Document:

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                                                                    EXHIBIT 10.2

                              NEOTHERAPEUTICS, INC.

                                     WARRANT

DATED: MARCH 8, 2001                                              NUMBER NEOT001

        NeoTherapeutics, Inc., a Delaware corporation (the "Company"), hereby
certifies that, for value received, IAT REINSURANCE SYNDICATE LTD., or its
registered assigns ("Holder"), is entitled, subject to the terms set forth
below, to purchase from the Company up to a total of 125,000 shares of Common
Stock, $.001 par value per share (the "Common Stock"), of the Company (each such
share, a "Warrant Share" and all such shares, the "Warrant Shares") at an
exercise price equal to $5.00 per share (as adjusted from time to time as
provided in Section 8, the "Exercise Price"), at any time and from time to time
from and after the date hereof and through and including March 8, 2006 (the
"Expiration Date"), and subject to the following terms and conditions:

        1. Registration of Warrant. The Company shall register this Warrant upon
records to be maintained by the Company for that purpose (the "Warrant
Register"), in the name of the record Holder hereof from time to time. The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, and the Company shall not be affected by
notice to the contrary.

         2. Registration of Transfers and Exchanges.

            (a) This Warrant may not be sold, transferred, assigned pledged,
hypothecated or otherwise disposed, directly or indirectly, in whole or in part,
without the prior written consent of the Company. Any attempted sale, transfer,
assignment, pledge, hypothecation or other disposition of this Warrant, or any
portion thereof, shall be void and without any force or effect; provided,
however, that, subject to compliance with any applicable securities laws, the
Holder may transfer this Warrant, or any portion thereof, without the prior
written consent of the Company, if such transfer is to (i) a spouse, child,
grandchild, parent, sibling or custodian or trustee for the benefit of any such
relatives, or (ii) any shareholder or affiliate entity.

            (b) The Company shall register the transfer of any portion of this
Warrant in conformance with Section 2(a) in the Warrant Register, upon surrender
of this Warrant, with the Form of Assignment attached hereto duly completed and
signed, to the Company at the office specified in or pursuant to Section 10.
Upon any such registration or transfer, a new warrant to purchase Common Stock,
in substantially the form of this Warrant (any such new warrant, a "New
Warrant"), evidencing the portion of this Warrant so transferred shall be issued
to the transferee and a New Warrant evidencing the remaining portion of this
Warrant not so transferred, if any, shall be issued to the transferring Holder.
The acceptance of the New Warrant by the transferee thereof shall be deemed the
acceptance of such transferee of all of the rights and obligations of a holder
of this Warrant.

            (c) This Warrant is exchangeable, upon the surrender hereof by the
Holder to the office of the Company specified in or pursuant to Section 10 for
one or more New Warrants, evidencing in the aggregate the right to purchase the
number of Warrant Shares which may then be purchased hereunder.

<PAGE>   2

         3. Duration and Exercise of Warrant.

            (a) This Warrant shall be exercisable by the then registered Holder
on any business day before 5:00 P.M., California time, at any time and from time
to time on or after the date hereof to and including the Expiration Date. At
5:00 P.M., California time on the Expiration Date, the portion of this Warrant
not exercised prior thereto shall be and become void and of no value.

            (b) Upon surrender of this Warrant, with the Form of Election to
Purchase attached hereto duly completed and signed, to the Company at its
address for notice set forth in Section 10 and upon payment of the Exercise
Price multiplied by the number of Warrant Shares that the Holder intends to
purchase hereunder, in the manner provided hereunder, all as specified by the
Holder in the Form of Election to Purchase, the Company shall promptly issue or
cause to be issued and cause to be delivered to or upon the written order of the
Holder and in such name or names as the Holder may designate, a certificate for
the Warrant Shares issuable upon such exercise. Any person so designated by the
Holder to receive Warrant Shares shall be deemed to have become holder of record
of such Warrant Shares as of the Date of Exercise of this Warrant.

            A "Date of Exercise" means the date on which the Company shall have
received (i) this Warrant (or any New Warrant, as applicable), with the Form of
Election to Purchase attached hereto (or attached to such New Warrant)
appropriately completed and duly signed, and (ii) payment of the Exercise Price
for the number of Warrant Shares so indicated by the holder hereof to be
purchased.

            (c) This Warrant shall be exercisable, either in its entirety or,
from time to time, for a portion of the number of Warrant Shares. If less than
all of the Warrant Shares which may be purchased under this Warrant are
exercised at any time, the Company shall issue or cause to be issued, at its
expense, a New Warrant evidencing the right to purchase the remaining number of
Warrant Shares for which no exercise has been evidenced by this Warrant.

            (d) Prior to the exercise of this Warrant, the Holder shall not be
entitled to any rights as a stockholder of the Company with respect to the
Warrant Shares, including (without limitation) the right to vote such shares,
receive dividends or other distributions thereon or be notified of stockholder
meetings (except as otherwise set forth in Section 7(f) herein).

         4. Payment of Taxes. The Company will pay any documentary stamp taxes
attributable to the issuance of Warrant Shares upon the exercise of this
Warrant; provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the registration
of any certificates for Warrant Shares or Warrants in a name other than that of
the Holder. The Holder shall be responsible for all other tax liability that may
arise as a result of holding or transferring this Warrant or receiving Warrant
Shares upon exercise hereof.

                                      -2-

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         5. Replacement of Warrant. If this Warrant is mutilated, lost, stolen
or destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation hereof, or in lieu of and substitution
for this Warrant, a New Warrant, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and indemnity, if
requested, satisfactory to it. Applicants for a New Warrant under such
circumstances shall also comply with such other reasonable regulations and
procedures and pay such other reasonable charges as the Company may prescribe.

         6. Reservation of Warrant Shares. The Company covenants that it will at
all times reserve and keep available out of the aggregate of its authorized but
unissued Common Stock, solely for the purpose of enabling it to issue Warrant
Shares upon exercise of this Warrant as herein provided, the number of Warrant
Shares which are then issuable and deliverable upon the exercise of this entire
Warrant, free from preemptive rights or any other actual contingent purchase
rights of persons other than the Holder. The Company covenants that all Warrant
Shares that shall be so issuable and deliverable shall, upon issuance and the
payment of the applicable Exercise Price in accordance with the terms hereof, be
duly authorized, validly issued and fully paid and nonassessable.

         7. Certain Adjustments. The Exercise Price and number of Warrant Shares
issuable upon exercise of this Warrant are subject to adjustment from time to
time as set forth in this Section 7. Upon each such adjustment of the Exercise
Price pursuant to this Section 7, the Holder shall thereafter prior to the
Expiration Date be entitled to purchase, at the Exercise Price resulting from
such adjustment, the number of Warrant Shares obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by the number of
Warrant Shares issuable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment.

         (a) If the Company, at any time while this Warrant is outstanding, (i)
shall pay a stock dividend (except scheduled dividends paid on outstanding
preferred stock which contain a stated dividend rate) or otherwise make a
distribution or distributions on shares of its Common Stock payable in shares of
Common Stock, (ii) subdivide outstanding shares of Common Stock into a larger
number of shares, or (iii) combine outstanding shares of Common Stock into a
smaller number of shares, the Exercise Price shall be multiplied by a fraction
of which the numerator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding before such event and the denominator shall
be the number of shares of Common Stock (excluding treasury shares, if any)
outstanding after such event. Any adjustment made pursuant to this Section shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision or
combination, and shall apply to successive subdivisions and combinations.

         (b) In case of any reclassification of the Common Stock, any
consolidation or merger of the Company with or into another person, the sale or
transfer of all or substantially all of the assets of the Company or any
compulsory share exchange pursuant to which the Common Stock is converted into
other securities, cash or property, then the Holder shall have the right
thereafter to exercise this Warrant only into the shares of stock and other
securities and property receivable upon or deemed to be held by holders of
Common Stock following such

                                      -3-

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reclassification, consolidation, merger, sale, transfer or share exchange, and
the Holder shall be entitled upon such event to receive such amount of
securities or property equal to the amount of Warrant Shares such Holder would
have been entitled to had such Holder exercised this Warrant immediately prior
to such reclassification, consolidation, merger, sale, transfer or share
exchange. The terms of any such consolidation, merger, sale, transfer or share
exchange shall include such terms so as to continue to give to the Holder the
right to receive the securities or property set forth in this Section 7(b) upon
any exercise following any such reclassification, consolidation, merger, sale,
transfer or share exchange.

         (c) If the Company, at any time while this Warrant is outstanding,
shall distribute to all holders of Common Stock (and not to holders of this
Warrant) evidences of its indebtedness or assets or rights or warrants to
subscribe for or purchase any security (excluding those referred to in Sections
7(a), and (b)), other than as part of its dissolution or liquidation or the
winding up of its affairs, then in each such case the Exercise Price shall be
determined by multiplying the Exercise Price in effect immediately prior to the
record date fixed for determination of stockholders entitled to receive such
distribution by a fraction of which the denominator shall be the fair market
value of a share of Common Stock determined as of the record date mentioned
above, and of which the numerator shall be the fair market value of a share of
Common Stock determined as of such record date less the fair market value at
such record date of the portion of such assets or evidence of indebtedness so
distributed applicable to one outstanding share of Common Stock as determined by
the Company's independent certified public accountants that regularly examines
the financial statements of the Company (an "Appraiser").

         (d) For the purposes of this Section 7, the following clauses shall
also be applicable:

             (i)  Record Date. In case the Company shall take a record of the
                  holders of its Common Stock for the purpose of entitling them
                  (A) to receive a dividend or other distribution payable in
                  Common Stock or in securities convertible or exchangeable into
                  shares of Common Stock, or (B) to subscribe for or purchase
                  Common Stock or securities convertible or exchangeable into
                  shares of Common Stock, then such record date shall be deemed
                  to be the date of the issue or sale of the shares of Common
                  Stock deemed to have been issued or sold upon the declaration
                  of such dividend or the making of such other distribution or
                  the date of the granting of such right of subscription or
                  purchase, as the case may be.

             (ii) Treasury Shares. The number of shares of Common Stock
                  outstanding at any given time shall not include shares owned
                  or held by or for the account of the Company, and the
                  disposition of any such shares shall be considered an issue or
                  sale of Common Stock.

                                      -4-

<PAGE>   5

         (e) All calculations under this Section 7 shall be made to the nearest
cent or the nearest 1/100th of a share, as the case may be.

         (f) If:

            (i)   the Company shall declare a dividend (or any other
                  distribution) on its Common Stock; or

            (ii)  the Company shall declare a special nonrecurring cash dividend
                  on or a redemption of its Common Stock; or

            (iii) the Company shall authorize the granting to all holders of the
                  Common Stock rights or warrants to subscribe for or purchase
                  any shares of capital stock of any class or of any rights; or

            (iv)  the approval of any stockholders of the Company shall be
                  required in connection with any reclassification of the Common
                  Stock of the Company, any consolidation or merger to which the
                  Company is a party, any sale or transfer of all or
                  substantially all of the assets of the Company, or any
                  compulsory share exchange whereby the Common Stock is
                  converted into other securities, cash or property; or

            (v)   the Company shall authorize the voluntary dissolution,
                  liquidation or winding up of the affairs of the Company,

then the Company shall cause to be mailed to each Holder at their last addresses
as they shall appear upon the Warrant Register, at least 30 calendar days prior
to the applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution, redemption, rights or warrants, or if a record is not to
be taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distributions, redemption, rights or warrants are to
be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of Common Stock of
record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding up; provided, however, that the failure to mail such notice or any
defect therein or in the mailing thereof shall not affect the validity of the
corporate action required to be specified in such notice.

         8. Payment of Exercise Price. The Holder shall pay the Exercise Price
in immediately available funds by certified check or bank draft payable to the
order of the Company or by wire transfer to an account designated by the
Company.

         9. Fractional Shares. The Company shall not be required to issue or
cause to be issued fractional Warrant Shares on the exercise of this Warrant.
The number of full Warrant Shares which shall be issuable upon the exercise of
this Warrant shall be computed on the basis of the aggregate number of Warrant
Shares purchasable on exercise of this Warrant so presented. If any fraction of
a Warrant Share would, except for the provisions of this Section 9, be issuable
on the exercise of this Warrant, the Company shall pay an amount in cash equal
to the Exercise Price multiplied by such fraction.

                                      -5-

<PAGE>   6

         10. Notices. Any and all notices or other communications or deliveries
hereunder shall be in writing and shall be deemed given and effective on the
earliest of (i) the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Section prior to 5:00 p.m. (California time) on a business day, (ii) the
business day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Section later than 5:00 p.m. (California time) on any date and earlier than
11:59 p.m. (California time) on such date, (iii) the business day following the
date of mailing, if sent by nationally recognized overnight courier service, or
(iv) upon actual receipt by the party to whom such notice is required to be
given. The addresses for such communications shall be: (i) if to the Company, to
157 Technology Drive, Irvine, CA 92618, Attention: Chief Financial Officer, or
to facsimile no. (949) 788-6706, or (ii) if to the Holder, to the Holder at the
address or facsimile number appearing on the Warrant Register or such other
address or facsimile number as the Holder may provide to the Company in
accordance with this Section 10.

         11. Warrant Agent. The Company shall serve as warrant agent under this
Warrant. The Company may appoint a new warrant agent upon notice to the Holder
in accordance with Section 11. Any corporation into which the Company may be
merged or any corporation resulting from any consolidation to which the Company
shall be a party or any corporation to which the Company transfers substantially
all of its corporate assets shall be a successor warrant agent under this
Warrant without any further act. Any such successor warrant agent shall promptly
cause notice of its succession as warrant agent to be mailed (by first class
mail, postage prepaid) to the Holder at the Holder's last address as shown on
the Warrant Register.

         12. Miscellaneous.

             (a) This Warrant shall be binding on and inure to the benefit of
the parties hereto and their respective successors and permitted assigns. This
Warrant may be amended only in writing signed by the Company and the Holder and
their successors and assigns.

             (b) Subject to Section 12(a), above, nothing in this Warrant shall
be construed to give to any person or corporation other than the Company and the
Holder any legal or equitable right, remedy or cause under this Warrant. This
Warrant shall inure to the sole and exclusive benefit of the Company and the
Holder.

             (c) This Warrant shall be governed by and construed and enforced in
accordance with the internal laws of the State of California without regard to
the principles of conflicts of law thereof. The Company and the Holder hereby
irrevocably submit to the exclusive jurisdiction of the state and federal courts
sitting in Orange County, California, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, or that such suit, action or proceeding is
improper. Each of the Company and the Holder hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by receiving a copy thereof sent to the Company at the address in
effect for notices to it under this instrument and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law.

                                      -6-

<PAGE>   7

             (d) The headings herein are for convenience only, do not constitute
a part of this Warrant and shall not be deemed to limit or affect any of the
provisions hereof.

             (e) In case any one or more of the provisions of this Warrant shall
be invalid or unenforceable in any respect, the validity and enforceability of
the remaining terms and provisions of this Warrant shall not in any way be
affected or impaired thereby and the parties will attempt in good faith to agree
upon a valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.

         IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer as of the date first indicated above.

                                            NEOTHERAPEUTICS, INC.

                                            By: /s/ Samuel Gulko
                                                --------------------------------
                                            Name:  Samuel Gulko
                                            Title: Senior Vice President,
                                                   Finance and Chief Financial
                                                   Officer

                                      -7-

<PAGE>   8

                          FORM OF ELECTION TO PURCHASE

(To be executed by the Holder to exercise the right to purchase shares of Common
Stock under the foregoing Warrant)

To NeoTherapeutics, Inc.:

         In accordance with the Warrant enclosed with this Form of Election to
Purchase, the undersigned hereby irrevocably elects to purchase __________
shares of Common Stock ("Common Stock"), $.001 par value per share, of
NeoTherapeutics, Inc. encloses herewith $__________ in cash, certified or
official bank check or checks, which sum represents the aggregate Exercise Price
(as defined in the Warrant) for the number of shares of Common Stock to which
this Form of Election to Purchase relates, together with any applicable taxes
payable by the undersigned pursuant to the Warrant.

         The undersigned requests that certificates for the shares of Common
Stock issuable upon this exercise be issued in the name of

                                             PLEASE INSERT SOCIAL SECURITY OR
                                             TAX IDENTIFICATION NUMBER

                                             -----------------------------------

--------------------------------------------------------------------------------
                         (Please print name and address)

         If the number of shares of Common Stock issuable upon this exercise
shall not be all of the shares of Common Stock which the undersigned is entitled
to purchase in accordance with the enclosed Warrant, the undersigned requests
that a New Warrant (as defined in the Warrant) evidencing the right to purchase
the shares of Common Stock not issuable pursuant to the exercise evidenced
hereby be issued in the name of and delivered to:

--------------------------------------------------------------------------------
                         (Please print name and address)

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

Dated: __________, ____                    Name of Holder:

                                           (Print)______________________________

                                           (By:) _______________________________

                                           (Name:)
                                           (Title:)
                                           (Signature must conform in all
                                           respects to name of holder as
                                           specified on the face of the Warrant)

<PAGE>   9

                               FORM OF ASSIGNMENT

           [To be completed and signed only upon transfer of Warrant]

         FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ____________________ the right represented by the Warrant enclosed with
this Form of Assignment to purchase __________ shares of Common Stock of
NeoTherapeutics, Inc. to which the Warrant relates and appoints
____________________ attorney to transfer said right on the books of
NeoTherapeutics, Inc. with full power of substitution in the premises.

Dated: __________, ____

                                           -------------------------------------
                                           (Signature must conform in all
                                           respects to name of holder as
                                           specified on the face of the Warrant)

                                           -------------------------------------
                                           Address of Transferee

                                           -------------------------------------

                                           -------------------------------------

In the presence of:

--------------------------------------EXHIBIT 10

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EXHIBIT 10.1

CATERPILLAR INC.

1996 STOCK OPTION AND LONG-TERM INCENTIVE PLAN

(Amended and Restated as of 12/31/2000)

 

Section 1. Purpose

The Caterpillar Inc. 1996 Stock Option and Long-Term
Incentive Plan ("Plan") is designed to attract and retain outstanding
individuals as directors, officers and key employees of Caterpillar Inc. and its
subsidiaries (collectively, the "Company"), and to furnish incentives
to such individuals through awards based upon the performance of the Company and
its stock. To this end, the Plan provides for grants of stock options,
restricted stock, and performance awards, or combinations thereof, to
non-employee directors, officers and other key employees of the Company, on the
terms and subject to the conditions set forth in the Plan.

Section 2.
Shares Subject to the Plan

     2.1 Shares Reserved for Issuance

     

 Twenty-four million shares of Company common stock
("Shares") shall be available for issuance under the Plan either from
authorized but unissued Shares or from Shares acquired by the Company, including
Shares purchased in the open market. An additional four million Shares
authorized but unissued under prior Company stock option plans shall be
available for issuance under this Plan.

     2.2 Stock Splits/Stock Dividends

     

In the event of a change in the outstanding Shares of the
Company by reason of a stock dividend, recapitalization, merger, consolidation,
split-up, combination, exchange of shares, or similar event, the Compensation
Committee ("Committee") of the Company's Board of Directors
("Board") shall take any action, which, in its discretion, it deems
necessary to preserve benefits under the Plan, including adjustment to the
aggregate number of Shares reserved for issuance under the Plan, the number and
option price of Shares subject to outstanding options granted under the Plan and
the number and price of Shares subject to other awards under the Plan.

     2.3 Reacquired Shares

     

If Shares issued pursuant to the Plan are not acquired by
participants because of lapse, expiration or termination of an award, such
Shares shall again become available for issuance under the Plan. Shares tendered
upon exercise of an option by a Plan participant may be added back and made
available solely for future grants under the Plan.

1

Section 3. Administration

The Committee shall have the authority to grant awards under
the Plan to officers and other key employees of the Company. Except as limited
by the express provisions of the Plan or by resolutions adopted by the Board,
the Committee also shall have the authority and discretion to interpret the
Plan, to establish and revise rules and regulations relating to the Plan, and to
make any other determinations that it believes necessary or advisable for
administration of the Plan.

The Committee shall be composed solely of members of the
Board that are outside directors, as that term is defined in Section 162(m) of
the Internal Revenue Code. The Committee shall have no authority with respect to
non-employee director awards under the Plan.

Section 4. Stock Options

    4.1 Company Employees

          
(a) Eligibility

The Committee shall determine Company officers and employees
to whom options shall be granted, the timing of such grants, and the number of
shares subject to the option; provided that the maximum number of Shares upon
which options may be granted to any employee in any calendar year shall be
400,000.

     (b) Option Exercise Price

The exercise price of each option shall not be less than 100%
of the fair market value of Shares underlying the option at the time the option
is granted. The fair market value for purposes of determining the exercise price
shall be the mean between the high and low prices at which Shares are traded on
the New York Stock Exchange the day the option is granted. In the event this
method for determining fair market value is not practicable, fair market value
shall be determined by such other reasonable method as the Committee shall
select.

     (c) Option Exercise

Options shall be exercisable in such installments and during
such periods as may be fixed by the Committee at the time of grant. Options that
are not incentive stock options as defined in Section 4.1(f) of the Plan shall
not be exercisable after the expiration of ten years from the date of grant.

Payment of the exercise price shall be made upon exercise of
all or a portion of any option. Such payment shall be in cash or by tendering
Shares having a fair market value equal to 100% of the exercise price. The fair
market value of Shares for this purpose shall be the mean between the high and
low prices at which Shares are traded on the New York Stock Exchange on the date
of exercise. Upon exercise of an option, any applicable taxes the Company is
required to withhold shall be paid to the Company. Shares to be received upon
exercise may be surrendered to satisfy withholding obligations.

2

        (d) Termination of
Employment

The Committee may require a period of continued employment
before an option can be exercised. That period shall not be less than one year,
except that the Committee may permit a shorter period in the event of
termination of employment by retirement or death.

Termination of employment with the Company shall terminate
remaining rights under options then held; provided, however, that an option
grant may provide that if employment terminates after completion of a specific
period, the option may be exercised during a period of time after termination.
That period may not exceed sixty months where termination of employment is
caused by retirement or death or sixty days where termination results from any
other cause. If death occurs after termination of employment but during the
period of time specified, such period may be extended to not more than sixty-six
months after retirement, or thirty-eight months after termination of employment
for any other cause. In the event of termination within two years after a Change
of Control as defined in Section 7.2 of the Plan, options shall be exercisable
for a period of sixty months following the date of termination or for the
maximum term of the option, whichever is shorter. Notwithstanding the foregoing,
the Committee may change the post-termination period of exercisability of an
option provided that change does not extend the original maximum term of the
option.

        (e)
Transferability of Options

           
(i) Except as otherwise permitted in Section 4.1(e)(ii), options shall not be
transferable other than by will or the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined by the Internal
Revenue Code or the Employee Retirement Income Security Act. Options are
exercisable during the holder's lifetime only by the holder, unless the holder
becomes incapacitated or disabled, in which case the option may be exercised by
the holder's authorized representative. A holder may file with the Company a
written designation of beneficiaries with the authority to exercise options in
the event of the holder's death.

           
(ii) Notwithstanding the provisions of Section 4.1(e)(i), and in addition to the
permissible transfers under that provision, options granted to persons at the
level of Vice President and above, as well as directors of this corporation and
persons retired from those positions, may be transferred to any one or more
"Permitted Transferees," as long as those options are not incentive
stock options as defined below and are fully vested. Options granted to
employees below the level of Vice President may be transferred upon prior
approval of the Company's Director of Compensation and Benefits pursuant to
the terms of this section.

           
(iii) For purposes of Section 4.1(e)(ii), the term "Permitted
Transferees" shall mean the members of the group that consists exclusively
of the individual to whom the option is granted, the spouse of the individual to
whom the option is granted, the lineal descendants of the individuals to whom
the option is granted, the spouses of the lineal descendents to whom the 

3

 option
is granted, the lineal descendants of any spouse or former spouse of the
individual to whom the option is granted, the spouses of the lineal descendants
of any spouse or former spouse of the individual to whom the option is granted,
the estate (and any trust that serves a distributive function of an estate) of
the Permitted Transferee, all trusts that an individual who is a Permitted
Transferee can revoke and all trusts, corporations, partnerships, limited
liability companies and other entities in which, directly or indirectly, but for
the exercise of a power of appointment or the death of the survivor of the
individual who are Permitted Transferees. Each owner of an equitable interest is
an individual who is a Permitted Transferee.

        (f) Incentive
Stock Options

Incentive stock options, as defined in Section 422 of the
Internal Revenue Code, may be granted under the Plan. The decision to grant
incentive stock options to particular persons is within the Committee's
discretion. Incentive stock options shall not be exercisable after expiration of
ten years from the date of grant. The amount of incentive stock options vesting
in a particular year cannot exceed $100,000 per option recipient, based on the
fair market value of the options on the date of grant; provided that any portion
of an option that cannot be exercised as an incentive stock option because of
this limitation may be converted by the Committee to another form of option. The
Board may amend the Plan to comply with Section 422 of the Internal Revenue Code
or other applicable laws and to permit options previously granted to be
converted to incentive stock options.

    4.2 Non-Employee Directors

        (a) Terms

Subject to the share ownership requirements, options with a
term of ten years and one day are granted to each non-employee director for
4,000 Shares, effective as of the close of each annual meeting of stockholders
at which an individual is elected a director or following which such individual
continues as a director. Options granted to non-employee directors shall become
exercisable by one-third at the end of each of the three successive one-year
periods since the date of grant. The exercise price of each option shall be 100%
of the fair market value of Shares underlying the option on the date of grant.

        (b) Termination of
Directorship

An option awarded to a non-employee director may be exercised
any time within 60 months of the date the director terminates such status.
In the event of a director's death, the director's authorized representative
may exercise the option within 60 months of the date of death, provided that if
the director dies after cessation of director status, the option is exercisable
within 66 months of such cessation. In no event shall an option awarded to a
non-employee director be exercisable beyond the expiration date of that option.

4

Section 5. Restricted
Stock

    5.1 Company Employees

        
(a) Eligibility

The Committee may determine whether restricted stock shall be
awarded to Company officers and employees, the timing of award, and the
conditions and restrictions imposed on the award.

         (b) Terms

During the restriction period, the recipient shall have a
beneficial interest in the restricted stock and all associated rights and
privileges of a stockholder, including the right to vote and receive dividends,
subject to any restrictions imposed by the Committee at the time of grant.

The following restrictions will be imposed on Shares of
restricted stock until expiration of the restriction period:

               
(i) The recipient shall not be entitled to delivery of the Shares;

               
(ii) None of the Shares issued as restricted stock may be transferred other than
by will or by the laws of descent and distribution; and

               
(iii) Shares issued as restricted stock shall be forfeited if the recipient
terminates employment with the Company, except for termination due to retirement
after a specified age, disability, death or other special circumstances approved
by the Committee.

Shares awarded as restricted stock will be issued subject to
a restriction period set by the Committee of no less than two nor more than ten
years. The Committee, except for restrictions specified in the preceding
paragraphs, shall have the discretion to remove any or all of the restrictions
on a restricted stock award whenever it determines such action appropriate. Upon
expiration of the restriction period, the Shares will be made available to the
recipient, subject to satisfaction of applicable tax withholding requirements.

     5.2 Non-Employee Directors

     

           
(a) On January 1 of each year, 400 Shares of restricted stock shall be granted
to each director who is not currently an employee of the Company. The stock will
be subject to a restriction period of three years from the date of grant. During
the restriction period, the recipient shall have a beneficial interest in the
restricted stock and all associated rights and privileges of a stockholder,
including the right to vote and receive dividends.

5

The following restrictions will be imposed on restricted
stock until expiration of the restricted period:

               
(i) The recipient shall not be entitled to delivery of the Shares;

               
(ii) None of the Shares issued as restricted stock may be transferred other than
by will or by the laws of descent and distribution; and

               
(iii) Shares issued as restricted stock shall be forfeited if the recipient
ceases to serve as a director of the Company, except for termination due to
death, disability, or retirement under the Company's Directors' Retirement
Plan.

Upon expiration of the restriction period, the Shares will be
made available to the recipient, subject to satisfaction of applicable tax
withholding requirements.

           
(b) Each January 1st, 350 shares of restricted stock, in addition to shares
described in Section 5.2(a), shall be awarded to each director who is not
currently and has not been an employee of the Company. Shares awarded under this
Section 5.2(b) will be held in escrow until the director terminates service with
the Company. During the restriction period, the recipient shall have a
beneficial interest in the restricted stock and all associated rights and
privileges of a stockholder except as discussed below.

The following restrictions will be imposed on restricted
stock awarded under this Section 5.2(b) until it is made available to the
recipient:

               
(i) The recipient shall not receive dividends on the shares, but an amount equal
to such dividends will be credited to the director's stock equivalent account
in the Company's Directors' Deferred Compensation Plan;

               
(ii) The recipient shall not be entitled to delivery of the shares;

               
(iii) None of the shares awarded may be transferred other than by will or by the
laws of descent and distribution; and

               
(iv) The right to receive shares shall be subordinate to the claims of general
creditors of the Company.

Upon termination of service, restricted shares will be made
available to the recipient subject to satisfaction of applicable tax withholding
requirements; provided, however, that if the recipient has not served on the
Board for at least five years at the time of such termination, all restricted
shares awarded under this Section 5.2(b) shall be forfeited.

Pursuant to termination of the Company's Directors'
Retirement Plan effective December 31, 1996, each director continuing in office
was awarded an amount of restricted stock equal to the accumulated value of past
pension accruals as determined by the Company's actuary. Those shares will be
subject to the same restrictions as shares awarded annually pursuant to this
Section 5.2(b).

6

Section 6.
Performance Awards

    6.1 Eligibility
and Terms

The Committee may grant awards to officers and other key
employees ("Performance Awards") based upon Company performance over a
period of years ("Performance Period"). The Committee shall have sole
discretion to determine persons eligible to participate, the Performance Period,
Company performance factors applicable to the award ("Performance
Measures"), and the method of Performance Award calculation.

At the time the Committee establishes a Performance Period
for a particular award, it shall also establish Performance Measures and targets
to be attained relative to those measures ("Performance Targets").
Performance Measures may be based on any of the following factors, alone or in
combination, as the Committee deems appropriate: (i) return on assets; (ii)
return on equity; (iii) return on sales; (iv) total shareholder return; (v) cash
flow; (vi) economic value added; and (vii) net earnings. Performance Targets may
include a minimum, maximum and target level of performance with the size of
Performance Awards based on the level attained. Once established, Performance
Targets and Performance Measures shall not be changed during the Performance
Period; provided, however, that the Committee may eliminate or decrease the
amount of a Performance Award otherwise payable to a participant. Upon
completion of a Performance Period, the Committee shall determine the Company's
performance in relation to the Performance Targets for that period and certify
in writing the extent to which Performance Targets were satisfied.

    6.2 Payment of Awards

Performance Awards may be paid in cash, Shares of restricted
stock (pursuant to terms applicable to restricted stock awarded to Company
employees as described in the Plan) or a combination thereof, as determined by
the Committee. Performance Awards shall be made not later than 90 days following
the end of the relevant Performance Period. The fair market value of a
Performance Award payment to any individual employee in any calendar year shall
not exceed $2.5 million. The fair market value of Shares to be awarded shall be
determined by the average of the high and low price of Shares on the New York
Stock Exchange on the last business day of the Performance Period. Federal,
state and local taxes will be withheld as appropriate.

    6.3 Termination

To receive a Performance Award, the participant must be
employed by the Company on the last day of the Performance Period. If a
participant terminates employment during the Performance Period by reason of
death, disability or retirement, a payout based on the time of employment during
the Performance Period shall be distributed. Participants employed on the last
day of the Performance Period, but not for the entire Performance Period, shall
receive a payout prorated for that part of the Performance Period for which they
were participants. If the participant is deceased at the time of Performance
Award payment, the payment shall be made to the recipient's designated
representative.

7

Section
7. Election to Receive Non-Employee Director Fees in Shares

Effective April 8, 1998, non-employee directors shall have
the option of receiving all or a portion of their annual retainer fees, as well
as fees for attendance at meetings of the Board and committees of the Board
(including any Committee Chairman stipend), in the form of Shares.

The number of Shares that may be issued pursuant to such
election shall be based on the amount of cash compensation subject to the
election divided by the fair market value of one Share on the date such cash
compensation is payable. The fair market value shall be the mean between the
high and low prices at which shares are traded on the New York Stock Exchange on
payable date.

Shares provided pursuant to the election shall be held in
book-entry form by the Company on behalf of the non-employee director. Upon
request, the Company shall deliver Shares so held to the non-employee director.
While held in book-entry form, the Shares shall have all associated rights and
privileges, including voting rights and the right to receive dividends.

Section 8. Change of
Control

    8.1 Effect on Grants and Awards

Unless the Committee shall otherwise expressly provide in the
agreement relating to a grant or award under the Plan, upon the occurrence of a
Change of Control as defined below: (i) all options then outstanding under the
Plan shall become fully exercisable as of the date of the Change of Control;
(ii) all terms and conditions of restricted stock awards then outstanding shall
be deemed satisfied as of the date of the Change of Control; and (iii) all
Performance Awards for a Performance Period not completed at the time of the
Change of Control shall be payable in an amount equal to the product of the
maximum award opportunity for the Performance Award and a fraction, the
numerator of which is the number of months that have elapsed since the beginning
of the Performance Period through the later of (A) the date of the Change of
Control or (B) the date the participant terminates employment, and the
denominator of which is the total number of months in the Performance Period;
provided, however, that if this Plan shall remain in force after a Change of
Control, a Performance Period is completed during that time, and the participant's
employment has not terminated, this provision (iii) shall not apply.

    8.2 Change of Control Defined
For purposes of the Plan, a "Change of Control" shall be deemed to
have occurred if:

           
(a) Any person becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing 15 percent or more of the combined voting power of the
Company's then outstanding common stock, unless the Board by resolution
negates the effect of this provision in a particular circumstance, deeming that
resolution to be in the best interests of Company stockholders;

8

           
(b) During any period of two consecutive years, there shall cease to be a
majority of the Board comprised of individuals who at the beginning of such
period constituted the Board;

           
(c) The shareholders of the Company approve a merger or consolidation which
would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) less than fifty
percent of the combined voting power of the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation; or

           
(d) Company shareholders approve a plan of complete liquidation of the Company
or an agreement for the sale or disposition by the Company of all or
substantially all of its assets.

Section 9.
Amendment and Termination

The Board may terminate the Plan at any time, except with
respect to grants and awards then outstanding. The Board may amend the Plan
without shareholder approval, unless such approval is necessary to comply with
applicable laws, including provisions of the Exchange Act or Internal Revenue
Code.

Section 10.
Regulatory Compliance

Notwithstanding any other provision of the Plan, the issuance
or delivery of any Shares may be postponed for such period as may be required to
comply with any applicable requirements of any national securities exchange or
any requirements under any other law or regulation applicable to the issuance or
delivery of such Shares. The Company shall not be obligated to issue or deliver
any Shares if such issuance or delivery shall constitute a violation of any
provision of any law or regulation of any governmental authority or national
securities exchange.

Section 11. Effective
Date

The Plan shall be effective upon its approval by the Company's
stockholders at the 1996 Annual Meeting of Stockholders.

9

Links:

Section 1. Purpose

Section 2. Shares Subject to the Plan

Section 3. Administration

Section 4. Stock Options

Section 5. Restricted Stock

Section 6. Performance Awards

Section 7. Election to Receive Non-Employee Director Fees in Shares

Section 8. Change of Control

Section 9. Amendment and Termination

Section 10. Regulatory Compliance

Section 11. Effective Date

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