Document:

EXHIBIT 10.7

                                                                  CONFORMED COPY

                   AMENDED AND RESTATED EMPLOYMENT AGREEMENT

     This Employment Agreement (the "Agreement") is dated the 21st day of June,
2000 (the "Effective Date") by and between Tekni-Plex, Inc., a Delaware
corporation (the "Employer"), having its principal offices at 201 Industrial
Parkway, Somerville, NJ 08876, and Kenneth W.R. Baker, an individual (the
"Executive"), residing at 25 Sutton Farm Road, Flemington, New Jersey 08822.

                              W I T N E S S E T H:

     WHEREAS, the Executive has been continuously employed by the Employer
since April 4, 1994 and the Executive and the Employer desire that the
Executive continue in his role as the President and Chief Operating Officer of
Employer, upon the terms and conditions herein set forth;

     WHEREAS, on April 4, 1997 the Employer and Executive entered into an
employment agreement which superceded and replaced in its entirety the prior
employment agreement between the Employer and the Executive dated April 4, 1994
(as amended, the "Prior Agreement");

     WHEREAS, on March 2, 1998 the Employer and the Executive entered into
Amendment Number 1 to the employment agreement dated April 4, 1997 (as amended,
the "Original Agreement"); and

     WHEREAS, in connection with the recapitalization of the Employer pursuant
to the Recapitalization Agreement dated as of April 12, 2000 among the Employer
and other parties thereto, the Employer and Executive each desires to amend the
terms of and restate the existing Original Agreement;

     NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants contained in this Agreement, the Employer and the Executive,
intending to be legally bound, hereby agree as follows:

     1. Employment. Subject to the terms and conditions hereinafter set forth,
the Employer hereby employs the Executive as President and Chief Operating
Officer of Employer, and the Executive hereby accepts such employment.

     2. Term. The term of employment of the Executive by the Employer commenced
on April 4, 1994 pursuant to the Prior Agreement, which was superceded and
replaced by the Original Agreement effective April 4, 1997 and by

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this Agreement on the date hereof. The term of employment (the "Employment
Term") pursuant to this Agreement shall terminate upon the earlier of: (a) June
27, 2003, to coincide with the fiscal year-end of Employer, or (b) the date on
which the employment of the Executive is terminated pursuant to Section 9
hereof. Absent written notice of intent not to renew by either party at least
90 days prior to the end of each fiscal year, beginning with the end of fiscal
year 2001, the Employment Term shall be automatically extended for a period of
one year after the previously scheduled expiration of the Employment Term.

     3. Duties. During the Employment Term, the Executive shall render his
services to the Employer as President and Chief Operating Officer to perform
the duties and services usually pertaining to such offices and to perform such
other administrative and managerial functions as may be assigned to Executive
from time to time by the Chief Executive Officer or by the Board of Directors
of the Employer. In addition to the foregoing, the Executive shall hold,
without additional compensation therefor, such other offices, directorships or
memberships of committees of the Employer and/or any subsidiary or affiliate of
the Employer to which, from time to time during the Employment Term, the
Executive may be elected or appointed. During the Employment Term, the
Executive shall devote his principal business time, efforts, energy and skill
to the business of the Employer in accordance with the reasonable directions
and orders of the Chief Executive Officer of the Employer and will use his best
efforts to promote the interests of Employer.

     4. Salary Compensation. In consideration of the services to be rendered by
the Executive, including, without limitation, any services which may be
rendered by the Executive as an officer, director or member of any committee of
the Employer or any subsidiary or affiliate of the Employer, the Employer shall
pay or cause to be paid to the Executive during the Employment Term, and the
Executive shall accept, compensation at the rate of two million five hundred
thousand ($2,500,000.00) dollars per annum (the "Salary"). Such compensation
shall be increased by 10% on each anniversary of the Effective Date. The
Employer's obligation to pay the Salary shall be payable in equal installments
in accordance with the usual payroll practices of the Employer which are in
effect from time to time during the Employment Term, but in no event less
frequently than monthly. The Executive's Salary shall be subject to all
applicable withholding and other taxes.

     5. Bonus Compensation.

          (a) Solely with respect to the Employer's fiscal year ended June 30,
     2000, Executive shall be entitled to receive the

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     Performance Bonus for such fiscal year provided for in the terms of the
     Original Agreement and Prior Agreement, as applicable.

          (b) Except as specifically provided in subparagraph (a) above,
     bonuses may be awarded solely at the discretion of the Board of Directors
     of the Employer with the affirmative vote of at least one director who is
     not actively involved in the management of the Employer.

     6. Employment Benefits. During the Employment Term, the Executive shall be
entitled to the following employment benefits:

          (a) Four weeks paid vacation for each year of the Employment Term and
     sick leave in accordance with the Employer's policies from time to time in
     effect for executive officers of the Employer;

          (b) Participation, subject to qualification requirements, in medical,
     life or other insurance or hospitalization plans and long-term disability
     policies which are presently in effect or hereinafter instituted by the
     Employer and applicable to its executive officers generally;

          (c) Participation, subject to classification requirements and
     continued maintenance thereof by Employer, in other employee benefit
     plans, such as profit sharing plans, which are from time to time
     applicable to the Employer's executive officers generally;

          (d) In the event Executive is relocated at Employer's request,
     reasonable temporary living expenses for a maximum of 120 days, reasonable
     expenses incurred for the purpose of finding a permanent residence at the
     new location, and reimbursement, upon presentation of appropriate
     receipts, for all reasonable moving expenses, brokerage commissions and
     closing expenses related to the sale of his current residence and the
     purchase of his new residence;

          (e) Reimbursement of reasonable disability insurance premiums to
     provide an annual benefit equal to 50% of Executive's Salary to age 65,
     and Executive's compensation shall be grossed-up annually to cover any
     additional taxes resulting from the annual premium paid for such policy by
     the Employer and treated as compensation to the Executive; and

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          (f) A leased full-size automobile, including insurance and
         maintenance therefor.

     7. Expenses. During the Employment Term, the Employer will reimburse the
Executive, upon presentation of appropriate receipts, for all travel,
entertainment and other out-of-pocket expenses which are reasonably and
necessarily incurred by the Executive in the performance of his duties
hereunder.

     8. Insurance. The Executive agrees to cooperate with the Employer in
obtaining any insurance on the life or on the disability of the Executive which
the Employer may desire to obtain for its own benefit or pursuant to Section
6(e) above, and shall undergo such physical and other examinations, and shall
execute any consents or applications, which the Employer may request in
connection with the issuance of one or more of such insurance policies.

     9. Termination. (a) Executive's employment under this Agreement may be
terminated without further liability by Employer at any time for "extreme
cause." For purposes of this Agreement, "extreme cause" is defined as (i)
Executive's willful refusal, after 30 days' prior written notice by Employer
(such notice detailing with specificity the nature of such breach), to cure any
continuing material breach hereof or (ii) a final non-appealable adjudication
in a criminal or civil proceeding that Executive has committed a fraud or
felony relating to or adversely affecting his employment, or, (iii) subject to
giving the Executive full opportunity to make a presentation to the Board of
Directors, determination by the Board of Directors upon indictment of the
Executive charging him with a crime which is a felony that termination of the
Executive is in the interests of the Employer. The foregoing to the contrary
notwithstanding, if Executive's employment is terminated as a result of an
indictment, and such indictment is finally dismissed, the Executive shall be
entitled to receive an amount equal to the Severance Benefit referred to in the
following clause (b), computed as of the date of termination.

          (b) Employer may terminate Executive's employment hereunder at any
     time, upon 30 days' notice to Executive, in the event that Employer is in
     default of its payment (interest or principal) obligations under any
     agreement governing the debt of the Employer for a period of more than 30
     days. In the event of such termination, Employer's sole obligation shall
     be payment of a severance benefit (the "Severance Benefit") equal to
     Executive's then current annual Salary and any bonus awarded pursuant to
     Section 5 and not yet paid. The Severance Benefit shall be payable in 12
     monthly installments.

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          (c) In the event of Executive's death, the Employer will pay an
     amount equal to the Severance Benefit to his designated beneficiary (or,
     failing such designation, to his estate) payable in 12 monthly
     installments.

          (d) In the event of Executive's disability or incapacity which
     renders him unable to perform his duties for a period in excess of 120
     consecutive days or a total of more than 180 days in any 12-month period,
     the Employer may terminate this Agreement without further compensation.

          (e) If, at any time during the Employment Term, the Executive resigns
     from the employ of the Employer for any reason other than Employer's
     failure to meet its obligations hereunder, the Employer shall have no
     further obligations hereunder after such resignation date other than the
     payment of amounts accrued and unpaid under Sections 4, 5, 6 and 7 hereof
     through such resignation date, and continuing obligations under Sections
     10 and 11 hereof.

     10. Restrictive Covenant. Without prior written consent of the Board of
Directors of Employer, Executive agrees that he will not for a period of one
year following the termination by Executive of his employment with Employer
whether before or after the expiration of the Employment Term (or to such
lesser extent and for such lesser period as may be deemed enforceable by a
court of competent jurisdiction, it being the intention of the parties that
this Section 10 shall be so enforced): (i) directly or indirectly engage, in
the United States, in any business in competition with the primary business
conducted by Employer, either as employee, independent contractor, owner,
partner, lender or stockholder, at the time of termination of the Executive
(provided that the foregoing shall not be construed to prohibit ownership of
less than 5% of the outstanding shares of any public corporation); (ii)
solicit, canvass, or accept any business for any other competing company, or
business similar to any business of Employer, from any past, present or future
("future," as used herein, shall mean at or prior to the time of termination of
employment) customer of Employer; (iii) directly or indirectly induce or
attempt to influence any employee of Employer to terminate his employment; or
(iv) directly or indirectly request any present or future (as defined above)
entities with whom Employer has significant business relationships to curtail
or cancel their business with Employer. In addition and without limiting the
foregoing, upon the termination of the Executive's employment by the Employer
for any reason, whether before or after the expiration of the Employment Term,
Executive shall not (x) at any time directly or indirectly disclose to any
person, firm or corporation any trade, technical or technological secrets, or
(y) for a period of one year following termination disclose any details of
organization or business affairs, or any names of past, present or future (as

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defined above) customers of Employer. For purposes of this Section 10, the term
"Employer" shall be deemed to include Employer and all of its subsidiary
corporations.

     11. Inventions. All inventions, discoveries, improvements, processes,
formulae and data relating to Employer's business that Executive may make,
conceive or learn during the employment of the Executive with the Employer
(during the term of this Agreement, whether during working hours or otherwise)
and relating to the Employer's lines of business shall be the exclusive
property of Employer. Executive agrees to make prompt disclosure to Employer of
all such inventions, etc., and to do at Employer's expense all lawful things
necessary or useful to assist Employer in securing their full enjoyment and
protection. In the event of any breach or threatened breach of the provisions
of this Section 11 or the preceding Section 10, Employer may apply to any court
of competent jurisdiction to enjoin such breach. Any such remedy shall be in
addition to Employer's remedies at law under such circumstances.

     12. Conflicting Agreements. Each of the parties hereby represents and
warrants to the other that (a) neither the execution of this Agreement by such
party nor the performance by such party of any of its obligations or duties
hereunder will conflict with or violate or constitute a breach of the terms of
any other agreement to which such party is a party or by which it is bound, and
(b) such party is not required to obtain the consent of any person, firm,
corporation or other entity in order to enter into this Agreement or to perform
any of his obligations or duties hereunder.

     13. Notices. Any notice, request, information or other document to be
given under this Agreement to any party by any other party shall be in writing
and delivered personally, sent by registered or certified mail, postage
prepaid, delivered by a nationally recognized overnight courier service, or
transmitted by facsimile machine followed by delivery of original documents by
a nationally recognized overnight courier service addressed as follows:

                  If to Employer:

                         Tekni-Plex, Inc.
                         201 Industrial Parkway
                         Somerville, NJ 08876
                         Attention: Dr. F. Patrick Smith
                         Facsimile No.: (908) 722-4967

                  with a copy to:

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                         Davis Polk & Wardwell
                         450 Lexington Avenue
                         New York, NY 10017
                         Attention: Phillip R. Mills, Esq.
                         Facsimile No.: (212) 450-4800

                  If to the Executive:

                         Kenneth W.R. Baker
                         at his then current address
                         included in the employment records
                         of the Employer

or to such other address as a party hereto may hereafter designate in writing
to the other party, provided that any notice of a change of address shall
become effective only upon receipt thereof.

     14. Assignment; Successors and Assigns. This Agreement may not be assigned
by either party. This Agreement shall be binding upon and shall inure to the
benefit of the Employer and the Executive and their respective heirs, legal
representatives, successors and assigns.

     15. Entire Agreement. This Agreement contains the entire understanding
between the Employer and the Executive with respect to the employment of the
Executive and supersedes all prior negotiations and understandings (including
the Prior Agreement) between the Employer and the Executive with respect to the
employment of the Executive by the Employer. This Agreement may not be amended
or modified except by a written instrument signed by both the Employer and the
Executive.

     16. Severability. In the event any one or more provisions of this
Agreement is held to be invalid or unenforceable, such illegality or
unenforceability shall not affect the validity or enforceability of the other
provisions hereof and such other provisions shall remain in full force and
effect, unaffected by such invalidity or unenforceability.

     17. Applicable Law; Submission to Jurisdiction; Litigation Expenses. This
Agreement and the rights, obligations and relations of the parties hereto shall
be governed by and construed and enforced in accordance with the laws of the
State of New York without giving effect to the principles of conflicts of law
thereof.

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     The parties hereto (i) submit for themselves, and any legal action or
proceeding relating to this Agreement or for recognition and enforcement of any
judgment in respect hereof, to the exclusive jurisdiction of the courts of the
State of New York, the courts of the United States of America for the Southern
District of New York, and appellate courts from any therefor, (ii) consent that
any action or proceeding shall be brought in such courts, and waive any
objection that each may now or hereafter have to the venue of any such action
or proceeding in any such court, (iii) agree that service of process of any
such action or proceeding may be effected by certified mail (or any
substantially similar form of mail), postage prepaid, to the appropriate party
at its address as set forth herein, and service made shall be deemed to be
completed upon the earlier of actual receipt or five (5) days after the same
shall have been posted as aforesaid, and (iv) agree that nothing herein shall
affect the right to effect service of process in any other manner permitted by
law.

     18. Headings. The headings of sections and subsections of this Agreement
are for convenience of reference only and are not to be considered in
construing this Agreement.

     19. Execution in Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of
which, when taken together, shall constitute one and the same instrument.

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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.

                                            Tekni-Plex, Inc.

                                            By: /s/ F. Patrick Smith
                                                --------------------------------
                                                Name:  F. Patrick Smith
                                                Title: Chief Executive Officer

                                            Executive:

                                            /s/ Kenneth W.R. Baker
                                            ------------------------------------
                                            Kenneth W.R. Baker

                                       9EXHIBIT 10.8

                                TEKNI-PLEX, INC.
                              Stock Incentive Plan

     SECTION 1. Purpose. The purposes of the Tekni-Plex, Inc. Stock Incentive
Plan are to promote the interests of Tekni-Plex, Inc. (the "Company") and its
stockholders by (i) attracting and retaining exceptional executive personnel
and other key employees of the Company and its Subsidiaries; (ii) motivating
such employees by means of performance-related incentives to achieve
longer-range performance goals; and (iii) enabling such employees to
participate in the long-term growth and financial success of the Company.

     SECTION 2. Definitions. As used in the Plan, the following terms shall
have the meanings set forth below:

     "Affiliate" means (i) any entity that is, directly or indirectly,
controlled by the Company and (ii) any other entity in which the Company has a
significant equity interest or which has a significant equity interest in the
Company, in either case as determined by the Committee.

     "Award" means any Option, Stock Appreciation Right, Performance Award,
Restricted Share or other Stock-Based Award.

     "Award Agreement" means any written agreement, contract, or other
instrument or document evidencing any Award, which may, but need not, be
executed or acknowledged by a Participant.

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

     "Cause" means "Cause" as defined in any Employment Agreement or Award
Agreement or if not so defined:

     (a) a Participant's willful and continued failure substantially to perform
his duties (other than as a result of total or partial incapacity due to
physical or mental illness);

     (b) an act or acts on a Participant's part constituting a felony under the
laws of the United States or any state thereof or any other jurisdiction in
which the Company conducts business;

<PAGE>

     (c) a Participant being repeatedly under the influence of illegal drugs or
alcohol while performing his duties; or

     (d) any other act or omission which is materially injurious to the
financial condition or business reputation of the Company as determined in the
reasonable discretion of the Company, including a Participant's breach of the
provisions of any non-competition, non-solicitation or confidentiality covenant
in favor of the Company and its subsidiaries binding upon such Participant.

     "Change of Control" shall mean, unless otherwise defined in any Employment
Agreement or Award Agreement,

          (i) any "person" (as such term is used in Section 3(a)(9) and
     13(d)(3) of the Exchange Act) other than any person who is an Affiliate of
     the Company on the Effective Date or any "group" (within the meaning of
     such Section 13(d)(3)) other than any group consisting of one or more of
     such Affiliates, acquires, directly or indirectly, by virtue of the
     consummation of any purchase, merger or other combination, securities of
     the Company representing more than 33% of the combined voting power of the
     Company's then outstanding voting securities with respect to matters
     submitted to a vote of the stockholders generally;

          (ii) the approval by the shareholders of the Company of a plan or
     agreement providing for (A) a merger or consolidation of the Company,
     other than a merger or consolidation with a wholly-owned subsidiary,
     unless, immediately following such merger or consolidation, the voting
     securities of the Company outstanding immediately prior thereto represent
     (either by remaining outstanding or by being converted into voting
     securities of the surviving entity) more than 67% of the combined voting
     power of the surviving entity; or

          (ii) a sale or transfer by the Company or any of its Subsidiaries of
     substantially all of the consolidated assets of the Company and its
     Subsidiaries to an entity which is not an Affiliate of the Company prior
     to such sale or transfer.

     "Code" means the Internal Revenue Code of 1986, as amended from time to
time.

     "Committee" means the Compensation Committee of the Board.

     "Disability" shall mean a Participant's inability, as a result of physical
or mental illness, to perform the duties of his position(s) for a period of 120

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consecutive days or for an aggregate of 180 days in any twelve consecutive
month period. Any question as to the existence of the Disability of a
Participant as to which such Participant and the Company cannot agree shall be
determined in writing by a qualified independent physician selected by the
Company and reasonably acceptable to the Participant. The determination of
Disability made in writing to the Company and the Participant shall be final
and conclusive for all purposes of the Plan.

     "Employee" means an employee of the Company or any Subsidiary.

     "Employment Agreement" means an employment agreement entered into between
the Company or any Subsidiary and a Participant.

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

     "Fair Market Value" means with respect to the Shares as of any given date
or dates, the average reported closing price of a share of such class of common
stock on such exchange or market as is the principal trading market for such
class of common stock for the five trading days immediately preceding such date
or dates. If such class of common stock is not traded on an exchange or
principal trading market on such date, the fair market value of a Share shall
be determined by the Committee in good faith.

     "Incentive Stock Option" means a right to purchase Shares from the Company
that is granted under Section 6 of the Plan and that is intended to meet the
requirements of Section 422 of the Code or any successor provision thereto.

     "Initial Public Offering" means an initial underwritten public offering of
equity securities of the Company pursuant to an effective registration
statement under the Securities Act of 1933, as amended.

     "Non-Qualified Stock Option" means a right to purchase Shares from the
Company that is granted under Section 6 of the Plan and that is not intended to
be an Incentive Stock Option.

     "Option" means an Incentive Stock Option or a Non-Qualified Stock Option.

     "Other Stock-Based Award" shall mean any right granted under Section 10 of
the Plan.

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     "Participant" means any Employee selected by the Committee to receive an
Award under the Plan (and to the extent applicable, any heirs or legal
representatives thereof).

     "Performance Award" shall mean any right granted under Section 8 of the
Plan.

     "Person" means any individual, corporation, limited liability company,
partnership, association, joint-stock company, trust, unincorporated
organization, government or political subdivision thereof or other entity.

     "Plan" means this Tekni-Plex, Inc. Stock Incentive Plan.

     "Restricted Share" shall mean any Share granted under Section 9 of the
Plan.

     "SEC" means the Securities and Exchange Commission or any successor
thereto.

     "Shares" means shares of common stock, $0.01 par value, of the Company or
such other securities as may be designated by the Committee from time to time.

     "Stock Appreciation Right" means any right granted under Section 7 of the
Plan.

     "Subsidiary" shall mean, with respect to any Person, any corporation or
other entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions are at the time directly or indirectly owned by
such Person.

     "Substitute Awards" means Awards granted in assumption of, or in
substitution for, outstanding awards previously granted by a company acquired
by the Company or with which the Company combines.

     SECTION 3. Administration.

     (a) Authority of Committee. The Plan shall be administered by the
Committee. Subject to the terms of the Plan, applicable law and contractual
restrictions affecting the Company, and in addition to other express powers and
authorizations conferred on the Committee by the Plan, the Committee shall have
full power and authority to: (i) designate Participants; (ii) determine the
type or

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types of Awards to be granted to a Participant; (iii) determine the number of
Shares to be covered by, or with respect to which payments, rights, or other
matters are to be calculated in connection with, Awards; (iv) determine the
terms and conditions of any Award and Award Agreement; (v) determine whether,
to what extent, and under what circumstances Awards may be settled or exercised
in cash, Shares, other securities, other Awards or other property, or canceled,
forfeited, or suspended and the method or methods by which Awards may be
settled, exercised, canceled, forfeited, or suspended; (vi) determine whether,
to what extent, and under what circumstances cash, Shares, other securities,
other Awards, 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 Committee; (vii) interpret and administer the Plan and any
instrument or agreement relating to, or Award made under, the Plan; (viii)
establish, amend, suspend, or waive such rules and regulations and appoint such
agents as it shall deem appropriate for the proper administration of the Plan;
and (ix) make any other determination and take any other action that the
Committee deems necessary or desirable for the administration of the Plan.

     (b) Committee Discretion Binding. Unless otherwise expressly provided
in the Plan, all designations, determinations, interpretations, and other
decisions under or with respect to the Plan or any Award shall be within the
sole discretion of the Committee, may be made at any time and shall be final,
conclusive and binding upon all Persons, including the Company, any Subsidiary,
any Participant, any holder or beneficiary of any Award, any shareholder and
any Employee.

     SECTION 4. Shares Available for Awards.

     (a) Shares Available. Subject to adjustment as provided in Section 4(b)
and 4(c), the number of Shares with respect to which Awards may be granted
under the Plan shall be 45.75206, of which the number of Shares with respect to
which Incentive Stock Options may be granted under the Plan shall be 45.75206.
If, after the effective date of the Plan, any Shares covered by an Award
granted under the Plan or to which such an Award relates are forfeited, or if
such an Award is settled for cash or otherwise terminates or is canceled
without the delivery of Shares, then the Shares covered by such Award, or to
which such Award relates, or the number of Shares otherwise counted against the
aggregate number of Shares with respect to which Awards may be granted, to the
extent of any such settlement, forfeiture, termination or cancellation, shall,
in the calendar year in which such settlement, forfeiture, termination or
cancellation occurs, again become Shares with respect to which Awards may be
granted. In addition, Shares tendered in satisfaction or partial satisfaction
of the exercise price of any Award or any tax withholding obligations will
again become Shares with respect to

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which Awards may be granted. Notwithstanding the foregoing and subject to
adjustment as provided in Section 4(b), no Employee of the Company may receive
Awards in any calendar year that relate to more than 15 Shares.

     (b) Adjustments. In the event that the Committee determines that any
dividend or other distribution (whether in the form of cash, Shares, other
securities or other property), recapitalization, stock split, reverse stock
split, reorganization, reclassification, merger, consolidation, split-up,
spin-off, combination, repurchase, or exchange of Shares or other securities of
the Company, issuance of warrants or other rights to purchase Shares or other
securities of the Company, or other similar corporate transaction or event
affects the Shares such that an adjustment is determined by the Committee to be
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust any or all of
(i) the number of Shares of the Company (or number and kind of other securities
or property) with respect to which Awards may thereafter be granted, (ii) the
number of Shares or other securities of the Company (or number and kind of
other securities or property) subject to outstanding Awards, and (iii) the
grant or exercise price with respect to any Award, or, if deemed appropriate,
make provision for a cash payment to the holder of an outstanding Award.

     (c) Substitute Awards. Any Shares underlying Substitute Awards shall not
be counted against the Shares available for Awards under the Plan.

     (d) Sources of Shares Deliverable Under Awards. Any Shares delivered
pursuant to an Award may consist, in whole or in part, of authorized and
unissued Shares or of treasury Shares.

     SECTION 5. Eligibility. Any Employee shall be eligible to be designated a
Participant.

     SECTION 6. Stock Options.

     (a) Grant. The Committee shall have sole and complete authority to
determine the Employees to whom Options shall be granted, the number of Shares
to be covered by each Option, the exercise price therefor and the conditions
and limitations applicable to the exercise of the Option. The Committee shall
have the authority to grant Incentive Stock Options, or to grant Non-Qualified
Stock Options, or to grant both types of options. In the case of Incentive
Stock Options, the terms and conditions of such grants shall be subject to and
comply with such rules as may be prescribed by Section 422 of the Code, as from
time to time amended, and any regulations implementing such statute.

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     (b) Exercise Price. Except as otherwise provided in an Award Agreement and
in the case of Substitute Awards, the exercise price shall be the Fair Market
Value on the date of grant.

     (c) Exercise. Each Option shall be exercisable at such times and subject
to such terms and conditions as the Committee may, in its sole discretion,
specify in the applicable Award Agreement or thereafter. The Committee may
impose such conditions with respect to the exercise of Options, including
without limitation, any relating to the application of Federal or state
securities laws, as it may deem necessary or advisable.

     (d) Payment. No Shares shall be delivered pursuant to any exercise of an
Option until payment in full of the exercise price, or adequate provision
therefor, is received by the Company. Such payment may be made: (i) in cash;
(ii) in Shares owned by the Participant for at least six months (the value of
such Shares shall be their Fair Market Value on the date of exercise); (iii) by
a combination of cash and Shares; (iv) if approved by the Committee, in
accordance with a cashless exercise program; or (v) in such other manner as
permitted by the Committee at the time of grant or thereafter.

     SECTION 7. Stock Appreciation Rights.

     (a) Grant. The Committee shall have sole and complete authority to
determine the Employees to whom Stock Appreciation Rights shall be granted, the
number of Shares to be covered by each Stock Appreciation Right Award, the
grant thereof and the conditions and limitations applicable to the exercise
thereof. Stock Appreciation Rights may be granted in tandem with another Award,
in addition to another Award, or freestanding and unrelated to another Award.
Stock Appreciation Rights granted in tandem with or in addition to an Award may
be granted either at the same time as the Award or at a later time. Stock
Appreciation Rights shall not be exercisable earlier than six months after
grant and shall have an exercise price as determined by the Committee on the
date of grant.

     (b) Exercise and Payment. A Stock Appreciation Right shall entitle the
Participant to receive an amount equal to the excess of the Fair Market Value
of a Share on the date of exercise of the Stock Appreciation Right over the
exercise price thereof. The Committee shall determine whether a Stock
Appreciation Right shall be settled in cash, Shares or a combination of cash
and Shares.

     (c) Other Terms and Conditions. Subject to the terms of the Plan and any
applicable Award Agreement, the Committee shall determine, at or after the
grant of a Stock Appreciation Right, the term, methods of exercise, methods and

                                       7
<PAGE>

form of settlement, and any other terms and conditions of any Stock
Appreciation Right. Any such determination by the Committee may be changed by
the Committee from time to time and may govern the exercise of Stock
Appreciation Rights granted or exercised prior to such determination as well as
Stock Appreciation Rights granted or exercised thereafter. The Committee may
impose such conditions or restrictions on the exercise of any Stock
Appreciation Right as it shall deem appropriate.

     SECTION 8. Performance Awards.

     (a) Grant. The Committee shall have sole and complete authority to
determine the Employees to whom Performance Awards shall be granted, the number
of Shares to be covered by each Performance Award, the grant thereof and the
conditions and limitations applicable to the exercise thereof. Performance
Awards (i) shall consist of rights denominated or payable in cash, Shares,
other securities or other property (including without limitation, restricted
securities) and (ii) shall confer on the holder thereof rights valued as
determined by the Committee and payable to, or exercisable by, such holder, in
whole or in part, upon the achievement of such performance goals during such
performance periods as the Committee shall establish. The criteria with respect
to which performance goals may be established shall be determined by the
Committee and may include stock price, market share, sales, earnings, earnings
per share, earnings before income tax, cash flow and return on equity.

     (b) Terms and Conditions. Subject to the terms of the Plan and any
applicable Award Agreement, the Committee shall determine the performance goals
to be achieved during any performance period, the length of any performance
period, the amount of any Performance Award and the amount of any payment or
transfer to be made pursuant to any Performance Award.

     (c) Payment of Performance Awards. Performance Awards may be paid in a
lump sum or in installments following the close of the performance period or,
in accordance with procedures established by the Committee, on a deferred
basis.

     SECTION 9. Restricted Shares.

     (a) Grant. The Committee shall have sole and complete authority to
determine the Employees to whom Restricted Shares shall be granted, the number
of Restricted Shares to be granted to each Participant, the duration of the
period during which, and the conditions under which, the Restricted Shares may
be forfeited to the Company, and the other terms and conditions of such Awards.
In addition:

                                       8
<PAGE>

          (i) Transfer Restrictions. Restricted Shares may not be sold,
     assigned, transferred, pledged or otherwise encumbered, except as provided
     in the Plan or the applicable Award Agreement. Each certificate issued in
     respect of Restricted Shares with respect to which transfer restrictions
     remain in effect shall bear a legend describing the restrictions to which
     the Restricted Shares are subject. Upon the lapse of the restrictions
     applicable to such Restricted Shares, the owner thereof may surrender to
     the Company the certificate or certificates representing such Shares and
     receive in exchange therefor a new certificate or certificates
     representing such Shares free of the legend and a certificate or
     certificates representing the remainder of the Shares, if any, with the
     legend.

          (ii) Distributions. Distributions paid on or in respect of any
     Restricted Shares may be paid directly to the Participant, or may be
     reinvested in additional Restricted Shares, as determined by the Committee
     in its sole discretion.

     SECTION 10. Other Stock-Based Awards.

     The Committee is hereby authorized to grant Employees Other Stock- Based
Awards, which shall consist of a right (i) which is other than an Award or
right described in Sections 6, 7, 8 or 9 above and (ii) which is denominated or
payable in, valued in whole or in part by reference to, or otherwise based on
or related to Shares (including, without limitation, securities convertible
into Shares), as are deemed by the Committee to be consistent with the purposes
of the Plan. Subject to the terms of the Plan and any applicable Award
Agreement, the Committee shall determine the terms and conditions of any such
Other Stock- Based Award, which conditions may include satisfaction of
performance goals.

     SECTION 11. Termination or Suspension of Employment or Service. The
following provisions shall apply in the event of the Participant's termination
of employment or service unless the Committee shall have provided otherwise,
either at the time of the grant of the Award or thereafter.

     (a) Cause; Termination by Participant. If the Participant's employment or
service with the Company or its Subsidiaries is terminated by the Company for
Cause or by the Participant for any reason other than retirement after age 65
(or earlier with the Company's consent), all Awards (whether vested or
unvested) shall be forfeited.

                                       9
<PAGE>

     (b) Death; Disability; Retirement; Termination by the Company without
Cause. Except as the Committee may at any time otherwise provide or as required
to comply with applicable law, if the Participant's employment or service with
the Company or its Subsidiaries is terminated for any reason other than those
described in clause (a) above, the Participant or his successor (if employment
or service is terminated by death) shall have the right (subject to Section
11(c)) to exercise, or retain, as the case may be, any vested Award, during the
one-year period (90 days in the case of a termination by the Company without
Cause) following such termination of employment or service, but in no event
shall such Award be exercisable later than the date such Award would have
expired had it not been for the termination of such employment or service. All
unvested Awards shall be forfeited.

     (c) Calls. Prior to an Initial Public Offering, upon a Participant's
termination of employment, the Company or its designee shall have the right to
purchase all or a portion of the vested Awards and/or Shares acquired upon the
exercise of Awards. In the case of a termination of employment by the Company
for Cause or by the Participant for any reason other than retirement after age
65 (or earlier with the Company's consent), the purchase price per Share shall
equal the lower of (i) Fair Market Value on the date of termination and (ii)
the amount paid by the Participant for such Share, if any. In all other types
of terminations, the purchase price per Share shall equal the Fair Market Value
on the date of termination and the purchase price per vested Award shall equal
the Fair Market Value on the date of termination less the exercise price of
such Award. If the Company elects to exercise its right under this clause (c),
the Company shall deliver written notice to the Participant to such effect
within 60 days of a termination of employment. Payment of the purchase price
may be made in cash or by certified check; provided that if the terms of any
agreement to which the Company is a party, or any of the indentures governing
any debt securities issued by the Company or any of its subsidiaries would
prohibit the Company from effecting such payment, payment may be effected
through a promissory note having such commercially reasonable terms and
interest rate as may be determined by the Company in its reasonable discretion,
provided that in any event such note shall become due at such time as the
prohibitions described above shall lapse. Payment shall be made within five
days of the Company's determination of Fair Market Value. The Company shall use
its best efforts to determine Fair Market Value at the time it delivers the
written notice referred to above.

     SECTION 12. Change of Control. In the event of a Change of Control, all
Awards shall become immediately vested.

                                      10
<PAGE>

     SECTION 13. Amendment and Termination.

     (a) Amendments to the Plan. The Board may amend, alter, suspend,
discontinue, or terminate the Plan or any portion thereof at any time; provided
that no such amendment, alteration, suspension, discontinuation or termination
shall be made without shareholder approval if such approval is necessary to
comply with any tax or regulatory requirement for which or with which the Board
deems it necessary or desirable to qualify or comply. Notwithstanding anything
to the contrary herein, the Committee may amend the Plan in such manner as may
be necessary so as to have the Plan conform with local rules and regulations in
any jurisdiction outside the United States.

     (b) Amendments to Awards. Subject to the terms of the Plan and applicable
law, the Committee may waive any conditions or rights under, amend any terms
of, or alter, suspend, discontinue, cancel or terminate, any Award theretofore
granted, prospectively or retroactively; provided that any such waiver,
amendment, alteration, suspension, discontinuance, cancellation or termination
that would adversely affect the rights Participant or any holder or beneficiary
of any Award theretofore granted shall not to that extent be effective without
the consent of the affected Participant, holder or beneficiary.

     (c) Cancellation. Any provision of this Plan or any Award Agreement to the
contrary notwithstanding, in the event of a Change of Control or an offer to
Participants generally relating to the acquisition of Shares, including through
purchase, merger or otherwise, the Committee may cause any Award granted
hereunder to be canceled in consideration of a cash payment or alternative
Award made to the holder of such canceled Award equal in value to the Fair
Market Value of such canceled Award.

     SECTION 14. General Provisions.

     (a) Dividend Equivalents. In the sole and complete discretion of the
Committee, an Award may provide the Participant with dividends or dividend
equivalents, payable in cash, Shares, other securities or other property on a
current or deferred basis.

     (b) Nontransferability. Except to the extent otherwise provided in an
Award Agreement, (i) no Award and (ii) prior to expiration of the right of the
Company to purchase Shares pursuant to Section 11(c), no Share acquired upon
exercise of an Award shall be assigned, alienated, pledged, attached, sold or
otherwise transferred or encumbered by a Participant, except by will or the
laws of descent and distribution.

                                      11
<PAGE>

     (c) No Rights to Awards. No Employee, Participant or other Person shall
have any claim to be granted any Award, and there is no obligation for
uniformity of treatment of Employees, Participants, or holders or beneficiaries
of Awards. The terms and conditions of Awards need not be the same with respect
to each recipient.

     (d) Share Certificates. Certificates issued in respect of Shares shall,
unless the Committee otherwise determines, be registered in the name of the
Participant. Such stock certificate shall carry such appropriate legends, and
such written instructions shall be given to the Company's transfer agent, as
may be deemed necessary or advisable by counsel to the Company in order to
comply with the requirements of the Securities Act of 1933, any state
securities laws or any other applicable laws and the restrictions on transfer
set forth herein. All certificates for Shares or other securities of the
Company or any Subsidiary delivered under the Plan pursuant to any Award or the
exercise thereof shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the Plan or the rules,
regulations and other requirements of the Securities and Exchange Commission or
any stock exchange upon which such Shares or other securities are then listed
and any applicable laws or rules or regulations, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.

     (e) Withholding. A Participant may be required to pay to the Company or
any Subsidiary, and the Company or any Subsidiary shall have the right and is
hereby authorized to withhold from any Award, from any payment due or transfer
made under any Award or under the Plan or from any compensation or other amount
owing to a Participant the amount (in cash, Shares, other securities, other
Awards or other property) of any applicable withholding taxes in respect of an
Award, its exercise, or any payment or transfer under an Award or under the
Plan and to take such other action as may be necessary in the opinion of the
Company to satisfy all obligations for the payment of such taxes. The Committee
may provide for additional cash payments to holders of Awards to defray or
offset any tax arising from any such grant, lapse, vesting, or exercise of any
Award.

     (f) Award Agreements. Each Award hereunder shall be evidenced by an
Award Agreement which shall be delivered to the Participant and shall specify
the terms and conditions of the Award and any rules applicable thereto.

     (g) No Limit on Other Compensation Arrangements. Nothing contained in the
Plan shall prevent the Company or any Subsidiary from adopting or continuing in
effect other compensation arrangements, which may, but need not, provide for
the grant of options, restricted stock, Shares and other types of Awards
provided for hereunder (subject to shareholder approval if such approval

                                      12
<PAGE>

is required), and such arrangements may be either generally applicable or
applicable only in specific cases.

     (h) No Right to Employment. The grant of an Award shall not be construed
as giving a Participant the right to be retained in the employ or service of
the Company or any Subsidiary. Further, the Company or an Subsidiary may at any
time dismiss a Participant from employment or service, free from any liability
or any claim under the Plan, unless otherwise expressly provided in the Plan or
in any Award Agreement.

     (i) Rights as a Stockholder. Subject to the provisions of the applicable
Award, no Participant or holder or beneficiary of any Award shall have any
rights as a stockholder with respect to any Shares to be issued under the Plan
until he or she has become the holder of such Shares.

     (j) Governing Law. The validity, construction, and effect of the Plan and
any rules and regulations relating to the Plan and any Award Agreement shall be
determined in accordance with the laws of the State of Delaware.

     (k) Severability. If any provision of the Plan or any Award is or becomes
or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as
to any Person or Award, or would disqualify the Plan or any Award under any law
deemed applicable by the Committee, such provision shall be construed or deemed
amended to conform to the applicable laws, or if it cannot be construed or
deemed amended without, in the determination of the Committee, materially
altering the intent of the Plan or the Award, such provision shall be stricken
as to such jurisdiction, Person or Award and the remainder of the Plan and any
such Award shall remain in full force and effect.

     (l) Other Laws. The Committee may refuse to issue or transfer any Shares
or other consideration under an Award if, acting in its sole discretion, it
determines that the issuance or transfer of such Shares or such other
consideration might violate any applicable law or regulation or entitle the
Company to recover the same under Section 16(b) of the Exchange Act, and any
payment tendered to the Company by a Participant in connection therewith shall
be promptly refunded to the relevant Participant, holder or beneficiary.
Without limiting the generality of the foregoing, no Award granted hereunder
shall be construed as an offer to sell securities of the Company, and no such
offer shall be outstanding, unless and until the Committee in its sole
discretion has determined that any such offer, if made, would be in compliance
with all applicable requirements of the U.S. federal securities laws and any
other laws to which such offer, if made, would be subject.

                                      13
<PAGE>

     (m) No Trust or Fund Created. Neither the Plan nor any Award shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Subsidiary and a Participant or any
other Person. To the extent that any Person acquires a right to receive
payments from the Company or any Subsidiary pursuant to an Award, such right
shall be no greater than the right of any unsecured general creditor of the
Company or any Subsidiary.

     (n) No Fractional Shares. The Committee shall not be required to issue or
deliver fractional Shares pursuant to the Plan or any Award, and the Committee
shall determine whether cash or other securities or other property shall be
paid or transferred in lieu of any fractional Shares.

     (o) Headings. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not
be deemed in any way material or relevant to the construction or interpretation
of the Plan or any provision thereof.

     SECTION 15. Term of the Plan.

     (a) Effective Date. The Plan shall be effective as of December 31, 1997.

     (b) Expiration Date. No Incentive Stock Option shall be granted under the
Plan after the tenth anniversary of the Effective Date. Unless otherwise
expressly provided in the Plan or in an applicable Award Agreement, any Award
granted hereunder may, and the authority of the Board or the Committee to
amend, alter, adjust, suspend, discontinue, or terminate any such Award or to
waive any conditions or rights under any such Award shall, continue after the
authority for grant of new Awards hereunder has been exhausted.

                                      14

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