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                                                                     EXHIBIT 4.2

                             STATEMENT OF RESOLUTION
                 ESTABLISHING AND DESIGNATING A SERIES OF SHARES
                                       OF
                          AMERICAN HOMESTAR CORPORATION

                  SERIES B JUNIOR PARTICIPATING PREFERRED STOCK

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

     Pursuant to the provisions of Article 2.13 of the Texas Business
Corporation Act, as amended and pursuant to Article IV of its Articles of
Incorporation, as amended through the date hereof, the undersigned, American
Homestar Corporation, a Texas corporation (the "Company"), hereby submits the
following statement for purposes of establishing and designating a series of
shards and fixing and determining the preferences, limitations and relative
rights thereof:

     I. The name of the Company is American Homestar Corporation.

     II. The following resolution establishing and designating a series of
shares and fixing and determining the preferences, limitations and relative
rights thereof was duly adopted by the Board of Directors of the Company
effective February 10, 2000, which action constitutes all necessary action on
the part of the Company for the adoption thereof:

     RESOLVED, that pursuant to the authority granted to and vested in the Board
of Directors of the Company (hereinafter called the "Board of Directors" or the
"Board") in accordance with the provisions of the Company's Articles of
Incorporation, as amended to date (hereinafter called the "Articles of
Incorporation"), the Board of Directors hereby creates a series of Preferred
Stock, par value $1.00 per share (the "Preferred Stock"), of the Company and
hereby states the designation and number of shares, and fixes the relative
rights, powers and preferences thereof, and the limitations thereof, as follows:

     Section 1. Designation and Amount. The shares of such series shall be
designated as "Series B Junior Participating Preferred Stock" (the "Series B
Preferred Stock") and the number of shares constituting the Series B Preferred
Stock shall be 100,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no decrease shall reduce
the number of shares of Series B Preferred Stock to a number less than the
number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Company convertible
into Series B Preferred Stock.

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     Section 2. Dividends and Distributions.

     (A) Subject to the rights of the holders of any shares of any series of
Preferred Stock of the Company (the "Preferred Stock") (or any similar stock)
ranking prior and superior to the Series B Preferred Stock with respect to
dividends, the holders of shares of Series B Preferred Stock, in preference to
the holders of Common Stock, par value $.05 per share of the Company (the
"Common Stock") and of any other stock of the Company ranking junior to the
Series B Preferred Stock, shall be entitled to receive, when, as and if declared
by the Board of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the last day of January, April, July, and
October in each year (each such date being referred to herein as a "Dividend
Payment Date"), commencing on the first Dividend Payment Date after the first
issuance of a share or fraction of a share of Series B Preferred Stock, in an
amount per share (rounded to the nearest cent) equal to the greater of (a) $1 or
(b) subject to the provision for adjustment hereinafter set forth, 1000 times
the aggregate per share amount of all cash dividends, and 1000 times the
aggregate per share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock, declared
on the Common Stock since the immediately preceding Dividend Payment Date or,
with respect to the first Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series B Preferred Stock. In the event the
Company shall at any time after February 10, 2000, declare or pay any dividend
on the Common Stock payable in shares of Common Stock, or effect a subdivision
or combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount to which holders of shares of Series B Preferred Stock were
entitled immediately prior to such event under clause (b) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.

     (B) The Company shall declare a dividend or distribution on the Series B
Preferred Stock as provided in paragraph (A) of this Section immediately after
it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, in the event no
dividend or distribution shall have been declared on the Common Stock during the
period between any Dividend Payment Date and the next subsequent Dividend
Payment Date, a dividend of $1 per share on the Series B Preferred Stock shall
nevertheless be payable, when, as and if declared, on such subsequent Dividend
Payment Date.

     (C) Dividends shall begin to accrue and be cumulative, whether or not
earned or declared, on outstanding shares of Series B Preferred Stock from the
Dividend Payment Date next preceding the date of issue of such shares, unless
the date of issue of such shares is prior to the record date for the first
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Dividend Payment Date or is a date

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after the record date for the determination of holders of shares of Series B
Preferred Stock entitled to receive a quarterly dividend and before such
Dividend Payment Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Series B
Preferred Stock in an amount less than the total amount of such dividends at the
time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares of
Series B Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than 50 days
prior to the date fixed for the payment thereof.

     Section 3. Voting Rights. The holders of shares of Series B Preferred Stock
shall have the following voting rights;

     (A) Subject to the provision for adjustment hereinafter set forth and
except as otherwise provided in the Articles of Incorporation or required by
law, each share of Series B Preferred Stock shall entitle the holder thereof to
1000 votes on all matters upon which the holders of the Common Stock of the
Company are entitled to vote. In the event the Company shall at any time after
February 10, 2000, declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the number of votes per
share to which holders of shares of Series B Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such number by
a fraction, the numerator of which is the-number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.

     (B) Except as otherwise provided herein, in the Articles of Incorporation
or in any other Certificate of Designations creating a series of Preferred Stock
or any similar stock, and except as otherwise required by law, the holders of
shares of Series B Preferred Stock and the holders of shares of Common Stock and
any other capital stock of the Company having general voting rights shall vote
together as one class on all matters submitted to a vote of stockholders of the
Company.

     (C) Except as set forth herein, or as otherwise provided by law, holders of
Series B Preferred Stock shall have no special voting rights and their consent
shall not be required (except to the extent they are entitled to vote with
holders of Common Stock as set forth herein) for taking any corporate action.

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     Section 4. Certain Restrictions.

     (A) Whenever quarterly dividends or other dividends or distributions
payable on the Series B Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not earned or declared, on shares of Series B Preferred Stock outstanding
shall have been paid in full, the Company shall not:

          (i) declare or pay dividends, or make any other distributions, on any
     shares of stock ranking junior (as to dividends) to the Series B Preferred
     Stock;

          (ii) declare or pay dividends, or make any other distributions, on any
     shares of stock ranking on a parity (as to dividends) with the Series B
     Preferred Stock, except dividends paid ratably on the Series B Preferred
     Stock and all such parity stock on which dividends are payable or in
     arrears in proportion to the total amounts to which the holders of all such
     shares are then entitled;

          (iii) redeem or purchase or otherwise acquire for consideration shares
     of any stock ranking junior (either as to dividends or upon liquidation,
     dissolution or winding up) to the Series B Preferred Stock, provided that
     the Company may at any time redeem, purchase or otherwise acquire shares of
     any such junior stock in exchange for shares of any stock of the Company
     ranking junior (as to dividends and upon dissolution, liquidation or
     winding up) to the Series B Preferred Stock or rights, warrants or options
     to acquire such junior stock;

          (iv) redeem or purchase or otherwise acquire for consideration any
     shares of Series B Preferred Stock, or any shares of stock ranking on a
     parity (either as to dividends or upon liquidation, dissolution or winding
     up) with the Series B Preferred Stock, except in accordance with a purchase
     offer made in writing or by publication (as determined by the Board of
     Directors) to all holders of such shares upon such terms as the Board of
     Directors, after consideration of the respective annual dividend rates and
     other relative rights and preferences of the respective series and classes,
     shall determine in good faith will result in fair and equitable treatment
     among the respective series or classes.

     (B) The Company shall not permit any subsidiary of the Company to purchase
or otherwise acquire for consideration any shares of stock of the Company unless
the Company could, under paragraph (A) of this Section 4, purchase or otherwise
acquire such shares at such time and in such manner.

     Section 5. Reacquired Shares. Any shares of Series B Preferred Stock
purchased or otherwise acquired by the Company in any manner whatsoever shall be
retired and canceled promptly after the acquisition thereof.

     Section 6. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Company, no distribution shall be made (A) to
the holders of the Common

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Stock or of shares of any other stock of the Company ranking junior, upon
liquidation, dissolution or winding up, to the Series B Preferred Stock unless,
prior thereto, the holders of shares of Series B Preferred Stock shall have
received $100 per share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not earned or declared, to the date of
such payment, provided that the holders of shares of Series B Preferred Stock
shall be entitled to receive an aggregate amount per share, subject to the
provision for adjustment hereinafter set forth, equal to 1000 times the
aggregate amount to be distributed per share to holders of shares of Common
Stock, or (B) to the holders of shares of stock ranking on a parity upon
liquidation, dissolution or winding up with the Series B Preferred Stock, except
distributions made ratably on the Series B Preferred Stock and all such parity
stock in proportion to the total amounts to which the holders of all such shares
are entitled upon such liquidation, dissolution or winding up. In the event the
Company shall at any time after February 10, 2000 declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the aggregate amount to which holders of shares of Series B Preferred
Stock were entitled immediately prior to such event under the proviso in clause
(A) of the preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.

     Section 7. Consolidation, Merger, etc. In case the Company shall enter into
any consolidation, merger, combination or other transaction in which the shares
of Common Stock are converted into, exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Series B Preferred Stock shall at the same time be similarly converted into,
exchanged for or changed into an amount per share (subject to the provision for
adjustment hereinafter set forth) equal to 1000 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the case
may be, into which or for which each share of Common Stock is converted,
exchanged or converted. In the event the Company shall at any time after
February 10, 2000 declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the amount set forth in
the preceding sentence with respect to the conversion, exchange or change of
shares of Series B Preferred Stock shall be adjusted by multiplying such amount
by a fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.

     Section 8. No Redemption. The shares of Series B Preferred Stock shall not
be redeemable from any holder.

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     Section 9. Rank. The Series B Preferred Stock shall rank, with respect to
the payment of dividends and the distribution of assets upon liquidation,
dissolution or winding up of the Company, junior to all other series of
Preferred Stock and senior to the Common Stock.

     Section 10. Amendment. if any proposed amendment to the Articles of
Incorporation (including this Certificate of Designations) would alter, change
or repeal any of the preferences, powers or special rights given to the Series B
Preferred Stock so as to affect the Series B Preferred Stock adversely, then the
holders of the Series B Preferred Stock shall be entitled to vote separately as
a class upon such amendment, and the affirmative vote of two-thirds of the
outstanding shares of the Series B Preferred Stock, voting separately as a
class, shall be necessary for the adoption thereof, in addition to such other
vote as may be required by the Business Corporation Act of the State of Texas.

     IN WITNESS WHEREOF, this Statement of Resolution is executed on behalf of
the Company by its President and attested-by its Assistant Secretary this 10th
day of February, 2000.

                                                   /s/ LAURENCE A. DAWSON, JR.
                                                  -----------------------------
                                                  Laurence A. Dawson, Jr.,
                                                  President

Attest:

 /s/ KRISTI E. GROSS
---------------------------
Kristi E. Gross,
Assistant Secretary

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                                                                    Exhibit 10.4

                                    FORM OF

                                FAIRMARKET, INC.

                      2000 STOCK OPTION AND INCENTIVE PLAN

SECTION 1.        GENERAL PURPOSE OF THE PLAN; DEFINITIONS

         The name of the plan is the FairMarket, Inc. 2000 Stock Option and
Incentive Plan (the "Plan"). The purpose of the Plan is to encourage and enable
the officers, employees, Independent Directors and other key persons (including
consultants) of FairMarket, Inc. (the "Company") and its Subsidiaries upon whose
judgment, initiative and efforts the Company largely depends for the successful
conduct of its business to acquire a proprietary interest in the Company. It is
anticipated that providing such persons with a direct stake in the Company's
welfare will assure a closer identification of their interests with those of the
Company, thereby stimulating their efforts on the Company's behalf and
strengthening their desire to remain with the Company.

         The following terms shall be defined as set forth below:

         "Act" means the Securities Act of 1933, as amended, and the rules and
regulations thereunder.

         "Administrator" is defined in Section 2(a).

         "Award" or "Awards," except where referring to a particular category of
grant under the Plan, shall include Incentive Stock Options, Non-Qualified Stock
Options, Deferred Stock Awards, Restricted Stock Awards, Unrestricted Stock
Awards, Performance Share Awards and Dividend Equivalent Rights.

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

         "Code" means the Internal Revenue Code of 1986, as amended, and any
successor Code, and related rules, regulations and interpretations.

         "Committee" means the Committee of the Board referred to in Section 2.

         "Covered Employee" means an employee who is a "Covered Employee" within
the meaning of Section 162(m) of the Code.

         "Deferred Stock Award" means Awards granted pursuant to Section 7.

         "Dividend Equivalent Right" means Awards granted pursuant to Section
11.
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         "Effective Date" means the date on which the Plan is approved by
stockholders as set forth in Section 17.

         "Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.

         "Fair Market Value" of the Stock on any given date means the fair
market value of the Stock determined in good faith by the Administrator;
provided, however, that if the Stock is admitted to quotation on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ"), NASDAQ
National System or a national securities exchange, the determination shall be
made by reference to market quotations. If there are no market quotations for
such date, the determination shall be made by reference to the last date
preceding such date for which there are market quotations; provided further,
however, that if the date for which Fair Market Value is determined is the first
day when trading prices for the Stock are reported on NASDAQ or on a national
securities exchange, the Fair Market Value shall be the "Price to the Public"
(or equivalent) set forth on the cover page for the final prospectus relating to
the Company's Initial Public Offering.

         "Incentive Stock Option" means any Stock Option designated and
qualified as an "incentive stock option" as defined in Section 422 of the Code.

         "Independent Director" means a member of the Board who is not also an
employee of the Company or any Subsidiary.

         "Initial Public Offering" means the consummation of the first fully
underwritten, firm commitment public offering pursuant to an effective
registration statement under the Act, other than on Forms S-4 or S-8 or their
then equivalents, covering the offer and sale by the Company of its equity
securities, or such other event as a result of or following which the Stock
shall be publicly held.

         "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.

         "Option" or "Stock Option" means any option to purchase shares of Stock
granted pursuant to Section 5.

         "Performance Share Award" means Awards granted pursuant to Section 9.

         "Performance Cycle" means one or more periods of time, which may be of
varying and overlapping durations, as the Administrator may select, over which
the attainment of one or more performance criteria will be measured for the
purpose of determining a grantee's right to and the payment of a Performance
Share Award, Restricted Stock Award or Deferred Stock Award.

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         "Restricted Stock Award" means Awards granted pursuant to Section 6.

         "Stock" means the Common Stock, par value $.001 per share, of the
Company, subject to adjustments pursuant to Section 3.

         "Subsidiary" means any corporation or other entity (other than the
Company) in any unbroken chain of corporations or other entities beginning with
the Company if each of the corporations or entities (other than the last
corporation or entity in the unbroken chain) owns stock or other interests
possessing 50 percent or more of the economic interest or the total combined
voting power of all classes of stock or other interests in one of the other
corporations or entities in the chain.

         "Unrestricted Stock Award" means any Award granted pursuant to Section
8.

SECTION 2.        ADMINISTRATION OF PLAN; ADMINISTRATOR AUTHORITY TO
                  SELECT GRANTEES AND DETERMINE AWARDS

         (a) Committee. The Plan shall be administered by either the Board or a
committee of not less than two Independent Directors (in either case, the
"Administrator").

         (b) Powers of Administrator. The Administrator shall have the power and
authority to grant Awards consistent with the terms of the Plan, including the
power and authority:

                  (i) to select the individuals to whom Awards may from time to
         time be granted;

                  (ii) to determine the time or times of grant, and the extent,
         if any, of Incentive Stock Options, Non-Qualified Stock Options,
         Restricted Stock Awards, Deferred Stock Awards, Unrestricted Stock
         Awards, Performance Share Awards and Dividend Equivalent Rights, or any
         combination of the foregoing, granted to any one or more grantees;

                  (iii) to determine the number of shares of Stock to be covered
         by any Award;

                  (iv) to determine and modify from time to time the terms and
         conditions, including restrictions, not inconsistent with the terms of
         the Plan, of any Award, which terms and conditions may differ among
         individual Awards and grantees, and to approve the form of written
         instruments evidencing the Awards;

                  (v) to accelerate at any time the exercisability or vesting of
         all or any portion of any Award;

                  (vi) subject to the provisions of Section 5(a)(ii), to extend
         at any time the period in which Stock Options may be exercised;

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                  (vii) to determine at any time whether, to what extent, and
         under what circumstances distribution or the receipt of Stock and other
         amounts payable with respect to an Award shall be deferred either
         automatically or at the election of the grantee and whether and to what
         extent the Company shall pay or credit amounts constituting interest
         (at rates determined by the Administrator) or dividends or deemed
         dividends on such deferrals; and

                  (viii) at any time to adopt, alter and repeal such rules,
         guidelines and practices for administration of the Plan and for its own
         acts and proceedings as it shall deem advisable; to interpret the terms
         and provisions of the Plan and any Award (including related written
         instruments); to make all determinations it deems advisable for the
         administration of the Plan; to decide all disputes arising in
         connection with the Plan; and to otherwise supervise the administration
         of the Plan.

         All decisions and interpretations of the Administrator shall be binding
on all persons, including the Company and Plan grantees.

         (c) Delegation of Authority to Grant Awards. The Administrator, in its
discretion, may delegate to the Chief Executive Officer of the Company all or
part of the Administrator's authority and duties with respect to the granting of
Awards at Fair Market Value, to individuals who are not subject to the reporting
and other provisions of Section 16 of the Exchange Act or "covered employees"
within the meaning of Section 162(m) of the Code. The Chief Executive Officer
shall be deemed a one-person committee of the Board. Any such delegation by the
Administrator shall include a limitation as to the amount of Awards that may be
granted during the period of the delegation and shall contain guidelines as to
the determination of the exercise price of any Stock Option or Stock
Appreciation Right, the conversion ratio or price of other Awards and the
vesting criteria. The Administrator may revoke or amend the terms of a
delegation at any time but such action shall not invalidate any prior actions of
the Administrator's delegate or delegates that were consistent with the terms of
the Plan.

         (d) Indemnification. Neither the Board nor the Committee, nor any
member of either or any delegatee thereof, shall be liable for any act,
omission, interpretation, construction or determination made in good faith in
connection with the Plan, and the members of the Board and the Committee (and
any delegatee thereof) shall be entitled in all cases to indemnification and
reimbursement by the Company in respect of any claim, loss, damage or expense
(including, without limitation, reasonable attorneys' fees) arising or resulting
therefrom to the fullest extent permitted by law and/or under any directors' and
officers' liability insurance coverage which may be in effect from time to time.

SECTION 3.        STOCK ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION

         (a) Stock Issuable. The maximum number of shares of Stock reserved and
available for issuance under the Plan shall be 4,017,250 shares, subject to
adjustment as provided in

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Section 3(b). For purposes of this limitation, the shares of Stock underlying
any Awards under this Plan, the Company's Amended and Restated 1997 Stock Option
Plan and the Company's 1999 Stock Option Plan which are forfeited, canceled,
reacquired by the Company, satisfied without the issuance of Stock or otherwise
terminated (other than by exercise) shall be added back to the shares of Stock
available for issuance under the Plan. Subject to such overall limitation,
shares of Stock may be issued up to such maximum number pursuant to any type or
types of Award; provided, however, that Stock Options with respect to no more
than 1,005,000 shares of Stock may be granted to any one individual grantee
during any one calendar year period. The shares available for issuance under the
Plan may be authorized but unissued shares of Stock or shares of Stock
reacquired by the Company and held in its treasury.

         (b) Changes in Stock. Subject to Section 3(c) hereof, if, as a result
of any reorganization, recapitalization, reclassification, stock dividend, stock
split, reverse stock split or other similar change in the Company's capital
stock, the outstanding shares of Stock are increased or decreased or are
exchanged for a different number or kind of shares or other securities of the
Company, or additional shares or new or different shares or other securities of
the Company or other non-cash assets are distributed with respect to such shares
of Stock or other securities, or, if, as a result of any merger or
consolidation, sale of all or substantially all of the assets of the Company,
the outstanding shares of Stock are converted into or exchanged for a different
number or kind of securities of the Company or any successor entity (or a parent
or subsidiary thereof), the Administrator shall make an appropriate or
proportionate adjustment in (i) the maximum number of shares reserved for
issuance under the Plan, (ii) the number of Stock Options or that can be granted
to any one individual grantee and the maximum number of shares that may be
granted under a Performance-based Award, (iii) the number and kind of shares or
other securities subject to any then outstanding Awards under the Plan, (iv) the
repurchase price per share subject to each outstanding Restricted Stock Award,
and (v) the price for each share subject to any then outstanding Stock Options
under the Plan, without changing the aggregate exercise price (i.e., the
exercise price multiplied by the number of Stock Options) as to which such Stock
Options remain exercisable. The adjustment by the Administrator shall be final,
binding and conclusive. No fractional shares of Stock shall be issued under the
Plan resulting from any such adjustment, but the Administrator in its discretion
may make a cash payment in lieu of fractional shares.

         The Administrator may also adjust the number of shares subject to
outstanding Awards and the exercise price and the terms of outstanding Awards to
take into consideration material changes in accounting practices or principles,
extraordinary dividends, acquisitions or dispositions of stock or property or
any other event if it is determined by the Administrator that such adjustment is
appropriate to avoid distortion in the operation of the Plan, provided that no
such adjustment shall be made in the case of an Incentive Stock Option, without
the consent of the grantee, if it would constitute a modification, extension or
renewal of the Option within the meaning of Section 424(h) of the Code.

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         (c) Mergers and Other Transactions. In the case of and subject to the
consummation of (i) the dissolution or liquidation of the Company, (ii) the sale
of all or substantially all of the assets of the Company on a consolidated basis
to an unrelated person or entity, (iii) a merger, reorganization or
consolidation in which the outstanding shares of Stock are converted into or
exchanged for a different kind of securities of the successor entity and the
holders of the Company's outstanding voting power immediately prior to such
transaction do not own a majority of the outstanding voting power of the
successor entity immediately upon completion of such transaction, or (iv) the
sale of all of the Stock of the Company to an unrelated person or entity (in
each case, a "Sale Event"), upon the effective time of the Sale Event, the Plan
and all outstanding Awards granted hereunder shall terminate, unless provision
is made in connection with such Sale Event in the sole discretion of the parties
thereto for the assumption or continuation of Awards theretofore granted, or the
substitution for such Awards with new Awards of the successor entity or a parent
or subsidiary thereof, with such adjustment as to the number and kind of shares
and the per share exercise prices as the parties shall agree.

         In the event the parties shall agree to assume or continue the Awards,
then the vesting of Awards shall accelerate (x) by one year if the grantee
continues to be employed by the successor to the Company (or its successor) on
the anniversary date of the closing of the Sale Event or (y) by two years less
the amount of time the grantee has been employed by the successor to the Company
(or its successor if the grantee's employment with the Company and its
subsidiaries or successor entity is terminated by the Company or its
Subsidiaries or successor entity without Cause (as defined below) or by the
grantee for Good Reason (as defined below), subject, however, to the following
sentence. Notwithstanding the foregoing, in the event that the Company receives
written advice from its independent public accountants in connection with any
Sale Event to the effect that vesting of any Award under the circumstances
contemplated by the preceding sentence would preclude or otherwise adversely
affect the ability of the Company or any other party to such Sale Event to
account for the same as a "pooling of interests" within the meaning of APB No.
16 (or any successor provision), which Sale Event would otherwise qualify for
such accounting treatment, then vesting of such Awards shall not accelerate on a
subsequent termination of the grantee's employment following such Sale Event as
contemplated by the preceding sentence. For purposes of this Section 3(c), the
term "Cause" means a vote of the Board of Directors of the Company or the
successor entity, as the case may be, resolving that the grantee should be
dismissed as a result of (I) any material breach by the grantee of any agreement
to which the grantee and the Company are parties, (II) any act (other than
retirement) or omission to act by the grantee which would reasonably be likely
to have a material adverse effect on the business of the Company or its
Subsidiaries or successor entity, as the case may be, or on the grantee's
ability to perform services for the Company or its Subsidiaries or successor
entity, as the case may be, including, without limitation, the conviction of any
crime (other than ordinary traffic violations), or (III) any material misconduct
or willful and deliberate non-performance of duties by the grantee in connection
with the business or affairs of the Company or its Subsidiaries or successor
entity, as the case may be; and the term "Good Reason" means the occurrence of
any of the following events: (x) a substantial adverse change in the nature or
scope of the grantee's responsibilities,

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authorities, title, powers, functions, or duties; (y) a reduction in the
grantee's annual base salary except for an across-the-board salary reduction
similarly affecting all or substantially all management employees; or (z) the
relocation of the offices at which the grantee is principally employed to a
location more than 50 miles from such offices.

         In the event that no such provision is made for the assumption or
continuation of the Awards, then all outstanding Awards granted hereunder shall
become fully vested and exercisable immediately prior to the closing of the Sale
Event and shall terminate upon the closing of the Sale Event. In the event of
such termination, each grantee shall be permitted, within a specified period of
time prior to the consummation of the Sale Event as determined by the
Administrator, to exercise all outstanding Options held by such grantee,
including those that will become exercisable upon the consummation of the Sale
Event; provided, however, that the exercise of Options not exercisable prior to
the Sale Event shall be subject to the consummation of the Sale Event.

         Notwithstanding anything to the contrary in this Section 3(c), in the
event of a Sale Event pursuant to which holders of the Stock of the Company will
receive upon consummation thereof a cash payment for each share surrendered in
the Sale Event, the Company shall have the right, but not the obligation, to
make or provide for a cash payment to the grantees holding Options, in exchange
for the cancellation thereof, in an amount equal to the difference between (A)
the value as determined by the Administrator of the consideration payable per
share of Stock pursuant to the Sale Event (the "Sale Price") times the number of
shares of Stock subject to outstanding Options (to the extent then exercisable
at prices not in excess of the Sale Price) and (B) the aggregate exercise price
of all such outstanding Options.

         (d) Substitute Awards. The Administrator may grant Awards under the
Plan in substitution for stock and stock based awards held by employees,
directors or other key persons of another corporation in connection with the
merger or consolidation of the employing corporation with the Company or a
Subsidiary or the acquisition by the Company or a Subsidiary of property or
stock of the employing corporation. The Administrator may direct that the
substitute awards be granted on such terms and conditions as the Administrator
considers appropriate in the circumstances. Any substitute Awards granted under
the Plan shall not count against the first share limitation set forth in Section
3(a).

SECTION 4.        ELIGIBILITY

         Grantees under the Plan will be such full or part-time officers and
other employees, Independent Directors and key persons (including consultants
and prospective employees) of the Company and its Subsidiaries as are selected
from time to time by the Administrator in its sole discretion.

                                        7
<PAGE>   8
SECTION 5.        STOCK OPTIONS

         Any Stock Option granted under the Plan shall be in such form as the
Administrator may from time to time approve.

         Stock Options granted under the Plan may be either Incentive Stock
Options or NonQualified Stock Options. Incentive Stock Options may be granted
only to employees of the Company or any Subsidiary that is a "subsidiary
corporation" within the meaning of Section 424(f) of the Code. To the extent
that any Option does not qualify as an Incentive Stock Option, it shall be
deemed a Non-Qualified Stock Option.

         No Incentive Stock Option shall be granted under the Plan after
February 8, 2010.

         (a) Stock Options Granted to Employees and Key Persons. The
Administrator in its discretion may grant Stock Options to eligible employees
and key persons of the Company or any Subsidiary. Stock Options granted pursuant
to this Section 5(a) shall be subject to the following terms and conditions and
shall contain such additional terms and conditions, not inconsistent with the
terms of the Plan, as the Administrator shall deem desirable. If the
Administrator so determines, Stock Options may be granted in lieu of cash
compensation at the optionee's election, subject to such terms and conditions as
the Administrator may establish.

                  (i) Exercise Price. The exercise price per share for the Stock
         covered by a Stock Option granted pursuant to this Section 5(a) shall
         be determined by the Administrator at the time of grant but shall not
         be less than 100 percent of the Fair Market Value on the date of grant
         in the case of Incentive Stock Options, or 85 percent of the Fair
         Market Value on the date of grant, in the case of Non-Qualified Stock
         Options (other than options granted in lieu of cash compensation). If
         an employee owns or is deemed to own (by reason of the attribution
         rules of Section 424(d) of the Code) more than 10 percent of the
         combined voting power of all classes of stock of the Company or any
         parent or subsidiary corporation and an Incentive Stock Option is
         granted to such employee, the option price of such Incentive Stock
         Option shall be not less than 110 percent of the Fair Market Value on
         the grant date.

                  (ii) Option Term. The term of each Stock Option shall be fixed
         by the Administrator, but no Stock Option shall be exercisable more
         than 10 years after the date the Stock Option is granted. If an
         employee owns or is deemed to own (by reason of the attribution rules
         of Section 424(d) of the Code) more than 10 percent of the combined
         voting power of all classes of stock of the Company or any parent or
         subsidiary corporation and an Incentive Stock Option is granted to such
         employee, the term of such Stock Option shall be no more than five
         years from the date of grant.

                  (iii) Exercisability; Rights of a Stockholder. Stock Options
         shall become exercisable at such time or times, whether or not in
         installments, as shall be determined by the Administrator at or after
         the grant date. The Administrator may at any time

                                        8
<PAGE>   9
         accelerate the exercisability of all or any portion of any Stock
         Option. An optionee shall have the rights of a stockholder only as to
         shares acquired upon the exercise of a Stock Option and not as to
         unexercised Stock Options.

                  (iv) Method of Exercise. Stock Options may be exercised in
         whole or in part, by giving written notice of exercise to the Company,
         specifying the number of shares to be purchased. Payment of the
         purchase price may be made by one or more of the following methods to
         the extent provided in the Option Award agreement:

                           (A) In cash, by certified or bank check or other
                  instrument acceptable to the Administrator;

                           (B) Through the delivery (or attestation to the
                  ownership) of shares of Stock that have been purchased by the
                  optionee on the open market or that have been beneficially
                  owned by the optionee for at least six months and are not then
                  subject to restrictions under any Company plan. Such
                  surrendered shares shall be valued at Fair Market Value on the
                  exercise date;

                           (C) By the optionee delivering to the Company a
                  properly executed exercise notice together with irrevocable
                  instructions to a broker to promptly deliver to the Company
                  cash or a check payable and acceptable to the Company for the
                  purchase price; provided that in the event the optionee
                  chooses to pay the purchase price as so provided, the optionee
                  and the broker shall comply with such procedures and enter
                  into such agreements of indemnity and other agreements as the
                  Administrator shall prescribe as a condition of such payment
                  procedure; or

                           (D) By the optionee delivering to the Company a
                  promissory note if the Board has expressly authorized the loan
                  of funds to the optionee for the purpose of enabling or
                  assisting the optionee to effect the exercise of his Stock
                  Option; provided that at least so much of the exercise price
                  as represents the par value of the Stock shall be paid other
                  than with a promissory note if otherwise required by state
                  law.

         Payment instruments will be received subject to collection. The
         delivery of certificates representing the shares of Stock to be
         purchased pursuant to the exercise of a Stock Option will be contingent
         upon receipt from the optionee (or a purchaser acting in his stead in
         accordance with the provisions of the Stock Option) by the Company of
         the full purchase price for such shares and the fulfillment of any
         other requirements contained in the Option Award agreement or
         applicable provisions of laws. In the event an optionee chooses to pay
         the purchase price by previously-owned shares of Stock through the
         attestation method, the number of shares of Stock transferred to the
         optionee upon the exercise of the Stock Option shall be net of the
         number of shares attested to.

                                        9
<PAGE>   10
                  (v) Annual Limit on Incentive Stock Options. To the extent
         required for "incentive stock option" treatment under Section 422 of
         the Code, the aggregate Fair Market Value (determined as of the time of
         grant) of the shares of Stock with respect to which Incentive Stock
         Options granted under this Plan and any other plan of the Company or
         its parent and subsidiary corporations become exercisable for the first
         time by an optionee during any calendar year shall not exceed $100,000.
         To the extent that any Stock Option exceeds this limit, it shall
         constitute a Non-Qualified Stock Option.

         (b) Reload Options. At the discretion of the Administrator, Options
granted under the Plan may include a "reload" feature pursuant to which an
optionee exercising an option by the delivery of a number of shares of Stock in
accordance with Section 5(a)(iv)(B) hereof would automatically be granted an
additional Option (with an exercise price equal to the Fair Market Value of the
Stock on the date the additional Option is granted and with such other terms as
the Administrator may provide) to purchase that number of shares of Stock equal
to the sum of (i) the number delivered to exercise the original Option and (ii)
the number withheld to satisfy tax liabilities, with an Option term equal to the
remainder of the original Option term unless the Administrator otherwise
determines in the Award agreement for the original Option grant.

         (c) Stock Options Granted to Independent Directors.

                  (i) Grant of Options to Independent Directors. The
         Administrator, in its discretion, may grant Non-Qualified Stock Options
         to Independent Directors. Any such grant may vary among individual
         Independent Directors. The exercise price per share for the Stock
         covered by a Stock Option granted under this Section 5(c) shall be
         equal to the Fair Market Value of the Stock on the date the Stock
         Option is granted.

                  (ii)     Exercise; Termination.

                           (A) An Option granted under Section 5(c) shall be
                  exercisable as determined by the Administrator. An Option
                  issued under this Section 5(c) shall not be exercisable after
                  the expiration of ten years from the date of grant.

                           (B) Options granted under this Section 5(c) may be
                  exercised only by written notice to the Company specifying the
                  number of shares to be purchased. Payment of the full purchase
                  price of the shares to be purchased may be made by one or more
                  of the methods specified in Section 5(a)(iv). An optionee
                  shall have the rights of a stockholder only as to shares
                  acquired upon the exercise of a Stock Option and not as to
                  unexercised Stock Options.

         (d) Non-transferability of Options. No Stock Option shall be
transferable by the optionee otherwise than by will or by the laws of descent
and distribution and all Stock Options shall be exercisable, during the
optionee's lifetime, only by the optionee, or by the optionee's legal
representative or guardian in the event of the optionee's incapacity.
Notwithstanding the

                                       10
<PAGE>   11
foregoing, the Administrator, in its sole discretion, may provide in the Award
agreement regarding a given Option that the optionee may transfer his
Non-Qualified Stock Options to members of his immediate family, to trusts for
the benefit of such family members, or to partnerships in which such family
members are the only partners, provided that the transferee agrees in writing
with the Company to be bound by all of the terms and conditions of this Plan and
the applicable Option.

SECTION 6.        RESTRICTED STOCK AWARDS

         (a) Nature of Restricted Stock Awards. A Restricted Stock Award is an
Award entitling the recipient to acquire, at such purchase price as determined
by the Administrator, shares of Stock subject to such restrictions and
conditions as the Administrator may determine at the time of grant ("Restricted
Stock"). Conditions may be based on continuing employment (or other service
relationship) and/or achievement of pre-established performance goals and
objectives. The grant of a Restricted Stock Award is contingent on the grantee
executing the Restricted Stock Award agreement. The terms and conditions of each
such agreement shall be determined by the Administrator, and such terms and
conditions may differ among individual Awards and grantees.

         (b) Rights as a Stockholder. Upon execution of a written instrument
setting forth the Restricted Stock Award and payment of any applicable purchase
price, a grantee shall have the rights of a stockholder with respect to the
voting of the Restricted Stock, subject to such conditions contained in the
written instrument evidencing the Restricted Stock Award. Unless the
Administrator shall otherwise determine, certificates evidencing the Restricted
Stock shall remain in the possession of the Company until such Restricted Stock
is vested as provided in Section 6(d) below, and the grantee shall be required,
as a condition of the grant, to deliver to the Company a stock power endorsed in
blank.

         (c) Restrictions. Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of except as
specifically provided herein or in the Restricted Stock Award agreement. If a
grantee's employment (or other service relationship) with the Company and its
Subsidiaries terminates for any reason, the Company shall have the right to
repurchase Restricted Stock that has not vested at the time of termination at
its original purchase price, from the grantee or the grantee's legal
representative.

         (d) Vesting of Restricted Stock. The Administrator at the time of grant
shall specify the date or dates and/or the attainment of pre-established
performance goals, objectives and other conditions on which the
non-transferability of the Restricted Stock and the Company's right of
repurchase or forfeiture shall lapse. Subsequent to such date or dates and/or
the attainment of such pre-established performance goals, objectives and other
conditions, the shares on which all restrictions have lapsed shall no longer be
Restricted Stock and shall be deemed "vested." Except as may otherwise be
provided by the Administrator either in the Award agreement or, subject to
Section 14 below, in writing after the Award agreement is issued, a grantee's
rights in any shares of Restricted Stock that have not vested

                                       11
<PAGE>   12
shall automatically terminate upon the grantee's termination of employment (or
other service relationship) with the Company and its Subsidiaries and such
shares shall be subject to the Company's right of repurchase as provided in
Section 6(c) above.

         (e) Waiver, Deferral and Reinvestment of Dividends. The Restricted
Stock Award agreement may require or permit the immediate payment, waiver,
deferral or investment of dividends paid on the Restricted Stock.

SECTION 7.        DEFERRED STOCK AWARDS

         (a) Nature of Deferred Stock Awards. A Deferred Stock Award is an Award
of phantom stock units to a grantee, subject to restrictions and conditions as
the Administrator may determine at the time of grant. Conditions may be based on
continuing employment (or other service relationship) and/or achievement of
pre-established performance goals and objectives. The grant of a Deferred Stock
Award is contingent on the grantee executing the Deferred Stock Award agreement.
The terms and conditions of each such agreement shall be determined by the
Administrator, and such terms and conditions may differ among individual Awards
and grantees. At the end of the deferral period, the Deferred Stock Award, to
the extent vested, shall be paid to the grantee in the form of shares of Stock.

         (b) Election to Receive Deferred Stock Awards in Lieu of Compensation.
The Administrator may, in its sole discretion, permit a grantee to elect to
receive a portion of the cash compensation or Restricted Stock Award otherwise
due to such grantee in the form of a Deferred Stock Award. Any such election
shall be made in writing and shall be delivered to the Company no later than the
date specified by the Administrator and in accordance with rules and procedures
established by the Administrator. The Administrator shall have the sole right to
determine whether and under what circumstances to permit such elections and to
impose such limitations and other terms and conditions thereon as the
Administrator deems appropriate.

         (c) Rights as a Stockholder. During the deferral period, a grantee
shall have no rights as a stockholder; provided, however, that the grantee may
be credited with Dividend Equivalent Rights with respect to the phantom stock
units underlying his Deferred Stock Award, subject to such terms and conditions
as the Administrator may determine.

         (d) Restrictions. A Deferred Stock Award may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of during the deferral
period.

         (e) Termination. Except as may otherwise be provided by the
Administrator either in the Award agreement or, subject to Section 14 below, in
writing after the Award agreement is issued, a grantee's right in all Deferred
Stock Awards that have not vested shall automatically terminate upon the
grantee's termination of employment (or cessation of service relationship) with
the Company and its Subsidiaries for any reason.

                                       12
<PAGE>   13
SECTION 8.        UNRESTRICTED STOCK AWARDS

         Grant or Sale of Unrestricted Stock. The Administrator may, in its sole
discretion, grant (or sell at par value or such higher purchase price determined
by the Administrator) an Unrestricted Stock Award to any grantee pursuant to
which such grantee may receive shares of Stock free of any restrictions
("Unrestricted Stock") under the Plan. Unrestricted Stock Awards may be granted
in respect of past services or other valid consideration, or in lieu of cash
compensation due to such grantee.

SECTION 9.        PERFORMANCE SHARE AWARDS

         (a) Nature of Performance Share Awards. A Performance Share Award is an
Award entitling the recipient to acquire shares of Stock upon the attainment of
specified performance goals. The Administrator may make Performance Share Awards
independent of or in connection with the granting of any other Award under the
Plan. The Administrator in its sole discretion shall determine whether and to
whom Performance Share Awards shall be made, the performance goals, the periods
during which performance is to be measured, and all other limitations and
conditions.

         (b) Rights as a Stockholder. A grantee receiving a Performance Share
Award shall have the rights of a stockholder only as to shares actually received
by the grantee under the Plan and not with respect to shares subject to the
Award but not actually received by the grantee. A grantee shall be entitled to
receive a stock certificate evidencing the acquisition of shares of Stock under
a Performance Share Award only upon satisfaction of all conditions specified in
the Performance Share Award agreement (or in a performance plan adopted by the
Administrator).

         (c) Termination. Except as may otherwise be provided by the
Administrator either in the Award agreement or, subject to Section 14 below, in
writing after the Award agreement is issued, a grantee's rights in all
Performance Share Awards shall automatically terminate upon the grantee's
termination of employment (or cessation of service relationship) with the
Company and its Subsidiaries for any reason.

         (d) Acceleration, Waiver, Etc. At any time prior to the grantee's
termination of employment (or other service relationship) by the Company and its
Subsidiaries, the Administrator may in its sole discretion accelerate, waive or,
subject to Section 14, amend any or all of the goals, restrictions or conditions
applicable to a Performance Share Award.

SECTION 10.       PERFORMANCE-BASED AWARDS TO COVERED EMPLOYEES

         Notwithstanding anything to the contrary contained herein, if any
Restricted Stock Award, Deferred Stock Award or Performance Share Award granted
to a Covered Employee is intended to qualify as "Performance-based Compensation"
under Section 162(m) of the Code

                                       13
<PAGE>   14
and the regulations promulgated thereunder (a "Performance-based Award"), such
Award shall comply with the provisions set forth below:

         (a) Performance Criteria. The performance criteria used in performance
goals governing Performance-based Awards granted to Covered Employees may
include any or all of the following: (i) the Company's return on equity, assets,
capital or investment, (ii) pre-tax or after-tax profit levels of the Company or
any Subsidiary, a division, an operating unit or a business segment of the
Company, or any combination of the foregoing; (iii) cash flow, funds from
operations or similar measure; (iv) total shareholder return; (v) changes in the
market price of the Stock; (vi) sales or market share; or (vii) earnings per
share.

         (b) Grant of Performance-based Awards. With respect to each
Performance-based Award granted to a Covered Employee, the Committee shall
select, within the first 90 days of a Performance Cycle (or, if shorter, within
the maximum period allowed under Section 162(m) of the Code) the performance
criteria for such grant, and the achievement targets with respect to each
performance criterion (including a threshold level of performance below which no
amount will become payable with respect to such Award). Each Performance-based
Award will specify the amount payable, or the formula for determining the amount
payable, upon achievement of the various applicable performance targets. The
performance criteria established by the Committee may be (but need not be)
different for each Performance Cycle and different goals may be applicable to
Performance-based Awards to different Covered Employees.

         (c) Payment of Performance-based Awards. Following the completion of a
Performance Cycle, the Committee shall meet to review and certify in writing
whether, and to what extent, the performance criteria for the Performance Cycle
have been achieved and, if so, to also calculate and certify in writing the
amount of the Performance-based Awards earned for the Performance Cycle. The
Committee shall then determine the actual size of each Covered Employee's
Performance-based Award, and, in doing so, may reduce or eliminate the amount of
the Performance-based Award for a Covered Employee if, in its sole judgment,
such reduction or elimination is appropriate.

         (d) Maximum Award Payable. The maximum Performance-based Award payable
to any one Covered Employee under the Plan for a Performance Cycle is 402,000
Shares (subject to adjustment as provided in Section 3(b) hereof).

SECTION 11.  DIVIDEND EQUIVALENT RIGHTS

         (a) Dividend Equivalent Rights. A Dividend Equivalent Right is an Award
entitling the grantee to receive credits based on cash dividends that would have
been paid on the shares of Stock specified in the Dividend Equivalent Right (or
other award to which it relates) if such shares had been issued to and held by
the grantee. A Dividend Equivalent Right may be granted hereunder to any grantee
as a component of another Award or as a freestanding award. The terms and
conditions of Dividend Equivalent Rights shall be specified in the Award

                                       14
<PAGE>   15
agreement. Dividend equivalents credited to the holder of a Dividend Equivalent
Right may be paid currently or may be deemed to be reinvested in additional
shares of Stock, which may thereafter accrue additional equivalents. Any such
reinvestment shall be at Fair Market Value on the date of reinvestment or such
other price as may then apply under a dividend reinvestment plan sponsored by
the Company, if any. Dividend Equivalent Rights may be settled in cash or shares
of Stock or a combination thereof, in a single installment or installments. A
Dividend Equivalent Right granted as a component of another Award may provide
that such Dividend Equivalent Right shall be settled upon exercise, settlement,
or payment of, or lapse of restrictions on, such other award, and that such
Dividend Equivalent Right shall expire or be forfeited or annulled under the
same conditions as such other award. A Dividend Equivalent Right granted as a
component of another Award may also contain terms and conditions different from
such other award.

         (b) Interest Equivalents. Any Award under this Plan that is settled in
whole or in part in cash on a deferred basis may provide in the grant for
interest equivalents to be credited with respect to such cash payment. Interest
equivalents may be compounded and shall be paid upon such terms and conditions
as may be specified by the grant.

         (c) Termination. Except as may otherwise be provided by the
Administrator either in the Award agreement or, subject to Section 14 below, in
writing after the Award agreement is issued, a grantee's rights in all Dividend
Equivalent Rights or interest equivalents shall automatically terminate upon the
grantee's termination of employment (or cessation of service relationship) with
the Company and its Subsidiaries for any reason.

SECTION 12.  TAX WITHHOLDING

         (a) Payment by Grantee. Each grantee shall, no later than the date as
of which the value of an Award or of any Stock or other amounts received
thereunder first becomes includable in the gross income of the grantee for
Federal income tax purposes, pay to the Company, or make arrangements
satisfactory to the Administrator regarding payment of, any Federal, state, or
local taxes of any kind required by law to be withheld with respect to such
income. The Company and its Subsidiaries shall, to the extent permitted by law,
have the right to deduct any such taxes from any payment of any kind otherwise
due to the grantee. The Company's obligation to deliver stock certificates to
any grantee is subject to and conditioned on tax obligations being satisfied by
the grantee.

         (b) Payment in Stock. Subject to approval by the Administrator, a
grantee may elect to have the minimum required tax withholding obligation
satisfied, in whole or in part, by (i) authorizing the Company to withhold from
shares of Stock to be issued pursuant to any Award a number of shares with an
aggregate Fair Market Value (as of the date the withholding is effected) that
would satisfy the withholding amount due, or (ii) transferring to the Company
shares of Stock owned by the grantee with an aggregate Fair Market Value (as of
the date the withholding is effected) that would satisfy the withholding amount
due.

                                       15
<PAGE>   16
SECTION 13.  TRANSFER, LEAVE OF ABSENCE, ETC.

         For purposes of the Plan, the following events shall not be deemed a
termination of employment:

         (a) a transfer to the employment of the Company from a Subsidiary or
from the Company to a Subsidiary, or from one Subsidiary to another; or

         (b) an approved leave of absence for military service or sickness, or
for any other purpose approved by the Company, if the employee's right to
re-employment is guaranteed either by a statute or by contract or under the
policy pursuant to which the leave of absence was granted or if the
Administrator otherwise so provides in writing.

SECTION 14.  AMENDMENTS AND TERMINATION

         The Board may, at any time, amend or discontinue the Plan and the
Administrator may, at any time, amend or cancel any outstanding Award for the
purpose of satisfying changes in law or for any other lawful purpose, but no
such action shall adversely affect rights under any outstanding Award without
the holder's consent. If and to the extent determined by the Administrator to be
required by the Code to ensure that Incentive Stock Options granted under the
Plan are qualified under Section 422 of the Code, if and to the extent intended
to so qualify, Plan amendments shall be subject to approval by the Company
stockholders entitled to vote at a meeting of stockholders. Nothing in this
Section 15 shall limit the Administrator's authority to take any action
permitted pursuant to Section 3(c).

SECTION 15.  STATUS OF PLAN

         With respect to the portion of any Award that has not been exercised
and any payments in cash, Stock or other consideration not received by a
grantee, a grantee shall have no rights greater than those of a general creditor
of the Company unless the Administrator shall otherwise expressly determine in
connection with any Award or Awards. In its sole discretion, the Administrator
may authorize the creation of trusts or other arrangements to meet the Company's
obligations to deliver Stock or make payments with respect to Awards hereunder,
provided that the existence of such trusts or other arrangements is consistent
with the foregoing sentence.

SECTION 16.  GENERAL PROVISIONS

         (a) No Distribution; Compliance with Legal Requirements. The
Administrator may require each person acquiring Stock pursuant to an Award to
represent to and agree with the Company in writing that such person is acquiring
the shares without a view to distribution thereof.

                                       16
<PAGE>   17
         No shares of Stock shall be issued pursuant to an Award until all
applicable securities law and other legal and stock exchange or similar
requirements have been satisfied. The Administrator may require the placing of
such stop-orders and restrictive legends on certificates for Stock and Awards as
it deems appropriate.

         (b) Delivery of Stock Certificates. Stock certificates to grantees
under this Plan shall be deemed delivered for all purposes when the Company or a
stock transfer agent of the Company shall have mailed such certificates in the
United States mail, addressed to the grantee, at the grantee's last known
address on file with the Company.

         (c) Other Compensation Arrangements; No Employment Rights. Nothing
contained in this Plan shall prevent the Board from adopting other or additional
compensation arrangements, including trusts, and such arrangements may be either
generally applicable or applicable only in specific cases. The adoption of this
Plan and the grant of Awards do not confer upon any employee any right to
continued employment with the Company or any Subsidiary.

         (d) Trading Policy Restrictions. Option exercises and other Awards
under the Plan shall be subject to such Company's insider trading policy, as in
effect from time to time.

         (e) Loans to Grantees. The Company shall have the authority to make
loans to grantees of Awards hereunder (including to facilitate the purchase of
shares) and shall further have the authority to issue shares for promissory
notes hereunder.

         (f) Designation of Beneficiary. Each grantee to whom an Award has been
made under the Plan may designate a beneficiary or beneficiaries to exercise any
Award or receive any payment under any Award payable on or after the grantee's
death. Any such designation shall be on a form provided for that purpose by the
Administrator and shall not be effective until received by the Administrator. If
no beneficiary has been designated by a deceased grantee, or if the designated
beneficiaries have predeceased the grantee, the beneficiary shall be the
grantee's estate.

SECTION 17.  EFFECTIVE DATE OF PLAN

         This Plan shall become effective upon approval by the holders of a
majority of the votes cast at a meeting of stockholders at which a quorum is
present or by written consent of stockholders. Subject to such approval by the
stockholders and to the requirement that no Stock may be issued hereunder prior
to such approval, Stock Options and other Awards may be granted hereunder on and
after adoption of this Plan by the Board.

                                       17
<PAGE>   18
SECTION 18.  GOVERNING LAW

         This Plan and all Awards and actions taken thereunder shall be governed
by, and construed in accordance with, the laws of the State of Delaware, applied
without regard to conflict of law principles.

DATE APPROVED BY BOARD OF DIRECTORS:                   February 8, 2000

DATE APPROVED BY STOCKHOLDERS:                         February  , 2000

                                       18

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