2006 INCENTIVE COMPENSATION PLAN
 
1.       PURPOSE OF THE PLAN
 
         The purpose of the Plan is to assist the  Company and its  Subsidiaries
         in attracting and retaining  selected  individuals to serve the Company
         who are expected to contribute to the Company's  success and to achieve
         long-term   objectives   which  will  inure  to  the   benefit  of  all
         stockholders of the Company through the additional  incentives inherent
         in the Awards hereunder.
 
2.       DEFINITIONS
 
         2.1. "Award" shall mean any Option, Other Stock Unit Award or any other
         right,  interest  or  option  relating  to  Shares,  or other  property
         (including cash) granted pursuant to the provisions of the Plan.
 
         2.2. "Award  Agreement" shall mean any written  agreement,  contract or
         other  instrument  or  document  evidencing  any Award  granted  by the
         Committee hereunder, including through an electronic medium.
 
         2.3. "Board" shall mean the Board of Directors of the Company.
 
         2.4. "Code"  shall mean the Internal  Revenue Code of 1986,  as amended
         from time to time.
 
         2.5. "Committee"  shall mean the Compensation  Committee of the  Board,
         consisting  of no fewer  than  three  Directors,  each of whom is (i) a
         "non-employee  director"  within  the  meaning  of  Rule  16b-3  of the
         Exchange Act, (ii) an "outside  director" within the meaning of Section
         162(m) of the Code, and (iii) an "independent  director" for purpose of
         the rules and regulations of the New York Stock Exchange (or such other
         principal securities market on which the Shares are traded).
 
         2.6. "Covered  Employee"  shall mean a "covered  employee"  within the
         meaning of Section 162(m) of the Code.
 
         2.7. "Director" shall mean a non-employee member of the Board.
 
         2.8. "Employee"   shall  mean  any  employee  of  the  Company  or  any
         Subsidiary and any prospective employee conditioned upon, and effective
         not earlier than, such person's  becoming an employee of the Company or
         any Subsidiary.
 
         2.9. "Exchange Act" shall mean the Securities  Exchange Act of 1934, as
         amended.
 
         2.10. "Fair   Market  Value" of Shares  as of any date  shall  mean the
         composite  transactions closing price for the Shares on the immediately
         preceding trading date of the New York Stock Exchange,  as published in
         The Wall Street  Journal  (or if there were no reported  prices on such
         date, on the last preceding date on which the prices were reported) or,
         if the  Company is not then listed on the New York Stock  Exchange,  on
         such  other  principal  securities  exchange  on which the  Shares  are
         traded, and if the Company is not listed on the New York Stock Exchange
         or any other securities exchange, the Fair Market Value of Shares shall
         be an amount, not less than book value,  determined by the Committee in
         its sole discretion.
 
         2.11. "Option" shall  mean any right granted to a Participant under the
         Plan  allowing  such  Participant  to purchase  Shares at such price or
         prices  and  during  such  period or  periods  as the  Committee  shall
         determine.
 
         2.12. "Option  Proceeds" shall  mean the cash actually  received by the
         Company for the option price in connection with the exercise of Options
         or options  granted under the Prior Plans that are exercised  after the
         effective date of the Plan,  plus the maximum tax benefit that could be
         realized by the Company as a result of the  exercise of such Options or
         options  granted  under the Prior  Plans,  which tax  benefit  shall be
         determined by multiplying (a) the amount that is deductible for federal
         income tax purposes as a result of any such option exercise  (currently
         equal to the  amount  upon  which  the  Participant's  withholding  tax
         obligation  is  calculated),  times (b) the maximum  federal  corporate
         income tax rate for the year of exercise.
 
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         2.13. "Other  Stock  Unit  Award"  shall have the  meaning set forth in
         Section 5.1.
 
         2.14. "Participant"  shall  mean an  individual  who is selected by the
         Committee to receive an Award under the Plan.
 
         2.15. "Payee" shall have the meaning set forth in Section 9.1 hereof.
 
         2.16. "Performance  Award"  shall mean any Award  granted  pursuant  to
         Article 6 hereof.
 
         2.17. "Performance  Period" shall mean that period  established by  the
         Committee at the time any  Performance  Award is granted or at any time
         thereafter   during  which  any  performance  goals  specified  by  the
         Committee with respect to such Award are to be measured.
 
         2.18. "Permitted  Assignee" shall have the meaning set forth in Section
         8.3 hereof.
 
         2.19. "Prior  Plan"  shall  mean the  Amended  and  Restated  2002  Old
         Republic International Corporation Non-Qualified Stock Option Plan.
 
         2.20. "Shares"  shall mean the shares of Common  Stock of the  Company,
         par value $1.00 per share.
 
         2.21. "Securities  Act"  shall  mean  the  Securities  Act of 1933,  as
         amended.
 
         2.22. "Subsidiary" shall  mean any corporation (other than the Company)
         in an unbroken chain of corporations  beginning with the Company if, at
         the time of the granting of the Award,  each of the corporations  other
         than the last  corporation in the unbroken chain owns stock  possessing
         50% or more of the total combined  voting power of all classes of stock
         in one of the other corporations in the chain.
 
3.       ELIGIBILITY AND ADMINISTRATION
 
         3.1.  Eligibility.  Any  individuals  who,  in  the  discretion  of the
         Committee,  are in positions to affect the  profitability and growth of
         the Company shall be eligible to be selected as Participants.
 
         3.2. Administration.
 
              (a) The Plan shall be administered by the Committee. The Committee
              shall have full power and authority,  subject to the provisions of
              the  Plan  and   subject  to  such  orders  or   resolutions   not
              inconsistent  with the  provisions of the Plan as may from time to
              time be adopted by the Board,  to: (i) select the  Participants to
              whom  Awards  may from  time to time be  granted  hereunder;  (ii)
              determine the type or types of Awards,  not inconsistent  with the
              provisions  of  the  Plan,  to  be  granted  to  each  Participant
              hereunder;  (iii)  determine the number of Shares to be covered by
              each  Award  granted  hereunder;  (iv)  determine  the  terms  and
              conditions,  not inconsistent  with the provisions of the Plan, of
              any  Award  granted  hereunder;  (v)  determine  whether,  to what
              extent,  and under what  circumstances  cash Awards made under the
              Plan shall be deferred; (vi) determine whether, to what extent and
              under what circumstances any Award shall be canceled or suspended;
              (vii)  interpret  and  administer  the Plan and any  instrument or
              agreement  entered  into  under or in  connection  with the  Plan,
              including any Award Agreement;  (viii) correct any defect,  supply
              any omission or  reconcile  any  inconsistency  in the Plan or any
              Award in the  manner and to the extent  that the  Committee  shall
              deem desirable to carry it into effect;  (ix) establish such rules
              and   regulations  and  appoint  such  agents  as  it  shall  deem
              appropriate  for the proper  administration  of the Plan;  and (x)
              make any other  determination  and take any other  action that the
              Committee deems necessary or desirable for  administration  of the
              Plan.
 
              (b)  Decisions of the  Committee  shall be final,  conclusive  and
              binding on all persons or entities,  including  the  Company,  any
              Participant,  and any Subsidiary. A majority of the members of the
              Committee  may determine its actions and fix the time and place of
              its meetings.
 
              (c) To the extent not inconsistent with applicable law,  including
              Section  162(m) of the Code, or the rules and  regulations  of the
              New York Stock Exchange (or such other principal securities market
              on which the Shares are traded),  the  Committee may delegate to a
              committee  of one or more  Directors  of the  Company  or,  to the
              extent  permitted by law, to one or more  executive  officers or a
              committee of executive officers of the Company or its Subsidiaries
              the  right to grant  Awards  to  Employees  who are not  executive
              officers of the Company and the authority to take action on behalf
              of the Committee  pursuant to the Plan to cancel or suspend Awards
              to Employees who are not executive officers of the Company.
 
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<PAGE>
4.       OPTIONS
 
         4.1. Number of Shares Subject to the Plan.
 
              a) Subject to  adjustment  as provided in Section 8.2 hereof,  the
              aggregate  number of Shares subject to Awards and issued  pursuant
              to this Plan  shall not  exceed  nine  percent  (9%) of the Shares
              issued and outstanding  (excluding  Shares held by the Company and
              any of its  Subsidiaries)  as of the end of the month  immediately
              preceding the granting of an Award  hereunder,  less the aggregate
              number of Shares  subject to options  then  outstanding  under the
              Company's Prior Plan.
 
              b) If any  Shares  subject  to an Award or to an award  under  the
              Prior Plan are forfeited,  expire or terminate without issuance of
              all or a portion of the Shares  subject to such Award,  the Shares
              shall, to the extent of such forfeiture,  expiration,  termination
              or non-issuance, again be available for Awards under the Plan.
 
              c)  In  the  event  that  (i)  any  Option  granted  hereunder  is
              exercisable through the tendering of Shares (either actually or by
              attestation)  or by the  withholding of Shares by the Company,  or
              (ii) withholding tax liabilities arising from such Option or Prior
              Plan  award are  satisfied  by the  tendering  of  Shares  (either
              actually or by attestation) or by the withholding of Shares by the
              Company,  then only the number of Shares  issued net of the Shares
              tendered or withheld  shall be counted for purposes of determining
              the maximum  number of Shares  available for grant under the Plan,
              and the Shares so tendered or  withheld  shall again be  available
              for Awards under the Plan.
 
              d) Shares  reacquired  by the  Company  on the open  market  using
              Option Proceeds shall be available for Awards under the Plan.
 
              e) In the event  that a company  acquired  by the  Company  or any
              Subsidiary  or with which the Company or any  Subsidiary  combines
              has  shares  available  under  a  pre-existing  plan  approved  by
              shareholders  and not adopted in contemplation of such acquisition
              or  combination,  the shares  available for grant  pursuant to the
              terms  of such  pre-existing  plan  (as  adjusted,  to the  extent
              appropriate,  using  the  exchange  ratio or other  adjustment  or
              valuation ratio or formula used in such acquisition or combination
              to determine  the  consideration  payable to the holders of common
              stock of the entities party to such  acquisition  or  combination)
              may be used for  Awards  under the Plan and shall not  reduce  the
              Shares  authorized for grant under the Plan;  provided that Awards
              using  such  available  shares  shall  not be made  after the date
              awards or  grants  could  have  been  made  under the terms of the
              pre-existing  plan,  absent the  acquisition or  combination,  and
              shall only be made to individuals  who were not Employees prior to
              such acquisition or combination.
 
         4.2. Character of Shares.  Any Shares issued hereunder may consist,  in
         whole or in part, of authorized and unissued shares, Treasury shares or
         shares purchased in the open market or otherwise.
 
         4.3. Grant of Options. Options may be granted hereunder to Participants
         either alone or in addition to other Awards granted under the Plan. Any
         Option shall be subject to the terms and  conditions  of this Article 4
         and to such additional terms and conditions,  not inconsistent with the
         provisions of the Plan, as the Committee shall deem desirable.
 
         4.4. Award  Agreements.  The Options granted pursuant to this Article 4
         shall be  evidenced  by a  written  Award  Agreement  in such  form and
         containing  such terms and conditions as the Committee  shall determine
         which are not  inconsistent  with the provisions of the Plan. The terms
         of  Options  need not be the same  with  respect  to each  Participant.
         Granting of an Option  pursuant to the Plan shall impose no  obligation
         on the recipient to exercise such Option. Any individual who is granted
         an Option  pursuant  to this  Article  4 may hold more than one  Option
         granted pursuant to the Plan at the same time.
 
         4.5. Option Price.  The option price per each Share  purchasable  under
         any Option  granted  pursuant to this  Article 4 shall not be less than
         100% of the Fair Market Value of such Share, as defined in Section 2.10
         above.  Other than pursuant to Section 8.2 hereof,  the Committee shall
 
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<PAGE>
         not without the approval of the  Company's  stockholders  (a) lower the
         option price per Share of an Option after it is granted,  (b) cancel an
         Option when the option price per Share exceeds the Fair Market Value of
         the underlying  Shares in exchange for another  Award,  or (c) take any
         other  action  with  respect  to an  Option  that may be  treated  as a
         repricing  under  the  rules  and  regulations  of the New  York  Stock
         Exchange (or such other principal securities market on which the Shares
         are traded).
 
         4.6.  Option  Term.  The  term of each  Option  shall  be  fixed by the
         Committee  in its sole  discretion;  provided  that no Option  shall be
         exercisable  after the  expiration  of ten (10) years from the date the
         Option is granted, except in the event of death or disability.
 
         4.7.  Exercise of Options.  Vested Options granted under the Plan shall
         be exercised by the Participant or by a Permitted  Assignee thereof (or
         by the  Participant's  executors,  administrators,  guardian  or  legal
         representative,  as may be provided in an Award Agreement) as to all or
         part of the Shares covered thereby,  by the giving of written notice of
         exercise to the Company or its designated agent,  specifying the number
         of Shares to be purchased,  accompanied by payment of the full purchase
         price for the Shares being purchased, together with the amount required
         to  be  withheld  by  the  then  current   Internal  Revenue  Code  and
         Regulations  and  applicable  state  income  taxes.   Unless  otherwise
         provided in an Award  Agreement,  full payment of such  purchase  price
         shall be made at the time of exercise and shall be made in cash or cash
         equivalents  (including  certified check or bank check or wire transfer
         of immediately available funds). The notice of exercise, accompanied by
         such  payment,  shall be  delivered  to the  Company  at its  principal
         business  office or such other office as the Committee may from time to
         time  direct,  and  shall  be in such  form,  containing  such  further
         provisions consistent with the provisions of the Plan, as the Committee
         may from time to time  prescribe.  In no event may any  Option  granted
         hereunder be exercised for a fraction of a Share.  No adjustment  shall
         be made for cash dividends or other rights for which the record date is
         prior to the date of such issuance.
 
         4.8. Amount Exercisable. Each Option may be exercised, so long as it is
         valid and outstanding, from time to time in part or as a whole, subject
         to the  following  percentage  limitations  and  any  limitations  with
         respect to the  number of Shares for which the Option may be  exercised
         at a particular  time and to such other  conditions as the Committee in
         its discretion may specify upon granting the Option.
 
              (a) Options may be  exercised  in  accordance  with the  following
              schedule of vesting:
<TABLE>
                Annual                                                                Cumulative
                ------                                                                ----------
                <s>                                                                   <c>
                10% as of December 31st of the year of the grant                          10%
                15% as of the second December 31st following the date of the grant        25%
                20% as of the third December 31st following the date of the grant         45%
                25% as of the fourth December 31st following the date of the grant        70%
                30% as of the fifth December 31st following the date of the grant;       100%
</TABLE>
              (b) If the Participant (i) dies while in the employ of the Company
              or any  Subsidiary,  or (ii)  retires  in good  standing  from the
              employ of the Company or any Subsidiary after attaining age 57, or
              (iii) retires as a result of disability under the then established
              rules of the Company or the Subsidiary, then options shall vest to
              the extent of the higher of:
 
                    (1) 10% of  the  number  of Shares covered by the Option for
              each year that the Participant has been employed by the Company or
              any Subsidiary; or
 
                    (2) the  actual vested percentage determined pursuant to the
              schedule  in  subparagraph (a)  above, plus  50%  of  the unvested
              remaining Shares;
 
              determined   as  of   the  date  of  the  Participant's  death  or
              retirement, with no additional vesting thereafter; or
 
              (c) If there is any Change of Control of the  Company,  as defined
              below,  regardless of the resulting price per Share of stock, then
              options shall vest in accordance  with the vesting  provisions set
              forth in the  preceding  subparagraph  (b) hereof,  and any Shares
              remaining  unvested  thereafter  shall vest in accordance with the
              vesting schedule in subparagraph (a) above.
 
                                      B-4
<PAGE>
              The right to purchase shall be cumulative and may be exercised  as
         to any Shares not previously purchased during the remainder of the term
         of the Option.
 
               For   purposes   of  subparagraphs   (b) and (c) above,  years of
         employment  shall  be  measured  from the date an  Employee  was  first
         employed by the Company or any Subsidiary and shall include  periods of
         employment  prior to the time when the  Subsidiary  or  division of the
         Company was acquired by the Company. As used in subparagraph (c) above,
         the term "Change of Control" of the Company  refers to: (i) the date of
         any  consolidation or merger of the Company in which the Company is not
         the continuing or surviving  corporation or pursuant to which Shares of
         the Company's  stock would be converted into cash,  securities or other
         property;  or (ii)  the  date of any  sale,  lease,  exchange  or other
         transfer (in one  transaction or a series of related  transactions)  of
         all, or substantially all, of the assets of the Company, other than any
         sale,  lease,  exchange or other transfer to any corporation  where the
         Company owns,  directly or indirectly,  at least 80% of the outstanding
         voting securities of such corporation after any such transfer; or (iii)
         the date of any plan or proposal for the  liquidation or dissolution of
         the  Company;  or (iv)  the date any  person  (as such  term is used in
         Section 13(d) of the Securities  Exchange Act of 1934),  other than the
         Old  Republic  International  Corporation  Employees  Savings and Stock
         Ownership Trust or any other trust  established by or contributed to by
         the Company or any of its  Subsidiaries for the benefit of Employees of
         the Company or its  Subsidiaries,  shall  become the  beneficial  owner
         (within  the meaning of Rule 13d-3  under the  Exchange  Act) of 20% or
         more of the Company's  outstanding  stock; or (v) the date,  during any
         period of twenty-four (24) consecutive months, on which individuals who
         at the beginning of such period constitute the entire Board shall cease
         for any reason to constitute a majority thereof.
 
         4.9.  Termination of Options Upon  Severance of  Employment.  Except as
         otherwise   expressly   provided   herein,   Options  shall   terminate
         immediately upon severance of the employment  relationship  between the
         Company and its Subsidiaries and the Participant for any reason, for or
         without cause, other than death or retirement in good standing from the
         employ  of  the  Company  or its  Subsidiaries  for  reasons  of age or
         disability  under  the then  established  rules of the  Company  or the
         Subsidiary. Whether authorized leave of absence, or absence on military
         or government  service,  shall  constitute  severance of the employment
         relationship between the Company and the Subsidiary and the Participant
         shall be determined by the Committee at the time thereof.
 
              (a) Death. In the event of the death of a Participant while in the
              employ of the  Company  or any  Subsidiary  and before the date of
              expiration  of an Option  held by such  Participant,  such  Option
              shall  terminate on the earlier of its date of  expiration or four
              (4) years following the date of such death. After the death of the
              Participant, the Participant's executors,  administrators,  or any
              person  or  persons  to  whom  the  Participant's  Option  may  be
              transferred by will, by the laws of descent and distribution or by
              beneficiary designation shall have the right, at any time prior to
              such termination, to exercise the Option, in whole or in part. The
              number  of  Shares  vested  and  exercisable,  however,  shall  be
              determined  as of the  date  of  death,  with no  further  vesting
              thereafter.
 
              (b)  Retirement.  If,  before the date of expiration of an Option,
              the  Participant  holding  the  Option  shall be  retired  in good
              standing  from the  employ of the  Company or any  Subsidiary  for
              reasons of age or disability under the then  established  rules of
              the Company or the  Subsidiary,  the Option shall terminate on the
              earlier of the normal date of  expiration  or four (4) years after
              the date of such retirement. In the event of such retirement,  the
              Option  shall  be  exercisable  prior to the  termination  of such
              Option to the  extent to which the  Participant  was  entitled  to
              exercise such Option  immediately  prior to such retirement unless
              the  provisions of Section  4.8(b) hereof  concerning  accelerated
              vesting apply. An employment  relationship between the Company and
              the  Participant  shall be deemed to exist  during  any  period in
              which  the   Participant   is  employed  by  the  Company  or  any
              Subsidiary. If the Participant dies after retirement, but prior to
              the expiration date of the Option,  the Option period shall not be
              extended  but  shall  terminate  on the  earlier  of the  date  of
              expiration  or four (4) years  after the date of  retirement.  The
              number  of  Shares  vested  and  exercisable,  however,  shall  be
              determined as of the date of retirement,  with no further  vesting
              thereafter.
 
              (c)  Change  of  Control  of  the  Company.  In the  event  of any
              involuntary  severance of the employment  relationship between the
              Participant and the Company or its  Subsidiaries  occurring within
              eighteen  (18) months  after any Change of Control of the Company,
              as defined in Section 4.8 hereof,  such Option shall  terminate on
              the earlier of its scheduled  date of expiration or six (6) months
              following severance of the employment relationship.
 
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<PAGE>
         4.10. Requirements of Law. The Company shall not be required to sell or
         issue any Shares  under any Option if the issuance of such Shares shall
         constitute a violation  by the holder or the Company of any  provisions
         of any law or regulation of any governmental authority. In addition, in
         connection  with the Securities  Act, upon exercise of any Option,  the
         Company shall not be required to issue such Shares unless the Committee
         has received evidence  satisfactory to it to the effect that the holder
         of such  Option will not  transfer  such  Shares  except  pursuant to a
         registration  statement in effect under the Securities Act or unless an
         opinion of counsel to the Company  has been  received by the Company to
         the effect that such registration is not required. Any determination in
         this  connection  by  the  Committee   shall  be  final,   binding  and
         conclusive.  At the  request of the Company to enable it to comply with
         the  Securities  Act,  the  person  exercising  the  Option  shall also
         represent  in writing  that the Shares  acquired  upon  exercise of the
         Option are being  acquired for the holder's own account for  investment
         and not with a view to  resale.  In the event the  Shares  issuable  on
         exercise of an Option are not registered  under the Securities Act, the
         Company may  imprint the  following  legend or any other  legend  which
         counsel for the Company considers necessary or advisable to comply with
         the Securities Act.
 
               "The shares of stock  represented by this  certificate  have
               not been  registered  under  the  Securities  Act of 1933 or
               under the  securities  laws of any state and may not be sold
               or transferred except upon such registration or upon receipt
               by the Company of an opinion of counsel  satisfactory to the
               Company, in form and substance  satisfactory to the Company,
               that   registration   is  not  required  for  such  sale  or
               transfer."
 
         4.11. The Company may, but shall in no event be obligated to,  register
         any securities covered hereby pursuant to the Securities Act (as now in
         effect or as  hereafter  amended);  and in the event any  Shares are so
         registered   the  Company   may  remove  any  legend  on   certificates
         representing such Shares.  The Company shall make reasonable efforts to
         cause the  exercise  of an Option or the  issuance  of Shares  pursuant
         thereto  to  comply  with  any law or  regulation  of any  governmental
         authority.
 
         4.12. No Rights as Shareholder. No Option holder shall have rights as a
         shareholder with respect to Shares covered by the Option until the date
         of issuance of a stock  certificate  for such  Shares;  and,  except as
         otherwise  provided in Section 8.2 hereof, no adjustment for dividends,
         or otherwise,  shall be made if the record date thereof is prior to the
         date of issuance of such certificate.
 
5.       OTHER STOCK UNIT AWARDS
 
         5.1.  Grants.  Stock  appreciation  rights,  restricted  stock or other
         Awards of units having a value equal to an  identical  number of Shares
         ("Other Stock Unit Awards") may be granted  hereunder to  Participants,
         in addition to other Awards  granted  under the Plan.  Other Stock Unit
         Awards  shall also be  available  as a form of payment of other  Awards
         granted   under  the  Plan  and  other  earned   cash-based   incentive
         compensation.
 
         5.2.  Award  Agreements.  The terms of Other Stock Unit Awards  granted
         hereunder  shall be set forth in a written Award  Agreement which shall
         contain  provisions  determined by the  Committee and not  inconsistent
         with the  Plan.  The  terms of such  Awards  need not be the same  with
         respect to each Participant.
 
         5.3. Payment.  Except as provided in Article 7 or as may be provided in
         an Award Agreement, Other Stock Unit Awards may be paid in Shares, cash
         or other property,  or any combination  thereof, in the sole discretion
         of the Committee at the time of payment. Other Stock Unit Awards may be
         paid in a lump sum or in installments or, in accordance with procedures
         established  by the  Committee,  on a  deferred  basis  subject  to the
         requirements of Section 409A of the Code.
 
6.       PERFORMANCE AWARDS
 
         6.1.  Grants.  Performance  Awards  in the form of cash may be  granted
         hereunder to Participants,  either alone or in addition to other Awards
         granted under the Plan. The  performance  goals to be achieved for each
         Performance  Period shall be  conclusively  determined by the Committee
         and shall be based upon the criteria set forth in Section 7.2 hereof.
 
         6.2. Award Agreements. The terms of any Performance Award granted under
         the Plan shall be set forth in a written  Award  Agreement  which shall
         contain  provisions  determined by the  Committee and not  inconsistent
         with the Plan.  The terms of  Performance  Awards  need not be the same
         with respect to each Participant.
 
         6.3.  Terms and  Conditions.  The  performance  criteria to be achieved
         during any Performance  Period and the length of the Performance Period
         shall  be  determined  by  the  Committee;  provided,  however,  that a
 
                                      B-6
<PAGE>
         Performance  Period shall not be shorter  than twelve (12) months.  The
         amount of the Award to be distributed shall be conclusively  determined
         by the Committee.
 
         6.4.  Payment.  Except  as  may  otherwise  be  provided  in  an  Award
         Agreement, Performance Awards will be distributed only after the end of
         the relevant  Performance  Period.  Performance Awards shall be paid in
         cash and may be paid in a lump  sum or in  installments  following  the
         close of the  Performance  Period  or, in  accordance  with  procedures
         established  by the  Committee,  on a  deferred  basis  subject  to the
         requirements of Section 409A of the Code.
 
7.       CODE SECTION 162(m) PROVISIONS
 
         7.1.  Covered  Employees.  Notwithstanding  any other  provision of the
         Plan, if the Committee  determines at the time an Award is granted to a
         Participant  who is,  or is likely to be, as of the end of the tax year
         in which the Company  would claim a tax  deduction in  connection  with
         such Award,  a Covered  Employee,  then the  Committee may provide that
         this Article 7 is applicable to such Award.
 
         7.2. Performance Criteria. If the Committee determines that an Award is
         subject to this Article 7, the  distribution  of cash,  Shares or other
         property  pursuant  thereto,  as  applicable,  shall be  subject to the
         achievement of one or more objective  performance  goals established by
         the  Committee,  which shall be based on the  attainment  of  specified
         levels of one or any combination of the following:  net sales; revenue;
         revenue growth;  operating income;  pre- or after-tax income (before or
         after  allocation  of  corporate  overhead  and bonus);  net  earnings;
         earnings per share; net income;  division, group or corporate financial
         goals; return on equity; total shareholder return;  return on assets or
         net  assets;  attainment  of  strategic  and  operational  initiatives;
         appreciation  in and/or  maintenance  of the price of the Shares or any
         other  publicly-traded  securities of the Company;  market share; gross
         profits;  earnings  (including  earnings before taxes,  earnings before
         interest and taxes or earnings before interest, taxes, depreciation and
         amortization);  economic  value-added models;  comparisons with various
         stock market indices;  reductions in costs;  cash flow (before or after
         dividends); cash flow per share (before or after dividends);  return on
         capital  (including  return on total  capital  or  return  on  invested
         capital;  cash flow return on investment;  improvement in or attainment
         of expense levels or working  capital  levels;  and cash margins.  Such
         performance  goals  also  may  be  based  solely  by  reference  to the
         Company's  performance or the  performance  of a Subsidiary,  division,
         business  segment or business  unit of the  Company,  or based upon the
         relative  performance of other companies or upon  comparisons of any of
         the  indicators  of  performance  relative  to  other  companies.   The
         Committee  may also exclude  charges  related to an event or occurrence
         which  the  Committee  determines  should  appropriately  be  excluded,
         including (a) restructurings,  discontinued  operations,  extraordinary
         items, and other unusual or non-recurring  charges, (b) an event either
         not directly related to the operations of the Company or not within the
         reasonable control of the Company's  management,  or (c) the cumulative
         effects of tax or  accounting  changes  in  accordance  with  generally
         accepted accounting principles.  Such performance goals shall be set by
         the Committee within the time period prescribed by, and shall otherwise
         comply with the  requirements  of,  Section 162(m) of the Code, and the
         regulations thereunder.
 
         7.3. Adjustments. Notwithstanding any provision of the Plan (other than
         Section 7.5 hereof),  with respect to any Award that is subject to this
         Article 7, the Committee  may adjust  downwards,  but not upwards,  the
         amount payable  pursuant to such Award, and the Committee may not waive
         the achievement of the applicable performance goals, except in the case
         of  the  death  or  disability  of  the  Participant  or  as  otherwise
         determined by the Committee in special circumstances.
 
         7.4.  Restrictions.  The Committee  shall have the power to impose such
         other  restrictions  on Awards  subject to this  Article as it may deem
         necessary  or  appropriate  to ensure  that  such  Awards  satisfy  all
         requirements for "performance-based compensation" within the meaning of
         Section 162(m) of the Code.
 
         7.5. Impact of Change of Control.  The terms of any  Performance  Award
         may provide in the Award  Agreement  evidencing the Award that,  upon a
         "Change  of  Control"  of the  Company  (as that  term  may be  defined
         therein),  all Performance  Awards shall be considered to be earned and
         payable (either in full or pro rata based on the portion of Performance
         Period  completed  as of the date of the  Change of  Control),  and any
         deferral or other restriction  shall lapse and such Performance  Awards
         shall be immediately  settled or distributed.  For purposes  hereof,  a
         "Change of Control" shall mean an event described in an Award Agreement
         evidencing  the Award or such  other  event as  determined  in the sole
         discretion of the Board.
 
                                      B-7
<PAGE>
         7.6.  Termination of Employment.  The Committee shall determine and set
         forth in each Award Agreement whether any Performance Awards granted in
         such Award Agreement will continue to be exercisable,  and the terms of
         such  exercise,  on and after the date that a Participant  ceases to be
         employed by or to provide  services  to the Company or any  Subsidiary,
         whether  by reason  of  death,  disability,  voluntary  or  involuntary
         termination  of  employment  or  services,  or  otherwise.  The date of
         termination  of  a   Participant's   employment  or  services  will  be
         determined by the Committee, which determination will be final.
 
         7.7.  Limitations  on  Grants to  Individual  Participant.  Subject  to
         adjustment  as provided in Section 8.2, no  Participant  may be granted
         (i) Options  during any  thirty-six  month  period with respect to more
         than  2,000,000  Shares,  or (ii)  Other  Stock  Unit  Awards  that are
         denominated  in Shares in any  thirty-six  month period with respect to
         more than 400,000  Shares.  In addition to the  foregoing,  the maximum
         dollar value payable to any Participant in any twelve-month period with
         respect to Performance Awards is $3,000,000.
 
8.       GENERALLY APPLICABLE PROVISIONS
 
         8.1. Amendment and Termination of the Plan. The Board may, from time to
         time,  alter,  amend,  suspend or  terminate  the Plan as it shall deem
         advisable,  subject to any requirement for stockholder approval imposed
         by applicable law,  including the rules and regulations of the New York
         Stock Exchange (or such other principal  securities market on which the
         Shares are  traded)  provided  that the Board may not amend the Plan in
         any manner that would  result in  noncompliance  with Rule 16b-3 of the
         Exchange Act. In addition,  no amendments  to, or  termination  of, the
         Plan  shall in any way impair  the  rights of a  Participant  under any
         Award previously granted without such Participant's consent.
 
         8.2.  Adjustments.   In  the  event  of  any  merger,   reorganization,
         consolidation,  recapitalization,  dividend or distribution (whether in
         cash,  shares or other  property,  other than a regular cash dividend),
         stock split,  reverse stock split,  spin-off or similar  transaction or
         other change in corporate  structure  affecting the Shares or the value
         thereof,  such adjustments and other substitutions shall be made to the
         Plan and to  Awards as the  Committee,  in its sole  discretion,  deems
         equitable or appropriate  taking into  consideration the accounting and
         tax  consequences,  including such adjustments in the aggregate number,
         class and kind of securities  that may be delivered under the Plan and,
         in the aggregate or to any one Participant,  in the number, class, kind
         and option or  exercise  price of  securities  subject  to  outstanding
         Awards  granted  under  the Plan  (including,  if the  Committee  deems
         appropriate, the substitution of similar options to purchase the shares
         of, or other awards  denominated in the shares of, another  company) as
         the Committee may determine to be appropriate  in its sole  discretion;
         provided, however, that the number of Shares subject to any Award shall
         always be a whole number.
 
         8.3. Transferability of Awards. Except as provided below, and except as
         otherwise  authorized by the Committee in an Award Agreement,  no Award
         and no  Shares  subject  to Awards  that have not been  issued or as to
         which any applicable  restriction,  performance or deferral  period has
         not lapsed, may be sold,  assigned,  transferred,  pledged or otherwise
         encumbered, other than by will, living trust or the laws of descent and
         distribution,  and such Award may be  exercised  during the life of the
         Participant  only by the Participant or the  Participant's  guardian or
         legal  representative.  Notwithstanding the foregoing,  an Award may be
         assigned to a beneficiary  pursuant to a written designation filed with
         the Company during the Participant's lifetime (each transferee thereof,
         a "Permitted Assignee"); provided that such Permitted Assignee shall be
         bound by and subject to all of the terms and conditions of the Plan and
         the Award Agreement relating to the transferred Award and shall execute
         an agreement  satisfactory to the Company  evidencing such obligations;
         and  provided  further that the  Participant  shall remain bound by the
         terms and conditions of the Plan. The Company shall  cooperate with any
         Permitted Assignee and the Company's transfer agent in effectuating any
         transfer permitted under this Section 8.3.
 
9.       MISCELLANEOUS
 
         9.1.  Tax  Withholding.  The  Company  shall have the right to make all
         payment or  distributions  pursuant to the Plan to a  Participant  of a
         Permitted  Assignee thereof (any such Participant or Permitted Assignee
         hereafter  referred  to as a "Payee")  net of any  applicable  federal,
         state and local  taxes  required  to be paid or withheld as a result of
         the grant of any  Performance  Award or the exercise of an Option.  The
         Company or any  Subsidiary  shall have the right to withhold from wages
         or other amounts otherwise payable to such Payee such withholding taxes
         as may be  required by law,  or to  otherwise  require the Payee to pay
         such  withholding  taxes.  If the  Payee  shall  fail to make  such tax
         payments as are required, the Company or its Subsidiaries shall, to the
 
                                      B-8
<PAGE>
         extent  permitted by law,  have the right to deduct any such taxes from
         any  payment  of any kind  otherwise  due to such Payee or to take such
         other  action  as  may  be   necessary  to  satisfy  such   withholding
         obligations.
 
         9.2. Right of Discharge Reserved; Claims to Awards. Nothing in the Plan
         nor the grant of an Award  hereunder shall confer upon any Employee the
         right to  continue in the  employment  or service of the Company or any
         Subsidiary or affect any right that the Company or any  Subsidiary  may
         have to  terminate  the  employment  or  service of (or to demote or to
         exclude  from future  Awards  under the Plan) any such  Employee at any
         time for any reason.  Except as specifically provided by the Committee,
         the Company  shall not be liable for the loss of existing or  potential
         profit  from  an  Award  granted  in the  event  of  termination  of an
         employment or other relationship. No Employee or Participant shall have
         any  claim to be  granted  any Award  under  the Plan,  and there is no
         obligation  for  uniformity  of treatment of Employees or  Participants
         under the Plan.
 
         9.3.  Prospective  Recipient.  The  prospective  recipient of any Award
         under the Plan shall not, with respect to such Award, be deemed to have
         become a Participant, or to have any rights with respect to such Award,
         until and unless such  recipient  shall have  executed an  agreement or
         other  instrument  evidencing the Award and delivered a copy thereof to
         the Company,  and otherwise complied with the then applicable terms and
         conditions.
 
         9.4.  Substitute  Awards.  Notwithstanding  any other  provision of the
         Plan, the terms of Substitute  Awards may vary from the terms set forth
         in the Plan to the extent the Committee  deems  appropriate to conform,
         in whole or in part, to the  provisions  of the awards in  substitution
         for which they are granted.
 
         9.5.  Cancellation of Award.  Notwithstanding  anything to the contrary
         contained  herein,  all  outstanding  Awards granted to any Participant
         shall be  canceled  if the  Participant,  without  the  consent  of the
         Company,  while  employed  by the  Company or any  Subsidiary  or after
         termination of such  employment or service,  establishes a relationship
         with a  competitor  of the  Company  or any  Subsidiary  or  engages in
         activity  that is in  conflict  with or adverse to the  interest of the
         Company or any  Subsidiary,  as determined by the Committee in its sole
         discretion.  The  Committee may provide in an Award  Agreement  that if
         within the time  period  specified  in the  Agreement  the  Participant
         establishes a relationship  with a competitor or engages in an activity
         referred to in the preceding sentence, the Participant will forfeit any
         gain  realized  on the  vesting or exercise of the Award and must repay
         such gain to the Company.
 
         9.6. Stop Transfer Orders.  All certificates for Shares delivered under
         the Plan  pursuant to any Award shall be subject to such  stop-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 Shares are then
         listed,  and any applicable  federal or state  securities  law, and the
         Committee  may  cause  a  legend  or  legends  to be put  on  any  such
         certificates to make appropriate reference to such restrictions.
 
         9.7.  Nature of Payments.  All Awards made  pursuant to the Plan are in
         consideration of services  performed or to be performed for the Company
         or any Subsidiary, division or business unit of the Company. Any income
         or gain  realized  pursuant  to  Awards  under the Plan  constitutes  a
         special  incentive  payment to the  Participant  and shall not be taken
         into  account,  to the extent  permissible  under  applicable  law,  as
         compensation  for purposes of any of the employee  benefit plans of the
         Company or any Subsidiary  except as may be determined by the Committee
         or by the Board or board of directors of the applicable Subsidiary.
 
         9.8. Other Plans. Nothing contained in the Plan shall prevent the Board
         from adopting other or additional compensation arrangements, subject to
         stockholder   approval  if  such   approval  is   required;   and  such
         arrangements may be either  generally  applicable or applicable only in
         specific cases.
 
         9.9. Severability.  If any provision of the Plan shall be held unlawful
         or otherwise invalid or unenforceable in whole or in part by a court of
         competent  jurisdiction,  such provision shall (a) be deemed limited to
         the extent that such court of competent  jurisdiction  deems it lawful,
         valid and/or  enforceable  and as so limited shall remain in full force
         and effect,  and (b) not affect any other provision of the Plan or part
         thereof,  each of which shall  remain in full force and effect.  If the
         making of any payment or the  provision of any other  benefit  required
         under  the  Plan  shall  be  held  unlawful  or  otherwise  invalid  or
         unenforceable by a court of competent jurisdiction,  such unlawfulness,
         invalidity or  unenforceability  shall not prevent any other payment or
         benefit from being made or provided  under the Plan,  and if the making
         of any payment in full or the provision of any other  benefit  required
         under  the Plan in full  would be  unlawful  or  otherwise  invalid  or
 
                                      B-9
<PAGE>
         unenforceable,  then such unlawfulness,  invalidity or unenforceability
         shall not prevent  such  payment or benefit from being made or provided
         in part,  to the  extent  that it would  not be  unlawful,  invalid  or
         unenforceable,  and the  maximum  payment or benefit  that would not be
         unlawful,  invalid or unenforceable shall be made or provided under the
         Plan.
 
         9.10.  Construction.  As used in the  Plan,  the  words  "include"  and
         "including," and variations thereof, shall not be deemed to be terms of
         limitation,  but  rather  shall be deemed to be  followed  by the words
         "without limitation."
 
         9.11.  Unfunded  Status of the Plan. The Plan is intended to constitute
         an  "unfunded"  plan for  incentive  and  deferred  compensation.  With
         respect to any payments not yet made to a  Participant  by the Company,
         nothing  contained  herein shall give any such  Participant  any rights
         that are greater than those of a general  creditor of the  Company.  In
         its sole discretion, the Committee may authorize the creation of trusts
         or other arrangements to meet the obligations created under the Plan to
         deliver  the Shares or  payments  in lieu of or with  respect to Awards
         hereunder;  provided,  however,  that the  existence  of such trusts or
         other arrangements is consistent with the unfunded status of the Plan.
 
         9.12.  Governing Law. The Plan and all determinations  made and actions
         taken thereunder,  to the extent not otherwise  governed by the Code or
         the laws of the United  States,  shall be  governed  by the laws of the
         State of Illinois, without reference to principles of conflict of laws,
         and construed accordingly.
 
         9.13.  Effective  Date of Plan;  Termination of Plan. The Plan shall be
         effective  as of  February  23,  2006,  subject to its  approval by the
         holders of the shares entitled to vote at a duly constituted meeting of
         the  stockholders of the Company within twelve (12) months  thereafter.
         The Plan  shall be null and  void  and of no  effect  if the  foregoing
         condition  is not  fulfilled  and  in  such  event  each  Award  shall,
         notwithstanding  any of the  preceding  provisions of the Plan, be null
         and void and of no effect.  Awards may be granted under the Plan at any
         time and from time to time on or prior to the tenth  anniversary of the
         effective  date of the Plan,  on which date the Plan will expire except
         as to Awards then outstanding  under the Plan. Such outstanding  Awards
         shall remain in effect until they have been exercised or terminated, or
         have expired.
 
         9.14. Foreign Employees.  Awards may be granted to Participants who are
         foreign  nationals or employed  outside the United States,  or both, on
         such terms and conditions  different from those applicable to Awards to
         Employees  employed in the United States as may, in the judgment of the
         Committee,  be necessary or desirable in order to recognize differences
         in local law or tax policy. The Committee also may impose conditions on
         the  exercise or vesting of Awards in order to minimize  the  Company's
         obligation   with  respect  to  tax   equalization   for  Employees  on
         assignments outside their home country.
 
         9.15.  Compliance  with Section 409A of the Code. This Plan is intended
         to comply and shall be  administered  in a manner  that is  intended to
         comply  with  Section  409A of the Code  and  shall  be  construed  and
         interpreted in accordance with such intent. To the extent that an Award
         or the payment,  settlement  or deferral  thereof is subject to Section
         409A of the Code, the Award shall be granted, paid, settled or deferred
         in a manner that will comply with Section  409A of the Code,  including
         regulations or other guidance  issued with respect  thereto,  except as
         otherwise determined by the Committee.  Any provision of this Plan that
         would  cause  the  grant  of an  Award or the  payment,  settlement  or
         deferral  thereof to fail to satisfy  Section 409A of the Code shall be
         amended  to comply  with  Section  409A of the Code on a timely  basis,
         which  may  be  made  on  a  retroactive   basis,  in  accordance  with
         regulations and other guidance issued under Section 409A of the Code.
 
         9.16.  Captions.  The  captions  in the  Plan  are for  convenience  of
         reference  only,  and are not  intended to narrow,  limit or affect the
         substance or interpretation of the provisions contained herein.
 
         9.17.  Shareholder  Approval  and  Termination.   This  Plan  shall  be
         effective  on the date it is  approved by the  affirmative  vote of the
         holders of a majority of the Company's  securities present and entitled
         to vote at a meeting duly held in accordance  with the applicable  laws
         of  Delaware.  It shall  terminate  on  February  23,  2016,  provided,
         however, that the Board may at any time amend, suspend or terminate the
         Plan. No termination or amendment of the Plan may,  without the consent
         of the  Participant  to whom any  Award  shall  have  been  theretofore
         granted,  adversely  affect the rights of such  Participant  under such
         Award.
 
                                      B-10
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</DOCUMENT>