Document:

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                                                                   EXHIBIT 10.38

                                                                  EXECUTION COPY

                                             EMPLOYMENT AGREEMENT dated as of
                                    March 1, 2003, between PACER INTERNATIONAL,
                                    INC., a Tennessee corporation (the
                                    "Company"), and DENIS M. BRUNCAK (the
                                    "Employee").

         The Company and the Employee are entering into this Agreement to set
forth the terms and conditions of the Employee's continued employment with the
Company. Accordingly, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the Company and the
Employee, the Company and the Employee hereby agree as follows:

     Section 1. Duties. On the terms and subject to the conditions contained in
this Agreement, the Employee will continue to be employed by the Company as its
Executive Vice President, Corporate Accounts and Relations, subject to the
supervision and direction of the Company's Board of Directors (the "Board") and
the Company's more senior officers. The Employee shall perform such duties for
and on behalf of the Company and its subsidiaries and other affiliates
consistent with such position as reasonably may be assigned to the Employee from
time to time by the Board or the Company's more senior officers.

     Section 2. Term. The Employee's employment hereunder shall be for the
period (the "Employment Period") that commenced on January 1, 2003 (the
"Commencement Date"), and will end on December 31, 2004 (the "Scheduled
Termination Date"), unless his employment is sooner terminated by the Company or
the Employee pursuant to and in accordance with the applicable provisions of
this Agreement. Upon such termination, the Employee (or, if applicable, the
Employee's beneficiaries or estate) shall be entitled to those rights and
benefits provided in Section 8(a) or Section 8(b), as applicable to such
termination.

     Section 3. Time to be Devoted to Employment. During the Employment Period,
the Employee shall devote substantially all of the Employee's working energies,
efforts, interest, abilities and time exclusively to the business and affairs of
the Company and its subsidiaries and other affiliates. The Employee shall not
engage in any other business or activity that, in the reasonable judgment of the
Board, would conflict or interfere with the performance of the Employee's duties
as set forth herein, whether or not such activity is pursued for gain, profit or
other pecuniary advantage.

     Section 4. Base Salary; Bonus; Benefits. During the Employment Period, the
Company (or any of its Affiliates) shall pay the Employee an annual base salary
(the "Base Salary") of $572,000, payable in such installments (but not less
often than monthly) as is generally the policy of the Company from time to time
with respect to the payment of regular compensation to its executive officers.
During the Employment Period, the Employee shall not be entitled to any bonus
unless otherwise determined by the Board in its sole discretion. During the
Employment Period, the Employee will be entitled to (i) no less than four (4)
weeks vacation per calendar year occurring during the Employment Period, which
shall accrue and be taken in accordance with the Company's policy in effect from
time to time, (ii) up to $400 per month for country club dues and up to $1,700
per month for an automobile allowance, and (iii) such paid holidays and other
benefits as may be made available from time to time to other executive officers
of the Company

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and its subsidiaries generally, including, without limitation, participation in
such health, life and disability insurance programs and retirement or savings
plans, if any, as the Company and its subsidiaries may from time to time
maintain in effect, subject to the Company's and its subsidiaries' rights from
time to time to amend, modify, change or terminate in any respect any of their
respective employee benefit plans, policies, programs or benefits.

     Section 5. Reimbursement of Expenses. During the Employment Period (and the
Consulting Period contemplated by Section 8(c), if any), the Company reasonably
shall reimburse the Employee in accordance with the Company's policy for all
reasonable and necessary traveling expenses and other disbursements incurred by
the Employee for or on behalf of the Company in connection with the performance
of the Employee's duties hereunder upon presentation of appropriate receipts or
other documentation therefor, in accordance with all applicable policies of the
Company.

     Section 6. Disability or Death. If, during the Employment Period, the
Employee is incapacitated or disabled by accident, sickness or otherwise
(hereinafter, a "Disability") so as to render the Employee mentally or
physically incapable of performing the services required to be performed by the
Employee under this Agreement for any period of ninety (90) consecutive days or
for an aggregate of one hundred and eighty (180) days in any period of three
hundred and sixty (360) consecutive days, the Company may, at any time
thereafter, at its option, terminate the Employee's employment under this
Agreement immediately upon giving the Employee written notice to that effect. In
the event of the Employee's death, the Employee's employment will be deemed
terminated as of the date of death.

     Section 7. Termination.

         (a) The Company may terminate the Employee's employment hereunder at
any time for "cause" by giving the Employee written notice of such termination,
containing reasonable specificity of the grounds therefor. For purposes of this
Agreement, "cause" shall mean (i) the Employee's willful misconduct with respect
to the business and affairs of the Company or any of its subsidiaries or other
affiliates, (ii) the Employee's willful neglect of the Employee's duties or the
failure to follow the lawful and reasonable directions of the Board or more
senior officers of the Company to whom the Employee reports, including the
violation of any material policy of the Company or any of its Affiliates that is
applicable to the Employee, (iii) the Employee's material breach of any of the
provisions of this Agreement or any other material written agreement between the
Employee and the Company or any of its Affiliates and, if such breach is capable
of being cured, the Employee's failure to cure such breach within thirty (30)
days of receipt of written notice thereof from the Company or any of its
Affiliates, (iv) the Employee's commission of a felony, (v) the Employee's
commission of an act of fraud or financial dishonesty with respect to the
Company or any of its Affiliates, or (vi) the Employee's conviction for a crime
involving moral turpitude or fraud. A termination pursuant to this Section 7(a)
shall take effect immediately upon the giving of the notice contemplated hereby.

         (b) The Company may terminate the Employee's employment hereunder at
any time without "cause" by giving the Employee written notice of such
termination, which termination shall be effective as of the date set forth in
such notice; provided, however, that such date shall not be earlier than the
date of such notice.

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         (c) The Employee may terminate his employment hereunder at any time for
"good reason" by giving the Company written notice of such termination,
specifying that such notice is being given pursuant to this Section 7(c) and
containing reasonable specificity of the grounds therefor, which termination
shall be effective as of the date the Company is deemed to have received such
notice pursuant to Section 14(b). For purposes of this Agreement, "good reason"
shall mean (i) any reduction in the Employee's then-current Base Salary; (ii)
any reduction in the benefits required under this Agreement to be provided by
the Company to the Employee, and if such reduction is capable of being cured,
the Company's failure to cure the same within thirty (30) days after the
Company's receipt of written notice thereof from the Employee; (iii) any breach
by the Company of its material obligations to the Employee under this Agreement
and, if such breach is capable of being cured, the Company's failure to cure
such breach within thirty (30) days after the Company's receipt of written
notice thereof from the Employee; and (iv) the Employee's principal office is
relocated to any location that is more than one hundred (100) miles from the
Columbus, Ohio, metropolitan area without the Employee's consent.

         (d) The Employee may terminate his employment hereunder at any time for
any or no reason by giving the Company written notice of such termination,
specifying that such notice is being given pursuant to this Section 7(d), which
termination shall be effective as of the date set forth in such notice, provided
that such date shall not be earlier than the day on which such notice is
delivered to the Company (determined pursuant to Section 14(b) below). Such
notice shall be deemed to constitute the Employee's agreement to provide
consulting services to the Company during the Consulting Period pursuant to
Section 8(c)).

     Section 8. Effect of Termination.

         (a) Upon the effective date of a termination of the Employee's
employment under this Agreement for any reason, including the Employee's
voluntary resignation where the Employee does not agree to provide consulting
services to the Company pursuant to Section 8(c) (but excluding (1) a
termination by the Company without "cause" pursuant to Section 7(b), (2) a
termination by the Employee for "good reason" pursuant to Section 7(c), and (3)
the Employee's voluntary resignation and agreement pursuant to Section 7(d) to
provide consulting services to the Company pursuant to Section 8(c)), neither
the Employee nor the Employee's beneficiaries or estate shall have any further
rights under this Agreement or any claims against the Company or any of its
Affiliates arising out of this Agreement, except the right to receive, within
thirty (30) days after the effective date of such termination (or such earlier
period as may be required by applicable law):

          (i) the unpaid portion of the Base Salary provided for in Section 4,
     computed on a per diem basis to the effective date of such termination;

          (ii) reimbursement for any expenses for which the Employee shall not
     have theretofore been reimbursed, as provided in Section 5; and

          (iii) the unpaid portion of any amounts earned by the Employee prior
     to the effective date of such termination pursuant to any benefit program
     in which the Employee participated during the Employment Period; provided,
                                                                      --------
     however, that the Employee shall not be entitled to receive any
     -------
     benefits under any benefit program that have accrued during

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any period if the terms of such program require that the beneficiary be
employed by the Company as of the end of such period; provided, however, that
                                                      -------- -------
the foregoing shall not be deemed to constitute a waiver of the
Employee's rights to continue coverage pursuant to the applicable provisions of
the Consolidated Omnibus Budget Reconciliation Act of 1993 (COBRA), subject to
the applicable terms and conditions thereof.

         (b) Upon the effective date of a termination of the Employee's
employment under this Agreement (1) by the Company without "cause" pursuant to
Section 7(b), (2) by the Employee for "good reason" pursuant to Section 7(c), or
(3) by the Employee as a result of his voluntary resignation and agreement
pursuant to Section 7(d) to provide consulting services to the Company pursuant
to Section 8(c), neither the Employee nor the Employee's beneficiaries or estate
shall have any further rights under this Agreement or any claims against the
Company or any of its subsidiaries or other affiliates arising out of this
Agreement, except the right to receive, within thirty (30) days after the
effective date of such termination, in the case of amounts due pursuant to
clause (i) below, and at such other times as provided in clause (ii) below in
the case of amounts due thereunder (or in each case such earlier period as may
be required by applicable law):

               (i) the payments, if any, referred to in Section 8(a) above; and

               (ii) provided that the Employee is not in breach of any provision
          of this Agreement surviving such termination and does not engage in
          any activity or conduct proscribed by Section 9 or Section 10
          (regardless of the extent to which such Section may be enforced under
          applicable law), the right to continue to receive an annual amount
          equal to the Base Salary for the period commencing on the effective
          date of such termination and ending on the Scheduled Termination Date,
          payable during such period in such manner as the Base Salary would
          have been payable pursuant to Section 4 but for such termination, with
          the parties understanding that the Employee shall not have any duty to
          mitigate the Company's liability pursuant to this Section 8(b)(ii) by
          seeking subsequent employment or other engagements for compensation.

         (c) If the Employee voluntary resigns from his employment hereunder
pursuant to Section 7(d) at any time prior to the Scheduled Termination Date,
then, in consideration of the Company's agreement to continue to provide to the
Employee, as a consulting fee, the payments contemplated by, and subject to the
conditions of, Section 8(b)(ii) , the Employee shall provide to the Company, on
a non-exclusive basis and subject to the Employee's other obligations and
commitments, such advisory and consulting services as the Company may reasonably
request from time to time during the period (the "Consulting Period") commencing
on the effective date of such resignation and ending on the Scheduled
Termination Date. During any such Consulting Period, and notwithstanding any
other provision of this Agreement to the contrary: (i) the Employee shall be
acting as an independent contractor to the Company and will have no authority to
act for or bind the Company in any way and will not represent otherwise to any
Person; and (ii) the Employee shall be responsible for, and shall indemnify,
defend and hold the Company harmless from and against, all federal, state and
local income, employment, social security and other similar taxes and levies
imposed on or payable by the Employee on or with respect to his receipt of such
consulting fees and other benefits paid and made available to the Employee
pursuant to this Section 8(c), any other provision of this Agreement to the
contrary notwithstanding. During the Consulting Period, the Company at its
expense will provide the

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Employee with an office and such shared secretarial support as may be reasonably
necessary to accommodate the Employee's performance of his duties under this
Agreement, located at the Company's or its Affiliate's offices in the vicinity
of Columbus, Ohio (so long as the Company or one of its Affiliates continues to
maintain offices at such location).

         (d) In addition to, and not by way of limitation of, any other
provision of this Agreement, upon the effective date of the termination of the
Employee's employment hereunder, unless otherwise agreed by the Company, the
Employee shall surrender and deliver to the Company (i) all credit cards and
charge cards of or belonging to or issued in the name of the Company or any of
its Affiliates, (ii) all membership cards for memberships maintained by or in
the name of the Company or any of its Affiliates, (iii) all documents, records,
and files (including all copies thereof, regardless of the form or media in
which the same exist or are stored) in the Employee's possession and belonging
or relating to the Company or any of its Affiliates (except that the Employee
may retain one copy thereof for personal archive purposes, subject to the other
terms and conditions of this Agreement, including Section 9), and (iv) any and
all other personal property in the Employee's possession belonging to the
Company or any of its Affiliates. Following the termination of the Employee's
employment hereunder, the Employee and the Company shall cooperate with one
another in timely executing and filing such notices and other documents
evidencing such termination as each may reasonably request, including filings
with the Internal Revenue Service and state taxing authorities, the Securities
and Exchange Commission, and the Company's third party plan administrators.

     Section 9. Disclosure of Information.

         (a) From and after the date hereof, the Employee shall not at any time
use or disclose, divulge, furnish, or make accessible to any Person (other than
any officer, director, employee, Affiliate or representative of the Company and
its Affiliates), except as required in connection with the performance of the
Employee's duties under and in compliance with this Agreement and as required by
law and judicial process (after giving the Company reasonably timely notice of
the receipt of any such legal or judicial requirement), any Confidential
Information (as defined in Section 9(b)) heretofore acquired or acquired during
the Employment Period (or the Consulting Period, if any) for any reason or
purpose whatsoever, nor shall the Employee make use of any of the Confidential
Information for the Employee's own purposes or for the benefit of any person or
entity except the Company or any of its Affiliates. The covenant contained in
this Section 9 shall survive the termination or expiration of the Employment
Period and any termination of this Agreement.

         (b) For purposes of this Agreement, "Confidential Information" means
(i) the Intellectual Property Rights (as defined in Section 9(c)) of the Company
and its Affiliates, and (ii) all other knowledge and information of a
proprietary or confidential nature relating to the Company or any of its
Affiliates, or the business or assets of the Company or any of its Affiliates,
including: books, records, agent and independent contractor lists and related
information, customer lists and related information, vendor lists and related
information, supplier lists and related information, distribution channels,
pricing information, cost information, marketing plans, strategies, forecasts,
financial statements, budgets and projections; provided, however, that
Confidential Information shall not include (A) information that is generally
available to the public on the date hereof, or that becomes generally available
to the public after the date hereof without

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action by the Employee, or (B) information that the Employee receives from a
third party who does not have any independent obligation to the Company to keep
such information confidential.

         (c) For purposes of this Agreement, the term "Intellectual Property
Rights" means all industrial and intellectual property rights, including,
without limitation, patents, patent applications, letters patent, patent rights,
trademarks, trademark applications, trade names, service marks, service mark
applications, copyrights, copyright applications, know-how, certificates of
public convenience and necessity, franchises, licenses, trade secrets,
proprietary processes and formulae, inventions, discoveries, improvements,
ideas, development tools, marketing materials, instructions, confidential
information, trade dress, logos and designs, and all documentation and media
constituting, describing or relating to the foregoing, including, without
limitation, manuals, memoranda and records.

     Section 10. Noncompetition Covenant.

         (a) The Employee acknowledges and agrees that he has received and will
continue to receive significant and substantial benefits from his prior and
future employment with the Company under this Agreement and the Prior Agreements
(as defined in Section 13), including the remuneration, compensation and other
consideration inuring to his benefit hereunder, as well as introductions to,
personal experience with, training in and knowledge of the Company and its
Affiliates, the industries in which they engage, and third parties with whom
they conduct business. Accordingly, in consideration of the foregoing, and to
induce the Company to employ or retain and continue to employ or retain the
Employee hereunder and to provide such benefits to the Employee, in each case
subject to the terms and conditions of this Agreement and the applicable
employment policies of the Company and its Affiliates, the Employee agrees that
he will not, during the Employment Period and the period commencing on the
effective date of the termination of his employment with the Company and
Affiliates for any reason and ending on the Scheduled Termination Date (the
Employment Period and such latter period together being called the
"Non-competition Period" herein) (i) in any geographic area where the Company or
any of its subsidiaries or other affiliates conducts business during the
Non-competition Period, engage in or participate in, directly or indirectly
(whether as an officer, director, employee, partner, consultant, holder of an
equity or debt investment, lender or in any other manner or capacity, including,
without limitation, by the rendering of services or advice to any person), or
lend his name (or any part or variant thereof) to, any Competing Business (as
defined in Section 10(b)) (provided, however, that the foregoing shall not apply
to the shipment of goods or commodities in cases where the Employee or one of
his Affiliates is the beneficial owner, consignor or consignee of such freight
and is engaged primarily in the business of manufacturing or distributing such
goods or commodities); (ii) deal, directly or indirectly, in a competitive
manner with any customers doing business with the Company or any of its
subsidiaries or other affiliates during the Non-competition Period; (iii)
solicit or employ any officer, director or agent of the Company or any of its
subsidiaries or other affiliates to become an officer, director, or agent of the
Employee, the Employee's affiliates or anyone else; or (iv) engage in or
participate in, directly or indirectly, any business conducted under any name
that shall be the same as or similar to the name of the Company or any of its
subsidiaries or other affiliates or any trade name used by any of them. The
Employee's ownership for investment purposes only of less than two percent (2%)
of the outstanding shares of capital stock or class of debt securities of any
corporation with one or more classes of its capital stock listed on a national
securities exchange or actively traded in the over-

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the-counter market shall not constitute a breach of the foregoing covenant. The
Employee is entering into the foregoing covenant to induce the Company to extend
this Agreement to, and to enter into this Agreement with, the Employee; the
Employee also acknowledges and reaffirms the terms of Section 7.9 of the Stock
Purchase Agreement dated as of December 18, 2000, among the Company, the
Employee and the other parties thereto and agrees that this Section 10 shall be
in addition to and independent of, and shall in no way modify or limit, the
terms of such Section 7.9 (it being agreed that, solely as to the Employee, the
proviso in clause (i) above shall also apply to clause (i) of Section 7.9(a) of
such Stock Purchase Agreement).

         (b) For purposes of this Agreement, the term "Competing Business" means
any transportation or other business that the Company or any of its Affiliates
has engaged in at any time during the Employment Period in any city or county in
any state of the United States, or in any similar political division of any
state, province, canton or other similar governmental entity in Canada, Mexico,
China, Japan or any country or other sovereign entity in South America or
Europe, including, without limitation, any business engaged in (i) intermodal
marketing, (ii) flatbed specialized hauling services, (iii) less-than-truckload
common carrier services, (iv) drayage, consolidation, deconsolidation or
distribution services, (v) contract warehousing, freight handling or logistic
services, (vi) comprehensive transportation management programs or services to
third party customers, (vii) freight consolidation and deconsolidation, (viii)
traffic management, (ix) railroad signal project management, (x) freight
forwarding and related services (including freight brokerage and handling), (xi)
customs brokerage, (xii) transportation brokerage, and (xiii) freight
transportation (including "full container load" and "less than container load"
transportation services).

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     Section 11. Inventions Assignment. During the Employment Period, the
Employee shall promptly disclose, grant and assign to the Company for its and
its Affiliates' sole use and benefit any and all inventions, improvements,
technical information and suggestions reasonably relating to the business of the
Company and its Affiliates (collectively, the "Inventions") that the Employee
may develop or acquire during the Employment Period (whether or not during usual
working hours), together with all Intellectual Property Rights associated with
or related to the Inventions. In connection with the previous sentence, (a) the
Employee, at the expense of the Company (including a reasonable payment (based
on the Employee's last per diem earnings) for the time involved if the Employee
is not then in the Company's employ or receiving payments from the Company
pursuant to Section 8(b)(ii)), shall execute and deliver promptly such
applications, assignments, descriptions and other instruments as may be
necessary or proper in the opinion of the Company to vest title to the
Inventions and any Intellectual Property Rights associated with or related to
the Inventions in the Company and to enable it to obtain and maintain the entire
right and title thereto throughout the world, and (b) the Employee shall render
to the Company, at its expense (including a reasonable payment (based on the
Employee's last per diem earnings) for the time involved if the Employee is not
then in the Company's employ or receiving payments from the Company pursuant to
Section 8(b)(ii)), reasonable assistance as it may require in the prosecution of
applications for such Intellectual Property Rights, in the prosecution or
defense of interferences or infringements that may be declared involving any
Intellectual Property Rights, and in any litigation in which the Company or any
of its subsidiaries or other affiliates may be involved relating to the
Inventions or any such Intellectual Property Rights.

     Section 12. Assistance in Litigation. At the request and expense of the
Company (including a reasonable payment (based on the Employee's last per diem
earnings) for the time involved if the Employee is not then in the Company's
employ or receiving payments from the Company pursuant to Section 8(b)(ii)), and
upon reasonable notice, the Employee, at all times during and after the
Employment Period, shall furnish such information and assistance to the Company
and its Affiliates as they may reasonably require in connection with any issue,
claim or litigation in which the Company or any of its Affiliates may be
involved. If such a request for assistance occurs after the expiration of the
Employment Period, then the Employee shall be required to render assistance to
the Company and its Affiliates only to the extent that the Employee can do so
without materially adversely affecting the Employee's other business obligations
to his employer and other third parties. The covenant contained in this Section
12 shall survive the termination or expiration of the Employment Period and any
termination of this Agreement.

     Section 13. Entire Agreement; Amendment and Waiver. This Agreement contains
the entire agreement and understanding between the Employee and the Company and
any predecessor of the Company, and any of their respective Affiliates, with
respect to the subject matter hereof and supersedes any and all prior and
contemporaneous agreements and understandings between the Employee and the
Company or any predecessor of the Company, or any of their respective
Affiliates, regarding the subject matter hereof (including the Employment
Agreement dated as of December 22, 2000, and the Amended and Restated Employment
Agreement dated as of September 1, 2001 (together, the "Prior Agreements"),
between the Employee and Rail Van LLC, an Ohio limited liability company and
predecessor-in-interest to Pacer Global Logistics, Inc., a wholly-owned
subsidiary of the Company. Other than this Agreement, there are no other
agreements or understandings continuing in effect relating to the subject matter
hereof (except that

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the parties acknowledge the existence of the separate and independent provisions
contained in Section 7.9 of the Purchase Agreement). No waiver, amendment or
modification of any provision of this Agreement shall be effective unless in
writing and signed by the Employee and the Company. The waiver by either party
of a breach of any provision of this Agreement by the other party shall not
operate or be construed as a waiver of any subsequent breach by such other
party. In consideration of the Employee's continued employment with the Company
hereunder and the other payments and consideration inuring to the benefit of the
Employee hereunder, the Employee waives and releases the Company and its
Affiliates from any and all claims, demands, actions, causes of action, losses,
liabilities and obligations whatsoever, whether known or unknown, fixed or
contingent, matured or unmatured, arising prior to the date hereof, whether
under the Prior Agreements or otherwise in connection with or relating to the
Employee's employment with the Company or any of it Affiliates prior to the date
hereof, including any arising under federal, state and local labor, employment,
civil rights and anti-discrimination laws (including the Age Discrimination in
Employment Act, the Americans With Disabilities Act and Title VII of the Civil
Rights Act) and any other restrictions on the Company's and its subsidiaries'
rights with respect to the modification or termination, for whatever reason, of
the employment of its employees; provided, however, that the foregoing shall not
apply to, and shall not be deemed to release, any right or claim of the
Employee, whenever arising, to be indemnified by the Company or any of its
affiliates under and to the extent of the applicable terms and provisions of the
Company's or such affiliate's charter, certificate or articles of incorporation,
or by-laws.

     Section 14. Notices.
                 -------

         (a) All notices or other communications pursuant to this Agreement
shall be in writing and shall be deemed to be sufficient if delivered
personally, telecopied, sent by nationally-recognized, overnight courier or
mailed by registered or certified mail (return receipt requested), postage
prepaid, to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice):

                           (i) if to the Company, to:

                                    Pacer International, Inc.
                                    One Concord Center
                                    2300 Clayton Road, Suite 1200
                                    Concord, California  94520
                                    Attention:  Chief Financial Officer
                                    Telephone No.:  (925) 887-1400
                                    Facsimile No.:  (925) 887-1565

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                              with copy to:

                                    Pacer International, Inc.
                                    225 Water Street, Suite 2050
                                    Jacksonville, Florida  32202
                                    Attention: Legal Department
                                    Telephone No.: (904) 633-9500
                                    Facsimile No.: (904) 633-9338

               (ii) if to the Employee, to him at his or her last known address
          contained in the records of the Company.

         (b) All such notices and other communications shall be deemed to have
been given and received (i) in the case of personal delivery, on the date of
such delivery, (ii) in the case of delivery by telecopy, on the date of such
delivery (if sent on a business day where sent, or if sent on other than a
business day where sent, on the next business day where sent after the date
sent), (iii) in the case of delivery by nationally-recognized, overnight
courier, on the next business day where sent following dispatch, and (iv) in the
case of mailing, on the third business day where sent next following such
mailing. In this Agreement, the term "business day" means, as to any location,
any day that is not a Saturday, a Sunday or a day on which banking institutions
in such location are authorized or required to be closed.

     Section 15. Headings. The section headings in this Agreement are for
convenience only and shall not control or affect the meaning of any provision of
this Agreement.

     Section 16. Severability. It is the desire and intent of the parties that
the provisions of this Agreement be enforced to the fullest extent permissible
under the law and public policies applied in each jurisdiction in which
enforcement is sought. Accordingly, in the event that any provision of this
Agreement would be held in any jurisdiction to be partially or wholly invalid,
illegal or unenforceable in any jurisdiction, then such provision shall, as to
such jurisdiction, be modified or restricted to the extent necessary to make
such provision valid, binding and enforceable, or if such provision cannot be so
modified or restricted, then such provision shall, as to such jurisdiction, be
deemed to be excised from this Agreement; provided, however, that the legality,
binding effect and enforceability of the remaining provisions of this Agreement,
to the extent the economic benefits conferred upon the parties by virtue of this
Agreement remain substantially unimpaired, shall not be affected or impaired in
any manner, and any such invalidity, illegality or unenforceability with respect
to such provision in such jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

     Section 17. Remedies. The Employee acknowledges and understands that the
provisions of this Agreement are of a special and unique nature, the loss of
which cannot be adequately compensated for in damages by an action at law, and
thus, the breach or threatened breach of the provisions of this Agreement would
cause the Company irreparable harm. The Employee further acknowledges that in
the event of a breach or any of the covenants contained in Section 9, Section
10, Section 11 or Section 12, the Company shall be entitled to either specific
performance or other immediate relief enjoining the same in any court or before
any judicial body having jurisdiction over such a claim, without the need to
post bond or other security or to show irreparable harm. All

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remedies hereunder are cumulative, are in addition to any other remedies
provided for by law and, to the extent permitted by law, may be exercised
concurrently or separately, and the exercise of any one remedy shall not be
deemed to be an election of such remedy or to preclude the exercise of any other
remedy.

     Section 18. Representation. The Employee hereby represents and warrants to
the Company that (i) the execution, delivery and performance of this Agreement
by the Employee do not breach, violate or cause a default under any agreement,
contract or instrument to which the Employee is a party or any judgment, order
or decree to which the Employee is subject, and (ii) the Employee is not a party
to or bound by any employment agreement, consulting agreement, non-compete
agreement, confidentiality agreement or similar agreement with any other Person,
, except for certain existing non-competition covenants from the Employee in
favor of the Company, which the Employee affirms are continuing and in full
force and effect and have been complied with in all respects.

     Section 19. Benefits of Agreement; Assignment. The terms and provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors, permitted assigns, representatives,
heirs and estates, as applicable. This Agreement shall not be assignable by any
party hereto without the prior written consent of the other party hereto, except
that the Company may assign this Agreement or its rights hereunder to any
Affiliate of the Company or to any Person succeeding to all or any substantial
portion of their respective businesses. Except as expressly provided in this
Agreement, this Agreement shall not confer any rights or remedies upon any
Person other than the parties hereto and their respective successors, permitted
assigns, representatives, heirs and estates, as applicable.

     Section 20. Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Ohio without
giving effect to any choice of law provision or rule (whether of the State of
Ohio or any other jurisdiction) that would cause the application of the laws of
any jurisdiction other than the State of Ohio. The parties consent to disputes
being resolved exclusively in a court of competent jurisdiction located in the
State of Ohio.

     Section 21. Mutual Waiver of Jury Trial. THE PARTIES HERETO WAIVE ALL RIGHT
TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND
ANY RIGHTS OR REMEDIES UNDER THIS AGREEMENT OR ANY DOCUMENTS RELATED TO THE
SUBJECT MATTER HEREOF.

     Section 22. Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts taken together shall be considered one and
the same agreement, effective when one or more counterparts have been signed by
each party and delivered to the other parties, it being understood that all
parties need not sign the same counterpart. Any signed counterpart delivered by
facsimile shall be deemed for all purposes to constitute such party's good and
valid execution and delivery of this Agreement.

     Section 23. Expenses; Taxes. Each party hereto shall bear his or its own
expenses incurred in connection with this Agreement (including legal, accounting
and any other third party fees,

                                       11

<PAGE>

costs and expenses incurred by such party). Subject to Section 8(c), if
applicable, all remuneration, compensation and other consideration payable by
the Company or any of its Affiliates hereunder to or for the benefit of the
Employee or his heirs, representatives, or estate shall be made and provided net
of any and all applicable withholding, F.I.C.A., employment and other similar
federal, state and local taxes and contributions required by law to be withheld
by the Company or any such Affiliate.

     Section 24. Interpretation and Construction; Defined Terms.
                   ----------------------------------------------

         (a) The term "Agreement" means this Employment Agreement and any and
all schedules, annexes and exhibits that may be attached hereto, as the same may
from time to time be amended, modified, supplemented or restated in accordance
with the terms hereof. The use in this Agreement of the word "including" means
"including, without limitation." The words "herein," "hereof," "hereunder,"
"hereby," "hereto," "hereinafter," and other words of similar import refer to
this Agreement as a whole, and not to any particular article, section,
subsection, paragraph, subparagraph or clause contained in, or any schedule,
annex or exhibit that may be attached to, this Agreement. All references to
articles, sections, subsections, paragraphs, subparagraphs, clauses, schedules,
annexes and exhibits mean such provisions of this Agreement and the schedules,
annexes and exhibits that may be attached to this Agreement, except where
otherwise stated. The use herein of the masculine, feminine or neuter forms also
shall denote the other forms, as in each case the context may require. Where
specific language is used to clarify by example a general statement contained
herein, such specific language shall not be deemed to modify, limit or restrict
in any manner the construction of the general statement to which it relates. The
language used in this Agreement has been chosen by the parties to express their
mutual intent, and no rule of strict construction shall be applied against any
party. Unless otherwise provided herein, the measure of one month or year for
purposes of this Agreement shall be that date of the following month or year
corresponding to the starting date, except that, if no corresponding date
exists, the measure shall be the next day of the following month or year (e.g.,
one month following February 8 is March 8, and one month following March 31 is
May 1).

         (b) The term "Affiliate" means, with respect to any Person, any other
Person that directly or indirectly through one or more intermediaries controls,
is controlled by or is under common control with such Person, where "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.

         (c) The term "Person" shall be construed as broadly as possible and
shall include an individual or natural person, a partnership (including a
limited liability partnership), a corporation, a limited liability company, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, a business, and any other entity, including a governmental entity
such as a domestic or foreign government or political subdivision thereof,
whether on a federal, state, provincial or local level and whether legislative,
Employee, judicial in nature, including any agency, authority, board, bureau,
commission, court, department or other instrumentality thereof.

                                   * * * * * *

                                       12

<PAGE>

         IN WITNESS WHEREOF, the parties have executed and delivered this
Employment Agreement effective as of the date first written above.

                                  THE COMPANY:

                                  PACER INTERNATIONAL, INC.

                                  By:_________________________________
                                  Name:
                                  Title:

                                  THE EMPLOYEE:

                                  ____________________________________
                                  Denis M. Bruncak<PAGE>

                                                                    Exhibit 10.1

                               TREX COMPANY, INC.
            AMENDED AND RESTATED 1999 STOCK OPTION AND INCENTIVE PLAN

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                Page
                                                                                ----
<S>                                                                             <C>
1.  PURPOSE ....................................................................  1
2.  DEFINITIONS ................................................................  1
3.  ADMINISTRATION OF THE PLAN .................................................  4
    3.1.   Board ...............................................................  4
    3.2.   Committee ...........................................................  5
    3.3.   Grants ..............................................................  5
    3.4.   No Liability ........................................................  6
    3.5.   Applicability of Rule 16b-3 .........................................  6
4.  STOCK SUBJECT TO THE PLAN ..................................................  6
    4.1.   Aggregate Limitation ................................................  6
    4.2.   Other Plan Limits ...................................................  7
    4.3.   Payment Shares ......................................................  7
    4.4.   Application of Aggregate Limitation .................................  7
    4.5.   Per-Grantee Limitation ..............................................  7
5.  EFFECTIVE DATE AND TERM OF THE PLAN ........................................  8
    5.1.   Effective Date ......................................................  8
    5.2.   Term ................................................................  8
6.  PERMISSIBLE GRANTEES .......................................................  8
    6.1.   Employees and Service Providers .....................................  8
    6.2.   Multiple Grants .....................................................  9
7.  LIMITATIONS ON GRANTS OF INCENTIVE STOCK OPTIONS ...........................  9
8.  AWARD AGREEMENT ............................................................  9
9.  OPTION PRICE ...............................................................  10
10. VESTING, TERM AND EXERCISE OF OPTIONS ......................................  10
    10.1.  Vesting and Option Period ...........................................  10
    10.2.  Term ................................................................  10
    10.3.  Acceleration ........................................................  10
    10.4.  Termination of Employment or Other Relationship for a
           Reason Other than Retirement, Death or Disability ...................  10
    10.5.  Rights in the Event of Death ........................................  11
    10.6.  Rights in the Event of Disability ...................................  11
    10.7.  Rights in the Event of Retirement ...................................  11
    10.8.  Limitations on Exercise of Option ...................................  12
    10.9.  Method of Exercise ..................................................  12
    10.10. Rights as a Stockholder; Dividend Equivalents .......................  13
    10.11. Delivery of Stock Certificates ......................................  13
11. TRANSFERABILITY OF OPTIONS .................................................  13
    11.1.  General Rule ........................................................  13
    11.2.  Family Transfers ....................................................  13
</TABLE>

                                      -i-

<PAGE>

<TABLE>
<S>                                                                                <C>
12. RESTRICTED STOCK ............................................................. 14
    12.1. Grant of Restricted Stock or Restricted Stock Units .................... 14
    12.2. Restrictions ........................................................... 14
    12.3. Restricted Stock Certificates .......................................... 15
    12.4. Rights of Holders of Restricted Stock .................................. 15
    12.5. Rights of Holders of Restricted Stock Units ............................ 15
    12.6. Termination of Employment or Other Relationship for a Reason
          Other than Death or Disability ......................................... 16
    12.7. Rights in the Event of Death ........................................... 16
    12.8. Rights in the Event of Disability ...................................... 16
    12.9. Delivery of Shares and Payment Therefor ................................ 17
13. STOCK APPRECIATION RIGHTS .................................................... 17
    13.1. Grant of Stock Appreciation Rights ..................................... 17
    13.2. Nature of a Stock Appreciation Right ................................... 17
    13.3. Terms and Conditions Governing SARs .................................... 17
14. UNRESTRICTED STOCK ........................................................... 18
15. PARACHUTE LIMITATIONS ........................................................ 18
16. REQUIREMENTS OF LAW .......................................................... 18
    16.1. General ................................................................ 18
    16.2. Rule 16b-3 ............................................................. 19
17. AMENDMENT AND TERMINATION OF THE PLAN ........................................ 20
18. EFFECT OF CHANGES IN CAPITALIZATION .......................................... 20
    18.1. Changes in Stock ....................................................... 20
    18.2. Reorganization, Sale of Assets or Sale of Stock ........................ 20
    18.3. Adjustments ............................................................ 22
    18.4. No Limitations on Company .............................................. 22
19. DISCLAIMER OF RIGHTS ......................................................... 22
20. NONEXCLUSIVITY OF THE PLAN ................................................... 22
21. WITHHOLDING TAXES ............................................................ 23
22. CAPTIONS ..................................................................... 23
23. OTHER PROVISIONS ............................................................. 23
24. NUMBER AND GENDER ............................................................ 24
25. SEVERABILITY ................................................................. 24
26. GOVERNING LAW ................................................................ 24
</TABLE>

                                      -ii-

<PAGE>

                               TREX COMPANY, INC.
            AMENDED AND RESTATED 1999 STOCK OPTION AND INCENTIVE PLAN

        Trex Company, Inc., a Delaware corporation (the "Company"), sets forth
herein the terms of its Amended and Restated 1999 Stock Option and Incentive
Plan (the "Plan") as follows:

1.      PURPOSE

        The Plan is intended to enhance the Company's ability to attract and
retain highly qualified officers, key employees, outside directors and other
persons, and to motivate such officers, key employees, outside directors and
other persons to serve the Company and its affiliates (as defined herein) and to
expend maximum effort to improve the business results and earnings of the
Company, by providing to such officers, key employees, outside directors and
other persons an opportunity to acquire or increase a direct proprietary
interest in the operations and future success of the Company. To this end, the
Plan provides for the grant of stock options, restricted stock, restricted stock
units, unrestricted stock and stock appreciation rights in accordance with the
terms hereof. Stock options granted under the Plan may be non-qualified stock
options or incentive stock options, as provided herein, except that stock
options granted to outside directors and all Service Providers shall in all
cases be non-qualified stock options.

2.      DEFINITIONS

        For purposes of interpreting the Plan and related documents (including
Award Agreements), the following definitions shall apply:

2.1.    "Affiliate" of, or person "affiliated" with, a person means any company
        or other trade or business that controls, is controlled by or is under
        common control with such person within the meaning of Rule 405 of
        Regulation C under the Securities Act.

2.2.    "Award Agreement" means the stock option agreement, restricted stock
        agreement, restricted stock unit agreement, stock appreciation right
        agreement or other written agreement between the Company and a Grantee
        that evidences and sets out the terms and conditions of a Grant.

2.3.    "Board" means the Board of Directors of the Company.

2.4.    "Code" means the Internal Revenue Code of 1986, as now in effect or as
        hereafter amended.

                                        1

<PAGE>

2.5.    "Committee" means a committee of, and designated from time to time by
        resolution of, the Board, which shall consist of no fewer than two
        members of the Board, none of whom shall be an officer or other salaried
        employee of the Company or any affiliate of the Company.

2.6.    "Company" means Trex Company, Inc., a Delaware corporation and any
        entity which is treated as a "disregarded entity" pursuant to Section
        7701 of the Code.

2.7.    "Effective Date" means the date designated by the Board in its
        resolution adopting the Plan.

2.8.    "Exchange Act" means the Securities Exchange Act of 1934, as now in
        effect or as hereafter amended.

2.9.    "Fair Market Value" means the closing price of a share of Stock reported
        on the New York Stock Exchange ("NYSE") on the date Fair Market Value is
        being determined, provided that if there should be no closing price
        reported on such date, the Fair Market Value of a share of Stock on such
        date shall be deemed equal to the closing price as reported by the NYSE
        for the last preceding date on which sales of shares were reported.
        Notwithstanding the foregoing, in the event that the shares of Stock are
        listed upon more than one established stock exchange, Fair Market Value
        means the closing price of a share of Stock reported on the exchange
        that trades the largest volume of shares on such date. If the Stock is
        not at the time listed or admitted to trading on a stock exchange, Fair
        Market Value means the mean between the lowest reported bid price and
        highest reported asked price of the Stock on the date in question in the
        over-the-counter market, as such prices are reported in a publication of
        general circulation selected by the Board and regularly reporting the
        market price of Stock in such market. If the Stock is not listed or
        admitted to trading on any stock exchange or traded in the
        over-the-counter market, Fair Market Value shall be as determined in
        good faith by the Board.

2.10.   "Grant" means an award of an Option, Restricted Stock, Restricted Stock
        Unit, Unrestricted Stock, or Stock Appreciation Right under the Plan.

2.11.   "Grant Date" means, as determined by the Board or authorized Committee,
        (i) the date as of which the Board or such Committee approves a Grant or
        (ii) such other date as may be specified by the Board or such Committee.

2.12.   "Grantee" means a person who receives or holds an Option, Restricted
        Stock, Restricted Stock Unit, Stock Appreciation Right or Unrestricted
        Stock under the Plan.

                                        2

<PAGE>

2.13.   "Immediate Family Members" means the spouse, children, grandchildren,
        parents and siblings of the Grantee.

2.14.   "Incentive Stock Option" means an "incentive stock option" within the
        meaning of Section 422 of the Code.

2.15.   "Option" means an option to purchase one or more shares of Stock
        pursuant to the Plan.

2.16.   "Option Period" means the period during which Options may be exercised
        as set forth in Section 10 hereof.

2.17.   "Option Price" means the purchase price for each share of Stock subject
        to an Option.

2.18.   "Outside Director" means a member of the Board who is not an officer or
        employee of the Company or any Subsidiary.

2.19.   "Plan" means this Trex Company, Inc. Amended and Restated 1999 Stock
        Option and Incentive Plan, as amended from time to time.

2.20.   "Reporting Person" means a person who is required to file reports under
        Section 16(a) of the Exchange Act.

2.21.   "Restricted Period" means the period during which Restricted Stock or
        Restricted Stock Units are subject to restrictions or conditions
        pursuant to Section 12.2 hereof.

2.22.   "Restricted Stock" means shares of Stock, awarded to a Grantee pursuant
        to Section 12 hereof, that are subject to restrictions and to a risk of
        forfeiture.

2.23.   "Restricted Stock Unit" means a unit awarded to a Grantee pursuant to
        Section 12 hereof, which represents a conditional right to receive a
        share of Stock in the future, and which is subject to restrictions and
        to a risk of forfeiture.

2.24.   "Securities Act" means the Securities Act of 1933, as now in effect or
        as hereafter amended.

2.25.   "Service Provider" means a consultant or adviser to the Company, a
        manager of the Company's properties or affairs, or other similar service
        provider or Affiliate of the Company, and employees of any of the
        foregoing, as such

                                        3

<PAGE>

        persons may be designated from time to time by the Board pursuant to
        Section 6 hereof.

2.26.   "Stock" means the common stock, par value $0.01 per share, of the
        Company.

2.27.   "Stock Appreciation Right" or "SAR" means a right granted to a Grantee
        pursuant to Section 13 hereof.

2.28.   "Subsidiary" means any "subsidiary corporation" of the Company within
        the meaning of Section 424(f) of the Code.

2.29.   "Termination Date" means the date upon which an Option shall terminate
        or expire, as set forth in Section Section 10.2 hereof.

2.30.   "Unrestricted Stock" means an award of Stock granted to a Grantee
        pursuant to Section 14 hereof.

3.      ADMINISTRATION OF THE PLAN

        3.1.  Board

        The Board shall have such powers and authorities related to the
administration of the Plan as are consistent with the Company's certificate of
incorporation, bylaws and applicable law. The Board shall have full power and
authority to take all actions and to make all determinations required or
provided for under the Plan, any Grant or any Award Agreement, and shall have
full power and authority to take all such other actions and make all such other
determinations not inconsistent with the specific terms and provisions of the
Plan that the Board deems to be necessary or appropriate to the administration
of the Plan, any Grant or any Award Agreement. All such actions and
determinations shall be by the affirmative vote of a majority of the members of
the Board present at a meeting or by unanimous consent of the Board executed in
writing in accordance with the Company's certificate of incorporation, bylaws
and applicable law. The interpretation and construction by the Board of any
provision of the Plan, any Grant or any Award Agreement shall be final and
conclusive. As permitted by law, the Board may delegate its authority under the
Plan to a member of the Board or an executive officer of the Company; provided,
however, that, unless otherwise provided by resolution of the Board, only the
Board or the Committee may make a Grant to an executive officer of the Company
and establish the number of shares of Stock that may be subject to Grants with
respect to any fiscal period.

                                        4

<PAGE>

        3.2.  Committee.

        The Board from time to time may delegate to a Committee such powers and
authorities related to the administration and implementation of the Plan, as set
forth in Section 3.1 hereof and in other applicable provisions of the Plan, as
the Board shall determine, consistent with the Company's certificate of
incorporation, bylaws and applicable law. In the event that the Plan, any Grant
or any Award Agreement provides for any action to be taken or determination to
be made by the Board, such action may be taken by or such determination may be
made by the Committee if the power and authority to do so has been delegated to
the Committee by the Board as provided for in this Section 3.2. Unless otherwise
expressly determined by the Board, any such action or determination by the
Committee shall be final, binding and conclusive. As permitted by law, the
Committee may delegate the authority delegated to it under the Plan to a member
of the Board of Directors or an executive officer of the Company; provided,
however, that, unless otherwise provided by the Board, only the Board or the
Committee may make a Grant to a Reporting Person of the Company and establish
the number of shares of Stock that may be subject to Grants during any fiscal
period.

        3.3.  Grants.

        Subject to the other terms and conditions of the Plan, the Board shall
have full and final authority (i) to designate Grantees, (ii) to determine the
types of Grants to be made to a Grantee, (iii) to determine the number of shares
of Stock to be subject to a Grant, (iv) to establish the terms and conditions of
each Grant, including, but not limited to, the Option Price of any Option, the
nature and duration of any restriction or condition (or provision for lapse
thereof, including lapse relating to a change in control of the Company)
relating to the vesting, exercise, transfer or forfeiture of a Grant or the
shares of Stock subject thereto, and any terms or conditions that may be
necessary to qualify Options as Incentive Stock Options, (v) to prescribe the
form of each Award Agreement evidencing a Grant, (vi) to make Grants alone, in
addition to, in tandem with, or in substitution or exchange for any other Grant
or any other award granted under another plan of the Company or a Subsidiary,
and (vii) to amend, modify or supplement the terms of any outstanding Grant.
Such authority specifically includes the authority, in order to effectuate the
purposes of the Plan but without amending the Plan, to modify Grants to eligible
individuals who are foreign nationals or are individuals who are employed
outside the United States to recognize differences in local law, tax policy or
custom. As a condition to any subsequent Grant, the Board shall have the right,
at its discretion, to require Grantees to return to the Company any Grants
previously awarded under the Plan. Subject to the terms and conditions of the
Plan, any such subsequent Grant shall be upon such terms and conditions as are
specified by the Board at the time the subsequent Grant is made.

                                        5

<PAGE>

     The Company may retain the right in an Award Agreement to cause a
forfeiture of the gain realized by a Grantee on account of actions taken by the
Grantee in violation or breach of or in conflict with any non-competition
agreement, any agreement prohibiting solicitation of employees or clients of the
Company or any affiliate thereof or any confidentiality obligation with respect
to the Company or any affiliate thereof or otherwise in competition with the
Company, to the extent specified in such Award Agreement applicable to the
Grantee. Furthermore, the Company may annul a Grant if the Grantee is an
employee of the Company or an affiliate thereof and is terminated "for cause" as
defined in the applicable Award Agreement. The Board may permit or require the
deferral of any award payment, subject to such rules and procedures as it may
establish, which may include provisions for the payment or crediting of interest
or dividend equivalents, including converting such credits into deferred Stock
equivalents.

     3.4.  No Liability.

     No member of the Board or of the Committee shall be liable for any action
or determination made in good faith with respect to the Plan or any Grant or
Award Agreement.

     3.5.  Applicability of Rule 16b-3.

     Those provisions of the Plan that make express reference to Rule 16b-3
under the Exchange Act shall apply only to Reporting Persons.

4.   STOCK SUBJECT TO THE PLAN

     4.1.  Aggregate Limitation.

     Subject to adjustment as provided in Section 18 hereof, the aggregate
number of shares of Stock available for issuance under the Plan pursuant to
Options or other Grants shall be one million four hundred thousand (1,400,000)
shares and shares may be authorized but unissued shares, treasury shares or
issued and outstanding shares that are purchased in the open market. Any shares
of Stock granted under the Plan which are forfeited to the Company because of
the failure to meet an award contingency or condition shall again be available
for issuance pursuant to new awards granted under the Plan. Any shares of Stock
covered by an award (or portion of an award) granted under the Plan which is
forfeited or canceled, expires or is settled in cash shall be deemed not to have
been issued for purposes of determining the maximum number of shares of Stock
available for issuance under the Plan. If any stock option is exercised by
tendering shares of Stock, either actually or by attestation, to the Company as
full or partial payment in connection with the exercise of a stock option under
the Plan or any prior plan of the Company as hereinabove described, only the
number of shares of Stock issued net of the

                                        6

<PAGE>

shares of Stock tendered shall be deemed issued for purposes of determining the
maximum number of shares of Stock available for issuance under the Plan. Shares
of Stock issued under the Plan through the settlement, assumption or
substitution of outstanding awards or obligations to grant future awards
resulting from the acquisition of another entity shall not reduce the maximum
number of shares available for issuance under the Plan.

     4.2.  Other Plan Limits.

     Subject to adjustment as provided in Section 18 hereof, the following
additional limitations are imposed under the Plan. The maximum number of shares
of Stock that may be delivered through stock options intended to be Incentive
Stock Options shall be one million four hundred thousand (1,400,000). Subject to
adjustment as provided in Section 19 hereof, the maximum number of shares of
Stock that may be issued in conjunction with awards granted pursuant to Section
12 and 14 hereof shall be two hundred fifty thousand (250,000); provided,
however, that shares issued in satisfaction of other compensation obligations of
the Company shall not count against this maximum number.

     4.3.  Payment Shares.

     Subject to the overall limitation on the number of shares of Stock that may
be delivered under the Plan, the Board may use available shares of Stock as the
form of payment for compensation, grants or rights earned or due under any other
compensation plans or arrangements of the Company, including the plan of any
entity acquired by the Company, and such payment shares shall not count against
the limitation on the maximum number of shares specified in Section 4.2.

     4.4.  Application of Aggregate Limitation.

     The Board may adopt reasonable counting procedures to ensure appropriate
counting, avoid double counting (as, for example, in the case of tandem or
substitute awards) and make adjustments if the number of shares of Stock
actually delivered differs from the number of shares of Stock previously counted
in connection with a Grant.

     4.5.  Per-Grantee Limitation.

     During any time when the Company has a class of equity security registered
under Section 12 of the Exchange Act:

     (i) no person eligible for a Grant under Section 6 hereof may be awarded
     Options for purposes of the Plan exercisable for greater than five hundred

                                        7

<PAGE>

     thousand (500,000) shares of Stock (subject to adjustment as provided in
     Section 18 hereof);

     (ii)  the maximum number of shares of Unrestricted Stock and Restricted
     Stock that may be awarded under the Plan (including for this purpose any
     shares of Stock represented by Restricted Stock Units) to any person
     eligible for a Grant under Section 12 and 14 hereof is two hundred fifty
     thousand (250,000) for purposes of the Plan (subject to adjustment as
     provided in Section 18 hereof);

     (iii) the maximum number of shares of Stock that may be the subject of SARs
     awarded to any Grantee under Section 13 hereof is two hundred fifty
     thousand (250,000) for purposes of the Plan (subject to adjustment as
     provided in Section 18 hereof).

5.   EFFECTIVE DATE AND TERM OF THE PLAN

     5.1.  Effective Date.

     The Plan shall be effective as of the Effective Date, subject to approval
of the Plan by the stockholders of the Company, within one year before or after
the date upon which the Plan was adopted by the Board. Such approval shall be by
a majority of the votes cast on the proposal at a meeting of stockholders,
provided that a quorum is present. Upon approval of the Plan by the stockholders
of the Company as set forth above, all Grants made under the Plan on or after
the Effective Date shall be fully effective as if the stockholders of the
Company had approved the Plan on the Effective Date. If the stockholders fail to
approve the Plan within the time period set forth above, any Grants made
hereunder shall be null and void and of no effect.

     5.2.  Term.

     The Plan has no termination date; however, no Incentive Stock Option may be
granted under the Plan on or after April 7, 2009.

6.   PERMISSIBLE GRANTEES

     6.1.  Employees and Service Providers.

     Subject to the provisions of Section 7 hereof, Grants may be made under the
Plan to any employee of the Company or any Subsidiary, including any such
employee who is an officer or director of the Company, to an Outside Director,
to a Service Provider or employee of a Service Provider providing, or who has
provided, services to the Company or any Subsidiary, and to any other individual
whose

                                        8

<PAGE>

participation in the Plan is determined by the Board to be in the best interests
of the Company, as the Board shall determine and designate from time to time.

     6.2.  Multiple Grants.

     An eligible person may receive more than one Grant, subject to such
restrictions as are provided herein.

7.   LIMITATIONS ON GRANTS OF INCENTIVE STOCK OPTIONS

     An Option shall constitute an Incentive Stock Option only (i) if the
Grantee of such Option is an employee of the Company or any Subsidiary of the
Company; (ii) to the extent specifically provided in the related Award
Agreement; and (iii) to the extent that the aggregate Fair Market Value
(determined at the time the Option is granted) of the shares of Stock with
respect to which all Incentive Stock Options held by such Grantee become
exercisable for the first time during any calendar year (under the Plan and all
other plans of the Grantee's employer and its affiliates) does not exceed
$100,000. This limitation shall be applied by taking Options into account in the
order in which they were granted.

8.   AWARD AGREEMENT

     Each Grant pursuant to the Plan shall be evidenced by an Award Agreement,
in such form or forms as the Board shall from time to time determine. Award
Agreements issued from time to time or at the same time need not contain similar
provisions but shall be consistent with the terms of the Plan. Each Award
Agreement evidencing a Grant of Options shall specify whether such Options are
intended to be non-qualified stock options or Incentive Stock Options, and in
the absence of such specification such options shall be deemed non-qualified
stock options.

9.   OPTION PRICE

     The Option Price of each Option shall be no less than the Fair Market Value
of a share of Stock on the date of grant and stated in the Award Agreement
evidencing such Option; provided, however, that in the event that a Grantee
would otherwise be ineligible to receive an Incentive Stock Option by reason of
the provisions of Sections 422(b)(6) and 424(d) of the Code (relating to
ownership of more than ten percent (10%) of the Company's outstanding shares of
Stock), the Option Price of an Option granted to such Grantee that is intended
to be an Incentive Stock Option shall be not less than one hundred ten percent
(110%) of the Fair Market Value of a share of Stock on the Grant Date. In no
case shall the Option Price of any Option be less than the par value of a share
of Stock.

                                        9

<PAGE>

10.  VESTING, TERM AND EXERCISE OF OPTIONS

     10.1. Vesting and Option Period.

     Subject to Section 10.2 and 18 hereof, each Option granted under the Plan
shall become exercisable at such times and under such conditions as shall be
determined by the Board and stated in the Award Agreement. For purposes of this
Section 10.1, fractional numbers of shares of Stock subject to an Option shall
be rounded down to the next nearest whole number. The period during which any
Option shall be exercisable shall constitute the "Option Period" with respect to
such Option.

     10.2. Term.

     Each Option granted under the Plan shall terminate, and all rights to
purchase shares of Stock thereunder shall cease, upon the expiration of ten
years from the date such Option is granted, or under such circumstances and on
such date prior thereto as is set forth in the Plan or as may be fixed by the
Board and thereafter stated in the Award Agreement relating to such Option;
provided, however, that in the event that the Grantee would otherwise be
ineligible to receive an Incentive Stock Option by reason of the provisions of
Sections 422(b)(6) and 424(d) of the Code (relating to ownership of more than
ten percent (10%) of the outstanding shares of Stock), an Option granted to such
Grantee that is intended to be an Incentive Stock Option shall not be
exercisable after the expiration of five years from its date of grant.

     10.3. Acceleration.

     Any limitation on the exercise of an Option contained in any Award
Agreement may be rescinded, modified or waived by the Board, in its sole
discretion, at any time and from time to time after the Grant Date of such
Option, so as to accelerate the time at which the Option may be exercised.

     10.4. Termination of Employment or Other Relationship for a Reason Other
           than Retirement, Death or Disability.

     Unless otherwise provided by the Board or in the Option Agreement, upon the
termination of a Grantee's employment or other relationship with the Company and
its Subsidiaries other than by reason of death, "permanent and total disability"
(within the meaning of Section 22(e)(3) of the Code) or retirement, any Option
or portion thereof held by such Grantee that has not vested in accordance with
the provisions of Section 10.1 hereof shall terminate immediately, and any
Option or portion thereof that has vested in accordance with the provisions of
Section 10.1 hereof but has not been exercised shall terminate at the close of
business on the 90th day following the Grantee's termination of employment or
other relationship (or, if such

                                       10

<PAGE>

90th day is a Saturday, Sunday or holiday, at the close of business on the next
preceding day that is not a Saturday, Sunday or holiday). Upon termination of an
Option or portion thereof, the Grantee shall have no further right to purchase
shares of Stock pursuant to such Option or portion thereof. Whether a leave of
absence or leave on military or government service shall constitute a
termination of employment or other relationship for purposes of the Plan shall
be determined by the Board, whose determination shall be final and conclusive.
For purposes of the Plan, a termination of employment, service or other
relationship shall not be deemed to occur if the Grantee is immediately
thereafter employed with the Company, a Subsidiary or a Service Provider, or is
engaged as a Service Provider or an Outside Director. Whether a termination of a
Grantee's employment or other relationship with the Company and its Subsidiaries
shall have occurred shall be determined by the Board, whose determination shall
be final and conclusive.

     10.5. Rights in the Event of Death.

     Unless otherwise provided by the Board, if a Grantee dies while employed by
or providing services to the Company, all Options granted to such Grantee that
have not previously terminated shall fully vest on the date of death, and the
executors or administrators or legatees or distributees of such Grantee's estate
shall have the right, at any time within five years after the date of such
Grantee's death and prior to termination of the Option pursuant to Section 10.2
hereof, to exercise any Option held by such Grantee at the date of such
Grantee's death.

     10.6. Rights in the Event of Disability.

     Unless otherwise provided by the Board, if a Grantee's employment or other
relationship with the Company is terminated by reason of the "permanent and
total disability" (within the meaning of Section 22(e)(3) of the Code) of such
Grantee, such Grantee's Options that have not previously terminated shall fully
vest, and shall be exercisable for a period of five years after such termination
of employment or other relationship, subject to earlier termination of the
Option as provided in Section 10.2 hereof. Whether a termination of employment
or other relationship is considered to be by reason of "permanent and total
disability" for purposes of the Plan shall be determined by the Board, whose
determination shall be final and conclusive.

     10.7. Rights in the Event of Retirement.

     Unless otherwise provided by the Board, if a Grantee retires under the
terms of any Company retirement plan applicable to the Grantee or as determined
by the Board, the Grantee shall be considered retired and all Options granted to
such Grantee that have not previously terminated shall fully vest on the date of
retirement, and the Grantee shall have the right, at any time within five years
after

                                       11

<PAGE>

the date of such Grantee's retirement and prior to termination of the Option
pursuant to Section 10.2 hereof, to exercise any Option held by such Grantee at
the date of such Grantee's retirement.

     10.8  Limitations on Exercise of Option.

   Notwithstanding any other provision of the Plan, in no event may any Option
be exercised, in whole or in part, prior to the date the Plan is approved by the
stockholders of the Company as provided herein, or after ten years following the
date upon which the Option is granted, or after the occurrence of an event
referred to in Section 18 hereof which results in termination of the Option.

     10.9  Method of Exercise.

   An Option that is exercisable may be exercised by the Grantee's delivery to
the Company of written notice of exercise on any business day, at the Company's
principal office, addressed to the attention of the Board. Such notice shall
specify the number of shares of Stock with respect to which the Option is being
exercised and shall be accompanied by payment in full of the Option Price of the
shares of Stock for which the Option is being exercised. The minimum number of
shares of Stock with respect to which an Option may be exercised, in whole or in
part, at any time shall be the lesser of (i) 100 shares or such lesser number
set forth in the applicable Award Agreement and (ii) the maximum number of
shares of Stock available for purchase under the Option at the time of exercise.
Payment of the Option Price for the shares of Stock purchased pursuant to the
exercise of an Option shall be made (i) in cash or in cash equivalents
acceptable to the Company; (ii) to the extent permitted by law and at the
Board's discretion, through the actual or constructive tender to the Company of
shares of Stock, which shares of Stock, if acquired from the Company, shall have
been held for at least six months prior to such tender and which shall be
valued, for purposes of determining the extent to which the Option Price has
been paid thereby, at their Fair Market Value on the date of exercise; or (iii)
to the extent permitted by law and at the Board's discretion, by a combination
of the methods described in clauses (i) and (ii). The Board may provide, by
inclusion of appropriate language in an Award Agreement, that payment in full of
the Option Price need not accompany the written notice of exercise, provided
that the notice is accompanied by delivery of an unconditional and irrevocable
undertaking by a licensed broker acceptable to the Company as the agent for the
individual exercising the Option to deliver promptly to the Company sufficient
funds to pay the Option Price and directs that the certificate or certificates
for the shares of Stock for which the Option is exercised be delivered to a
licensed broker acceptable to the Company as the agent for the individual
exercising the Option and, at the time such certificate or certificates are
delivered, the broker tenders to the Company cash (or cash equivalents
acceptable to the Company) equal to the Option Price for the shares of Stock
purchased pursuant to the exercise of the

                                       12

<PAGE>

Option plus the amount (if any) of federal or other taxes which the Company may
in its judgment be required to withhold with respect to the exercise of the
Option. An attempt to exercise any Option granted hereunder other than as set
forth above shall be invalid and of no force and effect.

     10.10. Rights as a Stockholder; Dividend Equivalents.

   Unless otherwise stated in the applicable Award Agreement, an individual
holding or exercising an Option shall have none of the rights of a stockholder
(for example, the right to receive cash or dividend payments or distributions
attributable to the subject shares of Stock or to direct the voting of the
subject shares of Stock) until the shares of Stock covered thereby are fully
paid and issued to such individual. Except as provided in Section 18 hereof, no
adjustment shall be made for dividends, distributions or other rights for which
the record date is prior to the date of such issuance. However, the Board may,
on such conditions as it deems appropriate, provide that a Grantee will receive
a benefit in lieu of cash dividends that would have been payable on any or all
shares of Stock subject to the Grant if such shares of Stock had been
outstanding. Without limitation, the Board may provide for payment to the
Grantee of amounts representing such dividends, either currently or in the
future, or for the investment of such amounts on behalf of the Grantee.

     10.11. Delivery of Stock Certificates.

   Promptly after the exercise of an Option by a Grantee and the payment in
full of the Option Price, such Grantee shall be entitled to the issuance of a
Stock certificate or certificates evidencing such Grantee's ownership of the
shares of Stock subject to the Option.

11.  TRANSFERABILITY OF OPTIONS

     11.1.  General Rule

   Except as provided in Section 11.2 hereof, during the lifetime of a Grantee,
only the Grantee (or, in the event of legal incapacity or incompetency, the
Grantee's guardian or legal representative) may exercise an Option. Except as
provided in Section 11.2 hereof, no Option shall be assignable or transferable
by the Grantee to whom it is granted, other than by will or the laws of descent
and distribution.

     11.2.  Family Transfers.

   To the extent permitted by the Board and under such rules and conditions as
imposed by the Board, a Grantee may transfer all or part of an Option that is
not an Incentive Stock Option to (i) any Immediate Family Member, (ii) a trust
or trusts

                                       13

<PAGE>

for the exclusive benefit of any Immediate Family Member or (iii) a partnership
or limited liability company in which Immediate Family Members are the only
partners or members, provided that (x) there may be no consideration for any
such transfer, and (y) subsequent transfers of transferred Options or transfers
of an interest in a trust, partnership, or limited liability company to which an
Option has been transferred are prohibited except those in accordance with this
Section 11.2 or by will or the laws of descent and distribution. Following such
transfer, any such Option shall continue to be subject to the same terms and
conditions as were applicable immediately prior to the transfer, provided that,
for purposes of this Section 11.2, the term "Grantee" shall be deemed to refer
to the transferee. The events of termination of employment or other relationship
referred to in Section 10.4 hereof shall continue to be applied with respect to
the original Grantee, following which the Option shall be exercisable by the
transferee only to the extent and for the periods specified in Section 10.4,
10.5, 10.6 or 10.7 hereof.

12.  RESTRICTED STOCK

     12.1. Grant of Restricted Stock or Restricted Stock Units.

   The Board from time to time may grant Restricted Stock or Restricted Stock
Units to persons eligible to receive Grants under Section 6 hereof, subject to
such restrictions, conditions and other terms as the Board may determine.

     12.2. Restrictions.

   At the time a Grant of Restricted Stock or Restricted Stock Units is made,
the Board shall establish a period of time (the "Restricted Period") applicable
to such Restricted Stock or Restricted Stock Units. Unless otherwise determined
by the Board, unless the Grant is being made in consideration of compensation
due under another plan, or unless vesting is subject to performance, the
Restricted Period will be a minimum of three years. Each Grant of Restricted
Stock or Restricted Stock Units may be subject to a different Restricted Period.
At the time a Grant of Restricted Stock or Restricted Stock Units is made, the
Board may, in its sole discretion, prescribe restrictions in addition to or
other than the expiration of the Restricted Period, including the satisfaction
of corporate or individual performance objectives, which may be applicable to
all or any portion of the Restricted Stock or Restricted Stock Units. Such
performance objectives shall be established in writing by the Board by not later
than the 90th day of the period of service to which such performance objectives
relate and while the outcome is substantially uncertain. Performance objectives
may be stated either on an absolute or relative basis and may be based on any of
the following criteria: earnings per share, total stockholder return, operating
earnings, growth in assets, return on equity, return on capital, market share,
stock price, net income, cash flow, sales growth (in general, by type of product
and by type of customer), retained earnings, completion of acquisitions,
completion of divestitures and asset sales, cost or expense reductions,
introduction

                                       14

<PAGE>

or conversion of product brands and achievement of specified management
information systems objectives. Performance objectives may include positive
results, maintaining the status quo or limiting economic losses. Subject to the
fifth sentence of this Section 12.2, the Board also may, in its sole discretion,
shorten or terminate the Restricted Period or waive any other restrictions
applicable to all or a portion of the Restricted Stock or Restricted Stock
Units. Neither Restricted Stock nor Restricted Stock Units may be sold,
transferred, assigned, pledged or otherwise encumbered or disposed of during the
Restricted Period or prior to the satisfaction of any other restrictions
prescribed by the Board with respect to such Restricted Stock or Restricted
Stock Units.

     12.3. Restricted Stock Certificates.

   The Company shall issue, in the name of each Grantee to whom Restricted
Stock has been granted, Stock certificates representing the total number of
shares of Restricted Stock granted to the Grantee, as soon as reasonably
practicable after the Grant Date. The Board may provide in an Award Agreement
that either (i) the Secretary of the Company shall hold such certificates for
the Grantee's benefit until such time as the Restricted Stock is forfeited to
the Company or the restrictions lapse, or (ii) such certificates shall be
delivered to the Grantee, provided, however, that such certificates shall bear a
legend or legends complying with the applicable securities laws and regulations
and making appropriate reference to the restrictions imposed under the Plan and
the Award Agreement.

     12.4. Rights of Holders of Restricted Stock.

   Unless the Board otherwise provides in an Award Agreement, holders of
Restricted Stock shall have the right to vote such shares of Stock and the right
to receive any dividends declared or paid with respect to such shares of Stock.
The Board may provide that any dividends paid on Restricted Stock must be
reinvested in shares of Stock, which may or may not be subject to the same
vesting conditions and restrictions applicable to such Restricted Stock. All
distributions, if any, received by a Grantee with respect to Restricted Stock as
a result of any stock split, stock dividend, combination of shares or other
similar transaction shall be subject to the restrictions applicable to the
original Grant.

     12.5. Rights of Holders of Restricted Stock Units.

   Unless the Board otherwise provides in an Award Agreement, holders of
Restricted Stock Units shall have no rights as stockholders of the Company. The
Board may provide in an Award Agreement evidencing a Grant of Restricted Stock
Units that the holder of such Restricted Stock Units shall be entitled to
receive, upon the Company's payment of a cash dividend on its outstanding shares
of Stock, a cash payment for each Restricted Stock Unit held equal to the
per-share dividend

                                       15

<PAGE>

paid on the shares of Stock. Such Award Agreement may also provide that such
cash payment will be deemed reinvested in additional Restricted Stock Units at a
price per unit equal to the Fair Market Value of a share on the date that such
dividend is paid.

      12.6. Termination of Employment or Other Relationship for a Reason Other
            than Death or Disability.

   Unless otherwise provided by the Board, upon the termination of a Grantee's
employment or other relationship with the Company and its Subsidiaries, in
either case other than, in the case of individuals, by reason of death or
"permanent and total disability" (within the meaning of Section 22(e)(3) of the
Code), any Restricted Stock or Restricted Stock Units held by such Grantee that
have not vested, or with respect to which all applicable restrictions and
conditions have not lapsed, shall immediately be deemed forfeited. Upon
forfeiture of Restricted Stock or Restricted Stock Units, the Grantee shall have
no further rights with respect to such Grant, including, but not limited to, any
right to vote Restricted Stock or any right to receive dividends with respect to
Restricted Stock or Restricted Stock Units. Whether a leave of absence or leave
on military or government service shall constitute a termination of employment
or other relationship for purposes of the Plan shall be determined by the Board,
whose determination shall be final and conclusive. For purposes of the Plan, a
termination of employment, service or other relationship shall not be deemed to
occur if the Grantee is immediately thereafter employed with the Company or any
other Service Provider, or is engaged as a Service Provider or an Outside
Director. Whether a termination of a Grantee's employment or other relationship
with the Company and its Subsidiaries shall have occurred shall be determined by
the Board, whose determination shall be final and conclusive.

      12.7. Rights in the Event of Death.

   Unless otherwise provided by the Board, if a Grantee dies while employed by
the Company or a Service Provider, or while serving as a Service Provider, all
Restricted Stock or Restricted Stock Units granted to such Grantee shall fully
vest on the date of death unless the Board provided otherwise in the Award
Agreement relating to such Restricted Stock or Restricted Stock Units. Upon such
vesting, the shares of Stock represented thereby shall be deliverable in
accordance with the terms of the Plan to the executors, administrators, legatees
or distributees of the Grantee's estate.

      12.8. Rights in the Event of Disability.

   Unless otherwise provided by the Board, if a Grantee's employment or other
relationship with the Company or a Service Provider, or service as a Service

                                       16

<PAGE>

Provider, is terminated by reason of the "permanent and total disability"
(within the meaning of Section 22(e)(3) of the Code) of such Grantee, such
Grantee's then unvested Restricted Stock or Restricted Stock Units shall be
fully vested. Whether a termination of employment, service or other relationship
is to be considered by reason of "permanent and total disability" for purposes
of the Plan shall be determined by the Board, whose determination shall be final
and conclusive.

      12.9. Delivery of Shares and Payment Therefor.

   Upon the expiration or termination of the Restricted Period and the
satisfaction of any other conditions prescribed by the Board, the restrictions
applicable to Restricted Stock or Restricted Stock Units shall lapse, and,
unless otherwise provided in the Award Agreement, upon payment by the Grantee to
the Company, in cash or by check, of the greater of (i) the aggregate par value
of the shares of Stock represented by such Restricted Stock or Restricted Stock
Units or (ii) the purchase price, if any, specified in the Award Agreement
relating to such Restricted Stock or Restricted Stock Units, a certificate for
such shares shall be delivered, free of all such restrictions, to the Grantee or
the Grantee's beneficiary or estate, as the case may be.

13.   STOCK APPRECIATION RIGHTS

      13.1. Grant of Stock Appreciation Rights.

   The Board may from time to time grant SARs to persons eligible to receive
grants under Section 6 hereof, subject to the provisions of this Section 13 and
to such restrictions, conditions and other terms as the Board may determine.

      13.2. Nature of a Stock Appreciation Right.

   An SAR shall confer on the Grantee a right to receive, upon exercise thereof,
the excess of (A) the Fair Market Value of one share of Stock on the date of
exercise over (B) the grant price of the SAR, as determined by the Board. Unless
the Board provides otherwise in the Award Agreement, the grant price of an SAR
shall not be less than the Fair Market Value of a share of Stock on the Grant
Date.

      13.3. Terms and Conditions Governing SARs.

   The Board shall determine at the Grant Date or thereafter the time or times
at which and the circumstances under which an SAR may be exercised in whole or
in part (including exercise based on achievement of performance objectives or
future service requirements), the time or times at which and the circumstances
under which an SAR shall cease to be exercisable, the method of exercise, the
method of settlement, form of consideration payable in settlement, whether or
not an SAR

                                       17

<PAGE>

shall be in tandem or in combination with any other Grant, and any other terms
and conditions of any SAR.

14. UNRESTRICTED STOCK

   The Board may, in its sole discretion, grant Stock (or sell Stock at par
value or such other higher purchase price determined by the Board) free of
restrictions other than those required under federal or state securities laws
("Unrestricted Stock") to persons eligible to receive grants under Section 6
hereof. Unrestricted Stock may be granted or sold as described in the preceding
sentence in respect of past services or other valid consideration, or in lieu of
any cash compensation due to such Grantee.

15. PARACHUTE LIMITATIONS

   If the Grantee is a "disqualified individual" (as defined in Section 280G(c)
of the Code), any Option, Restricted Stock, Restricted Stock Unit or SAR and any
other right to receive any payment or benefit under the Plan shall not vest or
become exercisable (i) to the extent that the right to vest or any other right
to any payment or benefit, taking into account all other rights, payments or
benefits to or for the Grantee, would cause any payment or benefit to the
Grantee under the Plan to be considered a "parachute payment" within the meaning
of Section 280G(b)(2) of the Code as then in effect (a "Parachute Payment") and
(ii) if, as a result of receiving a Parachute Payment, the aggregate after-tax
amounts received by the Grantee from the Company under any Award Agreements, the
Plan, and all other rights, payments or benefits to or for the Grantee would be
less than the maximum after-tax amount that could be received by the Grantee
without causing the payment or benefit to be considered a Parachute Payment. In
the event that, but for the provisions of this Section 15, the Grantee would be
considered to have received a Parachute Payment under any Award Agreements that
would have the effect of decreasing the after-tax amount received by the Grantee
as described in clause (ii) of the preceding sentence, then the Grantee shall
have the right, in the Grantee's sole discretion, to designate any rights,
payments or benefits under any Award Agreements, the Plan, any other agreements
and any benefit arrangements to be reduced or eliminated so as to avoid having
the payment or benefit to the Grantee under any Award Agreements be deemed to be
a Parachute Payment.

16. REQUIREMENTS OF LAW

      16.1. General.

   The Company shall not be required to sell or issue any shares of Stock under
any Grant if the sale or issuance of such shares of Stock would constitute a
violation by the Grantee, any other person exercising a right emanating from
such Grant, or the Company of any provision of any law or regulation of any
governmental authority, including, without limitation, any federal or state
securities laws or regulations. If at any time the Company shall determine, in
its discretion, that the

                                       18

<PAGE>

listing, registration or qualification of any shares of Stock subject to a Grant
upon any securities exchange or under any governmental regulatory body is
necessary or desirable as a condition of, or in connection with, the issuance or
purchase of shares of Stock hereunder, no shares of Stock may be issued or sold
to the Grantee or any other person exercising a right emanating from such Grant
unless such listing, registration, qualification, consent or approval shall have
been effected or obtained free of any conditions not acceptable to the Company,
and any delay caused thereby shall in no way affect the date of termination of
the Grant. Without limiting the generality of the foregoing, upon the exercise
of any Option or any SAR that may be settled in shares of Stock or the delivery
of any Restricted Stock or shares of Stock underlying Restricted Stock Units,
unless a registration statement under the Securities Act is in effect with
respect to the shares of Stock covered by such Grant, the Company shall not be
required to sell or issue such shares of Stock unless the Board has received
evidence satisfactory to it that the Grantee or any other person exercising a
right emanating from such Grant may acquire such shares of Stock pursuant to an
exemption from registration under the Securities Act. Any such determination by
the Board shall be final, binding and conclusive. The Company may, but shall in
no event be obligated to, register any securities covered hereby pursuant to the
Securities Act. The Company shall not be obligated to take any affirmative
action in order to cause the exercise of an Option or an SAR or the issuance of
shares of Stock pursuant to the Plan to comply with any law or regulation of any
governmental authority. As to any jurisdiction that expressly imposes the
requirement that an Option (or SAR that may be settled in shares of Stock) shall
not be exercisable until the shares of Stock covered by such Option (or SAR) are
registered or are exempt from registration, the exercise of such Option (or SAR)
under circumstances in which the laws of such jurisdiction apply shall be deemed
conditioned upon the effectiveness of such registration or the availability of
such an exemption.

      16.2. Rule 16b-3.

   During any time when the Company has a class of equity security registered
under Section 12 of the Exchange Act, it is the intent of the Company that
Grants pursuant to the Plan and the exercise of Options and SARs granted
hereunder will qualify for the exemption provided by Rule 16b-3 under the
Exchange Act. To the extent that any provision of the Plan or action by the
Board does not comply with the requirements of Rule 16b-3, such provision or
action shall be deemed inoperative to the extent permitted by law and deemed
advisable by the Board, and shall not affect the validity of the Plan. In the
event that Rule 16b-3 is revised or replaced, the Board may exercise its
discretion to modify the Plan in any respect necessary to satisfy the
requirements of, or to take advantage of any features of, the revised exemption
or its replacement.

                                       19

<PAGE>

17. AMENDMENT AND TERMINATION OF THE PLAN

   The Board may, at any time and from time to time, amend, suspend or terminate
the Plan as to any shares of Stock as to which Grants have not been made. Except
as permitted under this Section 17 or Section 18 hereof, no amendment,
suspension or termination of the Plan shall, without the consent of the Grantee,
alter or impair rights or obligations under any Grant theretofore awarded under
the Plan.

18. EFFECT OF CHANGES IN CAPITALIZATION

      18.1. Changes in Stock.

   Subject to Section 18.2 hereof, in the event of any merger, reorganization,
consolidation, recapitalization, separation, liquidation, stock dividend,
spin-off, split-up, share combination or other change in the corporate structure
of the Company affecting the shares of Stock, (a) such adjustment may be made in
the number and class of shares which may be delivered under Section 4 hereof and
the Grant limits under Section 4 hereof, and in the number and class of or price
of shares subject to outstanding Grants as may be determined to be appropriate
and equitable by the Board, in its sole discretion, to prevent dilution or
enlargement of existing rights; and (b) the Board or, if another legal entity
assumes the obligations of the Company hereunder, the board of directors,
compensation committee or similar body of such other legal entity shall either
(i) make appropriate provision for the protection of outstanding Grants by the
substitution on an equitable basis of appropriate equity interests or awards
similar to the Grants, provided that the substitution neither enlarges nor
diminishes the value and rights under the Grants, or (ii) upon written notice to
the Grantees, provide that Grants shall be exercised distributed, canceled or
exchanged for value pursuant to such terms and conditions (including the waiver
of any existing terms or conditions) as shall be specified in the notice. Any
adjustment of an Incentive Stock Option under this Section 18.1 shall be made in
such a manner so as not to constitute a "modification" within the meaning of
Section 424(h)(3) of the Code. The conversion of any convertible securities of
the Company shall not be treated as a change in the corporate structure of the
Company affecting the shares of Stock. Subject to any contrary language in an
Award Agreement evidencing a Grant of Restricted Stock, any restrictions
applicable to such Restricted Stock shall apply as well to any replacement
shares received by the Grantee as a result of the merger, reorganization or
other transaction referred to in this Section 18.1.

      18.2. Reorganization, Sale of Assets or Sale of Stock.

   Upon the dissolution or liquidation of the Company or upon a merger,
consolidation or reorganization of the Company with one or more other entities
in which the Company is not the surviving entity, or upon a sale of
substantially all of

                                       20

<PAGE>

the assets of the Company to another entity, or upon any transaction (including,
without limitation, a merger or reorganization in which the Company is the
surviving entity) approved by the Board that results in any person or entity (or
person or entities acting as a group or otherwise in concert) owning eighty
percent (80%) or more of the combined voting power of all classes of securities
of the Company, (i) all outstanding Restricted Stock and Restricted Stock Units
shall be deemed to have vested, and all restrictions and conditions applicable
to such Restricted Stock and Restricted Stock Units shall be deemed to have
lapsed, immediately prior to the occurrence of such transaction, and (ii) all
Options and SARs outstanding hereunder shall become immediately exercisable for
a period of fifteen days immediately prior to the scheduled consummation of such
transaction. Any exercise of an Option or SAR during such fifteen-day period
shall be conditioned upon the consummation of the transaction and shall be
effective only immediately before the consummation of the transaction.

   This Section 18.2 shall not apply to any transaction to the extent that (A)
provision is made in writing in connection with such transaction for the
continuation of the Plan or the assumption of the Options, SARs, Restricted
Stock and Restricted Stock Units theretofore granted, or for the substitution
for such Options, SARs, Restricted Stock and Restricted Stock Units of new
options, stock appreciation rights, restricted stock and restricted stock units
covering the stock of a successor entity, or a parent or subsidiary thereof,
with appropriate adjustments as to the number and kinds of shares or units and
exercise prices, in which event the Plan and Options, SARs, Restricted Stock and
Restricted Stock Units theretofore granted shall continue in the manner and
under the terms so provided or (B) a majority of the full Board determines that
such transaction shall not trigger application of the provisions of this Section
18.2 and limited by any "change in control" provision in any employment
agreement or Award Agreement applicable to the Grantee. Upon consummation of any
such transaction, the Plan and all outstanding but unexercised Options and SARs
shall terminate, except to the extent provision is made in writing in connection
with such transaction for the continuation of the Plan or the assumption of such
Options and SARs theretofore granted, or for the substitution for such Options
and SARs of new options and stock appreciation rights covering the shares of a
successor entity, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kinds of shares or units and exercise prices,
in which event the Plan and Options and SARs theretofore granted shall continue
in the manner and under the terms so provided. The Board shall send written
notice of an event that will result in such a termination to all individuals who
hold Options and SARs not later than the time at which the Company gives notice
thereof to its stockholders.

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<PAGE>

     18.3. Adjustments.

   Adjustments under this Section 18 related to shares of Stock or securities of
the Company shall be made by the Board, whose determination in that respect
shall be final and conclusive. No fractional shares or other securities shall be
issued pursuant to any such adjustment, and any fractions resulting from any
such adjustment shall be eliminated in each case by rounding downward to the
nearest whole share.

     18.4. No Limitations on Company.

   The making of Grants pursuant to the Plan shall not affect or limit in any
way the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge,
consolidate, dissolve or liquidate, or to sell or transfer all or any part of
its business or assets.

19. DISCLAIMER OF RIGHTS

   No provision in the Plan or in any Grant or Award Agreement shall be
construed to confer upon any individual the right to remain in the employ or
service of the Company or any affiliate thereof, or to interfere in any way with
any contractual or other right or authority of the Company or Service Provider
either to increase or decrease the compensation or other payments to any
individual at any time, or to terminate any employment or other relationship
between any individual and the Company or any affiliate thereof. In addition,
notwithstanding anything contained in the Plan to the contrary, unless otherwise
stated in the applicable Award Agreement or employment agreement, no Grant
awarded under the Plan shall be affected by any change of duties or position of
the Grantee, so long as such Grantee continues to be a director, officer,
consultant or employee of the Company. The obligation of the Company to pay any
benefits pursuant to the Plan shall be interpreted as a contractual obligation
to pay only those amounts described herein, in the manner and under the
conditions prescribed herein. The Plan shall in no way be interpreted to require
the Company to transfer any amounts to a third party trustee or otherwise hold
any amounts in trust or escrow for payment to any participant or beneficiary
under the terms of the Plan. No Grantee shall have any of the rights of a
stockholder with respect to the shares of Stock subject to an Option or SAR
except to the extent such shares of Stock shall have been issued upon the
exercise of the Option or SAR.

20. NONEXCLUSIVITY OF THE PLAN

   Neither the adoption of the Plan nor the submission of the Plan to the
stockholders of the Company for approval shall be construed as creating any
limitations upon the right and authority of the Board to adopt such other
incentive

                                       22

<PAGE>

compensation arrangements (which arrangements may be applicable either generally
to a class or classes of individuals or specifically to a particular individual
or particular individuals) as the Board in its discretion determines desirable,
including, without limitation, the granting of Stock options otherwise than
under the Plan.

21. WITHHOLDING TAXES

   The Company or a Subsidiary, as the case may be, shall have the right to
deduct from payments of any kind otherwise due to a Grantee any federal, state
or local taxes of any kind required by law to be withheld with respect to the
vesting of or other lapse of restrictions applicable to Restricted Stock or
Restricted Stock Units or upon the exercise of an Option or SAR or the grant of
Unrestricted Stock. At the time of such vesting, lapse or exercise, the Grantee
shall pay to the Company or the Subsidiary, as the case may be, any amount that
the Company or the Subsidiary may reasonably determine to be necessary to
satisfy such withholding obligation. Subject to the prior approval of the
Company or the Subsidiary, which may be withheld by the Company or the
Subsidiary, as the case may be, in its sole discretion, the Grantee may elect to
satisfy such obligations, in whole or in part, (i) by causing the Company or the
Subsidiary to withhold shares of Stock otherwise issuable to the Grantee or (ii)
by delivering to the Company or the Subsidiary shares of Stock already owned by
the Grantee. The shares of Stock so delivered or withheld shall have an
aggregate Fair Market Value equal to such withholding obligations. The Fair
Market Value of the shares of Stock used to satisfy such withholding obligation
shall be determined by the Company or the Subsidiary as of the date that the
amount of tax to be withheld is to be determined. A Grantee who has made an
election pursuant to this Section 21 may satisfy such Grantee's withholding
obligation only with shares of Stock that are not subject to any repurchase,
forfeiture, unfulfilled vesting or other similar requirement.

22. CAPTIONS

   The use of captions in the Plan or any Award Agreement is for convenience of
reference only and shall not affect the meaning of any provision of the Plan or
such Award Agreement.

23. OTHER PROVISIONS

   Each Grant awarded under the Plan may contain such other terms and conditions
not inconsistent with the Plan as may be determined by the Board, in its sole
discretion.

                                       23

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24. NUMBER AND GENDER

   With respect to words used in this Plan, the singular form shall include the
plural form and, the masculine gender shall include the feminine gender, as the
context requires.

25. SEVERABILITY

   If any provision of the Plan or any Award Agreement shall be finally
determined to be illegal or unenforceable by any court of law in any
jurisdiction, the remaining provisions hereof and thereof shall be severable and
enforceable in accordance with their terms, and all provisions shall remain
enforceable in any other jurisdiction.

26. GOVERNING LAW

   The validity and construction of this Plan and the instruments evidencing the
Grants awarded hereunder shall be governed by the laws of the State of Delaware
(without giving effect to the choice of law provisions thereof).

                                     * * * *

                                       24

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