<DOCUMENT>
<TYPE>EX-10.12
<SEQUENCE>5
<FILENAME>dex1012.txt
<DESCRIPTION>PITNEY BOWES OFFICE SYSTEMS, INC. 2001 STOCK PLAN
<TEXT>
 
<PAGE>
 
                                                                Exhibit 10.12
 
 
             THE PITNEY BOWES OFFICE SYSTEMS, INC. 2001 STOCK PLAN
 
                            Effective as of ., 2001
<PAGE>
 
             THE PITNEY BOWES OFFICE SYSTEMS, INC. 2001 STOCK PLAN
             -----------------------------------------------------
 
         Section 1. Purpose.
 
         The purposes of this Pitney Bowes Office Systems, Inc. 2001 Stock Plan
(the "Plan") are (1) to make available to key employees, certain compensatory
arrangements related to the growth in value of the common stock of the Company
so as to generate an increased incentive to contribute to the Company's future
financial success and prosperity, (2) to enhance the ability of the Company and
its Affiliates to attract and retain exceptionally qualified individuals whose
efforts can affect the financial growth and profitability of the Company, and
(3) to align generally the interests of key employees of the Company and its
Affiliates with the interests of the Company's stockholders.
 
         Section 2. Definitions.
 
         As used in the Plan, the following terms shall have the meanings set
forth below:
 
         (a)   "Affiliate" shall mean (i) any entity that, directly or through
one or more intermediaries, is controlled by the Company or (ii) any entity in
which the Company has a significant equity interest, as determined by the
Committee.
 
         (b)   "Award" shall mean any Option, Restricted Stock award, Restricted
Stock Unit, Dividend Equivalent, Other Stock-Based Award, Performance Award or
Substitute Award, granted under the Plan.
 
         (c)   "Award Agreement" shall mean any written agreement, contract, or
other instrument or document evidencing any Award granted under the Plan.
 
         (d)   "Board of Directors" shall mean the Board of Directors of the
Company as it may be composed from time to time.
 
         (e)   "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, or any successor code thereto.
 
         (f)   "Committee" shall mean the Board of Directors, excluding any
director who is not a Non-Employee Director" within the meaning of Rule 16b-3,
or any such other committee designated by the Board of Directors to administer
the Plan, which committee shall be composed of not less than the minimum number
of members of the Board of Directors from time to time required by Rule 16b-3 or
any applicable law, each of whom is a Non-Employee Director within the meaning
of Rule 16b-3.
 
         (g)   "Company" shall mean Pitney Bowes Office Systems, Inc., or any
successor thereto.
 
         (h)   "Company Service" shall mean any service with the Company, the
Company's former parent or any Affiliate in which the Company or its former
parent have at least a 51% ownership interest.
 
         (i)   "Covered Award" means an Award, other than an Option or other
Award with an exercise price per Share not less than the Fair Market Value of a
Share on the date of grant of such Award, to a Covered Employee, if it is
designated as such by the Committee at the time it is granted. Covered Awards
are subject to the provisions of Section 13 of this Plan.
 
         (j)   "Covered Employees" means Participants who are designated by the
Committee prior to the grant of an Award who are, or are expected to be at the
time taxable income will be realized with respect to the Award, "covered
employees" within the meaning of Section 162(m).
 
         (k)   "Dividend Equivalent" shall mean any right granted under Section
6(c) of the Plan.
 
         (l)   "Effective Date" shall mean the date that the Plan was approved
by the sole stockholder of the Company.
 
         (m)   "Employee" shall mean any employee or employee director of the
Company or of any Affiliate.
<PAGE>
 
         (n)   "Fair Market Value" shall mean, with respect to any property
(including, without limitation, any Shares or other securities), the fair market
value of such property determined by such methods, or procedures as shall be
established from time to time by the Committee.
 
         (o)   "Incentive Stock Option" or "ISO" shall mean an option granted
under Section 6(a) of the Plan that is intended to meet the requirements of
Section 422 of the Code, or any successor provision thereto.
 
         (p)   "Non-Qualified Stock Option" shall mean an option granted under
Section 6(a) of the Plan that is not intended to be an Incentive Stock Option.
 
         (q)   "Option" shall mean an Incentive Stock Option or a Non-Qualified
Stock Option.
 
         (r)   "Other Stock-Based Award" shall mean any Award granted under
Section 6(d) of the Plan.
 
         (s)   "Participant" shall mean an Employee who is granted an Award
under the Plan.
 
         (t)   "Performance Award" shall mean any Award granted hereunder that
complies with Section 6(e)(ii) of the Plan.
 
         (u)   "Performance Goals" means one or more objective performance
goals, established by the Committee at the time an Award is granted, and based
upon the attainment of targets for one or any combination of the following
criteria, which may be determined solely by reference to the Company's
performance or the performance of a subsidiary or an Affiliate (or any business
unit thereof) or based on comparative performance relative to other companies:
(i) net income; (ii) earnings before income taxes; (iii) earnings per share;
(iv) return on stockholders' equity; (v) expense management; (vi) profitability
of an identifiable business unit or product; (vii) revenue growth; (viii)
earnings growth; (ix) total stockholder return; (x) cash flow; (xi) return on
assets; (xii) pre-tax operating income; (xiii) net economic profit (operating
earnings minus a charge for capital); (xiv) customer satisfaction; (xv) provider
satisfaction; (xvi) employee satisfaction; (xvii) quality of networks; (xviii)
strategic innovation; or (xix) any combination of the foregoing. Performance
Goals shall be set by the Committee within the time period prescribed by Section
162(m).
 
         (v)   "Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, or
government or political subdivision thereof.
 
         (w)   "Released Securities" shall mean securities that were Restricted
Securities with respect to which all applicable restrictions have expired,
lapsed, or been waived.
 
         (x)   "Restricted Securities" shall mean Awards of Restricted Stock or
other Awards under which issued and outstanding Shares are held subject to
certain restrictions.
 
         (y)   "Restricted Stock" shall mean any Share granted under Section
6(b) of the Plan.
 
         (z)   "Restricted Stock Unit" shall mean any right granted under
Section 6(b) of the Plan that is denominated in Shares.
 
         (aa)  "Rule 16b-3" shall mean Rule 16b-3 promulgated by the Securities
and Exchange Commission under the Securities Exchange Act of 1934 as amended, or
any successor rule and the regulation thereto.
 
         (bb)  "Section 162(m)" means Section 162(m) of the Code or any
successor thereto, and the Treasury Regulations thereunder.
 
         (cc)  "Share" or "Shares" shall mean share(s) of the common stock of
the Company, $.01 par value, and such other securities or property as may become
the subject of Awards pursuant to the adjustment provisions of Section 4(c).
 
         (dd)  "Substitute Award" shall mean an Award granted in assumption of,
or in substitution for, an outstanding award previously granted by a company
acquired by the Company or with which the Company combines.
 
         Section 3. Administration.
 
         (a)      The Plan shall be administered by the Committee. Subject to
the terms of the Plan and applicable law, the Committee shall have full power
and authority to:
 
 
                                       2
<PAGE>
 
         (i)      designate Participants;
 
         (ii)     determine the type or types of Awards to be granted to each
                  Participant under the Plan;
 
         (iii)    determine the number of Shares to be covered by (or with
                  respect to which payments, rights, or other matters are to be
                  calculated in connection with) Awards;
 
         (iv)     determine the terms and conditions of any Award;
 
         (v)      determine whether, to what extent, and under what
                  circumstances Awards may be settled or exercised in cash,
                  Shares, other securities, other Awards, or other property, or
                  to what extent, and under what circumstances Awards may be
                  canceled, forfeited, or suspended, and the method or methods
                  by which Awards may be settled, exercised, canceled,
                  forfeited, or suspended;
 
         (vi)     determine whether, to what extent, and under what
                  circumstances cash, Shares, other securities, other Awards,
                  other property, and other amounts payable with respect to an
                  Award under the Plan shall be deferred either automatically or
                  at the election of the holder thereof or of the Committee;
 
         (vii)    interpret and administer the Plan and any instrument or
                  agreement relating to the Plan, or any Award made under the
                  Plan, including any Award Agreement;
 
         (viii)   establish, amend, suspend, or reconcile such rules and
                  regulations and appoint such agents as it shall deem
                  appropriate for the proper administration of the Plan; and
 
         (ix)     make any other determination and take any other action that
                  the Committee deems necessary or desirable for the
                  administration of the Plan.
 
         (b)      Unless otherwise expressly provided in the Plan, all
designations, determinations, interpretations, and other decisions under or with
respect to the Plan, any Award, or any Award Agreement, shall be within the sole
discretion of the Committee, may be made at any time, and shall be final,
conclusive, and binding upon all Persons, including the Company, any Affiliate,
any Participant, any holder or beneficiary of any Award, and any employee of the
Company or of any Affiliate.
 
         (c)      The Committee may delegate to one or more executive officers
of the Company or to a committee of executive officers of the Company the
authority to grant Awards to Employees who are not officers or directors of the
Company and to amend, modify, cancel or suspend Awards to such employees,
subject to Sections 7 and 9.
 
         Section 4. Shares Available For Awards.
 
         (a)      Maximum Shares Available. The maximum number of Shares that
                  ------------------------
may be issued to Participants pursuant to Awards under the Plan shall be C (the
"Plan Maximum), subject to adjustment as provided in Section 4(c) below. Only C
Shares may be issued pursuant to Awards of Restricted Stock and Restricted Stock
Units under Section 6(b) of the Plan. Pursuant to any Awards, the Company may in
its discretion issue treasury Shares or authorized but previously unissued
Shares pursuant to Awards hereunder. For the purpose of accounting for Shares
available for Awards under the Plan, the following shall apply:
 
         (i)      Only Shares relating to Awards actually issued or granted
                  hereunder shall be counted against the Plan Maximum. Shares
                  corresponding to Awards that by their terms expired, or that
                  are forfeited, canceled or surrendered to the Company without
                  full consideration paid therefor shall not be counted against
                  the Plan Maximum.
 
         (ii)     Shares that are forfeited by a Participant after issuance, or
                  that are reacquired by the Company after issuance without full
                  consideration paid therefor, shall be deemed to have never
                  been issued under the Plan and accordingly shall not be
                  counted against the Plan Maximum.
 
         (iii)    Awards not denominated in Shares shall be counted against the
                  Plan Maximum in such amount and at such time as the Committee
                  shall determine under procedures adopted by the Committee
                  consistent with the purposes of the Plan.
 
         (iv)     Substitute Awards shall not be counted against the Plan
                  Maximum, and clauses (i) and (ii) of this Section shall not
                  apply to such Awards.
 
                                       3
<PAGE>
 
         The maximum number of Shares that may be the subject of Awards made to
a single Participant in any one calendar year shall be.
 
         (b)      Shares Available for ISOs. The maximum number of Shares for
                  -------------------------
which ISOs may be granted under the Plan shall not exceed the Plan Maximum as
defined in Section 4(a) above, subject to adjustment as provided in Section 4(c)
below.
 
         (c)      Adjustments to avoid dilution. Notwithstanding paragraphs (a)
                  -----------------------------
and (b) above, in the event of a stock or extraordinary cash dividend, split-up
or combination of Shares, merger, consolidation, reorganization,
recapitalization, or other change in the corporate structure or capitalization
affecting the outstanding common stock of the Company, such that an adjustment
is determined by the Committee to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan or any Award, then the Committee may make appropriate adjustments
to (i) the number or kind of Shares available for the future granting of Awards
hereunder, (ii) the number and type of Shares subject to outstanding Awards, and
(iii) the grant, purchase, or exercise price with respect to any Award; or if it
deems such action appropriate, the Committee may make provision for a cash
payment to the holder of an outstanding Award; provided, however, that with
respect to any ISO no such adjustment shall be authorized to the extent that
such would cause the ISO to violate Code Section 422 or any successor provision
thereto. The determination of the Committee as to the adjustments or payments,
if any, to be made shall be conclusive.
 
         (d)     Other Plans. Shares issued under other plans of the Company
                 -----------
shall not be counted against the Plan Maximum und er the Plan.
 
         Section 5.  Eligibility.
 
         Any Employee shall be eligible to be designated a Participant.
 
         Section 6. Awards.
 
         (a)     Options. The Committee is hereby authorized to grant Options to
                 -------
Participants with the following terms and conditions and with such additional
terms and conditions, not inconsistent with the provisions of the Plan, as the
Committee shall determine:
 
         (i)     Exercise Price. The exercise price per Share under an Option
                 shall be determined by the Committee; provided, however, that
                 except in the case of Substitute Awards, no Option granted
                 hereunder may have an exercise price of less than 100% of Fair
                 Market Value of a Share on the date of grant.
 
         (ii)    Times and Method of Exercise. The Committee shall determine the
                 time or times at which an Option may be exercised in whole or
                 in part; in no event, however, shall the period for exercising
                 an Option extend more than 10 years from the date of grant. The
                 Committee shall also determine the method or methods by which
                 options may be exercised, and the form or forms (including
                 without limitation, cash, Shares, other Awards, or other
                 property, or any combination thereof, having a Fair Market
                 Value on the exercise date equal to the relevant exercise
                 price), in which payment of the exercise price with respect
                 thereto may be made or deemed to have been made.
 
         (iii)   Incentive Stock Options. The terms of any Incentive Stock
                 Option granted under the Plan shall comply in all respects with
                 the provisions of Section 422 of the Code, or any successor
                 provision thereto, and any regulations promulgated thereunder.
 
         (iv)    Termination of Employment. In the event that a Participant
                 terminates employment or becomes disabled, Options granted
                 hereunder shall be exercisable only as specified below:
 
                 (A)    Disability, Death and Retirement. Except as otherwise
                 provided in a written agreement with a Participant or as the
                 committee may otherwise provide, If a Participant becomes
                 disabled, dies or retires, any outstanding Option granted to
                 such a Participant, whether or not full or partial vesting has
                 occurred with respect to such Option at the time of the
                 disability, death or retirement, shall be exercisable during
                 the ten (10) year period beginning on the date of grant (or
                 during such shorter period if the original term is less than
                 ten (10 years) even though the disability, death or retirement
                 occurs prior to the last day of such option term. Any vesting
                 requirements under the Option shall be deemed to be satisfied
                 as of the date of disability, death or retirement.
 
                  For purposes of the Plan, a Participant shall be considered to
                  be "disabled" on the date he or she is determined to be
                  totally disabled under the procedures and provisions of the
                  Pitney Bowes Office
 
                                       4
<PAGE>
 
                  Systems, Inc. Long Term Disability Plan or such other plan in
                  which the Company participates as determined by the Committee
                  (the "LTD Plan"), irrespective of whether the Participant is
                  eligible for benefits under the LTD Plan. In addition, for
                  purposes of the Plan, a Participant shall be considered to
                  retire on the date he or she terminates employment on or after
                  attainment of age 55 and the completion of 10 years of service
                  (as determined under the methodology used in the Pitney Bowes
                  Office Systems 401(k) Plan). In the case of death, an Option
                  may be transferred to the executor of personal representative
                  of the Participant's estate or the Participant's heirs by will
                  or the laws of descent and distribution.
 
                  (B)    Termination for Reasons Other Than Death, Disability or
                  Retirement. Except as otherwise provided in a written
                  agreement with a Participant or as the Committee may otherwise
                  provide, if a Participant terminates employment for reasons
                  other than death, disability or retirement, any vested,
                  unexercised portion of an Option that is at least partially
                  vested at the time of the termination shall be forfeited in
                  its entirety if not exercised by the Participant within three
                  (3) months of the date of termination of employment, unless
                  the Committee has in its sole discretion established an
                  additional exercise period (but in any case not longer than
                  the original option term). Any portion of such partially
                  vested Option that is not vested at the time of termination
                  shall be forfeited unless the Committee has in its sole
                  discretion established that a Participant may continue to
                  satisfy the vesting requirements beyond the date of his or her
                  termination of employment. Except as otherwise provided in a
                  written agreement with a Participant or as the Committee
                  may otherwise provide, any outstanding Option granted to a
                  Participant terminating employment other than for death,
                  disability or retirement, for which no vesting has occurred at
                  the time of the termination shall be forfeited on the date of
                  termination and the Committee shall have no discretion to
                  extend the exercise period of such Option.
 
                  (C)    Sale of Business. Except as otherwise provided in a
                  written agreement with a Participant or as the Committee
                  may otherwise provide, in the event the "business unit,"
                  (defined as a division, subsidiary, unit or other delineation
                  that the Committee in its sole discretion may determine) for
                  which the Participant performs substantially all of his or her
                  services is assigned, sold, outsourced or otherwise
                  transferred, including an asset, stock or joint venture
                  transaction, to an unrelated third party such that after such
                  transaction the Company owns or controls directly or
                  indirectly less than 51% of the business unit, the affected
                  Participant shall become 100% vested in all outstanding
                  Options as of the date of the closing of such transaction,
                  whether or not fully or partially vested, and such Participant
                  shall be entitled to exercise such Options during the three
                  (3) months following the closing of such transaction, unless
                  the Committee has in its sole discretion established an
                  additional exercise period (but in any case not longer than
                  the original option term). Except as otherwise provided in a
                  written agreement with a Participant or as the Committee
                  may otherwise provide, all Options which are unexercised at
                  the end of such three (3) months shall be automatically
                  forfeited.
 
                  (D)    Conditions Imposed on Unvested Options. Notwithstanding
                  the foregoing provisions describing the additional exercise
                  periods for Options upon termination of employment, the
                  Committee may in its sole discretion condition the right of a
                  Participant to exercise any portion of a partially vested
                  Option for which the Committee has established an additional
                  exercise period on the Participant's agreement to adhere to
                  such conditions and stipulations which the Committee may
                  impose, including, but not limited to, restrictions on the
                  solicitation of employees or independent contractors,
                  disclosure of confidential information, covenants not to
                  compete, refraining from denigrating through adverse or
                  disparaging communication, written or oral, whether or not
                  true, the operations, business, management, products or
                  services of the Company or its current or former employees and
                  directors, including without limitation, the expression of
                  personal views, opinions or judgements. The unvested Options
                  of any Participant for whom the Committee has given an
                  additional exercise period subject to such conditions
                  subsequent as set forth in this Section 6(a)(iv)(D) shall be
                  forfeited immediately upon a breach of such conditions.
 
                  (E)    Forfeiture for Gross Misconduct. Notwithstanding
                  anything to the contrary herein, any Participant who engages
                  in "Gross Misconduct", as defined herein, (including any
                  Participant who may otherwise qualify for disability or
                  retirement status) shall forfeit all outstanding, unexercised
                  Options, whether vested or unvested, as of the date such Gross
                  Misconduct occurs. For purposes of the Plan, Gross Misconduct
                  shall be defined to mean (i) the Participant's conviction of a
                  felony (or crime of similar magnitude in non-U.S.
                  jurisdictions) in connection with the performance or
                  nonperformance of the Participant's duties or (ii) the
                  Participant's willful act or failure to act in a way that
                  results in material injury to the business or reputation of
                  the Company or employees of the Company.
 
                                       5
<PAGE>
 
                  (F)    Vesting. For purposes of the Plan, any reference to the
                  "vesting" of an Option shall mean any events or conditions
                  which, if satisfied, entitle a Participant to exercise an
                  Option with respect to all or a portion of the shares covered
                  by the Option. The complete vesting of an Option shall be
                  subject to Section 6(a)(iv)(E) hereof. Such vesting events or
                  conditions may be set forth in the Notice of Grant or
                  determined by the Committee.
 
         (b)      Restricted Stock and Restricted Stock Units. The Committee is
                  -------------------------------------------
hereby authorized to grant Awards of Restricted Stock and or Restricted Stock
Units to Participants with the following terms and conditions.
 
         (i)      Restrictions. Shares of Restricted Stock and Restricted Stock
                  Units shall be subject to such restrictions as the Committee
                  may impose (including, without limitation, continued
                  employment over a specified period or the attainment of
                  specified Performance Objectives (as defined in Section
                  6(e)(ii)(B)) or Performance Goals, in accordance with Section
                  13), which restrictions may lapse separately or concurrently
                  at such time or times, in such installments or otherwise, as
                  the Committee may deem appropriate. Notwithstanding the
                  foregoing and except as provided in Section 8(a)(ii) below,
                  (A) any Awards of Restricted Stock or Restricted Stock Units
                  as to which the sole restriction relates to the passage of
                  time and continued employment must have a restriction period
                  of not less than three years and (B) any Award not described
                  in Clause (A) must have a restriction period of not less than
                  one year subject, in the case of both (A) and (B) to the
                  proviso to Section 6(b)(iii) below.
 
         (ii)     Registration. Any Restricted Stock granted under the Plan may
                  be evidenced in such manner, as the Committee may deem
                  appropriate, including without limitation, book-entry
                  registration or issuance of a stock certificate or
                  certificates. In the event any stock certificate is issued in
                  respect of Shares of Restricted Stock granted under the Plan,
                  such certificate shall be registered in the name of the
                  Participant and shall bear an appropriate legend referring to
                  the terms, conditions, and restrictions applicable to such
                  Restricted Stock.
 
         (iii)    Termination of Employment. Except as otherwise provided in a
                  written agreement with a Participant or as the Committee
                  may otherwise provide, upon termination of employment of a
                  Participant for any reason during the applicable restriction
                  period, all Restricted Stock and all Restricted Stock Units,
                  or portion thereof, still subject to restriction shall be
                  forfeited and reacquired by the Company; provided, however,
                  that in the event termination of employment is due to the
                  death, total disability or retirement of the Participant, the
                  Committee may waive in whole or in part any or all remaining
                  restrictions with respect to Restricted Stock or Restricted
                  Stock Units.
 
         (c)      Dividend Equivalents. The Committee may grant to Participants
                  --------------------
Dividend Equivalents under which the holders thereof shall be entitled to
receive payments equivalent to dividends with respect to a number of Shares
determined by the Committee, and the Committee may provide that such amounts
shall be deemed to have been reinvested in additional Shares or otherwise
reinvested. Subject to the terms of the Plan, such Awards may have such terms
and conditions, as the Committee shall determine.
 
         (i)      Termination of Employment. Except as otherwise provided in a
                  written agreement with a Participant or as the Committee
                  may otherwise provide, upon termination of the Participant's
                  employment for any reason during the term of a Dividend
                  Equivalent, the right of a Participant to payment under a
                  Dividend Equivalent shall terminate as of the date of
                  termination; provided, however, that in the event the
                  Participant's employment terminates because of the death,
                  total disability or retirement of a Participant the Committee
                  may determine that such right terminates at a later date.
 
         (d)      Other Stock-Based Awards. The Committee is hereby authorized
                  ------------------------
to grant to Participants such other Awards that are denominated or payable in,
valued in whole or in part by reference to, or otherwise based on or related to
Shares (including without limitation securities convertible into Shares), as are
deemed by the Committee to be consistent with the purposes of the Plan;
provided, however, that such grants must comply with Rule 16b-3 and applicable
law.
 
         (i)      Consideration. If applicable, Shares or other securities
                  delivered pursuant to a purchase right granted under this
                  Section 6(d) shall be purchased for such consideration, which
                  may be paid by such method or methods and in such form or
                  forms, including without limitation cash, Shares, other
                  securities, other Awards or other property, or any combination
                  thereof, as the Committee shall determine; provided, however,
                  that except in the case of Substitute Awards, no derivative
                  security (as defined in Rule 16b-3) awarded hereunder may have
                  an exercise price of less than 100% of Fair Market Value of a
                  Share on the date of grant.
 
                                       6
<PAGE>
 
         (ii)     Termination of Employment. In granting any Stock-Based Award
                  pursuant to this Section 6(d) the Committee shall also
                  determine what effect the termination of employment of the
                  Participant holding such Award shall have on the rights of the
                  Participant pursuant to the Award.
 
         (e)      General. The following general provisions shall apply to all
                  -------
Awards granted hereunder, subject to the terms of other sections of this Plan or
any Award Agreement.
 
         (i)      Award Agreements. Each Award granted under this Plan shall be
                  evidenced by an Award Agreement which shall specify the
                  relevant material terms and conditions of the Award and which
                  shall be signed by the Participant receiving such Award, if so
                  indicated by the Award.
 
         (ii)     Performance Awards. Subject to the other terms of this Plan,
                  the payment, release or exercisability of any Award, in whole
                  or in part, may be conditioned upon the achievement of such
                  Performance Objectives (as defined below) during such
                  performance periods as are specified by the Committee.
                  (Hereinafter in this Section 6(e)(ii) the terms payment, pay,
                  and paid also refer to the release or exercisability of a
                  Performance Award, as the case may require.)
 
                  (A)    Terms. The Committee shall establish the terms and
                  conditions of any Performance Award including the Performance
                  Objectives (as defined below) to be achieved during any
                  performance period, the length of any performance period, any
                  event the occurrence of which will entitle the holder to
                  payment, and the amount of any Performance Award granted.
 
                  (B)    Performance Objectives. The Committee shall establish
                  "Performance Objectives" the achievement of which shall
                  entitle the Participant to payment under a Performance Award.
                  Performance Objectives may be any measure of the business
                  performance of the Company, or any of its divisions or
                  Affiliates, including but not limited to the growth in book or
                  market value of capital stock, the increase in the earnings in
                  total or per share, or any other financial or non-financial
                  indicator specified by the Committee.
 
                  (C)    Fulfillment of Conditions and Payment. The Committee
                  shall determine in a timely manner whether all or part of the
                  conditions to payment of a Performance Award have been
                  fulfilled and, if so, the amount, if any, of the payment to
                  which the Participant is entitled.
 
         (iii)    Rule 16b-3 Six Month Limitations. To the extent required in
                  order to render the grant of an Award, the exercise of an
                  Award or any derivative security, or the sale of securities
                  corresponding to an Award, an exempt transaction under Section
                  16(b) of the Securities Exchange Act of 1934 only, any equity
                  security granted under the Plan to a Participant must be held
                  by such Participant for at least six months from the date of
                  grant, or in the case of a derivative security granted
                  pursuant to the Plan to a Participant, at least six months
                  must elapse from the date of acquisition of the derivative
                  security to the date of disposition of the derivative security
                  (other than upon exercise or conversion) or its underlying
                  equity security. Terms used in the preceding sentence shall,
                  for the purposes of such sentence only, have the meanings if
                  any, assigned or attributed to them under Rule 16b-3.
 
         (iv)     Limits on Transfer of Awards. No Award (other than Released
                  Securities), and no right under any such Award shall be
                  assignable, alienable, pledgeable, attachable, encumberable,
                  saleable, or transferable by a Participant other than by will
                  or by the laws of descent and distribution or pursuant to a
                  domestic relations order (or, in the case of Awards that are
                  forfeited or canceled, to the Company); and any purported
                  assignment, sale, transfer, thereof shall be void and
                  unenforceable against the Company or Affiliate. If the
                  Committee so indicates in writing to a Participant, he or she
                  may designate one or more beneficiaries who may exercise the
                  rights of the Participant and receive any property
                  distributable with respect to any Award upon the death of the
                  Participant.
 
         Each Award, and each right under any Award, shall be exercisable,
during the Participant's lifetime only by the Participant or, if permissible
under applicable law, by the Participant's guardian or legal representative or
by a transferee receiving such Award pursuant to a domestic relations order
referred to above.
 
         (v)      Gift Transfers. Notwithstanding Section 6(e)(iv) herein to the
                  contrary, a Participant may transfer by gift the exercisable
                  portion of an Option provided that the following conditions
                  (A) through (G) are met:
 
                  (A)      The donees of the gift transfer are limited to Family
                  Members and Family Entities;
 
                                       7
<PAGE>
 
                  (B)      The Option is not further transferable by gift or
                  otherwise by such Family Member and Family Entity;
 
                  (C)      All rights appurtenant to the Option including
                  exercise rights, are irrevocability and unconditionally
                  assigned to the donee;
 
                  (D)      Transfers under this Section 6(e)(v) must meet all of
                  the requirements under applicable provisions of the Internal
                  Revenue Code to be considered "gift" transfers.
 
                  (E)      Following the transfer, the donee is subject to the
                  same terms and conditions under the Option as was the
                  Participant;
 
                  (F)      The early exercise of the transferred Option shall be
                  triggered if the Participant dies, becomes disabled, retires
                  or terminates employment prior to the end of the Option term
                  in accordance with Section 6(a)(iv) hereof.
 
                  (G)      For purposes of the Plan, the following definitions
                           shall apply:
 
                  (1)      Family Member means the Participant's natural or
                  adopted child, stepchild, grandchild, parent, stepparent,
                  grandparent, spouse, former spouse, sibling, mother-in-law,
                  father-in-law, son-in-law, daughter-in-law, sister-in-law,
                  nephew, niece (including by adoption) and any person sharing
                  the Participant's household (other than a tenant or employee);
                  and
 
                  (2)      Family Entity means any trust in which the
                  Participant has more than a 50% beneficial interest and any
                  entity in which the Participant and/or a Family Member owns
                  more than a 50% of the voting interests.
 
         (vi)     No Cash Consideration for Awards. Awards may be granted for no
                  cash consideration, or for such minimal cash consideration as
                  the Committee may specify, or as may be required by applicable
                  law.
 
         (vii)    Awards May Be Granted Separately or Together. Awards may, in
                  the discretion of the Committee, be granted either alone or in
                  addition to, in tandem with, or in substitution for any other
                  Award or any award granted under any other plan of the Company
                  or any Affiliate. Awards granted in addition to or in tandem
                  with other Awards or in addition to or in tandem with awards
                  granted under any other plan of the Company or any Affiliate
                  may be granted either at the same time as or at a different
                  time from the grant of such other Awards or awards.
                  Performance Awards and Awards which are not Performance Awards
                  may be granted to the same Participant.
 
         (viii)   Forms Of Payment Under Awards. Subject to the terms of the
                  Plan and of any applicable Award Agreement, payments or
                  transfers to be made by the Company or an Affiliate upon the
                  grant, exercise, or payment of an Award may be made in such
                  form or forms as the Committee shall determine, including,
                  without limitation, cash, Shares, other securities, other
                  Awards, or other property, or any combination thereof, and may
                  be made in a single payment or transfer, in installments, or
                  on a deferred basis, in each case in accordance with rules and
                  procedures established by the Committee. Such rules and
                  procedures may include, without limitation, provisions for the
                  payment or crediting of reasonable interest on installment or
                  deferred payments or the grant or crediting of Dividend
                  Equivalents in respect of installment or deferred payments.
 
         (ix)     Term of Awards. Except as provided in Sections 6(a)(ii) or
                  6(a)(iv), the term of each Award shall be for such period as
                  may be determined by the Committee.
 
         (x)      Share Certificates. All certificates for Shares or other
                  securities delivered under the Plan pursuant to any Award or
                  the exercise thereof shall be subject to such stop transfer
                  orders and other restrictions as the Committee may deem
                  advisable under the Plan or the rules, regulations, and other
                  requirements of the Securities and Exchange Commission, any
                  stock exchange upon which such Shares or other securities are
                  then listed, and any applicable Federal or state securities
                  laws, and the Committee may cause a legend or legends to be
                  put on any such certificates to make appropriate reference to
                  such restrictions. Unrestricted certificates representing
                  Shares, evidenced in such manner as the Committee shall deem
                  appropriate, shall be delivered to the holder of Restricted
                  Stock, Restricted Stock Units or any other relevant Award
                  promptly after such related Shares shall become Released
                  Securities.
 
                                       8
<PAGE>
 
         Section 7.  Amendment And Termination Of Awards.
 
         Except to the extent prohibited by applicable law and unless otherwise
expressly provided in an Award Agreement or in the Plan, the following shall
apply to all Awards.
 
         (a)     Amendments to Awards. Subject to Section 6(b)(i), the Committee
                 --------------------
may waive any conditions or rights under, amend any terms of, or amend, alter,
suspend, discontinue, cancel or terminate, any Award heretofore granted without
the consent of any relevant Participant or holder or beneficiary of an Award;
provided, however, that no such amendment, alteration, suspension,
discontinuance, cancellation or termination that would be adverse to the holder
of such Award may be made without such holder's consent. Notwithstanding the
foregoing, the Committee shall not amend any outstanding Option to change the
exercise price thereof to any price that is lower than the original exercise
price thereof except in connection with an adjustment authorized under Section
4(c).
 
         (b)     Adjustments of Awards Upon Certain Acquisitions. In the event
                 -----------------------------------------------
the Company or an Affiliate shall issue Substitute Awards, the Committee may
make such adjustments, not inconsistent with the terms of the Plan, in the terms
of Awards as it shall deem appropriate in order to achieve reasonable
comparability or other equitable relationship between the assumed awards and the
Substitute Awards granted under the Plan.
 
         (c)     Adjustments of Awards Upon the Occurrence of Certain Unusual or
                 ---------------------------------------------------------------
Nonrecurring Events. The Committee shall be authorized to make adjustments in
-------------------
the terms and conditions of, and the criteria included in, Awards in recognition
of unusual or nonrecurring events (including, without limitation, the events
described in Section 4(c) hereof) affecting the Company, any Affiliate, or the
financial statements of the Company or any Affiliate, or of changes in
applicable laws, regulations, or accounting principles, whenever the Committee
determines that such adjustments are appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits to be made available under the
Plan or an Award Agreement.
 
         (d)     Correction of Defects, Omissions, and Inconsistencies. The
Committee may correct any defect, supply any omission, or reconcile any
inconsistency in any Award Agreement in the manner and to the extent it shall
deem desirable to carry the Plan into effect.
 
         Section 8. Acceleration Upon A Change Of Control. In the event of a
Change of Control (as defined in Section 8(b) below) the following shall apply:
 
         (a)      Effect on Awards.
                  ----------------
 
         (i)      Options. In the event of a Change of Control, (1) all Options
                  outstanding on the date of such Change of Control shall become
                  immediately and fully exercisable without regard to any
                  vesting schedule provided for in the Option.
 
         (ii)     Restricted Stock and Restricted Stock Units. In the event of a
                  Change of Control, all restrictions applicable to any
                  Restricted Stock or Restricted Stock Unit shall terminate and
                  be deemed to be fully satisfied for the entire stated
                  restricted period of any such Award, and the total number of
                  underlying Shares shall become Released Securities. The
                  Participant shall immediately have the right to the prompt
                  delivery of certificates reflecting such Released Securities.
 
         (iii)    Dividend Equivalents. In the event of a Change of Control, the
                  holder of any outstanding Dividend Equivalent shall be
                  entitled to surrender such Award to the Company and to receive
                  payment of an amount equal to the amount that would have been
                  paid over the remaining term of the Dividend Equivalent, as
                  determined by the Committee.
 
         (iv)     Other Stock-Based Awards. In the event of a Change of Control,
                  all outstanding Other Stock-Based Awards of whatever type
                  become immediately vested and payable in an amount that
                  assumes that the Awards were outstanding for the entire period
                  stated therein, as determined by the Committee.
 
         (v)      Performance Awards. In the event of a Change of Control,
                  Performance Awards for all performance periods, including
                  those not yet completed, shall immediately become fully vested
                  and payable in accordance with the following:
 
                  (A) Non-Financial Performance Objectives. The total amount of
                  Performance Awards conditioned on nonfinancial Performance
                  Objectives and those conditioned on financial Performance be
                  immediately payable (or exercisable or released, as the case
                  may be) as if the Performance Objectives had been fully
                  achieved for the entire performance period.
 
                                       9
<PAGE>
 
                  (B)   Financial Performance Objectives. For Performance Awards
                  conditioned on financial Performance Objectives and payable in
                  cash, the Committee shall determine the amount payable under
                  such Award by taking into consideration the actual level of
                  attainment of the Performance Objectives during that portion
                  of the performance period that had occurred prior to the date
                  of the Change of Control, and with respect to the part of the
                  performance period that had not occurred prior to the date of
                  the Change of Control, the Committee shall determine an
                  anticipated level of attainment taking into consideration
                  available historical data and the last projections made by the
                  Company's Chief Financial Officer prior to the Change of
                  Control. The amount payable shall be the present value of the
                  amount so determined by the Committee discounted using a
                  factor that is the Prime Rate as established by Chase
                  Manhattan Bank, N.A. as of the date of the Change of Control.
 
         (vi)     Determination Final. The Committee's determination of amounts
                  payable under this Section 8(a) shall be final. Except as
                  otherwise provided in Section 8(a)(1), any amounts due under
                  this Section 8(a) shall be paid to Participants within 30 days
                  after such Change of Control.
 
         (vii)    Exclusion. The provisions of this Section 8(a) shall not be
                  applicable to any Award granted to a Participant if any Change
                  of Control results from such Participant's beneficial
                  ownership (within the meaning of Rule 13d-3 under the
                  Securities and Exchange Act of 1934, as amended (the "Exchange
                  Act")) of Shares or other Company common stock or Company
                  voting securities.
 
         (b)      Change of Control Defined. "A Change of Control" shall be
                  -------------------------
                  deemed to have occurred if:
 
 
         (i)      there is an acquisition, in any one transaction or a series of
                  transactions, other than from the Company, by any individual,
                  entity or group (within the meaning of Section 13(d)(3) or
                  14(d)(2) of the Securities Exchange Act of 1934, as amended
                  (the "Exchange Act")), of beneficial ownership (within the
                  meaning of Rule 13(d)(3) promulgated under the Exchange Act)
                  of 20% or more of either the then outstanding shares of Common
                  Stock or the combined voting power of the then outstanding
                  voting securities of the Company entitled to vote generally in
                  the election of directors, but excluding, for this purpose,
                  any such acquisition by the Company or any of its
                  subsidiaries, or any employee benefit plan (or related trust)
                  of the Company or its subsidiaries, or any corporation with
                  respect to which, following such acquisition, more than 50% of
                  the then outstanding shares of common stock of such
                  corporation and the combined voting power of the then
                  outstanding voting securities of such corporation entitled to
                  vote generally in the election of directors is then
                  beneficially owned, directly or indirectly, by the individuals
                  and entities who were the beneficial owners, respectively, of
                  the common stock and voting securities of the Company
                  immediately prior to such acquisition in substantially the
                  same proportion as their ownership, immediately prior to such
                  acquisition, of the then outstanding shares of Common Stock or
                  the combined voting power of the then outstanding voting
                  securities of the Company. entitled to vote generally in the
                  election of directors, as the case may be; or
 
         (ii)     individuals who, as of o, 2001, constitute the Board (as of
                  such date, the "Incumbent Board") cease for any reason to
                  constitute at least a majority of the Board, provided that any
                  individual becoming a director subsequent to the Effective
                  Date, whose election, or nomination for election by the
                  Company's stockholders, was approved by a vote of at least a
                  majority of the directors then comprising the Incumbent Board
                  shall be considered as though such individual were a member of
                  the Incumbent Board, but excluding, for this purpose, any such
                  individual whose initial assumption of office is in connection
                  with an actual or threatened election contest relating to the
                  election of the directors of the Company (as such terms are
                  used in Rule 14(a)(11) or Regulation 14A promulgated under the
                  Exchange Act); or
 
         (iii)    there occurs either (A) the consummation of a reorganization,
                  merger or consolidation, in each case, with respect to which
                  the individuals and entities who were the respective
                  beneficial owners of the common stock and voting securities of
                  the Company immediately prior to such reorganization, merger
                  or consolidation do not, following such reorganization, merger
                  or consolidation, beneficially own, directly or indirectly,
                  more than 50% of, respectively, the then outstanding shares of
                  common stock and the combined voting power of the then
                  outstanding voting securities entitled to vote generally in
                  the election of directors, as the case may be, of the
                  corporation resulting from such reorganization, merger or
                  consolidation, or (B) an approval by the stockholders of the
                  Company of a complete liquidation of dissolution of the
                  Company or of the sale or other disposition of all or
                  substantially all of the assets of the Company
 
                                      10
<PAGE>
 
         Section 9.  Amendment And Termination Of The Plan.
 
         Except to the extent prohibited by applicable law and unless otherwise
expressly provided in an Award Agreement or in the Plan, the Board of Directors
may amend, alter, suspend, discontinue, or terminate the Plan, including without
limitation any such action to correct any defect, supply any omission or
reconcile any inconsistency in the Plan, without the consent of any stockholder,
Participant, other holder or beneficiary of an Award, or Person; provided that
any such amendment, alteration, suspension, discontinuation, or termination that
would impair the rights of any Participant, or any other holder or beneficiary
of any Award heretofore granted shall not be effective without the approval of
the affected Participant(s); and provided further, that, notwithstanding any
other provision of the Plan or any Award Agreement, without the approval of the
stockholders of the Company no such amendment, alteration, suspension,
discontinuation or termination shall be made that would increase the total
number of Shares available for Awards under the Plan, except as provided in
Section 4 hereof.
 
         Section 10.  General Provisions
 
         (a)     No Rights to Awards. No Employee, Participant or other Person
                 -------------------
shall have any claim to be granted any Award under the Plan, and there is no
obligation for uniformity of treatment of Employees, Participants, or holders or
beneficiaries of Awards under the Plan. The terms and conditions of Awards need
not be the same with respect to each recipient.
 
         (b)     Withholding. The Company or any Affiliate shall be authorized
                 -----------
to withhold from any Award granted or any payment due or transfer made under any
Award or under the Plan the amount (in cash, Shares, other securities, other
Awards, or other property) of withholding taxes due in respect of an Award, its
exercise, or any payment or transfer under such Award or under the Plan and to
take such other action as may be necessary in the opinion of the Company or
Affiliate to satisfy all obligations for the payment of such taxes.
 
         (c)     No Limit on Other Compensation Agreements. Nothing contained in
                 -----------------------------------------
the Plan shall prevent the Company or any Affiliate from adopting or continuing
in effect other or additional compensation arrangements and such arrangements
may be either generally applicable or applicable only in specific cases.
 
         (d)     No Right to Employment. The grant of an Award shall not be
                 ----------------------
construed as giving a Participant the right to be retained in the employ of the
Company or any Affiliate. Further, the Company or an Affiliate may at any time
dismiss a Participant from employment, free from any liability or any claim
under the Plan, unless otherwise any claim under the Plan, unless otherwise
expressly provided in the Plan or in any Award Agreement.
 
         (e)     Governing Law. The validity, construction, and effect of the
                 -------------
Plan and any rules and regulations relating to the Plan shall be determined in
accordance with the laws of the State of Connecticut and applicable Federal law.
 
         (f)     Severability. If any provision of the Plan or any Award is or
                 ------------
becomes or is deemed to be invalid, illegal, or unenforceable in any
jurisdiction, or as to any Person or Award, or would disqualify the Plan or any
Award under any law deemed applicable by the Committee, such provision shall be
construed or deemed amended to conform to applicable laws, or if it cannot be so
construed or deemed amended without, in the determination of the Committee,
materially altering the intent of the Plan or the Award, such provision shall be
stricken as to such jurisdiction, Person, or Award and the remainder of the Plan
and any such Award shall remain in full force and effect.
 
         (g)     No Trust or Fund Created. Neither the Plan nor any Award shall
                 ------------------------
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Affiliate and a Participant or
any other Person. To the extent that any Person acquires a right to receive
payments from the Company or any Affiliate pursuant to an Award, such right
shall be that of an unsecured general creditor of the Company or any Affiliate.
 
         (h)     No Fractional Shares. No fractional Share shall be issued or
                 --------------------
delivered pursuant to the Plan or any Award, and the Committee shall determine
whether cash, other securities, or other property shall be paid or transferred
in lieu of any fractional Shares, or whether such fractional Shares, or whether
such fractional Shares or any rights thereto shall be canceled, terminated, or
otherwise eliminated.
 
         (i)     Headings. Headings are given to the sections and subsections of
                 --------
the Plan solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
 
                                      11
<PAGE>
 
         Section 11.  Effective Date Of The Plan.
 
         The Plan shall be effective as of the date of its approval by the sole
stockholder of the Company.
 
         Section 12.  Term Of The Plan.
 
         No Award shall be granted under the Plan after C, 2011. However, unless
otherwise expressly provided in the Plan or in an applicable Award Agreement,
any Award theretofore granted may extend beyond such date, and the authority of
the Committee hereunder to amend, alter, adjust, suspend, discontinue, or
terminate any such Award, or to waive any conditions or rights under any such
Award, and the authority of the Board of Directors of the Company to amend the
Plan, shall extend beyond such date.
 
         Section 13.  Participants Subject to Section 162(m).
 
         (a)     Applicability. The provisions of this Section 13 shall be
                 -------------
applicable to all Covered Awards. Covered Awards shall be made subject to the
achievement of one or more preestablished Performance Goals, in accordance with
procedures to be established by the Committee from time to time. Notwithstanding
any provision of the Plan to the contrary, the Committee shall not, other than
upon a Change of Control, have discretion to waive or amend such Performance
Goals or to, except as provided in Section 4(c), increase the number of Shares
subject to Covered Awards or the amount payable pursuant to Covered Awards after
the Performance Goals have been established; provided, however, that the
Committee may, in its sole discretion, reduce the number of Shares subject to
Covered Awards or the amount which would otherwise be payable pursuant to
Covered Awards; and provided, further, that the provisions of Section 8 shall
override any contrary provision of this Section 13.
 
         (b)     Certification. No shares shall be delivered and no payment
                 -------------
shall be made pursuant to a Covered Award unless and until the Committee shall
have certified in writing that the applicable Performance Goals have been
attained.
 
         (c)     Procedures. The Committee may from time to time establish
                 ----------
procedures pursuant to which Covered Employees will be permitted or required to
defer receipt of amounts payable under Awards made under the Plan.
 
         (d)     Committee. Notwithstanding any other provision of the Plan, for
                 ---------
all purposes involving Covered Awards, the Committee shall consist of at least
two members of the Board of Directors, each of whom is an "outside director"
within the meaning of Section 162(m).
 
 
                                      12
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</DOCUMENT>