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Sample Business Contracts

2001 Key Employee Stock Incentive Plan - Warren Resources Inc.

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                             WARREN RESOURCES, INC.
                     2001 KEY EMPLOYEE STOCK INCENTIVE PLAN


1.       PURPOSE.

     This 2001 Key Employee Stock  Incentive Plan (the "Plan") is intended as an
incentive  to encourage  stock  ownership  by certain key  employees  (including
officers)  of WARREN  RESOURCES,  INC.  (the  "Company"),  or of its  subsidiary
corporations (the  "Subsidiaries,"  as that term is defined in Section 424(f) of
the Internal  Revenue Code of 1986, as amended from time to time),  so that they
may acquire or increase their proprietary interest in the success of the Company
and the  Subsidiaries,  and to  encourage  them to remain  in the  employ of the
Company or of the  Subsidiaries.  The Plan is  designed  to meet this  intent by
offering  performance-based  stock and cash  incentives  and other  equity based
incentive  awards,  thereby  providing a  proprietary  interest in pursuing  the
long-term growth, profitability and financial success of the Company.

2.       DEFINITIONS.

     For purposes of this Plan, the following  terms shall have the meanings set
forth below:

     (a) "Award" or "Awards" means an award or grant made to a Participant under
Sections 6 through 8, inclusive, of the Plan.

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

     (c) "Code" means the Internal  Revenue Code of 1986,  as amended,  together
with the regulations promulgated thereunder.

     (d)  "Committee"  means the  Compensation  Committee  of the Board,  or any
committee of the Board performing similar functions,  constituted as provided in
Section 3 of the Plan.

     (e) "Common Stock" means the Common Stock of the Company or any security of
the Company issued in substitution, exchange or lieu thereof.

     (f) "Company" means Warren Resources, Inc., a New York corporation,  or any
successor corporation.

     (g) "Deferred  Compensation  Stock  Option" means any Stock Option  granted
pursuant  to the  provisions  of  Section  6 of the  Plan  that is  specifically
designated as such.

     (h) "Disability"  means a total and permanent  disability as defined in the
Company's  long-term  disability  plan,  or if  the  Company  has  no  long-term
disability  plan  in  effect  at  the  time  of  a   Participant's   disability,
"disability" shall have the meaning provided in Section 22(e)(3) of the Code.


<PAGE>

     (i) "Exchange  Act" means the  Securities  Exchange Act of 1934, as amended
and in effect from time to time, or any successor statute.

     (j) "Fair  Market  Value" means at any given time on any given date (i) the
closing  price of the  Common  Stock on any  established  national  exchange  or
exchanges  for the  immediately  prior  trading day on which there was a sale of
such stock,  or (ii) if the Common Stock is not listed on an  established  stock
exchange,   the  closing  bid  price  of  the  Common  Stock  in  the  New  York
over-the-counter  market as reported by the National  Association  of Securities
Dealers, Inc. for such trading date. For example, prior to closing of the market
on any given  business  day, Fair Market Value would be the closing price on the
preceding trading day on which there was a trade. After closing of the market on
any given  business  day,  Fair Market Value would be the closing  price on that
same day if there was a trade.

     (k) "Immediate  Family Member" means the spouse,  children or grandchildren
of a Participant.

     (l) "Incentive Stock Option" means any Stock Option (as defined below) that
is intended to be and is specifically  designated as an "incentive stock option"
within the meaning of Section 422 of the Code.

     (m) "Nonqualified  Stock Option" means any Stock Option granted pursuant to
the provisions of Section 6 of the Plan that is not an Incentive Stock Option.

     (n)  "Participant"  means a key  employee  (including  an  officer)  of the
Company  or a  Subsidiary,  who from  time to time  shall be  designated  by the
Committee  and in all such cases who is also granted an Award under the Plan. No
member of the Committee shall be eligible to be a Participant.

     (o) "Plan"  means this  Warren  Resources,  Inc.  2001 Key  Employee  Stock
Incentive Plan as set forth herein and as it may be hereafter amended.

     (p) "Restricted Award" means an Award granted pursuant to the provisions of
Section 8 of the Plan.

     (q)  "Restricted  Stock  Grant"  means an Award of shares  of Common  Stock
granted pursuant to the provisions of Section 8 of the Plan.

     (r) "Restricted Unit Grant" means an Award of units representing  shares of
Common Stock granted pursuant to the provisions of Section 8 of the Plan.

     (s)  "Stock  Appreciation  Right"  means  an  Award  to  benefit  from  the
appreciation of Common Stock granted  pursuant to the provisions of Section 7 of
the Plan.

     (t)  "Stock  Option"  means an Award to  purchase  shares of  Common  Stock
granted pursuant to the provisions of Section 6 of the Plan.

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<PAGE>

     (u)  "Subsidiary"  means a "subsidiary  corporation"  within the meaning of
Section 424(f) of the Code.

     (v) "Ten Percent  Shareholder" means a person who owns (or is considered to
own after taking into  account the  attribution  of  ownership  rules of Section
424(d) of the Code) more than ten  percent  (10%) of the total  combined  voting
power of all classes of stock of the Company or any of its Subsidiaries.

3.       ADMINISTRATION.

     (a) The Plan shall be administered by the Committee, as appointed from time
to time by the Board.  The Board may from time to time remove  members  from, or
add members to, the Committee. The Committee shall be comprised solely of two or
more members of the Board who are  "non-employee  directors"  as defined in Rule
16b-3 ("Rule  16b-3")  promulgated  by the  Securities  and Exchange  Commission
("SEC")  under the Exchange  Act as it may be amended from time to time,  or any
successor rule, and who are "outside  directors"  within the meaning of Treasury
Regulation Section  1.162-27(e)(3) and the delegation of powers to the Committee
shall be consistent with applicable  laws and  regulations  (including,  without
limitation, applicable state law and Rule 16b-3).

     (b) Unless otherwise provided in the By-Laws of the Company,  by resolution
of the Board of  Directors or  applicable  law, a majority of the members of the
Committee  shall  constitute a quorum for the transaction of business and action
approved in writing by a majority of the members of the  Committee  then serving
shall be as  effective  as if the action had been taken by  unanimous  vote at a
meeting duly called and held.

     (c) The  Committee is  authorized  to construe and  interpret  the Plan, to
promulgate,   amend,   and  rescind  rules  and   procedures   relating  to  the
implementation  of the Plan, and to make all other  determinations  necessary or
advisable for the  administration of the Plan. Any determination,  decision,  or
action of the Committee in  connection  with the  construction,  interpretation,
administration,   or   application  of  the  Plan  shall  be  binding  upon  all
Participants  and any person validly  claiming under or through any  Participant
and any Award under this Plan will be made only if the Committee  decides in its
sole  and  absolute  discretion  that the  Participant  or any  persons  validly
claiming  through any  Participant is entitled to such award.  In the event of a
disagreement  as to the  interpretation  of the  Plan or any  agreements  issued
hereunder as to any right or obligation arising from or related to the Plan, the
decision of the Committee shall be final and binding.

     (d) The Committee may designate persons other than members of the Committee
to carry out its  responsibilities  under such  conditions and limitations as it
may prescribe, except that the Committee may not delegate its authority to grant
Awards to persons  subject to Section 16 of the Exchange  Act. The  Committee is
specifically  authorized  to give  authority to the  Company's  chief  executive
officer within specified  written limits to grant Awards to new employees of the
Company in  connection  with their hiring,  which written  limits may be changed
from time to time by the Committee in its sole discretion.

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<PAGE>

     (e) The Committee is expressly authorized to make modifications to the Plan
as necessary to effectuate  the intent of the Plan as a result of any changes in
the tax, accounting,  or securities laws treatment of Participants and the Plan,
subject to those restrictions that are set forth in Section 13 below.

     (f) The Company  shall  effect the  granting of Awards  under the Plan,  in
accordance  with  the  determinations  made by the  Committee  by  execution  of
instruments  in writing as  specified  in  Section  14(d)  below in such form as
approved by the Committee.

4.       ELIGIBILITY.

     Persons  eligible for Awards under the Plan shall  consist of key employees
(including officers) of the Company or its Subsidiaries. Such Awards shall cover
such numbers of shares of Common  Stock as the  Committee  may  determine in its
sole discretion; provided, however that if on the date of grant of an Award, any
class of Common stock of the Company  (including  without  limitation the Common
Stock) is required to be  registered  under  Section 12 of the Exchange Act, the
maximum  number  of  shares  subject  to an  Award  that  may  be  granted  to a
Participant during any calendar year under the Plan shall be 750,000 shares (the
"Section 162 Maximum").

5.       DURATION OF AND COMMON STOCK SUBJECT TO PLAN.

     (a) Term.  The Plan was adopted by the Board on September 6, 2001.  Subject
to Section 13 below, the Plan shall terminate on September 5, 2011,  except with
respect to Awards  then  outstanding,  including  Reload  Options on Awards then
outstanding, and no Award may be granted under the Plan after that date.

     (b) Shares of Common Stock Subject to Plan. The maximum number of shares of
Common Stock in respect of which Awards may be granted under the Plan (the "Plan
Maximum")  shall be  2,500,000,  subject to adjustment as provided in Section 11
below.  Common Stock issued under the Plan may be either authorized and unissued
shares or treasury  shares.  The following  terms and conditions  shall apply to
Common Stock subject to the Plan:

          (i) In no event  shall  more  than the Plan  Maximum  be  cumulatively
     available for Awards under the Plan;

          (ii) For the purpose of computing the total number of shares of Common
     Stock  available for Awards under the Plan,  there shall be counted against
     the foregoing  limitations (A) the number of shares of Common Stock subject
     to issuance upon exercise or settlement of Awards  (regardless of vesting),
     and (B) the  number  of shares of  Common  Stock  which  equal the value of
     Restricted Unit Grants or Stock Appreciation Rights determined at the dates
     on which such Awards are granted;

          (iii) If any Awards are  forfeited,  terminated,  expire  unexercised,
     settled in cash in lieu of stock or exchanged for other Awards,  the shares
     of Common Stock which were previously  subject to the Awards shall again be
     available  for  Awards  under the Plan to the  extent  of such  forfeiture,
     termination, expiration, cash settlement or exchange; and

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<PAGE>

          (iv) Any  shares of  Common  Stock  which are used as full or  partial
     payment to the Company by a Participant  of the purchase price of shares of
     Common Stock upon  exercise of a Stock Option shall again be available  for
     Awards under the Plan.

6.       STOCK OPTIONS.

     Stock Options  granted under the Plan may be in the form of Incentive Stock
Options,  Non-Qualified  Stock Options or Deferred  Compensation  Stock Options.
Stock Options shall be subject to the following terms and  conditions,  and each
Stock  Option  shall  contain  such  additional   terms  and   conditions,   not
inconsistent  with the express  provisions of the Plan,  as the Committee  shall
deem desirable:

     (a) Grant.  Stock  Options  shall be granted  separately.  In no event will
Stock Options or Awards be issued in tandem  whereby the exercise of one affects
the right to exercise the other.

     (b) Stock  Option  Price.  The  exercise  price  per share of Common  Stock
purchasable  under a Stock Option shall be  determined  by the  Committee at the
time of  grant,  provided  that in no  event  shall  the  exercise  price  of an
Incentive  Stock  Option,   or  of  any  option  intended  to  comply  with  the
performance-based compensation exemption to the deduction limitations of Section
162(m) of the Code, be less than one hundred  percent  (100%) of the Fair Market
Value of the Common Stock on the date of the grant of the Stock  Option.  In the
case of a Ten Percent  Shareholder,  the exercise  price of an  Incentive  Stock
Option shall be not less than one hundred ten percent  (110%) of the Fair Market
Value of the Common Stock on the date of the grant.

     (c) Option  Term.  The term of each Stock  Option,  other than an Incentive
Stock  Option,  shall be fixed by the  Committee.  The term of  Incentive  Stock
Options  shall not  exceed  ten (10) years  after the date the  Incentive  Stock
Option is granted,  and the term of any Incentive  Stock Options  granted to Ten
Percent  Shareholders  shall not  exceed  five (5)  years  after the date of the
grant.

         (d)      Exercisability.

          (i) Incentive  Stock Options and  Nonqualified  Stock Options shall be
     exercisable  in  installments  as  determined  by the Committee in its sole
     discretion,  and shall be subject to such other terms and conditions as the
     Committee  shall  determine  at the  date of  grant;  provided  that if not
     otherwise  determined  by  the  Committee,   Incentive  Stock  Options  and
     Nonqualified Stock Options may be exercised as to twenty-five percent (25%)
     of the shares covered thereby  beginning on the first  anniversary  date of
     the date of grant  (hereinafter,  an "Anniversary  Date") and thereafter an
     additional  fifty  percent  (50%) on the second  Anniversary  Date,  and an
     additional  twenty-five percent (25%) on the third Anniversary Date, except
     as otherwise provided in Sections 9 and 12.

          (ii) Reload  Options  shall  become  exercisable  in  accordance  with
     Section 6(i)(iii) hereof.

          (iii) Deferred  Compensation Stock Options shall become exercisable in
     accordance  with the  terms of the  grant  thereof  as  established  by the
     Committee.

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<PAGE>

     (e) Method of Exercise.  Subject to applicable  exercise  restrictions  set
forth in Section  6(d) above,  a Stock Option 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. The notice shall be accompanied by payment in full of
the  purchase  price.  The  purchase  price may be paid by any of the  following
methods, subject to the restrictions set forth in Section 6(f) hereof:

          (i) in cash,  by certified or  cashier's  check,  by money order or by
     personal  check (if  approved by the  Committee)  of an amount equal to the
     aggregate  purchase  price of the  shares  of  Common  Stock to which  such
     exercise relates; or

          (ii) if acceptable to the  Committee,  by delivery of shares of Common
     Stock already owned by the  Participant  and held by the  Participant for a
     minimum of six months, which shares, including any cash tendered therewith,
     have an aggregate  Fair Market Value equal to the aggregate  purchase price
     of the shares of Common Stock to which such exercise relates; or

          (iii) the Committee  may, in its sole  discretion,  permit  payment of
     this exercise price by delivery by the  Participant of a properly  executed
     notice,  together with a copy of the Participant's  irrevocable instruction
     to a broker  acceptable to the Committee to deliver promptly to the Company
     the amount of sale or loan proceeds  sufficient to pay such exercise price.
     In  connection  therewith,  the  Company  may  enter  into  agreements  for
     coordinated procedures with one or more brokerage firms.

     In no case may a fraction of a share of Common Stock be purchased or issued
under the Plan.

     (f)  Restrictions  on Method and Timing of  Exercise.  Notwithstanding  the
foregoing provisions,  the Committee,  in granting Stock Options pursuant to the
Plan,  may limit the timing or methods by which a Stock  Option may be exercised
by any person or waive all or any  portion of such  limits on timing or methods,
and, in processing any purported  exercise of a Stock Option granted pursuant to
the Plan, may refuse to recognize the timing or methods of exercise  selected by
the  Participant  if, in the  opinion  of  counsel  to the  Company,  there is a
substantial  risk that such  exercise  could result in the violation of any then
applicable  rules or regulations,  including  federal or state  securities laws.
Furthermore,  no Incentive  Stock Option may be exercised in accordance with the
method of exercise set forth in subsections 6(e)(ii) and 6(e)(iii) above unless,
in the  opinion  of  counsel  to the  Company,  such  exercise  would not have a
material  adverse  effect upon the  incentive  stock option tax treatment of any
outstanding  Incentive  Stock Options or Incentive Stock Options (other than the
particular  option or options then exercised in accordance  with such subsection
6(e)(ii)) which may be granted pursuant to the Plan in the future.

     (g)  Transferability of Nonqualified  Stock Options.  The Committee may, in
its discretion,  authorize all or a portion of any Nonqualified  Stock Option to
be on terms which permit  transfer by the  Participant  to (i) Immediate  Family
Members,  (ii) a trust or trusts for the exclusive  benefit of Immediate  Family
Members,  (iii) a  charitable  trust or  trusts  created  or  controlled  by the
Participant,  or (iv) a partnership  in which  Immediate  Family Members are the
only  partners,  provided  that (x) there may be no  consideration  for any such
transfer,  (y) the  transfer  must be  approved  by the  Committee  in a  manner

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<PAGE>

consistent  with this  Section,  and (z)  subsequent  transfers  of  transferred
Options shall be prohibited except to a transferee to whom the Participant could
have transferred the Option pursuant to this Section 6(g) or by will or the laws
of descent and  distribution,  after which  assignment,  Section 9 hereof  shall
apply to exercise of the Option by the assignee.  Following  transfer,  any such
Options  shall  continue to be subject to the same terms and  conditions as were
applicable immediately prior to transfer,  provided that for all purposes hereof
the term Participant  shall be deemed to refer to the transferee.  The events of
termination  of employment of Section 9 hereof shall continue to be applied with
respect to the original Participant, following which events the Options shall be
exercisable by the transferee only to the extent,  and for the periods specified
in Section 9.

     (h) Tax Withholding. In addition to the alternative methods of exercise set
forth in Section 6(e),  holders of  Nonqualified  Stock Options,  subject to the
discretion  of the  Committee,  may be entitled to elect at or prior to the time
the exercise  notice is delivered to the Company,  to have the Company  withhold
from  the  shares  of  Common  Stock  to  be  delivered  upon  exercise  of  the
Nonqualified Stock Option the number of shares of Common Stock (determined based
on the Fair Market  Value) that is  necessary to satisfy any  withholding  taxes
attributable  to the  exercise of the  Nonqualified  Stock Option so long as the
amount withheld does not exceed the Company's  minimum statutory tax withholding
attributable to the underlying transaction.  If withholding is made in shares of
Common  Stock  pursuant to the method set forth  above,  the  Committee,  in its
discretion, may grant "Reload Options" (as defined and on the terms specified in
Section  6(i) below) for the number of shares so withheld.  Notwithstanding  the
foregoing  provisions,  a holder of a Nonqualified Stock Option may not elect to
satisfy his or her  withholding  tax  obligation  in respect of any  exercise as
contemplated  above if, in the  opinion  of  counsel  to the  Company,  there is
substantial  risk that such  election  could  result in a violation  of any then
applicable rules or regulations,  including  federal or state securities law, or
such withholding would have an adverse tax or accounting effect on the Company.

     (i) Grant of Reload Options. Whenever the Participant holding any Incentive
Stock Option or Nonqualified  Stock Option (the "Original  Option")  outstanding
under this Plan (including any "Reload  Options" granted under the provisions of
this Section 6(i)) exercises the Original Option and makes payment of the option
price by  tendering  shares of the Common  Stock  previously  held by him or her
pursuant  to Section  6(e)(ii)  hereof,  then the  Committee  may grant a reload
option (the "Reload  Options")  for that number of  additional  shares of Common
Stock  which is equal to the number of shares  tendered  by the  Participant  in
payment of the option price for the Original  Option being  exercised.  All such
Reload Options granted hereunder shall be on the following terms and conditions:

          (i) The Reload  Option price per share shall be an amount equal to the
     then current Fair Market Value per share of the Common Stock, determined as
     of the time and date of the  Company's  receipt of the exercise  notice for
     the Original Option;

          (ii) The option  exercise  period shall expire,  and the Reload Option
     shall no longer be  exercisable,  on the expiration of the option period of
     the  Original  Option  or two (2)  years  from the date of the grant of the
     Reload Option, whichever is later;

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<PAGE>

          (iii) Any Reload Option granted under this Section 6(i) shall vest and
     first become exercisable one (1) year following the date of exercise of the
     Original Option; and

          (iv) All other  terms of Reload  Options  granted  hereunder  shall be
     identical to the terms and conditions of the Original Option,  the exercise
     of which gives rise to the grant of the Reload Option.

     (j) Special Rule for  Incentive  Stock  Options.  With respect to Incentive
Stock  Options  granted under the Plan,  the aggregate  Fair Market Value of the
Common Stock with respect to which  Incentive  Stock Options are exercisable for
the first time by a Participant  during any calendar year under all stock option
plans of the Company or its  Subsidiaries  shall not exceed one hundred thousand
dollars  ($100,000).  The  Fair  Market  Value  of any  Common  Stock  shall  be
determined  as of the time the option  with  respect to such stock is granted or
such  other  time as may be  required  by  Section  422(d) of the Code,  as such
section of the Code may be amended from time to time.

     (k)  Deferred  Compensation  Stock  Options.  Deferred  Compensation  Stock
Options are  intended to provide a means by which  compensation  payments can be
deferred  to future  dates.  The number of shares of Common  Stock  subject to a
Deferred Compensation Stock Option shall be determined by the Committee,  in its
sole discretion, in accordance with the following formula:

      Amount of Compensation to be Deferred                   = Number of Shares
      --------------------------------------
      Fair Market Value - Stock Option Exercise Price

Amounts of compensation deferred may include amounts earned under Awards granted
under the Plan or under any other compensation plan,  program, or arrangement of
the Company as permitted by the Committee.

     (l) Incentive  Stock Options.  Notwithstanding  anything in the Plan to the
contrary,  no term of this Plan  relating to Incentive  Stock  Options  shall be
interpreted,  amended, or altered, nor shall any discretion or authority granted
under the Plan be so exercised,  so as to disqualify  the Plan under Section 422
of the Code. To the extent permitted under Section 422 of the Code or applicable
regulations    thereunder   or   any   applicable   Internal   Revenue   Service
pronouncements:

          (i) to the extent that any portion of any Incentive  Stock Option that
     first  becomes  exercisable  during any calendar  year exceeds the $100,000
     limitation  contained  in  Section  422(d) of the Code set forth in Section
     6(j) above,  such excess portion shall be treated as a  Nonqualified  Stock
     Option; and

          (ii) if the vesting  period or  exercisability  of an Incentive  Stock
     Option is accelerated, any portion of such Option that exceeds the $100,000
     limitation  set  forth  in  Section  6(j)  above  shall  be  treated  as  a
     Nonqualified Stock Option.

Even if the  shares of  Common  Stock  which are  issued  upon  exercise  of any
Incentive  Stock  Option are sold or  exchanged  within one year  following  the

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<PAGE>

exercise  of that  Incentive  Stock  Option  such  that the sale  constitutes  a
disqualifying  disposition for Incentive Stock Option  treatment under the Code,
no provision of this Plan shall be construed as prohibiting such a sale.

7.       STOCK APPRECIATION RIGHTS.

     The grant of Stock  Appreciation  Rights under the Plan shall be subject to
the following terms and conditions,  and shall contain such additional terms and
conditions,  not  inconsistent  with  the  express  terms  of the  Plan,  as the
Committee shall deem desirable:

     (a)  Stock  Appreciation  Rights.  A Stock  Appreciation  Right is an Award
entitling a Participant to receive an amount equal to (or if the Committee shall
determine  at the time of grant,  less than) the excess of the Fair Market Value
of a share of Common Stock on the date of exercise over the Fair Market Value of
a share of Common  Stock on the date of grant of the Stock  Appreciation  Right,
multiplied  by the number of shares of Common  Stock  with  respect to which the
Stock Appreciation Right shall have been exercised.

     (b) Grant. A Stock  Appreciation Right shall be granted  separately.  In no
event  will  Stock  Appreciation  Rights  and  other  Awards be issued in tandem
whereby the exercise of one such Award affects the right to exercise the other.

     (c) Exercise.  A Stock Appreciation Right may be exercised by a Participant
in accordance  with procedures  established by the Committee,  except that in no
event  shall a Stock  Appreciation  Right  be  exercisable  prior  to the  first
Anniversary Date of the date of grant. To the extent, in the opinion of counsel,
it would not subject such  Participant to a substantial  risk of liability under
Section 16 of the Exchange Act, the Committee,  in its  discretion,  may provide
that a Stock Appreciation Right shall be automatically  exercised on one or more
specified dates, or that a Stock Appreciation Right may be exercised during only
limited time periods.

     (d) Form of  Payment.  Payment to a  Participant  upon  exercise of a Stock
Appreciation  Right may be made (i) in cash, by certified or cashier's check, by
money order or by personal check (if approved by the  Committee)  (ii) in shares
of Common Stock,  (iii) in the form of a Deferred  Compensation Stock Option, or
(iv) any  combination  of the  above,  as the  Committee  shall  determine.  The
Committee  may  elect to make  this  determination  either at the time the Stock
Appreciation  Right is  granted,  or with  respect to payments  contemplated  in
clauses (i) and (ii) above, at the time of the exercise.

8.       STOCK GRANTS AND RESTRICTED AWARDS

     Restricted  Awards  granted  under  the Plan  may be in the form of  either
Restricted  Stock Grants or Restricted Unit Grants.  Restricted  Awards shall be
subject to the following terms and  conditions,  and may contain such additional
terms and conditions,  not inconsistent with the express provisions of the Plan,
as the Committee shall deem desirable.

     (a) Restricted Stock Grants. A Restricted Stock Grant is an Award of shares
of  Common  Stock  transferred  to a  Participant  subject  to  such  terms  and
conditions as the  Committee  deems  appropriate,  as set forth in Section 8 (d)
below. As a condition to the grant of Restricted  Stock to any Participant  who,


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<PAGE>

at the date of grant, has not been employed by the Company and has not performed
services for the Company, the Committee shall require such Participant to pay at
least an amount equal to the par value of the shares of Common Stock  subject to
the Restricted Stock Grant within thirty (30) days of the date of the grant, and
failure to pay such  amount  shall  result in an  automatic  termination  of the
Restricted Stock Grant.

     (b) Restricted  Unit Grants.  A Restricted  Unit Grant is an Award of units
granted to a Participant  subject to such terms and  conditions as the Committee
deems  appropriate,  including,  without  limitation,  the requirement that such
Participant  forfeit such units upon  termination  of  employment  for specified
reasons  within a  specified  period  of time,  and  restrictions  on the  sale,
assignment,  transfer  or  other  disposition  of  the  units.  Subject  to  the
discretion of the Committee at the time a Restricted  Unit Grant is awarded to a
Participant,  a unit  will have a value  (i)  equivalent  to one share of Common
Stock,  or (ii)  equivalent to the excess of the Fair Market Value of a share of
Common Stock on the date the restriction  lapses over the Fair Market Value of a
share of Common Stock on the date of the grant of the Restricted  Unit Grant (or
over such other value as the Committee determines at the time of the grant).

     (c) Grant of Awards.  Restricted  Awards shall be granted  separately under
the Plan in such form and on such terms and conditions as the Committee may from
time to time approve.  Restricted Awards,  however, may not be granted in tandem
with other Awards  whereby the  exercise of one such Award  affects the right to
exercise  the  other.  Subject  to the terms of the Plan,  the  Committee  shall
determine the number of Restricted Awards to be granted to a Participant and the
Committee may impose different terms and conditions on any particular Restricted
Award made to any  Participant.  Each  Participant  receiving a Restricted Stock
Grant  shall be issued a stock  certificate  in  respect of the shares of Common
Stock. The certificate shall be registered in the name of the Participant, shall
be accompanied by a stock power duly executed by the Participant, and shall bear
an  appropriate  legend  referring  to the terms,  conditions  and  restrictions
applicable to the Award. The certificate  evidencing the shares shall be held in
custody by the Company until the restrictions  imposed thereon shall have lapsed
or been removed.

     (d) Restriction Period.  Restricted Awards shall provide that, in order for
a Participant to vest in the Awards,  the Participant must continuously  provide
services for the Company or its  Subsidiaries,  subject to relief for  specified
reasons,  for a  period  of not  less  than  two (2)  years  (or one year if the
Restricted Award is performance  based)  commencing on the date of the Award and
ending on such later date or dates as the Committee may designate at the time of
the Award ("Restriction  Period").  During the Restriction Period, a Participant
may not sell, assign, transfer, pledge, encumber, or otherwise dispose of shares
of Common Stock received under a Restricted Stock Grant.  Upon expiration of the
applicable  Restriction Period (or lapse of restrictions  during the Restriction
Period where the restrictions  lapse in installments),  the Participant shall be
entitled  to  receive  his or her  Restricted  Award or the  applicable  portion
thereof,  as the case may be, along with a return of the stock power executed by
the Participant  once the restriction  has fully lapsed.  Upon  termination of a
Participant's  employment  with the  Company  or any  Subsidiary  for any reason
during the  Restriction  Period,  all or a portion  of the  shares or units,  as
applicable, that are still subject to a restriction may vest or be forfeited, in
accordance  with the terms and  conditions  established  by the  Committee at or
after grant.

                                       10
<PAGE>

               (e) Payment of Awards. A Participant shall be entitled to receive
payment for a Restricted Unit Grant (or portion thereof) in an amount equal to
the aggregate Fair Market Value of the units covered by the Award upon the
expiration of the applicable Restriction Period. Payment in settlement of a
Restricted Unit Grant shall be made as soon as practicable following the
conclusion of the respective Restriction Period (i) in cash, by certified or
cashier's check, by money order or by personal check (if approved by the
Committee), (ii) in shares of Common Stock equal to the number of units granted
under the Restricted Unit Grant with respect to which such payment is made,
(iii) in the form of a Deferred Compensation Stock Option, or (iv) in any
combination of the above, as the Committee shall determine. The Committee may
elect to make this determination either at the time the Award is granted, or
with respect to payments contemplated in clause (i) and (ii) above, at the time
the Award is settled.

     (f) Rights as a Shareholder.  A Participant shall have, with respect to the
shares of Common  Stock  received  under a Restricted  Stock  Grant,  all of the
rights of a shareholder of the Company,  including the right to vote the shares,
and the right to receive any cash dividends. Stock dividends issued with respect
to the shares covered by a Restricted Stock Grant shall be treated as additional
shares  under  the  Restricted  Stock  Grant and  shall be  subject  to the same
restrictions  and other  terms and  conditions  that  apply to shares  under the
Restricted Stock Grant with respect to which the dividends are issued.

     (g) Grants of Shares of Common Stock. The Committee may, in its discretion,
grant shares of Common Stock to a Participant  under this Plan,  with or without
restrictions,  vesting  requirements  and/or  conditions,  such direct grants of
shares to come from the  Company's  authorized  but unissued  shares or treasury
shares  available  from time to time.  As a condition  to the grant of shares of
Common Stock to any  Participant  who at the date of grant has not been employed
by the Company and has not  performed  services for the Company,  the  Committee
shall require such  Participant to pay at least an amount equal to the par value
of the shares of Common Stock to be granted that Participant.

9.       TERMINATION OF EMPLOYMENT.

     The terms and  conditions  under  which an Award may be  exercised  after a
Participant's  termination  of employment  shall be determined by the Committee,
except  as  otherwise   provided   herein.   The  conditions  under  which  such
post-termination  exercises  shall be permitted with respect to Incentive  Stock
Options shall be determined in accordance  with the provisions of Section 422 of
the Code and as  otherwise  provided  in  Section  6  above,  provided  that the
Committee, in its sole discretion,  may change, by any agreement approved by the
Committee, the post-termination rights of a Participant,  including accelerating
the dates  upon  which all or a portion  of any  outstanding  unexercised  Stock
Option held by a Participant  may become vested or be exercised  following  such
termination of employment.

     (a)  Termination  by Death.  Subject to Section  6(l),  if a  Participant's
employment  by the  Company  or  any  Subsidiary  terminates  by  reason  of the
Participant's  death or if the  Participant's  death occurs  within three months
after  the  termination  of  his or her  employment,  any  Award  held  by  such
Participant  immediately prior to the date of his or her death may thereafter be
exercised, to the extent such Award otherwise was exercisable by the Participant
immediately  prior to the date of his or her death, by the legal  representative
of the  Participant's  estate or by any person who acquired the Award by will or

                                       11

<PAGE>

the laws of descent and distribution,  for a period of one year from the date of
his or her  death or until  the  expiration  of the  stated  term of the  Award,
whichever period is the shorter,  provided,  however, that the Committee, in its
discretion may specifically  provide,  either in any agreement  providing for an
Award or in any  employment  contract  or any other  agreement  approved  by the
Committee,  for the  acceleration  of the vesting and/or right of exercise under
any  Award  held by a  Participant  immediately  prior to the date of his or her
death.  Any right of exercise under an Award held by the Participant  that after
termination  by  reason  of the  Participant's  death  is not  then  vested  and
exercisable,  or as a result thereof  becomes vested and  exercisable,  shall be
terminated and extinguished.

     (b)  Termination  by Reason of  Disability.  Subject to Section  6(l), if a
Participant's  employment by the Company or any Subsidiary  terminates by reason
of Disability,  any Award held by such Participant immediately prior to the date
of his or her Disability may thereafter be exercised by the Participant,  to the
extent such Award otherwise was exercisable by the Participant immediately prior
to the date of his or her  Disability  for a period of one year from the date of
such termination of employment by reason of Disability,  or until the expiration
of the  stated  term of such  Award,  whichever  period  is  shorter;  provided,
however,  that  if  the  Participant  dies  within  such  one-year  period,  any
unexercised  Award held by such  Participant  shall thereafter be exercisable to
the  extent to which it was  exercisable  immediately  prior to the date of such
death  for a period  of one year  from the date of his or her death or until the
expiration of the stated term of such Award,  whichever  period is shorter;  and
provided  further,  that  the  Committee  may,  in its  discretion  specifically
provide,  either in any agreement  providing  for an Award or in any  employment
contract or any other agreement  approved by the Committee for the  acceleration
of the vesting  and/or  right of exercise  under an Award held by a  Participant
immediately  prior to the time of  termination of employment by reason of his or
her  Disability.  Any right of exercise  under an Award held by the  Participant
that, after termination by reason of Participant's Disability is not then vested
and exercisable, or as a result thereof becomes vested and exercisable, shall be
terminated and extinguished.

     (c)  Other  Termination.  Subject  to  Section  6(l),  if  a  Participant's
employment by the Company or any  Subsidiary is terminated  for any reason other
than death or Disability, any Award held by the Participant immediately prior to
the date of his or her termination shall be exercisable, to the extent otherwise
then  exercisable,  for the lesser  period of three (3) months  from the date of
such  termination  or the  balance  of the term of the  Award,  and any right of
exercise under any Award held by a Participant  immediately prior to the time of
his or her  termination  that  is not  vested  immediately  after  such  date of
termination,  shall be terminated and extinguished;  provided, however, that the
Committee,  in its  discretion  may  specifically  provide that, for Awards held
prior to the termination, vesting and/or exercise may be accelerated at or prior
to the time of termination,  either in any agreement  providing for an Award, or
in any  employment  contract or any other  agreement  approved by the Committee;
provided,  however, that upon termination of employment upon retirement,  if the
Participant  continues  to serve,  or  commences  serving,  as a director of the
Company,  then  in  such  event  any  Awards  may  continue  to be  held  by the
Participant  under the original terms thereof,  with such  modifications  as the
Committee may determine in its discretion, with any Incentive Stock Options held
by such Participant to henceforth be treated as Nonqualified Stock Options.

                                       12
<PAGE>

     (d) General Provisions.  Unless otherwise specifically provided herein, the
Committee  shall  have the  following  discretion  regarding  the  treatment  of
outstanding Stock Options upon termination of employment:

          (i) Any  Stock  Option  outstanding  at the  time  of a  Participant's
     retirement,  termination  of  employment,  Disability or death shall remain
     exercisable  for such period of time  thereafter  as shall be determined by
     the Committee and set forth in the  documents  evidencing  the grant of any
     Stock Option or in an employment or other agreement with such  Participant,
     provided that no Stock Option shall be exercisable more than ten (10) years
     from the date of grant of the Original Option;

          (ii) The Committee shall have complete discretion,  exercisable either
     at the time a Stock  Option is granted  or any time while the Stock  Option
     remains  outstanding,  to  extend  the  period  of time for which the Stock
     Option is to remain  exercisable  following a Participant's  termination of
     employment from the limited  exercise  period  otherwise in effect for that
     Stock Option to such  greater  period of time as the  Committee  shall deem
     appropriate,  but in no event to a date  which is more than ten (10)  years
     from the date of grant of the Original Option;

          (iii) The  Committee  shall have the complete  discretion  to permit a
     Stock  Option  to  be  exercised  following  a  Participant's   retirement,
     termination of employment, Disability or death not only with respect to the
     number of Stock  Options  which are then fully vested but also with respect
     to one or more additional  installments in which the Participant would have
     vested had the Participant continued in the Company's employment.

10.      NON-TRANSFERABILITY OF INCENTIVE STOCK OPTIONS.

     No  Incentive  Stock  Option  under  the Plan,  and no  rights or  interest
therein,  shall be assignable or transferable by a Participant except by will or
the laws of descent and  distribution,  after which assignment  Section 9 hereof
shall apply to exercise of the Incentive  Stock Option by the  assignee.  During
the lifetime of a Participant,  Incentive Stock Options are exercisable  only by
such Participant or his or her legal representative.

11.      ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, ETC.

     (a) The existence of the Plan and the Awards  granted  hereunder  shall not
affect  or  restrict  in  any  way  the  right  or  power  of the  Board  or the
shareholders   of  the   Company   to  make   or   authorize   any   adjustment,
recapitalization,  reorganization  or  other  change  in the  Company's  capital
structure or its business, any merger or consolidation of the Company, any issue
of bonds,  debentures,  Common Stock, preferred or prior preference stocks ahead
of  or  affecting  the  Company's  Common  Stock  or  the  rights  thereof,  the
dissolution or liquidation of the Company, or any sale or transfer of all or any
part of its assets or business, or any other corporate act or proceeding.

     (b) In the event of any change in capitalization affecting the Common Stock
of the Company, such as a stock dividend, stock split, recapitalization, merger,
consolidation,   split-up,  combination,  exchange  of  shares,  other  form  of


                                       13
<PAGE>

reorganization,  or any other change  affecting the Common Stock,  the Board, in
its  discretion,  may make  proportionate  adjustments  it deems  appropriate to
reflect such change with  respect to (i) the maximum  number of shares of Common
Stock which may be sold or awarded to any Participant, (ii) the number of shares
of Common Stock covered by each outstanding Award, and (iii) the price per share
in respect of the outstanding Awards.

     (c) The  Committee may also make such  adjustments  in the number of shares
covered by, and the price or other value of any outstanding  Awards in the event
of a spin-off  or other  distribution  (other than  normal  cash  dividends)  of
Company assets to shareholders.

12.      CHANGE OF CONTROL.

     (a) Liquidation or Dissolution.  In the event of a proposed  liquidation or
dissolution  of the Company,  the  Committee  shall upon  written  notice to the
Participants   provide  that  all  then  unexercised  Options  will  (i)  become
exercisable  in full as of a specified  time at least 10 business  days prior to
the  effective  date of such  liquidation  or  dissolution  and  (ii)  terminate
effective upon such  liquidation or dissolution,  except to the extent exercised
before such effective date. The Board may specify the effect of a liquidation or
dissolution  on any other Award  granted under the Plan at the time of the grant
of such Award.

     (b) Acquisition and Change in Control Events

          (i) Definitions

               (A) An "Acquisition Event" shall mean:

                    (1) any merger or  consolidation of the Company with or into
               another entity as a result of which the Common Stock is converted
               into or exchanged  for the right to receive  cash,  securities or
               other property of the other entity; or

                    (2)  any  exchange  of  shares  of  the  Company  for  cash,
               securities  or other  property  in  connection  with an  exchange
               transaction.

               (B) A "Change in Control Event" shall mean:

                    (1) a sale of all or substantially  all of the assets of the
               Company;

                    (2)  the  acquisition  by an  individual,  entity  or  group
               (within  the  meaning  of Section  13(d)(3)  or  14(d)(2)  of the
               Exchange Act) (a "Person") of beneficial ownership of any capital
               stock of the  Company  if,  after such  acquisition,  such Person
               beneficially  owns (within the meaning of Rule 13d-3  promulgated
               under  the   Exchange   Act)  50%  or  more  of  either  (a)  the
               then-outstanding  shares  of  common  stock of the  Company  (the
               "Outstanding  Company Common  Stock") or (b) the combined  voting
               power of the then-outstanding  securities of the Company entitled
               to vote generally in the election of directors (the  "Outstanding
               Company Voting Securities"); provided, however, that for purposes
               of this  subsection  (2), the  following  acquisitions  shall not
               constitute  a  Change  in  Control  Event:  (c)  any  acquisition

                                       14

<PAGE>

              directly from the Company  (excluding an acquisition  pursuant to
               the exercise,  conversion or exchange of any security exercisable
               for,  convertible into or exchangeable for common stock or voting
               securities  of  the  Company,   unless  the  Person   exercising,
               converting  or exchanging  such  security  acquired such security
               directly  from  the  Company  or an  underwriter  or agent of the
               Company),  (d) any  acquisition by any employee  benefit plan (or
               related  trust)  sponsored  or  maintained  by the Company or any
               corporation   controlled  by  the  Company;  or  (e)  a  Business
               Combination (as defined below); or

                    (3)   the   consummation   of   a   merger,   consolidation,
               reorganization,  recapitalization or share exchange involving the
               Company  (a  "Business  Combination")  if  Persons  who  were not
               shareholders  of the Company  immediately  prior to such Business
               Combination  beneficially  own  (within the meaning of Rule 13d-3
               promulgated  under  the  Exchange  Act)  immediately  after  such
               Business Combination 50% or more of either the Outstanding Common
               Stock or the Outstanding Company Voting Securities.

               (C) "Good  Reason" shall mean any  significant  diminution in the
          Participant's  title,  authority,  or responsibilities  from and after
          such Acquisition Event or Change in Control Event, as the case may be,
          or any  reduction  in the  annual  cash  compensation  payable  to the
          Participant from and after such Acquisition Event or Change in Control
          Event,  as the case may be, or the relocation of the place of business
          at which the Participant is principally  located to a location that is
          greater than 50 miles from the then current site.

               (D) "Cause" shall mean in connection  with the  termination  of a
          Participant  (1) "cause," as such term (or any similar  term,  such as
          "with  cause")  is  defined  in any  employment,  consulting  or other
          applicable  agreement  for  services  between  the  Company  and  such
          Participant,  or (2) in the absence of such an  agreement,  "cause" as
          such term is defined  in the Award  Agreement  (as  defined in Section
          14(d) below) executed by the Company and such  Participant,  or (3) in
          the  absence  of  both  of  the  foregoing,  (a)  conviction  of  such
          Participant  for any felony or the entering by him of a plea of guilty
          or nolo  contendere  with  respect  thereto,  (b) willful and repeated
          failures in any material respect of such Participant to perform any of
          the Participant's  reasonable duties and responsibilities  assigned to
          him and the failure of the Participant to cure such failures hereunder
          within thirty (30) days after written notice thereof from the Company,
          (c) the  commission  of any act or failure to act by such  Participant
          that involves  moral  turpitude,  dishonesty,  theft,  destruction  of
          property,  fraud,  embezzlement or unethical business conduct, or that
          is otherwise  injurious to the Company,  or any of its Subsidiaries or
          any  other  affiliate  of the  Company  (or  its or  their  respective
          employees),  whether  financially  or  otherwise,  or (d) any material
          violation  by such  Participant  of the  requirements  of  such  Award
          Agreement,  any other  contract or  agreement  between the Company and
          such Participant or this Plan (as in effect from time to time) and the
          failure of the  Participant to cure such violation  within thirty (30)
          days after written notice thereof from the Company; in each case, with
          respect to subsections  (a) through (d), as determined by the Board of
          Directors.

          (ii) Effect on Options

               (A)  Acquisition  Event.  Upon the  occurrence of an  Acquisition
          Event  (regardless of whether such event also  constitutes a Change in

                                       15

<PAGE>

          Control Event),  or the execution by the Company of any agreement with
          respect to an Acquisition Event (regardless of whether such event will
          result in a Change in Control Event), the Board shall provide that all
          outstanding  Stock  Options shall be assumed,  or  equivalent  options
          shall be substituted,  by the acquiring or succeeding  corporation (or
          an affiliate  thereof);  provided that if such Acquisition  Event also
          constitutes  a  Change  in  Control   Event,   except  to  the  extent
          specifically provided to the contrary in the instrument evidencing any
          Stock  Option or any other  agreement  between a  Participant  and the
          Company,  the  outstanding  Stock  Options  shall  continue to vest in
          accordance with the provisions of Section  12(b)(ii)(B).  For purposes
          hereof, a Stock Option shall be considered to be assumed if, following
          consummation  of the Acquisition  Event,  the Stock Option confers the
          right to purchase, for each share of Common Stock subject to the Stock
          Option immediately prior to the consummation of the Acquisition Event,
          the  consideration   (whether  cash,  securities  or  other  property)
          received  as a result of the  Acquisition  Event by  holders of Common
          Stock for each  share of Common  Stock held  immediately  prior to the
          consummation of the  Acquisition  Event (and if holders were offered a
          choice  of  consideration,  the type of  consideration  chosen  by the
          holders  of a majority  of the  outstanding  shares of Common  Stock);
          provided,  however, that if the consideration  received as a result of
          the  Acquisition  Event is not solely common stock of the acquiring or
          succeeding  corporation  (or an affiliate  thereof),  the Company may,
          with the consent of the acquiring or succeeding  corporation,  provide
          for the  consideration  to be  received  upon  the  exercise  of Stock
          Options  to  consist  solely  of  common  stock  of the  acquiring  or
          succeeding  corporation (or an affiliate  thereof)  equivalent in fair
          market  value to the per share  consideration  received  by holders of
          outstanding  shares  of Common  Stock as a result  of the  Acquisition
          Event.

               Notwithstanding  the  foregoing,  if the  acquiring or succeeding
          corporation  (or an affiliate  thereof)  does not agree to assume,  or
          substitute for, such Stock Options, then the Board shall, upon written
          notice to the  Participants,  provide that all then unexercised  Stock
          Options will become  exercisable  in full as of a specified time prior
          to the Acquisition  Event and will terminate  immediately prior to the
          consummation of such Acquisition Event, except to the extent exercised
          by the Participants before the consummation of such Acquisition Event;
          provided, however, that in the event of an Acquisition Event under the
          terms of which holders of Common Stock will receive upon  consummation
          thereof a cash  payment  for each  share of Common  Stock  surrendered
          pursuant to such Acquisition Event (the "Acquisition Price"), then the
          Board may instead  provide that all  outstanding  Stock  Options shall
          terminate upon  consummation of such  Acquisition  Event and that each
          Participant shall receive, in exchange therefor,  a cash payment equal
          to the amount (if any) by which (1) the Acquisition  Price  multiplied
          by the number of shares of Common  Stock  subject to such  outstanding
          Stock  Options  (whether  or not then  exercisable),  exceeds  (2) the
          aggregate exercise price of such Stock Options.

               (B) Change in Control  Event.  Upon the occurrence of a Change in
          Control  Event,  except to the  extent  specifically  provided  to the
          contrary in the  instrument  evidencing  any Stock Option or any other
          agreement between a Participant and the Company,  the vesting schedule
          of such Stock Option shall be  accelerated in part so that one-half of
          the number of shares that would  otherwise have first become vested on
          any  date  after  the  date  of the  Change  in  Control  Event  shall
          immediately become exercisable.  The remaining one-half of such number
          of shares  shall  continue  to become  vested in  accordance  with the
          original  vesting  schedule  set  forth  in such  Stock  Option,  with

                                       16

<PAGE>

         one-half  of the  number of shares  that  would  otherwise  have first
          become vested  becoming so vested on each  subsequent  vesting date in
          accordance with the original schedule;  provided,  however,  that each
          such Stock Option shall be  immediately  exercisable in full if, on or
          prior to the first  anniversary of the date of the consummation of the
          Change in Control Event, the Participant's employment with the Company
          or the acquiring or  succeeding  corporation  is  terminated  for Good
          Reason  by the  Participant  or is  terminated  without  Cause  by the
          Company or the acquiring or succeeding corporation.

                  (iii)    Effect on Other Awards

                    (A) Acquisition Event that is not a Change in Control Event.
               The Board shall specify the effect of an  Acquisition  Event that
               is not a Change in Control Event on any other Award granted under
               the Plan at the time of the grant of such Award.

                    (B) Change in Control Event. Upon the occurrence of a Change
               in  Control  Event   (regardless   of  whether  such  event  also
               constitutes   an  Acquisition   Event),   except  to  the  extent
               specifically  provided to the contrary in the Award  Agreement or
               any other agreement  between a Participant  and the Company,  the
               vesting schedule of all other Awards shall be accelerated in part
               so that  one-half  of the number of shares  that would  otherwise
               have first become  exercisable,  realizable,  vested or free from
               conditions  or  restrictions  on any date  after  the date of the
               Change in Control  Event shall  immediately  become  exercisable,
               realizable,  vested  or free  from  conditions  or  restrictions.
               Subject to the following sentence, the remaining one-half of such
               number  of  shares   shall   continue   to  become   exercisable,
               realizable,  vested or free from  conditions or  restrictions  in
               accordance  with the  original  schedule set forth in such Award,
               with one-half of the number of shares that would  otherwise  have
               first  become  exercisable,   realizable,  vested  or  free  from
               conditions or restrictions  becoming so exercisable,  realizable,
               vested or free from conditions or restrictions on each subsequent
               vesting  date  in  accordance  with  the  original  schedule.  In
               addition,   each  such  Award  shall  immediately   become  fully
               exercisable,  realizable,  vested  or  free  from  conditions  or
               restrictions if, on or prior to the first anniversary of the date
               of  the   consummation  of  the  Change  in  Control  Event,  the
               Participant's  employment  with the Company or the  acquiring  or
               succeeding  corporation  is  terminated  for Good  Reason  by the
               Participant or is terminated  without Cause by the Company or the
               acquiring or succeeding corporation.

13.      AMENDMENT AND TERMINATION.

     The  Board  of  Directors,   without  further  approval  of  the  Company's
stockholders,  may at any time  suspend or  terminate  the Plan,  in whole or in
part, or amend it from time to time in such  respects as it may deem  advisable,
including  without  limitation,  in order that Incentive  Stock Options  granted
hereunder meet the requirements for "incentive stock options" under the Code, or
to comply  with the  provisions  of Rule  16b-3 of the  Exchange  Act or Section
162(m) of the Code or any change in applicable  laws or  regulations,  ruling or
interpretation of any governmental agency or regulatory body; provided, however,
that no amendment shall be effective,  without the requisite prior or subsequent
stockholder  approval,  which would (a) except as  contemplated in Paragraph 11,
increase  the maximum  number of shares of Common Stock for which any Awards may
be granted  under the Plan or change the  Section  162  Maximum,  (b) change the
eligibility  requirements for individuals  entitled to receive Awards hereunder,
or (c) make any change  which is required  to be  approved  by the  stockholders
under any law, rule or regulation or any rules for listed companies  promulgated
by any  national  stock  exchange on which the  Company's  stock is traded,  (d)

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result  in the  repricing  of  options  issued  under the Plan by  lowering  the
exercise price of a previously  granted Award, or by cancellation of outstanding
Awards with subsequent replacement,  or by regranting Awards with lower exercise
prices,  or (e) allow the creation of additional types of Awards under the Plan.
No termination,  suspension or amendment of the Plan shall adversely  affect the
rights of a  Participant  under any Award  granted  under the Plan  without such
Participant's consent. The power of the Committee to construe and administer any
Award granted under the Plan prior to the  termination or suspension of the Plan
shall continue after such termination or during such suspension.

14.      MISCELLANEOUS MATTERS.

     (a) Tax Withholding. In addition to the authority set forth in Section 6(h)
above, the Company shall have the right to deduct from a Participant's  wages or
from any settlement,  including the delivery of shares,  made under the Plan any
federal,  state,  or local taxes of any kind required by law to be withheld with
respect to such  payments,  or 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.

     (b) No  Right  to  Employment.  Neither  the  adoption  of the Plan nor the
granting of any Award shall  confer upon any  Participant  any right to continue
employment with the Company or any Subsidiary,  as the case may be, nor shall it
interfere in any way with the right of the Company or a Subsidiary  to terminate
the employment of any Participant at any time, with or without cause.

     (c) Securities Law Restrictions.  No shares of Common Stock shall be issued
under the Plan  unless  counsel  for the Company  shall be  satisfied  that such
issuance  will be in compliance  with  applicable  Federal and state  securities
laws.  Certificates  for shares of Common Stock  delivered under the Plan may be
subject to such  stock-transfer  orders and other  restrictions as the Committee
may deem advisable under the rules,  regulations,  and other requirements of the
Securities  and Exchange  Commission,  any stock  exchange upon which the Common
Stock is then listed,  and any applicable  Federal or state  securities law. The
Committee  may cause a legend or legends to be put on any such  certificates  to
refer to those restrictions.

     (d) Award  Agreement.  Each  Participant  receiving an Award under the Plan
shall  enter  into an  agreement  with the  Company in a form  specified  by the
Committee  agreeing to the terms and  conditions  of the Award and such  related
matters as the Committee,  in its sole  discretion,  shall determine (the "Award
Agreement").

     (e) Costs of Plan. The costs and expenses of  administering  the Plan shall
be borne by the Company.

     (f)  Governing  Law.  The Plan and all actions  taken  thereunder  shall be
governed by and construed in accordance with the laws of the State of Delaware.



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