Document:

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                                                                   EXHIBIT 10.20

AMENDMENT NO. 5 TO AND LIMITED WAIVER OF CERTAIN PROVISIONS OF CREDIT AGREEMENT

          This AMENDMENT NO. 5 TO AND LIMITED WAIVER OF CERTAIN PROVISIONS OF
CREDIT AGREEMENT (this "Amendment and Waiver") is made and entered into as of
July 30, 2001, by and among HUDSON RESPIRATORY CARE INC., a California
corporation (the "Borrower"), RIVER HOLDING CORP., a Delaware corporation
("Holding") and the Required Lenders (as defined in Article I of the Credit
Agreement).

                                    RECITALS

          A.  The Borrower, Holding, the Lenders (as defined in Article I of the
Credit Agreement), Salomon Brothers Inc., as Arranger, Advisor and Syndication
Agent, and Bankers Trust Company, as Administrative Agent and Collateral Agent,
entered into a Credit Agreement dated as of April 7, 1998 (as amended and
otherwise modified to the date hereof, the "Credit Agreement").  Capitalized
terms used herein and not otherwise defined shall have the meanings assigned to
them in the Credit Agreement.

          B.  The Borrower requested certain changes to the Credit Agreement and
the waiver of certain provisions of the Credit Agreement.

          C.  The Required Lenders are willing to so amend the Credit Agreement
and waive certain provisions thereof on the terms and conditions set forth
herein.

          D.  The Borrower, Holding and the Required Lenders are entering this
Amendment and Waiver pursuant to Section 9.08(b) of the Credit Agreement.

                                   AGREEMENTS

          In consideration of the foregoing Recitals, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrower, Holding and the Required Lenders agree as follows:

          1.  Definitions.

          (a) The definition of "Consolidated Interest Expense" is amended in
its entirety to read as follows:

          "'Consolidated Interest Expense' means, for any period, the total
          interest expense of the Borrower and its consolidated Restricted
          Subsidiaries, other than any non-cash interest expense with respect to
          the FS Convertible Senior Subordinated Debt, plus, to the extent not
          included in such total interest expense, and to the extent Incurred by
          the Borrower or its Restricted Subsidiaries, (a) interest expense
          attributable to capital leases, (b) amortization of Indebtedness
          discount and debt issuance cost, including commitment fees, (c)
          capitalized interest, (d) non-cash
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          interest expenses other than any non-cash interest expense with
          respect to the FS Convertible Senior Subordinated Debt, (e)
          commissions, discounts and other fees and charges owed with respect to
          letters of credit and bankers' acceptance financing, (f) net costs
          associated with Hedging Obligations (including amortization of fees),
          (g) dividends and other distributions on Disqualified Stock, (h)
          Preferred Stock dividends in respect of all Preferred Stock of
          Restricted Subsidiaries held by persons other than the Borrower or a
          wholly owned Subsidiary (to the extent paid in cash), (i) interest
          Incurred in connection with Investments in discontinued operations,
          (j) interest accruing on any Indebtedness of any other person to the
          extent such Indebtedness is Guaranteed by the Borrower or any
          Restricted Subsidiary and (k) the cash contributions to any employee
          stock ownership plan or similar trust to the extent such contributions
          are used by such plan or trust to pay interest or fees to any person
          (other than the Borrower) in connection with Indebtedness Incurred by
          such plan or trust."

          (b) The definition of "Debt/Adjusted EBITDA Ratio" is amended in its
entirety to read as follows:

          "'Debt/Adjusted EBITDA Ratio' means, as of any date with respect to
          the Borrower and its consolidated Restricted Subsidiaries, (a) the
          total amount of Debt of the Borrower and its consolidated Restricted
          Subsidiaries, excluding any FS Convertible Senior Subordinated Debt,
          as of such date to (b) Adjusted EBITDA of the Borrower and its
          consolidated Subsidiaries for the period of four fiscal quarters most
          recently ended for which financial statements are available."

          (c) The first sentence of the definition of "EBITDA" is amended in its
entirety to read as follows:

          "'EBITDA' means, for any period, an amount equal to, for the Borrower
          and its consolidated Restricted Subsidiaries, (a) the sum of
          Consolidated Net Income for such period, plus the following to the
          extent reducing Consolidated Net Income for such period:  (i) the
          provision for taxes based on income or profits or utilized in
          computing net loss, (ii) Consolidated Interest Expense plus any
          noncash interest expense with respect to the FS Convertible Senior
          Subordinated Debt, (iii) depreciation, (iv) amortization, (v) any
          other non-cash items (other than any such non-cash item to the extent
          that it represents an accrual of or reserve for cash expenditures in
          any future period), minus (b) all non-cash items increasing
          Consolidated Net Income for such period (other than any such non-cash
          item to the extent that it will result in the receipt of cash payments
          in any future period)."

          (d) The definition of "Equity Issuance" is amended in its entirety to
read as follows:

          "'Equity Issuance' means the issuance by Holding or the Borrower of
          any equity interests therein, or the issuance or sale by Holding or
          the Borrower of any instrument or obligation convertible into or
          exchangeable for, or giving any person any right, option or warrant to
          acquire from Holding or the Borrower any

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          equity interests therein or any such convertible or exchangeable
          instrument or obligation, but excluding (i) the Excluded Shares, (ii)
          the issuance of shares of the Borrower to Holding pursuant to the
          Gibeck AB Acquisition, (iii) the issuance of shares by Holding
          pursuant to the Gibeck AB Acquisition, (iv) the Additional Equity, if
          any, and (v) any shares issued by the Borrower to any of its
          shareholders in exchange for the proceeds of the Additional Equity or
          the FS Convertible Senior Subordinated Debt."

          (e) The definition of "Excluded Shares" is amended in its entirety to
read as follows:

          "'Excluded Shares' means Capital Stock of Holding, issued to an
          employee of Holding, the Borrower or any Subsidiary of the Borrower
          pursuant to any stock option, stock purchase, stock incentive or other
          similar plan of Holding, the Borrower or any Subsidiary of the
          Borrower established for the benefit of their employees (collectively,
          an "Employee Stock Issuance"), or any Capital Stock of the Borrower
          issued to Holding in consideration of the contribution by Holding to
          Borrower of the cash proceeds of any such Employee Stock Issuance."

          (f) The definition of "Permitted Acquisition" is amended by replacing
the figure "$45,000,000" in clause (e)(ii)(A) thereof with the figure
"$40,000,000" and by adding the following proviso at the end thereof:

          "; provided that notwithstanding anything in this Agreement to the
          contrary, without the prior written consent of Required Lenders, no
          Asset Acquisitions or Stock Acquisitions shall be permitted on and
          after the Fifth Amendment Effective Date."

          (g) the definition of "Pricing Adjustment" is amended by deleting the
"and" at the end of clause (ii) thereof and by adding the following prior to the
period at the end of clause (iii) thereof:

          "; and

          (iv) the Pricing Adjustment shall be 0% during the period from the
          Fifth Amendment Effective Date through June 30, 2002."

          (h) The definition of "Revolving Credit Maturity Date" is amended in
its entirety to read as follows:

          "'Revolving Credit Maturity Date' means June 30, 2003."

          (i) The definition of "Subordinated Obligations" is amended by adding
the phrase "including, but not limited to the FS Convertible Senior Subordinated
Debt" at the end thereof.

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          (j) The definition of "Term Loan Maturity Date" is amended in its
entirety to read as follows:

          "'Term Loan Maturity Date' means June 30, 2003."

          (k) The following definitions are inserted in Section 1.01 of the
Credit Agreement in alphabetical order:

          "'Acquisition Loans' has the meaning set forth in Section 3.13(e)(1).

          'Additional Equity' means (a) Capital Stock of Holding or the Borrower
          issued in exchange for up to $18,000,000 in cash proceeds paid by
          Freeman Spogli, an Affiliate of Freeman Spogli, management of Holding
          and/or the Borrower and other existing shareholders of Holding and/or
          the Borrower so long as such cash proceeds are either contributed to
          the Borrower or used to purchase Capital Stock of the Borrower on or
          prior to the Fifth Amendment Effective Date plus (b) any Capital Stock
          of Holding or the Borrower issued upon conversion of the FS
          Convertible Senior Subordinated Debt which Capital Stock, to the
          extent constituting Capital Stock of the Borrower, shall be pledged to
          the Administrative Agent pursuant to a non-recourse Pledge Agreement,
          satisfactory in form and substance to Administrative Agent, by the
          holders thereof.

          'Fifth Amendment' means that certain Amendment No. 5 and Limited
          Waiver to this Agreement dated as of July 30, 2001.

          'Fifth Amendment Effective Date' means the date on which the Fifth
          Amendment becomes effective pursuant to paragraph 22 thereof.

          'FS Convertible Senior Subordinated Debt' means up to $15,000,000 in
          aggregate principal amount of unsecured convertible senior
          subordinated notes of the Borrower owing to an Affiliate of Freeman
          Spogli, Freeman Spogli, management of Holding and/or the Borrower
          and/or other existing shareholders of Holding or the Borrower (which
          may include up to $6,500,000 in FS Convertible Senior Subordinated
          Debt issued in April and May 2001 and Indebtedness outstanding
          pursuant to Section 6.01(j) hereof), and any unsecured convertible
          senior subordinated notes issued in lieu of cash interest thereon, as
          the same may be amended, supplemented or otherwise modified from time
          to time in accordance with the terms hereof and thereof; provided that
          (1) interest shall not be payable in cash on such notes but shall be
          either accrued and compounded or shall be payable by the issuance of
          additional unsecured convertible senior subordinated notes to the
          extent such issuance is in compliance with the requirements of any
          indenture governing Subordinated Obligations of the Borrower or any
          Subsidiary; (2) such notes shall not mature earlier than March 31,
          2005 and shall have no scheduled amortization or sinking fund payments
          payable thereon; and (3) payments on or with respect to such notes
          shall be subordinated on terms and conditions substantially in the
          form attached as Annex A to the Fifth Amendment.

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          'Independent Consultant' means a consultant not affiliated with any
          Credit Party or any Lender.

          'Working Capital Loans' has the meaning set forth in Section
          3.13(e)(2)."

          2.    Commitments.  The second sentence in Section 2.01 shall be
amended in its entirety to read as follows:

          "Within the limits set forth in clause (b) of the preceding sentence
          and subject to the terms, conditions and limitations set forth herein,
          the Borrower may borrow, pay or prepay and reborrow Revolving Loans;
          provided however that on and after the Fifth Amendment Effective Date,
          --------
          Borrower may not borrow or reborrow Acquisition Loans (as defined in
          Section 3.13(e)(1))."

          3.    Fees.  Section 2.05 is amended by adding the following
subsections immediately after subsection (d) thereof:

          "(e)  The Borrower agrees to pay to each Lender, through the
          Administrative Agent, on July 1, 2002, a fee equal to 0.075% of the
          sum of such Lender's Revolving Credit Commitment and outstanding Term
          Loans as of such date.

          (f)   If the compliance certificate filed by the Borrower with respect
          to the fiscal period ended June 30, 2002 sets forth a Debt/Adjusted
          EBITDA Ratio in excess of 4.90:1.00, or if such compliance certificate
          is not filed by the deadline set forth in Section 5.04(b), the
          Borrower agrees to immediately pay each Lender, through the
          Administrative Agent, a fee equal to 0.025% of the sum of such
          Lender's Revolving Credit Commitment and outstanding Term Loans as of
          such deadline."

          4.    Interest on Loans.

          (a)   Section 2.06(a) is amended in its entirety to read as follows:

          "(a)  Subject to the provisions of Section 2.07, the Loans comprising
          each ABR Borrowing, including each Swingline Loan, shall bear interest
          (computed on the basis of the actual number of days elapsed over a
          year of 365 or 366 days, as the case may be, when the Alternate Base
          Rate is determined by reference to the Prime Rate and over a year of
          360 days at all other times) at a rate per annum equal to the
          Alternate Base Rate plus

                (i)  from the Fifth Amendment Effective Date through June 30,
                2002, 3.00% less the applicable Pricing Adjustment in the case
                of Term Loans and Working Capital Loans and 3.25% less the
                applicable Pricing Adjustment in the case of Acquisition Loans;

                (ii) from July 1, 2002 through March 31, 2003, 3.50% less the
                applicable Pricing Adjustment in the case of Term Loans and
                Working

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                Capital Loans and 3.75% less the applicable Pricing Adjustment
                in the case of Acquisition Loans; and

                (iii) from April 1, 2003, 4.00% less the applicable Pricing
                Adjustment in the case of Term Loans and Working Capital Loans
                and 4.25% less the Applicable Pricing Adjustment in the case of
                Acquisition Loans."

          (b)   Section 2.06(b) is amended in its entirety to read as follows:

          "(b)  Subject to the provisions of Section 2.07, the Loans comprising
          each Eurodollar Borrowing shall bear interest (computed on the basis
          of the actual number of days elapsed over a year of 360 days) at a
          rate per annum equal to the Adjusted Eurodollar Rate for the Interest
          Period in effect for such Borrowing plus

                (i)   from the Fifth Amendment Effective Date through June 30,
                2002, 4.00% less the applicable Pricing Adjustment in the case
                of Term Loans and Working Capital Loans and 4.25% less the
                applicable Pricing Adjustment in the case of Acquisition Loans;

                (ii)  from July 1, 2002 through March 31, 2003, 4.50% less the
                applicable Pricing Adjustment in the case of Term Loans and
                Working Capital Loans and 4.75% less the applicable Pricing
                Adjustment in the case of Acquisition Loans; and

                (iii) from April 1, 2003, 5.00% less the applicable Pricing
                Adjustment in the case of Term Loans and Working Capital Loans
                and 5.25% less the Applicable Pricing Adjustment in the case of
                Acquisition Loans."

          5.    Default Interest. Section 2.07 is hereby amended in its entirety
as follows:

          "Upon the occurrence and during the continuation of any Event of
          Default, the Borrower shall on demand from time to time pay interest,
          to the extent permitted by law, on the outstanding principal amount of
          all Loans, any interest payments thereon not paid when due and any
          fees and other amounts then due and payable hereunder on such Loans at
          the rate otherwise applicable to such Loan pursuant to Section 2.06
          without making the applicable Pricing Adjustment plus 2.00% per
          annum."

          6.    Termination and Reduction of Commitments.  Section 2.09(b) is
hereby amended by adding at the end thereof the following:

          "The Borrower in making any voluntary reduction of the Revolving
          Credit Commitments may designate whether such reduction applies to the
          Revolving Credit Commitments available with respect to Acquisition
          Loans pursuant to Section 3.13(e)(1) hereof, or to the Revolving
          Credit Commitments available with respect to Working Capital Loans
          pursuant to Section 3.13(e)(2) hereof."

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          7.  Repayment of Term Borrowings.  Section 2.11(a) is hereby amended
by deleting the figure "$3,000,000" each place it appears and by inserting in
lieu thereof in the table for June 30, 2003, the figure "$12,000,000".

          8.  Mandatory Prepayments.

          (a) Section 2.13(a) is amended to add at the end thereof the
following:

          "In the event that, as of any date of determination, the sum of (x)
          cash on hand plus (y) Permitted Investments exceeds $5,000,000 for a
          period of greater than 30 consecutive days, in each case as determined
          for Borrower and its Restricted Subsidiaries on a consolidated basis
          (the amount of such excess being hereinafter referred to as the
          `Excess Liquidity'), Borrower shall repay or prepay its Swingline
          Loans and its Revolving Credit Borrowings by an amount equal to such
          Excess Liquidity, such Excess Liquidity being applied to repay or
          prepay first Swingline Loans to the full extent thereof, second
          Working Capital Loans and third Acquisition Loans, in the case of
          Swingline Loans and Working Capital Loans without any related
          reduction in the Revolving Credit Commitment."

          (b) Section 2.13(c) is amended in its entirety to read as follows:

              "(c)  In the event and on each occasion that

              (i)  an Equity Issuance occurs as part of an initial public
          offering of the Capital Stock of the Borrower or Holding, the Borrower
          shall, substantially simultaneously with (and in any event not later
          than the third Business Day next following) the occurrence of such
          Equity Issuance, apply Net Cash Proceeds therefrom in an amount equal
          to 50% of the net cash proceeds of the Capital Stock sold in such
          initial public offering (whether or not all such Capital Stock is
          offered by the Borrower or Holding) to prepay outstanding Term Loans
          and/or reduce the Revolving Credit Commitment in accordance with
          Section 2.13(g); provided, however, that the remaining portion of such
          Net Cash Proceeds shall be applied either (A) pursuant to Section
          6.05(a)(iii) for the redemption of Exchangeable Preferred Stock
          (including accreted PIK liquidation preference) or (B) to prepay
          outstanding Term Loans and/or reduce the Revolving Credit Commitment
          in accordance with Section 2.13(g); and

              (ii) an Equity Issuance occurs other than as part of an initial
          public offering of the Capital Stock of the Borrower or Holding, the
          Borrower shall, substantially simultaneously with (and in any event
          not later than the third Business Day next following) the occurrence
          of such Equity Issuance, apply 100% of the Net Cash Proceeds therefrom
          to prepay outstanding Term Loans and/or reduce the Revolving Credit
          Commitment in accordance with Section 2.13(g)."

          9.  Use of Proceeds.  Section 3.13(e) is amended in its entirety to
read as follows:

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          "(e)  Notwithstanding anything in this Agreement to the contrary, but
          subject to Section 2.01(b) on and after the Fifth Amendment Effective
          Date, (1) not more than $40,000,000 of the Aggregate Revolving Credit
          Exposure outstanding at any time shall have been used by the Borrower
          for purposes of Permitted Acquisitions pursuant to Section 6.04(c)
          (the "Acquisition Loans"), (2) not more than $15,000,000 of the
          Aggregate Revolving Credit Exposure outstanding at any time may be
          used by the Borrower for any corporate purpose other than Permitted
          Acquisitions (the "Working Capital Loans"), and (3) no further
          Acquisition Loans will be made to the Borrower."

          10.   Maintaining Records; Access to Properties and Inspections.
          Section 5.07 is amended by adding the following subsection (c) at the
          end thereof:

          "(c)  Following an Event of Default resulting from a failure of the
          Borrower to comply with Section 6.09, 6.10, 6.11 or 6.12 hereof and
          upon the request of the Administrative Agent, each Credit Party will,
          and will cause its subsidiaries to, cooperate with an Independent
          Consultant hired on behalf of the Lenders to conduct such examinations
          and inquiries with respect to the business, operations and prospects
          of Borrower and its subsidiaries as may be requested by the
          Administrative Agent in its discretion, the results of such
          examinations and inquiries to be reported to the Lenders; provided
          that such Independent Consultant shall be selected by the Borrower
          from a list of three such Independent Consultants selected by the
          Administrative Agent and that all costs and expenses of such
          Independent Consultant shall be paid by the Borrower."

          11.   Indebtedness. Section 6.01 is amended in its entirety to read as
          follows:

          "SECTION 6.01  Indebtedness.  The Borrower will not, and will not
          permit any Restricted Subsidiary to, incur, create, assume or permit
          to exist any Indebtedness, except:

          (a)   Indebtedness for borrowed money existing on the date hereof and
          set forth in Schedule 6.01(a); provided, however, that such
          Indebtedness shall be repaid concurrently with the incurrence of the
          Borrowing of the Initial Credit Event hereunder ("Indebtedness to be
          Paid");

          (b)   Indebtedness represented by the Notes and by the other Credit
          Documents;

          (c)   Indebtedness under the Senior Subordinated Notes (as the same
          may be amended from time to time, without increasing the committed
          amount thereunder, except as otherwise permitted by this Section) and
          any Refinancing Indebtedness of the Borrower with respect thereto in
          an aggregate principal amount on the date of Incurrence that, when
          added to all other Indebtedness Incurred pursuant to this clause and
          then outstanding, shall not exceed the sum of the then outstanding
          Indebtedness under the Senior Subordinated Notes;

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          (d)   Indebtedness (i) of the Borrower to any wholly owned Restricted
          Subsidiary or to any Guarantor and (ii) of any Restricted Subsidiary
          to the Borrower or any wholly owned Restricted Subsidiary;

          (e)   Indebtedness represented by the Guarantees of Indebtedness
          Incurred pursuant to clause (c) (provided, that any Guarantee with
          respect to the Senior Subordinated Notes will be subordinated to the
          same extent as the Senior Subordinated Notes) or clause (d);

          (f)   Indebtedness relating to Capital Lease Obligations,
          Sale/Leaseback Transactions and Permitted Purchase Money Liens;
          provided, that

                (i)   with respect to Capital Lease Obligations, Indebtedness
                relating to Purchase Money Liens and Unrestricted Sale/Leaseback
                Transactions, either (A) the Incurrence of such Indebtedness
                relating to Capital Expenditures, Unrestricted Sale/Leaseback
                Transactions and Permitted Purchase Money Liens would be
                permitted pursuant to Section 6.08 in the fiscal year in which
                it is Incurred, or (B) the aggregate principal amount of such
                Indebtedness does not exceed $10,000,000 at any one time; and

                (ii)  with respect to Restricted Sale/Leaseback Transactions, if
                the Net Cash Proceeds thereof are applied in accordance with
                Section 2.13(b).

          (g)   Indebtedness under Hedging Obligations; provided, however, that
          such Hedging Obligations are entered into for bona fide hedging
          purposes of the Borrower or its Restricted Subsidiaries (as determined
          in good faith by the Board of Directors or senior management of the
          Borrower) and correspond in terms of notional amount, duration,
          currencies and interest rates, as applicable, to Indebtedness of the
          Borrower or its Restricted Subsidiaries Incurred without violation of
          this Agreement or to business transactions of the Borrower or its
          Restricted Subsidiaries on customary terms entered into in the
          ordinary course of business;

          (h)   Indebtedness represented by Guarantees constituting Investments
          permitted by Section 6.03(c)(iii)(B);

          (i)   The FS Convertible Senior Subordinated Debt; and

          (j)   Indebtedness in an aggregate principal amount which, together
          with all other Indebtedness of the Borrower and the Restricted
          Subsidiaries outstanding on the date of such Incurrence (other than
          Indebtedness permitted by clauses (a) through (g) and clause (i)) does
          not exceed $5,000,000 at any one time outstanding;

          provided that notwithstanding anything in this Agreement to the
          contrary, the sum of the aggregate outstanding principal amount of all
          Indebtedness permitted under clauses (i) and (j) of this Section 6.01
          shall not exceed $15,000,000."

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          12.   Mergers, Consolidations, Sales of Assets and Acquisitions.
Section 6.04(c) is amended to read in its entirety as follows:

          "(c)  The Borrower will not, and will not permit any Restricted
          Subsidiary to, purchase, lease, or otherwise acquire (in one
          transaction or a series of transactions) any Assets or capital stock
          (or other equity interests) of any person other than as permitted
          pursuant to Section 6.03 (provided that Investments pursuant to
          Section 6.03(d) shall be limited to Restricted Subsidiaries existing
          as of the Fifth Amendment Effective Date), Section 6.08 and, with the
          consent of Required Lenders, Permitted Acquisitions."

          13.   Dividends and Distributions; Restrictions on Ability of
Subsidiaries to Pay Dividends.  Section 6.05(a) is amended by amending the text
preceding the first proviso contained in clause (a) thereof in its entirety to
read as follows:

          "(a)  Directly or indirectly, declare or pay any dividend or make any
          distribution (whether in cash, securities or other Property) on or
          with respect to the Capital Stock of the Borrower or any Restricted
          Subsidiary (including any payment in connection with any merger or
          consolidation with or into the Borrower or any Restricted Subsidiary)
          except for any dividends or distributions payable solely in its
          Capital Stock (other than Disqualified Stock) and except any dividend
          or distribution which is made to the Borrower or a wholly owned
          Restricted Subsidiary (provided that such Restricted Subsidiary is a
          Wholly Owned Subsidiary), or any dividend or distribution payable
          solely in shares of Capital Stock (other than Redeemable Stock) of the
          Borrower, purchase, repurchase, redeem, retire or otherwise acquire
          for value any Capital Stock of the Borrower or any Affiliate of the
          Borrower held by persons other than the Borrower or a Restricted
          Subsidiary or any Securities exchangeable for or convertible into any
          such Capital Stock (other than for or into Capital Stock of the
          Borrower that is not Disqualified Stock),  purchase, repurchase,
          redeem, defease or otherwise acquire or retire for value, prior to
          scheduled maturity, scheduled repayment or scheduled sinking fund
          payment any Subordinated Obligations (other than the purchase,
          repurchase or other acquisition of Subordinated Obligations purchased
          in anticipation of satisfying a sinking fund obligation, principal
          installment or final maturity, in each case due within one year of the
          date of acquisition, or the refinancing of any Subordinated
          Obligations with Refinancing Indebtedness), or make any Investment
          (other than pursuant to Section 6.03) in any person or to pay cash
          interest on the FS Convertible Senior Subordinated Debt (any such
          dividend, distribution, purchase, redemption, repurchase, defeasance,
          other acquisition, retirement, Investment or payment being herein
          referred to as a "Restricted Payment");"

and by deleting the "or" at the end of clause (a)(vii)(B) thereof and inserting
the following prior to the period at the end of clause (b) thereof:

          "or

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          (c)  Make any interest payment, or permit its subsidiaries to make any
          interest payment on any Subordinated Obligations with the proceeds, in
          whole or in part, of Loans if at any time during the five Business Day
          period preceding the borrowing of such Loans, the outstanding
          aggregate Revolving Credit Exposure used by the Borrower for any
          purpose other than Permitted Acquisitions exceeds $8,000,000, unless
          the Administrative Agent has consented in writing to such payment."

          14.  Capital Expenditures.  Section 6.08 is amended to add the
following proviso at the end of the first sentence thereof:

          "; provided further that during the four fiscal quarter period,
             --------
          commencing with the fourth fiscal quarter in fiscal year 2000 and
          through the third fiscal quarter in fiscal year 2001, the Borrower may
          exclude up to $750,000 in the aggregate in Capital Expenditures."

          15.  Debt/Adjusted EBITDA Ratio.  Section 6.09 is amended in its
entirety to read as follows:

          "SECTION 6.09.  Debt/Adjusted EBITDA Ratio.  The Debt/Adjusted EBITDA
          Ratio shall not exceed the following amounts as of the ends of the
          fiscal quarters of the Borrower ending nearest to the following dates:

<TABLE>
<CAPTION>
 Fiscal Quarter
Ending Nearest to                                     Debt/Adjusted EBITDA Ratio
--------------------------------------------------------------------------------------------------------------
                             1998         1999         2000         2001         2002         2003     2004
--------------------------------------------------------------------------------------------------------------
<S>                        <C>          <C>          <C>          <C>          <C>          <C>        <C>
March 31                                6.40:1.00    5.60:1.00      N/A        6.35:1.00    4.20:1.00
--------------------------------------------------------------------------------------------------------------
June 30                    6.75:1:00    6.40:1.00    6.00:1.00      N/A        5.55:1.00    4.10:1.00
--------------------------------------------------------------------------------------------------------------
September 30               6.75:1.00    6.20:1.00    5.50:1.00    8.75:1.00    4.60:1.00
--------------------------------------------------------------------------------------------------------------
December 31                6.40:1.00    6.00:1.00    6.90:1.00    6.35:1.00    4.40:1.00
--------------------------------------------------------------------------------------------------------------
</TABLE>

          ; provided that

          (i)  for the period of four fiscal quarters ending nearest to
          September 30, 2001, the Debt/Adjusted EBITDA Ratio shall be calculated
          by dividing (a) the Debt of the Borrower and its Restricted
          Subsidiaries as of the last day of such period by (b) 2 times Adjusted
          EBITDA for the two fiscal quarters ended nearest to September 30,
          2001; and

          (ii) for the period of four fiscal quarters ending nearest to December
          31, 2001, the Debt/Adjusted EBITDA Ratio shall be calculated by
          dividing (a) the Debt of the Borrower and its Restricted Subsidiaries
          as of the last day of such period by

                                       11
<PAGE>

          (b) 1.33 times Adjusted EBITDA for the three fiscal quarters ended
          nearest to December 31, 2001."

          16.  Minimum EBITDA.  Section 6.10 is amended to read in its entirety
as follows:

          "SECTION 6.10.  Minimum EBITDA.  The Borrower's EBITDA for the four
          fiscal quarters ending nearest to the following dates shall not be
          less than the following amounts:

<TABLE>
<CAPTION>
  Fiscal Quarter
 Ending Nearest to                                        Minimum EBITDA
----------------------------------------------------------------------------------------------------
<S>                     <C>          <C>          <C>          <C>          <C>          <C>
                               1998         1999         2000         2001         2002         2003
----------------------------------------------------------------------------------------------------
March 31                             $24,000,000  $26,500,000          N/A  $29,000,000  $37,500,000
----------------------------------------------------------------------------------------------------
June 30                              $24,000,000  $27,500,000  $ 2,750,000  $33,000,000  $38,000,000
----------------------------------------------------------------------------------------------------
September 30                         $24,500,000  $28,000,000  $11,000,000  $36,000,000
----------------------------------------------------------------------------------------------------
December 31             $24,000,000  $25,000,000  $24,000,000  $22,500,000  $37,000,000
----------------------------------------------------------------------------------------------------
</TABLE>

          ; provided that

          (i)    for the period of four quarters ending nearest to June 30,
          2001, minimum EBITDA shall be calculated for the one fiscal quarter
          ended nearest to June 30, 2001 only;

          (ii)   for the period of four quarters ending nearest to September 30,
          2001, minimum EBITDA shall be calculated for the two fiscal quarters
          ended nearest to September 30, 2001 only; and

          (iii)  for the period of four quarters ending nearest to December 31,
          2001, minimum EBITDA shall be calculated for the three fiscal quarters
          ended nearest to December 31, 2001 only."

          17.    Interest Coverage Ratio. Section 6.11(d) is amended in its
entirety as follows:

          "(d)   The ratio of EBITDA to Consolidated Interest Expense for the
          period of four fiscal quarters ending nearest to each of the following
          dates, shall not be less than the following ratios:

                                       12
<PAGE>

<TABLE>
<CAPTION>

  Fiscal Quarter
Ending Nearest to                      Consolidated Interest Coverage Ratio
--------------------------------------------------------------------------------------
<S>                     <C>        <C>        <C>        <C>        <C>        <C>
                             1999       2000       2001       2002       2003     2004
--------------------------------------------------------------------------------------
March 31                1.55:1.00  1.80:1.00        N/A  1.60:1.00  2.35:1:00
--------------------------------------------------------------------------------------
June 30                 1.55:1.00  1.70:1.00        N/A  1.80:1.00  2.40:1:00
--------------------------------------------------------------------------------------
September 30            1.65:1.00  1.70:1.00  1.20:1.00  2.15:1.00
--------------------------------------------------------------------------------------
December 31             1.65:1.00  1.25:1.00  1.60:1.00  2.25:1.00
--------------------------------------------------------------------------------------
</TABLE>

          ; provided that

          (i)  for the period of four fiscal quarters ending nearest to
          September 30, 2001, the Consolidated Interest Coverage Ratio shall be
          calculated for the two fiscal quarters ended nearest to September 30,
          2001 only; and

          (ii) for the period of four fiscal quarters ending nearest to December
          31, 2001, the Consolidated Interest Coverage Ratio shall be calculated
          for the three fiscal quarters ended nearest to December 31, 2001
          only."

          18.  Fixed Charge Coverage Ratio.  Section 6.12 is amended in its
entirety as follows:

          "SECTION 6.12  Fixed Charge Coverage Ratio.  The Fixed Charge Coverage
          Ratio as of the end of the period of four fiscal quarters ending
          nearest to the following dates shall not be less than the following
          ratios, beginning with the fiscal quarter ending nearest to March 31,
          1999:

<TABLE>
<CAPTION>

  Fiscal Quarter
Ending Nearest to                  Fixed Charge Coverage Ratio
------------------------------------------------------------------------------
                        1999       2000       2001       2002       2003  2004
------------------------------------------------------------------------------
<S>                <C>        <C>        <C>        <C>        <C>        <C>
March 31           1.05:1.00  1.00:1.00        N/A  0.85:1.00  1.15:1.00
------------------------------------------------------------------------------
June 30            1.00:1.00  1.00:1.00        N/A  0.95:1.00  1.15:1.00
------------------------------------------------------------------------------
September 30       1.00:1.00  1.00:1.00  0.65:1.00  1.10:1.00
------------------------------------------------------------------------------
December 31        1.00:1.00  0.70:1.00  0.85:1.00  1.10:1.00
------------------------------------------------------------------------------
</TABLE>

          ; provided that

          (i)  for the period of four fiscal quarters ending nearest to
          September 30, 2001, the Fixed Charge Coverage Ratio shall be
          calculated for the two fiscal quarters ended nearest to September 30,
          2001 only; and

          (ii) for the period of four fiscal quarters ending nearest to December
          31, 2001, the Fixed Charge Coverage Ratio shall be calculated for the
          three fiscal quarters ended nearest to December 31, 2001 only."

                                       13
<PAGE>

          19.   Bank Accounts.  Article VI is amended by adding the following
Section 6.15 at the end thereof:

          "6.15  BANK ACCOUNTS.  Neither Holding, the Borrower nor any
          Restricted Subsidiary shall open or maintain any new bank account at
          any financial institution that is not a Lender.  Within 90 days of the
          effectiveness of the Fifth Amendment, Borrower, Wells Fargo Bank, N.A.
          and the Administrative Agent shall enter into a blocked account
          agreement providing that upon the occurrence of an Event of Default
          and notice by the Administrative Agent, all collected amounts in such
          account will be transferred to Administrative Agent for repayment of
          the Revolving Loans but without any related commitment reduction."

          20.   Events of Default.  Section 7.01 is amended by deleting the "or"
at the end of clause (l) thereof and by adding the following at the end of
clause (m) thereof:

          "(n)  the audited financial statements for the fiscal year ending on
          or about December 31, 2000 delivered pursuant to Section 5.04(a) are
          materially adversely different than the draft of such financial
          statements delivered by the Borrower to the Lenders on May 25, 2001 or
          are not accompanied by an opinion of the Borrower's accountants
          complying with Section 5.04(a)(i) of the Credit Agreement and a
          certificate of an officer complying with Section 5.04(d) of the Credit
          Agreement; or

          (o)   the financial statements for the fiscal quarter ending on or
          about March 31, 2001 delivered pursuant to Section 5.04(b) are
          materially adversely different than the draft of such financial
          statements delivered by the Borrower to the Lenders on June 18, 2001;"

          21.   Limited Waiver.  The undersigned Lenders, constituting Required
Lenders under the Credit Agreement, hereby waive (A) compliance with Section
5.04(a) of the Credit Agreement with respect to the fiscal year ending on or
about December 31, 2000 until August 15, 2001, on which date such waiver will
expire without any further action; (B) the failure to deliver at the time
required the financial statements required under Section 5.04(b) of the Credit
Agreement with respect to the fiscal quarter ending on or about March 31, 2001;
(C) the failure to deliver at the time required the financial statements
required under Section 5.04(c) of the Credit Agreement with respect to the
fiscal months ending on or about January 31, 2001, February 28, 2001, April 30,
2001 and May 31, 2001; (D) the failure to deliver the certificates required
under Section 5.04(d) of the Credit Agreement with respect to the fiscal quarter
ended on or about March 31, 2001; and with respect to the fiscal months ending
on or about January 31, 2001, February 28, 2001, April 30, 2001 and May 31, 2001
until August 15, 2001, on which date such waiver will expire without any further
action, provided that Borrower need not provide the information set forth in
subsection (ii) of Section 5.04(d) in the certificates delivered for such
periods; and (E) compliance with Section 6.01 from April 1, 2001 through and
including the date on which this Amendment and Waiver becomes effective pursuant
to paragraph 22 hereof, but only to the extent noncompliance with such section
is as a result of the FS Convertible Senior Subordinated Debt incurred in April
2001.  Further, the undersigned Lenders, constituting

                                       14
<PAGE>

Required Lenders under the Credit Agreement, waive any Defaults or Events of
Default under the financial covenants set forth in the Credit Agreement during
the period from and including December 29, 2000 through and including the date
on which this Amendment and Waiver becomes effective pursuant to paragraph 22
hereof. Without limiting the generality of the provisions of Sections 5.04(a),
5.04(b), 5.04(c), 5.04(d) and 6.01 of and the financial covenants set forth in
the Credit Agreement, pursuant to which this waiver is made, the waiver set
forth herein shall be limited precisely as written and relates solely to the
noncompliance by the Borrower with the provisions of Sections 5.04(a), 5.04(b),
5.04(c), 5.04(d) and 6.01 of and the financial covenants set forth in the Credit
Agreement in the manner and to the extent described in this paragraph, and
nothing in this paragraph shall be deemed to (a) constitute a waiver of
compliance by Borrower with respect to (i) Sections 5.04(a), 5.04(b), 5.04(c),
5.04(d) and 6.01 of and the financial covenants set forth in the Credit
Agreement in any other instance or (ii) any other term, provision or condition
of the Credit Agreement or any other instrument or agreement referred to therein
or (b) prejudice any right or remedy that the Syndication Agent, the Collateral
Agent or any Lender may now have (except to the extent such right or remedy was
based upon existing defaults that will not exist after giving effect to this
Limited Waiver) or may have in the future under or in connection with the Credit
Agreement or any other instrument or agreement referred to therein.

          22.  Binding Effect and Effectiveness.  This Amendment and Waiver may
be executed in as many counterparts as may be convenient and shall become
binding when the Borrower, Holding and the Required Lenders have each executed
and delivered at least one counterpart, and shall become legally binding and
immediately effective upon satisfaction of the following conditions precedent:

          (a)  The Borrower shall have paid to each Consenting Lender an
amendment fee equal to 0.375% of the sum of such Lender's Revolving Credit
Commitment and outstanding Term Loans as of the date of this Amendment.  A
"Consenting Lender" is any Lender that executes and delivers to the
Administrative Agent an executed signature page to this Amendment and Waiver at
or before 12:00 noon, Los Angeles time, on July 30, 2001.

          (b)  The Borrower shall have paid to the Administrative Agent all fees
which are due and payable to the Administrative Agent under the Credit Agreement
as amended.  The Borrower shall have paid all legal expenses of counsel to
Administrative Agent with respect to periods prior to July 18, 2001.

          (c)  The Borrower shall have received, or shall receive concurrently
herewith, $18,000,000 in aggregate cash proceeds in connection with the issuance
of the Additional Equity, FS Convertible Senior Subordinated Debt or a
combination thereof (which may include up to $6,500,000 in FS Convertible Senior
Subordinated Debt issued in April and May 2001 and Indebtedness outstanding
pursuant to Section 6.01(j) of the Credit Agreement so long as such Indebtedness
satisfies the conditions set forth in the definition of "FS Convertible Senior
Subordinated Debt" included in this Amendment and Waiver) and shall have
applied, or shall apply concurrently herewith, such cash proceeds for working
capital purposes or with respect to such cash proceeds received on the Fifth
Amendment Effective Date, first to repay outstanding Revolving Loans made for
purposes other than Permitted Acquisitions to the full extent thereof

                                       15
<PAGE>

and thereafter to repay outstanding Revolving Loans made for the purpose of
funding Permitted Acquisitions to the full extent thereof but in either case
without any corresponding Revolving Credit Commitment reduction.

          (d)  The Administrative Agent and the Lenders shall have received the
quarterly financial statements for the quarter ended on or about March 31, 2001,
required pursuant to Section 5.04(b) of the Credit Agreement and the monthly
financial statements for the months of January, February, March, April and May
in Fiscal Year 2001 required pursuant to Section 5.04(c) of the Credit
Agreement.

          23.  Representations and Warranties.  In order to induce Lenders to
enter into this Amendment and Waiver, the Borrower and Holding, by its execution
of a counterpart of this Amendment and Waiver, represents and warrants that
after giving effect to this Amendment and Waiver (a) no Default or Event of
Default exists under the Credit Agreement, (b) all representations and
warranties contained in the Credit Agreement and the instruments and agreements
referred to therein are true, correct and complete in all material respects on
and as of the date hereof except to the extent such representations and
warranties specifically relate to an earlier date, in which case they were true,
correct and complete in all material respects on and as of such earlier date and
(c) the Borrower and Holding have performed all agreements to be performed on
its part as set forth in the Credit Agreement.

          24.  Governing Law.  THIS AMENDMENT AND WAIVER AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW
OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

          25.  Reference to Credit Agreement.  Except as amended and waived
hereby, the Credit Agreement shall remain in full force and effect and is hereby
ratified and confirmed in all respects.  On and after the effectiveness of the
amendment to the Credit Agreement accomplished hereby, each reference in the
Credit Agreement to "this Agreement", "hereunder", "hereof", "herein" or words
of like import, and each reference to the Credit Agreement shall be deemed a
reference to the Credit Agreement, as amended hereby.

                  [remainder of page intentionally left blank]

                                       16
<PAGE>

          IN WITNESS WHEREOF, the parties hereto have caused this Amendment and
Waiver to be duly executed by their respective officers as of the date first
above written.

                              HUDSON RESPIRATORY CARE INC.

                              By:    /s/ Patrick G. Yount
                                    ----------------------------------------
                              Name:   Patrick G. Yount
                              Title:  Chief Financial Officer

                              RIVER HOLDING CORP.

                              By:   /s/ Patrick G. Yount
                                    ----------------------------------------
                              Name:   Patrick g. Yount
                              Title:  Chief Financial Officer

                              Acknowledged by:

                              BANKERS TRUST COMPANY, as Administrative Agent and
                              Collateral Agent

                              By:   /s/ Mary Jo Jolly
                                    ----------------------------------------
                              Name:   Mary Jo Jolly
                              Title:  Assistant Vice President

                              SALOMON BROTHERS INC., as Arranger,
                              Advisor and Syndication Agent

                              By:   /s/ Allen Fisher
                                    ----------------------------------------
                              Name:   Allan Fisher
                              Title:  Attorney-in-Fact
<PAGE>

                              LENDERS
                              -------

                              BANKERS TRUST COMPANY

                              By:   /s/ Mary Jo Jolly
                                    ----------------------------------------
                              Name:   Mary Jo Jolly
                              Title:  Assistant Vice President

                              BANK OF AMERICA, N.A.

                              By:   /s/ David Maiorella
                                    ----------------------------------------
                              Name:   David Maiorella
                              Title:  Vice President

                              BANK OF TOKYO-MITSUBISHI TRUST COMPANY

                              By:   /s/ David Fraenkel
                                    ----------------------------------------
                              Name:   David Fraenkel
                              Title:  Vice President

                              BHF (USA) CAPITAL CORPORATION

                              By:   /s/ Thomas Dearth
                                    ----------------------------------------
                              Name:   Thomas Dearth
                              Title:  Associate

                              By:   /s/ Ronni J. Leopold
                                    ----------------------------------------
                              Name:   Ronni J. Leopold
                              Title:  Vice President

                              CITICORP USA, INC.

                              By:   /s/ Allen Fisher
                                    ----------------------------------------
                              Name:   Allan Fisher
                              Title:  Vice President
<PAGE>

                              IMPERIAL BANK

                              By:   /s/ Thomas G. Kinzel
                                    ----------------------------------------
                              Name:   Thomas G. Kinzel
                              Title:  Vice President

                              ROYAL BANK OF CANADA

                              By:   /s/ Peter Gray-Donald
                                    ----------------------------------------
                              Name:   Peter Gray-Donald
                              Title:  Senior Manager

                              SOCIETE GENERALE

                              By:   /s/ Richard Bernal
                                    ----------------------------------------
                              Name:   Richard Bernal
                              Title:  Director, Corporate Banking

                              WELLS FARGO BANK, N.A.

                              By:   /s/ S. Michael St. Geme
                                    ----------------------------------------
                              Name:   S. Michael St. Geme
                              Title:  Vice President

                              BANK AUSRTIA CREDITANSTALT CORPORATE FINANCE, INC.

                              By:   /s/ Deter Boehme
                                    ----------------------------------------
                              Name:   Deter Boehme
                              Title:  Executive Vice President

                              By:   /s/ Peter Maher
                                    ----------------------------------------
                              Name:   Peter Maher
                              Title:  Vice President<PAGE>

                                                                    Exhibit 10.1

                          MANHATTAN SCIENTIFICS, INC.

                          2000 EQUITY INCENTIVE PLAN

     This Manhattan Scientifics, Inc. 2000 Equity Incentive Plan (the "Plan") is
established by Manhattan Scientifics, Inc., a Delaware corporation (the
"Company"), effective as of October 20, 2000 (the "Effective Date"), subject to
the approval of the shareholders of the Company within twelve (12) months
thereafter.  Capitalized terms not otherwise defined shall have the meanings set
forth in Section 25.

     1.   Purpose.  The Plan is intended to provide qualifying Employees
(including officers and Directors), Independent Directors and Consultants with
equity ownership in the Company, thereby strengthening their commitment to the
success of the Company, promoting the identity of interests between the
Company's shareholders and such Employees, Independent Directors and Consultants
and stimulating their efforts on behalf of the Company, and to assist the
Company in attracting and retaining talented personnel.

     2.   Scope of the Plan.  Subject to adjustment in accordance with Section
20, the total number of Shares for which grants under the Plan shall be
available is 30,000,000.  If any Shares subject to any Award granted hereunder
are forfeited or such Award otherwise terminates without the issuance of such
Shares or for other consideration in lieu of such Shares, the Shares subject to
such Award, to the extent of any such forfeiture or termination, shall again be
available for grant under the Plan.  Shares awarded under the Plan may be
treasury shares or newly-issued shares.

     3.   Administration.

          (a) The Plan shall be administered by a Committee which shall consist
of at least two or more members of the Board, all of whom, so long as the
Company remains a Public Company, shall qualify as "non-employee directors"
under Section (b)(3)(i) of Rule 16b-3.  If applicable requirements of Rule 16b-3
are met, grants of equity based compensation are not deemed to be purchases or
sales of underlying securities for purposes of Section 16(b) of the 1934 Act
(short swing liability).  The number of members of the Committee may from time
to time be increased or decreased, and so long as the Company remains a Public
Company, shall be subject to such conditions, as the Board deems appropriate to
permit transactions in Shares pursuant to the Plan to satisfy such conditions of
Rule 16b-3 as then in effect.  In the event there is not a Committee or the
Committee is unable to act, the Board shall be take any and all actions required
or permitted to be taken by the Committee under the Plan and shall serve as the
Committee.

          (b) Subject to the express provisions of the Plan, the Committee has
full and final authority and discretion as follows:
<PAGE>

               (i)    to determine when and to whom Awards should be granted and
the terms, conditions and restrictions applicable to each Award, including,
without limitation, (A) the exercise price of the Award, (B) the method of
payment for Shares purchased upon the exercise of the Award, (C) the method of
satisfaction of any tax withholding obligation arising in connection with the
Award, (D) the timing, terms and conditions of the exercisability of the Award
or the vesting of any Shares acquired upon the exercise thereof, (E) the time of
the expiration of the vesting of any Shares acquired upon the exercise thereof,
(F) the effect of the Grantee's termination of employment or service with the
Company on any of the foregoing, (G) all other terms,conditions and restrictions
applicable to the Award or such Shares not inconsistent with the terms of the
Plan, (H) the benefit payable under any SAR or Performance Share, and (I)
whether or not specific Awards shall be identified with other specific Awards,
and if so whether they shall be exercisable cumulatively with, or alternatively
to, such other specific Awards;

               (ii)   to determine the amount, if any, that a Grantee shall pay
for Restricted Shares, whether to permit or require the payment of cash
dividends thereon to be deferred and the terms related thereto, when Restricted
Shares (including Restricted Shares acquired upon the exercise of any Award)
shall be forfeited and whether such Shares shall be held in escrow;

               (iii)  to interpret the Plan and to make all determinations
necessary or advisable for the administration of the Plan;

               (iv)   to make, amend and rescind rules, guidelines and policies
relating to the Plan, or to adopt supplements to, or alternative versions of,
the Plan, including, without limitation, rules with respect to the
exercisability and forfeitability of Awards upon the termination of employment
or service of a Grantee;

               (v)    to determine the terms, conditions and restrictions of all
Award Agreements (which need not be identical) and, with the consent of the
Grantee, to amend any such Award Agreement at any time, among other things, to
permit transfers of such Awards to the extent permitted by the Plan, except that
the consent of the Grantee shall not be required for any amendment which (A)
does not adversely affect the rights of the Grantee or (B) is necessary or
advisable (as determined by the Committee) to carry out the purpose of the Award
as a result of any change in applicable law;

               (vi)   to cancel, with the consent of the Grantee, outstanding
Awards and to grant new Awards in substitution therefor;

               (vii)  to accelerate the exercisability of, and to accelerate or
waive any or all of the terms, conditions and restrictions applicable to, any
Award or any group of Awards for any reason and at any time, including in
connection with a termination of employment or service (other than for Cause);

               (viii) subject to Section 6(c), to extend the time during which
any Award or group of Awards may be exercised;
<PAGE>

               (ix)  to make such adjustments or modifications to Awards to
Grantees working outside the United States as are advisable to fulfill the
purposes of the Plan;

               (x)   to impose such additional terms, conditions and
restrictions upon the grant, exercise or retention of Awards as the Committee
may, before or concurrent with the grant thereof, deem appropriate; and

               (xi)  to take any other action with respect to any matters
relating to the Plan for which it is responsible. The determination of the
Committee on all matters relating to the Plan or any Award Agreement shall be
final.

     4.   Indemnification and Reimbursement.  Service as a member of the
Committee or any other duly appointed subcommittee shall constitute service as a
Board member, and such members shall accordingly be entitled to full
indemnification and reimbursement as Board members for their service as members
of the Committee or any other duly appointed subcommittee.  No Committee or
other duly appointed subcommittee member shall be liable for any act or omission
made in good faith with respect to the Plan or any Award granted under the Plan.

     5.   Eligibility.  The Committee may, in its discretion, grant Awards to
any Eligible Person, whether or not he or she has previously received an Award,
except in the case of an ISO, which can only be granted to an Employee of the
Company or any Subsidiary.

     6.   Conditions to Grants.

          (a)  General Conditions. Awards shall be evidenced by written Award
Agreements specifying the number of Shares covered thereby, in such form as the
Committee shall from time to time establish.  Award Agreements may incorporate
all or any of the terms of the Plan by reference and shall comply with and be
subject to the following terms and conditions:

               (i)    The Grant Date of an Award shall be the date on which the
Committee grants the Award or such later date as specified in advance by the
Committee;

               (ii)   In the case of an Award of options, the Option Term shall
under no circumstances extend more than ten (10) years after the Grant Date and
shall be subject to earlier termination as herein provided; and

               (iii)  Any terms and conditions of an Award not set forth in the
Plan shall be set forth in the Award Agreement related to that Award.

          (b)  Grant of Options. No later than the Grant Date of any option, the
Committee shall determine the Option Price of such option. Subject to Section
6(c), the
<PAGE>

Option Price of an option may be the Fair Market Value of a Share on the Grant
Date or may be less than or more than that Fair Market Value. An option shall be
exercisable for unrestricted Shares, unless the Award Agreement provides that it
is exercisable for Restricted Shares.

          (c)  Grant of ISOs.  At the time of the grant of any option, the
Committee may, in its discretion, designate that such option shall be made
subject to additional restrictions to permit the option to qualify as an
"incentive stock option" under the requirements of Section 422 of the Code. Any
option designated as an ISO:

               (i)    shall have an Option Price that is not less than the Fair
Market Value of a Share on the Grant Date and, if granted to a Ten Percent
Owner, have an Option Price that is not less than 110% of the Fair Market Value
of a Share on the Grant Date;

               (ii)   shall be for a period of not more than ten (10) years and,
if granted to a Ten Percent Owner, not more than five (5) years, from the Grant
Date and shall be subject to earlier termination as provided herein or in the
applicable Award Agreement;

               (iii)  shall meet the limitations of this subparagraph 6(c)(iii).
If the aggregate Fair Market Value of Shares with respect to which ISOs first
become exercisable by a Grantee in any calendar year exceeds the limit
determined in accordance with the provisions of Section 422 of the Code (the
"Limit") taking into account Shares subject to all ISOs granted by the Company
that are held by the Grantee, the excess will be treated as nonqualified
options. To determine whether the Limit is exceeded, the Fair Market Value of
Shares subject to options shall be determined as of the Grant Dates of the
options. In reducing the number of options treated as ISOs to meet the Limit,
the most recently granted options will be reduced first. If a reduction of
simultaneously granted options is necessary to meet the Limit, the Committee may
designate which Shares are to be treated as Shares acquired pursuant to an ISO;

               (iv)   shall be granted within ten (10) years from the Effective
Date;

               (v)    shall require the Grantee to notify the Committee of any
disposition of any Shares issued upon the exercise of the ISO under the
circumstances described in Section 421(b) of the Code (relating to certain
disqualifying dispositions, a "Disqualifying Disposition"), within ten (10)
business days after such Disqualifying Disposition; and

               (vi)   unless otherwise permitted by the Code, shall by its terms
not be assignable or transferable other than by will or the laws of descent and
distribution and may be exercised, during the Grantee's lifetime, only by the
Grantee, except that the Grantee may, in accordance with Section 7, designate in
writing a beneficiary to exercise his or her ISOs after the Grantee's death.
<PAGE>

          (d)  Grant of SARs.

               (i)   When granted, SARs may, but need not, be identified with a
specific option, specific Restricted Shares, or specific Performance Shares of
the Grantee (including any option, Restricted Shares, or Performance Shares
granted on or before the Grant Date of the SARs) in a number equal to or
different from the number of SARs so granted. If SARs are identified with Shares
subject to an option, with Restricted Shares, or with Performance Shares, then,
unless otherwise provided in the applicable Award Agreement, the Grantee's
associated SARs shall terminate upon (A) the expiration, termination,
forfeiture, or cancellation of such option, Restricted Shares or Performance
Shares, (B) the exercise of such option or Performance Shares, or (C) the date
such Restricted Shares become nonforfeitable.

               (ii)  The strike price (the "Strike Price") of any SAR shall
equal, for any SAR that is identified with an option, the Option Price of such
option, or for any other SAR, one hundred percent (100%) of the Fair Market
Value of a Share on the Grant Date of such SAR, except that the Committee may
(A) specify a higher Strike Price in the Award Agreement or (B) provide that the
benefit payable upon exercise of any SAR shall not exceed such percentage of the
Fair Market Value of a Share on such Grant Date as the Committee shall specify.

          (e)  Grant of Performance Shares.

               (i)   Before the grant of Performance Shares, the Committee
shall:

                     (A)  determine objective performance goals, which may
     consist of any one or more of the following goals deemed appropriate by the
     Committee: earnings (either in the aggregate or on a per share basis),
     operating income, cash flow, EBITDA (earnings before interest, taxes,
     depreciation and amortization), return on equity, indices related to EVA
     (economic value added), per share rate of return on the Common Stock
     (including dividends), general indices relative to levels of general
     customer service satisfaction, as measured through various randomly-
     generated customer service surveys, market share (in one or more markets),
     customer retention rates, market penetration rates, revenues, reductions in
     expense levels, the attainment by the Common Stock of a specified market
     value for a specified period of time, and any other objective performance
     goal deemed appropriate by the Committee, in each case where applicable to
     be determined either on a Company-wide basis, individual basis or in
     respect of any one or more business units, and the amount of compensation
     under the goals applicable to such grant;

                     (B)  designate a period for the measurement of the extent
     to which performance goals are attained, which may begin simultaneously
     with, prior to or following the Grant Date (the "Performance Period"); and
<PAGE>

                     (C) assign a performance percentage to each level of
     attainment of performance goals during the Performance Period, with the
     percentage applicable to minimum attainment being zero percent and the
     percentage applicable to maximum attainment to be determined by the
     Committee from time to time (the "Performance Percentage").

               (ii)   If a Grantee is promoted, demoted, or transferred to a
different business unit of the Company during a Performance Period, then, to the
extent the Committee determines any one or more of the performance goals,
Performance Period or Performance Percentage are no longer appropriate, the
Committee may make any changes thereto as it deems appropriate in order to make
them appropriate.

               (iii)  When granted, Performance Shares may, but need not, be
identified with Shares subject to a specific option, specific Restricted Shares
or specific SARs of the Grantee granted under the Plan in a number equal to or
different from the number of the Performance Shares so granted. If Performance
Shares are so identified, then, unless otherwise provided in the applicable
Award Agreement, the Grantee's associated Performance Shares shall terminate
upon (A) the expiration, termination, forfeiture or cancellation of the option,
Restricted Shares or SARs with which the Performance Shares are identified, (B)
the exercise of such option or SARs, or (C) the date Restricted Shares become
nonforfeitable.

          (f)  Grant of Restricted Shares.

               (i)    The Committee shall determine the amount, if any, that a
Grantee shall pay for Restricted Shares, subject to the following sentence. The
Committee shall require the Grantee to pay at least the Minimum Consideration
for each Restricted Share. Such payment shall be made in full by the Grantee
before the delivery of the shares and in any event no later than ten (10)
business days after the Grant Date. In the discretion of the Committee and to
the extent permitted by law, payment may also be made in accordance with Section
9.

               (ii)   The Committee may, but need not, provide that all or any
portion of a Grantee's Restricted Shares, or Restricted Shares acquired upon
exercise of an option, shall be forfeited:

                     (A)  except as otherwise specified in the Plan or the Award
     Agreement, upon the Grantee's termination of employment or service within a
     specified time period after the Grant Date; or

                     (B)  if the Company or the Grantee does not achieve
     specified performance goals (if any) within a specified time period after
     the Grant Date and before the Grantee's termination of employment or
     service; or
<PAGE>

                     (C)  upon failure to satisfy such other conditions as the
     Committee may specify in the Award Agreement.

               (iii) If Restricted Shares are forfeited and the Grantee was
required to pay for such shares or acquired such Restricted Shares upon the
exercise of an option, the Grantee shall be deemed to have resold such
Restricted Shares to the Company at a price equal to the lesser of (A) the
amount paid by the Grantee for such Restricted Shares or (B) the Fair Market
Value of the Restricted Shares on the date of forfeiture, which shall be paid to
the Grantee in cash as soon as administratively practicable. Such Restricted
Shares shall cease to be outstanding and shall no longer confer on the Grantee
thereof any rights as a shareholder of the Company, from and after the date of
the event causing the forfeiture, whether or not the Grantee accepts the
Company's tender of payment for such Restricted Shares.

               (iv)  The Committee may provide that the certificates for any
Restricted Shares (A) shall be held (together with a stock power executed in
blank by the Grantee) in escrow by the Secretary of the Company until such
Restricted Shares become nonforfeitable or are forfeited or (B) shall bear an
appropriate legend restricting the transfer of such Restricted Shares. If any
Restricted Shares become nonforfeitable, the Company shall cause certificates
for such shares to be issued without such legend.

               (v)   At the time of a grant of Restricted Shares, the Committee
may require the payment of cash dividends thereon to be deferred and, if the
Committee so determines, reinvested in additional Restricted Shares. Stock
dividends or deferred cash dividends issued with respect to Restricted Shares
shall be subject to the same restrictions and other terms as apply to the
Restricted Shares with respect to which such dividends are issued. The Committee
may in its discretion provide for payment of interest on deferred cash
dividends.

          (g)  Grant of Stock Bonuses. The Committee may grant Bonus Shares to
any Eligible Employee.

     7.   Non-Transferability.  An Award granted hereunder shall not be
assignable or transferable other than by will or the laws of descent and
distribution and may be exercised during the Grantee's lifetime only by the
Grantee or his or her guardian or legal representative, except that, subject to
Section 6(c) in respect of ISOs, a Grantee may, if permitted by the Committee,
in its discretion, (a) designate in writing a beneficiary to exercise an Award
after his or her death (if that designation has been received by the Company
prior to the Grantee's death) and (b) transfer the Award to one or more members
of the Grantee's Immediate Family or any other individuals or entities.

     8.   Exercise.

          (a)  Exercise of Options.
<PAGE>

           (i)    Subject to Section 6, each option shall become exercisable at
such time or times as may be specified by the Committee from time to time in the
applicable Award Agreement.

           (ii)   An option shall be exercised by the delivery to the Company
during the Option Term of (A) a written notice of intent to purchase a specific
number of Shares subject to the option in accordance with the terms of the
option by the person entitled to exercise the option and (B) payment in full of
the Option Price of such specific number of Shares in accordance with Section
8(a)(iii).

           (iii)  Payment of the Option Price may be made by any one or more
of the following means:

                  (A) cash, check, or wire transfer;

                  (B) with the approval of the Committee, Mature Shares,
     valued at their Fair Market Value on the date of exercise;

                  (C) with the approval of the Committee, Restricted Shares
     held by the Grantee for at least six (6) months prior to the exercise of
     the option, each such share valued at the Fair Market Value of a Share on
     the date of exercise;

                  (D) so long as the Company remains a Public Company, in
     accordance with procedures previously approved by the Company, through the
     sale of the Shares acquired on exercise of the option through a bank or
     broker-dealer to whom the Grantee has submitted an irrevocable notice of
     exercise and irrevocable instructions to deliver promptly to the Company
     the amount of sale or loan proceeds sufficient to pay for such Shares,
     together with, if requested by the Company, the amount of federal, state,
     local or foreign withholding taxes payable by Grantee by reason of such
     exercise; or

                  (E) in the discretion of the Committee, payment may also be
     made in accordance with Section 9.

                  (F) with the approval of the Committee, in any combination
     of the foregoing or such other manner determined by the Committee. The
     Committee may in its discretion specify that, if any Restricted Shares are
     used to pay the Option Price ("Tendered Restricted Shares"), (A) all the
     Shares acquired on exercise of the option shall be subject to the same
     restrictions as the Tendered Restricted Shares, determined as of the date
     of exercise of the option or (B) a number of Shares acquired on exercise of
     the option equal to the number of Tendered Restricted Shares shall be
     subject to the same restrictions as the Tendered Restricted Shares,
     determined as of the date of exercise of the option.
<PAGE>

          (b)  Exercise of SARs.

               (i) Subject to Section 6(d), (A) each SAR not identified with any
other Award shall become exercisable at such time or times as may be specified
by the Committee from time to time in the applicable Award Agreement and (B)
except as otherwise provided in the applicable Award Agreement, each SAR which
is identified with any other Award shall become exercisable as and to the extent
that the option or Restricted Shares with which such SAR is identified may be
exercised or becomes nonforfeitable, as the case may be.

               (ii) SARs shall be exercised by delivery to the Company of
written notice of intent to exercise a specific number of SARs. Unless otherwise
provided in the applicable Award Agreement, the exercise of SARs that are
identified with Shares subject to an option or Restricted Shares shall result in
the cancellation or forfeiture of such option or Restricted Shares, as the case
may be, to the extent of such exercise.

               (iii) The benefit for each SAR exercised shall be equal to (A)
the Fair Market Value of a Share on the date of such exercise, minus (B) the
Strike Price specified in such SAR. Such benefit shall be payable in cash,
except that the Committee may provide in the Award Agreement that benefits may
be paid wholly or partly in Shares.

          (c) Payment of Performance Shares.  Unless otherwise provided in the
Award Agreement with respect to an Award of Performance Shares, if the minimum
performance goals applicable to such Performance Shares have been achieved
during the applicable Performance Period, then the Company shall pay to the
Grantee of such Award that number of Shares equal to the product of:

               (i) the sum of (A) the number of Performance Shares specified in
the applicable Award Agreement and (B) the number of additional Shares that
would have been issuable if such Performance Shares had been Shares outstanding
throughout the Performance Period and the stock dividends, cash dividends
(except as otherwise provided in the Award Agreement), and other property paid
in respect of such Shares had been reinvested in additional Shares as of each
dividend payment date, multiplied by

               (ii) the Performance Percentage achieved during such Performance
Period. The Committee may, in its discretion, determine that cash be paid in
lieu of some or all of such Shares. The amount of cash payable in lieu of a
Share shall be determined by valuing such Share at its Fair Market Value on the
business day immediately preceding the date such cash is to be paid. Payments
pursuant to this Section 8 shall be made as soon as administratively practical
after the end of the applicable Performance Period. Any Performance Shares with
respect to which the performance goals shall not have been achieved by the end
of the applicable Performance Period shall expire.
<PAGE>

     9.   Loans.  The Committee may in its discretion allow a Grantee to defer
payment to the Company of all or any portion of (a) the Option Price of an
option, (b) the purchase price of Restricted Shares, or (c) any taxes associated
with the exercise, nonforfeitability of, or payment of benefits in connection
with, an Award. Any such payment deferral by the Company shall be on such terms
and conditions as the Committee may determine, except that a Grantee shall not
be entitled to defer the payment of such Option Price, purchase price, or any
related taxes unless the Grantee (y) enters into a binding obligation to pay the
deferred amount and (z) other than with respect to treasury shares, pays upon
exercise of an option or grant of Restricted Shares, as applicable, an amount at
least equal to the Minimum Consideration therefor.  If the Committee has
permitted a payment deferral in accordance with this Section 9, then the
Committee may require the immediate payment of such deferred amount upon the
Grantee's termination of employment or if the Grantee sells or otherwise
transfers his or her Shares purchased pursuant to such deferral.  The Committee
may at any time in its discretion forgive the repayment of any or all of the
principal of, or interest on, any such deferred payment obligation.

     10.  Notification under Section 83(b).  If the Grantee, in connection with
the exercise of any option or the grant of Restricted Shares, makes the election
permitted under Section 83(b) of the Code to include in such Grantee's gross
income in the year of transfer the amounts specified in Section 83(b) of the
Code, then such Grantee shall notify the Company, in writing, of such election
within ten (10) days after filing the notice of the election with the Internal
Revenue Service, in addition to any filing and notification required pursuant to
regulations issued under Section 83(b) of the Code.  The Committee may, in
connection with the grant of an Award or at any time thereafter, prohibit a
Grantee from making the election described in this Section 10.

     11.  Mandatory Tax Withholding.

          (a) Whenever under the Plan, Shares are to be delivered upon exercise
or payment of an Award or upon Restricted Shares becoming nonforfeitable, or any
other event with respect to rights and benefits hereunder, the Company shall be
entitled to require (i) that the Grantee remit an amount in cash, or in the
Company's discretion, Mature Shares or any other form of consideration,
sufficient to satisfy all federal, state and local tax withholding requirements
related thereto ("Required Withholding"), (ii) the withholding of such Required
Withholding from compensation otherwise due to the Grantee or from any Shares
due to the Grantee under the Plan, or (iii) any combination of the foregoing.

          (b) Any Grantee who makes a Disqualifying Disposition or an election
under Section 83(b) of the Code shall remit to the Company an amount sufficient
to satisfy all resulting Required Withholding, except that in lieu of or in
addition to the foregoing, the Company shall have the right to withhold such
Required Withholding from compensation otherwise due to the Grantee or from any
Shares or other payment due to the Grantee under the Plan.
<PAGE>

          (c) Any surrender by a Section 16 Grantee of previously owned shares
of Common Stock to satisfy tax withholding arising upon exercise of the Award
must comply with the applicable provisions of Rule 16b-3(e) under the 1934 Act.

     12.  Elective Share Withholding. At the Company's discretion, a Grantee
may, with the prior consent of the Committee, elect the withholding by the
Company of a portion of the Shares otherwise deliverable to such Grantee upon
the exercise of an Award or upon Restricted Shares becoming nonforfeitable
(each, a "Taxable Event") having a Fair Market Value equal to the minimum amount
necessary to satisfy the Required Withholding liability attributable to the
Taxable Event.

     13.  Termination of Employment or Service.

          (a) For Cause.  Except as otherwise provided by the Committee in an
Award Agreement, if a Grantee's employment or service is terminated for Cause,
(i) the Grantee's Restricted Shares (and any SARs identified therewith) that are
then forfeitable shall on the date of the Grantee's termination of employment or
service be forfeited on such date, subject to the provisions of Section
6(f)(iii) regarding repayment of certain amounts to the Grantee; and (ii) any
unexercised option, SAR or Performance Share shall terminate effective
immediately upon such termination of employment or service.

          (b) On Account of Death.  Except as otherwise provided by the
Committee in the Award Agreement, if a Grantee's employment or service
terminates on account of death, then:

               (i) the Grantee's Restricted Shares (and any SARs identified
therewith) that are then forfeitable shall on the date of the Grantee's
termination of employment or service be forfeited on such date;

               (ii) any unexercised option or SAR, to the extent exercisable on
the date of such termination of employment or service, may be exercised, in
whole or in part, within the first twelve (12) months after such termination of
employment or service (but only during the Option Term) after the death of the
Grantee by (A) his or her personal representative or by the person to whom the
option or SAR, as applicable, is transferred by will or the applicable laws of
descent and distribution, (B) the Grantee's designated beneficiary, or (C) a
Permitted Transferee; and

               (iii) any unexercised Performance Shares may be exercised in
whole or in part, at any time within six (6) months after such termination of
employment or service on account of the death of the Grantee, by (A) his or her
personal representative or by the person to whom the Performance Shares are
transferred by will or the applicable laws of descent and distribution, (B) the
Grantee's designated beneficiary, or (C) a Permitted Transferee, except that the
benefit payable with respect to any Performance Shares for which the Performance
Period has not ended as of the date of such termination of employment or service
on account of death shall be equal to the
<PAGE>

product of Fair Market Value of such Performance Shares multiplied successively
by each of the following:

                     (A) a fraction, the numerator of which is the number of
     months (including as a whole month any partial month) that has elapsed
     since the beginning of such Performance Period until the date of such
     termination of employment or service and the denominator of which is the
     number of months (including as a whole month any partial month) in the
     Performance Period; and

                     (B) a percentage determined in the discretion of the
     Committee that would be earned under the terms of the applicable Award
     Agreement assuming that the rate at which the performance goals have been
     achieved as of the date of such termination of employment or service would
     continue until the end of the Performance Period, or, if the Committee
     elects to compute the benefit after the end of the Performance Period, the
     Performance Percentage, as determined by the Committee, attained during the
     Performance Period for such Performance Shares.

                     (C) On Account of Disability.  Except as otherwise provided
     by the Committee in the Award Agreement, if a Grantee's employment or
     service terminates on account of Disability, then:

                         (i) the Grantee's Restricted Shares (and any SARs
                     identified therewith) that are then forfeitable shall on
                     the date of the Grantee's termination of employment or
                     service be forfeited on such date;

                         (ii) any unexercised option or SAR, to the extent
                     exercisable on the date of such termination of employment
                     or service, may be exercised in whole or in part, within
                     the first twelve (12) months after such termination of
                     employment or service (but only during the Option Term) by
                     the Grantee, or by (A) his or her personal representative
                     or by the person to whom the option or SAR, as applicable,
                     is transferred by will or the applicable laws of descent
                     and distribution, (B) the Grantee's designated beneficiary,
                     or (C) a Permitted Transferee; and

                         (iii) any unexercised Performance Shares may be
                     exercised in whole or in part, at any time within six (6)
                     months after such termination of employment or service on
                     account of Disability by the Grantee, or by (A) his
                     personal representative or by the person to whom the
                     Performance Shares are transferred by will or the
                     applicable laws of descent and distribution, (B) the
                     Grantee's designated beneficiary, or (C) a Permitted
                     Transferee, except that the
<PAGE>

                     benefit payable with respect to any Performance Shares for
                     which the Performance Period has not ended as of the date
                     of such termination of employment or service on account of
                     Disability shall be equal to the product of the Fair Market
                     Value of the Performance Shares multiplied successively by
                     each of the following:

                         (A) a fraction, the numerator of which is the number of
                     months (including as a whole month any partial month) that
                     have elapsed since the beginning of such Performance Period
                     until the date of such termination of employment or service
                     and the denominator of which is the number of months
                     (including as a whole month any partial month) in the
                     Performance Period; and

                         (B) a percentage determined in the discretion of the
                     Committee that would be earned under the terms of the
                     applicable Award Agreement assuming that the rate at which
                     the performance goals have been achieved as of the date of
                     such termination of employment or service would continue
                     until the end of the Performance Period, or, if the
                     Committee elects to compute the benefit after the end of
                     the Performance Period, the Performance Percentage, as
                     determined by the Committee, attained during the
                     Performance Period for such Performance Shares.

          (d) Any Reason Other Than For Cause Or On Account of Death or
Disability. Except as otherwise provided by the Committee in the Award
Agreement, if a Grantee's employment or service terminates for any reason other
than for Cause, or on account of death or Disability, then:

               (i) the Grantee's Restricted Shares (and any SARs identified
therewith), that are then forfeitable shall on the date of the Grantee's
termination of employment or service be forfeited on such date;

               (ii) any unexercised option or SAR (other than a SAR identified
with a Restricted Share or Performance Share), to the extent exercisable
immediately before the Grantee's termination of employment or service, may be
exercised in whole or in part, not later than three (3) months after such
termination of employment or service (but only during the Option Term); and

               (iii) the Grantee's Performance Shares (and any SARs identified
therewith) shall terminate effective immediately upon such termination of
employment or service.
<PAGE>

     14.  Substituted Awards.  If the Committee cancels any Award (whether
granted under the Plan or any plan of any entity acquired by the Company or a
Subsidiary), the Committee may, in its discretion, substitute a new Award
therefor upon such terms and conditions consistent with the Plan as the
Committee may determine, except that (a) the Option Price of any new option, and
the Strike Price of any new SAR, shall not be less than one hundred percent
(100%) (one hundred ten percent (110%) in the case of an incentive stock option
granted to a Ten Percent Owner) of the Fair Market Value of a Share on the date
of the grant of the new Award; and (b) the Grant Date of the new Award shall be
the date on which such new Award is granted.

     15.  Securities Law Matters.

          (a) If the Committee deems necessary to comply with any applicable
securities law, the Committee may require a written investment intent
representation by the Grantee and may require that a restrictive legend be
affixed to certificates for Shares. If, based upon the advice of counsel to the
Company, the Committee determines that the exercise or nonforfeitability of, or
delivery of benefits pursuant to, any Award would violate any applicable
provision of (i) federal or state securities laws or (ii) the listing
requirements of any national exchange or national market system on which are
listed any of the Company's equity securities, then the Committee may postpone
any such exercise, nonforfeitability or delivery, as applicable, but the Company
shall use all reasonable efforts to cause such exercise, nonforfeitability or
delivery to comply with all such provisions at the earliest practicable date.

          (b) Grants of options to Section 16 Grantees shall comply with Rule
16b-3 and shall contain such additional conditions or restrictions as may be
required thereunder for such grants to qualify for exemption from liability
under Section 16(b) of the 1934 Act.

     16.  No Employment Rights.  Neither the establishment of the Plan nor the
grant of any Award shall (a) give any Grantee the right to remain employed by or
in the service of the Company or any Subsidiary or to any benefits not
specifically provided by the Plan or (b) modify the right of the Company or any
Subsidiary to modify, amend, or terminate the Plan or any other employee benefit
plan or employment, consulting or other agreement.

     17.  No Rights as a Shareholder.  A Grantee shall not have any rights as a
shareholder of the Company with respect to the Shares (other than Restricted
Shares) which may be deliverable upon exercise or payment of an Award until such
Shares have been delivered to him or her. Restricted Shares, whether held by a
Grantee or in escrow by the Company, shall confer on the Grantee all rights of a
shareholder of the Company, except as otherwise provided in the Plan or
applicable Award Agreement.

     18.  Nature of Payments.  Awards shall be special incentive payments to the
Grantee and shall not be taken into account in computing the amount of salary or
compensation of the Grantee for purposes of determining any pension, retirement,
death
<PAGE>

or other benefit under (a) any pension, retirement, profit-sharing, bonus,
insurance or other employee benefit plan of the Company or any Subsidiary or (b)
any agreement between (i) the Company or any Subsidiary and (ii) the Grantee,
except as such plan or agreement shall otherwise expressly provide.

     19.  Non-uniform Determinations.  The Committee's determinations under the
Plan need not be uniform and may be made by the Committee selectively among
persons who receive, or are eligible to receive, Awards, whether or not such
persons are similarly situated. Without limiting the generality of the
foregoing, the Committee shall be entitled to enter into non-uniform and
selective Award Agreements as to (a) the identity of the Grantees, (b) the terms
and provisions of Awards, including, without limitation, vesting and manner of
payment of purchase price upon exercise, and (c) the treatment of terminations
of employment or service.

     20.  Adjustments.  The Committee shall make equitable adjustment of:

          (a) the aggregate number of Shares available under the Plan for Awards
and the aggregate number of Shares for which Awards may be granted to any
individual Grantee in any calendar year pursuant to the second sentence of
Section 2;

          (b) the number of Shares, SARs or Performance Shares covered by an
Award; and

          (c) the Option Price of all outstanding options and the Strike Price
of all outstanding SARs; to reflect a stock dividend, stock split, reverse stock
split, share combination, recapitalization, merger, consolidation, spin-off,
split-off, reorganization, rights offering, liquidation or similar event of or
by the Company.

     21.  Amendment of the Plan.  The Committee may from time to time, in its
discretion, amend the Plan without the approval of the Company's shareholders,
except (a) as such shareholder approval may be required under the listing
requirements of any securities exchange or national market system on which are
listed the Company's equity securities and (b) that the Committee may not
without the approval of the Company's shareholders amend the Plan to increase
the total number of shares reserved for the purposes of the Plan (other than in
accordance with Section 20).

     22.  Termination of the Plan.  The Plan shall continue in effect until the
earlier of its termination by the Committee or the date on which all of the
shares of Common Stock available for issuance under the Plan have been issued
and all restrictions on such shares under the terms of the Plan and the
agreements evidencing Awards granted under the Plan have lapsed. However, all
Awards shall be granted, if at all, within ten (10) years from the earlier of
the date the Plan is adopted by the Committee or the date the Plan is duly
approved by the shareholders of the Company. Notwithstanding the foregoing, if
the maximum number of shares of Common Stock issuable pursuant to the Plan has
been increased at any time, all Awards shall be granted, if at all, no later
than the last day preceding the ten (10) year anniversary of the earlier of (a)
the date on which the latest
<PAGE>

such increase in the maximum number of shares of Common Stock issuable under the
Plan was approved by the shareholders of the Company or (b) the date such
amendment was adopted by the Committee. No termination shall affect any Award
then outstanding under the Plan.

     23.  No Illegal Transactions.  The Plan and all Awards granted pursuant to
it are subject to all applicable laws and regulations. Notwithstanding any
provision of the Plan or any Award, Grantees shall not be entitled to exercise,
or receive benefits under any Award, and the Company shall not be obligated to
deliver any Shares or deliver benefits to a Grantee, if such exercise or
delivery would constitute a violation by the Grantee or the Company of any
applicable law or regulation.

     24.  Constructive Sales.  The Grantee shall not directly or indirectly,
through related parties or otherwise, "short" or "short against the box" (as
those terms are generally understood in the securities markets), or otherwise
directly or indirectly (through derivative instruments or otherwise) dispose of
or hedge, any securities of the Company issuable upon exercise of such Grantee's
Award(s).

     25.  Definitions.  The terms set forth below have the indicated meanings
which are applicable to both the singular and plural forms thereof:

     "Award" shall mean options, including ISOs, Restricted Shares, Bonus
Shares, SARs or Performance Shares granted under the Plan.

     "Award Agreement" shall mean the written agreement by which an Award shall
be evidenced.

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

     "Bonus Shares" shall mean Shares that are awarded to a Grantee without cost
and without restrictions.

     "Cause", with respect to any employee or consultant of the Company shall
have the meaning set forth in such person's employment or consulting agreement
or, in the absence of such an agreement or if such term is not defined in such
agreement, shall mean any one or more of the following, as determined by the
Committee (in the case of a Section 16 Grantee) or the Chief Executive Officer
or President of the Company (in the case of any other Grantee):

          (i)   a Grantee's commission of a crime that is likely to result in
     injury to the Company or a Subsidiary;

          (ii)  the material violation by the Grantee of written policies of the
     Company or a Subsidiary;

          (iii) the habitual neglect by the Grantee in the performance of his or
     her duties to the Company or a Subsidiary; or
<PAGE>

     (iv) a Grantee's willful misconduct or inaction in connection with his or
her duties to the Company or a Subsidiary resulting in a material injury to the
Company or a Subsidiary.

     "Code" shall mean the Internal Revenue Code of 1986, as amended or
superseded, and the regulations and rulings thereunder. Reference to a
particular section of the Code shall include references to successor provisions.

     "Committee" shall mean the committee of the Board appointed pursuant to
Section 3(a), or if not so appointed or unable to act or with reference to
Awards to Independent Directors, shall mean the entire Board.

     "Common Stock" shall mean the common stock, $0.001 par value per share, of
the Company.

     "Consultant" shall mean any person, including a Director, who is engaged by
the Company or any Parent, Subsidiary or Affiliate thereof, to render services
to or for the benefit of the Company and is compensated for such services.

     "Director" shall mean a member of the Board.

     "Disability" shall mean a permanent and total disability, within the
meaning of Section 22(e)(3) of the Code.

     "Disqualifying Disposition" shall mean any disposition (including any sale)
of Common Stock before the later of (i) two (2) years after the date Grantee was
granted the ISOs hereunder or (ii) one year after the date Grantee acquired the
Common Stock by exercising the ISOs granted hereunder. If Grantee dies before
such Common Stock is sold, these holding period requirements do not apply and no
Disqualifying Disposition can occur thereafter.

     "Effective Date" shall mean the date set forth in the first paragraph
hereof.

     "Eligible Person" shall mean any Employee, Consultant or Director of the
Company or any Subsidiary, including any prospective Employee or Employee on an
approved leave of absence or layoff, if such leave or layoff does not qualify as
a Disability.

     "Employee" shall mean any person treated as an employee (including officers
and directors) in the records of the Company (or Subsidiary) and who is subject
to the control and direction of the Company (or Subsidiary) with regard to both
the work to be performed and the manner and method of performance. The payment
of a director's fee by the Company (or Subsidiary) to a Director shall not be
sufficient to constitute "employment" of the Director by the Company (or
Subsidiary).
<PAGE>

     "Fair Market Value" per share of Common Stock on any relevant date shall
mean such value as determined in accordance with the following provisions:

          (i) If the Common Stock is at that time listed on a national
     securities exchange, then the Fair Market Value shall mean the closing
     selling price per share of Common Stock on the exchange on which such
     Common Stock is principally traded on the relevant date or, if there were
     no sales on that date, the closing selling price of such Common Stock on
     the last preceding date on which there were sales.

          (ii) If the Common Stock is at that time traded on the Nasdaq National
     Market, Nasdaq Small Cap Market or OTC Bulletin Board, as the case may be,
     then the Fair Market Value shall mean the closing selling price per share
     of Common Stock on the relevant date, as the price is reported by the
     National Association of Securities Dealers on the Nasdaq National Market,
     Nasdaq Small Cap Market or OTC Bulletin Board, as the case may be, or any
     successor system. If there is no closing selling price for the Common Stock
     on the relevant date, then the Fair Market Value shall mean the closing
     selling price on the last preceding date for which such quotation exists.

          (iii) If the Common Stock is neither listed on any national securities
     exchange nor traded on the Nasdaq National Market, Nasdaq Small Cap Market
     or OTC Bulletin Board, then the Fair Market Value shall mean that value
     determined by the Committee after taking into account such factors as the
     Committee shall in good faith deem appropriate.

     "Grant Date" shall have the meaning specified in Section 6(a).

     "Grantee" shall mean a person who has been granted an Award or any
Permitted Transferee.

     "ISO" shall mean an incentive stock option within the meaning of Section
422 of the Code.

     "Immediate Family" shall mean, with respect to a particular Grantee, the
Grantee's spouse, children and grandchildren.

     "Independent Director" shall mean a member of the Board who in not an
Employee of the Company.

     "Mature Shares" shall mean Shares for which the holder thereof has good
title, free and clear of all liens and encumbrances, and which such holder has
held for at least six (6) months.

     "Minimum Consideration" shall mean par value per Share or such other amount
that is from time to time considered to be minimum consideration under
applicable law.
<PAGE>

     "1934 Act" shall mean the Securities Exchange Act of 1934, as amended.
References to a particular section of the 1934 Act or rule thereunder, include
references to successor provisions.

     "Option Price" shall mean the per share exercise price of an option.

     "Option Term" shall mean the period beginning on the Grant Date of an
option and ending on the expiration date of such option, as specified in the
Award Agreement for such option and as may, in the discretion of the Committee
and consistent with the provisions of the Plan, be extended from time to time.

     "Performance Shares" shall mean an Award to a Grantee pursuant to Section
6(e).

     "Permitted Transferee" shall mean a person to whom an Award may be
transferred or assigned in accordance with Section 7.

     "Public Company" shall mean any entity issuing any class of equity
securities that has been, or is required to be, registered under Section 12 of
the 1934 Act.

     "Restricted Shares" shall mean Shares that are subject to forfeiture if the
Grantee does not satisfy the conditions specified in the Award Agreement
applicable to those Shares.

     "Rule 16b-3" shall mean Rule 16b-3 of the SEC under the 1934 Act, as
amended from time to time, together with any successor rule.

     "SAR" shall mean a stock appreciation right.

     "SEC" shall mean the Securities and Exchange Commission.

     "Section 16 Grantee" shall mean a person who is subject to potential
liability under Section 16(b) of the 1934 Act with respect to transactions
involving equity securities of the Company.

     "Share" shall mean a share of Common Stock.

     "Strike Price" shall have the meaning specified in Section 6(d)(ii).

     "Subsidiary" shall mean a subsidiary corporation, as defined in Section
424(f) of the Code (with the Company being treated as the employer corporation
for purposes of this definition).

     "Ten Percent Owner" shall mean a person who owns capital stock (including
stock treated as owned under Section 424(d) of the Code) possessing more than
ten
<PAGE>

percent of the total combined Voting Power of all classes of capital stock of
the Company or any Subsidiary.

     "Voting Power" shall mean the combined voting power of the then-outstanding
securities of the Company entitled to vote generally in the election of
directors.

     26.  Controlling Law.  The law of the State of Delaware, except its law
with respect to choice of law, shall control all matters relating to the Plan.

     27.  Severability.  If any part of the Plan is declared by any court or
governmental authority to be unlawful or invalid, such unlawfulness or
invalidity shall not invalidate any other part of the Plan. Any Section or part
of a Section so declared to be unlawful or invalid shall, if possible, be
construed in a manner which will given effect to the terms of such Section to
the fullest extent possible while remaining lawful and valid.

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