Document:

exv10w2

 

Exhibit 10.2

EXHIBIT A

FIRST AMENDMENT TO

SAFEGUARD SCIENTIFICS, INC.

1999 EQUITY COMPENSATION PLAN

     Effective as of July 28, 2004, the Safeguard Scientifics, Inc. 1999 Equity
Compensation Plan is amended as set forth herein.

     1.       Section 12 of the Plan entitled “Loan Provisions” is hereby deleted in
its entirety.

     Amended by the Board of Directors on July 28, 2004.

	 	 	 	 	 
	 	 	 
	 	                                        /s/ Christopher J. Davis
 	 
	 	Christopher J. Davis 	 
	 	Executive Vice President and Chief
Administrative and Financial Officer 	 
	 

Dated: July 28, 2004exv10w3

 

Exhibit 10.3

EXHIBIT A

SECOND AMENDMENT TO

SAFEGUARD SCIENTIFICS, INC.

2001 ASSOCIATES EQUITY COMPENSATION PLAN

     Effective as of July 28, 2004, the Safeguard Scientifics, Inc. 2001
Associates Equity Compensation Plan is amended as set forth herein.

     1.      Section 12 of the Plan entitled “Loan Provisions” is hereby deleted in
its entirety.

     Amended by the Board of Directors on July 28, 2004.

	 	 	 	 	 
	 	 	 
	 	                                        /s/ Christopher J. Davis
 	 
	 	Christopher J. Davis 	 
	 	Executive Vice President and Chief
Administrative and Financial Officer 	 
	 

Dated: July 28, 2004<PAGE>

                                                                    EXHIBIT 10.1

                                    May 19, 2004

Mr. Lawrence E. Daurelle
c/o Reliance Standard Life Insurance Company
2001 Market Street, Suite 1500
Philadelphia, Pennsylvania 19103-7303

Re:  Stock Option Award Agreement

Dear Mr. Daurelle:

      We are pleased to inform you that, pursuant to action taken by the Stock
Option and Compensation Committee (the "Committee") of the Board of Directors of
Delphi Financial Group, Inc. ("Delphi") under Section 5 of the 2003 Employee
Long-Term Incentive and Share Award Plan (the "Plan"), you have been granted
options to purchase up to 150,000 shares of Delphi's Class A Common Stock (the
"Stock") at the price of $41.81 per share (the "Options"), which was the fair
market value of the Stock as of April 22, 2004, the date of such action, as
determined under the Plan. This notice, once countersigned by you, shall
constitute an "Award Agreement" as defined in Section 2(c) of the Plan.

      Such option grant is in all respects governed by, and is subject to, the
terms and conditions set forth herein and in Exhibit A hereto. In addition, such
grant was made subject to the approval by the stockholders of Delphi, at
Delphi's 2004 Annual Meeting of Stockholders, of the amendment to the Plan to
increase the number of shares available thereunder by 1,000,000, which approval
has been obtained. All capitalized terms used but not defined herein shall have
the meanings given to them in the Plan.

      The Options will become exercisable, in accordance with the procedures set
forth herein, if and to the extent that Reliance Standard Life Insurance Company
of Texas and its consolidated subsidiaries (collectively, "the RSL Companies")
meet the following financial performance goals:

<PAGE>

Lawrence E. Daurelle
May 19, 2004
Page 2

      (a) If the RSL Companies' aggregate Pre-Tax Operating Income, as defined
in Exhibit A hereto ("Pre-Tax Operating Income"), for the period consisting of
Delphi's 2004, 2005 and 2006 fiscal years is at least $329,378,043, 75,000
Options shall become exercisable. Alternatively, if the RSL Companies' aggregate
Pre-Tax Operating Income for such period does not reach $329,378,043 but is
greater than $300,480,791, a reduced number of the Options shall become
exercisable, to be determined by interpolating between zero and 75,000 in
relation to the point at which the Pre-Tax Operating Income amount falls in the
range between $300,480,791 and $329,378,043. For example, if Pre-Tax Operating
Income for such period were exactly $314,929,417, 37,500 Options would become
exercisable.

      (b) If the RSL Companies' aggregate Pre-Tax Operating Income for the
period consisting of Delphi's 2004, 2005, 2006, 2007 and 2008 fiscal years is at
least $646,159,683, 150,000 Options, less the number of Options, if any, as have
previously exercisable pursuant to the preceding clause (a) (the "Previously
Vested Options"), shall become exercisable. Alternatively, if the RSL Companies'
aggregate Pre-Tax Operating Income for such period does not reach $646,159,683,
but is greater than $559,927,799, a reduced number of the Options shall become
exercisable, to be determined by interpolating between zero and 150,000 in
relation to the point at which the Pre-Tax Operating Income amount falls in the
range between $559,927,799 and $646,159,683, and subtracting the number of the
Previously Vested Options. For example, if Pre-Tax Operating Income for such
period was $624,601,637, and the number of the Previously Vested Options was
37,500, 75,000 Options would become exercisable. If, in such example, there were
instead no Previously Vested Options, 112,500 Options would become exercisable.

      (c) In addition, if your employment with Delphi's subsidiary, Reliance
Standard Life Insurance Company ("RSL"), terminates due to death or Disability
or is terminated by RSL without Cause or by you for Good Reason, then,
notwithstanding any provisions hereof or of the Plan to the contrary, with
respect to Options that have not become exercisable prior to such termination
pursuant to the provisions of the preceding

<PAGE>

Lawrence E. Daurelle
May 19, 2004
Page 3

clauses (a) and/or (b), such Options will become exercisable at such times, if
any, as would have been the case pursuant to such clauses if not for such
termination; provided, however, that the number of Options that becomes
exercisable will, in each case, be reduced by a percentage equal to the
applicable percentage of the three-year period (in the case of clause (a)) and
the five-year period (in the case of clause (b)) during which you were not
employed by RSL by reason of such termination. For purposes of this clause (c),
the following definitions shall apply:

      "Disability" shall mean an illness, injury, accident or condition of
either a physical or psychological nature as a result of which you are unable to
perform substantially the duties and responsibilities of your position during a
period of 180 days during a period of 365 consecutive calendar days.

      "Cause" shall mean (i) conviction of a felony or other crime involving
fraud, dishonesty or moral turpitude, (ii) fraud or intentional
misrepresentation, embezzlement, misappropriation or conversion of assets or
opportunities of Delphi or any Subsidiary thereof, or any unauthorized
disclosure of confidential information or trade secrets of Delphi or any
Subsidiary thereof (a "Breach of Confidentiality"), or (iii) gross neglect of
duties of your office specified by the Board of Directors of RSL.

      "Good Reason" shall mean (i) reduction of your base salary for any fiscal
year to less than 100 percent of the rate of base salary in effect for you as of
the date of this Award Agreement; or (ii) the failure of RSL to continue in
effect any retirement, life insurance, medical insurance or disability plan in
which you were participating of as the date of this Award Agreement, except, as
to any such plan, where RSL provides you with a plan that provides substantially
comparable benefits or where the discontinuation of such plan applies generally
with respect to the employees of RSL (or, in the case of a plan furnished only
to a specified group of RSL employees, with respect to such group).

      Options which do not become exercisable pursuant to the provisions of the
preceding clauses (a), (b) and/or (c) shall expire and terminate in their
entirety without becoming

<PAGE>

Lawrence E. Daurelle
May 19, 2004
Page 4

exercisable.

      For purposes of application of the foregoing provisions relating to the
exercisability of the Options, the following procedures shall apply:

      Each determination of Pre-Tax Operating Income shall be made by Delphi,
based upon a statement of operations of the RSL Companies for the applicable
period conforming to the provisions of Exhibit A hereto and in form and
substance reasonably acceptable to Delphi.

      Delphi shall notify you in writing, within 105 days following the close of
each of the multi-year periods referenced in the preceding clauses (a) and (b),
of its determination as to the level of aggregate Pre-Tax Operating Income
achieved and, based on such determination, the extent to which the Options have
become exercisable pursuant to the applicable provision of such clauses (a) and
(b) or, if applicable, clause (c). Options having become exercisable, as
described in such notice, shall for all purposes of the Plan be exercisable
immediately as of the date of such notice.

      Options that become exercisable as provided herein will, if not sooner
exercised or terminated pursuant to the provisions hereof, terminate at the
close of business on April 22, 2014. The Options are in all respects subject to
each of the terms and conditions of the Plan, a copy of which is attached hereto
as Exhibit B, except as otherwise provided herein and except that: (i) the
provisions of Sections 5(b)(iii), (iv), (vi) and (viii) of the Plan will not
limit your ability to exercise, following a termination of your employment by
RSL or for the other reasons set forth therein, Options that have become
exercisable as of the date of such termination or that become exercisable
thereafter pursuant to the provisions of clause (c) above; provided, however,
that the Options will terminate in their entirety upon the occurrence of a
Breach of Confidentiality on your part occurring subsequent to such termination
of employment; (ii) for purposes of Section 5(b)(v) of the Plan, your discharge
for cause shall result in the termination of Options that are exercisable at the
time of such discharge only where the Committee determines that the discharge
was based on an event or

<PAGE>

Lawrence E. Daurelle
May 19, 2004
Page 5

action of the type described in clause (ii) of the definition of "Cause" above;
and (iii) notwithstanding the provisions of Section 5(b)(ix) of the Plan, the
exercise price for the Options may be paid by your directing that Delphi
withhold from the Option shares a number of shares having a market value, at the
time of exercise, equal to such exercise price, so long as such payment method
will not, in Delphi's judgment, result in adverse accounting consequences for
Delphi; and (iv) the provisions of Section 8(a) of the Plan shall not apply to
the Options.

      In addition, RSL, by its execution of this Award Agreement, has agreed
that if it terminates your employment without Cause or if you terminate your
employment for Good Reason (as such term is defined above) subsequent to the
occurrence of a Change of Ownership, and all or a portion of the Options remain
outstanding as of the date (the "Termination Date") of such termination (whether
such Options are then exercisable for shares of Delphi or another company, cash
or other property), then, so long as the Performance Condition has then been
satisfied and unless, in connection with such termination, the Committee (or, if
applicable, such other committee, person or entity as then has the authority to
do so) effects an Accelerated Vesting with respect to such remaining Options,
RSL shall pay or cause to be paid to you the Black-Scholes Value of such
remaining Options within thirty (30) days following the Termination Date. For
purposes of this paragraph:

      "Change of Ownership" shall mean, in addition to the events specified in
the definition of such term contained in the Plan, the occurrence of any
transaction pursuant to which Delphi ceases to own, directly or indirectly, a
majority of the total voting power of the voting securities of RSL.

      "Performance Condition" shall mean the attainment by the RSL Companies,
for the period commencing on January 1, 2004 through and including the full
calendar quarter most recently having been completed as of the Termination Date,
of aggregate Pre-Tax Operating Income in an amount representing a compound
average annualized growth rate of at least eleven percent (11%), as compared
with the 2003 base amount of $80,998,000. For example, as to a Termination Date
occurring on August 3, 2005, the Performance Condition would relate to the
period from

<PAGE>

Lawrence E. Daurelle
May 19, 2004
Page 6

January 1, 2004 through June 30, 2005, and would require that aggregate Pre-Tax
Operating Income for such period equal at least $139,806,597.

      "Accelerated Vesting" shall mean the acceleration of the exercisability of
the Options in their entirety, effective as of the Termination Date, to the
extent that such Options have not previously become exercisable pursuant to the
terms thereof.

      "Black-Scholes Value" shall mean the fair value of the Options, as of the
Termination Date, determined pursuant to the standard Black-Scholes option
pricing model by a nationally recognized public accounting firm designated by
the Board of Directors of RSL, in consultation with the Committee, and engaged
at RSL's expense.

      Finally, in accordance with Section 6(d) of the Plan, this will confirm
that you may, upon written notice to Delphi, transfer the Options, for or
without consideration, to members of your immediate family (as defined below),
to a partnership or limited liability company in which one or more of your
immediate family members are the only partners or members, or to a trust or
trusts established for your exclusive benefit or the exclusive benefit of one or
more members of your immediate family. Any Options held by the transferee will
continue to be subject to the same terms and conditions that were applicable to
the Options immediately prior to the transfer, except that the Options will be
transferable by the transferee only by will or the laws of descent and
distribution. For purposes hereof, "immediate family" means your children,
grandchildren, and spouse. You are further advised that, under existing rules of
the Securities and Exchange Commission, any Form S-8 registration statement
filed by Delphi relating to the Plan will not cover the exercise of Options
transferred for consideration, and therefore, such exercise would be required to
be covered by an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act"), or otherwise be exempt from registration
under the 1933 Act, and shares of Stock acquired on such exercise would
constitute "restricted securities" within the meaning of Rule 144 under the 1933
Act. No assurance can be given that, under such circumstances, registration
under the 1933 Act with respect to such exercise or such shares can or

<PAGE>

Lawrence E. Daurelle
May 19, 2004
Page 7

will be effected or that an exemption from such registration will be available.

      If you are in agreement with and accept each of the terms and conditions
of the Options, as described above, please confirm such agreement and acceptance
by executing and dating both counterparts of this Stock Option Award Agreement
and returning one fully executed counterpart to me. The other counterpart should
be retained for your files.

                                    Very truly yours,

                                    /s/ CHAD W. COULTER

                                    Chad W. Coulter
                                    Vice President, Secretary
                                     and General Counsel

Agreed to and accepted:

RELIANCE STANDARD LIFE INSURANCE COMPANY
(as to the Contingent Payment Agreement)

By: /s/ ROBERT ROSENKRANZ
    --------------------------------
    Robert Rosenkranz
    Chairman of the Board

/s/ LAWRENCE E. DAURELLE                                Date: May 20, 2004
------------------------------------
Lawrence E. Daurelle

<PAGE>

EXHIBIT A
TO
STOCK OPTION AWARD AGREEMENT

General

      Capitalized terms used but not defined herein shall have the meanings
given to them in the Stock Option Award Agreement to which this Exhibit A is
attached (the "Option Agreement"). For purposes of the Option Agreement,
"Pre-Tax Operating Income" shall mean the operating income of the RSL Companies,
excluding realized investment gains and losses, net of interest expense and
before extraordinary gain or loss and federal income tax expense, all as
determined in accordance with Generally Accepted Accounting Principles, as in
effect as of January 1, 2004 ("GAAP"), subject to the Special Adjustments for
which this Exhibit A provides. The determination of Pre-Tax Operating Income
will be made by Delphi annually within 90 days of the end of each year.

Special Adjustments

      Adjustment events: Each of the following shall constitute an Adjustment
      Event for purposes of the Option Agreement:

            (A) the receipt by Delphi from the RSL Companies of stockholder
      dividends exceeding (i) $16,300,000 in the aggregate during the period
      consisting of Delphi's 2004, 2005 and 2006 fiscal years or (ii)
      $27,200,000 in the aggregate during the period consisting of the 2004,
      2005, 2006, 2007 and 2008 fiscal years (the "Performance Period");

            (B) the making by Delphi of capital and/or surplus contributions to
      any of the RSL Companies at any time during the Performance Period,
      regardless of the form of such contribution, which, taken together with
      any previous such contributions during the Performance Period, exceed
      $10,000,000 in the aggregate;

            (C) the acquisition by Delphi, directly or indirectly, of a company
      or a division or business unit thereof by merger, consolidation, purchase
      of equity interests or assets or any other similar transaction, the
      business activities of which are substantially related to

<PAGE>

      any of the business activities then conducted (or intended to be conducted
      subsequent to such acquisition) by the RSL Companies.

      Upon the occurrence of an Adjustment Event, Delphi executive management,
      in consultation with the Chief Executive Officer of the RSL Companies, may
      recommend to the Committee any amendments or modifications to the
      conditions to vesting of the Options relating to the financial performance
      of the RSL Companies, as set forth in clauses (a) and (b) at page 2 of the
      Option Agreement (the "Vesting Provisions"), which Delphi executive
      management believes in good faith to be necessary or appropriate to take
      into account the effect of such Adjustment Event, including but not
      limited to the adjustment of one or more of the Pre-Tax Operating Income
      thresholds set forth therein. It is anticipated that such adjustments will
      consist of reductions (in the case of an Adjustment Event described in
      clause (A) above) and increases (in the case of an Adjustment Event
      described in clause (B) above) in such thresholds, respectively, by
      applying an appropriate interest factor to the relevant amounts paid as
      dividends or contributed to capital, as the case may be.

      Upon receipt of any such recommendation, the Committee shall determine in
      its sole discretion whether to amend or modify the Vesting Provisions
      based on the relevant Adjustment Event, and the terms and conditions of
      any such amendment or modification. Any such amendment or modification
      shall be communicated in writing to, and shall be final and binding on,
      each holder of Stock options whose terms contain goals relating to Pre-Tax
      Operating Income for the 2004-2008 period (collectively, the RSL
      Optionholders"). For the purpose of avoidance of doubt, no such amendment
      or modification shall be deemed to have materially and adversely affected
      the rights of any RSL Optionholder under the Options for any purpose of
      Section 9(d) of the Plan.

      Employee option expenses: SFAS 123 expenses attributable to options
      granted to RSL employees on or after January 1, 2004 (other than the
      options granted to the RSL Optionholders) shall be included as items of
      expense.

<PAGE>

Arbitration

      Delphi shall provide each RSL Optionholder with a detailed written
      calculation supporting Delphi's determination as to whether the applicable
      goal has been achieved (each, a "Delphi Determination") and, where such
      calculation indicates such goal having been achieved, confirming the
      number of Options having become exercisable as a result thereof, within
      ninety (90) days after the completion of each of the 2006 and 2008 fiscal
      periods. If a majority of the RSL Optionholders shall disagree with any
      Delphi Determination, the RSL Optionholders shall give written notice of
      such disagreement to Delphi within ten (10) business days after receipt of
      such Delphi Determination. If within twenty (20) business days after
      Delphi's receipt of the notice of disagreement from the RSL Optionholders
      referenced in the immediately preceding sentence, Delphi and the RSL
      Optionholders are unable to agree with regard to any Delphi Determination,
      the disagreement may be submitted to arbitration by either Delphi or the
      RSL Optionholders, which arbitration determination shall be final and
      binding on the parties. The party instituting the arbitration procedures
      shall give written notice to the other party of its desire to arbitrate
      and such notice shall specify the name and address of the person
      designated to act as an arbitrator on its behalf. Within twenty (20)
      business days after the service of this notice, the other party shall
      notify the first party of the appointment of its arbitrator within the
      twenty (20) business day period specified above, then the appointment of
      the second arbitrator shall be made in the same manner as hereinafter
      provided for the appointment of a third arbitrator in a case where the two
      appointed arbitrators are unable to agree upon a third arbitrator. The two
      arbitrators so chosen shall meet within 10 business days after the second
      arbitrator is appointed and shall select the third arbitrator by mutual
      agreement. If the two arbitrators shall fail to appoint a third arbitrator
      within 10 business days after the second arbitrator is appointed, then the
      third arbitrator shall be appointed by the American Arbitration
      Association ("AAA"), or any organization successor thereto, in accordance
      with its prevailing rules. Each arbitrator chosen or appointed pursuant to
      the foregoing provisions shall be an active or retired officer of an
      insurance or reinsurance company and shall be a disinterested person.

<PAGE>

      The arbitrators shall review the provisions of this Exhibit A and the
      Option Agreement, as well as any other documents or materials supplied by
      either party supporting such party's position. The arbitrators shall
      render their decision with regard to the disputed Delphi Determination
      upon the concurrence of at least two of their number not later than thirty
      (30) business days after the appointment of the third arbitrator. The
      decision of the arbitrators shall be in writing and counterpart copies
      shall be delivered to each of Delphi and the RSL Optionholders. In
      rendering their decision, the arbitrators shall have no power to modify
      any of the provisions of this Agreement. All arbitration proceedings shall
      occur in Philadelphia, Pennsylvania. Judgment may be entered on the award
      of the arbitrators and may be enforced in accordance with the laws of the
      Commonwealth of Pennsylvania.

      Immediately upon a party hereto giving written notice of its desire to
      arbitrate hereunder, Delphi agrees upon request to provide the RSL
      Optionholders with access to the books and records of the RSL Companies
      which reasonably relate to the Delphi Determinations (including, without
      limitation, examination rights and the right to make abstracts or copies
      from such books and records) during the normal business hours of RSL.

      Each party shall pay the fees and expenses of the original arbitrator that
      it appointed (or in the case of the second party, the arbitrator appointed
      on its behalf if it should fail to appoint its own arbitrator). The fees
      and expenses of the third arbitrator and all other expenses of the
      arbitrators shall be borne by Delphi, on one hand, and the RSL
      Optionholders, on the other hand, equally. Each party shall bear the
      expense of its own counsel and the preparation and presentation of proof
      or supportive documentation.

<PAGE>

                                    EXHIBIT B

                          DELPHI FINANCIAL GROUP, INC.
             2003 EMPLOYEE LONG-TERM INCENTIVE AND SHARE AWARD PLAN

1. PURPOSES

The purposes of the 2003 Long-Term Incentive and Share Award Plan are to advance
the interests of Delphi Financial Group, Inc. and its shareholders by providing
a means to attract, retain, and motivate employees of the Company and its
Subsidiaries and Affiliates and other participants upon whose judgment,
initiative and efforts the continued success, growth and development of the
Company is dependent.

2. DEFINITIONS

For purposes of the Plan, the following terms shall be defined as set forth
below:

      (a) "AFFILIATE" means any entity other than the Company and its
Subsidiaries that is designated by the Board or the Committee as a participating
employer under the Plan; provided, however, that the Company directly or
indirectly owns at least 30% of the combined voting power of all classes of
stock of such entity or at least 30% of the ownership interests in such entity.

      (b) "AWARD" means any Option, Restricted Share, Restricted Share Unit, or
Other Share-Based Award granted to an Eligible Person under the Plan.

      (c) "AWARD AGREEMENT" means any written agreement, contract, or other
instrument or document evidencing an Award.

      (d) "BOARD" means the Board of Directors of the Company.

      (e) "CODE" means the Internal Revenue Code of 1986, as amended from time
to time. References to any provision of the Code shall be deemed to include
successor provisions thereto and regulations thereunder.

      (f) "COMMITTEE" means the Stock Option and Compensation Committee of the
Board, or such other Board committee (which may include the entire Board) as may
be designated by the Board to administer the Plan; provided, however, that,
unless otherwise determined by the Board, the Committee shall consist of two or
more directors of the Company, each of whom is a "non-employee director" within
the meaning of Rule 16b-3 under the Exchange Act, to the extent applicable, and
each of whom is an "outside director" within the meaning of Section 162(m) of
the Code, to the extent applicable; provided, further, that the mere fact that
the Committee shall fail to qualify under either of the foregoing requirements
shall not invalidate any Award made by the Committee which Award is otherwise
validly made under the Plan.

                                      -1-
<PAGE>

      (g) "COMPANY" means Delphi Financial Group, Inc., a corporation organized
under the laws of Delaware, or any successor corporation.

      (h) "ELIGIBLE PERSON" means (i) an employee of the Company, a Subsidiary
or an Affiliate, including any director who is an employee, or (ii) another
individual who, in the Committee's judgment, can make substantial contributions
to the long-term profitability and value of the Company, its Subsidiaries or
Affiliates. Notwithstanding any provision of this Plan to the contrary, an Award
may be granted to an employee, in connection with his or her hiring, prior to
the date the employee first performs services for the Company, a Subsidiary or
an Affiliate; provided, however, that any such Award shall not become vested
prior to the date the employee first performs such services.

      (i) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time. References to any provision of the Exchange Act shall be
deemed to include successor provisions thereto and regulations thereunder.

      (j) "FAIR MARKET VALUE" means, with respect to Shares or other property,
the fair market value of such Shares or other property determined by such
methods or procedures as shall be established from time to time by the
Committee. If the Shares are listed on any established stock exchange or a
national market system, unless otherwise determined by the Committee in good
faith, the Fair Market Value of Shares shall mean the closing price per Share on
the applicable date (or, if the Shares were not traded on that day, the next
preceding day on which the Shares were traded) on the principal exchange or
market system on which the Shares are traded, as such prices are officially
reported on such exchange.

      (k) "ISO" means any Option intended to be and designated as an incentive
stock option within the meaning of Section 422 of the Code.

      (l) "NQSO" means any Option that is not an ISO.

      (m) "OPTION" means a right, granted under Section 5(b), to purchase
Shares.

      (n) "OTHER SHARE-BASED AWARD" means a right, granted under Section 5(e),
that relates to or is valued by reference to Shares.

      (o) "PARTICIPANT" means an Eligible Person who has been granted an Award
under the Plan.

      (p) "PLAN" means this 2003 Employee Long-Term Incentive and Share Award
Plan.

      (q) "RESTRICTED SHARES" means an Award of Shares under Section 5(c) that
may be subject to certain restrictions and to a risk of forfeiture.

      (r) "RESTRICTED SHARE UNIT" means a right, granted under Section 5(d), to
receive Shares or cash at the end of a specified deferral period.

                                      -2-
<PAGE>

      (s) "RULE 16b-3" means Rule 16b-3, as from time to time in effect and
applicable to the Plan and Participants, promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act.

      (t) "SHARES" means Class A common stock, $.01 par value per share, of the
Company.

      (u) "SUBSIDIARY" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations (other than the last corporation in the unbroken chain) owns shares
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain.

3. ADMINISTRATION

      (a) AUTHORITY OF THE COMMITTEE. The Plan shall be administered by the
Committee, and the Committee shall have full and final authority to take the
following actions, in each case subject to and consistent with the provisions of
the Plan:

         (i) to select Eligible Persons to whom Awards may be granted;

         (ii) to designate Affiliates;

         (iii) to determine the type and number of Awards to be granted, the
number of Shares to which an Award may relate, the terms and conditions of any
Award granted under the Plan (including, but not limited to, any exercise price,
grant price, or purchase price, any restriction or condition, any schedule for
lapse of restrictions or conditions relating to transferability or forfeiture,
exercisability, or settlement of an Award, and waiver or accelerations thereof,
and waivers of performance conditions relating to an Award, based in each case
on such considerations as the Committee shall determine), and all other matters
to be determined in connection with an Award;

         (iv) to determine whether, to what extent, and under what circumstances
an Award may be settled, or the exercise price of an Award may be paid, in cash,
Shares, other Awards, or other property, or an Award may be canceled, forfeited,
exchanged, or surrendered;

         (v) to determine whether, to what extent, and under what circumstances
cash, Shares, other Awards, or other property payable with respect to an Award
will be deferred either automatically, at the election of the Committee, or at
the election of the Eligible Person;

         (vi) to prescribe the form of each Award Agreement, which need not be
identical for each Eligible Person;

         (vii) to adopt, amend, suspend, waive, and rescind such rules and
regulations and appoint such agents as the Committee may deem necessary or
advisable to administer the Plan;

                                      -3-
<PAGE>

         (viii) to correct any defect or supply any omission or reconcile any
inconsistency in the Plan and to construe and interpret the Plan and any Award,
rules and regulations, Award Agreement, or other instrument hereunder;

         (ix) to accelerate the exercisability or vesting of all or any portion
of any Award or to extend the period during which an Award is exercisable;

         (x) to determine whether uncertificated Shares may be used in
satisfying Awards and otherwise in connection with the Plan; and

         (xi) to make all other decisions and determinations as may be required
under the terms of the Plan or as the Committee may deem necessary or advisable
for the administration of the Plan.

      (b) MANNER OF EXERCISE OF COMMITTEE AUTHORITY. The Committee shall have
sole discretion in exercising its authority under the Plan. Any action of the
Committee with respect to the Plan shall be final, conclusive, and binding on
all persons, including but not limited to the Company, Subsidiaries, Affiliates,
Eligible Persons, any person claiming any rights under the Plan from or through
any Eligible Person, and shareholders. The express grant of any specific power
to the Committee, and the taking of any action by the Committee, shall not be
construed as limiting any power or authority of the Committee. The Committee may
delegate to other members of the Board or officers or employees of the Company
or any Subsidiary or Affiliate the authority, subject to such terms as the
Committee shall determine, to perform administrative functions.

      (c) LIMITATION OF LIABILITY. Each member of the Committee shall be
entitled to, in good faith, rely or act upon any report or other information
furnished to him or her by any officer or employee of the Company or any
Subsidiary or Affiliate, the Company's independent certified public accountants,
or other professional retained by the Company to assist in the administration of
the Plan. No member of the Committee, and no officer or employee of the Company
acting on behalf of the Committee, shall be personally liable for any action,
determination, or interpretation taken or made in good faith with respect to the
Plan, and all members of the Committee and any officer or employee of the
Company acting on their behalf shall, to the fullest extent permitted by law, be
indemnified and protected by the Company with respect to any such action,
determination, or interpretation.

      (d) LIMITATION ON COMMITTEE'S DISCRETION. Anything in this Plan to the
contrary notwithstanding, in the case of any Award which is intended to qualify
as "qualified performance-based compensation" within the meaning of Section
162(m) of the Code, the Committee shall have no discretion to increase the
amount of compensation payable under the Award to the extent such an increase
would cause the Award to lose its qualification as such qualified
performance-based compensation.

                                      -4-
<PAGE>

4. SHARES SUBJECT TO THE PLAN

      (a) Subject to adjustment as provided in Section 4(c) hereof, the total
number of Shares reserved for issuance in connection with Awards under the Plan
shall be 2,500,000. No Award may be granted if the number of Shares to which
such Award relates, when added to the number of Shares previously issued under
the Plan and the number of shares to which outstanding Awards then relate,
exceeds the number of Shares reserved under the preceding sentence. If any
Awards are forfeited, canceled, terminated, exchanged or surrendered or such
Award is settled in cash or otherwise terminates without a distribution of
Shares to the Participant, any Shares counted against the number of Shares
reserved and available under the Plan with respect to such Award shall, to the
extent of any such forfeiture, settlement, termination, cancellation, exchange
or surrender, again be available for Awards under the Plan. Upon the exercise of
any Award granted in tandem with any other Awards, such related Awards shall be
canceled to the extent of the number of Shares as to which the Award is
exercised.

      (b) Subject to adjustment as provided in Section 4(c) hereof, the maximum
number of Shares (i) with respect to which Options may be granted during a
calendar year to any Eligible Person under this Plan shall be 750,000 Shares,
and (ii) with respect to Restricted Shares, Restricted Share Units or Other
Share-Based Awards intended to qualify as qualified performance-based
compensation within the meaning of Section 162(m) of the Code, shall be the
equivalent of 225,000 Shares during a calendar year to any Eligible Person under
this Plan.

      (c) In the event that the Committee shall determine that any dividend in
Shares, recapitalization, Share split, reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, or share exchange, or other
similar corporate transaction or event, affects the Shares or the value thereof
such that an adjustment is appropriate in order to prevent dilution or
enlargement of the rights of Eligible Persons under the Plan, then the Committee
shall make such equitable changes or adjustments as it deems appropriate,
including but not limited to the adjustment, in such manner as it may deem
equitable, of any or all of (i) the number and kind of shares which may
thereafter be issued under the Plan, (ii) the number and kind of shares, other
securities or other consideration issued or issuable in respect of outstanding
Awards, and (iii) the exercise price, grant price, or purchase price relating to
any Award; provided, however, in each case that, with respect to ISOs, such
adjustment shall be made in accordance with Section 424(a) of the Code, unless
the Committee determines otherwise. In addition, subject to the limitations set
forth in Section 3(d) and Section 7 hereof, the Committee is authorized to make
adjustments in the terms and conditions of, and the criteria and performance
objectives, if any, included in, Awards in recognition of unusual or
non-recurring events (including, without limitation, events described in the
preceding sentence) affecting the Company or any Subsidiary or Affiliate or the
financial statements of the Company or any Subsidiary or Affiliate, or in
response to changes in applicable laws, regulations, or accounting principles.

      (d) Any Shares distributed pursuant to an Award may consist, in whole or
in part, of authorized and unissued Shares or treasury Shares including Shares
acquired by purchase in the open market or in private transactions.

                                      -5-
<PAGE>

5. SPECIFIC TERMS OF AWARDS

      (a) GENERAL. Awards may be granted on the terms and conditions set forth
in this Section 5. In addition, the Committee may impose on any Award or the
exercise thereof, at the date of grant or thereafter (subject to Section 9(d)),
such additional terms and conditions, not inconsistent with the provisions of
the Plan, as the Committee shall determine, including terms regarding forfeiture
of Awards or continued exercisability of Awards in the event of termination of
service by the Eligible Person.

      (b) OPTIONS. The Committee is authorized to grant Options, which may be
NQSOs or ISOs, to Eligible Persons on the following terms and conditions:

         (i) EXERCISE PRICE. The exercise price per Share purchasable under an
Option shall be determined by the Committee; provided, however, that the
exercise price per Share of an Option shall not be less than the Fair Market
Value of a Share on the date of grant of the Option. The Committee may, without
limitation, set an exercise price that is based upon achievement of performance
criteria if deemed appropriate by the Committee.

         (ii) OPTION TERM AND EXERCISE PERIOD. The term of each Option shall be
determined by the Committee; provided, however, that such term shall not be
longer than ten years from the date of grant of the Option. The last day of the
term of an Option shall be referred to herein as its "Expiration Date." Subject
to Sections 5(b)(iii) through 5(b)(vi), Options may be exercised by a
Participant only for so long as such Participant is employed by the Company.

         (iii) TERMINATION OF EMPLOYMENT EXCEPT BY DEATH, DISABILITY OR
DISCHARGE FOR CAUSE. Unless otherwise specified in an Award Agreement, in the
event that the employment of a Participant by the Company, its Subsidiaries or
Affiliates shall terminate for any reason other than death, disability, or
discharge for cause, Options may be exercised only within ninety (90) days after
such termination of employment or such longer period as may be established by
the Committee at the time of grant or thereafter, but (unless otherwise
determined by the Committee) only to the extent such Option was exercisable on
the last day of employment, and in no event may an Option be exercised after its
Expiration Date. Any portion of the Option which was not exercisable on such
last day shall expire immediately. Whether an authorized leave of absence or
absence for military or governmental service shall constitute termination of
employment for purposes of the Plan shall be determined by the Committee, which
determination shall be final and conclusive.

                                      -6-
<PAGE>

         (iv) DEATH OR DISABILITY. Unless otherwise specified in an Award
Agreement, in the event a Participant shall die or become disabled while in the
employ of the Company, a Subsidiary or an Affiliate, Options may be exercised at
any time within one (1) year after the Participant's death or disability or such
longer period as may be established by the Committee at the time of grant or
thereafter, but (unless otherwise determined by the Committee) only to the
extent that such Option was exercisable on the last day of employment, and in no
event may an Option be exercised after its Expiration Date. During such one-year
period, the Option may be exercised by the Participant or a representative, or
in the case of death, by the executors or administrators of the Participant or
by any person or persons who shall have acquired the Option directly from the
Participant by bequest or inheritance. Whether a Participant shall have become
disabled for the purposes of the Plan shall be determined by the Committee,
which determination shall be final and conclusive.

         (v) DISCHARGE FOR CAUSE. If a Participant is discharged for cause, all
unexercised Options shall terminate as of the date of discharge. Whether a
Participant is discharged for cause for purposes of the Plan shall be determined
by the Committee, which determination shall be final and conclusive.

         (vi) RETIREMENT. Notwithstanding the provisions of Section 5(b)(iii)
hereof, the Committee may, at the time of grant of an Option or thereafter,
permit the Participant to exercise Options up to one (1) year following the
Participant's retirement under the Company's, its Subsidiary's or its
Affiliate's, as applicable, retirement policy or such longer period as may be
established by the Committee at the time of grant or thereafter; provided that
in no event may an Option be exercised after its Expiration Date.

         (vii) NON-EMPLOYEE OPTIONEES. Section 5(b)(ii) (except for the first
sentence thereof) through (vi) shall not apply with respect to Options having
been granted to a Participant who is not an employee of the Company, a
Subsidiary, or an Affiliate (a "Non-Employee Optionee"). In the case of any such
Options, the Award Agreement shall set forth the applicable limitations on the
exercisability thereof, and the effect on such exercisability of death,
disability and any other events provided for therein, at the time of grant or
thereafter.

         (viii) RIGHT OF COMPANY. In the case of a termination of an Optionee's
employment by reason of death, disability, retirement or discharge other than
for cause (or, in the case of a Non-Employee Optionee, to the extent provided in
the Award Agreement at the time of grant or thereafter) the Company may, but is
not obligated to, purchase unexercised Options held by such Participant and pay
such person the amount of cash equal to (i) the aggregate Fair Market Value of
the Shares underlying such Option (to the extent that such Options would have
been exercisable by the Participant upon termination of employment) as of the
date of termination of employment (or, in the case of a Non-Employee Optionee,
the date provided in the Award Agreement at the time of grant or thereafter),
less (ii) the aggregate exercise price under such option.

         (ix) TIME AND METHOD OF EXERCISE. The Committee shall determine at the
date of grant or thereafter the time or times at which an Option may be
exercised in whole or in part (including, without limitation, upon achievement
of performance criteria if deemed appropriate by the Committee), the methods by
which such exercise price may be paid or deemed to be paid (including, without
limitation, broker-assisted exercise arrangements), the form of such payment
(including, without limitation, cash, Shares, notes or other property), and the
methods by which Shares will be delivered or deemed to be delivered to Eligible
Persons; provided, however, unless otherwise determined by the Committee that in
no event may any portion of the exercise price be paid with Shares acquired
either under an Award granted pursuant to this Plan, upon exercise of a stock
option granted under another

                                      -7-
<PAGE>

Company plan or as a stock bonus or other stock award granted under another
Company plan unless, in any such case, the Shares were acquired and vested more
than six months in advance of the date of exercise.

         (x) ISOS. The terms of any ISO granted under the Plan shall comply in
all respects with the provisions of Section 422 of the Code, including but not
limited to the requirement that the ISO shall be granted within ten years from
the earlier of the date of adoption or shareholder approval of the Plan. ISOs
may only be granted to employees of the Company or a Subsidiary.

      (c) RESTRICTED SHARES. The Committee is authorized to grant Restricted
Shares to Eligible Persons on the following terms and conditions:

         (i) ISSUANCE AND RESTRICTIONS. Restricted Shares shall be subject to
such restrictions on transferability and other restrictions, if any, as the
Committee may impose at the date of grant or thereafter, which restrictions may
lapse separately or in combination at such times, under such circumstances
(including, without limitation, upon achievement of performance criteria if
deemed appropriate by the Committee), in such installments, or otherwise, as the
Committee may determine. Except to the extent restricted under the Award
Agreement relating to the Restricted Shares, an Eligible Person granted
Restricted Shares shall have all of the rights of a shareholder including,
without limitation, the right to vote Restricted Shares and the right to receive
dividends thereon. If Restricted Shares are intended to qualify as "qualified
performance-based compensation" for purposes of Section 162(m) of the Code, such
Restricted Shares shall be issued in accordance with the provisions of Section 7
below.

         (ii) FORFEITURE. Except as otherwise determined by the Committee, at
the date of grant or thereafter, upon termination of service during the
applicable restriction period, Restricted Shares and any accrued but unpaid
dividends that are at that time subject to restrictions shall be forfeited;
provided, however, that the Committee may provide, by rule or regulation or in
any Award Agreement, or may determine in any individual case, that restrictions
or forfeiture conditions relating to Restricted Shares will be waived in whole
or in part in the event of terminations resulting from specified causes, and the
Committee may in other cases waive in whole or in part the forfeiture of
Restricted Shares.

         (iii) CERTIFICATES FOR SHARES. Restricted Shares granted under the Plan
may be evidenced in such manner as the Committee shall determine. If
certificates representing Restricted Shares are registered in the name of the
Eligible Person, such certificates shall bear an appropriate legend referring to
the terms, conditions, and restrictions applicable to such Restricted Shares,
and the Company shall retain physical possession of the certificate.

         (iv) DIVIDENDS. Dividends paid on Restricted Shares shall be either
paid at the dividend payment date, or deferred for payment to such date as
determined by the Committee, in cash or in unrestricted Shares having a Fair
Market Value equal to the amount of such dividends. Shares distributed in
connection with a Share split or dividend in Shares, and other property
distributed as a dividend, shall be subject to restrictions and a risk of
forfeiture to the same extent as the Restricted Shares with respect to which
such Shares or other property has been distributed.

      (d) RESTRICTED SHARE UNITS. The Committee is authorized to grant
Restricted Share Units to Eligible Persons, subject to the following terms and
conditions:

                                      -8-
<PAGE>

         (i) AWARD AND RESTRICTIONS. Delivery of Shares or cash, as the case may
be, will occur upon expiration of the deferral period specified for Restricted
Share Units by the Committee (or, if permitted by the Committee, as elected by
the Eligible Person). In addition, Restricted Share Units shall be subject to
such restrictions as the Committee may impose, if any (including, without
limitation, the achievement of performance criteria if deemed appropriate by the
Committee), at the date of grant or thereafter, which restrictions may lapse at
the expiration of the deferral period or at earlier or later specified times,
separately or in combination, in installments or otherwise, as the Committee may
determine. If Restricted Share Units are intended to qualify as "qualified
performance-based compensation" for purposes of Section 162(m) of the Code, such
Restricted Share Units shall be issued in accordance with the provisions of
Section 7 below.

         (ii) FORFEITURE. Except as otherwise determined by the Committee at
date of grant or thereafter, upon termination of service (as determined under
criteria established by the Committee) during the applicable deferral period or
portion thereof to which forfeiture conditions apply (as provided in the Award
Agreement evidencing the Restricted Share Units), or upon failure to satisfy any
other conditions precedent to the delivery of Shares or cash to which such
Restricted Share Units relate, all Restricted Share Units that are at that time
subject to deferral or restriction shall be forfeited; provided, however, that
the Committee may provide, by rule or regulation or in any Award Agreement, or
may determine in any individual case, that restrictions or forfeiture conditions
relating to Restricted Share Units will be waived in whole or in part in the
event of termination resulting from specified causes, and the Committee may in
other cases waive in whole or in part the forfeiture of Restricted Share Units.

      (e) OTHER SHARE-BASED AWARDS. The Committee is authorized, subject to
limitations under applicable law, to grant to Eligible Persons such other Awards
that may be denominated or payable in, valued in whole or in part by reference
to, or otherwise based on, or related to, Shares, as deemed by the Committee to
be consistent with the purposes of the Plan, including, without limitation,
unrestricted shares awarded purely as a "bonus" and not subject to any
restrictions or conditions, other rights convertible or exchangeable into
Shares, purchase rights for Shares, Awards with value and payment contingent
upon performance of the Company or any other factors designated by the
Committee, and Awards valued by reference to the performance of specified
Subsidiaries or Affiliates. The Committee shall determine the terms and
conditions of such Awards at date of grant or thereafter. Shares delivered
pursuant to an Award in the nature of a purchase right granted under this
Section 5(e) shall be purchased for such consideration, paid for at such times,
by such methods, and in such forms, including, without limitation, cash, Shares,
notes or other property, as the Committee shall determine. Cash awards, as an
element of or supplement to any other Award under the Plan, shall also be
authorized pursuant to this Section 5(e).

6. CERTAIN PROVISIONS APPLICABLE TO AWARDS

      (a) STAND-ALONE, ADDITIONAL, TANDEM AND SUBSTITUTE AWARDS. Awards granted
under the Plan may, in the discretion of the Committee, be granted to Eligible
Persons either alone or in addition to, in tandem with, or in exchange or
substitution for, any other Award granted under the Plan or any award granted
under any other plan or agreement of the Company, any Subsidiary or Affiliate,
or any business entity to be acquired by the Company or a Subsidiary or
Affiliate, or any other right of an Eligible Person to receive payment from the
Company or any Subsidiary or Affiliate. Awards may be granted in addition to or
in tandem with such other

                                      -9-
<PAGE>

Awards or awards, and may be granted either as of the same time as or a
different time from the grant of such other Awards or awards. The per Share
exercise price of any Option or purchase price of any other Award conferring a
right to purchase Shares which is granted, in connection with the substitution
of awards granted under any other plan or agreement of the Company or any
Subsidiary or Affiliate or any business entity to be acquired by the Company or
any Subsidiary or Affiliate, shall be determined by the Committee, in its
discretion.

      (b) TERM OF AWARDS. The term of each Award granted to an Eligible Person
shall be for such period as may be determined by the Committee; provided,
however, that in no event shall the term of any Option exceed a period of ten
years from the date of its grant (or such shorter period as may be applicable
under Section 422 of the Code).

      (c) FORM OF PAYMENT UNDER AWARDS. Subject to the terms of the Plan and any
applicable Award Agreement, payments to be made by the Company or a Subsidiary
or Affiliate upon the grant, maturation, or exercise of an Award may be made in
such forms as the Committee shall determine at the date of grant or thereafter,
including, without limitation, cash, Shares, notes or other property, and may be
made in a single payment or transfer, in installments, or on a deferred basis.
The Committee may make rules relating to installment or deferred payments with
respect to Awards, including the rate of interest to be credited with respect to
such payments, and the Committee may require deferral of payment under an Award
if, in the sole judgment of the Committee, it may be necessary in order to avoid
nondeductibility of the payment under Section 162(m) of the Code.

      (d) NONTRANSFERABILITY. Unless otherwise set forth by the Committee in an
Award Agreement, Awards shall not be transferable by an Eligible Person except
by will or the laws of descent and distribution and shall be exercisable during
the lifetime of an Eligible Person only by such Eligible Person or his guardian
or legal representative. An Eligible Person's rights under the Plan may not be
pledged, mortgaged, hypothecated, or otherwise encumbered, and shall not be
subject to claims of the Eligible Person's creditors.

      (e) NONCOMPETITION. The Committee may, by way of the Award Agreements or
otherwise, establish such other terms, conditions, restrictions and/or
limitations, if any, of any Award, provided they are not inconsistent with the
Plan, including, without limitation, the requirement that the Participant not
engage in competition with the Company.

7. PERFORMANCE AWARDS GRANTED TO DESIGNATED PARTICIPANTS

     (a) GENERAL. If the Committee determines that an award of Restricted Shares
or Restricted Share Units or an Other Share-Based Award to be granted to a
Participant should qualify as "qualified performance-based compensation" for
purposes of Section 162(m) of the Code, the grant, vesting and/or settlement of
such an Award shall be contingent upon achievement of preestablished performance
goals and other terms set forth in this Section 7.

      (b) PERFORMANCE GOALS GENERALLY. The performance goals for such Awards
("Performance Awards") shall consist of one or more business criteria and a
targeted level or levels of performance with respect to each of such criteria,
as specified by the Committee consistent with this Section 7. Performance goals
shall be objective and shall otherwise meet the requirements of Section 162(m)
of the Code and regulations thereunder (including

                                      -10-
<PAGE>

Regulation 1.162-27 and successor regulations thereto). The Committee may
determine that such Performance Awards shall be granted, vested and/or settled
upon achievement of any one performance goal or that two or more of the
performance goals must be achieved as a condition to grant, vesting and/or
settlement of such Performance Awards. Performance goals may differ for
Performance Awards granted to any one Participant or to different Participants.

      (c) BUSINESS CRITERIA. One or more of the following business criteria for
the Company, on a consolidated basis, and/or for specified subsidiaries or
business units of the Company (except with respect to the total stockholder
return and earnings per share criteria), shall be used by the Committee in
establishing performance goals for such Performance Awards: appreciation in
value of the Shares; total shareholder return; operating income or earnings; net
income; pretax earnings; pretax earnings before interest, depreciation and
amortization; pro forma net income; return on equity; return on designated
assets; return on capital; economic value added; earnings per share and/or
growth thereof; revenues; expenses (including expense ratio); loss ratio;
combined ratio; new business production; operating profit margin; operating cash
flow; free cash flow; cash flow return on investment; operating margin; or net
profit margin; or any of the above criteria as compared to the performance of a
published or special index or benchmark deemed applicable by the Committee.

      (d) PERFORMANCE PERIOD; TIMING FOR ESTABLISHED PERFORMANCE GOALS.
Achievement of performance goals in respect of such Performance Awards shall be
measured over a performance period, as specified by the Committee. Performance
goals shall be established not later than 90 days after the beginning of any
performance period applicable to such Performance Awards, or at such other date
as may be required or permitted for "qualified performance-based compensation"
under Section 162(m) of the Code.

      (e) SETTLEMENT OF PERFORMANCE AWARDS; OTHER TERMS. Settlement of such
Performance Awards shall be in cash, Shares or other property, in the discretion
of the Committee. The Committee may, in its discretion, reduce the amount of a
settlement otherwise to be made in connection with such Performance Awards, but
may not exercise discretion to increase any such amount payable to the
Participant in respect of a Performance Award subject to this Section 7.

      (f) WRITTEN DETERMINATION. All determinations by the Committee as to the
establishment of performance goals or potential individual Performance Awards
and as to the achievement of performance goals relating to Performance Awards
under Section 7 shall be made in writing in the case of any award intended to
qualify under Section 162(m) of the Code.

8. CHANGE OF OWNERSHIP PROVISIONS

      (a) ACCELERATION OF EXERCISABILITY AND LAPSE OF RESTRICTIONS. Unless
otherwise provided by the Committee at the time of the Award grant, in the event
of a Change of Ownership, (i) all outstanding Awards pursuant to which the
Participant may have rights the exercise of which is restricted or limited,
shall become fully exercisable at the time of the Change of Ownership, and (ii)
unless the right to lapse of restrictions or limitations is waived or deferred
by a Participant prior to such lapse, all restrictions or limitations (including
risks of forfeiture and deferrals) on outstanding Awards subject to restrictions
or limitations under the Plan shall lapse, and all performance criteria and
other conditions to payment of Awards under which payments of cash

                                      -11-
<PAGE>

Shares or other property are subject to conditions shall be deemed to be
achieved or fulfilled and shall be waived by the Company at the time of the
Change of Ownership.

      (b) DEFINITION OF CHANGE OF OWNERSHIP. For purposes of this Section 8, a
"Change of Ownership" shall be deemed to have occurred (1) if individuals who,
as of the effective date of this Plan, constitute the Board (the "Incumbent
Board") cease for any reason to constitute at least a majority of the directors
constituting the Board, provided that any person becoming a director subsequent
to the effective date of this Plan whose election, or nomination for election by
the Company's shareholders, was approved by a vote of at least three-quarters
(3/4) of the then directors who are members of the Incumbent Board (other than
an election or nomination of an individual whose initial assumption of office is
(A) in connection with the acquisition by a third person, including a "group" as
such term is used in Section 13(d)(3) of the Exchange Act, of beneficial
ownership, directly or indirectly, of 20% or more of the combined voting
securities ordinarily having the right to vote for the election of directors of
the Company (unless such acquisition of beneficial ownership was approved by a
majority of the Board who are members of the Incumbent Board), or (B) in
connection with an actual or threatened election contest relating to the
election of the directors of the Company, as such terms are used in Rule 14a-11
of Regulation 14A promulgated under the Exchange Act) shall be, for purposes of
this Plan, considered as though such person were a member of the Incumbent
Board; or (2) if the stockholders of the Company approve a merger,
consolidation, recapitalization or reorganization of the Company, reverse split
of any class of voting securities of the Company, or an acquisition of
securities or assets by the Company, or the sale or disposition by the Company
of all or substantially all of the Company's assets, or if any such transaction
is consummated without stockholder approval, other than any such transaction in
which the holders of outstanding Company voting securities immediately prior to
the transaction receive, with respect to such Company voting securities, voting
securities of the surviving or transferee entity representing more than 60
percent of the total voting power outstanding immediately after such
transaction, with the voting power of each such continuing holder relative to
other such continuing holders not substantially altered in the transaction; or
(3) if the stockholders of the Company approve a plan of complete liquidation of
the Company.

9. GENERAL PROVISIONS

      (a) COMPLIANCE WITH LEGAL AND TRADING REQUIREMENTS. The Plan, the granting
and exercising of Awards thereunder, and the other obligations of the Company
under the Plan and any Award Agreement, shall be subject to all applicable
federal, state and foreign laws, rules and regulations, and to such approvals by
any regulatory or governmental agency as may be required. The Company, in its
discretion, may postpone the issuance or delivery of Shares under any Award
until completion of such stock exchange or market system listing or registration
or qualification of such Shares or other required action under any state or
federal law, rule or regulation as the Company may consider appropriate, and may
require any Participant to make such representations and furnish such
information as it may consider appropriate in connection with the issuance or
delivery of Shares in compliance with applicable laws, rules and regulations. No
provisions of the Plan shall be interpreted or construed to obligate the Company
to register any Shares under federal, state or foreign law. The Shares issued
under the Plan may be subject to such other restrictions on transfer as
determined by the Committee.

      (b) NO RIGHT TO CONTINUED EMPLOYMENT OR SERVICE. Neither the Plan nor any
action taken thereunder shall be construed as giving anyone the right to be
retained in the employ or service of the Company or any of its

                                      -12-
<PAGE>

Subsidiaries or Affiliates, nor shall it interfere in any way with the right of
the Company or any of its Subsidiaries or Affiliates to terminate anyone's
employment or service at any time.

      (c) TAXES. The Company or any Subsidiary or Affiliate is authorized to
withhold from any Award granted, any payment relating to an Award under the
Plan, including from a distribution of Shares, or any payroll or other payment
to an Eligible Person, amounts of withholding and other taxes due in connection
with any transaction involving an Award, and to take such other action as the
Committee may deem advisable to enable the Company and Eligible Persons to
satisfy obligations for the payment of withholding taxes and other tax
obligations relating to any Award. This authority shall include authority to
withhold or receive Shares or other property and to make cash payments in
respect thereof in satisfaction of an Eligible Person's tax obligations;
provided, however, that the amount of tax withholding to be satisfied by
withholding Shares shall be limited to the minimum amount of taxes, including
employment taxes, required to be withheld under applicable Federal, state and
local law.

      (d) CHANGES TO THE PLAN AND AWARDS. The Board may amend, alter, suspend,
discontinue, or terminate the Plan or the Committee's authority to grant Awards
under the Plan without the consent of shareholders of the Company or
Participants; provided, however, that any such amendment, alteration,
suspension, discontinuance or termination shall be subject to the approval of
the Company's shareholders (i) if, and to the extent, required under the rules
of any stock exchange or automated quotation system on which the Shares may then
be listed or quoted, and (ii) as it applies to ISOs, to the extent required
under Section 422 of the Code. Notwithstanding the foregoing, without the
consent of an affected Participant, no amendment, alteration, suspension,
discontinuation, or termination of the Plan may materially and adversely affect
the rights of such Participant under any Award theretofore granted to him or
her. The Committee may waive any conditions or rights under, amend any terms of,
or amend, alter, suspend, discontinue or terminate, any Award theretofore
granted, prospectively or retrospectively; provided, however, that, without the
consent of a Participant, no amendment, alteration, suspension, discontinuation
or termination of any Award may materially and adversely affect the rights of
such Participant under any Award theretofore granted to him or her.

      (e) NO RIGHTS TO AWARDS; NO SHAREHOLDER RIGHTS. No Eligible Person or
employee shall have any claim to be granted any Award under the Plan, and there
is no obligation for uniformity of treatment of Eligible Persons and employees.
No Award shall confer on any Eligible Person any of the rights of a shareholder
of the Company unless and until Shares are duly issued or transferred to the
Eligible Person in accordance with the terms of the Award.

      (f) UNFUNDED STATUS OF AWARDS. The Plan is intended to constitute an
"unfunded" plan for incentive compensation. With respect to any payments not yet
made to a Participant pursuant to an Award, nothing contained in the Plan or any
Award shall give any such Participant any rights that are greater than those of
a general creditor of the Company; provided, however, that the Committee may
authorize the creation of trusts or make other arrangements to meet the
Company's obligations under the Plan to deliver cash, Shares, other Awards, or
other property pursuant to any Award, which trusts or other arrangements shall
be consistent with the "unfunded" status of the Plan unless the Committee
otherwise determines with the consent of each affected Participant.

      (g) NONEXCLUSIVITY OF THE PLAN. Neither the adoption of the Plan by the
Board nor its submission to the shareholders of the Company for approval shall
be construed as creating any limitations on the power of the Board to adopt or
utilize such other incentive arrangements as it may deem desirable, including,
without

                                      -13-
<PAGE>

limitation, the granting of options and other awards otherwise than under the
Plan, and such arrangements may be either applicable generally or only in
specific cases.

      (h) NOT COMPENSATION FOR BENEFIT PLANS. No Award payable under this Plan
shall be deemed salary or compensation for the purpose of computing benefits
under any benefit plan or other arrangement of the Company unless the Company, a
Subsidiary or Affiliate shall determine otherwise.

      (i) NO FRACTIONAL SHARES. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award. The Committee shall determine
whether cash, other Awards, or other property shall be issued or paid in lieu of
such fractional Shares or whether such fractional Shares or any rights thereto
shall be forfeited or otherwise eliminated.

      (j) GOVERNING LAW. The validity, construction, and effect of the Plan, any
rules and regulations relating to the Plan, and any Award Agreement shall be
determined in accordance with the laws of Delaware, without giving effect to
principles of conflict of laws thereof.

      (k) EFFECTIVE DATE; PLAN TERMINATION. The Plan shall become effective as
of April 1, 2003 (the "Effective Date"), subject to approval by the shareholders
of the Company. The Plan shall terminate as to future awards on the date which
is ten (10) years after the Effective Date.

      (l) TITLES AND HEADINGS. The titles and headings of the sections in the
Plan are for convenience of reference only. In the event of any conflict, the
text of the Plan, rather than such titles or headings, shall control.

                                      -14-

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