SOUTHERN UNION COMPANY
 
 
                          SECOND AMENDED AND RESTATED
 
 
                         2003 STOCK AND INCENTIVE PLAN
 
 
                                      I.
 
                                   PURPOSES
 
     1.1. Purposes. The purposes of this Second Amended and Restated 2003 Stock
and Incentive Plan (as the same may be amended from time to time, the "Plan")
are (i) to advance the interest of Southern Union Company, a Delaware
corporation (the "Company"), and its Subsidiaries (as defined below) and
shareholders by strengthening the ability of the Company and its Subsidiaries to
attract and retain salaried employees of experience and ability and (ii) to
furnish an additional incentive to such persons to expend their best efforts on
behalf of the Company or any such Subsidiary.
 
     1.2. Types of Awards. The Plan provides for the granting of the following
types of awards:
 
     (a)  Incentive Options (as defined below);
 
     (b)  Nonstatutory Options (as defined below);
 
     (c)  Stock Appreciation Rights (as defined below);
 
     (d)  Stock Awards (as defined below);
 
     (e)  Performance Units (as defined below); and
 
     (f)  Other Equity-Based Rights (as defined below).
 
     1.3. Effectiveness. The Southern Union Company 2003 Stock and Incentive
Plan (the "Initial Plan") was adopted by the Board of Directors on, and was
effective as of, September 28, 2003 and was subsequently approved by the
shareholders of the Company on November 4, 2003. The Amended and Restated 2003
Stock and Incentive Plan was adopted by the Board of Directors, and subsequently
approved by the shareholders on May 9, 2005. This Plan was adopted by the Board
of Directors and will be effective February 14, 2006 (the "Effective Date") and
Awards may be made hereunder immediately, provided that no Award shall be
effective unless and until the Plan has been approved by the shareholders of the
Company and, if such approval is not obtained, any Awards previously given under
this Plan shall automatically be void. If this Plan is not so approved by the
shareholders, then this Plan shall be void ab initio, and the Amended and
Restated 2003 Stock and Incentive Plan shall continue in effect as if this
amendment and restatement had not occurred; provided, however, that thereafter
Awards may continue to be granted pursuant to the terms of the Amended and
Restated 2003 Stock and Incentive Plan, as in effect prior to this amendment and
restatement and as may be otherwise amended hereafter. Notwithstanding the
foregoing or anything to the contrary contained herein, any Awards granted under
the Amended and Restated 2003 Stock and Incentive Plan prior to the Effective
Date shall continue in effect under the terms of the Award Agreements and be
controlled by the terms of the Amended and Restated 2003 Stock and Incentive
Plan. Further, the status of any Award granted under this Plan as an Incentive
Option shall be subject to such approval by the shareholders of the Company
taking place within twelve (12) months after the Effective Date.
 
 
                                      II.
 
                              CERTAIN DEFINITIONS
 
     In addition to any terms defined elsewhere in the Plan, the following
capitalized terms shall have the following respective meanings as used in the
Plan:
 
     2.1. "Annual Non-Employee Director Election" has the meaning given to that
term in Section 10.1.
 
     2.2. "Arbitration Notice" has the meaning given to that term in Section
13.22(b).
 
     2.3. "Available Shares" has the meaning given to that term in Section 3.2.
 
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     2.4. "Award" means the grant of any form of Option, Stock Appreciation
Right, Stock Award, Performance Unit or Other Equity-Based Right under the Plan,
whether granted singly, in combination, or in tandem, to a Holder pursuant to
such terms, conditions and limitations as the Committee may establish from time
to time in order to fulfill the objectives of the Plan.
 
     2.5. "Award Agreement" means the written document or agreement evidencing
the grant of an Award by the Company to a Holder and any additional terms,
conditions or limitations with respect to such grant.
 
     2.6. "Board of Directors" means the board of directors of the Company.
 
     2.7. "Business Day" means any day other than a Saturday, a Sunday, or a day
on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
 
     2.8. "Change in Control" means:
 
          (a) Any "person" (solely for purposes of this Section 2.7, defined as
such term is used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act), or
more than one person acting as a group (as defined in paragraph (c) below), (i)
becomes the beneficial owner, directly or indirectly, of securities of the
Company representing more than fifty percent (50%) of the combined voting power
of the Company's outstanding Voting Securities or (ii) notwithstanding the
occurrence of a Change of Control pursuant to Section 2.7(a)(i), acquires (or
has acquired during the 12-month period ending on the date of the most recent
acquisition by such person or persons) ownership of securities of the Company
representing thirty five percent (35%) or more of the combined voting power of
the Company's outstanding Voting Securities;
 
          (b) There is a change in the composition of the Board of Directors
over a period of twelve (12) consecutive months or less such that a majority of
the members of the Board of Directors (rounded up to the nearest whole number)
cease to be individuals who either (x) have been members of the Board of
Directors continuously since the beginning of such period or (y) have been
elected or nominated for election as members of the Board of Directors during
such period by at least two-thirds (2/3) of the members of the Board of
Directors described in clause (x) who were still in office at the time such
election or nomination was approved by the Board of Directors; or
 
          (c) The sale of all or substantially all of the assets of the Company
or any merger, consolidation, issuance of securities or purchase of assets, the
results of which merger, consolidation, issuance of securities or purchase is
the occurrence of any event described in clause (a) or (b) above.
Notwithstanding anything to the contrary contained herein, no Change in Control
shall be considered to occur where there is a transfer of all or substantially
all of the assets of the Company to (i) a shareholder of the Company
(immediately before the asset transfer) in exchange for or with respect to its
stock; (ii) an entity, fifty percent (50%) or more of the total value or voting
power of which is owned, directly or indirectly, by the Company; (iii) a person,
or more than one person acting as a group, that owns, directly or indirectly,
fifty percent (50%) or more of the total value or voting power of all the
outstanding stock of the Company; or (iv) an entity, at least fifty percent
(50%) of the total value or voting power of which is owned, directly or
indirectly, by a person described in paragraph (iii).
 
               For purposes of this definition of Change in Control, persons
will be considered to be acting as a group if they are owners of a corporation
that enters into a merger, consolidation, purchase or acquisition of assets, or
similar business transaction with the Company. It is intended that the Change in
Control events described in this definition meet the requirements for a "Change
in Control Event" as described in Notice 2005-1, as such requirements may be
modified from time to time by further IRS guidance under Section 409A, and the
term "Change in Control" shall be interpreted and applied for all purposes of
this Plan in a manner consistent with such intent.
 
     2.9. "Code" means the Internal Revenue Code of 1986, as amended.
 
     2.10. "Committee" means the committee appointed by the Board of Directors
pursuant to Article IV to administer the Plan.
 
     2.11. "Company" has the meaning given to that term in Section 1.1.
 
     2.12. "Covered Event" means (a) the commission by a Holder of a criminal or
other act that causes or probably will cause substantial economic damage to the
Company or a Subsidiary or substantial injury to the business
 
 
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reputation of the Company or a Subsidiary; (b) the commission by a Holder of an
act of fraud in the performance of such Holder's duties on behalf of the Company
or a Subsidiary; (c) the continuing failure of a Holder to perform the duties of
such Holder to the Company or a Subsidiary (other than such failure resulting
from the Holder's incapacity due to physical or mental illness) after written
notice thereof (specifying the particulars thereof in reasonable detail) and a
reasonable opportunity to be heard and cure such failure are given to the Holder
by the Company; or (d) the order of a court of competent jurisdiction requiring
the termination of the Holder's employment.
 
     2.13. "Date of Grant" has the meaning given to that term in Section 5.4 or
(with respect to Reload Options) Section 6.9.
 
     2.14. "Designated Beneficiary" has the meaning given to that term in
Section 13.6(a).
 
     2.15. "Disability" has the meaning given it in the employment agreement
between the Company or a Subsidiary and the Holder; provided, however, that if
the Holder has no such employment agreement or such term is not defined in the
employment agreement, "Disability" shall mean that (1) the Committee has
determined that the Holder has a permanent physical or mental impairment of
sufficient severity as to prevent the Holder from performing duties for the
Company or Subsidiary, as applicable, and (2) the Committee or the Company or
the relevant Subsidiary has provided written notice to the Holder that the
Holder's employment is terminated due to a permanent "Disability" pursuant to
this Section. Notwithstanding the preceding sentence, with respect to any Award
constituting a deferral of compensation subject to the requirements of Section
409A, "Disability" shall mean that a Holder is "disabled" within the meaning of
Section 409(a)(2)(C). The Committee may establish any process or procedure it
deems appropriate for determining whether a Holder has a "Disability."
 
     2.16. "Dispute" has the meaning given to that term in Section 13.22.
 
     2.17. "Effective Date" has the meaning given to that term in Section 1.3.
 
     2.18. "Eligible Individuals" means directors, officers, employees and
agents of, and other providers of services to, the Company or any of its
Subsidiaries.
 
     2.19. "Exchange Act" means the Securities Exchange Act of 1934, as amended.
 
 
     2.20. "Exercise Notice" has the meaning given to that term in Section 6.5
(with respect to Options) or Section 7.4 (with respect to Stock Appreciation
Rights).
 
     2.21. "Exercise Price" has the meaning given to that term in Section 6.4.
 
     2.22. "Fair Market Value" means a per share value defined as follows, for a
particular day:
 
          (a) Subject to Paragraph 2.21(e), if shares of Stock of the same class
are listed or admitted to unlisted trading privileges on any national securities
exchange at the date of determination of Fair Market Value, then the closing
price of one share on that exchange (or, if more than one exchange, the exchange
determined by the Committee to be used for such purpose) on the date in question
or, if such day is not a Business Day or no such closing price is reported for
that day, on the last Business Day for which such a closing price is reported
before the date in question, in any case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to unlisted trading privileges on that exchange; or
 
          (b) Subject to Paragraph 2.21(e), if shares of Stock of the same class
are not listed or admitted to unlisted trading privileges as provided in
Paragraph 2.21(a) and if sales prices for shares of Stock of the same class in
the over-the-counter market are reported by the National Association of
Securities Dealers, Inc. Automated Quotations ("NASDAQ") National Market System
(or such other system then in use) at the date of determination of Fair Market
Value, then the closing price of one share as reported on the NASDAQ National
Market System (or such other system then in use) on the date in question or, if
such day is not a Business Day or no such closing price is reported that day, on
the last Business Day for which such a closing price is reported before the date
in question; or
 
          (c) Subject to Paragraph 2.21(e), if shares of Stock of the same class
are not listed or admitted to unlisted trading privileges as provided in
Paragraph 2.21(a) and closing prices for shares of Stock of the same class are
not reported by the NASDAQ National Market System (or such other system then in
use) as provided in Paragraph 2.21(b), and if bid and asked prices for shares of
Stock of the same class in the over-the-counter market
 
 
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are reported by NASDAQ (or, if not so reported, by the National Quotation Bureau
Incorporated) at the date of determination of Fair Market Value, then the mean
between the high bid and low asked prices on the date in question or, if such
day is not a Business Day or no such prices are reported that day, on the last
Business Day for which such prices are reported before the date in question; or
 
          (d) If shares of Stock of the same class are not listed or admitted to
unlisted trading privileges as provided in Paragraph 2.21(a) and closing prices
therefor are not reported by the NASDAQ National Market System as provided in
Paragraph 2.21(b) and bid and asked prices therefor are not reported by NASDAQ
(or the National Quotation Bureau Incorporated) as provided in Paragraph 2.21(c)
at the date of determination of Fair Market Value, then the value determined by
the Committee; or
 
          (e) If shares of Stock of the same class are listed or admitted to
unlisted trading privileges as provided in Paragraph 2.21(a) or closing prices
therefor are reported by the NASDAQ National Market System as provided in
Paragraph 2.21(b) or bid and asked prices therefor are reported by NASDAQ (or
the National Quotation Bureau Incorporated) as provided in Paragraph 2.21(c) at
the date of determination of Fair Market Value, but the volume of trading is so
low that the Committee determines that such prices are not indicative of the
fair value of the Stock, then the value determined by the Committee.
 
     2.23. "Holder" means an Eligible Individual to whom an Award has been
granted.
 
     2.24. "Incentive Option" means an incentive stock option as defined under
Section 422 of the Code.
 
     2.25. "Linked Stock Appreciation Right" has the meaning given to that term
in Section 7.1.
 
     2.26. "Maximum Shares" has the meaning given to that term in Section 3.1.
 
     2.27. "NASDAQ" has the meaning given to that term in Section 2.21.
 
     2.28. "Non-Employee Director" means a person who is a "Non-Employee
Director" as that term is used in Rule 16b-3.
 
     2.29. "Non-Employee Director Award" has the meaning given to that term in
Section 10.1.
 
     2.30. "Non-Linked Stock Appreciation Right" has the meaning given to that
term in Section 7.1.
 
     2.31. "Nonstatutory Option" means a stock option that (i) does not satisfy
the requirements for an incentive stock option under Section 422 of the Code;
(ii) that is designated at the Date of Grant or in the applicable Option
Agreement to be an option other than an Incentive Option; or (iii) is modified
in accordance with Paragraph 14.2(b) to be an option other than an Incentive
Option.
 
     2.32. "Normal Retirement" means the termination of the Holder's employment
with the Company and its Subsidiaries on account of retirement at any time on or
after the date on which the Holder attains fifty-five (55) (but for purposes of
clarification excludes any termination of employment as a result of a Covered
Event).
 
     2.33. "Notice 2005-1" means IRS Notice 2005-1, 2005-2 I.R.B. 274.
 
     2.34. "Option" means either an Incentive Option or a Nonstatutory Option,
or both.
 
     2.35. "Option Agreement" means an Award Agreement for an Option.
 
     2.36. "Other Equity-Based Right" means an Award granted under Article XI of
the Plan.
 
     2.37. "Outside Director" means an "outside director" as that term is used
in Section 162(m).
 
     2.38. "Performance Period" means a period over which performance is
measured for the purpose of determining the payment value of Performance Units.
 
 
     2.39. "Performance Unit" means a unit representing a contingent right to
receive a specified amount of cash or shares of Stock at the end of a
Performance Period.
 
     2.40. "Person" means any individual, partnership, joint venture,
corporation, trust, unincorporated organization, association, limited liability
company, joint stock company, government or any department or agency thereof, or
any other form of association or entity.
 
 
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     2.41. "Plan" has the meaning given to that term in Section 1.1.
 
     2.42. "Reload Option" has the meaning given to that term in Section 6.9.
 
     2.43. "Restricted Stock Award" means the grant or purchase, on the terms,
conditions and limitations that the Committee determines or on the terms,
conditions and limitations of Article VIII, of Stock that may be nontransferable
and/or subject to substantial risk of forfeiture until specific conditions are
met; provided, however, that this term shall not apply to shares of Stock issued
or transferred in connection with the exercise or settlement of an Option, a
Stock Appreciation Right, a Performance Unit or an Other Equity-Based Right,
whether or not such shares of Stock are nontransferable or subject to
substantial risk of forfeiture when issued or transferred.
 
     2.44. "Rule 16b-3" means Rule 16b-3 under Section 16(b) of the Exchange
Act.
 
     2.45. "SAR Exercise Price" means the price specified in the Award Agreement
related to a Non-Linked Stock Appreciation Right as the exercise price per share
of Stock for that Non-Linked Stock Appreciation Right.
 
     2.46. "Section 162(m)" means Section 162(m) of the Code.
 
     2.47. "Section 409A" means Section 409A of the Code.
 
     2.48. "Securities Act" means the Securities Act of 1933, as amended.
 
     2.49. "Stock" means the Company's authorized common stock, par value $1.00
per share, or any other securities, property or assets that are substituted for
the Stock as provided in Section 13.1.
 
     2.50. "Stock Appreciation Right" means the right to receive an amount equal
to the excess of the Fair Market Value of a share of Stock (as determined on the
date of exercise) over, as appropriate, the Exercise Price of a related Option
or over the SAR Exercise Price.
 
     2.51. "Stock Award" means the grant or purchase, on the terms, conditions
and limitations that the Committee determines or on the terms, conditions and
limitations of Article VIII, of a Restricted Stock Award or a Stock Bonus Award.
 
     2.52. "Stock Bonus Award" means the grant or purchase, on the terms,
conditions and limitations that the Committee determines or on the terms,
conditions and limitations of Article VIII, of Stock that may not be subject to
a substantial risk of forfeiture if conditions imposed by the Committee are not
satisfied; provided, however, that this term shall not apply to shares of Stock
issued or transferred in connection with the exercise or settlement of an
Option, a Stock Appreciation Right, a Performance Unit or an Other Equity-Based
Right, whether or not such shares of Stock are nontransferable or subject to
substantial risk of forfeiture when issued or transferred.
 
     2.53. "Subsidiary" means an entity, as may from time to time be designated
by the Committee, that is (i) a subsidiary corporation, or is treated as, or as
part of, a subsidiary corporation of the Company (within the meaning of Section
424 of the Code), or (ii) any other entity that the Company has a significant
interest in, directly or indirectly, including, without limitation, CCE
Holdings, LLC, CrossCountry Energy, LLC, each wholly owned subsidiary thereof
and Citrus Corp. For purposes of this definition, "control" means the power to
direct the management and policies of such entity, whether through the ownership
of Voting Securities, by contract or otherwise.
 
     2.54. "Ten Percent Shareholder" shall have the meaning given to that term
in Section 5.2.
 
     2.55. "Voting Securities" means any securities that at the applicable time
are entitled to vote generally in the election of directors, in the admission of
general partners, or in the selection of any other similar governing body.
 
 
                                     III.
 
                      SHARES OF STOCK SUBJECT TO THE PLAN
 
     3.1. Maximum Shares. Subject to the provisions of Section 3.6 and Section
13.1, the aggregate number of shares of Stock that may be issued or transferred
pursuant to Awards under the Plan (the "Maximum Shares") shall be Nine Million
(9,000,000); provided, however, that, notwithstanding anything to the contrary
contained herein: (a) the total number of shares of Stock that can be issued or
transferred pursuant to Stock Awards, Performance
 
 
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Units and Other Equity Based Rights shall not exceed One and a Half Million
(1,500,000) Shares, and (b) the total number of shares of Stock that can be
issued or transferred through Incentive Options shall not exceed Six Million
Nine Hundred Ninety Five Thousand (6,995,000) shares.
 
     3.2. Available Shares. Except as otherwise provided in Section 3.3, at any
time, the number of shares of Stock that may then be made subject to issuance or
transfer pursuant to new Awards under the Plan (the "Available Shares") shall be
equal to (a) the number of Maximum Shares minus (b) the sum of (1) the number of
shares of Stock subject to issuance or transfer upon exercise or settlement of
then outstanding Awards (provided that shares of Stock subject to issuance or
transfer upon exercise or settlement of then outstanding Linked Stock
Appreciation Rights shall only be counted once, and not for both the Option and
related Linked Stock Appreciation Right and provided further that Awards that
may but need not be settled in Stock shall be charged against the number of
Maximum Shares in such amounts and at such times as the Committee shall
determine from time to time) and (2) the number of shares of Stock that have
been issued or transferred upon exercise or settlement of Awards.
 
     3.3. Restoration of Unused Shares. If Stock subject to any Award is not
issued or transferred, or ceases to be issuable or transferable, for any reason,
including because an Award is forfeited, terminated, expires unexercised, is
settled in cash in lieu of Stock or is exchanged for other Awards, the shares of
Stock that were subject to that Award shall no longer be charged against the
number of Maximum Shares in calculating the number of Available Shares under
Section 3.2 and shall again be included in Available Shares.
 
     3.4. Description of Shares. The shares of Stock to be delivered under the
Plan shall be made available from (a) authorized but unissued shares of Stock,
(b) Stock held in the treasury of the Company, or (c) previously issued shares
of Stock reacquired by the Company, including shares purchased on the open
market, in each situation as the Board of Directors or the Committee may
determine from time to time. All shares of Stock issued or transferred as
provided in the Plan shall be fully paid and non-assessable to the extent
permitted by law.
 
     3.5. Listing, Registration, etc. of Shares. If at any time the Board of
Directors shall determine in its discretion that the listing, registration or
qualification of the shares of Stock covered by the Plan upon any national
securities exchange or other trading system or under any state or federal law,
or the consent or approval of any governmental or regulatory body, is necessary
or desirable as a condition of, or in connection with, the issuance or transfer
of shares of Stock under the Plan, no shares of Stock shall be issued or
transferred under the Plan unless and until such listing, registration,
qualification, consent or approval shall have been effected or obtained, or
otherwise provided for, free of any conditions not acceptable to the Board of
Directors. Nothing in the Plan shall require the Company to list, register or
qualify any securities, to obtain any such consent or approval, or to maintain
any such listing, registration, qualification, consent or approval.
 
     3.6. Reduction in Outstanding Shares of Stock. Nothing in this Article III
shall impair the right of the Company to reduce the number of outstanding shares
of Stock pursuant to repurchases, redemptions, or otherwise; provided, however,
that no reduction in the number of outstanding shares of Stock shall (a) impair
the validity of any outstanding Award, whether or not that Award is fully
exercisable or fully vested, or (b) impair the status of any shares of Stock
previously issued or transferred pursuant to an Award or thereafter issued or
transferred pursuant to a then-outstanding Award as duly authorized, validly
issued, fully paid, and nonassessable shares.
 
 
                                      IV.
 
                          ADMINISTRATION OF THE PLAN
 
     4.1. Committee. The Board of Directors shall designate the Committee to
administer the Plan, each member of which shall at all times be (a) a
Non-Employee Director and (b) an Outside Director. The number of individuals
that shall constitute the Committee shall be determined from time to time by the
Board of Directors, but shall be no fewer than two (2) individuals.
 
     4.2. Duration, Removal, Etc. The members of the Committee shall serve at
the pleasure of the Board of Directors, which shall have the power, at any time
and from time to time, to remove members from or add members to the Committee.
Removal from the Committee may be with or without cause. Any individual serving
as a member of the Committee shall have the right to resign from membership on
the Committee by written notice to the Board of Directors. The Board of
Directors, and not the remaining members of the Committee, shall have the power
and
 
 
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authority to fill vacancies on the Committee, however caused. The Board of
Directors shall promptly fill any vacancy that causes the number of members of
the Committee to be below two (2) or any other number that Rule 16b-3 or Section
162(m) may require from time to time.
 
     4.3. Meetings and Actions of Committee. The Board of Directors shall
designate which of the Committee members shall be the chairman of the Committee.
If the Board of Directors fails to designate a Committee chairman, the members
of the Committee shall elect one of the Committee members as chairman, who shall
act as chairman until the director ceases to be a member of the Committee or
until the Board of Directors elects a new chairman. The Committee shall hold its
meetings at such times and places as the chairman of the Committee may
determine. At all meetings of the Committee, a quorum for the transaction of
business shall be required, and a quorum shall be deemed present if at least a
majority of the members of the Committee are present. At any meeting of the
Committee, each member shall have one vote. All decisions and determinations of
the Committee shall be made by the majority vote or majority decision of all of
its members present at a meeting at which a quorum is present; provided,
however, that any decision or determination reduced to writing and signed by all
of the members of the Committee shall be as fully effective as if it had been
made at a meeting that was duly called and held. The Committee may make any
rules and regulations for the conduct of its business that are not inconsistent
with the provisions of the Plan, the Certificate of Incorporation of the
Company, the Bylaws of the Company, Rule 16b-3 and Section 162(m), to the extent
applicable, as the Committee may deem advisable.
 
     4.4. Committee's Powers. Subject to the express provisions of the Plan, any
applicable Award Agreement, Rule 16b-3 and Section 162(m), to the extent
applicable, the Committee shall have the authority (a) to adopt, amend, and
rescind administrative, interpretive and other rules and regulations relating to
the Plan; (b) to determine the Eligible Individuals to whom, and the time or
times at which, Awards shall be granted; (c) to determine the number of shares
of Stock, or amount of cash or other property or assets, that shall be the
subject of each Award; (d) to determine the terms and provisions of each Award
Agreement and any amendments thereto, including provisions defining or otherwise
relating to (i) the term and the period or periods and extent of exercisability
of the Options, Stock Appreciation Rights and other Awards, (ii) the extent to
which the transferability of shares of Stock issued or transferred pursuant to
any Award is restricted, (iii) the effect of termination of employment on the
Award, and (iv) except as provided in Section 13.5, the effect of leaves of
absence and the effect of transfers of an Eligible Individual's employment from
the Company to a Subsidiary or from a Subsidiary to the Company (consistent with
any applicable regulations of the Internal Revenue Service and any other
requirements of applicable law with respect to the same); (e) to construe the
respective Award Agreements, the Plan, and any rules or regulations with respect
thereto; (f) to make determinations of the Fair Market Value of the Stock
pursuant to the Plan; (g) to amend any Award Agreement or waive any provision,
condition or limitation thereof; (h) to delegate its duties under the Plan to
such agents as it may appoint from time to time, provided that the Committee may
not delegate its duties with respect to making Awards to Eligible Individuals;
(i) to take or refrain from taking such other actions as are described in the
Plan as within the purview of the Committee; and (j) to make all other
determinations, perform all other acts, and exercise all other powers and
authority necessary or advisable for administering the Plan, including the
delegation of those ministerial acts and responsibilities as the Committee deems
appropriate. Subject to Rule 16b-3 and Section 162(m), to the extent applicable,
the Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan, in any Award, or in any Award Agreement in the manner
and to the extent it deems necessary or desirable to carry the Plan into effect.
Any determinations and other actions of the Committee with respect to any of the
matters referred to in this Section 4.4 or elsewhere in the Plan or in any Award
Agreement need not be consistent, even among Eligible Individuals who are
similarly situated and/or who have previously received similar or other Awards,
except as may be specifically provided to the contrary in the Plan or in the
applicable Award Agreement. The determinations and other actions of the
Committee with respect to any of the matters referred to in this Section 4.4 or
elsewhere in the Plan or in any Award Agreement shall, except as may be
specifically provided to the contrary in the Plan or in the applicable Award
Agreement, be made in the sole discretion of the Committee (subject to
modification or rescission by the Board of Directors, if consistent with Rule
16b-3 and Section 162(m), to the extent applicable) and shall be final, binding
and conclusive.
 
     4.5. Counsel, Consultants and Agents. The Committee may employ such legal
counsel, consultants and agents as it may deem desirable for the administration
of the Plan and may rely upon any opinion received from any such counsel or
consultants and any computation received from any such consultants or agents.
Expenses incurred by the Committee in the engagement of any such counsel,
consultants or agents shall be paid by the Company.
 
 
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                                      V.
 
              ELIGIBILITY AND PARTICIPATION; CERTAIN AWARD TERMS
 
     5.1. Eligible Individuals. Awards may be granted pursuant to the Plan only
to persons who are Eligible Individuals at the time of the grant thereof (and,
with respect to Incentive Options, satisfy the requirements of Section 5.2).
Notwithstanding the preceding sentence, except as may otherwise be provided in
guidance issued by the IRS under Section 409A, a person shall not be awarded an
Option or Stock Appreciation Right pursuant to the Plan if the Subsidiary by
which such person is employed (or to which such person provides services) would
not be considered part of the same "single employer" as the Company under
Sections 414(b) and 414(c) of the Code.
 
     5.2. Limitation for Incentive Options. Notwithstanding any provision
contained in the Plan to the contrary, (a) a person shall not be eligible to
receive an Incentive Option unless the person is an Eligible Individual employed
by the Company or any Subsidiary of the Company that is a subsidiary
corporation, or is treated as, or as part of, a subsidiary corporation of the
Company (within the meaning of Section 424 of the Code) at the time of the grant
thereof, and (b) a person shall not be eligible to receive an Incentive Option
if, immediately before the time the Option is granted, that person owns (within
the meaning of Sections 422 and 424 of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or a Subsidiary of the Company that is a subsidiary corporation, or is
treated as, or as part of, a subsidiary corporation of the Company (within the
meaning of Section 424 of the Code) (a "Ten Percent Shareholder"). Nevertheless,
clause (b) of the foregoing sentence of this Section 5.2 shall not apply if, at
the time the Incentive Option is granted, the Exercise Price of the Incentive
Option is at least one hundred and ten percent (110%) of the Fair Market Value
per share of Stock and the Incentive Option is not, by its terms, exercisable
after the expiration of five (5) years from the Date of Grant.
 
     5.3. Grant of Awards. Subject to the express provisions of the Plan, the
Committee shall determine which Eligible Individuals shall be granted Awards
from time to time. In making grants, the Committee may take into consideration
the contribution the potential Holder has made or may make to the success of the
Company or its Subsidiaries and such other considerations as the Committee may
from time to time determine. The Committee shall also determine the number (or
the method of determining the number) of shares of Stock, or amounts (or method
of determining the amounts) of cash or other property or assets, subject to each
of the Awards.
 
     5.4. Date of Grant. The date on which the Award covered by an Award
Agreement is granted (the "Date of Grant") shall be the date specified by the
Committee as the effective date or date of grant of an Award. Except as
otherwise determined by the Committee, in no event shall a Holder gain any
rights with respect to an Award in addition to those specified by the Committee
in its grant, regardless of the time that may pass between the grant of the
Award and the actual execution or delivery of the Award Agreement by the Company
and (if required in the Award Agreement) the Holder. The Committee may
invalidate an Award at any time before the Award Agreement is executed by the
Holder (if such execution is required) or is delivered to the Holder (if such
execution is not required), and any such invalidated Award shall be treated as
never having been granted.
 
     5.5. Award Agreements. Each Award granted under the Plan shall be
evidenced by an Award Agreement that is executed by the Company and, if
required in the Award Agreement, by the Eligible Individual to whom the Award
is granted, and that includes such terms, conditions and limitations that the
Committee shall deem necessary or desirable. More than one Award may be granted
under the Plan to the same Eligible Individual and be outstanding concurrently
(provided, however, that the grant of certain rights in tandem with an
Incentive Option may result in the Incentive Option being treated as a
Nonstatutory Option).
 
     5.6. No Right to Award. The adoption of the Plan shall not be deemed to
give any person a right to be granted an Award.
 
     5.7. Limitation on Individual Awards. No Eligible Individual shall, in one
calendar year, be granted Awards to which more than Five Hundred Thousand
(500,000) shares of Stock are subject, without regard to any vesting limitations
with respect to such grant.
 
 
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     5.8. Payment of Taxes. The Committee may require a Holder to pay to the
Company (or, if the Holder is an employee of a Subsidiary of the Company, to
such Subsidiary), with respect to an Option or Stock Appreciation Right, at the
time of the exercise of such Option or Stock Appreciation Right, with respect to
a Stock Award, at such time or times as may be designated by the Committee, with
respect to a Performance Unit, at the time of the payment of cash or Stock in
connection with the Performance Unit, and with respect to Other Equity-Based
Rights, at such time or times as may be designated by the Committee, the amount
that the Committee deems necessary to satisfy the Company's or such Subsidiary's
current or future obligation to withhold federal, state or local income or other
taxes associated with the exercise, grant or payment with respect to the
relevant Award. Upon the exercise of an Option or Stock Appreciation Right
requiring tax withholding (or, with respect to a Stock Award, a Performance
Unit, or an Other Equity-Based Right, prior to such time or times as such
payment is due from the Holder to the Company or such Subsidiary), the Holder
may (a) request that the Company withhold from the shares of Stock to be issued
or transferred to the Holder, or the amount of cash to be paid to the Holder,
the number of shares (based upon the shares' Fair Market Value per share as of
the day before the date of withholding) or the amount of cash necessary to
satisfy the Company's or such Subsidiary's obligation to withhold taxes, the
determination as to such obligation to be based on the shares' Fair Market Value
per share as of the day before the date of exercise (with respect to an Option
or Stock Appreciation Right) or as of the date on which tax withholding is to be
made (with respect to Stock Awards, Performance Units or Other Equity-Based
Rights); (b) request that the Holder be allowed to deliver to the Company
sufficient shares of Stock (based upon the shares' Fair Market Value per share
as of the day before the date of such delivery) to satisfy the Company's or such
Subsidiary's tax withholding obligations; or (c) deliver sufficient cash to the
Company to satisfy the Company's or such Subsidiary's tax withholding
obligations. Holders who wish to proceed under clause (a) or (b) above must make
their request to do so at such time and in such manner that the Committee
prescribes from time to time, and such transaction shall be effected in
accordance with such procedures as the Committee may establish from time to
time. Notwithstanding the foregoing, however, the Committee may, at its sole
option, deny any Holder's request to proceed under clause (a) or (b) above or
may impose any conditions it deems appropriate on such action, including the
escrow of shares of Stock or cash. In the event the Committee subsequently
determines that the cash amount or the aggregate Fair Market Value (as
determined above) of any shares of Stock withheld or tendered as payment of any
tax withholding obligation is insufficient to discharge that tax withholding
obligation, then the Holder shall pay to the Company, immediately upon the
Committee's request, the amount of that deficiency. The Company may also, if the
Committee so elects, retain any cash and any certificates evidencing shares of
Stock to which such Holder is entitled upon the exercise of the Option or Stock
Appreciation Right or in connection with a Stock Award or upon settlement of a
Performance Unit or with respect to any Other Equity-Based Right as security for
the payment of any tax withholding obligation until satisfied, and the Company
shall have all rights of a secured creditor under the Uniform Commercial Code
with respect to the same. Each Holder acknowledges that the delivery to the
Company of Stock acquired by such Holder upon exercise of an Incentive Option
may constitute a disqualifying disposition of such Stock for purposes of the
Code.
 
     5.9. Forfeiture and Restrictions on Transfer; Other Conditions. Without
limitation of any other provisions of the Plan or any power of the Board of
Directors or the Committee hereunder, any Award Agreement may contain or
otherwise provide for, in addition to any terms, conditions or limitations
required or permitted by other provisions of the Plan, such other terms,
conditions or limitations as the Committee may deem advisable or proper from
time to time provided any such additional term, condition or limitation is not
inconsistent with the terms of the Plan, including (i) restrictions on the
transferability of the Award; (ii) restrictions or the removal of restrictions
upon the exercise of an Award; (iii) restrictions or the removal of restrictions
on the retention or transfer of any shares of Stock acquired pursuant to an
Award or otherwise; (iv) options and rights of first refusal in favor of the
Company and one or more stockholders of the Company; (v) requirements that the
Holder render substantial services to the Company or one or more of its
Subsidiaries for a specified period of time; (vi) restrictions on disclosure and
use of certain information regarding the Company or other Persons; (vii)
restrictions on solicitation of employees and other Persons; (viii) restrictions
on competition; and (ix) other terms, conditions or limitations; all of which as
the Committee may deem proper or advisable from time to time.
 
 
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                                      VI.
 
                        TERMS AND CONDITIONS OF OPTIONS
 
     All Options granted under the Plan shall comply with, and the related
Option Agreements shall be subject to, the terms, conditions and limitations set
forth in this Article VI (to the extent each such term, condition or limitation
applies to the form of Option and provided that, if any such term, condition or
limitation is left to the discretion of the Committee, the Committee determines
to apply it to such Option) and also to the terms, conditions and limitations
set forth in Article XIII (to the extent each such term, condition or limitation
applies to the form of Option and provided that, if any such term, condition or
limitation is left to the discretion of the Committee, the Committee determines
to apply it to such Option); provided, however, that the Committee may authorize
an Option Agreement that expressly contains or is subject to terms, conditions
and limitations that differ from any of the terms, conditions and limitations of
Article XIII. The Committee may also authorize an Option Agreement that contains
or is subject to any or all of the terms, conditions and limitations of Article
XII (to the extent each such term, condition or limitation applies to the form
of Option and provided that, if any such term, condition or limitation is left
to the discretion of the Committee, the Committee determines to apply it to such
Option) or similar terms, conditions and limitations; nevertheless, no term,
condition or limitation of Article XII (or any similar term, condition or
limitation) shall apply to an Option Agreement unless the Option Agreement
expressly states that such term, condition or limitation applies.
 
     6.1. Number of Shares; Type of Award. Each Option Agreement shall state the
total number of shares of Stock to which it relates. Each Option Agreement shall
identify the Option evidenced thereby as an Incentive Option or Nonstatutory
Option, as the case may be, and no Option Agreement shall cover both an
Incentive Option and a Nonstatutory Option.
 
     6.2. Vesting. Each Option Agreement shall state (i) any time, periods or
other conditions in or pursuant to which the right to exercise the Option or a
portion thereof shall vest and (ii) the number (or method of determining the
number) of shares of Stock with respect to each such vesting.
 
     6.3. Expiration. Nonstatutory Options and Incentive Options may be
exercised during the term determined by the Committee and set forth in the
Option Agreement; provided that no Incentive Option shall be exercised after
the expiration of a period of ten (10) years (or, with respect to a Ten Percent
Shareholder, five (5) years) commencing on the Date of Grant of the Incentive
Option.
 
     6.4. Exercise Price. Each Option Agreement shall state the exercise price
per share of Stock (the "Exercise Price"), which shall not be less than the
greatest of (a) the par value per share of the Stock, (b) one hundred percent
(100%) of the Fair Market Value per share of the Stock on the Date of Grant of
the Option, or (c) in the case of an Incentive Option granted to a Ten Percent
Shareholder, one hundred ten percent (110%) of the Fair Market Value per share
of the Stock on the Date of Grant of the Option.
 
     6.5. Method of Exercise. Each Option shall be exercisable only by notice of
exercise (the "Exercise Notice") in the manner (including the time period)
specified by the Committee from time to time (which need not comply with Section
15.14 if expressly so provided by the Committee) to the Secretary of the Company
at the chief executive office of the Company (or to such other person and
location as may be designated from time to time by the Committee) during the
term of the Option, which notice shall (a) state the number of shares of Stock
with respect to which the Option is being exercised, (b) be signed or otherwise
given by the Holder of the Option or by another Person authorized to exercise
the Option pursuant to Section 13.6 or 13.7 (to the extent that each is
applicable to the Option) or pursuant to the relevant Option Agreement, (c) be
accompanied by the aggregate Exercise Price for all shares of Stock for which
the Option is exercised in accordance with Section 6.7, and (d) include such
other information, instruments, and documents as may be required to satisfy any
other condition under the Plan or the relevant Option Agreement or as may be
reasonably imposed by the Committee. The Option shall not be deemed to have been
exercised unless all of the requirements of the preceding provisions of this
Section 6.5 have been satisfied.
 
     6.6. Incentive Option Exercises and Disqualifying Dispositions. Except as
provided in Paragraph 13.6(b) or Section 13.7 (to the extent that each is
applicable to the Option), during the Holder's lifetime, only the Holder may
exercise an Incentive Option. The Holder of an Incentive Option shall
immediately notify the Company in
 
 
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<PAGE>
 
writing of any disposition of any Stock acquired pursuant to the Incentive
Option that would disqualify the Incentive Option from being treated as an
incentive stock option under Section 422 of the Code (including any disposition
of Stock upon exercise of an Award requiring exercise, or in connection with the
payment of taxes with respect to an Award, if the same would constitute such a
disqualifying disposition). The notice shall state the number of shares disposed
of, the dates of acquisition and disposition of the shares, and the
consideration received in connection with each disposition.
 
     6.7. Medium and Time of Payment. The Exercise Price of an Option shall be
payable in full upon the exercise of the Option (a) in cash, by cashier's check,
by wire transfer or by other means as may be acceptable to the Committee from
time to time, (b) with the Committee's prior consent (which consent, with
respect to an Incentive Option, must be evidenced in the relevant Option
Agreement as of the Date of Grant), and to the extent permitted by applicable
law, with shares of Stock that would otherwise be issued or transferred to the
Holder upon the exercise of the Option or with shares of Stock already owned by
the Holder (but in all events excluding any shares that are to be or were issued
or transferred pursuant to a Restricted Stock Award with respect to which the
restrictions have not yet expired or been removed or that otherwise are or will
be subject to restrictions on transferability or a substantial risk of
forfeiture) and having an aggregate Fair Market Value at least equal to the
aggregate Exercise Price payable in connection with such exercise, and pursuant
to such procedures (including constructive delivery of such shares of Stock) as
the Committee may establish from time to time for such purpose, (c) with the
Committee's prior consent (which consent, with respect to an Incentive Option,
must be evidenced in the relevant Option Agreement as of the Date of Grant), and
to the extent permitted by applicable law, in such other forms, under such other
terms, and by such other means (including those specified in Section 6.8) as may
be acceptable to the Committee from time to time, and pursuant to such
procedures as the Committee may establish from time to time for such purpose, or
(d) with the Committee's prior consent (which consent, with respect to an
Incentive Option, must be evidenced in the relevant Option Agreement as of the
Date of Grant), by any combination of clauses (a), (b) and (c). Unless otherwise
provided in the relevant Option Agreement, any portion of the Exercise Price
that is paid with shares of Stock that the Holder acquired from the Company,
directly or indirectly, shall be paid only with shares of Stock that the Holder
has owned for more than six (6) months (or such longer or shorter period of
time, if any, as may be required to avoid payment with such shares resulting in
a charge to earnings for financial accounting purposes). If the Committee elects
to accept shares of Stock in payment of all or any portion of the aggregate
Exercise Price, then (for purposes of payment of the aggregate Exercise Price)
unless otherwise provided in the relevant Option Agreement those shares of Stock
shall be deemed to have a cash value equal to their aggregate Fair Market Value
determined as of the day before the date of the delivery of the Exercise Notice.
Each Holder acknowledges that the delivery to the Company of Stock acquired by
such Holder upon exercise of an Incentive Option may constitute a disqualifying
disposition of such Stock for purposes of the Code.
 
     6.8. Payment with Sale Proceeds. The Committee may (but shall not be
required to) approve from time to time (which approval, with respect to an
Incentive Option, must be evidenced in the relevant Option Agreement as of the
Date of Grant) arrangements with a brokerage firm (provided that such
arrangements comply with applicable law, including Regulation T of the Board of
Governors of the Federal Reserve System), under which that brokerage firm, on
behalf of the Holder, shall pay to the Company the aggregate Exercise Price of
the Option being exercised (either as a loan to the Holder or from the proceeds
of the sale of Stock issued or transferred pursuant to that exercise of the
Option), and the Company shall cause the shares with respect to which the Option
was so exercised to be delivered to the brokerage firm. Such transactions shall
be effected in accordance with such procedures (which may include payment of the
exercise price by, or delivery of Stock to, such brokerage firm) as the
Committee may establish from time to time.
 
     6.9. Reload Provisions. The Committee may cause one or more Option
Agreements to contain provisions pursuant to which a Holder who pays all or a
portion of the Exercise Price of an Option, or the tax required to be withheld
pursuant to the exercise of an Option, by surrendering (or having withheld)
shares of Stock shall automatically be granted an Option for the purchase of the
number of shares of Stock equal to the number of shares so surrendered (or
withheld) (a "Reload Option"). With respect to an Incentive Option, no Holder
shall be entitled to a Reload Option unless the Holder's Option Agreement, as of
the Date of Grant, provides for the Reload Option. The Date of Grant of the
Reload Option shall be the date on which the Holder surrenders (or the Company
withholds) the shares of Stock in respect of which the Reload Option is granted.
The Reload Option shall have an Exercise Price equal to the Fair Market Value
per share of Stock on the Date of Grant of the Reload Option and shall have
 
 
                                      B-11
<PAGE>
 
a term that is no longer than the remaining term of the underlying Option. If a
Reload Option relates to shares surrendered or withheld in connection with the
exercise of an Incentive Option, then for purposes of the Plan such Reload
Option shall be considered an Incentive Option provided that such Reload Option
otherwise satisfies the requirements for an incentive stock option under Section
422 of the Code; otherwise, a Reload Option shall be treated as a Nonstatutory
Option for purposes of the Plan. Option Agreements containing provisions for
Reload Options may contain such terms, conditions and limitations with respect
to such Reload Options as the Committee may determine (which may include vesting
provisions, limitations on the number of shares subject to Reload Options or the
number of times Reload Options shall be granted, or prohibitions on the grant of
Reload Options with respect to options exercised following acceleration of
vesting or following or in anticipation of a Change in Control). Separate Option
Agreements may from time to time be granted by the Company to existing Holders
of Nonstatutory Options or Incentive Options to provide the same benefit to such
Holders as the Reload Options described in the foregoing provisions of this
Section 6.9, but any such stand alone Options shall not be deemed to be Reload
Options for purposes of the Plan.
 
     6.10. Limitation on Aggregate Value of Shares That May Become First
Exercisable During Any Calendar Year Under an Incentive Option. With respect to
any Incentive Option granted under the Plan, the aggregate Fair Market Value of
shares of Stock subject to an incentive stock option that first becomes
exercisable by a Holder in any calendar year (under all plans of the Company,
its Subsidiaries that are subsidiary corporations, or are treated as, or as part
of, a subsidiary corporation of the Company (within the meaning of Section 424
of the Code) or any predecessor corporation) may not (with respect to that
Holder) exceed $100,000, or such other amount as may be prescribed under Section
422 of the Code. As used in the previous sentence, Fair Market Value shall be
determined as of the date the Incentive Option is granted, and the limitation
shall be applied by taking into account Incentive Options in the order in which
they were granted. For purposes of this Section 6.10, "predecessor corporation"
means (a) a corporation that was a party to a transaction described in Section
424(a) of the Code (or which would be so described if a substitution or
assumption under that section had been effected) with the Company, (b) a
corporation which, at the time the new incentive stock option (within the
meaning of Section 422 of the Code) is granted, is a related corporation of the
Company, or (c) a predecessor corporation of any such corporations. Failure to
comply with this Section 6.10 (including any such failure resulting from
accelerated vesting of an Incentive Option, whether under Section 12.1 or
Section 13.21 (to the extent that either is applicable) or otherwise) shall not
impair the enforceability or exercisability of any Incentive Option, but shall
cause the Incentive Option to be treated as a Nonstatutory Option for federal
tax purposes to the extent that it exceeds the $100,000 limitation described in
this Section 6.10.
 
     6.11. No Fractional Shares. The Company shall not in any case be required
to sell, issue, transfer or deliver any fractional shares with respect to any
Option. In lieu of the issuance or transfer of any fractional share of Stock,
the Company shall pay to the Holder an amount in cash equal to the same fraction
(as the fractional share) of the Fair Market Value of a share of Stock
determined as of the date of the applicable Exercise Notice.
 
     6.12. Other Provisions Regarding Incentive Options. With respect to any
Option that is designated in the governing Option Agreement as an Incentive
Option, (i) if any of the terms, conditions or limitations of the Plan or the
relevant Option Agreement conflict with the requirements of Sections 421, 422
and 424 of the Code, as applicable, then those conflicting terms, conditions and
limitations shall be deemed inoperative to the extent they so conflict with such
requirements, and (ii) if the Plan or such Option Agreement does not contain any
provision required to be included herein or therein under Sections 421, 422 and
424 of the Code, as applicable, that provision shall be deemed to be
incorporated herein or therein with the same force and effect as if that
provision had been set out at length herein or therein, in each case unless the
Committee determines to treat such Option (in whole or in part) as a
Nonstatutory Option. Notwithstanding the foregoing, however, (i) to the extent
that any Option that was intended to qualify as an Incentive Option nevertheless
cannot so qualify, that Option (to that extent) shall be deemed a Nonstatutory
Option for all purposes of the Plan, and (ii) in no event shall this Section
6.12 operate to overcome the terms under which such Option vests (including any
accelerated vesting, to the extent applicable).
 
 
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                                     VII.
 
                           STOCK APPRECIATION RIGHTS
 
     All Stock Appreciation Rights granted under the Plan shall comply with, and
the related Award Agreements shall be subject to, the terms, conditions and
limitations set forth in this Article VII (to the extent each such term,
condition or limitation applies to the form of Stock Appreciation Right and
provided that, if any such term, condition or limitation is left to the
discretion of the Committee, the Committee determines to apply it to such Stock
Appreciation Right) and also to the terms, conditions or limitations set forth
in Article XIII (to the extent each such term, condition or limitation applies
to the form of Stock Appreciation Right and provided that, if any such term,
condition or limitation is left to the discretion of the Committee, the
Committee determines to apply it to such Stock Appreciation Right); provided,
however, that the Committee may authorize an Award Agreement governing a Stock
Appreciation Right that expressly contains or is subject to terms, conditions
and limitations that differ from any of the terms, conditions and limitations
set forth in Article XIII. The Committee may also authorize an Award Agreement
governing a Stock Appreciation Right that contains or is subject to any or all
of the terms, conditions and limitations of Article XII (to the extent each such
term, condition or limitation applies to the form of Stock Appreciation Right
and provided that, if any such term, condition or limitation is left to the
discretion of the Committee, the Committee determines to apply it to such Stock
Appreciation Right) or similar terms, conditions and limitations; nevertheless,
no term, condition or limitation of Article XII (or any similar term, condition
or limitation) shall apply to an Award Agreement governing a Stock Appreciation
Right unless such Award Agreement expressly states that such term, condition or
limitation applies.
 
     7.1. Type of Award. A Stock Appreciation Right may be granted to an
Eligible Individual (a) in connection with an Option, either at the time of
grant or at any time during the term of the Option (a "Linked Stock Appreciation
Right"), or (b) without relation to an Option (a "Non-Linked Stock Appreciation
Right"). Each Award Agreement relating to a Stock Appreciation Right shall
identify the Stock Appreciation Rights evidenced thereby as Linked Stock
Appreciation Rights or Non-Linked Stock Appreciation Rights, as the case may be,
and no Award Agreement with respect to Stock Appreciation Rights shall cover
both Linked Stock Appreciation Rights and Non-Linked Stock Appreciation Rights.
 
     7.2. Linked Stock Appreciation Rights. A Linked Stock Appreciation Right
shall entitle the Holder, upon exercise, to surrender the related Option or any
portion thereof, to the extent unexercised, and to receive payment of an amount
computed pursuant to Paragraph 7.2(b). That Option shall then cease to be
exercisable to the extent surrendered. No Linked Stock Appreciation Right shall
be issued if the Committee determines that such issuance may cause the Limited
Stock Appreciation Right, the related Option, or both to constitute or to
include a deferral of compensation subject to Section 409A. A Linked Stock
Appreciation Right shall relate to the same number of shares of Stock as the
Option to which it relates, and shall be subject to the terms of the Option
Agreement for the related Option, but shall also be subject to the following
additional provisions:
 
          (a) Exercise and Transfer. A Linked Stock Appreciation Right shall be
exercisable only at such time or times and only to the extent that the related
Option is exercisable (provided, however, that a Linked Stock Appreciation Right
shall be exercisable only if and to the extent that the Fair Market Value per
share of Stock that is subject to the related Option exceeds the Exercise Price
for such Option) and shall not be transferable except to the extent that the
related Option is transferable. Without limitation of the foregoing, to the
extent that the related Option terminates, expires or has been exercised, the
Linked Stock Appreciation Right shall terminate.
 
          (b) Value of Right. Upon the exercise of a Linked Stock Appreciation
Right, the Holder shall be entitled to receive payment from the Company of an
amount determined by multiplying:
 
          The difference obtained by subtracting the Exercise Price of a share
          of Stock specified in the related Option from the Fair Market Value of
          a share of Stock on the date of exercise of the Linked Stock
          Appreciation Right, by
 
          The number of shares as to which that Linked Stock Appreciation Right
has been exercised.
 
     7.3. Non-Linked Stock Appreciation Rights. A Non-Linked Stock Appreciation
Right shall be exercisable as determined by the Committee and set forth in the
Award Agreement governing the Non-Linked Stock Appreciation Right, which Award
Agreement shall comply with the following provisions:
 
 
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          (a) Number of Shares. Each Award Agreement shall state the total
number of shares of Stock to which the Non-Linked Stock Appreciation Right
relates.
 
          (b) Vesting. Each Award Agreement shall state (i) any time, periods or
other conditions in or pursuant to which the right to exercise the Non-Linked
Stock Appreciation Right or a portion thereof shall vest and (ii) the number (or
method of determining the number) of shares of Stock with respect to each such
vesting.
 
          (c) Expiration. Each Award Agreement shall state the date at which the
Non-Linked Stock Appreciation Right shall expire to the extent not previously
exercised.
 
          (d) SAR Exercise Price; Value of Right. Each Award Agreement shall
state the SAR Exercise Price, which SAR Exercise Price shall not be less than
one hundred percent (100%) of the Fair Market Value per share of the Stock on
the Date of Grant of the Non-Linked Stock Appreciation Right. A Non-Linked Stock
Appreciation Right shall entitle the Holder, upon exercise of the Non-Linked
Stock Appreciation Right, to receive payment of an amount determined by
multiplying:
 
          the difference obtained by subtracting the SAR Exercise Price from the
          Fair Market Value of a share of Stock on the date of exercise of the
          Non-Linked Stock Appreciation Right, by
 
          the number of vested rights as to which the Non-Linked Stock
          Appreciation Right has been exercised.
 
     7.4. Method of Exercise. Each Stock Appreciation Right shall be exercisable
only by notice of exercise (the "Exercise Notice") in the manner specified by
the Committee from time to time (which need not comply with Section 15.14 if
expressly so provided by the Committee) to the Secretary of the Company at the
chief executive office of the Company (or to such other person and location as
may be designated from time to time by the Committee) during the term of the
Stock Appreciation Right, which notice shall (a) state the number of shares of
Stock with respect to which the Stock Appreciation Right is being exercised, (b)
be signed or otherwise given by the Holder of the Stock Appreciation Right or by
another person authorized to exercise the Stock Appreciation Right pursuant to
the Plan or the relevant Award Agreement, and (c) include such other
information, instruments and documents as may be required to satisfy any other
condition under the Plan or the relevant Award Agreement. The Stock Appreciation
Right shall not be deemed to have been exercised unless all of the requirements
of the preceding provisions of this Section 7.4 have been satisfied.
Notwithstanding the foregoing, a Non-Linked Stock Appreciation Right shall be
deemed exercised in full (to the extent that it is vested) on the last day of
its term, if not otherwise exercised by the Holder, provided that the Fair
Market Value per share of the shares of Stock subject to the Non-Linked Stock
Appreciation Right exceeds the SAR Exercise Price of such Non-Linked Stock
Appreciation Right on such date.
 
     7.5. Limitations on Rights. Notwithstanding Paragraph 7.2(b) and Paragraph
7.3(d), the Committee may limit the amount payable upon exercise of a Stock
Appreciation Right. Any such limitation must be set forth in the Award Agreement
governing the Holder's Stock Appreciation Right.
 
     7.6. Payment of Rights. Payment of the amount determined under Paragraph
7.2(b) or Paragraph 7.3(d) and Section 7.5 may be made solely in whole shares of
Stock valued at the Fair Market Value per share of Stock on the date of exercise
of the Stock Appreciation Right or, if so determined by the Committee, solely in
cash or a combination of cash and Stock; provided, however, that no such payment
shall be made in cash unless the Committee determines that a payment in such
form will not cause the Stock Appreciation Right or any payment made with
respect thereto to be treated as a deferral of compensation subject to the
requirements of Section 409A. If the Committee decides to make full payment in
shares of Stock and the amount payable results in a fractional share, payment
for the fractional share shall be made in cash (subject to the proviso in the
preceding sentence).
 
 
                                     VIII.
 
                                 STOCK AWARDS
 
     All Stock Awards granted under the Plan shall comply with, and the related
Award Agreements shall be subject to, the terms, conditions and limitations set
forth in this Article VIII (to the extent each such term, condition or
limitation applies to the form of Stock Award and provided that, if any such
term, condition or limitation is left to the discretion of the Committee, the
Committee determines to apply it to such Stock Award) and also to the terms,
 
 
                                      B-14
<PAGE>
 
conditions and limitations set forth in Article XIII (to the extent applicable
to the form of Stock Award and provided that, if any such term, condition or
limitation is left to the discretion of the Committee, the Committee determines
to apply it to such Stock Award); provided, however, that the Committee may
authorize an Award Agreement governing a Stock Award that expressly contains or
is subject to terms, conditions and limitations that differ from the terms,
conditions and limitations set forth in Article XIII. The Committee may also
authorize an Award Agreement governing a Stock Award that contains or is subject
to any or all of the terms, conditions and limitations of Article XII (to the
extent applicable to the form of Stock Award and provided that, if any such
term, condition or limitation is left to the discretion of the Committee, the
Committee determines to apply it to such Stock Award) or similar terms,
conditions and limitations; nevertheless, no term, condition or limitation of
Article XII (or any similar term, condition or limitation) shall apply to an
Award Agreement governing a Stock Award unless the Award Agreement expressly
states that such term, condition or limitation applies.
 
     8.1. Number of Shares; Type of Award. Each Award Agreement governing a
Stock Award shall state the total number of shares of Stock to which it relates
and shall designate each share as either associated with a Restricted Stock
Award or a Stock Bonus Award.
 
     8.2. Restrictions Applicable to Restricted Stock Awards. Unless otherwise
provided in the relevant Award Agreement, all shares of Stock granted or sold
pursuant to Restricted Stock Awards made under the Plan shall be subject to the
following terms, conditions and limitations:
 
          (a) Transferability. The shares may not be sold, transferred or
otherwise alienated or hypothecated until the restrictions are removed or
expire.
 
          (b) Legend. Each certificate representing such shares shall bear a
legend making appropriate reference to the restrictions imposed.
 
          (c) Possession. The Committee may (i) authorize issuance of a
certificate for shares associated with a Restricted Stock Award only upon
removal or expiration of the applicable restrictions, (ii) require the Company
to retain physical custody of certificates representing shares issued or
transferred pursuant to Restricted Stock Awards during the restriction period
and require the Holder of the Award to execute stock powers in blank for those
certificates and deliver those stock powers to the Company, (iii) require the
Holder to enter into an escrow agreement providing that the certificates
representing shares issued or transferred pursuant to Restricted Stock Awards
shall remain in the physical custody of an escrow holder until all restrictions
are removed or expire, or (iv) take such other steps as the Committee may
determine in order to enforce such restrictions.
 
          (d) Expiration or Removal of Restrictions. The restrictions imposed
pursuant to this Section 8.2 on Restricted Stock Awards shall expire as
determined by the Committee and set forth in the applicable Award Agreement.
Expiration of the restrictions may be based on or conditioned on the passage of
time, continuing employment or service as an employee or officer, achievement of
performance objectives, or other events, occurrences or conditions determined by
the Committee. Each Restricted Stock Award may have different restrictions,
including a different restriction period, as determined by the Committee. The
Committee may remove any restriction or reduce any restriction period applicable
to a particular Restricted Stock Award. Upon the expiration or removal of all
restrictions, the Company shall deliver to the Holder of the Restricted Stock
Award, as soon as practicable following the request of such Holder, a
certificate representing the number of shares for which such restrictions have
expired or been removed, free of any restrictive legend relating to the expired
or removed restrictions.
 
          (e) Rights as Stockholder. Subject to the provisions of this Section
8.2, the Committee may determine what rights, if any, the Holder shall have with
respect to the Restricted Stock Awards granted or sold, including any right to
vote the related shares or to receive dividends and other distributions paid or
made with respect thereto.
 
          (f) Other Conditions. The Committee may impose such other terms,
conditions or limitations on any shares granted or sold pursuant to Restricted
Stock Awards made under the Plan as it may deem advisable, including (i)
restrictions under the Securities Act or Exchange Act, (ii) restrictions
relating to the requirements of any securities exchange or quotation system upon
which the shares or shares of the same class are listed or traded, and (iii)
restrictions relating to any state or foreign securities law applicable to the
shares.
 
     8.3. Stock Bonus Awards. Any shares of Stock granted or sold pursuant to
Stock Bonus Awards made under the Plan shall not be subject to vesting or other
restrictions under Section 8.2 unless the Committee specifically
 
 
                                      B-15
<PAGE>
 
provides otherwise in the related Award Agreement; however, the Committee may,
in the related Award Agreement or otherwise, impose other terms, conditions and
limitations with respect to any such shares of Stock, even if similar or
identical to the provisions set forth in Section 8.2.
 
     8.4. Purchase and Payment. If any shares of Stock are to be sold rather
than granted pursuant to Restricted Stock Awards or Stock Bonus Awards made
under the Plan, then the relevant Award Agreement shall set forth the price to
be paid for such shares and the method of payment.
 
     8.5. Compliance with Section 409A. Each Restricted Stock Award or Stock
Bonus Award shall comply with the requirements of subsection (a) of Section
409A, if applicable, and be operated in accordance with such requirements.
 
 
                                      IX.
 
                               PERFORMANCE UNITS
 
     All Performance Units granted under the Plan shall comply with, and the
related Award Agreements shall be subject to, the terms, conditions and
limitations set forth in this Article IX (to the extent each such term,
condition or limitation applies to the form of Performance Unit and provided
that, if any such term, condition or limitation is left to the discretion of the
Committee, the Committee determines to apply it to such Performance Unit) and
also to the terms, conditions and limitations set forth in Article XIII (to the
extent each such term, condition or limitation applies to the form of
Performance Unit and provided that, if any such term, condition or limitation is
left to the discretion of the Committee, the Committee determines to apply it to
such Performance Unit); provided, however, that the Committee may authorize an
Award Agreement governing a Performance Unit that expressly contains or is
subject to terms, conditions and limitations that differ from the terms,
conditions and limitations set forth in Article XIII. The Committee may also
authorize an Award Agreement governing a Performance Unit that contains or is
subject to any or all of the terms, conditions and limitations of Article XII
(to the extent each such term, condition or limitation applies to the form of
Performance Unit and provided that, if any such term, condition or limitation is
left to the discretion of the Committee, the Committee determines to apply it to
such Performance Unit) or similar terms, conditions and limitations;
nevertheless, no term or provision of Article XII (or any similar term,
condition or limitation) shall apply to an Award Agreement governing a
Performance Unit unless such Award Agreement expressly states that such term,
condition or limitation applies.
 
     9.1. Number of Units. Each Award Agreement governing a Performance Unit
shall state the total number of Performance Units to be awarded under that Award
Agreement.
 
     9.2 Performance Period, Vesting, Etc. Each Award Agreement governing a
Performance Unit shall state (i) the beginning and ending dates of the relevant
Performance Period(s), (ii) any time, periods or other conditions in or pursuant
to which the right to receive the Performance Unit or a portion thereof shall
vest and (iii) the number of Performance Units (or portions thereof) with
respect to each such vesting.
 
     9.3. Multiple Grants. The Committee may make grants of Performance Units in
such a manner that two or more Performance Periods (which need not be the same
period or of the same duration) are in progress simultaneously. At or before the
beginning of each Performance Period, the Committee shall establish the
contingent value of each Performance Unit for that Performance Period, which may
vary depending on the degree to which performance objectives established by the
Committee are met.
 
     9.4. Performance Standards. At or before the beginning of each Performance
Period, the Committee shall (i) establish for that Performance Period such
specific performance objectives as the Committee believes are relevant to the
Company's overall business objectives, (ii) determine the minimum and maximum
value of a Performance Unit (which may be equal to the Fair Market Value per
share of Stock as of a specified date) and the value of a Performance Unit based
on the degree to which performance objectives are achieved, exceeded or not
achieved, (iii) determine a minimum performance level below which Performance
Units will be assigned a value of zero, and a maximum performance level above
which the value of Performance Units will not increase, and (iv) notify each
Holder of a Performance Unit for that Performance Period in writing of the
established performance objectives and minimum, target, and maximum Performance
Unit value for that Performance Period.
 
 
                                      B-16
<PAGE>
 
     9.5. Modification of Standards. If the Committee determines that the
established performance measures or objectives are no longer suitable to the
Company's objectives because of a change in the Company's business, operations,
corporate structure, capital structure, or other conditions the Committee deems
to be material, the Committee may modify the performance measures and objectives
as it considers appropriate and equitable.
 
     9.6. Payment for Units. The basis for payment of Performance Units for a
given Performance Period shall be the achievement of those performance
objectives determined by the Committee at the beginning of the Performance
Period (subject to modification pursuant to Section 9.5). If minimum performance
is not achieved or exceeded for a Performance Period, no payment shall be made
and all contingent rights shall cease. If minimum performance is achieved or
exceeded, the value of a Performance Unit shall be based on the degree (as
determined by the Committee) to which actual performance exceeded the
pre-established (or modified) minimum performance standards. Unless otherwise
provided in the relevant Award Agreement, the amount of payment shall be
determined by multiplying the number of Performance Units granted at the
beginning of the Performance Period that have vested by the final Performance
Unit value. Payments shall be made in whole shares of Stock valued at Fair
Market Value on the last day of the applicable Performance Period or, if so
determined by the Committee, solely in cash or a combination of cash and Stock.
If the Committee decides to make full payment in shares of Stock and the amount
payable results in a fractional share, payment for the fractional share shall be
made in cash. In the event that shares of Stock that are subject to substantial
risk of forfeiture are awarded in satisfaction of Performance Units, such shares
may be registered in the name of the Holder and deposited, together with a stock
power endorsed in blank, with the Company. Except as may be otherwise provided
in the relevant Award Agreement, any payments with respect to Performance Units
may be made in a lump sum or in installments, as the Committee may determine,
and any lump sum payments shall be made as soon as practicable following the end
of the relevant Performance Period(s).
 
     9.7. Compliance with Section 409A. Each Performance Unit granted under the
Plan shall comply with the requirements of subsection (a) of Section 409A, if
applicable, and be operated in accordance with those requirements.
 
 
                                      X.
 
                       AWARDS TO NON-EMPLOYEE DIRECTORS
 
     10.1. Annual Awards to Non-Employee Directors. Subject to adjustment
pursuant to Section 13.1, each Non-Employee Director shall receive, for each
calendar year that the Plan is in effect, pursuant to an irrevocable election to
be made by each individual Non-Employee Director by the later of the end of the
calendar year immediately preceding the calendar year for which such grant is
made or 30 days after his initial appointment or election as a director (each,
an "Annual Non-Employee Director Election"), one of the following (each of (a),
(b) or (c) below is hereinafter referred to as a "Non-Employee Director Award"):
 
          (a) a Restricted Stock Award totaling 2,000 shares (or such lesser or
greater amount (but not to exceed 5,000 shares) as may be determined by the
Committee in its discretion);
 
          (b) an Award of Nonstatutory Options having a value equivalent to the
value of the Restricted Stock Award contemplated by Section 10.1(a) above as of
the Date of Grant,
 
          (c) which equivalent value shall be determined in accordance with
Section 10.2; or
 
          (d) a combination of Awards of Restricted Stock and Nonstatutory
Options in such proportions as may as specified by the Non-Employee Director in
his or her Annual Non-Employee Director Election, which together have a value
equivalent to the value of the Restricted Stock Award contemplated by Section
10.1(a) above as of the Date of Grant, which equivalent value shall be
determined in accordance with Section 10.2.
 
     10.2 Valuation of Awards. The Committee shall determine the value of any
Award of Restricted Stock or Nonstatutory Options pursuant to Section 10.1 using
any recognized valuation methodology (including assumptions) selected by the
Committee in its absolute discretion.
 
     10.3 Terms of Awards. The Committee in its discretion shall determine the
Date of Grant and the amount and terms of each Non-Employee Director Award, in
each case subject to the terms, conditions and limitations of this Plan.
Notwithstanding the foregoing, (a) each Non-Employee Director's Award for the
calendar year ending
 
 
                                      B-17
<PAGE>
 
December 31, 2005 shall consist solely of Restricted Stock; (b) any Non-Employee
Director who fails to make an Annual Non-Employee Director Election for any
calendar year shall receive an Award consisting solely of Restricted Stock,
notwithstanding any election from any prior year to the contrary; (c) if an
individual serving as a Non-Employee Director on the Date of Grant for a
calendar year pursuant to Section 10.1 commenced service as a Non-Employee
Director after January 1 of such calendar year, the Committee may (but shall not
be required to) determine that the Non-Employee Director Award be reduced to
reflect such individual's partial year of service; and (d) if a Non-Employee
Director is not a member of the Board of Directors on the Date of Grant, such
Non-Employee Director shall not be entitled to a Non-Employee Director Award for
such calendar year pursuant to Section 10.1, provided, that the Committee may
(but shall not be required to) determine that a Non-Employee Director Award be
made to such Non-Employee Director as of a date in such calendar year designated
by the Committee and be reduced to reflect such individual's partial year of
service.
 
     10.4 Terms of Nonstatutory Options. Any Award of Nonstatutory Options
pursuant to Section 10.1 shall have the following terms, subject to any
additional or different terms, conditions or limitations specified pursuant to
this Plan or in the Award Agreement relating to such Award:
 
          (a) such Nonstatutory Options shall become exercisable in full six
months after their Date of Grant and shall not be exercisable after the tenth
(10th) anniversary of their Date of Grant; and
 
          (b) the Exercise Price under each Nonstatutory Option shall be 100% of
the Fair Market Value per share of the Stock on the Date of Grant of the
Nonstatutory Option.
 
 
                                      XI.
 
                           OTHER EQUITY-BASED RIGHTS
 
     The Committee is authorized to grant to Eligible Individuals such Awards
(other than Options, Stock Appreciation Rights, Stock Awards, or Performance
Units) that are denominated or payable in, valued in whole or in part by
reference to, or otherwise based on or related to, Stock (including, without
limitation, securities convertible into Stock), as may be deemed by the
Committee to be consistent with the purposes of the Plan; provided, however,
that such grants must comply with applicable law. Without limitation of the
foregoing, each such Award shall comply with the requirements of Section 409A of
the Code, if applicable, and be operated in accordance with such requirements.
The terms, conditions and limitations of Other Equity-Based Rights shall be set
forth in the Award Agreements governing the relevant Other Equity-Based Rights
and may contain or be subject to such provisions in addition to those required
by the Plan as the Committee may deem advisable. All Other Equity-Based Rights
granted under the Plan shall be subject to the terms, conditions and limitations
set forth in Article XIII (to the extent each such term, condition or limitation
applies to the form of Other Equity-Based Right and provided that, if any such
term, condition or limitation is left to the discretion of the Committee, the
Committee determines to apply it to such Other Equity-Based Right); provided,
however, that the Committee may authorize an Award Agreement governing an Other
Equity-Based Right which expressly contains or is subject to terms, conditions
and limitations that differ from any of the terms, conditions and limitations
set forth in Article XIII. The Committee may also authorize an Award Agreement
governing an Other Equity-Based Right that contains or is subject to any or all
of the terms, conditions and limitations of Article XII (to the extent that each
such term, condition or limitation applies to the form of Other Equity-Based
Right and provided that, if any such term, condition or limitation is left to
the discretion of the Committee, the Committee determines to apply it to such
Other Equity-Based Right) or similar terms, conditions and limitations;
nevertheless, no term, condition or limitation of Article XII (or any similar
term, condition or limitation) shall apply to an Award Agreement governing an
Other Equity-Based Right unless such Award Agreement expressly states that such
term, condition or limitation applies. Shares of Stock or other securities
delivered pursuant to a purchase right granted under an Award related to an
Other Equity-Based Right shall be purchased for such consideration, which may be
paid by such method or methods and in such form or forms, including cash, Stock,
other securities, other Awards, other property or assets, or any combination
thereof, as the Committee shall determine, the value of which consideration, as
established by the Committee, shall not be less than the aggregate Fair Market
Value of such shares of Stock or the fair market value (as determined by the
Committee) of such other securities, other Awards or other property or assets as
of the Date of Grant (or, if the Committee so determines, in the case of any
such purchase right retroactively granted in tandem with or in
 
 
                                      B-18
<PAGE>
 
substitution for another Award or any outstanding award granted under any other
plan of the Company, on the Date of Grant of such other Award or award).
 
 
                                     XII.
 
                         CHANGE IN CONTROL PROVISIONS
 
     The Committee may authorize an Award that contains or is subject to any or
all of the terms, conditions and limitations of this Article XII or similar
terms, conditions and limitations; nevertheless, no term, condition or
limitation of this Article XII (or any similar term, condition or limitation)
shall apply to an Award unless the related Award Agreement expressly states that
such term, condition or limitation applies.
 
     12.1 Changes in Control. Immediately prior to the occurrence of a Change in
Control (or at such other time prior to a Change in Control or proposed Change
in Control as may be determined by the Committee), (a) all outstanding Options
and Stock Appreciation Rights shall immediately become fully vested and
exercisable in full, including that portion of any Options or Stock Appreciation
Rights that pursuant to the terms and provisions of the applicable Award
Agreement had not yet become exercisable; (b) the expiration of the restrictions
applicable to all outstanding Restricted Stock Awards shall immediately be
accelerated so that the Stock subject to those Awards shall be owned by the
Holders thereof without transfer restrictions or risks of forfeiture; and (c)
such other results shall take place with respect to any outstanding Stock Bonus
Awards, Performance Units or Other Equity-Based Rights as may be set forth in
the relevant Award Agreements for such Stock Bonus Awards, Performance Units and
Other Equity-Based Rights. Nothing in this Section 12.1 shall impose on any
Holder any obligation to exercise any Award immediately before or upon any
Change in Control, nor shall any Holder forfeit the right to exercise any Award
during the remainder of the original term of the Award because of a Change in
Control, except as provided under Article XIII (if applicable), under other
provisions governing termination or expiration of the applicable Award, or as
provided in the following sentence. Notwithstanding the foregoing, the Committee
may, by notice to any or all Holders, provide that all or any portion of any
outstanding Option or Stock Appreciation Right (whether vested prior to the
Change in Control or subject to accelerated vesting due to the Change in
Control) that is not exercised within a specified time period (as determined by
the Committee) ending on or before the Change in Control shall terminate upon
the Change in Control (or at such later time as may be determined by the
Committee) and in such event such unexercised Options or Stock Appreciation
Rights shall terminate upon the Change in Control, notwithstanding any
provisions of this Plan that would allow for a later exercise, including Article
XIII if applicable.
 
 
                                     XIII.
 
                             ADDITIONAL PROVISIONS
 
     The terms, conditions and limitations of this Article XIII shall apply to
each Award (unless, pursuant to the relevant Award Agreement, such term,
condition or limitation is inapplicable or is altered); provided, however, that
the Committee may authorize an Award Agreement that expressly contains terms,
conditions and limitations that differ from the terms, conditions and
limitations set forth in this Article XIII.
 
     13.1. Adjustment of Awards and Authorized Stock. The terms of an Award and
the Stock authorized for issuance or transfer under the Plan shall be subject to
adjustment from time to time in accordance with the following provisions:
 
          (a) In the event that the Committee shall determine that any dividend
or other distribution (whether in the form of cash, Stock, other securities, or
other property or assets), reclassification, consolidation, Stock split, reverse
Stock split, recapitalization, reorganization, merger, plan of exchange,
split-up, spin off, combination, repurchase, issuance or transfer of securities
or other similar transaction or event affects the shares of Stock such that an
adjustment is determined by the Committee to be appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits made or intended
to be made available under the Plan, then the Committee shall, in such manner as
it may deem equitable, (i) adjust any or all of (w) the number and type of
shares of Stock (or other securities, property or assets) which thereafter may
be made the subject of Awards, (x) the number and type of shares of Stock (or
other securities, property or assets) subject to outstanding Awards, (y) the
number and type of shares of Stock (or other securities, property or assets)
specified as the Maximum Shares, Available Shares, any limitation per Eligible
Individual (pursuant to Section 5.7 or otherwise) or other restriction, and (z)
the grant,
 
 
                                      B-19
<PAGE>
 
purchase or exercise price of, or amount payable with respect to, any Award; or
(ii) if deemed appropriate by the Committee, provide for a cash payment to the
Holder of an outstanding Award. Notwithstanding the foregoing, however, with
respect to any Awards of Incentive Options, no such adjustment shall be
authorized except to the extent that such adjustment complies with the rules of
Section 424(a) of the Code, and in no event shall any such adjustment be made
that would render any Incentive Option granted hereunder other than an
"incentive stock option" for purposes of Section 422 of the Code (unless the
Committee determines to treat such Option as a Nonstatutory Option). In
addition, notwithstanding the foregoing, with respect to any Option or Stock
Appreciation Right, no adjustment shall be made that would cause such Option or
Stock Appreciation Right to constitute a deferral of compensation subject to the
requirements of Section 409A.
 
          (b) Whenever outstanding Awards are required to be adjusted as
provided in this Section 13.1, the Committee shall promptly prepare and provide
to each Holder a notice setting forth, in reasonable detail, the event requiring
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated, and the change in price and the number of shares of Stock, other
securities, cash, property or assets purchasable subject to each Award after
giving effect to the adjustments.
 
          (c) Adjustments under Paragraph 13.1(a) shall be made by the
Committee. No fractional interests shall be issued or transferred under the Plan
on account of any such adjustments.
 
          (d) The existence of the Plan and any Awards granted hereunder shall
not affect in any way the right or power of the Company or its shareholders to
make or authorize any and all adjustments, recapitalizations, reorganizations or
other changes in the Company's capital structure or business, or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred or
prior preference stock or other securities ahead of or affecting the Company's
common stock or the rights thereof, or the dissolution or liquidation of the
Company or any sale, exchange or transfer of all or any part of its assets or
business, or any other corporate act or proceedings, whether of a character
similar to that described in Paragraph 13.1(a) or this Paragraph 13.1(d) or
otherwise. Except as may be expressly provided in this Section 13.1, the
Company's issuance or transfer of securities of any class, for money, services,
other property or assets, or otherwise, upon direct sales, upon the exercise of
rights or warrants to subscribe therefor, upon conversion of shares or
obligations of the Company convertible into shares, or otherwise, shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
number, price or other attributes of Stock subject to the Plan or to Awards
granted hereunder.
 
     13.2. Termination of Employment Other than for Death, Disability or Normal
Retirement. Subject to Sections 13.23 and 13.24, if a Holder's employment is
terminated for any reason other than that Holder's death, Disability or Normal
Retirement, then the following provisions shall apply to all Awards held by that
Holder:
 
          (a) If such termination was by the Company or a Subsidiary, as
applicable, as a result of a Covered Event, then the following provisions shall
apply to all Awards held by that Holder:
 
               That portion, if any, of all Options or Stock Appreciation Rights
held by that Holder that have not been exercised as of the time of the
termination of employment shall be null and void as of the time of the
termination of employment;
 
               That portion, if any, of any Restricted Stock Awards held by that
Holder with respect to which the restrictions have not expired or been removed
(by acceleration or otherwise) as of the time of the termination of employment
shall be forfeited as of the time of the termination of employment; and
 
               Except as may be expressly provided in this Paragraph 13.2(a) or
in the relevant Award Agreement, all other Awards held by that Holder shall be
null and void as of the time of the termination of employment; provided,
however, that the foregoing shall not result in the forfeiture of any cash
previously paid to, or shares of Stock (other than shares subject to
restrictions at the time of the termination of employment) previously issued or
transferred to, such Holder under the Plan.
 
          (b) If such termination was (i) by the Company or a Subsidiary, as
applicable, but not as a result of a Covered Event or (ii) by the Holder, then
the following provisions shall apply to all Awards held by that Holder:
 
 
                                      B-20
<PAGE>
 
               That portion, if any, of all Options or Stock Appreciation Rights
held by that Holder that are not yet exercisable (by acceleration or otherwise)
as of the time of the termination of employment shall be null and void as of the
time of the termination of employment;
 
               That portion, if any, of all Options or Stock Appreciation Rights
held by that Holder that are exercisable (by acceleration or otherwise) but have
not been exercised as of the time of the termination of employment shall be
exercisable by that Holder until the earlier of:
 
               (A)  The termination of the Option or Stock Appreciation Right;
                    or
 
               (B)  (i) three (3) months after the date of the termination of
                    employment in the case of termination by the Company or a
                    Subsidiary but not as a result of a Covered Event; and (ii)
                    thirty (30) days after the date of the termination of
                    employment in the case of termination by the Holder;
                    provided, however, that if the termination was by the
                    Company but not as a result of a Covered Event and the
                    Holder dies within the three (3) month period described in
                    clause (i) of this subparagraph or if the termination was by
                    the Holder and the Holder dies with the thirty (30) day
                    period described in clause (ii) of this subparagraph, then
                    such three (3) month period or such thirty (30) day period,
                    as applicable, shall automatically be extended to one (1)
                    year after the date of the termination of employment; (and
                    any portion of any Option or Stock Appreciation Right not
                    exercised prior to the expiration of the relevant period
                    shall be null and void);
 
               That portion, if any, of any Restricted Stock Awards held by that
Holder with respect to which the restrictions have not expired or been removed
(by acceleration or otherwise) as of the time of the termination of employment
shall be forfeited as of the time of the termination of employment;
 
               That portion, if any, of any Performance Units held by that
Holder that have not been fully earned (by acceleration or otherwise) at the
time of the termination of employment shall be forfeited as of the time of
termination of employment; and
 
               Except as may be expressly provided in this Paragraph 13.2(b) or
in the relevant Award Agreement, all other Awards held by that Holder shall be
null and void as of the time of the termination of employment; provided,
however, that the foregoing shall not result in the forfeiture of any cash
previously paid to, or shares of Stock (other than shares subject to
restrictions at the time of the termination of employment) previously issued or
transferred to, such Holder under the Plan.
 
     13.3. Termination of Employment for Death or Disability. Subject to
Sections 13.23 and 13.24, if a Holder's employment is terminated by reason of
the death or Disability of such Holder, then the following provisions shall
apply to all Awards held by that Holder:
 
          (a) That portion, if any, of all Options or Stock Appreciation Rights
held by that Holder that are not yet exercisable (by acceleration or otherwise)
as of the time of the termination of employment shall be null and void as of the
time of the termination of employment;
 
          (b) That portion, if any, of all Options or Stock Appreciation Rights
held by that Holder that are exercisable (by acceleration or otherwise) but have
not been exercised as of the time of the termination of employment shall be
exercisable by that Holder or that Holder's Designated Beneficiary, guardian,
legal representatives, legatees or distributees until the earlier of:
 
               The termination of the Option or Stock Appreciation Right; or
 
               one (1) year after the date of the termination of employment;
 
(and any portion of any Option or Stock Appreciation Right not exercised prior
to expiration of the relevant period shall be null and void);
 
          (c) That portion, if any, of any Restricted Stock Awards held by that
Holder with respect to which the restrictions have not expired or been removed
(by acceleration or otherwise) as of the time of the termination of employment
shall be forfeited as of the time of the termination of employment; provided,
however, that, (i) subject to clause (ii) below, upon the time of the
termination of employment, such restrictions shall be deemed removed
 
 
                                      B-21
<PAGE>
 
with respect to such number of shares of Stock subject to each such Restricted
Stock Award as is equal to the product of (x) a fraction, the numerator of which
is the number of completed months elapsed from the Date of Grant through the
time of the termination of employment and the denominator of which is the number
of months in the original restriction period for the relevant Restricted Stock
Award and (y) the number of shares of Stock subject to the relevant Restricted
Stock Award; and (ii) clause (i) above shall not apply if such restrictions,
pursuant to the relevant Award Agreement, were to expire on a monthly or daily
basis;
 
          (d) That portion, if any, of any Performance Units held by that Holder
that have not been fully earned (by acceleration or otherwise) at the time of
the termination of employment shall be forfeited as of the time of termination
of employment, unless the Committee, taking into consideration the performance
of such Holder and the performance of the Company over the relevant Performance
Period (or, in the discretion of the Committee, that portion of the relevant
Performance Period which has been completed at the time of the termination of
employment), specifically authorizes the payment to such Holder (or such
Holder's Designated Beneficiary, guardian, legal representatives, legatees,
heirs or distributees) of all or portion of the amount which would have been
paid to such Holder had such Holder continued as an employee through the end of
the Performance Period (any such payment to be made in such a time and manner as
would have occurred if the Holder's employment had not terminated before the
expiration of the Performance Period, unless otherwise determined by the
Committee); and
 
          (e) Except as may be expressly provided in this Section 13.3 or in the
relevant Award Agreement, all other Awards held by that Holder shall be null and
void as of the time of the termination of employment; provided, however, that
the foregoing shall not result in the forfeiture of any cash previously paid to,
or shares of Stock (other than shares subject to restrictions at the time of the
termination of employment) previously issued or transferred to, such Holder
under the Plan.
 
          (f) If a Holder's employment is terminated due to a physical or mental
impairment or condition of any degree of severity or permanence, but the
Committee does not inform the Holder in writing that the Holder's employment is
terminated due to "Disability" for the purposes of this Section, such Holder's
employment is not terminated due to "Disability" for the purposes of this
Section.
 
     13.4. Termination of Employment for Normal Retirement. Subject to Sections
13.23 and 13.24, if a Holder's employment is terminated by reason of the
Holder's Normal Retirement, then the following provisions shall apply to all
Awards held by that Holder:
 
          (a) That portion, if any, of all Options or Stock Appreciation Rights
held by that Holder that are not yet exercisable (by acceleration or otherwise)
as of the time of the termination of employment shall be null and void as of the
time of the termination of employment;
 
          (b) That portion, if any, of all Options or Stock Appreciation Rights
held by that Holder that are exercisable (by acceleration or otherwise) but have
not been exercised as of the time of the termination of employment shall be
exercisable by that Holder until the earlier of:
 
               The termination of the term of the Option or Stock Appreciation
Right; or
 
               three (3) months after the date of the termination of
employment; provided, however, that if that Holder dies within such three (3)
month period, then such three (3) month period shall automatically be extended
to one (1) year after the date of the termination of employment; (and any
portion of any Option or Stock Appreciation Right not exercised prior to the
expiration of the relevant period shall be null and void);
 
          (c) That portion, if any, of any Restricted Stock Awards held by that
Holder with respect to which the restrictions have not expired or been removed
(by acceleration or otherwise) as of the time of the termination of employment
shall continue until they expire or are removed; provided, however, that any
restrictions that require forfeiture of the Restricted Stock Award solely based
on termination of employment shall be deemed removed as of the time of the
termination of employment;
 
          (d) That portion, if any, of any Performance Units held by that Holder
that have not been fully earned (by acceleration or otherwise) at the time of
the termination of employment shall be forfeited as of the time of termination
of employment, unless the Committee, taking into consideration the performance
of such Holder and the performance of the Company over the relevant Performance
Period (or, in the discretion of the Committee, that
 
 
                                      B-22
<PAGE>
 
portion of the Performance Period which has been completed at the time of the
termination of employment), specifically authorizes the payment to such Holder
of all or portion of the amount which would have been paid to such Holder had
such Holder continued as an employee through the end of the Performance Period
(any such payment to be made in such a time and manner as would have occurred if
the Holder's employment had not terminated before the expiration of the
Performance Period, unless otherwise determined by the Committee); and
 
          (e) Except as may be expressly provided in this Section 13.4 or in the
relevant Award Agreement, all other Awards held by that Holder shall be null and
void as of the time of the termination of employment; provided, however, that
the foregoing shall not result in the forfeiture of any cash previously paid to,
or any shares of Stock (other than shares subject to restrictions at the time of
the termination of employment) previously issued or transferred to, such Holder
under the Plan.
 
     13.5. Cause of Termination; Employment Relationship. For purposes of this
Article XIII, the Committee shall have the authority to determine whether any
Eligible Individual's employment with the Company or any Subsidiary, as
applicable, terminated as a result of death, Disability, Normal Retirement, a
Covered Event, or any other cause or reason. For purposes of Incentive Options,
an employment relationship shall be deemed to exist between a Holder and the
Company or a Subsidiary that is a subsidiary corporation, or is treated as, or
as part of, a subsidiary corporation of the Company (within the meaning of
Section 424 of the Code) while the Holder is on military leave, sick leave or
other bona fide leave of absence (such as temporary employment by the
government) if the period of such leave does not exceed ninety (90) days, or, if
longer, so long as the Holder's right to re-employment with the Company or
Subsidiary that is a subsidiary corporation, or is treated as, or as part of, a
subsidiary corporation of the Company (within the meaning of Section 424 of the
Code) is guaranteed either by statute or by contract. Where the period of leave
exceeds ninety (90) days and where the Holder's right to re-employment is not
guaranteed by statute or by contract, termination of employment shall be deemed
to have occurred on the ninety-first (91st) day of such leave.
 
     13.6. Exercise Following Death or Disability.
 
          (a) All Options or Stock Appreciation Rights or other Awards requiring
exercise that remain subject to exercise following the death of the Holder may
be exercised by the Holder's beneficiary as designated by the Holder on such
forms and in accordance with such procedures as may be required or authorized by
the Committee from time to time (a "Designated Beneficiary") or, in the absence
of an authorized designation, by the legatee or legatees of such Options or
Stock Appreciation Rights or other Awards requiring exercise under the Holder's
last will, or by such Holder's legal representatives, heirs or distributees. If
an Option or Stock Appreciation Right or other Award requiring exercise shall be
exercised by any Person referenced above (other than a Designated Beneficiary),
notice of exercise shall be accompanied by a certified copy of letters
testamentary or equivalent proof of the right of such Person to exercise such
Option or Stock Appreciation Right or other Award requiring exercise.
 
          (b) All Options or Stock Appreciation Rights or other Awards requiring
exercise that remain subject to exercise following the Disability of the Holder
may be exercised by the Holder or by the Holder's guardian or legal
representative that meets the requirements of Section 13.7 on such forms and in
accordance with such procedures as may be required or authorized by the
Committee from time to time (which may include proof of the status of such
guardian or legal representative).
 
     13.7. Transferability of Awards. No Option, Stock Appreciation Right,
Restricted Stock Award, Performance Unit, or Other Equity-Based Right shall be
transferable or subject to pledge, encumbrance or any other disposition in any
manner, whether by operation of law or otherwise, other than (to the extent such
a transfer is not prohibited by Paragraph 8.2(a) or other provisions of this
Plan or the relevant Award Agreement) by (i) will or the laws of descent and
distribution or (ii) with respect to all Awards other than Incentive Awards (and
with the approval of the Committee), by a domestic relations order. Any Award
requiring exercise shall be exercisable during a Holder's lifetime only by that
Holder or by that Holder's guardian or legal representative; provided, however,
that, under applicable state law, the guardian or legal representative is a mere
custodian of the Holder's property or assets, standing in a fiduciary
relationship to the Holder and subject to court supervision. Notwithstanding
anything in this Section 13.7 to the contrary, however, the Committee may
determine to grant a Nonstatutory Option that is transferable by a Holder (but
not by a Holder's transferee) to any member of the Holder's immediate family, to
a trust established for the exclusive benefit of one or members of the Holder's
immediate family, to a partnership
 
 
                                      B-23
<PAGE>
 
or other entity of which the only partners or interest holders are members of
the Holder's immediate family, and to a charitable organization, or to any of
the foregoing; provided, however, that (i) the Holder receives no consideration
for the transfer, (ii) the Holder gives the Committee at least fifteen (15) days
prior written notice of any proposed transfer, and (iii) the Holder and
transferee shall comply with such other requirements as the Committee may
require from time to time to assure compliance with applicable laws, including
federal, state and foreign securities laws. Following any transfer permitted by
the preceding sentence, a transferred Nonstatutory Option shall continue to be
subject to the same terms, conditions and limitations that were applicable
immediately prior to its transfer and shall be exercisable by the transferee
only to the extent and for the periods that it would have been exercisable by
the Holder. The Committee may amend an outstanding Nonstatutory Option to
provide that the Nonstatutory Option shall be transferable in the manner
described in the two immediately preceding sentences. As used in this Section
13.7, the term "immediate family" shall mean any child, step-child, grandchild,
parent, step-parent, grandparent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, and shall include
relationships arising from legal adoption. A beneficiary designation authorized
pursuant to any provision of the Plan or relevant Award Agreement shall not be
deemed a transfer or encumbrance for purposes of this Section 13.7.
 
     13.8. Delivery of Certificates of Stock. Subject to Section 13.9 and upon
receipt by the Company of any tax withholding as may be required, the Company
shall promptly deliver one or more certificates representing the number of
shares of Stock as to which vested Awards payable in Stock have been properly
exercised or are otherwise payable (and, with respect to Restricted Stock
Awards, with respect to which restrictions have expired or been removed). If a
Holder is entitled to receive certificates representing Stock received for more
than one form of Award under the Plan, separate Stock certificates may be
delivered with respect to each such Award; further, separate Stock certificates
may be delivered with respect to shares of Stock issued or transferred upon
exercise of Incentive Options and Nonstatutory Options respectively.
 
     13.9. Certain Conditions. Nothing herein or in any Award Agreement shall
require the Company to permit any exercise of, or issue or transfer any shares
with respect to, any Award if (i) the Holder has failed to satisfy any term,
condition or limitation of the Plan or the relevant Award Agreement or (ii) that
issuance or transfer would, in the opinion of counsel for the Company,
constitute a violation of the Securities Act, any other applicable law or
regulation (including state and foreign securities laws and regulations), or any
rule of any applicable securities exchange or securities association. At the
time of any grant or exercise of an Option or Stock Appreciation Right, at the
time of any grant or vesting of a Stock Award, and at the time of any grant or
settlement of any other Award, the Company may, as a condition precedent to such
grant or exercise of that Option or Stock Appreciation Right, grant or vesting
of the Stock Award, or grant or settlement of such other Award, require from the
Holder of the Award (or in the event of the Holder's death or Disability, the
Holder's Designated Beneficiary, guardian, legal representatives, heirs,
legatees, or distributees) such written representations, if any, concerning the
Holder's or such Persons' intentions with regard to the retention or disposition
of the shares of Stock being acquired pursuant to the Award and such written
covenants and agreements, if any, as to the manner of disposal of such shares
as, in the opinion of counsel to the Company, may be necessary or appropriate to
ensure that any disposition by that Holder or such other Person will not involve
a violation of the Securities Act, any other applicable law or regulation
(including state and foreign securities laws and regulations), or any rule of
any applicable securities exchange or securities association. The Company may
also endorse such legend or legends upon certificates for any shares of Stock
issued or transferred pursuant to the Plan, and may issue such "stop transfer"
instructions to its transfer agent in respect of such shares, as the Committee
determines from time to time to be necessary or appropriate to (i) prevent a
violation of, or perfect an exemption from, the registration requirements of the
Securities Act or any other applicable state or foreign securities law, (ii)
implement the provisions of the Plan and any relevant Award Agreement, or (iii)
permit the Company to determine the occurrence of any disposition of shares of
Stock issued or transferred upon exercise of an Incentive Option that would
disqualify the Incentive Option from the incentive option tax treatment afforded
by Section 422 of the Code.
 
     13.10. Certain Directors and Officers. If any of the terms, conditions or
limitations of the Plan or any Award Agreement would preclude any award to an
Eligible Individual who is subject to Section 16(b) of the Exchange Act from
qualifying for the exemptions from Section 16(b) of the Exchange Act provided by
Rule 16(b)-(3), then those conflicting terms, conditions or limitations shall be
deemed inoperative to the extent necessary to allow such qualification (unless
the Board of Directors has expressly determined that the Plan, or the Committee
has expressly
 
 
                                      B-24
<PAGE>
 
determined that the Award, should not comply with Rule 16(b)-(3)). In addition,
all Award Agreements for Eligible Individuals who are subject to Section 16(b)
of the Exchange Act shall be deemed to include such additional terms, conditions
and limitations as may be required in order for the related Award to qualify for
the exemptions from Section 16(b) of the Exchange Act provided by Rule 16(b)-(3)
(unless the Committee has expressly determined that any such Award should not
comply with the requirements of Rule 16b-3).
 
     13.11. Securities Act Legend. The Committee may require that certificates
for some or all shares of Stock issued or transferred pursuant to the Plan have
a legend similar to the following, or statements of other applicable
restrictions, endorsed thereon:
 
     THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
     REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
     SECURITIES LAWS. THE SHARES MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED,
     TRANSFERRED, OR OTHERWISE DISPOSED OF UNTIL THE HOLDER HEREOF PROVIDES
     EVIDENCE SATISFACTORY TO THE ISSUER (WHICH, IN THE DISCRETION OF THE
     ISSUER, MAY INCLUDE AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER) THAT
     SUCH OFFER, SALE, PLEDGE, TRANSFER, OR OTHER DISPOSITION WILL NOT VIOLATE
     APPLICABLE FEDERAL OR STATE LAWS.
 
This legend shall not be required for shares of Stock issued or transferred
pursuant to an effective registration statement under the Securities Act.
 
     13.12. Legend for Restrictions on Transfer. Each certificate representing
shares of Stock issued or transferred to a Holder pursuant to an Award granted
under the Plan shall, if such shares are subject to any transfer restriction,
including a right of first refusal, provided for under the Plan or the relevant
Award Agreement, bear a legend that complies with applicable law with respect to
such transfer restriction, such as:
 
     THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
     RESTRICTIONS ON TRANSFERABILITY IMPOSED BY THE SOUTHERN UNION COMPANY
     AMENDED AND RESTATED 2003 STOCK OPTION AND INCENTIVE PLAN AS ADOPTED BY
     SOUTHERN UNION COMPANY (THE "COMPANY") ON ________________, ____ AND AN
     AWARD AGREEMENT THEREUNDER BETWEEN THE COMPANY AND ___________ DATED
     ___________, _____ AND MAY NOT BE TRANSFERRED, SOLD, OR OTHERWISE DISPOSED
     OF EXCEPT AS THEREIN PROVIDED. THE COMPANY WILL FURNISH A COPY OF SUCH
     INSTRUMENT AND AGREEMENT TO THE RECORD HOLDER OF THIS CERTIFICATE WITHOUT
     CHARGE ON REQUEST TO THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS OR
     REGISTERED OFFICE.
 
     13.13. Rights as a Stockholder; Dividends. Except as may be specifically
provided to the contrary by the Committee pursuant to Paragraph 8.2(e) with
respect to a particular Restricted Stock Award, a Holder shall have no right as
a stockholder with respect to any shares of Stock covered by the Holder's Award
until a certificate representing those shares is issued in the Holder's name and
subject to any further restrictions imposed in accordance with the Plan. Except
as may be expressly determined by the Committee from time to time with respect
to one or more Awards, and subject to such terms, conditions and limitations as
the Committee may establish with respect to the same, no adjustment shall be
made for dividends (whether ordinary or extraordinary, whether in cash or other
property or assets) or distributions or other rights for which the record date
is before the date that the certificate is issued and any such restrictions have
expired or been removed.
 
     13.14. No Interest. Neither the value of any shares of Stock, nor any cash
or other property or assets, issued, transferred or delivered with respect to
any Award under the Plan shall bear any interest, even if not issued,
transferred or delivered when required by the Plan, except as may be otherwise
provided in the applicable Award Agreement or as may be required pursuant to
rules and procedures established by the Committee from time to time for the
crediting of such interest.
 
     13.15. Furnishing of Information. Each Holder shall furnish to the Company
all information requested by the Company that the Committee deems necessary or
appropriate in order to allow the Company to administer the Plan and any Awards
or to enable it to comply with any reporting or other requirement imposed upon
the Company by or under any applicable law or regulation.
 
 
                                      B-25
<PAGE>
 
     13.16. No Obligation to Exercise. No grant of any Award shall impose any
obligation upon the Holder or any other Person to exercise the same or any part
thereof.
 
     13.17. Remedies. The Company shall be entitled to recover from a Holder the
Company's damages, costs and expenses, including reasonable attorneys' fees,
incurred in connection with the enforcement of any of the terms, conditions or
limitations of the Plan or any Award Agreement, whether by an action to enforce
specific performance, for damages for breach, or otherwise.
 
     13.18. Certain Information Confidential. As partial consideration for the
granting of each Award hereunder, each Holder agrees with the Company that such
Holder shall keep confidential all information and knowledge that such Holder
may have relating to the manner, extent and amount of the Holder's (or any other
Holder's) participation in the Plan; provided, however, that the Holder may
disclose such information or knowledge to the Holder's spouse or to the Holder's
tax or financial advisors, provided such disclosure is made pursuant to similar
terms and conditions (but without any further rights of distribution). The
foregoing obligations of confidentiality shall not apply to the extent that the
Company specifically consents in writing to further disclosure or to the extent
that the information or knowledge becomes generally and readily available to the
public without breach by the Holder or any other Person of any contractual,
fiduciary or other duty owed to the Company or any of its affiliates. In
addition, the foregoing obligations of confidentiality shall not prohibit a
Holder from disclosing such information or knowledge to the extent such Holder
is required to do so by government or judicial order, provided that such Holder
gives the Company prompt written notice of such order and a reasonable
opportunity to limit such disclosure and reasonable assistance in contesting or
limiting any such disclosure.
 
     13.19. Consideration. No Option or Stock Appreciation Right shall be
exercisable, no restriction on any Restricted Stock Award shall lapse, and no
other Award shall be settled in Stock with respect to a Holder unless and until
the Holder shall have paid cash or other property to, or performed services for,
the Company or any of its Subsidiaries that the Committee believes is equal to
or greater in value than the par value of the Stock subject to such Award.
 
     13.20. [Deliberately omitted]
 
     13.21. [Deliberately omitted]
 
     13.22. Dispute Resolution.
 
          (a) Any claim, demand, cause of action, dispute or controversy arising
out of or relating to the Plan, any Award Agreement, any Award, the parties'
performance with respect to any thereof, or any alleged breach of any thereof,
and any claims, demands, causes of actions, disputes or controversies that are
pursuant to a separate written agreement to be dealt with pursuant to the
provisions of this Section (each, a "Dispute"), shall be settled by binding
arbitration in accordance with the then current rules of the American
Arbitration Association by three (3) independent and impartial arbitrators of
whom each party shall appoint one, and those appointed arbitrators shall select
a third arbitrator, who shall be the presiding arbitrator. Judgment upon any
award rendered by the arbitrators may be entered by any court having
jurisdiction thereof.
 
          (b) Either party may commence arbitration proceedings by giving notice
(the "Arbitration Notice") to the other party demanding that the Dispute be
arbitrated, specifying in reasonable detail the nature of the Dispute and the
amount, if any, to be submitted to arbitration. The arbitration hearing shall
take place in any city on which the parties agrees, or failing such agreement
within ten (10) days after the date the Arbitration Notice is given, in New
York, New York. The arbitration hearing shall be continuous subject to weekends,
holidays or other days to be mutually agreed.
 
          (c) The arbitrators shall render their award no later than thirty (30)
days after the conclusion of the hearing. The arbitrators shall base their
awards on the terms of the Plan and the relevant Award Agreements and shall
follow the law and judicial precedents which a United States Judicial District
Judge sitting in New York, New York would apply in the event the Dispute was
litigated in such court. The parties expressly agree that this Section shall
confer no power or authority upon the arbitrators to render any judgment or
award that is erroneous in its application of substantive law and expressly
agree that no such erroneous judgment or award shall be eligible for
confirmation. The arbitrators shall render their award in writing and, unless
both parties agree otherwise, shall include the findings of fact and conclusions
of law upon which their award is based. Nothing in this Section shall
 
 
                                      B-26
<PAGE>
 
preclude the parties from contractually agreeing to maximum and/or minimum
levels of damages applicable to any such award, whether or not such agreement is
disclosed to the arbitrators and any award shall be subject to such agreement.
The arbitrators shall apply the substantive laws of the State of New York,
without regard to principles of conflicts of laws.
 
          (d) Unless otherwise agreed, and unless otherwise determined by the
arbitrators, each party shall bear its own costs and expenses, including
attorneys' fees, in connection with the arbitration, including the fees and
expenses of the arbitrator appointed by them, except that the expenses and fees
of the third arbitrator, expenses for hearing facilities, and other expenses of
the arbitration itself shall be shared equally between the parties.
 
          (e) The existence and results of any arbitration under this Section
shall be treated as confidential under Section 13.18 of the Plan.
 
          (f) Notwithstanding the foregoing provisions of this Section, and
whether or not an arbitration proceeding has been initiated, any party shall be
entitled to seek, and all courts having jurisdiction are authorized to issue and
enforce in any lawful manner, (i) such temporary restraining orders, preliminary
injunctions and other interim measures of relief as may be necessary to prevent
harm to the Company's, any of its Subsidiaries' or such party's interest or
 
          (g) as otherwise may be appropriate pending the conclusion of the
arbitration proceedings pursuant to this Section, and (ii) such judgments for
permanent and equitable relief as may be necessary to prevent harm to the
Company's, any Subsidiaries' or such party's interest or as otherwise may be
appropriate following the issuance of arbitration awards pursuant to this
Section.
 
     13.23. Awards to Non-Employees. The provisions of Sections 13.2, 13.3 and
13.4 shall not apply to any Awards made to any Holder that was not an employee
of the Company or any of its Subsidiaries on the date of the making of the
Award.
 
     13.24. Compliance with Section 409A. No provision of this Article XIII
shall be interpreted to require a payment or other transfer with respect to an
Award at a time or in a manner that would violate any requirement of subsection
(a) of Section 409A; and the Committee may defer or otherwise change the terms
of payment with respect to any Award, as otherwise set forth in this Article
XIII or any related Award Agreement, if and to the extent necessary to comply
with the requirements of Section 409A (if applicable). With respect to any Award
constituting a deferral of compensation to which Section 409A applies and that
is made to a "specified employee" of the Company or its Subsidiaries as defined
in Section 409A(a)(2)(B)(i) of the Code, no payment resulting from a separation
from service of such employee shall be made with respect to the Award before the
date which is 6 months after the date of separation from service (or, if
earlier, the date of death of the employee).
 
 
                                     XIV.
 
              DURATION AND AMENDMENT OF PLAN AND AWARD AGREEMENTS
 
     14.1. Duration. No Awards may be granted hereunder after September 28,
2013; provided, however, that Awards granted prior to the expiration of such
period may extend beyond the expiration of such period, in accordance with the
terms of the Plan (including all rights of the Company and the Committee
hereunder) and the relevant Award.
 
     14.2. Amendment, etc.
 
          (a) The Board of Directors may, at any time and from time to time,
insofar as is permitted by law, suspend or terminate the Plan, in whole or in
part, but without the consent of such Holder no such action shall adversely
affect any rights, or increase any obligations, of any Holder with respect to
any Award previously granted to such Holder hereunder. The Board of Directors
may also, at any time and from time to time, insofar as is permitted by law,
amend or modify the Plan in any respect whatsoever including (i) for purposes of
making the Plan comply with Section 16(b) of the Exchange Act and the exemptions
from that Section, the Code (including Section 409A and Section 422 of the
Code), or the Employee Retirement Income Security Act of 1974, as amended, (ii)
for purposes of meeting or addressing any changes in any legal requirements
applicable to the Company or the Plan or (iii) for any other purpose permitted
by law. Notwithstanding the foregoing, (i) any amendment or modification
 
 
                                      B-27
<PAGE>
 
of the Plan is subject to any other applicable restrictions on such amendment or
modification set forth in the Plan, (ii) without the consent of such Holder, no
such amendment or modification shall adversely affect any rights, or increase
any obligations, of any Holder under any Award previously granted to such Holder
hereunder and (iii) without the consent of the holders of a majority of the
shares of Stock represented and voting on such amendment or modification at a
shareholders' meeting duly called and held, no amendment or modification to the
Plan may be made that would (a) increase the aggregate number of shares of Stock
that may be issued or transferred under the Plan or increase the aggregate
number of shares of Stock subject to Awards that may be granted to any Eligible
Individual in one calendar year pursuant to Section 5.7 (except for acceleration
of vesting or other adjustments pursuant to Sections 12.1 or 13.1 of the Plan,
to the extent each is applicable), or (b) modify the requirements regarding
eligibility for participation in the Plan; provided, however, that such
amendments or modifications may be made without the consent of stockholders of
the Company if (x) necessary to permit Incentive Options granted under the Plan
to qualify as incentive stock options within the meaning of Section 422 of the
Code, or (y) necessary to comply with changes that occur in law or in other
legal requirements (including Rule 16b-3, Section 162(m), Section 409A, and the
Employee Retirement Income Security Act of 1974, as amended).
 
          (b) Subject to the terms, conditions and limitations of the Plan, Rule
16b-3, to the extent it is applicable, and any consent required by the last
three sentences of this Paragraph 14.2(b), the Committee may (a) modify, amend,
extend or renew outstanding Awards granted under the Plan, and (b) accept the
surrender of Awards requiring exercise that may be outstanding under the Plan
(to the extent not previously exercised) and authorize the granting of new
Awards in substitution for such outstanding Awards (or portion thereof) so
surrendered. Without the consent of the Holder, the Committee may not modify or
amend the terms of an Incentive Option at any time to include provisions that
have the effect of changing the Incentive Option to a Nonstatutory Option;
provided, however, that the consent of the Holder is not required to the extent
that the acceleration of the vesting of an Incentive Option (whether under
Section 12.1 or otherwise) causes the Incentive Option to be treated as a
Nonstatutory Option, for federal tax purposes, to the extent that it exceeds the
$100,000 limitation described in Section 6.10. Without the consent of the Holder
and of the holders of a majority of the shares of Stock represented and voting
on such modification or amendment at a shareholders' meeting duly called and
held, the Committee may not modify or amend any outstanding Option so as to
specify a higher or lower exercise price or accept the surrender of outstanding
Incentive Options and authorize the granting of new Options in substitution
therefor specifying a higher or lower exercise price, or take any other action
to "reprice" any option if the effect of such repricing would be to increase or
decrease the exercise price applicable to such Option. In addition, no
modification or amendment of an Award shall, without the consent of the Holder,
adversely affect any rights of the Holder or increase the obligations of the
Holder under such Award except, with respect to Incentive Options, as may be
necessary to satisfy the requirements of Section 422 of the Code.
 
 
                                      XV.
 
                                    GENERAL
 
     15.1. Application of Funds. The proceeds received by the Company from the
sale of shares of Stock pursuant to Awards shall be used for general corporate
purposes or any other purpose permitted by law.
 
     15.2. Right of the Company and Subsidiaries to Terminate Employment.
Nothing contained in the Plan, or in any Award Agreement, shall confer upon any
Holder any right to continue in the employ of the Company or any Subsidiary, or
interfere in any way with the rights of the Company or any Subsidiary to
terminate any such employment relationship at any time.
 
     15.3. No Liability for Good Faith Determinations. Neither the Board of
Directors nor the Committee nor any member of either shall be liable for any
act, omission, or determination taken or made in good faith with respect to the
Plan or any Award granted under the Plan, and members of the Board of Directors
and the Committee shall be entitled to indemnification and reimbursement by the
Company in respect of any claim, loss, damage, or expense (including attorneys'
fees, the costs of settling any suit, provided such settlement is approved by
independent legal counsel selected by the Company, and amounts paid in
satisfaction of a judgment, except a judgment based on a finding of bad faith)
arising therefrom to the full extent permitted by law and under any directors
and officers liability or similar insurance coverage that may from time to time
be in effect. This right to indemnification shall be in
 
 
                                      B-28
<PAGE>
 
addition to, and not a limitation on, any other indemnification rights any
member of the Board of Directors or the Committee may have.
 
     15.4. Other Benefits. Participation in the Plan shall not preclude any
Holder from eligibility in (or entitle any Holder to participate in) any other
stock or stock option plan of the Company or any Subsidiary or any old age
benefit, insurance, pension, profit sharing, retirement, bonus, or other extra
compensation plan that the Company or any Subsidiary has adopted or may, at any
time, adopt for the benefit of its employees or other Persons. Neither the
adoption of the Plan by the Board of Directors nor the submission of the Plan to
the stockholders of the Company for approval shall be construed as creating any
limitations on the power of the Board of Directors to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the
granting of stock options and the awarding of securities and cash otherwise than
under the Plan, and such arrangements may be either generally applicable or
applicable only in specific cases.
 
     15.5. Exclusion From Pension and Profit-Sharing Compensation. By acceptance
of an Award (whether in Stock or cash), as applicable, each Holder shall be
deemed to have agreed that the Award is special incentive compensation that will
not be taken into account in any manner as salary, compensation or bonus in
determining the amount of any payment under any pension, retirement or other
employee benefit plan of the Company or any Subsidiary except as may otherwise
be specifically provided in such plan. In addition, each beneficiary of a
deceased Holder shall be deemed to have agreed that no Award to such Holder
shall affect the amount of any life insurance coverage, if any, provided by the
Company or a Subsidiary on the life of the Holder that is payable to the
beneficiary under any life insurance plan covering employees of the Company or
any Subsidiary.
 
     15.6. Execution of Receipts and Releases. Any payment of cash or other
property or assets or any issuance or transfer of shares of Stock to the Holder,
or to the Holder's Designated Beneficiary, guardian, legal representatives,
heirs, legatees, distributees or permitted assigns, in accordance with the
provisions hereof, shall, to the extent thereof, be in full satisfaction of all
claims of such Persons hereunder. The Committee may require any Holder,
Designated Beneficiary, guardian, legal representative, heir, legatee,
distributee or assignee, as a condition precedent to such payment, to execute a
release and receipt therefor in such form as the Committee shall determine.
 
     15.7. Unfunded Plan. Insofar as it provides for Awards of cash, Stock or
other property or assets, the Plan shall be unfunded. Although bookkeeping
accounts may be established with respect to Holders who are entitled to cash,
Stock, other property or assets or rights thereto under the Plan, any such
accounts shall be used merely as a bookkeeping convenience. The Company shall
not be required to segregate any assets that may at any time be represented by
cash, Stock, other property or assets or rights thereto, nor shall the Plan be
construed as providing for such segregation, nor shall the Company nor the Board
of Directors nor the Committee be deemed to be a trustee of any cash, Stock,
other property or assets or rights thereto to be granted under the Plan. Any
liability of the Company to any Holder with respect to a grant of cash, Stock,
other property or assets or rights thereto under the Plan shall be based solely
upon any contractual obligations that may be created by the Plan and any Award
Agreement; no such obligation of the Company shall be deemed to be secured by
any pledge or other encumbrance on any property or assets of the Company.
Neither the Company nor the Board of Directors nor the Committee shall be
required to give any security or bond for the performance of any obligation that
may be created by the Plan.
 
     15.8. No Guarantee of Interests. Neither the Company, the Board of
Directors nor the Committee guarantees the Stock of the Company from loss or
depreciation.
 
     15.9. Payment of Expenses. Subject to Section 13.17, all expenses incident
to the administration, termination or protection of the Plan, including legal
and accounting fees and any issue taxes with respect to the issuance of shares
of Stock pursuant to the Plan, shall be paid by the Company or its Subsidiaries.
 
     15.10. Company Records. The records of the Company or its Subsidiaries
regarding any Holder's period of employment, termination of employment and the
reason therefor, leaves of absence, re-employment, and other matters shall be
conclusive for all purposes hereunder, unless determined by the Committee to be
incorrect.
 
     15.11. No Liability of Company. The Company assumes no obligation or
responsibility to the Holder or the Holder's Designated Beneficiary, guardian,
legal representatives, heirs, legatees, distributees or assignees for any act
of, or failure to act on the part of, the Committee.
 
 
                                      B-29
<PAGE>
 
     15.12. Company Action. Any action required of the Company shall be by
resolution of its Board of Directors or by a duly authorized officer of the
Company or by another Person authorized to act by resolution of the Board of
Directors.
 
     15.13. Severability. Whenever possible, each provision of the Plan and each
Award Agreement shall be interpreted in such a manner as to be effective and
valid under applicable law, but if any provision of the Plan or any Award
Agreement, or the application thereof to any Person or under any circumstances,
is invalid or unenforceable to any extent under applicable law, then such
provision shall be deemed severed from the Plan or such Award Agreement with
respect to such Person or circumstance, without invalidating the remainder of
the Plan or such Award Agreement or the application of such provision to other
Persons or circumstances, and a new provision shall be deemed substituted in
lieu of the provision so severed which new provision shall, to the extent
possible, accomplish the intent of the parties as evidenced by the provision so
severed.
 
     15.14. Notices. Except as may be expressly provided in the Plan or the
relevant Award Agreement, whenever any notice is required or permitted to be
given under the Plan or such Award Agreement, such notice must be in writing and
delivered (including delivery by private courier or facsimile transmittal) or
sent by mail (which if to the Company must be certified or registered, return
receipt requested) postage and charges prepaid, addressed to the Person for whom
the communication is intended (which for the Company shall be the address of the
Company's chief executive office from time to time, or such other address as may
be established from time to time by the Committee, and which for any Holder
shall be the address for such Holder set forth in the relevant Award Agreement
or such other address as shall have been furnished by notice by such Holder to
the Company). Any such notice shall be deemed to be given on the date received
or (if mailed in the manner set forth herein) three (3) Business Days after the
date of mailing. Any person entitled to notice hereunder may waive such notice.
 
     15.15. No Waiver. No waiver of any provision of the Plan or any Award
Agreement shall be effective unless made in writing and signed by the party to
be charged with the waiver. Failure of any party at any time to require any
other party's performance of any obligation under the Plan or Award Agreement
shall not affect the right to require performance of that obligation. Any waiver
by any party of any breach of any provision of the Plan or any Award Agreement
shall not be construed as a waiver of any continuing or succeeding breach of
such provision, or as a waiver or modification of the provision itself.
 
     15.16. Successors. Subject to the restrictions contained herein, the Plan
shall be binding upon the Holder, the Holder's Designated Beneficiaries,
guardian, legal representatives, heirs, legatees, distributees and permitted
assigns, and upon the Company, its successors and assigns.
 
     15.17. Further Assurances. Each Holder shall execute and deliver such
documents, and take or cause to be taken such other actions, as may be
reasonably requested by the Committee in order to implement the terms of the
Plan and any Award Agreement with respect to that Holder.
 
     15.18. Governing Law. EXCEPT AS MAY BE OTHERWISE PROVIDED IN A PARTICULAR
AWARD AGREEMENT, TO THE EXTENT NOT GOVERNED BY FEDERAL LAW, THIS PLAN AND EACH
AWARD AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW;
PROVIDED, HOWEVER, THAT ISSUES REGARDING THE INTERNAL AFFAIRS OF THE COMPANY
SHALL BE GOVERNED BY THE LAW OF THE COMPANY'S JURISDICTION OF ORGANIZATION.
 
     15.19. Jurisdiction and Venue. EXCEPT AS MAY BE OTHERWISE PROVIDED IN A
PARTICULAR AWARD AGREEMENT AND SUBJECT TO SECTION 13.22, EACH HOLDER HEREBY
SUBMITS TO THE JURISDICTION OF ALL FEDERAL AND STATE COURTS OF NEW YORK AND
HEREBY AGREES THAT ANY SUCH COURT SHALL BE A PROPER FORUM FOR THE DETERMINATION
OF ANY DISPUTE ARISING UNDER THE PLAN OR ANY AWARD AGREEMENT WITH RESPECT TO
SUCH HOLDER.
 
     15.20. Interpretation. When a reference is made in the Plan or any Award
Agreement to Schedules, Exhibits or Addenda, such reference shall be to a
schedule, exhibit or addendum to this Plan or the relevant Award Agreement
unless otherwise indicated. Each instance in the Plan or any Award Agreement of
the words "include," "includes," and "including" shall be deemed to be followed
by the words "without limitation." As used in the Plan or any Award Agreement,
the term "days" means calendar days, not business days, unless otherwise
specified. Unless otherwise
 
 
                                      B-30
<PAGE>
 
specified, the words "herein," "hereof," and "hereunder" and other words of
similar import refer to the Plan or relevant Award Agreement as a whole and not
to any particular article, section, paragraph, subparagraph, schedule, exhibit,
addendum or other subdivision. Similarly, unless otherwise specified, the words
"therein," "thereof" and "thereunder" and other words of similar import refer to
a particular agreement or other instrument as a whole and not to any particular
article, section, paragraph, subparagraph, schedule, exhibit, addendum or other
subdivision. Unless otherwise specified, any reference to a statute includes and
refers to the statute itself, as well as to any rules and regulations made and
duly promulgated pursuant thereto, and all amendments made thereto and in force
currently from time to time and any statutes, rules or regulations thereafter
duly made, enacted and/or promulgated, as may be appropriate, and/or any other
governmental actions thereafter duly taken from time to time having the effect
of supplementing or superseding such statute, rules, and/or regulations. The
language in all parts of the Plan and each Award Agreement shall be in all cases
construed simply, fairly, equitably, and reasonably, according to its plain
meaning and not strictly for or against one or more of the parties. Any table of
contents or headings contained in the Plan or any Award Agreement are for
reference purposes only and shall not be construed to affect the meaning or
interpretation of the Plan or any Award Agreement. When required by the context,
(i) whenever the singular number is used in the Plan or any Award Agreement, the
same shall include the plural, and the plural shall include the singular; and
(ii) the masculine gender shall include the feminine and neuter genders and vice
versa.
 
     15.21. No Representations. NEITHER THE COMPANY, ANY OF ITS SUBSIDIARIES OR
OTHER AFFILIATES, THE BOARD OF DIRECTORS OR THE COMMITTEE, OR ANY MEMBER OF
EITHER THEREOF MAKES ANY REPRESENTATIONS OR WARRANTIES WHATSOEVER REGARDING THE
LEGAL, TAX OR ACCOUNTING CONSEQUENCES OF ANY ASPECT OF THE PLAN OR ANY AWARDS,
INCLUDING ANY REPRESENTATION OR WARRANTY THAT ANY OPTION SHALL BE TREATED AS AN
INCENTIVE STOCK OPTION UNDER THE CODE. BY ACCEPTING ANY AWARD, EACH HOLDER
ACKNOWLEDGES THAT SUCH HOLDER HAS CONSULTED WITH SUCH ADVISORS AS THE HOLDER HAS
DEEMED APPROPRIATE WITH RESPECT TO ANY OF SUCH MATTERS.
 
 
 
 
 
 
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