
designated either by the Corporation or by any of its customers or clients as
confidential or proprietary.
<PAGE>

                                      -5-

          (b) All improvements, discoveries, programs, process, innovations, and
inventions, and inventions conceived (whether or not deemed patentable),
devised, made, developed or perfected by Employee during any period of his
employment by the Corporation or any period prior to the effective date hereof
during which Employee was in the service of any entity acquired by the
Corporation or any period prior to the effective date hereof during which
Employee was in the service of any entity acquired by the Corporation and
related in any material way to the business, including development and research
of the Corporation, shall be fully and promptly disclosed to the Corporation and
the same shall be the sole and absolute property of the Corporation.  Upon
request of the Corporation, the Employee will execute all documents reasonably
deemed appropriate by the Corporation to secure the foregoing rights and for
obtaining the grants of patents, both domestic and foreign, with respect to such
improvements, discoveries, programs, processes, innovations or inventions and
for vesting title to such patents in the Corporation provided, however, that
Employee shall not be required to incur any costs or legal expenses in
conjunction with the compliance of any such request.

     (c)  Employee agrees to refrain, except as properly required in the
business of the Corporation, or as authorized in writing by the Corporation, (i)
from using for Employee's own benefit any matters to be treated as trade secrets
or as confidential or proprietary information under Paragraph (a) above; (ii)
from using these matters for the benefit of any other person, firm or
corporation; (iii) from disclosing these matters to any other person, firm or
corporation; and (iv) from authorizing or permitting such disclosure during the
term of his employment or thereafter.

      (d) Employee agrees to surrender to the Corporation at any time upon
request and in any event upon termination of employment, except as the
Corporation may otherwise consent in writing, all written documents, sketches,
records or information whether copyrighted or patented or not, or any copies of
imitations thereof, whether made by Employee or not, which embody or contain or
describe in any way those matters to be treated as trade secrets or as
confidential or proprietary information under Paragraph (a) above.  The
Corporation shall not unreasonably withhold authorization for Employee to retain
any matters covered by this Paragraph 6, the continued possession of which by
Employee will not, in the Corporation's sole but reasonable, opinion, be
detrimental to the best interest of the Corporation.

      (e) Employee agrees, during the term of his employment and for a period
of two (2) years after the termination thereof, whether such termination be
voluntary or not, that the Employee will not, except at the direction of the
Corporation, either directly or indirectly, for himself as a proprietor,
principal partner, director, officer, employee, agent or other representative
acquire or attempt to acquire the business then conducted by the Corporation
with any customer of the Corporation under any contracts existing or proposals
submitted on or before the date of termination of his employment.
<PAGE>

                                      -6-

          The term "Customer of the Corporation" for purposes hereof shall mean
any individual or entity which is the ultimate user or recipient of the
Corporation's (or any subsidiary of the Corporation) services and products
whether the same be made available directly to such entity or through an
intermediate purchaser of such services and products.

      (f) Employee agrees to refrain, during the term of his employment and
for one (1) year thereafter, from hiring or offering to hire, except with the
written permission of the Corporation, any employee of the Corporation or from
enticing away or in any other manner persuading or attempting to persuade any
employee of the Corporation to discontinue his relationship with the
Corporation, provided, however, that nothing herein shall prohibit Employee from
hiring or offering to hire, any employee of the Corporation where the initial
hiring inquiry was solely initiated by any such employee or a third party
without the direction from Employee.

      (g) No provision of this paragraph 6 is intended to limit Employee's
right to use or disclose information which is in the public domain or a matter
of common knowledge, or which is generally known in the industry, or acquired by
him from a third party not prohibited from making such disclosure to him, or
which information was already known to Employee other than by breach of this
Agreement; nor is it intended to limit the Employee's obligation to comply with
lawful subpoenas or other lawful process.

      (h) No act or failure to act shall be a waiver of any right conveyed
hereunder, except an express waiver in writing.  The rights reserved to the
Corporation under this Paragraph 6 of this Agreement are necessarily of a
special, unique, unusual and extraordinary character, which gives them a
peculiar value, the loss of which cannot reasonably or adequately be compensated
for in damages in an action at law, and the breach by Employee of any of the
provisions in this Paragraph 6 will cause the Corporation irreparable injury.
Therefore, in addition to any other available remedies, the Corporation shall be
entitled to an injunction to restrain any violation of this Agreement by
Employee, his agents, servants or employees and all persons, firms, or
corporations acting for or with him.  The obligations of the Employee under the
covenants herein contained shall not cease upon termination of his employment
for whatever reason, except where otherwise limited in time above.

          These covenants contained in this Paragraph 6 on the part of the
Employee shall each be construed as an agreement independent of any other
provision in this Agreement, and the existence of any claim or cause of action
of Employee against the Corporation, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by the Corporation
of such covenants.  It is the intention of both parties to make the covenants of
this Paragraph 6 binding only to the extent that it may be lawfully done under
existing applicable laws.  In the event that any part of any covenant of this
Paragraph 6 is determined by a court of law to be overly broad thereby making
the covenant unenforceable, the parties hereto agree, and it is their desire,
that such court shall substitute a reasonable judicially enforceable limitation
in place of the offensive part of the covenant, and that as so modified the
covenant shall be as fully enforceable as set forth herein by the parties
themselves in the modified form.
<PAGE>

                                      -7-

     7.        Terms and Earlier Termination.
               -----------------------------

          (a) Subject to the provisions for earlier termination as herein
provided, the term of this Agreement shall commence and terminate as specified
above.

          (b)  This Agreement shall terminate prior to the expiration date
hereinafter set forth in the event that the Board of Directors shall determine
that the Employee has become disabled, or the Employee shall be dismissed for
cause, as hereinafter provided:

               (i)  The Board of Directors of the Corporation may determine
                    that the Employee has become disabled, for purposes of this
                    Agreement, in the event that the Employee shall fail,
                    because of illness or incapacity, to render for one hundred
                    twenty (120) successive days in excess of the number of days
                    provided for in the Corporation's then applicable sick leave
                    policy or for shorter periods aggregating one hundred twenty
                    (120) days or more in excess of the number of days provided
                    for in the Corporation's then applicable sick leave policy
                    during the term hereof, services of the character
                    contemplated by this Agreement, and thereupon this Agreement
                    and the employment of the Employee hereunder shall be deemed
                    to have been terminated as of the end of the calendar month
                    in which such determination was made. Any termination under
                    this Paragraph 7(b)(i) shall not be deemed to be a
                    termination "for cause" for any purpose under the Agreement
                    or under any other contract or arrangement between the
                    Employee and the Corporation relating to employment services
                    or compensation between them.

               (ii) The Board of Directors may dismiss the Employee for cause
                    in the event that it determines that the Employee has
                    committed: (A) fraud or material dishonesty; (B) intentional
                    or willful or grossly negligent injury to the Corporation;
                    (C) criminal conduct in relation to his employment; or (D)
                    continued neglect of his duties hereunder which continues
                    subsequent to fifteen (15) days written notice to cure,
                    provided that if a longer cure period is required, Employee
                    shall diligently pursue such cure; and thereupon, this
                    Agreement shall terminate and the Employee shall be removed
                    from all positions held by him with the Corporation and any
                    subsidiary corporation, effective upon the delivery of
                    notice to the Employee by the Board of Directors that it has
                    made such determination; any other termination by the
                    Corporation shall be considered termination without cause
                    for purposes of this
<PAGE>

                                      -8-

             (iii)  Agreement and any other contract or arrangement between the
                    parties hereto. In the event that the Board of Directors
                    shall desire to dismiss the Employee based on any
                    determination referred to in the preceding sentence, such
                    determination shall be effective only upon the following
                    conditions complied with in the following order: (A)
                    Employee shall be furnished with a written statement
                    specifying in reasonable detail the actions or events
                    supporting such determination; (B) at the request of the
                    Employee, there shall be convened a Special Meeting of the
                    Board of Directors no later than fifteen (15) business days
                    after Employee's receipt of the notice referred to in (A)
                    above at which meeting the Employee may, with assistance of
                    counsel or other representation, present evidence to refute
                    or in mitigation of such actions or events or to establish
                    that the actions or events have been cured; and (C) within
                    five (5) business days after the adjournment of such Special
                    Meeting, the Board of Directors shall furnish a written
                    statement to Employee that, based upon Employee's
                    representations and upon other relevant evidence, such
                    determination has either been confirmed or rescinded.

               (iv) The Board of Directors may terminate this Agreement and
                    dismiss the Employee, without cause and for any reason
                    deemed sufficient by the Board of Directors. In the event
                    that the Board of Directors shall decide to dismiss the
                    Employee and terminate this Agreement based on any
                    determination referred to in the preceding sentence, such
                    determination shall be effective as of such date as shall be
                    designated by notice in writing from the Board of Directors
                    to the Employee (the "Effective Termination Date"). In the
                    event that this Agreement is terminated pursuant to this
                    subparagraph (iii), Employee shall be entitled to payment on
                    the Effective Termination Date of an amount equal to

                     (A) the lesser of the basic salary due pursuant to
                     paragraph 3(a) to accrue during the remainder of the
                     initial three-year term of this Agreement or the basic
                     salary that would be due under paragraph 3(a) for the
                     twelve (12) month period following the Effective
                     Termination Date; plus (B) such cash bonus compensation
                     prorated to the Effective Termination Date otherwise due
                     Employee pursuant to paragraph 3(b); and (C) the benefits
                     to be paid to Employee pursuant to paragraph 3(c), 3(d) and
                     3(e) prorated to the Effective Termination Date.
<PAGE>

                                      -9-

          (c) Notwithstanding anything to the contrary contained herein, any
termination of Employee's employment by the Corporation pursuant to the terms of
this paragraph, shall not affect or diminish:  (i) any rights accruing to the
Employee under this Agreement prior to the effective date of such termination
and in such event Employee rights to all compensation, including, but not
limited to, Paragraphs 3 and 4 above, shall be calculated and paid for and in
respect of any period prior to such effective date; and (ii) any rights or
remedies available to the Corporation by reason of any breach or threatened
breach of the provisions of Paragraph 7 hereof, the force and effect of which
provisions shall survive the termination of this Agreement, however such
termination occurs.

          (d) In the event Employee gives his notice to terminate prior to the
expiration of the Initial Term, Employee shall be entitled to any rights
accruing to the Employee under this Agreement prior to the effective date of
termination and in such event Employee rights to all compensation shall be
calculated and paid for to such effective date, including but not limited to,
his basic salary as described in 3(a), his emoluments and benefits as described
in paragraph 3(c), any unused vacation as set forth in paragraph 3(d), and any
incurred or paid expenses as set forth in paragraph 4.  Additionally, Employee
shall be entitled to any vested Stock Incentive Payments as described in
paragraph 3(e).

     8.        Partial Invalidity.  All paragraphs, subparagraphs, and portions
               ------------------
of this Agreement shall be considered as separate and distinct from one another,
and if, for any reason any paragraph, subparagraph or portion of this Agreement
shall be held to be invalid or unenforceable, it is agreed that the same shall
not be held to affect the validity or enforceability of the remaining
paragraphs, subparagraphs or portions of this Agreement.

     9.        Notice.  Any notices, requests, demands or other communications
               ------
required or permitted under this Agreement shall be in writing and shall be
deemed to have been given when delivered personally, one (1) day after being
sent by recognized overnight courier service with all charges prepaid or charges
to the sender's account, or three (3) days after being mailed by certified mail,
return receipt requested, addressed to the party

being notified at the address of such party first set above, or at such other
address as such party may hereafter have designated by notice; provided,
however, that any notice of change of address shall not be effective until its
receipt by the party to be charged therewith.  Copies of any notices or other
communications to the Corporation shall simultaneously be sent by first class
mail to:

          Independent Wireless One Corporation
          319 Great Oaks Boulevard
          Albany, NY 12203
          Attention: General Counsel
<PAGE>

                                      -10-

     Notice to Holdings shall be as follows:

          c/o Investcorp International Inc.
          280 Park Avenue
          New York, New York  10017
          Telephone:  212-599-4700
          Facsimile:  212-983-7073
          Attention:  Christopher J. Stadler

          With a copy to:

          Gibson, Dunn & Crutcher LLP
          200 Park Avenue
          New York, New York  10166
          Telephone:  212-351-4000
          Facsimile:  212-351-4035
          Attention:  Sean P. Griffiths, Esq.

     10.  Corporation Defined. The terms "Independent Wireless One Corporation"
          -------------------
and "IWO Holdings, Inc." as used in this Agreement, shall include, respectively,
IWO and Holdings, and its respective successors and/or assigns, any subsidiary
corporation of IWO and Holdings, and any corporation into which or which IWO or
Holdings may be merged or consolidated or to which all, or substantially all, of
their respective businesses and/or assets are transferred.

     11.  Waiver of Breach.  The waiver by either party of a breach of any
          ----------------
provision of this Agreement, shall not operate or be construed as a waiver of
any subsequent breach by the same party.

     12.  Integration:  Entire Agreement.  This instrument contains the entire
          ------------------------------
agreement of the parties with regard to the subject matter hereof and supersedes
all prior oral or written understandings, memoranda or communications with
regard to the terms or conditions of Employee's employment by the Corporation.
This Agreement may not be changed orally, but only by an agreement in writing
signed by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.

     13.  Binding Effect.  Except as otherwise provided hereinabove, this
          --------------
contract shall inure to the benefit of, and be binding upon, the heirs,
executors, administrators, successors and assigns of the parties hereto.

     14.  Assignment.  Corporation may assign all or any portion of
          ----------
Corporation's rights or delegate all or any portion of Corporation's duties
under this Agreement to any Affiliate or to any entity that acquires all or a
substantial portion of the business of the Corporation and Affiliates.  However,
any such assignment or delegation shall not relieve Corporation of its financial
obligations to Employee under this Agreement.  Except
<PAGE>

                                      -11-

in conjunction with his estate planning or in the event of death, Employee may
not assign any rights under this Agreement or delegate any duties under this
Agreement.

     15.  Counterparts.  This Agreement may be executed in counterparts,
          ------------
including facsimile counterparts, all of which taken together shall constitute
but one agreement.

     IN WITNESS WHEREOF, IWO and Holdings have caused this Agreement to be
signed by their respective officers hereunto duly authorized, and the Employee
has hereunto set his hand and seal, effective as of the day and year first above
written.

INDEPENDENT WIRELESS ONE CORPORATION

BY:     /s/ Solon L. Kandel
        ------------------------

  Name:  Solon L. Kandel
        ------------------------
  Title: President & CEO
        ------------------------

IWO HOLDINGS, INC.

BY:     /s/ Solon L. Kandel
        ------------------------

  Name:  Solon L. Kandel
        ------------------------
  Title: President & CEO
        ------------------------

EMPLOYEE

 /s/ Steven M. Nielsen
------------------------
Steven M. Nielsen<PAGE>

                                                                   EXHIBIT 10.18

                              IWO HOLDINGS, INC.
                             STOCK INCENTIVE PLAN

     1.  Establishment and Purpose of the Plan.  This Management Stock Incentive
         -------------------------------------
Plan (the "Plan") is established by IWO Holdings, Inc., a Delaware corporation
           ----
("Holdings"), as of December 20, 1999.  The Plan is designed to enable Holdings
  --------
to attract, retain and motivate directors, members of the management and certain
other officers and key employees of Holdings and its subsidiaries, by providing
for or increasing their proprietary interest in Holdings.  The Plan provides for
the grant of options ("Options") that qualify as incentive stock options
                       -------
("Incentive Stock Options") under Section 422 of the Internal Revenue Code of
-------------------------
1986, as amended (the "Code"), as well as Options that do not so qualify ("Non-
                       ----                                                ---
Qualified Options"), for the grant of stock appreciation rights ("Stock
-----------------                                                 -----
Appreciation Rights") and for the sale or grant of restricted stock ("Restricted
-------------------                                                   ----------
Stock").
-----

     2.  Stock Subject to Plan.  The number of shares of stock that may be
         ---------------------
subject to Options or Stock Appreciation Rights granted hereunder plus the
number of shares of stock that may be granted or sold as Restricted Stock
hereunder shall not in the aggregate exceed 56,179.7754 shares of Holdings'
Class B Common Stock (the "Shares"), subject to adjustment under Section 13
                           ------
hereof; provided further that the number of Shares that a Participant (as
hereinafter defined) may receive pursuant to the Plan shall in no event exceed
16,853.9326 in any year.  The Shares that may be subject to Options granted and
Restricted Stock sold or granted under the Plan may be authorized and unissued
Shares or Shares reacquired by Holdings and held as treasury stock.

     Shares that are subject to the unexercised portions of any Options that
expire, terminate or are canceled, and Shares that are subject to any Stock
Appreciation Rights that expire, terminated or are canceled, and Shares of
Restricted Stock that are reacquired by Holdings pursuant to the restrictions
thereon, shall again be available for the grant of Options or Stock Appreciation
Rights and the sale or grant of Restricted Stock under the Plan.  If a Stock
Appreciation Right is exercised, any Option or portion thereof that is
surrendered in connection with such exercise shall terminate and the Shares
theretofore subject to the Option or portion thereof shall not be available for
further use under the Plan.

     3.  Shares Subject to Certificate of Incorporation.  All Shares issuable
         ----------------------------------------------
under Options or Stock Appreciation Rights and all Shares of Restricted Stock
sold or granted pursuant to this Plan shall be subject to the terms and
restrictions contained in the Certificate of Incorporation of Holdings.  A copy
of the Certificate of Incorporation shall be delivered to the recipient of an
Option, Stock Appreciation Right or Restricted Stock at the time of grant or
issuance.

     4.  Administration of the Plan.  The Plan shall be administered by a
         --------------------------
committee (the "Committee") appointed by the Board of Directors (the "Board") of
                ---------                                             -----
Holdings.  If no persons are a designated by the Board to serve on the
Committee, the Plan shall be administered by the Board and all references herein
to the Committee shall refer to the Board.  The Board shall have the discretion
to add, remove or replace members of the Committee, and shall have the sole
authority to fill vacancies on the Committee.
<PAGE>

     All actions of the Committee shall be authorized by a majority vote thereof
at a duly called meeting.  The Committee shall have the sole authority, in its
absolute discretion, to adopt, amend, and rescind such rules and regulations as,
in its opinion, may be advisable in the administration of the Plan, to construe
and interpret the Plan, the rules and regulations, and the agreements and other
instruments evidencing Options and Stock Appreciation Rights granted and
Restricted Stock sold or granted under the Plan, and to make all other
determinations deemed necessary or advisable for the administration of the Plan.
All decisions, determinations, and interpretations of the Committee shall be
final and conclusive upon the Participants, as hereinafter defined provided such
determinations and interpretations shall not adversely effect the terms of any
outstanding Option without the consent of the holder thereof.  Notwithstanding
the foregoing, any dispute arising under any Agreement (as defined below) shall
be resolved pursuant to the dispute resolution mechanism set forth in such
Agreement.

     Subject to the express provisions of the Plan, the Committee shall
determine the number of Shares subject to grants or sales and the terms thereof,
including the provisions relating to the exercisability of Options and Stock
Appreciation Rights, lapse and non-lapse restrictions upon the Shares obtained
or obtainable under the Plan and the termination and/or forfeiture of Options
and Stock Appreciation Rights and Restricted Stock under the Plan.  The terms
upon which Options and Stock Appreciation Rights are granted and Restricted
Stock is sold or granted shall be evidenced by a written agreement, executed by
Holdings and the Participant (each, an "Agreement"), containing such terms and
                                        ---------
conditions as may be approved by the Committee; provided that such terms and
conditions are not inconsistent with the express conditions of the Plan.

     5.  Eligibility.  Persons who shall be eligible for grants of Options or
         -----------
Stock Appreciation Rights or sales or grants of Restricted Stock hereunder shall
be those directors, officers and employees of Holdings or a subsidiary of
Holdings who are members of a select group of directors, management and other
key employees that the Committee may from time to time designate to participate
under the Plan ("Participants") through grants of Non-Qualified Options,
                 ------------
Incentive Stock Options and, if applicable, Stock Appreciation Rights, and/or
through sales or grants of Restricted Stock.

     6.  Terms and Conditions of Options.  No Incentive Stock Option shall be
         -------------------------------
granted for a term of more than ten years and no Non-Qualified Option shall be
granted for a term of more than ten (10) years and thirty (30) days.  Options
may, in the discretion of the Committee, be granted with associated Stock
Appreciation Rights or be amended so as to provide for associated Stock
Appreciation Rights.  The Agreement may contain such other terms, provisions,
and conditions as may be determined by the Committee as long as such terms,
conditions and provisions are not inconsistent with the Plan.  The Committee
shall designate as such those Options intended to be eligible to qualify and be
treated as Incentive Stock Options and, correspondingly, those Options not
intended to be eligible to qualify and be treated as Incentive Stock Options.

                                       2
<PAGE>

     7.  Exercise Price of Options.  The exercise price for each Non-Qualified
         -------------------------
Option granted hereunder shall be set forth in the Agreement.  For so long as
required under Section 422 of the Code and the regulations promulgated
thereunder (or any successor statute or rules), the exercise price of any Option
intended to be eligible to qualify and be treated as an Incentive Stock Option
shall not be less than the fair market value of the Shares on the date such
Incentive Stock Option is granted, except that if such Incentive Stock Option is
granted to a Participant who on the date of grant is treated under Section
424(d) of the Code as owning stock (not including stock purchasable under
outstanding options) possessing more than ten percent of the total combined
voting power of all classes of Holdings' stock, the exercise price shall not be
less than one hundred ten percent (110%) of the fair market value of the Shares
on the date such Incentive Stock Option is granted.

     Unless otherwise provided by the Agreement, the fair market value of Shares
for the purposes of this Plan shall be determined by the Board, whose valuation
shall be binding upon each Optionee.

     Payment for Shares purchased upon exercise of any Option granted hereunder
shall be in cash at the time of exercise, except that, if either the Agreement
so provides or the Committee so permits, and if Holdings is not then prohibited
from doing so, such payment may be made in whole or in part with surrendered or
withheld shares of stock of the same class as the stock then subject to the
Option provided that Optionee has owned such shares for at least six (6) months.
The Committee also may on an individual basis permit payment or agree to permit
payment by such other alternative means as may be lawful, including by delivery
of an execute exercise notice together with irrevocable instructions to a broker
promptly to deliver to Holdings the amount of sale or loan proceeds required to
pay the exercise price.

     8.  Non-transferability.  Unless provided otherwise in the Agreement, any
         -------------------
Option granted under this Plan shall by its terms be nontransferable by the
Participant other than by will or the laws of descent and distribution (in which
case such descendant or beneficiary shall be subject to all terms of the Plan
applicable to Participants) and is exercisable during the Participant's lifetime
only by the Participant or by the Participant's guardian or legal
representative.

     9.  Incentive Stock Options.  The provisions of the Plan are intended to
         -----------------------
satisfy the requirements set forth in Section 422 of the Code and the
regulations promulgated thereunder (including the aggregate fair market value
limits set forth in Section 422(d) of the Code) with respect of Incentive Stock
Options granted under the Plan.  For so long as required under Section 422 of
the Code and the regulations promulgated thereunder (or any successor statute or
rules), during the term of the Plan, the aggregate fair market value of the
Shares with respect to which Incentive Stock Options are first exercisable by a
Participant during any calendar year shall not exceed $100,000.  For the purpose
of this Section 9, the fair market value of the Shares shall be determined at
the time the Incentive Stock Option is granted.

     10.  Stock Appreciation Rights.  The Committee may, under such terms and
          -------------------------
conditions as it deems appropriate, grant to any Participant selected by the
Committee Stock Appreciation Rights, which may or may not be associated with
Options.  Upon exercise of a

                                       3
<PAGE>

Stock Appreciation Right, the Participant shall be entitled to receive payment
of an amount equal to the excess of the fair market value, as defined by the
Committee, of the underlying Shares on the date of exercise over the Stock
Appreciation Right's exercise price. Such payment may be made in additional
Shares valued at their fair market value on the date of exercise or in cash, or
partly in Shares and partly in cash, as the Committee may designate. The
Committee may require that any Stock Appreciation Right shall be subject to the
condition that the Committee may at any time in its absolute discretion not
allow the exercise of such Stock Appreciation Right.

     11.  Restricted Stock.  The Committee may sell or grant Restricted Stock
          ----------------
under the Plan (either independently or in connection with the exercise of
Options or Stock Appreciation Rights under the Plan) to Participants selected by
the Committee.  The Committee shall in each case terminate the number of Shares
of Restricted Stock to be sold or granted, the price at which such Shares are
sold, if applicable, and the terms and duration of the restrictions to be
imposed upon those Shares.

     12.  Investment Representation.  Each Agreement may contain an agreement
          -------------------------
that, upon demand by the Committee for such a representation, the Optionee shall
deliver to the Committee at the time of any exercise of an Option a written
representation that the Shares to be acquired upon such exercise are to be
acquired for investment and not for resale or with a view to distribution
thereof.  Upon such demand, delivery of such representation prior to the
delivery of any Shares issued upon exercise of an Option and prior to the
expiration of the option period shall be a condition precedent to the right of
the optionee or such other person to purchase any Shares.

     13.  Adjustments.  In the event of any one or more reorganizations,
          -----------
recapitalizations, stock splits, reverse stock splits, stock dividends,
extraordinary dividends, or distributions, or similar events, an appropriate
adjustment shall be made in the number, exercise or sale price and/or type of
shares or securities for which Options or Stock Appreciation Rights may
thereafter be granted and Restricted Stock may thereafter be sold or granted
under the Plan.  The Committee also shall designate the appropriate changes that
shall be made in Options or Stock Appreciation Rights, or rights to purchase
Restricted Stock under the Plan, so as to preserve the value of any such
Options, Stock Appreciation Rights or Restricted Stock.  Any such adjustment in
outstanding Options shall be made without changing the aggregate exercise price
applicable to the unexercised portions of such Options.  Any such adjustments in
outstanding rights to purchase Restricted Stock shall be made without changing
the aggregate purchase price of such Restricted Stock.

     14.  Duration of Plan.  Options may not be granted and Restricted Stock may
          ----------------
not be sold or granted under the Plan after December 20, 2009.

     15.  Amendment and Termination of the Plan.  The Committee may amend the
          -------------------------------------
Plan or any Agreement issued hereunder to the extent necessary for any Option or
Stock Appreciation Right granted or Restricted Stock sold or granted under the
Plan to comply with applicable tax or securities laws.  If the Board determines
that the approval of such action by the stockholders of Holdings is advisable or
necessary for compliance with applicable securities law, tax law, stock

                                       4
<PAGE>

exchange requirement or other applicable federal or state law, no such action of
the Board or the Committee shall be permitted unless taken with or ratified by
such approval.

     No Option or Stock Appreciation Right may be granted or Restricted Stock
sold or granted during any suspension of the Plan or after the termination of
the Plan.  No amendment, suspension or termination of the Plan or of any
Agreement issued hereunder shall, without the consent of the affected holder of
such Option or Stock Appreciation Right or Restricted Stock, adversely alter or
otherwise impair any rights or obligations in any Option or Stock Appreciation
Right or Restricted Stock theretofore granted or sold to such holder under the
Plan.

     16.  Nature of Plan.  This Plan is intended to qualify as a compensatory
          --------------
benefit plan within the meaning of Rule 701 under the Act.  This Plan is
intended to constitute an unfunded arrangement for a select group of directors,
management and other key employees.

     17.  Cancellation of Options.  Any Option granted under the Plan may be
          -----------------------
canceled at any time with the consent of the holder and a new Option may be
granted to such holder in lieu thereof.

     18.  Withholding Taxes.  Whenever Shares are to be issued with respect to
          -----------------
the exercise of Options or amounts are to be paid or income earned with respect
to Stock Appreciation Rights or Restricted Stock under the Plan, the Committee
in its discretion may require the Participant to remit to Holdings, prior to the
delivery of any certificate or certificates for such Shares or the payment of
any such amounts, all or any part of the amount determined in the Committee's
discretion to be sufficient to satisfy federal, state and local withholding tax
obligations (the "Withholding Obligation") that Holdings or its counsel
                  ----------------------
determines may arise with respect to such exercise, issuance or payment.
Pursuant to a procedure established by the Committee or as set forth in the
Agreement, the Participant may (i) request Holdings to withhold delivery of a
sufficient number of Shares or a sufficient amount of the Participant's
compensation or (ii)  deliver a sufficient number of previously-issued Shares,
to satisfy the Withholding Obligation, which shares have been owned by the
Optionee for at least six (6) months with an aggregate Fair Market Value equal
to the minimum statutory amount of the federal, state, local and other taxes
required to be withheld.

                                       5

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