Document:

EXHIBIT 10.01

                              QUALITY SYSTEMS, INC.

                                2005 STOCK OPTION

                                       AND

                                 INCENTIVE PLAN

                                   ARTICLE I
                                     GENERAL

      1.1 Purpose.  The purpose of the Quality  Systems,  Inc. 2005 Stock Option
and  Incentive  Plan (the  "Plan") is to promote  the future  success of Quality
Systems, Inc. (the "Company") by providing an incentive for officers,  employees
and directors of, and  consultants  and advisors to, the Company and its Related
Entities to acquire a  proprietary  interest in the success of the  Company,  to
remain in the  service of the Company  and/or  Related  Entities,  and to render
superior performance during such service.

      1.2 Definitions of Certain Terms.

            (a) "Award"  means an award under the Plan as  described  in Section
      1.5 and Article II.

            (b) "Award Agreement" means a written agreement entered into between
      the Company and a Grantee in connection with an Award.

            (c) "Board" means the Board of Directors of the Company.

            (d) "Cause."  Termination  of  Employment by the Company for "Cause"
      means,  with  respect to a Grantee  and an Award,  (i) except as  provided
      otherwise in the applicable  Award Agreement or as provided in clause (ii)
      below,  Termination  of  Employment of the Grantee by the Company (A) upon
      Grantee's  failure to  substantially  perform  Grantee's  duties  with the
      Company or a Related  Entity (other than any such failure  resulting  from
      death or Disability),  (B) upon Grantee's failure to substantially  follow
      and comply with the  specific  and lawful  directives  of the Board or any
      officer of the  Company or a Related  Entity to whom  Grantee  directly or
      indirectly  reports,  (C)  upon the  Board's  determination  of  Grantee's
      commission of an act of fraud or dishonesty  resulting in actual economic,
      financial or reputational  injury to the Company or a Related Entity,  (D)
      upon the Board's determination of Grantee's engagement in illegal conduct,
      gross  misconduct  or an  act  of  moral  turpitude,  involving  economic,
      financial or reputational  injury to the Company or a Related  Entity,  or
      (E) upon  Grantee's  material  violation of any material  written  policy,
      guideline,  code,  handbook or similar  document  governing the conduct of
      directors,  officers or employees  of the Company or its Related  Entities
      resulting  in actual  economic,  financial or  reputational  injury to the
      Company or Related Entity;  or (ii) in the case of directors,  officers or
      employees  who at the  time  of the  Termination  of  Employment  (A)  are
      entitled to the  benefits of a change in  control,

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      employment or similar  agreement  entered into by the Company or a Related
      Entity or (B) are subject to an existing Company policy or agreement, that
      defines  or  addresses  termination  for cause,  termination  for cause as
      defined and/or determined pursuant to such agreement.

            (e) "Code" means the Internal Revenue Code of 1986, as amended.

            (f)  "Committee"  means a  compensation  committee  appointed by the
      Board in accordance with Section 1.3(a) of the Plan.

            (g) "Common Stock" means the common stock of the Company.

            (h) "Disability"  means, with respect to a Grantee and an Award, (i)
      except as provided in the  applicable  Award  Agreement  or as provided in
      clause (ii) below, "disability" as defined in (i) the long-term disability
      plan in which Grantee is participating;  or (ii) in the case of directors,
      officers or employees who at the time of the Termination of Employment are
      entitled to the  benefits of a change in  control,  employment  or similar
      agreement  entered into by the Company or a Related Entity that defines or
      addresses  termination  because of disability,  "disability" as defined in
      such agreement;  or (iii) if neither (i) nor (ii) apply,  then such a plan
      in which any of the officers of the Company may be participating;  or (iv)
      if (i), (ii) and (iii) do not apply,  then as defined in Section  22(e)(3)
      of the Code.  Notwithstanding  the foregoing,  in the case of an Incentive
      Stock Option, the term "Disability" for purposes of the preceding sentence
      shall have the  meaning  given to it by Section 422 (c)(6) of the Code and
      (B) to the extent an Award is subject to the provisions of Section 409A of
      the Code and if in order  for  compensation  provided  under  any Award to
      avoid the  imposition of taxes under Section 409A of the Code, a different
      definition of "disabled" is required by Section 409A, then a Grantee shall
      be  determined  to have  suffered  a  Disability  only if such  Grantee is
      "disabled" within the meaning of Section 409A of the Code.

            (i)  "Exchange  Act" means the  Securities  Exchange Act of 1934, as
      amended.

            (j) The "Fair  Market  Value" of a share of Common Stock on any date
      shall be (i) the  closing  sale  price per share of  Common  Stock  during
      normal trading hours on the national securities  exchange,  association or
      other market on which the Common Stock is principally traded for such date
      or the last  preceding date on which there was a sale of such Common Stock
      on such exchange,  association or market,  or (ii) if the shares of Common
      Stock are then traded in an  over-the-counter  market,  the average of the
      closing bid and asked prices for the shares of Common Stock during  normal
      trading  hours in such  over-the-counter  market for such date or the last
      preceding  date on which  there  was a sale of such  Common  Stock in such
      market,  or (iii) if the shares of Common  Stock are not then  listed on a
      national securities exchange,  association or other market or traded in an
      over-the-counter  market,  such  value  as  the  Board  on  advice  of the
      Committee and in the Board's discretion shall determine.

            (k) "Grantee" means a person who receives an Award.

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            (l) "Incentive  Stock Option" means,  subject to Section  2.3(f),  a
      stock  option that is intended to qualify for special  federal  income tax
      treatment  pursuant  to  Sections  421 and 422 of the Code (or a successor
      provision  thereof) and which is so  designated  in the  applicable  Award
      Agreement.  Under no  circumstances  shall  any stock  option  that is not
      specifically  designated  as an Incentive  Stock Option be  considered  an
      Incentive Stock Option.

            (m) "Key  Executive"  means a Key Person who, on the last day of the
      Company's  taxable year, is either (i) the chief executive  officer of the
      Company  or  acting  in such  capacity,  or (ii)  among  the four  highest
      compensated officers (other than the chief executive officer).

            (n) "Key  Persons"  means  then  acting  or  prospective  directors,
      officers  and  employees of the Company or of a Related  Entity,  and then
      acting or prospective consultants and advisors to the Company or a Related
      Entity.

            (o)  "Non-Employee  Director" has the meaning given to it in Section
      2.13(a).

            (p)  "Performance  Goals" means the  objective  goal(s) (or combined
      goal(s))  adopted by the Committee in its discretion to be applicable to a
      Key Executive with respect to an Award;  such Performance Goals applicable
      to an Award may  provide  for a targeted  or  measured  level or levels of
      achievement or change using any objective performance standard, including,
      but not  limited  to (and  by way of  example  only):  (i)  revenue,  (ii)
      earnings per share, (iii) net income, (iv) return on assets, (v) return on
      equity,  (vi) stock price,  (vii)  economic  profit or  shareholder  value
      added,  (viii) total shareholder  return,  (ix) EBIT, and (x) EBITDA. Such
      measures may be defined and calculated in such objective manner and detail
      as the Committee in its discretion may determine,  including  whether such
      measures shall be calculated  before or after income taxes or other items,
      the degree or manner in which  various items shall be included or excluded
      from such measures,  whether total assets or certain  categories of assets
      shall be used,  whether such measures shall be applied to the Company on a
      consolidated  basis or to certain  Related  Entities  of the Company or to
      certain  divisions,  operating units or business lines of the Company or a
      Related Entity,  the weighting that shall be given to various  measures if
      combined goals are used, and the periods and dates during or on which such
      measures shall be calculated.  The  Performance  Goals may differ from Key
      Executive to Key Executive and from Award to Award. A Performance  Goal is
      objective  if a third party having  knowledge of the relevant  facts could
      determine whether the Performance Goal is met.

            (q) "Person," whether or not capitalized,  means any natural person,
      any corporation, partnership, limited liability company, trust or legal or
      contractual entity or joint undertaking and any governmental authority.

            (r) "Related  Entity" means any  corporation,  partnership,  limited
      liability  company or other entity that is an  "affiliate"  of the Company
      within the meaning of Rule 12b-2 under the Exchange Act.

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            (s)  "Retirement"  means,  with  respect to a Grantee  and an Award,
      except as  otherwise  provided  in the  applicable  Award  Agreement,  the
      Grantee's  Termination of Employment  with the Company or a Related Entity
      for a reason other than for Cause and that at the time of the  Termination
      of Employment  the Grantee has  satisfied  the criteria for  retirement in
      accordance with the Company's  employment  policies if and when adopted by
      the Company.

            (t) "Rule 16b-3" means Rule 16b-3 under the Exchange Act.

            (u) A Grantee shall be deemed to have a "Termination  of Employment"
      upon ceasing employment with the Company or any Related Entity (or, in the
      case of a Grantee who is not an employee,  upon ceasing  association  with
      the Company or any Related  Entity as a director,  consultant,  advisor or
      otherwise), provided, however, it shall not be considered a Termination of
      Employment of a Grantee if the Grantee  ceases  employment or  association
      with  the  Company  or a  Related  Entity  but  continues  or  immediately
      commences  employment or association with a majority-owned  Related Entity
      or the Company.

      1.3 Administration.

            (a) The Committee.  If such is required to assure  compliance  under
      Section 162(m),  different  Committees with respect to different groups of
      Key  Persons  may  administer  the Plan in  accordance  with this  Section
      1.3(a).

                  (i)  Section  162(m).  To the extent the Award is  intended to
            qualify as  "performance-based  compensation"  within the meaning of
            Section  162(m) of the Code,  the Plan  shall be  administered  by a
            Committee of two or more "outside  directors"  within the meaning of
            Section 162(m) of the Code.

                  (ii) Other  Administration.  Other than as provided above, the
            Plan shall be administered by (A) the Board through  recommendations
            of the  Compensation  Committee  as set  forth  herein,  or (B) upon
            election  and  delegation  by the Board,  a  Compensation  Committee
            (including any successor thereto) of the Board which it may elect to
            act  upon  in  its  sole  and  absolute  discretion,  provided  such
            Compensation   Committee   shall   consist  of  not  less  than  two
            independent directors.

            (b) Authority.  The Committee shall advise the Board  concerning the
      administration  of the Plan and the  Board's  actions  which  may be taken
      pursuant to the Plan. The Committee  shall have the authority to recommend
      to the Board for Board approval:  (i) the manner in which the Plan and any
      Award  Agreement  is  construed,   interpreted  and   implemented,   (iii)
      amendments and rescission of rules and  regulations  relating to the Plan,
      including rules governing its own operations,  (iv) determinations  deemed
      necessary or advisable in administering  the Plan (including  defining and
      calculating  Performance  Goals and certifying that such Performance Goals
      have been met), (v) the  correction of any defect,  supplying any omission
      and reconciling any  inconsistency  in the Plan, (vi) amending the Plan to
      reflect changes in applicable law or regulations,  (vii) whether,  to what
      extent and under what circumstances  Awards may be

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      settled or exercised in cash,  shares of Common Stock,  other  securities,
      other Awards or other  property,  or canceled,  forfeited or suspended and
      the method or methods by which Awards may be settled, canceled,  forfeited
      or  suspended  (including,  but not  limited  to,  canceling  an  Award in
      exchange for a cash payment (or securities with an equivalent value) equal
      to the difference between the Fair Market Value of a share of Common Stock
      on the date of grant and the Fair Market  Value of a share of Common Stock
      on the date of cancellation,  and, if no such difference exists, canceling
      an Award without a payment in cash or securities), and (viii) whether, and
      to what extent and under what circumstances  cash, shares of Common Stock,
      other securities, other Awards or other property and other amounts payable
      with respect to an Award shall be deferred either  automatically or at the
      election of the holder thereof or of the Board.

            (c) Voting. Actions of the Committee shall be taken by the vote of a
      majority of its members.  Any action may be taken by a written  instrument
      signed by all of the Committee members, and action so taken shall be fully
      as effective as if it had been taken by a vote at a meeting.

            (d) Binding  Determinations.  The  determination of the Board on all
      matters  relating  to the Plan or any  Award  Agreement  shall  be  final,
      binding and conclusive.

            (e)  Exculpation.  No member of the  Board or the  Committee  or any
      officer,  employee or agent of the Company or any of its Related  Entities
      (each such  person a "Covered  Person")  shall have any  liability  to any
      person (including,  without limitation,  any Grantee) for any action taken
      or  omitted  to be  taken or any  determination  made in good  faith  with
      respect to the Plan or any Award. Each Covered Person shall be indemnified
      and  held  harmless  by the  Company  against  and from  any  loss,  cost,
      liability or expense (including  attorneys' fees) that may be imposed upon
      or incurred by such Covered  Person in connection  with or resulting  from
      any action, suit or proceeding to which such Covered Person may be a party
      or in which such  Covered  Person may be  involved by reason of any action
      taken or omitted to be taken  under the Plan and  against and from any and
      all amounts paid by such Covered Person, with the Company's  approval,  in
      settlement  thereof, or paid by such Covered Person in satisfaction of any
      judgment in any such  action,  suit or  proceeding  against  such  Covered
      Person;  provided  that  the  Company  shall  have the  right,  at its own
      expense,  to assume and defend any such action,  suit or  proceeding  and,
      once the Company  gives  notice of its intent to assume the  defense,  the
      Company  shall have sole  control  over such  defense  with counsel of the
      Company's  choice  subject to approval  of the  Covered  Person (not to be
      unreasonably  withheld).  The foregoing right of indemnification shall not
      be available  to a Covered  Person to the extent that a court of competent
      jurisdiction  in a final judgment or other final  adjudication,  in either
      case, not subject to further appeal, determines that the acts or omissions
      of such Covered Person giving rise to the  indemnification  claim resulted
      from such  Covered  Person's bad faith,  fraud or willful  criminal act or
      omission. The foregoing right of indemnification shall not be exclusive of
      any other  rights  of  indemnification  to which  Covered  Persons  may be
      entitled under the Company's  Articles of Incorporation or Bylaws, in each
      case as amended from time to time,  as a matter of law, or  otherwise,  or
      any other  power that the Company may have to  indemnify  such  persons or
      hold them harmless pursuant to an  indemnification  agreement or otherwise
      (in which case, any

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      conflict  between  the  indemnification  agreement  or  such  other  Board
      approved  agreement  shall be  resolved  in  favor of the  indemnification
      agreement or such other agreement).

            (f) Experts.  In making any determination or in taking or not taking
      any action under this Plan,  the  Committee or the Board,  as the case may
      be, may obtain and rely upon the advice of experts, including professional
      and financial advisors and consultants to the Committee or the Company. No
      director,  officer,  employee or agent of the Company  shall be liable for
      any such  action or  determination  taken or made or omitted in good faith
      reliance on such advice.

            (g) Board.  Subject to the  provisions  of  Sections  1.3(a)(i)  and
      1.7(b), but notwithstanding any other provision herein to the contrary (i)
      until the Board shall appoint the members of the Committee, the Plan shall
      be  administered  by the  Board,  and  (ii)  the  Board  may,  in its sole
      discretion,  at any time and from  time to time,  (A)  grant  Awards,  (B)
      require  that  the  Committee's  authority  shall  be  limited  to  making
      recommendations to the Board concerning the granting and administration of
      the Plan and  Awards  hereunder,  or (C)  resolve to  administer  the Plan
      directly.  In any of the foregoing events, the Board shall have all of the
      authority   and   responsibility   granted   to  the   Committee   herein.
      Notwithstanding  the  foregoing,  at any time during which the Board shall
      administer  the  granting  of Awards,  any  Awards to the Chief  Executive
      Officer and other  executive  officers of the Company shall be made by the
      Board  meeting in executive  session  consisting  entirely of  independent
      directors (as defined in Rule 4350 of the Nasdaq Marketplace Rules).

      1.4 Persons Eligible for Awards. Awards under the Plan may be made to such
Key Persons as the Committee shall select and recommended to the Board.

      1.5 Types of Awards  Under the  Plan.  Awards  may be made  under the Plan
including:   (i)  stock   options,   including   Incentive   Stock  Options  and
non-qualified stock options,  (ii) stock appreciation  rights,  (iii) restricted
stock,  (iv)  unrestricted  stock, (v) restricted stock units,  (vi) performance
shares,  (vii)  performance  units (including  performance  options),  and other
stock-based Awards, as set forth in Article II.

      1.6 Shares Available for or Subject to Awards.

            (a) Total  Shares  Available.  The total  number of shares of Common
      Stock that may be  transferred  pursuant to Awards  granted under the Plan
      shall not exceed 1,200,000 shares.  All of such shares shall be authorized
      for issuance  pursuant to incentive stock options under Section 2.3 or for
      other Awards under Article II. Such shares may be authorized  but unissued
      Common Stock. Any stock  certificate  evidencing shares issued pursuant to
      the  Plan  shall  bear  a  legend  setting  forth  such   restrictions  on
      transferability  as may apply to such shares  pursuant  to the Plan.  Such
      legend  shall be caused to be removed  by the  Company's  Chief  Financial
      Officer and Chief Executive Officer upon their joint written determination
      that the conditions  warranting the inclusion of such legend are no longer
      applicable.  If any  Award is  forfeited  or  otherwise  terminates  or is
      canceled  without the delivery of shares of Common Stock,  then the shares
      covered by such forfeited, terminated or canceled Award shall again become
      available for transfer

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      pursuant to Awards granted or to be granted under this Plan.  However,  if
      any Award or shares of Common  Stock  issued or issuable  under Awards are
      tendered or withheld as payment for the  exercise  price of an Award,  the
      shares of Common  Stock may not be reused  or  reissued  or  otherwise  be
      treated as being  available  for Awards or issuance  pursuant to the Plan.
      With respect to a stock  appreciation  right,  both shares of Common Stock
      issued pursuant to the Award and shares of Common Stock  representing  the
      exercise  price of the Award  shall be  treated as being  unavailable  for
      other  Awards or other  issuances  pursuant  to the Plan  unless the stock
      appreciation  right is  forfeited,  terminated  or  cancelled  without the
      delivery of shares of Common Stock.  Any shares of Common Stock  delivered
      by the  Company,  any shares of Common  Stock with respect to which Awards
      are made by the  Company  and any shares of Common  Stock with  respect to
      which the Company becomes obligated to make Awards, through the assumption
      of, or in substitution for,  outstanding  awards previously  granted by an
      acquired  entity,  shall not be counted  against the shares  available for
      Awards under this Plan.

            (b) Treatment of Certain Awards.  Any shares of Common Stock subject
      to Awards shall be counted  against the  numerical  limits of this Section
      1.6 as two shares for every share  subject  thereto.  For  example,  if an
      Award of restricted  shares or performance  shares (or any Award involving
      the receipt of actual  "hard" shares of the Company) is made in the amount
      of 10,000  shares,  then 20,000  shares  shall be  deducted  from the then
      existing  balance of authorized  and unissued  shares  (originally  set at
      1,200,000 in Section 1.6(a),  above)  available for future issuances under
      the Plan.

            (c)  Adjustments.  The number of shares of Common  Stock  covered by
      each outstanding  Award, the number or amount of shares or units available
      for Awards  under  Section  1.6(a) or  otherwise,  the number or amount of
      shares or units  that may be subject  to Awards to any one  Grantee  under
      Section 1.7(b) or otherwise,  the price per share of Common Stock or units
      covered by each such outstanding Award and any other calculation  relating
      to shares of Common Stock available for Awards or under outstanding Awards
      (including Awards under Section 2.13) shall be  proportionately  adjusted,
      in order to prevent  dilution or  enlargement of the benefits or potential
      benefits intended to be made available under the Plan, for any increase or
      decrease in the number of issued shares of Common Stock  resulting  from a
      stock  split,  reverse  stock  split,  stock  dividend,  recapitalization,
      combination   or   reclassification   of  the  Common   Stock  or  similar
      transaction,  or any other  increase  or  decrease in the number of issued
      shares of Common Stock effected  without receipt of  consideration  by the
      Company  or to  reflect  any  distributions  to  holders  of Common  Stock
      (including rights offerings) other than regular cash dividends;  provided,
      however,  that  conversion  of any  convertible  securities of the Company
      shall  not  be  deemed  to  have  been   "effected   without   receipt  of
      consideration."  Except as expressly  provided herein,  no issuance by the
      Company of shares of stock of any class,  or securities  convertible  into
      shares of stock of any class,  shall  affect,  and no adjustment by reason
      thereof  shall be made with  respect  to, the number or price of shares of
      Common Stock subject to an Award.  After any  adjustment  made pursuant to
      this  paragraph,  the number of shares subject to each  outstanding  Award
      shall be rounded to the nearest whole number.

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            (d) Grants Exceeding  Allotted Shares. If the shares of Common Stock
      covered by an Award exceeds, as of the date of grant, the number of shares
      of Common  Stock  which may be issued  under the Plan  without  additional
      shareholder approval, such Award shall be void.

      1.7 Regulatory Considerations.

            (a) General.  To the extent that the Board  determines  it desirable
      for any  Award  to be  given  any  particular  tax,  accounting,  legal or
      regulatory  treatment,  the Award may be made by the Board, subject to any
      necessary  restrictions,  conditions  or other terms or  otherwise in such
      manner as is necessary to obtain the desired treatment.

            (b) Code Section 162(m)  Provisions.  For purposes of qualifying any
      compensation  attributable  to a grant of an Award to a Key  Executive  as
      "performance-based  compensation"  within the meaning of Section 162(m) of
      the Code:

                  (i) The compensation shall either:

                        (A)  Be  attributable  solely  to  (I)  Incentive  Stock
                  Options,  (II)  nonqualified  stock  options  with a per share
                  exercise price equal to at least 100% of the Fair Market Value
                  of a share of Common  Stock on the date the option is granted,
                  and/or (III) stock appreciation rights for which the amount of
                  compensation  is based  solely on an  increase in the value of
                  the shares of Common  Stock of the  Company  after the date of
                  grant of the Award; or

                        (B)  To  the   extent   subsection   (A)  above  is  not
                  applicable, be based upon the achievement of Performance Goals
                  established by the Committee in writing not later than 90 days
                  after the  commencement  of the period of service to which the
                  Performance  Goal  relates,   provided  that  the  outcome  is
                  substantially  uncertain  at the time the  Committee  actually
                  establishes  the  Performance  Goal and  less  than 25% of the
                  period of service to which the  Performance  Goal  relates has
                  elapsed at such time;

                  (ii) The Committee described in Section 1.3(a)(i) of this Plan
            shall  grant the  Award and  establish  any  applicable  Performance
            Goals;

                  (iii) With respect to any Award of stock options  and/or stock
            appreciation rights described in Section 1.7(b)(i)(A) above (subject
            to Section 1.6(b)), no Key Executive shall be granted, in any fiscal
            year, stock options,  or stock  appreciation  rights to purchase (or
            obtain the benefits of the  equivalent  of) more than 200,000 shares
            of Common Stock (the "Annual Share Limit"); provided,  however, that
            in connection with his or her initial service, the Key Executive may
            be granted stock options,  or stock appreciation  rights to purchase
            up to an additional  300,000 (the "Initial Service Limit") shares of
            Common  Stock of the Company  which do not count  against the Annual
            Share Limit; and provided, further, that if a stock option, or stock
            appreciation  right  is  cancelled  in the same  fiscal  year of the
            Company in which it was granted (other than in

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            connection  with a  transaction  described in Section  1.6(c)),  the
            cancelled stock option, or stock  appreciation right will be counted
            against  the  Annual  Share  Limit  for such  fiscal  year (for this
            purpose,  if the exercise  price of a stock  option is reduced,  the
            transaction  will be treated as a  cancellation  of the stock option
            and grant of a new stock option).  The foregoing  Annual Share Limit
            and  Initial  Service  Limit shall be  adjusted  proportionately  in
            connection  with  any  change  in the  Company's  capitalization  as
            described  in  Section  1.6(c).   All  provisions  of  this  Section
            1.7(b)(iii)  will  also  apply  to  grants  of  full  value  shares,
            including restricted stock, restricted units and performance shares,
            except that the maximum  grants will be fifty  percent  (50%) of the
            maximums   shown  above   applicable  to  stock  options  and  stock
            appreciation   rights.   Nothing  in  this  Section  1.7(b)(iii)  or
            elsewhere in this Plan shall be  construed so as to permit,  without
            prior stockholder approval, the administrator of the Plan to reprice
            stock options,  stock  appreciation or purchase rights,  outstanding
            under the Plan by  modifying  or amending  such options or rights or
            canceling such options or rights and replacing them with new options
            or rights having a lower exercise price.

                  (iv) No Key Executive  shall be paid, in any fiscal year, more
            than  $2,000,000  in cash  performance  units  (which are a separate
            vehicle from performance shares); and

                  (v)  Prior  to  payment  of the  compensation,  the  Committee
            described  in  Section  1.3(a)(i)   certifies  that  any  applicable
            Performance  Goals and any other material terms of the Award were in
            fact satisfied.

                                   ARTICLE II
                              AWARDS UNDER THE PLAN

      2.1 Awards and Award  Agreements.  Each Award granted under the Plan shall
be evidenced by an Award  Agreement  which shall contain such  provisions as the
Board in its  discretion  deems  necessary or  desirable.  Such  provisions  may
include (but are not limited to) restrictions on the Grantee's right to transfer
the shares of Common Stock issuable  pursuant to the Award,  a requirement  that
the  Grantee  become a party to an  agreement  restricting  transfer or allowing
repurchase  of any shares of Common  Stock  acquired  pursuant  to the Award,  a
requirement  that the  Grantee  acknowledge  that such shares are  acquired  for
investment  purposes  only,  and a right of  first  refusal  exercisable  by the
Company in the event that the Grantee  wishes to transfer any such  shares.  The
Board may grant Awards in tandem or in connection with or independently of or in
substitution  for any other Award or Awards granted under this Plan or any award
granted under any other plan of the Company. Payments or transfers to be made by
the Company upon the grant,  exercise or payment of an Award may be made in such
form as the Board shall  determine,  including  cash,  shares of Common Stock or
other securities (or proceeds from the sale thereof), other Awards (by surrender
or  cancellation  thereof or otherwise)  or other  property and may be made in a
single payment or transfer,  in installments  or on a deferred basis.  The Board
may  determine  that a Grantee  shall  have no rights  with  respect to an Award
unless  such  Grantee  accepts  the Award  within such period as the Board shall
specify  by  executing  an  Award  Agreement  in such  form as the  Board  shall
determine  and, if the Board shall so require,  makes  payment to the Company in
such  amount as the Board may  determine.  Loans to

                                       9
<PAGE>

executive officers of the Company may not be extended, guaranteed or arranged by
the  Company in  violation  of Section  402 of the  Sarbanes-Oxley  Act of 2002,
Regulation  O of the Board of  Governors  of the Federal  Reserve  System or any
other applicable law or regulation.

      2.2 No Rights as a  Shareholder.  No Grantee of an Award (or other  person
having  rights  pursuant  to such  Award)  shall  have  any of the  rights  of a
shareholder  of the Company with  respect to shares  subject to such Award until
the  transfer of such shares to such  person.  Except as  otherwise  provided in
Section  1.6(c),  no adjustment  shall be made for dividends,  distributions  or
other rights (whether ordinary or extraordinary, and whether in cash, securities
or other  property)  for which the record  date is prior to the date such shares
are issued.

      2.3 Grant of Stock  Options,  Stock  Appreciation  Rights  and  Additional
Options.

            (a) Grant of Stock  Options.  The Board  may  grant  stock  options,
      including  Incentive  Stock Options and  nonqualified  stock  options,  to
      purchase shares of Common Stock from the Company,  to such Key Persons, in
      such  amounts  and  subject to such terms and  conditions  (including  the
      attainment  of  Performance  Goals),  as the Board shall  determine in its
      discretion, subject to the provisions of the Plan.

            (b) Grant of Stock  Appreciation  Rights.  The Board may grant stock
      appreciation  rights to such Key  Persons,  in such amounts and subject to
      such terms and conditions (including the attainment of Performance Goals),
      as the Board shall determine in its discretion,  subject to the provisions
      of the Plan. Stock  appreciation  rights may be granted in connection with
      all or any part of, or  independently  of, any stock option  granted under
      the Plan. A stock  appreciation  right may be granted at or after the time
      of grant of such option.

            (c) Stock  Appreciation  Rights. The Grantee of a stock appreciation
      right  shall  have the  right,  subject  to the  terms of the Plan and the
      applicable Award Agreement, to receive from the Company an amount equal to
      (i) the excess of the Fair Market  Value of a share of Common Stock on the
      date of exercise of the stock  appreciation  right over (ii) the  exercise
      price of such  right as set  forth in the  Award  Agreement  (if the stock
      appreciation right is granted in connection with a stock option,  then the
      exercise  price of the option),  multiplied  by (iii) the number of shares
      with respect to which the stock appreciation  right is exercised.  Payment
      to the Grantee upon exercise of a stock  appreciation  right shall be made
      in cash or in shares of Common Stock (valued at their Fair Market Value on
      the date of  exercise  of the stock  appreciation  right) or both,  as the
      Board shall  determine  in its  discretion.  Upon the  exercise of a stock
      appreciation  right granted in connection with a stock option,  the number
      of shares  subject to the option shall be  correspondingly  reduced by the
      number of shares  with  respect to which the stock  appreciation  right is
      exercised.  Upon the exercise of a stock option in connection with which a
      stock appreciation right has been granted, the number of shares subject to
      the stock  appreciation  right  shall be  reduced  correspondingly  by the
      number of shares with respect to which the option is exercised.

            (d) Exercise  Price.  Each Award  Agreement  with respect to a stock
      option or stock  appreciation  right shall set forth the  exercise  price,
      which shall be determined by

                                       10
<PAGE>

      the  Committee  in its  discretion,  except that no stock  option or stock
      appreciation  right may be granted  with an exercise  price below the fair
      market value of the Company's common stock on the date of grant.

            (e) Exercise  Periods.  Each Award Agreement with respect to a stock
      option or stock  appreciation  right  shall set forth the  periods  during
      which  the  Award  evidenced   thereby  shall  be  exercisable,   and,  if
      applicable,   the  conditions  which  must  be  satisfied  (including  the
      attainment of Performance  Goals) in order for the Award evidenced thereby
      to  be  exercisable,  whether  in  whole  or in  part.  Such  periods  and
      conditions  shall be determined by the Board in its discretion;  provided,
      however,  that no  stock  option  or  stock  appreciation  right  shall be
      exercisable more than ten (10) years after the date the Award is issued.

            (f) Incentive Stock Options. Notwithstanding Section 2.3(d) and (e),
      with respect to any  Incentive  Stock Option or stock  appreciation  right
      granted in  connection  with an  Incentive  Stock  Option (i) the exercise
      price shall be at least 100% of the Fair Market Value of a share of Common
      Stock on the date the option is granted (except as permitted in connection
      with the  assumption  or  issuance  of options in a  transaction  to which
      Section 424(a) of the Code applies) and (ii) the exercise period shall not
      be for  longer  than ten (10) years  after the date of the  grant.  To the
      extent that the aggregate Fair Market Value (determined as of the time the
      option is  granted)  of the shares of Common  Stock with  respect to which
      Incentive  Stock  Options  and  stock   appreciation   rights  granted  in
      connection  with Incentive  Stock Options  granted under this Plan and all
      other plans of the Company are first exercisable by any Grantee during any
      calendar year shall exceed the maximum  limit  (currently,  $100,000),  if
      any, imposed from time to time under Section 422 of the Code, such options
      and rights shall be treated as nonqualified stock options. For purposes of
      this Section  2.3(f),  Incentive Stock Options shall be taken into account
      in the order in which they were granted.

            (g) Ten Percent Owners.  Notwithstanding  the provisions of Sections
      2.3(d), (e) and (f), to the extent required under Section 422 of the Code,
      an  Incentive  Stock  Option  may  not be  granted  under  the  Plan to an
      individual who, at the time the option is granted,  owns stock  possessing
      more than 10% of the total  combined  voting power of all classes of stock
      of  his  or her  employer  corporation  or of  its  parent  or  subsidiary
      corporations  (as such ownership may be determined for purposes of Section
      422(b)(6) of the Code) unless (i) at the time such Incentive  Stock Option
      is granted the exercise price is at least 110% of the Fair Market Value of
      the shares  subject  thereto,  and (ii) the Incentive  Stock Option by its
      terms is not  exercisable  after the expiration of five (5) years from the
      date granted.

            (h)  Repricing  Requires  Shareholder  Approval.  No  Award  granted
      hereunder  shall have its exercise  price  modified or "repriced"  without
      first obtaining shareholder approval.

      2.4 Exercise of Stock Options and Stock  Appreciation  Rights.  Each stock
option or stock  appreciation  right granted under the Plan shall be exercisable
as follows:

                                       11
<PAGE>

            (a)  Exercise  Period.  A stock option or stock  appreciation  right
      shall  become  and  cease  to be  exercisable  at such  time or  times  as
      determined by the Board and set forth in the Award Agreement.

            (b)  Manner of  Exercise.  Unless  the  applicable  Award  Agreement
      otherwise  provides,  a stock  option or stock  appreciation  right may be
      exercised  from  time to time as to all or part of the  shares as to which
      such Award is then exercisable (but, in any event, only for whole shares).
      A stock  appreciation  right granted in  connection  with an option may be
      exercised  at any time when,  and to the same  extent  that,  the  related
      option may be exercised.  A stock option or stock appreciation right shall
      be  exercised by written  notice to the Company,  on such form and in such
      manner as the Board shall prescribe.

            (c) Payment of Exercise  Price.  Any written notice of exercise of a
      stock option shall be accompanied by payment of the exercise price for the
      shares  being  purchased.  Such  payment  shall  be made  (i) in cash  (by
      certified  check or as otherwise  permitted by the Board),  or (ii) (A) by
      delivery of shares of Common  Stock  (which,  if acquired  pursuant to the
      exercise  of a stock  option or under an Award made under this Plan or any
      other  compensatory  plan of the Company,  were  acquired at least six (6)
      months  prior to the option  exercise  date)  having a Fair  Market  Value
      (determined  as of the exercise date) equal to all or part of the exercise
      price and cash for any  remaining  portion of the exercise  price,  (B) by
      cashless exercise procedure through a broker-dealer, and (C) to the extent
      permitted by law, by such other  method not  otherwise  prohibited  by the
      Board including, without limitation, a "net exercise."

            (d) Delivery of Shares. Promptly after receiving payment of the full
      exercise  price,  or after  receiving  notice of the  exercise  of a stock
      appreciation right for which payment by the Company will be made partly or
      entirely  in shares of Common  Stock,  the Company  shall,  subject to the
      provisions of Section 3.3 (relating to certain restrictions),  transfer to
      the Grantee or to such other person as may then have the right to exercise
      the  Award,  the  shares  of  Common  Stock  for  which the Award has been
      exercised  and to which the Grantee is entitled.  If the method of payment
      employed upon option exercise so requires,  and if applicable law permits,
      a Grantee may direct the  Company to deliver  the shares to the  Grantee's
      broker-dealer.

      2.5 Termination of Employment.

            (a)  Termination  of  Employment by Grantee for any Reason or By the
      Company for Cause.  Except to the extent otherwise  provided in paragraphs
      (b),  (c), (d) and (e) below or in the  applicable  Award  Agreement,  all
      unvested  stock  options and stock  appreciation  rights to the extent not
      theretofore  exercised shall terminate  immediately upon (i) the Grantee's
      Termination  of  Employment  at Grantee's  election for any reason or (ii)
      Grantee's Termination of Employment by the Company for Cause.

            (b) At Election of Company or a Related Entity. Except to the extent
      otherwise provided in the applicable Award Agreement, upon the Termination
      of  Employment  of a Grantee at the  election  of the Company or a Related
      Entity  (other than in  circumstances  governed by paragraph  (a) above or
      paragraphs (c), (d) or (e) below) the

                                       12
<PAGE>

      Grantee may exercise any  outstanding  stock option or stock  appreciation
      right on the following terms and conditions: (i) exercise may be made only
      to the extent that the Grantee was  entitled to exercise  the Award on the
      date of the Termination of Employment; and (ii) exercise must occur within
      three (3) months after the Termination of Employment but in no event after
      the expiration date of the Award as set forth in the Award Agreement.

            (c)  Retirement.  At such  time as the  Company  adopts a policy  of
      retirement and during the continued  effectiveness of such policy,  except
      to the extent otherwise  provided in the applicable Award Agreement,  upon
      the  Termination  of  Employment  of a Grantee by reason of the  Grantee's
      Retirement, the Grantee may exercise any outstanding stock option or stock
      appreciation right on the following terms and conditions: (i) exercise may
      be made only to the extent that the Grantee was  entitled to exercise  the
      Award on the date of Retirement; and (ii) exercise must occur within three
      (3) years after  Retirement but in no event after the  expiration  date of
      the Award as set forth in the Award Agreement.

            (d)  Disability.  Except to the  extent  otherwise  provided  in the
      applicable  Award  Agreement,  upon the  termination  of  Employment  of a
      Grantee by reason of Disability  the Grantee may exercise any  outstanding
      stock  option  or stock  appreciation  right on the  following  terms  and
      conditions:  (i)  exercise may be made only to the extent that the Grantee
      was  entitled  to  exercise  the  Award  on the  date  of  Termination  of
      Employment;  and (ii)  exercise  must  occur no later  than six (6) months
      after the  Termination  of Employment but in no event after the expiration
      date of the Award as set forth in the Award Agreement.

            (e) Death. Except to the extent otherwise provided in the applicable
      Award  Agreement,  if a  Grantee  dies  during  the  period  in which  the
      Grantee's  stock  options or stock  appreciation  rights are  exercisable,
      whether  pursuant to their terms or pursuant to paragraph  (b), (c) or (d)
      above, any outstanding stock option or stock  appreciation  right shall be
      exercisable  on the following  terms and  conditions:  (i) exercise may be
      made only to the extent  that the Grantee  was  entitled  to exercise  the
      Award on the date of death; and (ii) exercise must occur no later than six
      (6) months after the date of the Grantee's  death. Any such exercise of an
      Award  following  a Grantee's  death  shall be made only by the  Grantee's
      executor or administrator, unless the Grantee's will specifically disposes
      of such  Award,  in which  case  such  exercise  shall be made only by the
      recipient  of such  specific  disposition.  If a  Grantee's  executor  (or
      administrator)  or the  recipient  of a  specific  disposition  under  the
      Grantee's  will shall be entitled to  exercise  any Award  pursuant to the
      preceding sentence, such executor (or administrator) or recipient shall be
      bound by all the terms and conditions of the Plan and the applicable Award
      Agreement which would have applied to the Grantee.

      2.6 Grant of Restricted Stock and Unrestricted Stock.

            (a) Grant of Restricted Stock. The Board may grant restricted shares
      of Common Stock to such Key  Persons,  in such amounts and subject to such
      terms and

                                       13
<PAGE>

      conditions  (including the attainment of Performance  Goals), as the Board
      shall determine in its discretion, subject to the provisions of the Plan.

            (b) Grant of Unrestricted  Stock.  The Board may grant  unrestricted
      shares of Common Stock to such Key Persons, in such amounts and subject to
      such terms and conditions as the Board shall  determine in its discretion,
      subject to the provisions of the Plan.

            (c) Rights as  Shareholder.  The Company may issue in the  Grantee's
      name shares of Common  Stock  covered by an Award of  restricted  stock or
      unrestricted  stock.  Upon the issuance of such shares,  the Grantee shall
      have the rights of a shareholder  with respect to the restricted  stock or
      unrestricted stock, subject to the transfer restrictions and the Company's
      repurchase  rights  described in paragraphs  (d) and (e) below and to such
      other  restrictions  and  conditions  as the Board in its  discretion  may
      include in the applicable Award Agreement.

            (d) Company to Hold  Certificates.  Unless the Board shall otherwise
      determine,  any certificate  issued  evidencing shares of restricted stock
      shall remain in the  possession  of the Company until such shares are free
      of  any  restrictions  specified  in the  Plan  or  the  applicable  Award
      Agreement.

            (e)  Nontransferable.  Shares of  restricted  stock may not be sold,
      assigned,  transferred,  pledged or  otherwise  encumbered  or disposed of
      except  as  specifically  provided  in this Plan or the  applicable  Award
      Agreement.  The Board at the time of grant shall specify the date or dates
      (which may depend  upon or be related  to the  attainment  of  Performance
      Goals)  and  other  conditions  on which  the  non-transferability  of the
      restricted  stock  shall  lapse.  Unless the  applicable  Award  Agreement
      provides  otherwise,  additional  shares of Common Stock or other property
      distributed  to the Grantee in respect of shares of restricted  stock,  as
      dividends  or  otherwise,  shall  be  subject  to  the  same  restrictions
      applicable to such  restricted  stock.  The Board at any time may waive or
      amend  the  transfer  restrictions  or  other  condition  of an  Award  of
      restricted stock.

            (f)  Termination  of  Employment.  Except  to the  extent  otherwise
      provided in the applicable Award Agreement or unless otherwise  determined
      by the Board, in the event of the Grantee's  Termination of Employment for
      any reason,  shares of  restricted  stock that remain  subject to transfer
      restrictions  as of the  date  of  such  termination  (and  therefore  are
      unvested) shall be forfeited and canceled.

      2.7 Grant of Restricted Stock Units.

            (a) Grant of Restricted  Stock Units.  The Board may grant Awards of
      restricted stock units to such Key Persons, in such amounts and subject to
      such terms and conditions (including the attainment of Performance Goals),
      as the Board shall determine in its discretion,  subject to the provisions
      of the Plan.

            (b) Vesting. The Board, at the time of grant, shall specify the date
      or dates on which the restricted stock units shall become vested and other
      conditions to vesting (including the attainment of Performance Goals).

                                       14
<PAGE>

            (c)  Termination  of  Employment.  Except  to the  extent  otherwise
      provided in the applicable Award Agreement or unless otherwise  determined
      by the Board, in the event of the Grantee's  Termination of Employment for
      any reason, restricted stock units that have not vested shall be forfeited
      and canceled.

      2.8 Grant of Performance Shares, Performance Options and Performance Share
Units.

            (a)  Grant of  Performance  Shares,  Options  Share  Units  and Cash
      Performance  Units. The Board may grant performance  shares in the form of
      actual shares of Common Stock,  performance options or share units over an
      identical  number of shares of Common Stock, to such Key Persons,  in such
      amounts  (which may depend on the  extent to which  Performance  Goals are
      attained),  subject  to the  attainment  of  such  Performance  Goals  and
      satisfaction  of such other  terms and  conditions  (which may include the
      occurrence  of  specified  dates),  as the Board  shall  determine  in its
      discretion,  subject  to the  provisions  of the Plan.  The Board may also
      grant cash performance units, which are cash awards subject to performance
      goal attainment, but which are denominated only in cash, not in stock. The
      Performance  Goals and the length of the performance  period applicable to
      any Award of  performance  shares,  performance  options,  share  units or
      performance  units  shall be  determined  by the  Board.  The Board  shall
      determine in its discretion whether performance shares granted in the form
      of share units shall be paid in cash,  Common Stock,  or a combination  of
      cash and Common Stock.

            (b) Company to Hold  Certificates.  Unless the Board shall otherwise
      determine,  any certificate  issued  evidencing  performance  shares shall
      remain in the possession of the Company until such performance  shares are
      earned  and are  free of any  restrictions  specified  in the  Plan or the
      applicable Award Agreement.

            (c)  Nontransferable.  Performance shares may not be sold, assigned,
      transferred,  pledged or  otherwise  encumbered  or  disposed of except as
      specifically provided in this Plan or the applicable Award Agreement.  The
      Board at the time of grant  shall  specify  the date or dates  (which  may
      depend  upon or be related to the  attainment  of  Performance  Goals) and
      other  conditions  on which  the  non-transferability  of the  performance
      shares  shall  lapse.  Unless  the  applicable  Award  Agreement  provides
      otherwise, additional shares of Common Stock or other property distributed
      to  the  Grantee  in  respect  of  performance  shares,  as  dividends  or
      otherwise,  shall be subject to the same  restrictions  applicable to such
      performance  shares. The Board at any time may waive or amend the transfer
      restrictions or other condition of an Award of performance shares.

            (d)  Termination  of  Employment.  Except  to the  extent  otherwise
      provided in the applicable Award Agreement or unless otherwise  determined
      by the Board, in the event of the Grantee's  Termination of Employment for
      any  reason,  performance  shares  and  performance  share  units  or cash
      performance  units that remain subject to transfer  restrictions as of the
      date of such  termination  (and therefore  shall not have vested) shall be
      forfeited and canceled.

                                       15
<PAGE>

      2.9 Grant of Dividend  Equivalent  Rights. The Board may in its discretion
include in the Award  Agreement  with respect to any share  denominated  Award a
dividend  equivalent right entitling the Grantee to receive amounts equal to the
ordinary dividends that would be paid, during the time such Award is outstanding
and  unexercised,  on the shares of Common  Stock  covered by such Award if such
shares were then  outstanding.  In the event such a provision  is included in an
Award Agreement,  the Board shall determine  whether such payments shall be made
in cash,  in shares of Common  Stock or in another  form,  whether they shall be
conditioned  upon the exercise or vesting of, or the attainment or  satisfaction
of terms and conditions  applicable to, the Award to which they relate, the time
or times at which they shall be made, and such other terms and conditions as the
Board shall deem appropriate.

      2.10 Deferred Stock Units.

            (a) Description.  Deferred stock units shall consist of a restricted
      stock,  restricted stock unit,  performance share or share unit Award that
      the Board in its discretion permits to be paid out in installments or on a
      deferred basis, in accordance with rules and procedures established by the
      Board.  Deferred  stock  units shall  remain  subject to the claims of the
      Company's  general  creditors  until  distributed  to  the  Grantee.  Cash
      Performance Units may be deferred,  but shall remain subject to the claims
      of the Company's general creditors until distributed to the Grantee.

            (b)  162(m)   Limits.   Deferred   stock  units  and  deferred  cash
      performance  units shall be subject to the annual  Section  162(m)  limits
      applicable to the  underlying  restricted  stock,  restricted  stock unit,
      performance share or share unit or cash performance unit Award as forth in
      Section 1.7(b).

      2.11  Other  Stock-Based  Awards.  The  Board  may  grant  other  types of
stock-based  Awards to such Key  Persons,  in such  amounts  and subject to such
terms and conditions, as the Board shall in its discretion determine, subject to
the provisions of the Plan. Such Awards may entail the transfer of actual shares
of Common  Stock,  or payment in cash or otherwise of amounts based on the value
of shares of Common Stock.

      2.12 Director Stock Options.

            (a)  Eligibility.  Subject to the specific  requirements,  terms and
      conditions as adopted from time to time by the Board in its discretion (i)
      all voting  directors of the Company who are not  employees of the Company
      ("Non-Employee  Directors")  shall receive  stock options  pursuant to the
      conditions of this Section 2.12.

            (b) Grant of Director Stock Options.  Each Non-Employee Director may
      be  granted  stock  options  to  purchase  shares of  Common  Stock of the
      Company.

            (c) Exercise Price. Notwithstanding Section 2.3(d), until and unless
      the Board in its discretion determines  otherwise,  the per share exercise
      price for each stock option  granted under this Section 2.13 shall be 100%
      of the Fair Market  Value of a share of Common Stock on the date the stock
      option is granted.

                                       16
<PAGE>

            (d) Exercise  Period.  Each stock option  granted under this Section
      2.13 shall vest, become  exercisable and possess a term in accordance with
      the policy then in place and as adopted by the Board,  provided,  however,
      that (i) if the Non-Employee Director's service on the Board is terminated
      as a result of not being  renominated or reelected to the Board, then such
      stock option shall continue to  exercisable  until the earlier to occur of
      (A) the  expiration of the  remaining  term of the option or (B) three (3)
      years from the date Board service terminated, and (ii) no stock option may
      have a term in excess of ten (10) years.

            (e) Non-statutory  Options. Stock options granted under this Section
      2.12 will constitute nonqualified stock options.

            (f) Other Stock Option Terms Applicable. Except as set forth in this
      Section 2.12,  all stock  options  granted under this Section 2.12 will be
      subject to and benefited by the terms and  conditions  (including  Section
      3.7) of the Plan applicable to other stock options granted under the Plan.

                                  ARTICLE III
                                  MISCELLANEOUS

      3.1 Amendment of the Plan; Modification of Awards.

            (a) Board  Authority to Amend Plan.  The Board in its discretion may
      at any time suspend, discontinue,  revise or amend the Plan in any respect
      whatsoever,  except  that  any such  amendment  (other  than an  amendment
      pursuant to paragraphs (d), (e) or (f) of this Section 3.1 or an amendment
      to effect an assumption or other action  consistent with Section 3.7) that
      materially impairs the rights or materially increases the obligations of a
      Grantee under an outstanding Award shall be effective with respect to such
      Grantee  and Award only with the  consent  of the  Grantee  (or,  upon the
      Grantee's  death,  the  Grantee's   executor  (or  administrator)  or  the
      recipient of a specific disposition under the Grantee's will).

            (b)  Shareholder  Approval.  Shareholder  approval of any  amendment
      shall be obtained to the extent  necessary  to comply with  Section 422 of
      the Code  (relating to Incentive  Stock  Options) or any other  applicable
      law,   regulation  or  rule   (including  the  rules  of   self-regulatory
      organizations). As set forth in Section 2.3(h), shareholder approval shall
      be required for any "repricing" of a previously granted Award hereunder.

            (c) Board Authority to Amend Awards. Subject to Section 2.3(h) which
      requires  shareholder  approval for any  "repricing"  of an Award  granted
      hereunder,  the Board in its discretion may at any time, whether before or
      after the grant, expiration,  exercise, vesting or maturity of or lapse of
      restriction  on an Award or the  Termination  of  Employment of a Grantee,
      amend any  outstanding  Award or Award  Agreement,  including an amendment
      which  would  accelerate  the time or times at  which  the  Award  becomes
      unrestricted   or  may  be  exercised,   or  waive  or  amend  any  goals,
      restrictions or conditions set forth in the Award Agreement.  However, any
      such amendment (other than an amendment pursuant to paragraphs (d), (e) or
      (f) of this  Section 3.1 or an  amendment

                                       17
<PAGE>

      to effect an action  consistent with Section 3.7) that materially  impairs
      the rights or materially  increases the  obligations of a Grantee under an
      outstanding  Award shall be made only with the consent of the Grantee (or,
      upon the Grantee's death, the Grantee's executor (or administrator) or the
      recipient  of a  specific  disposition  under  the  Grantee's  will).  For
      purposes  of the Plan,  any action of the Board that alters or affects the
      tax treatment of any Award shall not be  considered  to materially  impair
      any rights of any Grantee.

            (d) Regulatory  Changes Generally.  Notwithstanding  anything to the
      contrary in this Plan,  the Board shall have full  discretion to amend the
      Plan or an outstanding Award or Award Agreement to the extent necessary to
      preserve any tax,  accounting,  legal or regulatory treatment with respect
      to any Award and any outstanding  Award Agreement shall be deemed to be so
      amended to the same extent,  without  obtaining the consent of any Grantee
      (or, after the Grantee's death, the Grantee's  executor (or administrator)
      or the  recipient  of a specific  disposition  under the  Grantee's  will)
      provided that such amendment does not adversely  affect a Grantee's rights
      under the Plan or such Award and Award Agreement.

            (e) Section 409A Changes.  Notwithstanding  anything to the contrary
      in this Plan,  the Board shall have full  discretion  to amend the Plan or
      any outstanding  Award or Award Agreement to the extent necessary to avoid
      the  imposition  of any tax  under  Section  409A of the  Code.  Any  such
      amendments  to the Plan,  an Award or an Award  Agreement  may be  adopted
      without  obtaining  the consent of any Grantee  (or,  after the  Grantee's
      death,  the Grantee's  executor (or  administrator)  or the recipient of a
      specific disposition under the Grantee's will), regardless of whether such
      amendment  adversely  affects a  Grantee's  rights  under the Plan or such
      Award or Award Agreement.

            (f) Other Tax Changes. In the event that changes are made to Section
      83(b),  162(m),  422 or other  applicable  provision of the Code the Board
      may,  subject to Sections  3.1(a),  (b) and (c), make any  adjustments  it
      determines in its discretion to be appropriate with respect to the Plan or
      any Award or Award Agreement.

      3.2 Tax Withholding.

            (a) Tax Withholdings. As a condition to the receipt of any shares of
      Common Stock pursuant to any Award or the lifting of  restrictions  on any
      Award,  or in connection with any other event that gives rise to a federal
      or  other  governmental  tax  withholding  obligation  on the  part of the
      Company relating to an Award (including,  without  limitation,  FICA tax),
      the Company  shall be entitled  to require  that the Grantee  remit to the
      Company an amount sufficient in the opinion of the Company to satisfy such
      withholding obligation.

            (b) Withholding  Shares. If the event giving rise to the withholding
      obligation is a transfer of shares of Common Stock, then, unless otherwise
      provided in the applicable Award  Agreement,  the Grantee may satisfy only
      the minimum statutory  withholding  obligation imposed under paragraph (a)
      by electing to have the Company  withhold  shares of Common Stock having a
      Fair  Market  Value  equal to the amount of tax

                                       18
<PAGE>

      to be withheld. For this purpose, Fair Market Value shall be determined as
      of the date on which the amount of tax to be withheld is  determined  (and
      any fractional share amount shall be settled in cash).

      3.3 Restrictions.

            (a) Required Consents. If the Board shall at any time determine that
      any consent  (as  hereinafter  defined) is  necessary  or  desirable  as a
      condition  of, or in  connection  with,  the  granting  of any Award,  the
      issuance or purchase of shares of Common Stock or other rights thereunder,
      or the taking of any other action  thereunder (a "Plan  Action"),  then no
      such Plan  Action  shall be taken,  in whole or in part,  unless and until
      such consent shall have been effected or obtained to the full satisfaction
      of the Board.

            (b)  Definition.  The term  "consent" as used herein with respect to
      any action  referred to in paragraph  (a) means (i) any and all  listings,
      registrations  or  qualifications  in respect  thereof upon any securities
      exchange or under any  federal,  state or local law,  rule or  regulation,
      (ii) any and all written  agreements  and  representations  by the Grantee
      with respect to the  disposition  of shares,  or with respect to any other
      matter,  which the Board shall deem  necessary or desirable to comply with
      the terms of any such listing,  registration or qualification or to obtain
      an exemption from the requirement that any such listing,  qualification or
      registration be made, (iii) any and all consents, clearances and approvals
      in  respect  of a Plan  Action  by any  governmental  or other  regulatory
      bodies, and (iv) any and all consents or authorizations required to comply
      with, or required to be obtained under,  applicable local law or otherwise
      required by the Board.  Nothing  herein shall require the Company to list,
      register or qualify the shares of Common Stock on any securities exchange.

      3.4 Nonassignability.

            (a) Nonassignability.  No Award or right granted to any person under
      the Plan shall be assignable or transferable  other than by will or by the
      laws of descent and distribution,  and all such Awards and rights shall be
      exercisable  during  the life of the  Grantee  only by the  Grantee or the
      Grantee's legal representative and any such attempted assignment, transfer
      or  exercise  in   contravention  of  this  Section  3.4  shall  be  void.
      Notwithstanding the foregoing,  the Board may in its discretion permit the
      donative  transfer of any Award  under the Plan  (other than an  Incentive
      Stock Option) by the Grantee (including to a trust or similar instrument),
      subject to such terms and conditions as may be established by the Board.

            (b) Cashless Exercises  Permitted.  The restrictions on exercise and
      transfer in paragraph (a) above shall not be deemed to prohibit  "cashless
      exercise" procedures with parties who provide financing for the purpose of
      (or who  otherwise  facilitate)  the  exercise of Awards  consistent  with
      applicable legal restrictions and Rule 16b-3 and as otherwise permitted by
      Section 2.4(c).

                                       19
<PAGE>

      3.5  Requirement  of  Notification  of Election Under Section 83(b) of the
Code. If a Grantee, in connection with the acquisition of shares of Common Stock
under the Plan, is permitted  under the terms of the Award Agreement to make the
election permitted under Section 83(b) of the Code (i.e., an election to include
in gross income in the year of transfer the amounts  specified in Section  83(b)
of the  Code  notwithstanding  the  continuing  transfer  restrictions)  and the
Grantee  makes such an  election,  the Grantee  shall notify the Company of such
election within ten (10) days of filing 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.

      3.6  Requirement of  Notification  Upon  Disqualifying  Disposition  Under
Section 421(b) of the Code. If any Grantee shall make any  disposition of shares
of Common  Stock issued  pursuant to the  exercise of an Incentive  Stock Option
under the  circumstances  described in Section  421(b) of the Code  (relating to
certain  disqualifying  dispositions),  such Grantee shall notify the Company of
such disposition within ten (10) days thereof.

      3.7 Change in Control.

            Definition. A "Change in Control" means the occurrence of any one of
      the following events:

                  (i) any Person (as defined in Sections  13(d) and 14(d) of the
            Exchange Act) is or becomes the Beneficial Owner (as defined in Rule
            13d-3 under the Exchange Act), directly or indirectly, of securities
            of the Company representing in excess of fifty percent (50%) or more
            of the  combined  voting  power of the  Company's  then  outstanding
            securities ("Company Voting Securities");  provided,  however,  that
            the event  described in this clause (i) shall not be deemed a Change
            in Control by virtue of any of the  following  acquisitions:  (A) by
            the Company or any corporation controlled by the Company, (B) by any
            employee  benefit plan (or related trust) sponsored or maintained by
            the Company or any corporation controlled by the Company, (C) by any
            underwriter  temporarily  holding securities pursuant to an offering
            of such securities, (D) pursuant to a Non-Qualifying Transaction (as
            defined in clause (iii) below),  (E) pursuant to any  acquisition by
            Grantee or any group of  persons  including  Grantee  (or any entity
            controlled  by Grantee or any group of persons  including  Grantee),
            (F) a  transaction  (other than one described in clause (iii) below)
            in which outstanding Company Voting Securities are acquired from the
            Company,  if a majority of the  Continuing  Directors (as defined in
            clause (ii) below) approve a resolution providing expressly that the
            acquisition  pursuant to this  subclause  (F) does not  constitute a
            Change in Control  under this clause (F), or (G) any increase in the
            ownership  position of a person of the  outstanding  Company  Voting
            Securities  as a result of an  acquisition  of  common  stock of the
            Company by the Company  which,  by reducing  the number of shares of
            common stock of the Company outstanding, increases the proportionate
            number of shares  beneficially  owned by such person to in excess of
            fifty  percent  (50%)  or more  of the  outstanding  Company  Voting
            Securities,  provided,  however,  that if a person  shall become the
            beneficial  owner of in excess of fifty percent (50%) or more of the

                                       20
<PAGE>

            outstanding   Company  Voting   Securities  by  reason  of  a  share
            acquisition by the Company as described above and shall,  after such
            share acquisition by the Company, become the beneficial owner of any
            additional  shares  of  common  stock  of  the  Company,  then  such
            acquisition shall constitute a Change in Control;

                  (ii) the  consummation of a merger,  consolidation,  statutory
            share  exchange or similar form of corporate  transaction  involving
            the Company or any of its subsidiaries that requires the approval of
            the  Company's  shareholders,  whether for such  transaction  or the
            issuance   of   securities   in   the   transaction   (a   "Business
            Combination"),    unless   immediately   following   such   Business
            Combination:  (A) more than 50% of the total voting power of (x) the
            corporation resulting from such Business Combination (the "Surviving
            Corporation"), or (y) if applicable, the ultimate parent corporation
            that directly or indirectly has beneficial ownership of at least 95%
            of  the  voting  securities  eligible  to  elect  directors  of  the
            Surviving Corporation (the "Parent Corporation"),  is represented by
            Company Voting Securities that were outstanding immediately prior to
            such Business  Combination  (or, if  applicable,  is  represented by
            shares into which such  Company  Voting  Securities  were  converted
            pursuant to such Business Combination),  and such voting power among
            the holders thereof is in  substantially  the same proportion as the
            voting power of such  Company  Voting  Securities  among the holders
            thereof immediately prior to the Business Combination, (B) no person
            (other than any employee  benefit plan (or related trust)  sponsored
            or   maintained  by  the   Surviving   Corporation   or  the  Parent
            Corporation),  is or  becomes  the  beneficial  owner,  directly  or
            indirectly, of in excess of fifty percent (50%) or more of the total
            voting power of the outstanding voting securities  eligible to elect
            directors  of the  Parent  Corporation  (or,  if there is no  Parent
            Corporation,  the Surviving Corporation) and (C) at least a majority
            of the members of the board of directors  of the Parent  Corporation
            (or, if there is no Parent Corporation,  the Surviving  Corporation)
            following  the   consummation   of  the  Business   Combination  are
            Continuing  Directors (any Business  Combination which satisfies all
            of the criteria specified in subclauses (A), (B) and (C) above shall
            be deemed to be a "Non-Qualifying Transaction");  provided, however,
            that if  Continuing  Directors  constitute  a majority  of the Board
            immediately following the occurrence of a Business Combination, then
            a  majority  of   Continuing   Directors  in  office  prior  to  the
            Consummation  of the Business  Combination  may approve a resolution
            providing   expressly  that  such  Business   Combination  does  not
            constitute  a Change in Control  under this  clause (ii) for any and
            all purposes of the Plan.

                  (iii)  the  shareholders  of the  Company  approve  a plan  of
            complete liquidation or dissolution of the Company;

                  (iv)  the   consummation   of  an  agreement  (or  agreements)
            providing  for the  sale or  disposition  by the  Company  of all or
            substantially  all of the  Company's  assets  other  than a sale  or
            disposition  which  would  result in the  voting  securities  of the
            Company   outstanding   immediately  prior  thereto   continuing  to
            represent 50% or more of the combined voting power of the Company or
            such surviving  entity  outstanding  immediately  after such sale or
            disposition; or

                                       21
<PAGE>

                  (v) in the case of  directors,  officers or employees  who are
            entitled to the benefits of a change in control agreement or similar
            provisions  within an  agreement  entered  into by the  Company or a
            Related Entity that defines or addresses change of control,  "change
            of control" as defined in such agreement

            (b) Effect of Change in Control.  Upon the occurrence of a Change in
      Control  specified in paragraph (a)(i) above and immediately  prior to the
      occurrence of a Change in Control specified in paragraph (a)(ii), (a)(iii)
      or (a)(iv)  above,  Awards shall Fully Vest (as defined in  paragraph  (c)
      below).  If,  within  two (2) years  after the  occurrence  of a Change in
      Control a Termination of Employment occurs with respect to any Grantee for
      any reason  other than Cause,  Disability,  death or  Retirement,  Grantee
      shall be  entitled  to exercise  Awards at any time  thereafter  until the
      earlier of (i) the date twelve (12) months  after the date of  Termination
      of  Employment  and  (ii)  the  expiration  date in the  applicable  Award
      Agreement.

            (c) Fully Vest.  The  following  shall occur if Awards "Fully Vest":
      (i) any stock options and stock appreciation rights granted under the Plan
      shall become fully vested and immediately exercisable, (ii) any restricted
      stock, restricted stock units,  performance shares,  performance units and
      other  stock-based  Awards granted under the Plan will become fully vested
      and matured,  any  restrictions  applicable to such Awards shall lapse and
      such Awards  denominated in stock will be immediately  paid out, and (iii)
      any  Performance  Goals  applicable  to Awards  will be deemed to be fully
      satisfied;  provided  that (A) any  Performance  Goals  whose  performance
      period has not yet lapsed shall be  calculated  based on the higher of (x)
      the  target  value of the Awards as  established  by the Board and (y) the
      value of the Awards  calculated under the terms of the Awards based on the
      average  performance  through  the end of the fiscal  quarter  immediately
      prior to the effective date of the Change of Control  (continued pro forma
      through the end of the  performance  period if  necessary  for purposes of
      determining  whether the Performance Goal would have been met), and (B) if
      the Award has a performance  period  greater than one (1) year, the amount
      of the  Award  payable  to the  Grantee  will  be pro  rated,  based  on a
      fraction,  the  numerator  of  which  is the  number  of  fiscal  quarters
      completed from the beginning of the performance period until the effective
      date of the Change of Control and the  denominator  is the total number of
      fiscal quarters in the performance period.

            (d) Section 409A. To the extent it is necessary for the term "change
      of control"  to be defined in order for  compensation  provided  under any
      Award to avoid the  imposition  of taxes under  Section  409A of the Code,
      then the term "change in control,"  only insofar as it applies to any such
      Award  and its  treatment  under  Section  409A,  shall be  defined  as so
      required,  rather  than as provided  in Section  3.7(a),  and the terms of
      Sections 3.7(b) through (c) shall be applied and interpreted  with respect
      to such Section 409A  mandated  definition  in such manner as the Board in
      its  discretion  determines  to be equitable  and reflect the intention of
      Sections 3.7(a) through (c).

            (e) No Conflict with Other Agreements.  The foregoing  definition of
      "change of control" is applicable only to the matters  contemplated by and
      set forth in this Plan and

                                       22
<PAGE>

      any Award  agreement  pursuant to this Plan,  and shall not be controlling
      with  respect to any other  agreement  between  the  Company and any third
      party.

      3.8 No Right to Employment.  Nothing in the Plan or in any Award Agreement
shall  confer  upon any  Grantee  the  right to  continue  in the  employ  of or
association with the Company or any Related Entity or affect any right which the
Company or Related Entity may have to terminate  such  employment or association
at any time (with or without cause).

      3.9 Nature of  Payments.  Unless the Board  determines  at any time in its
discretion, any and all grants of Awards and issuances of shares of Common Stock
under the Plan shall constitute a special  incentive  payment to the Grantee and
shall  not  be  taken  into  account  in  computing  the  amount  of  salary  or
compensation  of the Grantee for the purpose of  determining  any benefits under
any pension, retirement,  profit-sharing, bonus, life insurance or other benefit
plan of the Company or under any agreement with the Grantee, unless such plan or
agreement specifically provides otherwise.

      3.10 Non-Uniform Determinations. The Board's determinations under the Plan
need not be uniform and may be made by it 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 Board shall be
entitled, among other things, to make non-uniform and selective  determinations,
and to enter into non-uniform and selective Award Agreements,  as to the persons
to receive  Awards under the Plan,  and the terms and provisions of Awards under
the Plan.

      3.11 Other  Payments  or Awards.  Nothing  contained  in the Plan shall be
deemed in any way to limit or  restrict  the  Company  from  making any award or
payment  to any  person  under any other  plan,  arrangement  or  understanding,
whether now existing or hereafter in effect.

      3.12  Interpretation.  The section  headings  contained herein are for the
purpose of convenience only and are not intended to define or limit the contents
of the sections. As used in the Plan, "include," "includes," and "including" are
deemed to be followed by "without  limitation"  whether or not they are followed
by such  words or words of like  import;  except as the  context  requires,  the
singular  includes the plural and visa versa; and references to any agreement or
other  document  are  references  to such  agreement  or  document as amended or
supplemented from time to time. Any determination, interpretation or similar act
to be made by the Board shall be made in the discretion of the Board, whether or
not the  applicable  provisions  of the Plan  specifically  refer to the Board's
discretion.

      3.13  Effective  Date and Term of Plan.  Unless  sooner  terminated by the
Board,  the Plan,  including the  provisions  respecting  the grant of Incentive
Stock Options,  shall terminate on the tenth  anniversary of the adoption of the
Plan by the Board;  provided that the Plan shall continue to govern  outstanding
Awards  until such Awards have been  satisfied  or  terminated.  All Awards made
under the Plan prior to its termination shall remain in effect until such Awards
have been satisfied or terminated in accordance with the terms and provisions of
the Plan and the applicable Award Agreements.

                                       23
<PAGE>

      3.14  Governing  Law. All rights and  obligations  under the Plan shall be
construed  and  interpreted  in  accordance  with  the  laws  of  the  State  of
California, without giving effect to principles of conflict of laws.

      3.15 Severability; Entire Agreement. If any of the provisions of this Plan
or any Award Agreement is finally held to be invalid,  illegal or  unenforceable
(whether in whole or in part),  such provision  shall be deemed  modified to the
extent,   but  only  to  the  extent,   of  such   invalidity,   illegality   or
unenforceability  and the remaining  provisions  shall not be affected  thereby;
provided, that if any of such provisions is finally held to be invalid, illegal,
or  unenforceable  because  it  exceeds  the  maximum  scope  determined  to  be
acceptable to permit such provision to be  enforceable,  such provision shall be
deemed to be modified to the minimum  extent  necessary  to modify such scope in
order to make  such  provision  enforceable  hereunder.  The Plan and any  Award
Agreements  contain  the entire  agreement  of the parties  with  respect to the
subject matter thereof and supersede all prior agreements,  promises, covenants,
arrangements,  communications,  representations  and  warranties  between  them,
whether written or oral, with respect to the subject matter thereof.

      3.16 No Third Party  Beneficiaries.  Except as expressly provided therein,
neither the Plan nor any Award  Agreement  shall confer on any person other than
the Company and the grantee of any Award any rights or remedies thereunder.

      3.17 Successors and Assigns.  The terms of this Plan shall be binding upon
and inure to the benefit of the Company and its successors and assigns.

      3.18 Waiver of Claims. Each Grantee of an Award recognizes and agrees that
prior to being  recommended by the Committee to the Board to receive an Award he
or she has no right to any benefits hereunder.  Accordingly, in consideration of
the Grantee's  receipt of any Award  hereunder,  he or she expressly  waives any
right to contest the amount of any Award, the terms of any Award Agreement,  any
determination,  action or omission hereunder or under any Award Agreement by the
Committee,  the Company or the Board,  or any amendment to the Plan or any Award
Agreement  (other than an amendment to this Plan or an Award  Agreement to which
his or her consent is expressly  required by the express terms of the Plan or an
Award Agreement).

                                       24Exhibit 10.1

 

EXECUTIVE EMPLOYMENT AND NON-COMPETITION AGREEMENT

AGREEMENT made this 7th day of October, 2005, by and between Lippert Components Manufacturing, Inc., a Delaware corporation (the “Corporation”) and Jason D. Lippert (the “Executive”).

W I T N E S S E T H:

WHEREAS, the Executive has served as President and Chief Executive Officer of the Corporation, Lippert Components, Inc. (“LCI”), parent of the Corporation, and all other entities of which LCI is a direct or indirect parent or partner, excluding Lippert Components Holding, Inc. (collectively, the “LCI Entities”), all of which are direct or indirect subsidiaries of Drew Industries Incorporated (“Drew”), and has had extensive business and financial experience with the business conducted by the LCI Entities, and the Corporation desires to continue to utilize the Executive’s experience, knowledge and abilities in connection with the operations of the LCI Entities; and

WHEREAS, the Corporation does not wish the Executive to compete against the LCI Entities,

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, it is agreed as follows:

1.          Employment.  The Corporation hereby employs the Executive and the Executive hereby agrees to serve the LCI Entities, excluding Lippert Components Holding, Inc., as President and Chief Executive Officer.  The Executive will perform his duties on behalf of the LCI Entities at the principal executive offices of the Corporation in Goshen, Indiana; provided, however, that relocation of the Corporation’s executive offices shall be subject to approval of the 

 

 

Board of Directors of the Corporation, and the Executive shall at no time be required to change his residence without his consent.

2.          Term.  The term of this Agreement shall be for the five (5) year period commencing January 1, 2006 and terminating December 31, 2010 (the “Term”).

3.          Duties.  During the Term, the Executive shall exert his best efforts, and, subject to the terms and provisions hereof, shall devote substantially all of his time, attention, skills and efforts to the business and affairs of the LCI Entities and will use his best efforts to promote the interests thereof. Consistent with the foregoing, the Executive shall not be precluded from giving appropriate attention to his personal and financial affairs. The Executive shall act in accordance with the policies of the LCI Entities as determined from time-to-time by their respective Boards of Directors consistent with this Agreement, and shall perform such services and duties as such Boards of Directors may from time-to-time direct consistent with this Agreement, including, but not
limited to, the duty to hire and discharge employees of the LCI Entities and to determine the compensation paid to such employees, including bonuses paid to such employees from the annual 18% incentive bonus pools maintained by the LCI Entities (the “Bonus Pools”).

	
            4.
 	
            Compliance.   
 

4.1        The Corporation and the Executive intend that the provisions of this Agreement shall comply in all respects with the requirements of section 409A of the Internal Revenue Code of 1986, as amended (the “Code).  Accordingly, notwithstanding anything in this Agreement to the contrary, all elections to defer, distributions, and all other aspects of this Agreement shall be made in compliance Section 409A of the Code and any regulations or other guidance thereunder.  To the extent required, this Agreement will be revised and amended in 

 

– 2 –

 

 

order to comply with the provisions of Section 409A of the Code and any regulations or guidance thereunder.

4.2        All compensation, in whatever form, payable pursuant to this Agreement shall be subject in all respects to the terms, provisions and conditions of the Drew Industries Incorporated 2002 Equity Award and Incentive Plan, as amended from time to time.

 

5.          Compensation.  The Corporation agrees to pay the Executive for his services to the LCI Entities a salary (“Base Salary”) of Four Hundred Thousand ($400,000) Dollars for each year of the Term, payable according to the customary payroll practice of the Corporation.  Performance of the Executive’s services will be reviewed annually by the Compensation Committee of the Board of Directors of Drew (the “Compensation Committee”).

	
            6.
 	
            Incentive Compensation.
 

6.1        In addition to the Base Salary, and subject to Section 6.3 hereof, the Executive shall be entitled to receive, for each year during the Term commencing with the year ending December 31, 2006, performance-based incentive compensation (the “Bonus”), equal to five (5%) percent of (i) the excess of operating profits of the LCI Entities over (ii) $14.0 million; provided, however, that if any of the LCI Entities shall acquire additional business operations or dispose of any existing business operations, the performance goals pursuant to which the Bonus is paid may be modified upon agreement between the Executive and the Corporation.  The Bonus shall be paid from, and applied against, the Bonus Pools.

6.2        For purposes of this Agreement, the term “operating profits of the LCI Entities” means the consolidated income of the LCI Entities (A) before (i) interest expense, (ii) interest or dividend income, (iii) impairment of goodwill, (iv) intercompany administrative fees charged to any of the LCI Entities by Drew, (v) taxes based upon income, (vi) extraordinary 

 

– 3 –

 

 

items determined in accordance with generally accepted accounting principles, and (vii) the cumulative effect of a change in accounting principles, and (B) after giving effect (positive or negative) to a capital charge equal to 6% of the increase or decrease in (i) the average net assets employed by the LCI Entities during the year for which the Bonus is being determined over (ii) $114 million.  For purposes of this Agreement, the term “net assets” means: (a) total assets, excluding cash, minus (b) total liabilities, excluding (i) current and long-term debt, (ii) intercompany balances, and (iii) income taxes payable or deferred, all as reflected on the monthly Consolidating Balance Sheet of Drew and its subsidiaries.

6.3        Notwithstanding anything to the contrary contained herein, the following shall apply to payment of the Bonus:

6.3.1     at least 60% of the amount of Bonus in excess of $600,000 for any year during the Term shall be paid in shares of Drew Restricted Stock, and the balance of 40% shall be paid in such proportions of shares of Drew Restricted Stock and cash as the Executive shall elect in his sole discretion.  All such shares of Drew Restricted Stock shall be subject only to the restriction on transferability for a period of two years from the date of grant;

6.3.2     the amount of Bonus in excess of five times the Base Salary for any year during the Term shall be paid in shares of Drew Deferred Stock.  The shares shall be issued to the Executive in five consecutive annual installments on January 2nd, each in the amount of 20% of the total grant of Deferred Stock, commencing in year after the date of grant; and

6.3.3     all grants and issuances of Restricted Stock and Deferred Stock as aforesaid, shall be made on, or as soon as practicable after, the date on which Drew 

 

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releases its year-end results of operations, but in no event later than two and one-half months after the end of Drew’s fiscal year. 

6.4        Nothing in this Agreement, nor any fixing of compensation in the form of Base Salary, Bonus, deferred compensation, securities or otherwise, shall prevent the Compensation Committee from granting to the Executive additional compensation in the form of cash, salary increases, deferred compensation, securities or otherwise.

	
            7.
 	
            Benefits.
 

7.1        The Executive and his immediate family shall continue to receive medical coverage at least equivalent, in nature and extent, to the medical coverage afforded to him by the LCI Entities prior to the date hereof, and such other reasonable benefits which he has received from the LCI Entities prior to the date hereof.

7.2        The Executive agrees to have an annual comprehensive physical examination at the expense of the Corporation (to the extent not covered by insurance) by a physician of his choice.

7.3        The Executive shall be eligible to participate in any pension, retirement, or profit-sharing plan adopted by the LCI Entities for the benefit of its executives.  Each year during the Term, the Executive shall be entitled to receive $40,000 pursuant to Drew’s retirement bonus program, payable in the year earned, that must be used to purchase a tax deferred annuity and/or cash value life insurance.  

7.4        The LCI Entities shall maintain, at no cost to the Executive, disability insurance providing for weekly payments to the Executive, in the event the Executive shall fail or be unable to perform his obligations hereunder, in the amount of not less than 

 

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$120,000 per year. Such payments shall continue for the maximum available term after the commencement of disability.

7.5        During the period of employment hereunder, the Corporation, at its expense, will make available to the Executive one automobile (or an automobile allowance at the option of the Executive), together with gasoline, customary insurance, maintenance, license fees, and parking, to be used in connection with the business of the LCI Entities.

7.6        The Executive shall be entitled to a vacation in each year during the Term of not less than three (3) weeks.

7.7        Each year during the Term, the Corporation will recommend that the Compensation Committee grant to the Executive options to purchase additional shares of Drew Common Stock, or other equity awards of equivalent value, having a Black-Scholes option pricing model (or similar model) annual value of at least $130,000, subject, however, to the discretion of the Compensation Committee.  Notwithstanding the foregoing, the Board of Directors of Drew may from time-to-time in its sole discretion increase the value of the options to be granted  The expense related to stock option compensation will be deducted from “operating profits of the LCI Entities” (as defined in Section 6.2 hereof) as and when expensed by Drew.

7.8        In no event shall the Executive receive any equity awards which are deemed to be deferred compensation under the provisions of Section 409A of the Code, unless all aspects of such awards meet the requirements of section 409A of the Code.

8.          Expenses.  All travel and other expenses incident to the rendering of services by the Executive hereunder in accordance with the travel policies of the LCI Entities 

 

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will be paid by the Corporation.  If any such expenses are paid in the first instance by the Executive, the Corporation will reimburse him therefor on presentation of expense vouchers.

	
            9.
 	
            Termination.
 

9.1        If, on account of physical or mental disability, the Executive shall fail or be unable to fully perform this Agreement for a continuous period of six (6) months, the Corporation may, at its option, at any time thereafter, upon thirty (30) days written notice to the Executive, terminate this Agreement, and this Agreement shall come to an end at the end of said notice period as if such date were the termination date of this Agreement. Notwithstanding the termination of the period of employment as aforesaid, the Corporation shall pay the Bonus to the Executive proportionately with respect to the period prior to the date of termination.

9.2        In the event of the death of the Executive during the Term, this Agreement shall terminate on the date of death. In such case, the Corporation shall continue to pay to the heir or designee of the Executive (i) the Base Salary, which the Executive would have been entitled to receive but for such termination, for a period of six (6) months from the date of death of the Executive, and (ii) the Bonus, proportionately, with respect to the period prior to the date of termination.

9.3        The Corporation shall have the right to terminate this Agreement at any time upon ten (10) days written notice to the Executive in the event that (i) the Executive has committed a willful material breach of the terms of this Agreement and such breach shall continue for a period of ten (10) days after notice specifying the nature of the breach, or (ii) the Executive is convicted of, or pleads nolo contendere to, any felony or crime involving moral turpitude.  In such event, this Agreement shall come to an end as of the end of such notice period as if such date were the termination date of this Agreement.

 

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            10.
 	
            Non-Competition, Corporate Property.:
 

10.1      During the Term, and for a period of five (5) years from the date of termination of this Agreement, the Executive shall not, directly or indirectly, undertake or perform services in or for, or render services to, participate in, or have any financial interest in, or engage in, any business competitive to that of the business of the LCI Entities, Drew or their affiliates (collectively, the “Affiliated Companies”) or solicit for employment or employ any employee of the Affiliated Companies. For purposes hereof, a business shall be deemed competitive if it is conducted in any geographic or market area in which any of the Affiliated Companies are engaged in business during the period covered by this Section 10 and involves the development, design, manufacture, marketing, packaging sale or distribution of any products developed,
designed, manufactured sold or distributed, or the offering of any services offered, by any of the Affiliated Companies whether on the date hereof or as of the date of termination of this Agreement including, but not limited to, to the manufactured housing (including park and office models), modular housing, recreational vehicle, and utility trailer industries; and the Executive shall be deemed directly or indirectly to engage in such business if he, or any member of his immediate family (i.e., his spouse and children) participates in such business, or in any entity engaged in or which owns, such business, as an officer, director, employee, consultant, partner, individual proprietor, manager or as an investor who has made any loans, contributed to capital stock or purchased any stock; provided, however, that the Executive will not at any time utilize the names “Lippert”, “Lippert Components”, “Zieman”, “Continental Stamping”, “Kinro”,
“Drew”, “Venture” or any derivatives of any of the foregoing, or any other name used by any of the Affiliated Companies in any business competitive to that of the business of the Affiliated Companies, or any patent, trademark, tradename, service mark, logo, copyright or 

 

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similar intellectual property, whether or not registered, of any of the Affiliated Companies, or any proprietary information of any of the Affiliated Companies. The foregoing, however, shall not be deemed to prevent the Executive from investing in securities if such class of securities in which the investment is made is listed on a national securities exchange or is of a company registered under Section 12(g) of the Securities Exchange Act of 1934, and, if the company in which such investment is made competes with any of the Affiliated Companies, such investment represents less than one (1%) per cent of the outstanding securities of such class.

10.2      The Executive agrees that all products, packaging, inventions, patents, patent applications, designs, creations, ideas, techniques, methods, or any portions thereof, or any improvements or modifications thereon, or any know-how or procedures related thereto, which relate to the business of the Affiliated Companies, conceived, invented, discovered or executed by the Executive during the term of this Agreement, whether or not marketed or utilized by the Affiliated Companies, shall be the sole and exclusive property of the LCI Entities, without additional compensation payable therefor; and by these presents the Executive hereby assigns to the Corporation any and all right, title and interest he has, or may have, therein.

11.        Notices.  All notices and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, telegram, facsimile or other standard form of telecommunication, or by registered or certified post-paid mail, return receipt requested, and addressed as follows, or to such other address as any party may notify the other in accordance with the provisions hereof:

 

 

 

– 9 –

 

 

 

	
            To the Corporation:
 	
            Lippert Components, Inc.
 

2375 Tamiami Trail North

Suite 110

Naples, Florida 34103

Attention:  Chairman

Telephone:  (239) 659-2005

Telecopy:  (239) 659-2009

 

-copy to-

 

Drew Industries Incorporated

200 Mamaroneck Avenue

White Plains, New York 10601 

Attention: President 

Telephone:  (914) 428-9098 

Telecopy:  (914) 428-4581

 

 

	
            To the Executive:
 	
            Jason D. Lippert
 

707 Bainbridge Place

Goshen, IN 46526

 

 

 

 

	
            12.
 	
            Additional Provisions.
 

12.1      This Agreement constitutes the entire Agreement between the parties, and there are no terms other than those contained herein. No variation hereof shall be deemed valid unless in writing and signed by the parties hereto, and no discharge of the terms hereof shall be deemed valid unless by full performance by the parties hereto, or by a writing signed by the parties hereto.

12.2      This Agreement shall inure to the benefit of and be binding upon the Corporation, its successors and assigns, and the Executive, his heirs, executors, administrators and legal representatives.

 

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12.3      This Agreement shall not be terminated, voluntarily or involuntarily, by the liquidation or dissolution of the Corporation or by the merger or consolidation of the Corporation with or into another corporation.

12.4      In the event that any one or more of the provisions of this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Agreement and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein.

12.5      This Agreement shall be governed by the internal laws of the State of Indiana without giving effect to principles of conflicts of law.  Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the United States District Court located in Indianapolis, Indiana over any suit, action or proceeding arising out of or relating to this Agreement.  Each party hereby irrevocably waives to the fullest extent permitted by law, (i) the right to a trial by jury; (ii) any objection that they may now or hereafter have to the venue of any such suit, action or proceeding brought in any such court; or (iii) any claim that any such suit, action or proceeding has been brought in an inconvenient forum. Final judgement in any suit, action or proceeding brought in any such court shall be conclusive and binding upon each party duly served
with process therein and may be enforced in the courts of the jurisdiction of which either party or any of their property is subject, by a suit upon such judgement.

12.6      This Agreement may be executed in one or more counterparts, each of which shall be an original, but all of which shall be deemed to be one and the same instrument.

 

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12.7      In the event of any proceeding involving a claim or dispute arising under this Agreement, the prevailing party (by motion, on the merits, or otherwise) shall be entitled to recover, in addition to any remedy awarded in such proceeding, all costs and expenses, including actual attorneys fees, incurred by the prevailing party in such proceeding.

12.8      The headings of this Agreement are for the convenience of reference only and shall not affect in any manner any of the terms and conditions hereof.

(Signature Page Follows)

 

 

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IN WITNESS. WHEREOF, the Corporation has caused these presents to be signed by its duly authorized officer, and its corporate seal to be hereunto affixed, and the Executive has hereunto set his hand the day and year first above written.

	
            ATTEST:
 
 
 
 

———————————————————–
 	
            LIPPERT COMPONENTS MANUFACTURING,
         INC.
 
 
 

————————————————————
 
	
             

WITNESS:

 

————————————————
 	
             

 

 

————————————————————

Jason D. Lippert
 

 

 

 

– 13 –

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