LANCASTER COLONY CORPORATION
                                 2005 STOCK PLAN
 
1. PURPOSES OF THE PLAN. The purposes of this Plan are to attract and retain the
best available personnel for positions of substantial responsibility, to provide
additional incentive to Employees, Directors and Consultants and to promote the
success of Lancaster Colony Corporation's business. The Plan permits the grant
of any of the following types of awards, as the Administrator determines at the
time of the grant: Incentive Stock Options, Nonstatutory Stock Options,
Restricted Stock, Stock Appreciation Rights, Restricted Stock Units, Performance
Units, Performance Shares and Other Stock-Based Awards. The specifics of the
award(s) made shall be reflected in the terms of the written award agreement.
 
2. DEFINITIONS. As used herein, the following definitions shall apply:
 
     "ADMINISTRATOR" means the Board or any of its Committees as will be
administering the Plan, in accordance with Section 4 of the Plan.
 
     "AFFILIATE" means, with respect to any specified person, any other person
that directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified person
("control," "controlled by" and "under common control with" will mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person, whether through ownership
of voting securities, by contact or credit arrangement, as trustee or executor,
or otherwise).
 
     "APPLICABLE LAWS" means the requirements relating to the administration of
equity-based awards or equity compensation plans under U.S. state corporate
laws, U.S. federal and state securities law, the Code, any stock exchange or
quotation system on which the Common Stock is listed or quoted and the
applicable laws of any foreign country or jurisdiction where Awards are, or will
be, granted under the Plan.
 
     "AWARD" means, individually or collectively, a grant under the Plan of
Options, SARs, Restricted Stock, Restricted Stock Units, Performance Units,
Performance Shares or Other Stock-Based Awards.
 
     "AWARD AGREEMENT" means the written agreement setting forth the terms and
provisions applicable to each Award granted under the Plan. The Award Agreement
is subject to the terms and conditions of the Plan.
 
     "AWARDED STOCK" means the Common Stock subject to an Award.
 
     "BOARD" means the Board of Directors of the Company.
 
     "CHANGE IN CONTROL" means the occurrence of any of the following events:
 
     (a) Any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) becomes the "beneficial owner" (as defined in Rule 13d-3 of the
Exchange Act), directly or indirectly, of securities of the Company representing
fifty percent (50%) or more of the total voting power represented by the
Company's then outstanding voting securities;
 
     (b) The consummation of the sale or disposition by the Company of all or
substantially all of the Company's assets; or
 
     (c) The consummation of a merger or consolidation of the Company with any
other corporation, other than a merger or consolidation which would result in
the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or its parent) at least fifty
percent (50%) of the total voting power represented by the voting securities of
the Company or such surviving entity or its parent outstanding immediately after
such merger or consolidation.
 
     "CODE" means the Internal Revenue Code of 1986, as amended. Any reference
to a section of the Code in this Plan is also a reference to any successor or
amended section of the Code.
 
 
                                       C-1
 
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     "COMMITTEE" means a committee of Directors or other individuals satisfying
Applicable Laws appointed by the Board in accordance with Section 4.
 
     "COMMON STOCK" means the Common Stock of the Company, or in the case of
Performance Units and certain Other Stock-Based Awards, the cash equivalent of
the Common Stock of the Company.
 
     "COMPANY" means Lancaster Colony Corporation, an Ohio corporation, or any
of its successors.
 
     "CONSULTANT" means any person, including an advisor, engaged by the Company
or any Parent or Subsidiary to render services and who is compensated for such
services.
 
     "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT" means the absence of any
interruption or termination of service as an Employee or Consultant. Continuous
Status as an Employee or Consultant shall not be considered interrupted in the
case of sick leave, military leave, or any other leave of absence approved by
the Administrator, provided that such leave is for a period of not more than
ninety (90) days, unless reemployment upon the expiration of such leave is
guaranteed by contract or statute, or unless provided otherwise pursuant to
Company policy adopted from time to time, or in the case of transfers between
locations of the Company or between the Company, its Subsidiaries or its
successor. For purposes of this Plan, a change in status from an Employee to a
Consultant or from a Consultant to an Employee will not constitute a termination
of employment.
 
     "DIRECTOR" means a member of the Board.
 
     "DISABILITY" means total and permanent disability as defined in Section
22(e)(3) of the Code, provided that in the case of Awards other than Incentive
Stock Options, the Administrator in its discretion may determine whether a
permanent and total disability exists in accordance with uniform and
nondiscriminatory standards that the Administrator adopts from time to time.
 
     "DIVIDEND EQUIVALENT" means a credit made at the discretion of the
Administrator to the account of a Participant in an amount equal to the cash
dividends paid on one Share for each Share represented by an Award held by such
Participant.
 
     "EMPLOYEE" means any person, including Officers and Directors, employed by
the Company or any Parent or Subsidiary of the Company. Neither service as a
Director nor payment of a director's fee by the Company will be sufficient to
constitute "employment" by the Company.
 
     "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
 
     "EXCHANGE PROGRAM" means a program (subject to shareholder approval
pursuant to Section 4(b)(viii)) under which (a) outstanding Awards are
surrendered or cancelled in exchange for Awards of the same type (which may have
lower exercise prices and different terms), Awards of a different type, and/or
cash, and/or (b) the exercise price of an outstanding Award is reduced. The
Administrator may determine the terms and conditions of any Exchange Program in
its sole discretion.
 
     "FAIR MARKET VALUE" means, as of any date and unless the Administrator
determines otherwise, the value of Common Stock determined as follows:
 
     (a) If the Common Stock is listed on any established stock exchange or a
national market system, including without limitation the Nasdaq National Market
of the National Association of Securities Dealers, Inc. Automated Quotation
("Nasdaq") System, its Fair Market Value shall be the closing sales price for
such stock as quoted on such system on the date of determination (or the closing
bid, if no sales were reported on that day) as reported in The Wall Street
Journal or such other source as the Administrator deems reliable;
 
     (b) If the common Stock is regularly quoted by a recognized securities
dealer but selling prices are not reported, the Fair Market Value of a Share of
Common Stock will be the mean between the high bid and low asked prices for the
Common Stock for the day of determination, as reported in The Wall Street
Journal or such other source as the Administrator deems reliable; or
 
     (c) In the absence of an established market for the Common Stock, the
Administrator will determine the Fair Market Value in good faith.
 
 
                                      C-2
 
<PAGE>
 
     (d) Notwithstanding the preceding, for federal, state, and local income tax
reporting purposes and for such other purposes as the Administrator deems
appropriate, the Administrator will determine Fair Market Value in accordance
with uniform and nondiscriminatory standards it adopts from time to time.
 
     "INCENTIVE STOCK OPTION" means an option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and
regulations promulgated thereunder.
 
     "NONSTATUTORY STOCK OPTION" means an Option that by its terms does not
qualify or is not intended to qualify as an Incentive Stock Option.
 
     "OFFICER" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
 
     "OPTION" means a stock option granted pursuant to this Plan.
 
     "OPTIONED STOCK" means the Common Stock subject to an Option.
 
     "OPTIONEE" means a Service Provider who receives an Option.
 
     "OTHER STOCK-BASED AWARDS" means any other awards not specifically
described in the Plan that are valued in whole or in part by reference to, or
are otherwise based on, Shares and are created by the Administrator pursuant to
Section 12.
 
     "OUTSIDE DIRECTOR" means a Director who is not an Employee.
 
     "PARENT" means a "parent corporation" as defined in Section 424(e) of the
Code, whether that corporation is existing now or after the date of this Plan.
 
     "PARTICIPANT" means the holder of an outstanding Award granted under the
Plan.
 
     "PERFORMANCE-BASED COMPENSATION" means compensation qualifying as
"performance-based compensation" under Section 162(m) of the Code.
 
     "PERFORMANCE SHARE" means an Award granted to a Service Provider pursuant
to Section 10.
 
     "PERFORMANCE UNIT" means an Award granted to a Service Provider pursuant to
Section 10.
 
     "PERIOD OF RESTRICTION" means the period during which the transfer of
Shares of Restricted Stock are subject to restrictions and therefore, the Shares
are subject to a substantial risk of forfeiture. Such restrictions may be based
on the passage of time, the achievement of target levels of performance, or the
occurrence of other events as determined by the Administrator.
 
     "PLAN" means this 2005 Stock Plan.
 
     "RESTRICTED STOCK" means shares of Common Stock issued pursuant to a
Restricted Stock Award under Section 8, Section 11 or Section 12.
 
     "RESTRICTED STOCK UNIT" means an Award which may be earned in whole or in
part upon the passage of time or the attainment of performance objectives
established by the Administrator and which may be settled for cash, Shares or
other securities or a combination of cash, Shares or other securities as
established by the Administrator pursuant to Sections 4 and 11.
 
     "RULE 16B-3" means Rule 16b-3 of the Exchange Act or any successor to Rule
16b-3, as in effect when discretion is being exercised with respect to the Plan.
 
     "SECTION" unless otherwise specified, refers to numbered sections of this
Plan.
 
     "SECTION 16(B)" means Section 16(b) of the Exchange Act.
 
     "SERVICE PROVIDER" means an Employee, Director or Consultant.
 
     "SHARE" means a share of the Common Stock, as adjusted in accordance with
Section 15.
 
 
                                       C-3
 
<PAGE>
 
     "STOCK APPRECIATION RIGHT" or "SAR" means an Award, granted alone or in
connection with an Option, that pursuant to Section 9 is designated as a SAR.
 
     "SUBSIDIARY" means a "subsidiary corporation" as defined in Section 424(f)
of the Code, whether that corporation exists now or after the date of this Plan.
 
3. STOCK SUBJECT TO THE PLAN.
 
     (a) Stock Subject to the Plan. Subject to the provisions of Section 15, the
maximum aggregate number of Shares that may be issued under the Plan (including
pursuant to the grant of Incentive Stock Options) is 2,000,000 shares of Common
Stock. The Shares may be authorized, but unissued, or reacquired Common Stock.
If an Award is settled in whole or in part with cash, the number of Shares
available for future issuance under the Plan shall be reduced by the total
amount of Shares issued pursuant to the Award (if applicable) and the number of
Shares representing the portion of the Award settled in cash. If Shares are used
to pay for the exercise of an Award, the number of Shares used to pay for the
exercise of an Award shall be counted against the total number of Shares
available for issuance under the Plan. If a Participant pays the exercise price
(or purchase price, if applicable) of an Award by tendering Shares, or if Shares
are tendered or withheld to satisfy any Company withholding obligations, the
number of Shares so tendered or withheld shall be counted against the total
number of Shares available for issuance under the Plan.
 
     (b) Lapsed Awards under this Plan. If any outstanding Award expires or is
terminated or canceled without having been exercised or settled in full, or if
Shares acquired pursuant to an Award subject to forfeiture or repurchase are
forfeited or the Company repurchases them, the Shares allocable to the
terminated portion of such Award or such forfeited or repurchased Shares under
this Plan or shall again be available for grant under the Plan.
 
4. ADMINISTRATION OF THE PLAN.
 
     (a) Procedure. The Plan will be administered by the Board or by a
Committee, which committee will be constituted to satisfy Applicable Laws.
Notwithstanding this general statement, the following specific procedures shall
apply:
 
          (i)  Multiple Administrative Bodies. Different Committees may
               administer the Plan with respect to different groups of Service
               Providers.
 
          (ii) Section 162(m). To the extent that the Administrator determines
               it to be desirable and necessary to qualify Awards granted under
               this Plan as "performance-based compensation" within the meaning
               of Section 162(m) of the Code, the Plan will be administered by a
               Committee of two or more "outside directors" within the meaning
               of Section 162(m) of the Code.
 
          (iii) Rule 16b-3. To the extent desirable to qualify transactions
               under this Plan as exempt under Rule 16b-3, the transactions
               contemplated under this Plan will be structured to satisfy the
               requirements for exemption under Rule 16b-3.
 
          (iv) Delegation of Authority for Day-to-Day Administration. Except to
               the extent prohibited by Applicable Law, the Administrator may
               delegate to one or more individuals the day-to-day administration
               of the Plan and any of the functions assigned to it in this Plan.
               The Administrator may revoke any delegation at any time.
 
     (b) Powers of the Administrator. Subject to the provisions of the Plan and,
in the case of a Committee, subject to the specific duties delegated by the
Board to such Committee, the Administrator will have the authority, in its
discretion, to:
 
          (i)  determine the Fair Market Value;
 
          (ii) select the Service Providers to whom Awards may be granted under
               the Plan;
 
          (iii) determine the number of Shares to be covered by each Award
               granted under the Plan;
 
          (iv) approve forms of agreement for use under the Plan;
 
 
                                      C-4
 
<PAGE>
 
          (v)  determine the terms and conditions, consistent with the terms of
               the Plan, of any Award granted under the Plan. Such terms and
               conditions include, but are not limited to, the exercise price,
               the time or times when Awards may be exercised (which may be
               based on performance objectives), any vesting acceleration or
               waiver of forfeiture or repurchase restrictions, and any
               restriction or limitation regarding any Award or the Shares
               relating to any Award, based in each case on such factors as the
               Administrator, in its sole discretion, will determine;
 
          (vi) construe and interpret the terms of the Plan and Awards granted
               pursuant to the Plan;
 
          (vii) prescribe, amend and rescind rules and policies relating to the
               Plan, including rules and policies relating to sub-plans
               established for the purpose of satisfying applicable foreign laws
               and/or qualifying for preferred tax treatment under applicable
               foreign tax laws;
 
          (viii) modify or amend each Award (subject to Section 18(c) of the
               Plan), including the discretionary authority to extend the
               post-termination exercisability period of Awards longer than is
               otherwise provided for in the Plan, provided that (A) the
               reduction of the exercise price or purchase price of any Award
               awarded under the Plan shall be subject to shareholder approval,
               (B) any Exchange Program shall be subject to shareholder approval
               and (C) the vesting schedule for Awards of Restricted Stock,
               Restricted Stock Units Performance Shares and Performance Units
               may only be amended in the event of a Change in Control or in the
               event of the Participant's death or Disability;
 
          (ix) allow Participants to satisfy withholding tax obligations by
               electing to have the Company withhold from the Shares or cash to
               be issued upon exercise or vesting of an Award that number of
               Shares or cash having a Fair Market Value equal to the minimum
               amount required to be withheld. The Fair Market Value of any
               Shares to be withheld will be determined on the date that the
               amount of tax to be withheld is to be determined. All elections
               by a Participant to have Shares or cash withheld for this purpose
               will be made in such form and under such conditions as the
               Administrator may deem necessary or advisable;
 
          (x)  authorize any person to execute on behalf of the Company any
               instrument required to effect the grant of an Award previously
               granted by the Administrator;
 
          (xi) allow a Participant to defer the receipt of the payment of cash
               or the delivery of Shares that would otherwise be due to such
               Participant under an Award;
 
          (xii) determine whether Awards will be settled in Shares, cash or in
               any combination thereof;
 
          (xiii) determine whether Awards will be adjusted for Dividend
               Equivalents;
 
          (xiv) create Other Stock-Based Awards for issuance under the Plan;
 
          (xv) establish a program whereby Service Providers designated by the
               Administrator can reduce compensation otherwise payable in cash
               in exchange for Awards under the Plan;
 
          (xvi) impose such restrictions, conditions or limitations as it
               determines appropriate as to the timing and manner of any resales
               by a Participant or other subsequent transfer by the Participant
               of any Shares issued as a result of or under an Award, including
               without limitation, (A) restrictions under an insider trading
               policy, and (B) restrictions as to the use of a specified
               brokerage firm for such resales or other transfers; and
 
          (xvii) make all other determinations deemed necessary or advisable for
               administering the Plan.
 
     (c) Effect of Administrator's Decision. The Administrator's decisions,
determinations and interpretations will be final and binding on all Participants
and any other holders of Awards.
 
5. ELIGIBILITY. Any Service Providers may be granted Nonstatutory Stock Options,
Restricted Stock, Stock Appreciation Rights, Performance Units, Performance
Shares, Restricted Stock Units and Other Stock-Based Awards. Incentive Stock
Options may be granted only to Employees.
 
 
                                      C-5
 
<PAGE>
 
6. LIMITATIONS.
 
     (a) ISO $100,000 Rule. Each Option will be designated in the Award
Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option.
However, notwithstanding such designation, to the extent that the aggregate Fair
Market Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Participant during any calendar year
(under all plans of the Company and any Parent or Subsidiary) exceeds $100,000,
such Options will be treated as Nonstatutory Stock Options. For purposes of this
Section 6(a), Incentive Stock Options will be taken into account in the order in
which they were granted. The Fair Market Value of the Shares will be determined
as of the time the Option with respect to such Shares is granted.
 
     (b) No Rights as a Service Provider. Neither the Plan nor any Award shall
confer upon a Participant any right with respect to continuing his or her
relationship as a Service Provider, nor shall they interfere in any way with the
right of the Participants or the right of the Company or its Parent or
Subsidiaries to terminate such relationship at any time, with or without cause.
 
     (c) Individual Limitations on Awards.
 
          (i)  Individual Limit for Options and SARs. The maximum number of
               Shares with respect to which Options and SARs may be granted to
               any Participant in any calendar year shall be 50,000. The
               foregoing limitation shall be adjusted proportionately in
               connection with any change in the Company's capitalization
               pursuant to Section 15 below. To the extent required by Section
               162(m) of the Code or the regulations thereunder, in applying the
               foregoing limitations with respect to a Participant, if any
               Option or SAR is canceled, the canceled Option or SAR shall
               continue to count against the maximum number of Shares with
               respect to which Options and SARs may be granted to the
               Participant. For this purpose, the repricing of an Option (or in
               the case of a SAR, the base amount on which the stock
               appreciation is calculated is reduced to reflect a reduction in
               the Fair Market Value of the Common Stock) shall be treated as
               the cancellation of the existing Option or SAR and the grant of a
               new Option or SAR.
 
          (ii) Individual Limit for Restricted Stock, Restricted Stock Units,
               Performance Share and Performance Units. For awards of Restricted
               Stock, Restricted Stock Units, Performance Shares and Performance
               Units that are intended to be Performance-Based Compensation, the
               maximum number of Shares with respect to which such Awards may be
               granted to any Participant in any calendar year shall be 50,000.
               The foregoing limitation shall be adjusted proportionately in
               connection with any change in the Company's capitalization
               pursuant to Section 15 below.
 
     (d) Performance-Based Exercise Price. In the case of Awards intended to
qualify as Performance-Based Compensation, the exercise or purchase price, if
any, shall be no less than 100% of the Fair Market Value per Share on the date
of grant.
 
     (e) Vesting of Restricted Stock, Restricted Stock Units, Performance Shares
and Performance Units. Awards of Restricted Stock, Restricted Stock Units,
Performance Shares and Performance Units issued under the Plan shall vest and be
released from the risk of forfeiture over a period of no less than one (1) year
measured from the date of issuance of the Award. As provided in Section
4(b)(viii), the vesting schedule for awards of Restricted Stock, Restricted
Stock Units, Performance Shares and Performance Units may only be amended in the
event of a Change in Control or in the event of the Participant's death or
Disability.
 
7. STOCK OPTIONS.
 
     (a) Term of Option. The term of each Option will be designated by the
Administrator in each Award Agreement, provided, however, that no Option shall
be exercisable for a period of more than ten (10) years from the date of grant.
Moreover, in the case of an Incentive Stock Option granted to a Participant who,
at the time the Incentive Stock Option is granted, owns stock representing more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or any Parent or Subsidiary, the term of the Incentive
Stock Option will be five (5) years from the date of grant or such shorter term
as may be provided in the Award Agreement.
 
 
                                      C-6
 
<PAGE>
 
     (b) Option Exercise Price and Consideration.
 
          (i)  Exercise Price. The per Share exercise price for the Shares to be
               issued pursuant to exercise of an Option will be determined by
               the Administrator, subject to the following:
 
               (1)  In the case of an Incentive Stock Option
 
                    (A)  granted to an Employee who, at the time the Incentive
                         Stock Option is granted, owns stock representing more
                         than ten percent (10%) of the voting power of all
                         classes of stock of the Company or any Parent or
                         Subsidiary, the per Share exercise price will be no
                         less than 110% of the Fair Market Value per Share on
                         the date of grant.
 
                    (B)  granted to any Employee other than an Employee
                         described in paragraph (A) immediately above, the per
                         Share exercise price will be no less than 100% of the
                         Fair Market Value per Share on the date of grant.
 
               (2)  In the case of a Nonstatutory Stock Option, the per Share
                    exercise price will be no less than 100% of the Fair Market
                    Value per Share on the date of grant.
 
               (3)  Notwithstanding the foregoing, in the case of an Option
                    issued pursuant to a merger or other corporate transaction,
                    the exercise price for the Option shall be determined in
                    accordance with the provisions of the relevant instrument
                    evidencing the agreement to issue such Award.
 
          (ii) Waiting Period and Exercise Dates. At the time an Option is
               granted, the Administrator will fix the period within which the
               Option may be exercised and will determine any conditions that
               must be satisfied before the Option may be exercised.
 
     (c) Form of Consideration. The Administrator will determine the acceptable
form of consideration for exercising an Option, including the method of payment.
In the case of an Incentive Stock Option, the Administrator will determine the
acceptable form of consideration at the time of grant. Such consideration to the
extent permitted by Applicable Laws may consist entirely of:
 
          (i)  cash;
 
          (ii) check;
 
          (iii) other Shares which meet the conditions established by the
               Administrator to avoid adverse accounting consequences (as
               determined by the Administrator);
 
          (iv) consideration received by the Company under a cashless exercise
               program implemented by the Company in connection with the Plan;
 
          (v)  a reduction in the amount of any Company liability to the
               Participant, including any liability attributable to the
               Participant's participation in any Company-sponsored deferred
               compensation program or arrangement;
 
          (vi) any combination of the foregoing methods of payment; or
 
          (vii) such other consideration and method of payment for the issuance
               of Shares to the extent permitted by Applicable Laws.
 
     (d) Exercise of Option.
 
          i.   Procedure for Exercise; Rights as a Shareholder. Any Option
               granted hereunder will be exercisable according to the terms of
               the Plan and at such times and under such conditions as
               determined by the Administrator and set forth in the Award
               Agreement. An Option may not be exercised for a fraction of a
               Share.
 
 
                                      C-7
 
<PAGE>
 
               An Option will be deemed exercised when the Company receives: (x)
               written notice of exercise (in accordance with the Award
               Agreement) from the person entitled to exercise the Option, and
               (y) full payment for the Shares with respect to which the Option
               is exercised. Full payment may consist of any consideration and
               method of payment authorized by the Administrator and permitted
               by the Award Agreement and the Plan. Shares issued upon exercise
               of an Option will be issued in the name of the Participant or, if
               requested by the Participant, in the name of the Participant and
               his or her spouse or the Participant's nominee. Until the Shares
               are issued (as evidenced by the appropriate entry on the books of
               the Company or of a duly authorized transfer agent of the
               Company), no right to vote or receive dividends or any other
               rights as a shareholder will exist with respect to the Awarded
               Stock, notwithstanding the exercise of the Option. The Company
               will issue (or cause to be issued) such Shares promptly after the
               Option is exercised. No adjustment will be made for a dividend or
               other right for which the record date is prior to the date the
               Shares are issued, except as provided in Section 15 of the Plan
               or the applicable Award Agreement.
 
          ii.  Termination of Relationship as a Service Provider. If a
               Participant ceases to be a Service Provider, other than upon the
               Participant's death or Disability, the Participant may exercise
               his or her Option within such period of time as is specified in
               the Award Agreement to the extent that the Option is vested on
               the date of termination (but in no event later than the
               expiration of the term of such Option as set forth in the Award
               Agreement). In the absence of a specified time in the Award
               Agreement, the Option will remain exercisable for three (3)
               months following the Participant's termination. Unless otherwise
               provided by the Administrator, if on the date of termination the
               Participant is not vested as to his or her entire Option, the
               Shares covered by the unvested portion of the Option will revert
               immediately to the Plan on the date of the Participant's
               termination. If after termination the Participant does not
               exercise his or her Option within the time specified by the
               Administrator, the Option will terminate, and the Shares covered
               by such Option will revert to the Plan.
 
          iii. Disability of Participant. If a Participant ceases to be a
               Service Provider as a result of the Participant's Disability, the
               Participant may exercise his or her Option within such period of
               time as specified in the Award Agreement to the extent the Option
               is vested on the date of termination (but in no event later than
               the expiration of the term of such Option as set forth in the
               Award Agreement). In the absence of a specified time in the Award
               Agreement, the Option will remain exercisable for six (6) months
               following the Participant's termination.
 
               Unless otherwise provided by the Administrator, if on the date of
               termination the Participant is not vested as to his or her entire
               Option, the Shares covered by the unvested portion of the Option
               will immediately revert to the Plan on the date of the
               Participant's termination. If after the termination the
               Participant does not exercise his or her Option within the time
               specified herein, the Option will terminate, and the Shares
               covered by such Option will revert to the Plan.
 
          iv.  Death of Participant. If a Participant dies while a Service
               Provider, the Option may be exercised following the Participant's
               death within such period of time as is specified in the Award
               Agreement to the extent that the Option is vested on the date of
               death (but in no event may the option be exercised later than the
               expiration of the term of such Option as set forth in the Award
               Agreement), by the Participant's designated beneficiary, provided
               such beneficiary has been designated prior to Participant's death
               in a form acceptable to the Administrator. If no such beneficiary
               has been designated by the Participant, then such Option may be
               exercised by the personal representative of the Participant's
               estate or by the person(s) to whom the Option is transferred
               pursuant to the Participant's will or in accordance with the laws
               of descent and distribution. In the absence of a specified time
               in the Award Agreement, the Option will remain exercisable for
               twelve (12) months following Participant's death. Unless
               otherwise provided by the Shares covered by the unvested portion
               of the Option will immediately revert to the Plan on the date of
               the Participant's death. If the Option is not so exercised within
               the time specified herein, the Option will terminate, and the
               Shares covered by such Option will revert to the Plan.
 
 
                                      C-8
 
<PAGE>
 
8. RESTRICTED STOCK.
 
     (a) Grant of Restricted Stock. Subject to the terms and provisions of the
Plan, the Administrator, at any time and from time to time, may grant Shares of
Restricted Stock to Service Providers in such amounts as the Administrator, in
its sole discretion, determines.
 
     (b) Restricted Stock Agreement. Each Award of Restricted Stock will be
evidenced by an Award Agreement that will specify the Period of Restriction, the
number of Shares granted, and such other terms and conditions as the
Administrator, in its sole discretion, determines. Unless the Administrator
determines otherwise, Shares of Restricted Stock will be held by the Company as
escrow agent until the restrictions on such Shares have lapsed.
 
     (c) Transferability. Except as provided in this Section 8, Shares of
Restricted Stock may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated until the end of the applicable Period of Restriction.
 
     (d) Other Restrictions. The Administrator, in its sole discretion, may
impose such other restrictions on Shares of Restricted Stock as it may deem
advisable or appropriate.
 
     (e) Removal of Restrictions. Except as otherwise provided in this Section
8, Shares of Restricted Stock covered by each Restricted Stock grant made under
the Plan will be released from escrow as soon as practicable after the last day
of the Period of Restriction. The Administrator, in its sole discretion and in
compliance with Section 4(b)(viii), may accelerate the time at which any
restrictions will lapse or be removed.
 
     (f) Voting Rights. During the Period of Restriction, Service Providers
holding Shares of Restricted Stock granted hereunder may exercise full voting
rights with respect to those Shares, unless the Administrator determines
otherwise.
 
     (g) Dividends and Other Distributions. During the Period of Restriction,
Service Providers holding Shares of Restricted Stock will be entitled to receive
all dividends and other distributions paid with respect to such Shares unless
otherwise provided in the Award Agreement. If any such dividends or
distributions are paid in Shares, the Shares will be subject to the same
restrictions on transferability and forfeitability as the Shares of Restricted
Stock with respect to which they were paid.
 
     (h) Return of Restricted Stock to Company. On the date set forth in the
Award Agreement, the Restricted Stock for which restrictions have not lapsed
will revert to the Company and again will become available for grant under the
Plan.
 
9. STOCK APPRECIATION RIGHTS.
 
     (a) Grant of SARs. Subject to the terms and conditions of the Plan, a SAR
may be granted to Service Providers at any time and from time to time as will be
determined by the Administrator, in its sole discretion.
 
     (b) Number of Shares. The Administrator will have complete discretion to
determine the number of SARs granted to any Service Provider.
 
     (c) Exercise Price and Other Terms. The Administrator, subject to the
provisions of the Plan, will have complete discretion to determine the terms and
conditions of SARs granted under the Plan.
 
     (d) Exercise of SARs. SARs will be exercisable on such terms and conditions
as the Administrator, in its sole discretion, determines.
 
     (e) SAR Agreement. Each SAR grant will be evidenced by an Award Agreement
that will specify the exercise price, the term of the SAR, the conditions of
exercise, and such other terms and conditions as the Administrator, in its sole
discretion, determines.
 
     (f) Expiration of SARs. A SAR granted under the Plan will expire upon the
date determined by the Administrator, in its sole discretion, and set forth in
the Award Agreement. Notwithstanding the foregoing, the rules of Section
7(d)(ii), 7(d)(iii) and 7(d)(iv) also will apply to SARs.
 
 
                                      C-9
 
<PAGE>
 
     (g) Payment of SAR Amount. Upon exercise of a SAR, a Participant will be
entitled to receive payment from the Company in an amount determined by
multiplying:
 
          (i)  The difference between the Fair Market Value of a Share on the
               date of exercise over the exercise price; times
 
          (ii) The number of Shares with respect to which the SAR is exercised.
 
At the discretion of the Administrator, the payment upon SAR exercise may be in
cash, in Shares of equivalent value, or in some combination thereof.
 
10. PERFORMANCE UNITS AND PERFORMANCE SHARES.
 
     (a) Grant of Performance Units/Shares. Subject to the terms and conditions
of the Plan, Performance Units and Performance Shares may be granted to Service
Providers at any time and from time to time, as determined by the Administrator,
in its sole discretion. Subject to Section 6(c)(ii), the Administrator will have
complete discretion in determining the number of Performance Units and
Performance Shares granted to each Participant.
 
     (b) Value of Performance Units/Shares. Each Performance Unit will have an
initial value that is established by the Administrator on or before the date of
grant. Each Performance Share will have an initial value equal to the Fair
Market Value of a Share on the date of grant.
 
     (c) Performance Objectives and Other Terms. The Administrator will set
performance objectives in its discretion which, depending on the extent to which
they are met, will determine the number or value of Performance Units/Shares
that will be paid to the Service Providers. The time period during which the
performance objectives must be met will be called the "Performance Period." Each
Award of Performance Units/Shares will be evidenced by an Award Agreement that
will specify the Performance Period, and such other terms and conditions as the
Administrator, in its sole discretion, determines. The performance objectives
established by the Administrator may be based on any one of, or combination of,
the following: (i) increase in share price, (ii) earnings per share, (iii) total
shareholder return, (iv) operating margin, (v) gross margin, (vi) return on
equity, (vii) return on assets, (viii) return on investment, (ix) operating
income, (x) net operating income, (xi) pretax profit, (xii) cash flow, (xiii)
revenue, (xiv) expenses, (xv) earnings before interest, taxes and depreciation,
(xvi) economic value added and (xvii) market share. The performance objectives
may be applicable to the Company, a Parent or Subsidiary of the Company and/or
any individual business units of the Company or any Parent or Subsidiary of the
Company. Partial achievement of the specified objective may result in a payment
or vesting corresponding to the degree of achievement as specified in the Award
Agreement.
 
     (d) Earning of Performance Units/Shares. After the applicable Performance
Period has ended, the holder of Performance Units/Shares will be entitled to
receive a payout of the number of Performance Units/Shares earned by the
Participant over the Performance Period, to be determined as a function of the
extent to which the corresponding performance objectives have been achieved.
 
     (e) Form and Timing of Payment of Performance Units/Shares. Payment of
earned Performance Units/Shares will be made as soon after the expiration of the
applicable Performance Period as determined by the Administrator. The
Administrator, in its sole discretion, may pay earned Performance Units/Shares
in the form of cash, in Shares (which have an aggregate Fair Market Value equal
to the value of the earned Performance Units/Shares at the close of the
applicable Performance Period) or in a combination thereof.
 
     (f) Cancellation of Performance Units/Shares. On the date set forth in the
Award Agreement, all unearned or unvested Performance Units/Shares will be
forfeited to the Company, and again will be available for grant under the Plan.
 
11. RESTRICTED STOCK UNITS. Restricted Stock Units may be earned in whole or in
part upon the passage of time or the attainment of performance objectives
established by the Administrator and which may be settled for cash, Shares or
other securities or a combination of cash, Shares or other securities as
established by the Administrator.
 
12. OTHER STOCK-BASED AWARDS. Other Stock-Based Awards may be granted either
alone, in additional to, or in tandem with, other Awards granted under the Plan
and/or cash awards made outside of the Plan. The Administrator shall have
authority to determine the Service Providers to whom and the time or times at
which Other Stock-Based
 
 
                                      C-10
 
<PAGE>
 
Awards shall be made, the amount of such Other Stock-Based Awards, and all other
conditions of the Other Stock-Based Awards including any dividend and/or voting
rights.
 
13. LEAVES OF ABSENCE. Unless the Administrator provides otherwise, vesting of
Awards granted hereunder will be suspended during any unpaid leave of absence
and will resume on the date the Participant returns to work on a regular
schedule as determined by the Company; provided, however, that no vesting credit
will be awarded for the time vesting has been suspended during such leave of
absence. A Service Provider will not cease to be an Employee in the case of (i)
any leave of absence approved by the Company or (ii) transfers between locations
of the Company or between the Company, its Parent, or any Subsidiary. For
purposes of Incentive Stock Options, no such leave may exceed three (3) months,
unless reemployment upon expiration of such leave is guaranteed by statute or
contract. If reemployment upon expiration of a leave of absence approved by the
Company is not so guaranteed, then three months following the expiration of such
three (3) month period any Incentive Stock Option held by the Participant will
cease to be treated as an Incentive Stock Option and will be treated for tax
purposes as a Nonstatutory Stock Option.
 
14. NONTRANSFERABILITY OF AWARDS. Unless determined otherwise by the
Administrator, an Award may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Participant, only by the Participant. If the Administrator makes an Award
transferable, such Award Agreement will contain such additional terms and
conditions as the Administrator deems appropriate.
 
15. ADJUSTMENTS; DISSOLUTION OR LIQUIDATION; MERGER OR CHANGE IN CONTROL.
 
     (a) Adjustments. Subject to any required action by the shareholders of the
Company, the number of Shares covered by each outstanding Award, and the number
of Shares which have been authorized for issuance under the Plan but as to which
no Awards have yet been granted or which have been returned to the Plan, the
exercise or purchase price of each such outstanding Award, the maximum number of
Shares with respect to which Awards may be granted to any Participant in any
calendar year, as well as any other terms that the Administrator determines
require adjustment shall be proportionately adjusted for (i) any increase or
decrease in the number of issued Shares resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of the Shares, or
similar transaction affecting the Shares, (ii) any other increase or decrease in
the number of issued Shares effected without receipt of consideration by the
Company, or (iii) as the Administrator may determine in its discretion, any
other transaction with respect to Common Stock including a corporate merger,
consolidation, acquisition of property or stock, separation (including a
spin-off or other distribution of stock or property), reorganization,
liquidation (whether partial or complete) or any similar transaction; provided,
however that conversion of any convertible securities of the Company shall not
be deemed to have been "effected without receipt of consideration." In the event
of any distribution of cash or other assets to shareholders other than a normal
cash dividend, the Administrator may also, in its discretion, make adjustments
described in (i)-(iii) of this Section 15(a) or substitute, exchange or grant
Awards with respect to the shares of a Parent of Subsidiary of the Company
(collectively "adjustments"). In determining adjustments to be made under this
Section 15(a), the Administrator may take into account such factors as it deems
appropriate, including (x) the restrictions of Applicable Law, (y) the potential
tax, accounting or other consequences of an adjustment and (z) the possibility
that some Participants might receive an adjustment and a distribution or other
unintended benefit, and in light of such factors or circumstances may make
adjustments that are not uniform or proportionate among outstanding Awards,
modify vesting dates, defer the delivery of stock certificates or make other
equitable adjustments. Any such adjustments to outstanding Awards will be
effected in a manner that precludes the material enlargement of rights and
benefits under such Awards. Adjustments, if any, and any determinations or
interpretations, including any determination of whether a distribution is other
than a normal cash dividend, shall be made by the Administrator and its
determination shall be final, binding and conclusive. In connection with the
foregoing adjustments, the Administrator may, in its discretion, prohibit the
exercise of Awards during certain periods of time. Except as the Administrator
determines, no issuance by the Company of shares of any class, or securities
convertible into shares of any class, shall affect, and no adjustment by reason
hereof shall be made with respect to, the number or price of Shares subject to
an Award.
 
     (b) Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, the Administrator will notify each Participant as
soon as practicable prior to the effective date of such proposed transaction.
The Administrator in it sole discretion may provide for a Participant to have
the right to exercise his or
 
 
                                      C-11
 
<PAGE>
 
her Award, to the extent applicable, until ten (10) days prior to such
transaction as to all of the Awarded Stock covered thereby, including Shares as
to which the Award would not otherwise be exercisable. In addition, the
Administrator may provide that any Company repurchase option or forfeiture
rights applicable to any Award shall lapse 100%, and that any Award vesting
shall accelerate 100%, provided the proposed dissolution or liquidation takes
place at the time and in the manner contemplated. To the extent it has not been
previously exercised or vested, an Award will terminate immediately prior to the
consummation of such proposed action.
 
     (c) Merger or Change in Control.
 
          (i)  Stock Options and SARs. In the event of a merger or Change in
               Control, each outstanding Option and SAR shall be assumed or an
               equivalent option or SAR substituted by the successor corporation
               or a Parent or Subsidiary of the successor corporation. With
               respect to Options and SARs granted to an Outside Director, the
               Participant shall fully vest in and have the right to exercise
               such Options and SARs as to all of the Awarded Stock, including
               Shares as to which it would not otherwise be vested or
               exercisable, immediately prior to the merger or Change in
               Control. Unless determined otherwise by the Administrator, in the
               event that the successor corporation refuses to assume or
               substitute for the Option or SAR, the Participant shall fully
               vest in and have the right to exercise the Option or SAR as to
               all of the Awarded Stock, including Shares as to which it would
               not otherwise be vested or exercisable. If an Option or SAR is
               not assumed or substituted in the event of a merger or Change in
               Control, the Administrator shall notify the Participant in
               writing or electronically that the Option or SAR shall be
               exercisable, to the extent vested, for a period of time (as
               determined by the Administrator) following the date of such
               notice, and the Option or SAR shall terminate upon the expiration
               of such period. For the purposes of this paragraph, the Option or
               SAR shall be considered assumed if, following the merger or
               Change in Control, the option or stock appreciation right confers
               the right to purchase or receive, for each Share of Awarded Stock
               subject to the Option or SAR immediately prior to the merger or
               Change in Control, the consideration (whether stock cash, or
               other securities or property) received in the merger or Change in
               Control by holders of Common Stock for each Share held on the
               effective date of the transaction (and if holders were offered a
               choice of consideration, the type of consideration chosen by the
               holders of a majority of the outstanding Shares); provided,
               however, that if such consideration received in the merger or
               Change in Control is not solely common stock of the successor
               corporation or its Parent, the Administrator may, with the
               consent of the successor corporation, provide for the
               consideration to be received upon the exercise of the Option or
               SAR, for each Share of Awarded Stock subject to the Option or
               SAR, to be solely common stock of the successor corporation or
               its Parent equal in fair market value to the per share
               consideration received by holders of Common Stock in the merger
               or Change in Control. Notwithstanding anything herein to the
               contrary, an Award that vests, is earned or paid out upon the
               satisfaction of one or more performance goals will not be
               considered assumed if the Company or its successor modifies any
               of such performance goals without the Participant's consent;
               provided, however, a modification to such performance goals only
               to reflect the successor corporation's post-merger or post-Change
               in Control corporate structure will not be deemed to invalidate
               an otherwise valid Award assumption.
 
          (ii) Restricted Stock, Performance Shares, Performance Units,
               Restricted Stock Units and Other Stock-Based Awards. In the event
               of a merger or Change in Control, each outstanding Restricted
               Stock, Performance Share, Performance Unit, Other Stock-Based
               Award and Restricted Stock Unit awards shall be assumed or an
               equivalent Restricted Stock, Performance Share, Performance Unit,
               Other Stock-Based Award and Restricted Stock Unit award
               substituted by the successor corporation or a Parent or
               Subsidiary of the successor corporation. With respect to Awards
               granted to an Outside Director, the Participant shall fully vest
               in such Awards, including Shares as to which it would not
               otherwise be vested or exercisable, immediately prior to the
               merger or Change in Control. Unless determined otherwise by the
               Administrator, in the event that the successor corporation
               refuses to assume or substitute for the Restricted Stock,
               Performance Share, Performance Unit, Other Stock-Based Award and
               Restricted Stock Unit award, the Participant shall fully vest in
               the Restricted Stock, Performance
 
 
                                      C-12
 
<PAGE>
 
               Share, Performance Unit, Other Stock-Based Award or Restricted
               Stock Unit including as to Shares which would not otherwise be
               vested. If an award of Restricted Stock, Performance Shares,
               Performance Units, Other Stock-Based Awards or Restricted Stock
               Units is not assumed or substituted in the event of a merger or
               Change in Control, the Administrator shall notify the Participant
               in writing or electronically that such Award shall be
               exercisable, to the extent vested, for a period of time (as
               determined by the Administrator) following the date of such
               notice, and that such Award shall terminate upon the expiration
               of such period. For purposes of this paragraph, Restricted Stock,
               Performance Share, Performance Unit, Other Stock-Based Award and
               Restricted Stock Unit award shall be considered assumed if,
               following the merger or Change in Control, the award confers the
               right to purchase or receive, for each Share subject to the Award
               immediately prior to the merger or Change in Control, the
               consideration (whether stock, cash, or other securities or
               property) received in the merger or Change in Control by holders
               of Common Stock for each Share held on the effective date of the
               transaction (and if holders were offered a choice of
               consideration, the type of consideration chosen by the holders of
               a majority of the outstanding Shares); provided, however, that if
               such consideration received in the merger or Change in Control is
               not solely common stock of the successor corporation or its
               Parent, the Administrator may, with the consent of the successor
               corporation, provide for the consideration to be solely common
               stock of the successor corporation or its Parent equal in fair
               market value to the per share consideration received by holders
               of Common Stock in the merger or Change in Control.
               Notwithstanding anything herein to the contrary, an Award that
               vests, is earned or paid out upon the satisfaction of one or more
               performance goals will not be considered assumed if the Company
               or its successor modifies any of such performance goals without
               the Participant's consent; provided, however, a modification to
               such performance goals only to reflect the successor
               corporation's post-merger or post-Change in Control corporate
               structure will not be deemed to invalidate an otherwise valid
               Award assumption.
 
16. DATE OF GRANT. The date of grant of an Award will be, for all purposes, the
date on which the Administrator makes the determination granting such Award, or
such other later date as is determined by the Administrator. Notice of the
determination will be provided to each Participant within a reasonable time
after the date of such grant.
 
17. TERM OF PLAN. Subject to Section 22 of the Plan, the Plan will become
effective upon receipt of shareholder approval as set forth in Section 22 of the
Plan. It will continue in effect for a term ending on May 24, 2015, which date
is ten (10) years from the date of adoption of the Plan by the Board, unless
terminated earlier under Section 18 of the Plan.
 
18. AMENDMENT AND TERMINATION OF THE PLAN.
 
     (a) Amendment and Termination. The Board may at any time amend, alter,
suspend or terminate the Plan.
 
     (b) Shareholder Approval. The Company will obtain shareholder approval of
any Plan amendment to the extent necessary and desirable to comply with
Applicable Laws, or if such amendment would change any of the provisions of
Section 4(b)(viii) or this Section 18(b).
 
     (c) Effect of Amendment or Termination. Subject to Section 20, no
amendment, alternation, suspension or termination of the Plan will impair the
rights of any Participant, unless mutually agreed otherwise between the
Participant and the Administrator, which agreement must be in writing and signed
by the Participant and the Company. Termination of the Plan will not affect the
Administrator's ability to exercise the powers granted to it hereunder with
respect to Awards granted under the Plan prior to the date of such termination.
 
19. CONDITIONS UPON ISSUANCE OF SHARES.
 
     (a) Legal Compliance. Shares will not be issued pursuant to the exercise of
an Award unless the exercise of such Award and issuance and delivery of such
Shares will comply with Applicable Laws and will be further subject to the
approval of counsel for the Company with respect to such compliance.
 
     (b) Investment Representations. As a condition to the exercise or receipt
of an Award, the Company may require the person exercising or receiving such
Award to represent and warrant at the time of any such exercise or
 
 
                                      C-13
 
<PAGE>
 
receipt that the Shares are being purchased only for investment and without any
present intention to sell or distribute such Shares if, in the opinion of
counsel for the Company, such a representation is required.
 
20. SEVERABILITY. Notwithstanding any contrary provision of the Plan or an Award
to the contrary, if any one or more of the provisions (or any part thereof) of
this Plan or the Awards shall be held invalid, illegal or unenforceable in any
respect, such provision shall be modified so as to make it valid, legal and
enforceable, and the validity, legality and enforceability of the remaining
provisions (or any part thereof) of the Plan or Award, as applicable, shall not
in any way be affected or impaired thereby.
 
21. INABILITY TO OBTAIN AUTHORITY. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary for the lawful issuance and sale
of any Shares hereunder, will relieve the Company of any liability with respect
to the failure to issue or sell such Shares as to which such requisite authority
will not have been obtained.
 
22. SHAREHOLDER APPROVAL. The Plan will be subject to approval by the
shareholders of the Company within twelve (12) months after the date the Plan is
adopted. Such shareholder approval will be obtained in the manner and to the
degree required under Applicable Laws.