HEADWATERS INCORPORATED
                      LONG TERM INCENTIVE COMPENSATION PLAN
 
                             Effective 1 March 2005
                        (Subject to Stockholder Approval)
1.       PURPOSES
         The purposes of this Long Term Incentive Compensation Plan are to
         promote the long-term success of Headwaters Incorporated and its
         subsidiaries and to provide financial incentives to employees of
         Headwaters Incorporated and its subsidiaries to strive for long-term
         creation of stockholder value. The Plan provides long-term incentives
         to employees of the Company and its subsidiaries who are able to
         contribute towards the creation of or have created stockholder value by
         providing them stock options and other stock and cash incentives.
 
2.       DEFINITIONS
         The following definitions shall be applicable throughout the Plan:
         (a)      "Award" means an incentive award as described in Section 5(a).
         (b)      "Board" means the Board of Directors of the Company.
         (c)      "Change in Control" means:
                  (i) The consummation of a merger or consolidation of the
                  Company with or into another entity or any other corporate
                  reorganization, if persons who were not stockholders of the
                  Company immediately prior to such merger, consolidation or
                  other reorganization own immediately after such merger,
                  consolidation or other reorganization 50% or more of the
                  voting power of the outstanding securities of each of (A) the
                  continuing or surviving entity and (B) any direct or indirect
                  parent corporation of such continuing or surviving entity;
 
                  (ii) The sale, transfer or other disposition of all or
                  substantially all of the Company's assets;
 
                  (iii) Any transaction as a result of which any person is the
                  "beneficial owner" (as defined in Rule 13d-3 under the
                  Securities Exchange Act of 1934), directly or indirectly, of
                  securities of the Company representing at least 50% of the
                  total voting power represented by the Company's then
                  outstanding voting securities. For purposes of this Paragraph
                  (iii), the term "person" shall have the same meaning as when
                  used in sections 13(d) and 14(d) of the Securities Exchange
                  Act of 1934 but shall exclude (A) a trustee or other fiduciary
                  holding securities under an employee benefit plan of the
                  Company or of a parent or subsidiary of the Company and (B) a
                  corporation owned directly or indirectly by the stockholders
                  of the Company in substantially the same proportions as their
                  ownership of the common stock of the Company.
 
                  A transaction shall not constitute a Change in Control if its
                  sole purpose is to change the state of the Company's
                  incorporation or to create a holding company that will be
                  owned in substantially the same proportions by the persons who
                  held the Company's securities immediately before such
                  transaction.
         (d)      "Chief Executive Officer" or "CEO" means the Chief Executive
                  Officer of the Company.
         (e)      "Chief Financial Officer" or "CFO" means the Chief Financial
                  Officer of the Company.
         (f)      "Code" means the Internal Revenue Code of 1986, as amended.
         (g)      "Committee" means the Compensation Committee of the Board
                  unless another committee comprised of members of the Board is
                  designated by the Board to oversee and administer the Plan,
                  provided, that the Committee shall consist of two or more
                  members of the Board as the Board may designate from time to
                  time, each of whom shall satisfy such requirements as:
                  (i)      the Securities and Exchange Commission may establish
                           for administrators acting under plans intended to
                           qualify for exemption under Rule 16b-3 or its
                           successor under the Exchange Act;
 
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                  (ii)     the rules of a stock exchange on which the securities
                           of the Company are traded as may be established
                           pursuant to its rule-making authority of such stock
                           exchange; and
                  (iii)    the Internal Revenue Service may establish for
                           outside directors acting under plans intended to
                           qualify for exemption under Section 162(m) of the
                           Code.
         (h)      "Company" means Headwaters Incorporated, a Delaware
                  corporation.
         (i)      "Covered Employee" shall have the meaning given that term by
                  Section 162(m) of the Code and income tax regulations
                  promulgated thereunder.
         (j)      "Disability" means a physical or mental medical condition that
                  prevents the Participant from performing the duties of his or
                  her position with the Company and is likely to last at least
                  twelve months or result in death, as determined by the
                  Committee in its sole discretion.
         (k)      "EVA Award" means the award described in Section 11.
         (l)      "Exchange Act" means the federal Securities Exchange Act of
                  1934, as amended.
         (m)      "Fair Market Value" means, with respect to the common stock of
                  the Company, the closing sale price of such common stock at
                  four o'clock p.m. (Eastern Time), on the principal United
                  States national stock exchange on which the common stock of
                  the Company is traded, as determined by the Committee, or, if
                  the common stock shall not have been traded on such date, the
                  closing sale price on such stock exchange on the first day
                  prior thereto on which the common stock was so traded, or, if
                  the common stock is not traded on a United States national
                  stock exchange, such other amount as may be determined by the
                  Committee by any fair and reasonable means. Fair Market Value
                  determined by the Committee in good faith shall be final,
                  binding and conclusive on all parties.
 
         (n)      "Incentive Stock Option" means an option to purchase the stock
                  of the Company as described in Section 422 of the Code.
 
         (o)      "LTIPA" means an agreement establishing the terms and
                  conditions for an Award granted under the Plan, including any
                  applicable performance goals.
 
         (p)      "Nonstatutory Stock Option" means an option to purchase the
                  stock of the Company which is designated not to be an
                  Incentive Stock Option.
 
         (q)      "Participant" means, subject to the provisions of Section 11
                  with respect to EVA Awards, a full-time employee of the
                  Company who meets the requirements of Section 4(b).
         (r)      "Performance Stock" means the award described in Section 9.
                  (s) "Performance Unit" means the award described in Section
                  10.
         (t)      "Plan" means this Headwaters Incorporated Long Term Incentive
                  Compensation Plan.
         (u)      "Restricted Stock" means the award described in Section 8.
         (v)      "Restricted Stock Unit" means the award described in Section
                  8.
         (w)      "Service" means that the Participant's service with the
                  Company or an affiliated entity, whether as an employee,
                  consultant or member of the Board, is not interrupted or
                  terminated. The Participant's Service shall not be deemed to
                  have been interrupted or terminated merely because of a change
                  in the capacity in which the Participant renders service to
                  the Company or an affiliated entity as an employee, consultant
                  or member of the Board or a change in the entity for which the
                  Participant renders such service, provided, that there
                  otherwise is no interruption or termination of the
                  Participant's Service. For example, a change in status from an
                  employee of the Company to a consultant of an affiliate or a
                  member of the Board will not constitute an interruption of
                  Service. The Committee, in its sole discretion, may determine
                  whether Service shall be considered interrupted in the case of
                  any leave of absence approved by the Company, including sick
                  leave, military leave or any other personal leave.
         (x)      "Stock Appreciation Right" or "SAR" means the award described
                  in Section 7.
         (y)      "Stock Option" means the award described in Section 6, which
                  may be either an Incentive Stock Option or a Nonstatutory
                  Stock Option, as determined by the Committee.
         (z)      "Ten Percent Shareholder" means a person who owns (or is
                  deemed to own pursuant to Section 424(d) 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 of any
                  of its Affiliates (as defined in Section 424 of the Code).
 
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3.       POWERS AND ADMINISTRATION
         The Plan shall be administered by the Committee. The Committee shall
         have the authority to construe and interpret the Plan and any Awards
         granted thereunder, to establish and amend rules for Plan
         administration, to change the terms and conditions of options and other
         Awards at or after grant, and to make all other determinations which it
         deems necessary or advisable for the administration of the Plan. The
         determinations of the Committee shall be made in accordance with its
         judgment as to the best interests of the Company and its stockholders
         and in accordance with the purposes of the Plan. The Committee may take
         action by a meeting in which a quorum of the Committee is present. The
         meeting may be in person, by telephone or in such other manner in which
         the members of the Committee participating in the meeting may
         communicate directly with each other. A majority of the members of the
         Committee shall constitute a quorum, and all determinations of the
         Committee shall be made by a majority of its members. Any determination
         of the Committee under the Plan may be made without notice or meeting
         of the Committee, in a writing signed by all the Committee members.
         The Committee shall have the authority to reduce (but not increase) the
         payouts on such Awards and the Committee shall have the authority to
         limit (but not waive) the actual performance-based vesting of such
         Awards, in both cases in its sole discretion. The Committee may
         prescribe rules and procedures for the administration of the Plan and
         shall have the authority to delegate ministerial duties to agents for
         the Committee (and allocate responsibilities among the agents appointed
         by the Committee for the performance of the ministerial duties) in the
         administration of the Plan.
 
4.       ELIGIBILITY AND PARTICIPATION
         (a)      Eligibility. Only employees of the Company and its
                  subsidiaries designated by this Plan or selected by the
                  Committee to participate in the Plan shall be eligible to
                  participate in the Plan. Any corporation or other entity in
                  which a 50% or greater interest is at the time directly or
                  indirectly owned by the Company shall be a subsidiary for
                  purposes of the Plan.
         (b)      Participation. The CEO and the CFO shall participate in the
                  Plan and their Awards and rights under the Plan shall be
                  determined by the Committee. In addition, each year the CEO
                  shall present to the Committee a list of employees of the
                  Company or its subsidiaries that the CEO recommends be
                  designated as Participants for an upcoming Performance Period
                  (or a concurrent Performance Period with respect to a newly
                  hired employee of the Company or a subsidiary of the Company),
                  proposed Awards to such employees, and proposed terms for the
                  LTIPAs for the proposed Awards to such employees. In addition,
                  the CEO may present recommended amendments to any existing
                  LTIPAs, and the proposed Phase Level advancement for existing
                  LTIPAs with respect to EVA Awards. The Committee shall
                  consider the CEO's recommendations and shall determine the
                  Awards, if any, to be granted and the terms of the LTIPAs for
                  such Awards, any amendments to existing LTIPAs (subject to the
                  restrictions on the authority granted to the Committee in
                  Section 3), and Phase Level advancements. Designation of an
                  employee as a Participant for any Performance Period shall not
                  require the Committee to designate that person to be a
                  Participant or to receive an Award in any Performance Period
                  or to receive the same type or amount of Award as granted to
                  the Participant in such year. Grants of Awards to Participants
                  need not be of the same type or amount and may have different
                  terms. Employment with the Company or its subsidiary prior to
                  completion of or during a Performance Period does not entitle
                  the employee to participate in the Plan or vest in any
                  interest in any Award under the Plan. The Committee shall
                  consider all factors that it deems relevant in selecting
                  Participants and in determining the type and amount of their
                  respective Awards.
 
5.       AWARDS AVAILABLE
         (a)      Types of Awards. The Awards available under the Plan shall
                  consist of Stock Options, Stock Appreciation Rights,
                  Restricted Stock, Restricted Stock Units, Performance Stock,
                  Performance Units, EVA Awards, and other stock or cash awards,
                  as described below.
         (b)      Shares Available under the Plan. There is hereby reserved for
                  issuance under the Plan an aggregate of one million five
                  hundred thousand (1,500,000) shares of the Company common
                  stock. All shares issued under the Plan may be either
                  authorized and unissued shares or issued shares reacquired by
                  the Company. Shares covered by an Award granted under the Plan
                  shall not be counted as used unless and until they are
                  actually issued and delivered to a Participant. Any shares
                  covered by an SAR shall be counted as used only to the extent
 
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                  shares are actually issued to the Participant upon exercise of
                  the right. In addition, any shares of common stock exchanged
                  by an optionee as full or partial payment to the Company of
                  the exercise price under any Stock Option exercised under the
                  Plan, any shares retained by the Company pursuant to a
                  Participant's tax withholding election, and any shares covered
                  by a Award which is settled in cash shall be added to the
                  shares available for Awards under the Plan. All of the
                  available shares may, but need not, be issued pursuant to the
                  exercise of Incentive Stock Options. Notwithstanding anything
                  else contained in this Section 5 the total number of shares of
                  the common stock of the Company that may be issued under the
                  Plan for Awards other than cash Awards shall not exceed a
                  total of 1,500,000 shares (subject to adjustment in accordance
                  with Sections 16 and 17).
         (c)      Annual Limit on Total Grants of Restricted Stock, Restricted
                  Stock Units and Performance Stock. Notwithstanding any else in
                  this Section 5, the Restricted Stock, Restricted Stock Units
                  and Performance Shares granted under the Plan in any one
                  calendar year shall not relate to more than 300,000 shares of
                  Common Stock in the aggregate, provided, that any portion of
                  such 300,000 share limit not reserved for grants of Restricted
                  Stock, Restricted Stock Units or Performance Shares made in
                  any calendar year beginning in 2005, shall be added to the
                  300,000 share limit for subsequent calendar years.
         (d)      Reversion of Shares. If there is a lapse, expiration,
                  termination or cancellation of any Stock Option issued under
                  the Plan prior to the issuance of shares thereunder or if
                  shares of common stock are issued under the Plan and
                  thereafter are reacquired by the Company, the shares subject
                  to those options and the reacquired shares shall be added to
                  the shares available for Awards under the Plan.
         (e)      Limits on Individual Grants. Under the Plan, no Participant
                  may receive in any calendar year (i) Stock Options relating to
                  more than 500,000 shares, (ii) Restricted Stock or Restricted
                  Stock Units that are subject to the attainment of Performance
                  Goals below hereof relating to more than 500,000 shares, (iii)
                  Stock Appreciation Rights relating to more than 500,000
                  shares, or (iv) Performance Stock relating to more than
                  500,000 shares. Under the Plan, the maximum cash payment that
                  may be made to a single Participant in any calendar year under
                  a Performance Unit Award, an EVA Award or other cash Award
                  shall not exceed $20,000,000.
         (f)      Minimum Vesting. Subject to the provisions of Section 16 and
                  24, all stock and cash bonus Awards under the Plan, other than
                  EVA Awards, shall be subject to a minimum service vesting
                  requirement over a period of at least three years, with
                  vesting in each of the first two years of the vesting period
                  for such Awards not to exceed one-third of the total Award,
                  provided, however, that the Committee shall have the
                  discretion to provide for faster vesting in the event of the
                  Disability, death or retirement (as defined by the Committee)
                  of a Participant.
         (g)      Adjustments. The shares reserved for issuance and the
                  limitations set forth above shall be subject to adjustment in
                  accordance with Sections 16 and 17 hereof.
 
6.       STOCK OPTIONS
         (a)      Grant of Stock Options. Stock Options may be granted to
                  Participants by the Committee, at any time as determined by
                  the Committee.
         (b)      Terms of Stock Options. The Committee shall determine the
                  terms and conditions of each Stock Option, the number of
                  shares subject to the Stock Option, and whether the Stock
                  Option is an Incentive Stock Option or a Nonstatutory Stock
                  Option. The option price for each Stock Option shall be
                  determined by the Committee but shall not be less than 100% of
                  the Fair Market Value of the Company's common stock on the
                  date the Stock Option is granted. Notwithstanding the
                  foregoing, a Stock Option may be granted with an exercise
                  price lower than that set forth in the preceding sentence if
                  such Option is granted pursuant to an assumption or
                  substitution for another option in a manner satisfying the
                  provisions of Section 424(a) of the Code.
         (c)      Term of Stock Options. Each Stock Option shall expire at such
                  time as the Committee shall determine at the time of grant.
         (d)      Exercisability of Stock Options. Each Stock Option shall be
                  exercisable at such time and subject to such terms and
                  conditions as the Committee shall determine; provided,
                  however, that no Stock Option shall be exercisable later than
                  the tenth anniversary of its grant. The option price, upon
                  exercise of any Stock Option, shall be payable to the Company
                  in full by (i) cash payment or its equivalent, (ii) tendering
                  previously acquired shares (held for at least six months to
                  the extent necessary to avoid any variable accounting on such
                  option) or purchased on the open market and having a Fair
 
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                  Market Value at the time of exercise equal to the option
                  price, or certification of ownership of such
                  previously-acquired shares, (iii) delivery of a properly
                  executed exercise notice, together with irrevocable
                  instructions to a broker to promptly deliver to the Company
                  the amount of sale proceeds from the option shares or loan
                  proceeds to pay the exercise price and any withholding taxes
                  due to the Company, and (iv) such other methods of payment as
                  the Committee, at its discretion, deems appropriate, provided,
                  that payment of the common stock's "par value," as defined in
                  the Delaware General Corporation Law, shall not be made by
                  deferred payment. Except as otherwise provided in a LTIPA, in
                  the event the Service of a Participant holding a Stock Option
                  terminates (other than upon the Participant's death or
                  Disability), the Participant may exercise his or her Stock
                  Option (to the extent that the Participant was entitled to
                  exercise such Stock Option as of the date of termination) but
                  only within such period of time ending on the earlier of (i)
                  the date three (3) months following the termination of the
                  Participant's Service (or such longer or shorter period
                  specified in the LTIPA for such Stock Option), or (ii) the
                  expiration of the term of the Stock Option as set forth in the
                  LTIPA. If, after termination, the Participant does not
                  exercise his or her Option within the time specified in the
                  LTIPA, the Stock Option shall thereafter terminate.
 
         (e)      Vesting. Subject to the provisions of Sections 5(f), 16 and
                  24, the total number of shares of Common Stock subject to a
                  Stock Option shall be subject to the following vesting
                  provisions of this Subsection 6(e):
                  (i)      The total number of shares of Common Stock subject to
                           a Stock Option may, but need not, vest and therefore
                           become exercisable in periodic installments that may,
                           but need not, be equal.
                  (ii)     The Option may be subject to such other terms and
                           conditions on the time or times when it may be
                           exercised (which may be based on performance or other
                           criteria) as the Committee may deem appropriate.
                  (iii)    The vesting provisions of individual Stock Options
                           may vary.
                  (iv)     The provisions of this Subsection 6(e) are subject to
                           any Stock Option provisions governing the minimum
                           number of shares of Common Stock as to which a Stock
                           Option may be exercised.
 
         (f)      Incentive Stock Option Requirements. Stock Options granted
                  under the Plan as Incentive Stock Options shall have such
                  terms as required by Sections 422 of the Code for an Incentive
                  Stock Option, including, but not limited to, the following
                  terms in this Section 6(f).
                  (i)      Incentive stock options shall be granted only to
                           employees of the Company or its subsidiary.
                  (ii)     The exercise price of each Incentive Stock Option
                           shall be not less than one hundred percent (100%) of
                           the Fair Market Value of the Common Stock subject to
                           the Option on the date the Option is granted or one
                           hundred ten percent (110%) in the case of a grant of
                           an Incentive Stock Option to a Ten Percent
                           Shareholder. Notwithstanding the foregoing, an
                           Incentive Stock Option may be granted with an
                           exercise price lower than that set forth in the
                           preceding sentence if such Option is granted pursuant
                           to an assumption or substitution for another option
                           in a manner satisfying the provisions of Section
                           424(a) of the Code.
                  (iii)    The maximum term of an Incentive Stock Option shall
                           be ten years from the date of grant provided that the
                           maximum term of an Incentive Stock Option granted to
                           a Ten Percent Shareholder shall be five years from
                           the date of grant of the Incentive Stock Option.
                  (iv)     To the extent that the aggregate Fair Market Value
                           (determined at the time of grant) of Common Stock
                           with respect to which Incentive Stock Options are
                           exercisable for the first time by any Participant
                           during any calendar year (under all plans of the
                           Company and its affiliated corporations) exceeds one
                           hundred thousand dollars ($100,000), the Stock
                           Options or portions thereof which exceed such limit
                           (according to the order in which they were granted)
                           shall be treated as Nonstatutory Stock Options.
 
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                  (v)      The maximum number of shares which may be issuable
                           pursuant to the exercise of Incentive Stock Options
                           shall not exceed 1,500,000.
         (e)      No Repricings Permitted. In no event shall the Committee
                  cancel any outstanding Stock Option for the purpose of
                  reissuing the Stock Option to the Participant at a lower
                  exercise price or reduce the option price of an outstanding
                  Stock Option.
 
7.       STOCK APPRECIATION RIGHTS
         (a)      Stock Appreciation Rights may be granted to Participants at
                  any time as determined by the Committee. An SAR may be granted
                  in tandem with a Stock Option granted under this Plan or on a
                  free-standing basis. The Committee also may, in its
                  discretion, substitute SARs which can be settled only in stock
                  for outstanding Stock Options, at any time when the Company is
                  subject to fair value accounting.
         (b)      The grant price of a tandem or substitute SAR shall be equal
                  to the option price of the related option. The grant price of
                  a free-standing SAR shall be equal to the Fair Market Value of
                  the Company's common stock on the date of its grant. An SAR
                  may be exercised upon such terms and conditions and for the
                  term as the Committee in its sole discretion determines to
                  apply to the SAR; provided, however, that the term of the SAR
                  shall not exceed the option term in the case of a tandem or
                  substitute SAR or ten years in the case of a free-standing
                  SAR, and the terms and conditions applicable to a substitute
                  SAR shall be substantially the same as those applicable to the
                  Stock Option which it replaces.
         (c)      Upon exercise of an SAR, the Participant shall be entitled to
                  receive payment from the Company in an amount determined by
                  multiplying the excess of the Fair Market Value of a share of
                  common stock of the Company on the date of exercise over the
                  grant price of the SAR by the number of shares with respect to
                  which the SAR is exercised. The payment may be made in cash or
                  stock, at the discretion of the Committee, except in the case
                  of a substitute SAR which may be made only in stock.
 
8.       RESTRICTED STOCK AND RESTRICTED STOCK UNITS
         Restricted Stock and Restricted Stock Units may be awarded or sold to
         Participants under such terms and conditions as shall be established by
         the Committee. Restricted Stock and Restricted Stock Units shall be
         subject to such restrictions as the Committee determines, including,
         without limitation, any or both of the following:
         (a)      a prohibition against sale, assignment, transfer, pledge,
                  hypothecation or other encumbrance for a specified period; or
         (b)      a requirement that the holder forfeit (or in the case of
                  shares or units sold to the Participant resell to the Company
                  at cost) such shares or units in the event of termination of
                  employment during the period of restriction.
 
         All restrictions shall expire at such times as the Committee shall
         specify.
 
9.       PERFORMANCE STOCK
         The Committee shall designate the Participants to whom long-term
         performance stock "Performance Stock") is to be awarded and determine
         the number of shares, the length of the performance period and the
         other terms and conditions of each such award; provided the stated
         performance period will not be less than 12 months. Each award of
         Performance Stock shall entitle the Participant to a payment in the
         form of shares of common stock of the Company upon the attainment of
         performance goals and other terms and conditions specified by the
         Committee.
 
         Notwithstanding satisfaction of any performance goals, the number of
         shares issued under a Performance Stock award may be adjusted by the
         Committee on the basis of such further consideration as the Committee
         in its sole discretion shall determine. However, the Committee may not,
         in any event, increase the number of shares earned upon satisfaction of
         any performance goal by any Participant who is a Covered Employee. The
         Committee may, in its discretion, make a cash payment equal to the fair
         market value of shares of common stock otherwise required to be issued
         to a Participant pursuant to a Performance Stock award.
 
10.      PERFORMANCE UNITS
         The Committee shall designate the Participants to whom long-term
         performance units ("Performance Units") are to be awarded and determine
 
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         the number of units and the terms and conditions of each such award;
         provided the stated performance period will not be less than 12 months.
         Each Performance Unit award shall entitle the Participant to a payment
         in cash upon the attainment of performance goals and other terms and
         conditions specified by the Committee.
         Notwithstanding the satisfaction of any performance goals, the amount
         to be paid under a Performance Unit Award may be adjusted by the
         Committee on the basis of such further consideration as the Committee
         in its sole discretion shall determine. However, the Committee may not,
         in any event, increase the amount earned under Performance Unit Awards
         upon satisfaction of any performance goal by any Participant who is a
         Covered Employee and the maximum amount earned by a Covered Employee in
         any calendar year may not exceed $20,000,000. The Committee may, in its
         discretion, substitute actual shares of common stock for the cash
         payment otherwise required to be made to a Participant pursuant to a
         Performance Unit award.
 
11.      EVA AWARDS
         (a)      Definitions. The following terms shall have the meanings given
                  them below in this Section 11 for purposes of the EVA Awards
                  granted under the Plan.
                  (1)      "Adjusted Basic Award" means the Basic Award adjusted
                           by the percentage completion of a Target Goal.
                  (2)      "Annual Review" means the annual review by the
                           Committee of each LTIPA entered into under the Plan.
                           The review will determine the Phase Level attainment
                           by the Participant, any proposed changes to the
                           LTIPA, evaluate the Participant's performance during
                           the Performance Period and provides the basis for the
                           Committee's determination of an individual Award.
                  (3)      "Basic Award" means that monetary value set forth in
                           the LTIPA that could form the basis of the Award that
                           may be achieved upon full attainment of the Target
                           Goal.
                  (4)      "EVA" means the net operating profit after taxes, as
                           adjusted to eliminate the effect of non-economic
                           elements of generally accepted accounting principles,
                           ("NOPAT"), less the weighted average cost of capital
                           employed during the year ("Employed Capital"). The
                           Committee shall have the discretion to adjust NOPAT
                           to include or exclude: (i) extraordinary, unusual
                           and/or non-recurring items of gain or loss, (ii)
                           gains or losses on the disposition of a business,
                           (iii) changes in tax or accounting regulations or
                           laws, or (iv) the effect of a merger or acquisition,
                           as identified in the Company's quarterly and annual
                           earnings releases. In all other respects, Performance
                           Criteria shall be calculated in accordance with the
                           Company's financial statements, generally accepted
                           accounting principles, or under a methodology
                           established by the Committee prior to the issuance of
                           an Award which is consistently applied and identified
                           in the audited financial statements, including
                           footnotes, or the Management Discussion and Analysis
                           section of the Company's annual report.
                  (5)      "EVA Unit" means the designated unit of EVA
                           identified in the LTIPA.
                  (6)      "Payment Cycle" shall mean that period of time over
                           which an Award, if earned, may be paid.
                  (7)      "Phase Level" means the level of attainment achieved
                           during a Performance Period towards accomplishment of
                           a Target Goal. The Phase Level shall be determined
                           annually by the Committee based on recommendations
                           from the CEO and is a factor in determining the
                           Award.
                  (8)      "Performance Period" means a period of time
                           designated in the LTIPA during which performance
                           under the Plan will be measured and may be a period
                           of at least one year and up to ten years in length
                           and which may overlap, provided that no two
                           Performance Periods under the Plan of equal length
                           shall coincide.
                  (9)      "Target Goal" means the EVA objective set forth in
                           the LTIPA.
         (b)      Eligibility and Participation. Only the following employees of
                  the Company or its subsidiary shall be eligible for an EVA
                  Award. Employees employed by the Company or its subsidiary on
                  the last day of the Performance Period, who:
                  (1)      are specifically designated as Participants in the
                           Plan by the Committee;
                  (2)      have been designated to be eligible to receive an EVA
                           Award by the Committee;
                  (3)      have executed an LTIPA which is executed by the CEO
                           (or, with respect to the LTIPA of the CEO, a
                           non-employee member of the Committee);
                  (4)      have achieved relevant LTIPA performance criteria;
                           and
 
                                      B-7
<PAGE>
 
                  (5)      have participated in Annual Reviews of the LTIPA
                           during the Performance Period.
 
         (c)      EVA Award. The EVA Award is the Adjusted Basic Award
                  multiplied by the Phase Level attained by the Participant and
                  a factor the numerator of which is the average of the closing
                  price of the common stock of the Company (on the principal
                  stock exchange on which the Company's common stock is traded,
                  as determined by the Company) for the six months preceding the
                  last day of a Performance Period and the denominator is the
                  average closing price of the common stock of the Company (on
                  the principal stock exchange on which the Company's common
                  stock is traded, as determined by the Committee) for the six
                  months preceding the execution of a Participant's LTIPA
                  ("Beginning Stock Price"). The factor so determined shall not
                  be less than one.
                  The Adjusted Basic Award shall be determined based on the EVA
                  Unit and the Participant's achievement of the Target Goal. At
                  an achievement level of 49.99%, the Adjusted Basic Award is 0%
                  of the Basic Award. The Adjusted Basic Award is the percent of
                  the Target Goal achieved (at 50% or higher) multiplied by the
                  Basic Award, not to exceed 100% of the Basic Award.
                  (1)      A Participant's potential Award shall be earned after
                           the last day of a Performance Period and upon the
                           final approval of the Compensation Committee of the
                           Award. Portions of the Award are subject to
                           forfeiture during the Payment Cycle as provided in
                           Section 11(d). The Participant shall have no interest
                           in the Award until the final approval of the
                           Compensation Committee of the Award.
                  (2)      The actual Award granted to a Participant hereunder
                           shall be based upon the Company's overall
                           performance, the EVA Unit's overall performance and
                           the Participant's individual performance and shall be
                           determined by the Committee, in its sole discretion.
                  (3)      No Award will be granted if a Participant's
                           individual performance is unsatisfactory, as
                           determined by the Committee in its sole discretion,
                           upon the advice of the Chief Executive Officer.
         (d)      Form and Time of Payment of EVA Award. The form of payment
                  shall be in stock or cash at the sole discretion of the
                  Committee. The amounts paid under an Award shall be paid to
                  the Participant less applicable federal, state, local income
                  and employment taxes, during the Payment Cycle after the date
                  on which the Award has been approved by Committee. If the
                  Award is paid in stock, then sufficient shares shall be
                  withheld to meet withholding obligations unless other
                  arrangements have been made by the Participant. The shares to
                  be delivered in payment (including any Deferred Award Payments
                  as provided below) shall be valued at the average price for
                  the five trading days prior to the date payment to the
                  Participant.
                  (1)      The Committee shall have the authority to approve,
                           reduce or eliminate an potential EVA Award and
                           portions thereof. The Payment Cycle shall commence on
                           the date that an EVA Award is approved by the
                           Committee and shall extend for 24 months after the
                           end of the Performance Period.
                  (2)      As provided in the LTIPA for the EVA Award, the
                           Committee shall determine in its discretion what
                           portion, if any, of one-half of the potential EVA
                           Award shall be paid initially to a Participant
                           ("Initial Award Payment"). The amount of the Initial
                           Award Payment to be paid shall be paid as soon as
                           administratively practicable after approval by the
                           Committee of the EVA Award.
                  (3)      The Committee shall determine in its discretion what
                           portion of the remaining half of the potential EVA
                           Award shall be paid to a Participant ("Deferred Award
                           Payment"). Except as otherwise provided in the LTIPA
                           for the EVA Award (as determined by the Compensation
                           Committee in its sole discretion), Deferred Award
                           Payments shall not be vested or earned until the
                           conditions for payment set forth below or in the
                           LTIPA for the EVA Award under which the Deferred
                           Award Payment would be paid. The amount of the
                           Deferred Award Payment that may be paid to the
                           Participant shall be subject to the following
                           forfeiture provisions in this Section 11(d)(3):
                           (i)      One-half of the approved Deferred Award
                                    Payment shall be paid 12 months after the
                                    end of the Performance Period and one-half
                                    of the approved Deferred Award Payment shall
                                    be paid 24 months after the end of the
                                    Performance Period subject to the following
                                    forfeiture provisions.
 
                                      B-8
<PAGE>
 
                           (ii)     As provided in the Participant's LTIPA for
                                    the EVA Award, (A) failure of the EVA Unit
                                    to achieve the same level of the Target Goal
                                    as was obtained during the Performance
                                    Period in the 12 months following the
                                    Performance Period will result in forfeiture
                                    of one-half of the Deferred Award Payment,
                                    and (B) failure to achieve the EVA Unit in
                                    the 12 months beginning 12 months after the
                                    ending of the Performance Period and ending
                                    24 months after the end of the Performance
                                    Period will result in the forfeiture of
                                    one-half of the Deferred Award Payment.
                                    Payment of a portion of the Deferred Award
                                    Payment, if applicable, shall be made as
                                    soon as administratively practicable
                                    following the end of the applicable 12-month
                                    period.
                           (iii)    Among other conditions to be included in a
                                    Participant's LTIPA, the Committee may
                                    require a Participant who is eligible to
                                    receive a Deferred Award Payment to remain
                                    in employment with the Company or its
                                    subsidiary through the payment date as a
                                    condition for such payment.
 
         (e)      Disability, Death and Other Terminations
                  (1)      In the event of the termination of a Participant's
                           employment due to his or her Disability or death,
                           such Participant (or the Participant's probate
                           estate, in the event of his or her death) may receive
                           payment of an EVA Award, consistent with the terms of
                           the Plan, subject to the terms of the LTIPA for the
                           EVA Award and at the sole discretion of the
                           Committee. Any such Award shall be determined and
                           paid in accordance with the regular procedures of the
                           Plan.
                  (2)      In the event of the Participant's death, should an
                           EVA Award be approved under Section 11(e)(1), such
                           EVA Award shall be paid in cash or stock, less
                           applicable federal, state, and local income and
                           employment taxes, on the normal EVA Award payout date
                           and subject to the terms of forfeiture, to the
                           Participant's estate, or to the person or persons who
                           have acquired, by will or by the laws of descent and
                           distribution or by other legal proceedings, the right
                           to such Award, in the determination and discretion of
                           the Committee.
                  (3)      In the event of the termination of a Participant's
                           employment for reasons other than his or her
                           Disability or death, such Participant's right to
                           receive an EVA Award, if any, shall be determined by
                           the following terms in this Section 11(e)(3):
                           (i)      If the Participant's employment is
                                    terminated during the Performance Period for
                                    the EVA Award, then the Participant shall
                                    not be eligible to any payment under the EVA
                                    Award.
                           (ii)     If the Participant's employment is
                                    terminated following the Performance Period
                                    for the EVA Award and the Committee has
                                    approved the payment of the EVA Award to the
                                    Participant, then the EVA Award shall be
                                    paid to the Participant subject to the
                                    conditions for the payment of the EVA Award
                                    (including the achievement of the EVA Unit's
                                    Target Goals during the two 12-month periods
                                    following the Performance Period required
                                    for the payment of the Deferred Award
                                    Payments set forth in Section 11(d)).
         (f)      No Reallocation of EVA Awards. In no event may the portion of
                  the potential EVA Award allocated to a Participant be
                  increased in any way, including as a result of the reduction
                  of any other Participant's allocated portion.
 
12.      CASH BONUS AWARDS
         The Committee may designate the employees of the Company who are
         eligible to receive a cash bonus payment in any calendar year based on
         an incentive pool to be determined by the Committee. The Committee
         shall allocate an incentive pool percentage to each designated
         Participant for each calendar year. In no event may the incentive pool
         percentage for any one Participant exceed fifty (50%) of the total
         pool.
         As soon as possible after the determination of the incentive pool for a
         calendar year, the Committee shall calculate the Participant's
 
                                      B-9
<PAGE>
 
         allocated portion of the incentive pool based upon the percentage
         established at the beginning of the calendar year. The Participant's
         incentive award then shall be determined by the Committee based on the
         Participant's allocated portion of the incentive pool subject to
         adjustment in the sole discretion of the Committee. In no event may the
         portion of the incentive pool allocated to a Participant be increased
         in any way, including as a result of the reduction of any other
         Participant's allocated portion.
 
13.      OTHER STOCK OR CASH AWARDS
         In addition to the incentives described in sections 6 through 12 above,
         the Committee may grant other incentives payable in cash or in common
         stock under the Plan as it determines to be in the best interests of
         the Company and subject to such other terms and conditions as it deems
         appropriate; provided, an outright grant of stock will not be made
         unless it is offered in exchange for cash compensation that has
         otherwise already been earned by the recipient.
 
14.      PERFORMANCE GOALS
         Except as provided with respect to EVA Awards, cash bonus Awards and
         awards of Restricted Stock, Restricted Stock Units, Performance Stock,
         Performance Units and other incentives under the Plan may be made
         subject to the attainment of performance goals relating to any one or
         more business criteria within the meaning of Section 162(m) of the
         Code, including, but not limited to, cash flow; cost; ratio of debt to
         debt plus equity; profit before tax; economic profit; earnings before
         interest and taxes; earnings before interest, taxes, depreciation and
         amortization; earnings per share; operating earnings; economic value
         added; ratio of operating earnings to capital spending; free cash flow;
         net profit; net sales; sales growth; price of the Company common stock;
         return on net assets, equity or stockholders' equity; market share; or
         total return to stockholders ("Performance Criteria"). Any one or more
         Performance Criteria may be used to measure the performance of the
         Company as a whole or any business unit of the Company and may be
         measured relative to a peer group or index.
         Any Performance Criteria may include or exclude Special Items. Special
         Items shall include (i) extraordinary, unusual and/or non-recurring
         items of gain or loss, (ii) gains or losses on the disposition of a
         business, (iii) changes in tax or accounting regulations or laws, or
         (iv) the effect of a merger or acquisition, as identified in the
         Company's quarterly and annual earnings releases. In all other
         respects, Performance Criteria shall be calculated in accordance with
         the Company's financial statements, generally accepted accounting
         principles, or under a methodology established by the Committee prior
         to the issuance of an award which is consistently applied and
         identified in the audited financial statements, including footnotes, or
         the Management Discussion and Analysis section of the Company's annual
         report.
         With respect to Awards subject to a Performance Criteria, the Committee
         shall have the authority to reduce (but not increase) the payouts on
         such Awards and shall have the authority to limit (but not waive) the
         actual performance-based vesting of such Awards in its sole discretion.
 
15.      DEFERRAL OF PAYMENT ON AWARDS
         Subject to the provisions of Section 409A of the Code and any
         regulatory guidance promulgated thereunder, a Participant and the
         Company may enter into an agreement under which the payment of amounts
         payable under a vested Award shall be deferred on terms and conditions
         to be established by the Participant and the Company.
 
16.      ADJUSTMENT PROVISIONS
         (a)      If the Company shall at any time change the number of issued
                  shares of common stock by stock dividend, stock split,
                  spin-off, split-off, spin-out, recapitalization, merger,
                  consolidation, reorganization, combination, or exchange of
                  shares, the total number of shares reserved for issuance under
                  the Plan, the maximum number of shares which may be made
                  subject to an Award or all Awards in any calendar year, and
                  the number of shares covered by each outstanding Award and the
                  price therefor, if any, shall be equitably adjusted by the
                  Committee, in its sole discretion.
         (b)      In the event of any merger, consolidation or reorganization of
                  the Company with or into another corporation which results in
                  the outstanding common stock of the Company being converted
                  into or exchanged for different securities, cash or other
                  property, or any combination thereof, the Company shall have
                  the authority to provide in the controlling agreement for such
                  transaction (i) that there shall be substituted, as determined
                  by the Committee in its discretion, for each share of common
 
                                      B-10
<PAGE>
 
                  stock then subject to an Award granted under the Plan, the
                  number and kind of shares of stock, other securities, cash or
                  other property to which holders of common stock of the Company
                  will be entitled pursuant to the transaction, (ii) that the
                  acquiring or surviving corporation in the transaction shall
                  assume the outstanding Awards under the Plan (which may be
                  exercisable into the securities of the acquiring or surviving
                  corporation), (iii) that all unexercised Awards shall
                  terminate immediately prior to such transaction unless
                  exercised prior to the closing of the transaction, or (iv) a
                  combination of the foregoing.
 
17.      SUBSTITUTION AND ASSUMPTION OF AWARDS
         Without affecting the number of shares reserved or available hereunder,
         the Board or the Committee may authorize the issuance of Awards under
         this Plan in connection with the assumption of, or substitution for,
         outstanding Awards previously granted to individuals who become
         employees of the Company or any subsidiary as a result of any merger,
         consolidation, acquisition of property or stock, or reorganization
         other than a Change in Control, upon such terms and conditions as the
         Committee may deem appropriate.
 
18.      TRANSFERABILITY
         Each Award granted under the Plan shall not be transferable otherwise
         than by will or the laws of descent and distribution and each Stock
         Option and SAR shall be exercisable during the Participant's lifetime
         only by the Participant or, in the event of Disability, by the
         Participant's personal representative. In the event of the death of a
         Participant, exercise of any Award or payment with respect to any Award
         shall be made only by or to the executor or administrator of the estate
         of the deceased Participant or the person or persons to whom the
         deceased Participant's rights under the Award shall pass by will or the
         laws of descent and distribution.
 
19.      TAXES
         The Company shall be entitled to withhold the amount of any tax
         attributable to any amounts payable or shares deliverable under the
         Plan, after giving the person entitled to receive such payment or
         delivery notice and the Company may defer making payment or delivery as
         to any award, if any such tax is payable until indemnified to its
         satisfaction. A Participant may pay all or a portion of any required
         withholding taxes arising in connection with the exercise of a Stock
         Option or SAR or the receipt or vesting of shares hereunder by electing
         to have the Company withhold shares of common stock, having a fair
         market value equal to the amount required to be withheld.
 
20.      OTHER PROVISIONS
         (a)      The grant of any Award under the Plan may also be subject to
                  other provisions (whether or not applicable to the Award
                  awarded to any other Participant) as the Committee determines
                  appropriate, including provisions intended to comply with
                  federal or state securities laws and stock exchange
                  requirements, understandings or conditions as to the
                  Participant's employment, requirements or inducements for
                  continued ownership of common stock after exercise or vesting
                  of Awards, forfeiture of awards in the event of termination of
                  employment shortly after exercise or vesting, or breach of
                  non-solicitation, non-disparagement, non-competition or
                  confidentiality agreements following termination of
                  employment, or provisions permitting the deferral of the
                  receipt of a Award for such period and upon such terms as the
                  Committee shall determine.
         (b)      In the event any Award under this Plan is granted to an
                  employee who is employed or providing services outside the
                  United States and who is not compensated from a payroll
                  maintained in the United States, the Committee may, in its
                  sole discretion, modify the provisions of the Plan as they
                  pertain to such individuals to comply with applicable law,
                  regulation or accounting rules.
         (c)      The Committee, in its sole discretion, may permit or require a
                  Participant to have amounts or shares of common stock that
                  otherwise would be paid or delivered to the Participant as a
                  result of the exercise or settlement of an award under the
                  Plan credited to a deferred compensation or stock unit account
                  established for the Participant by the Committee on the
                  Company's books of account.
         (d)      As a condition for the receipt of stock Awards under the Plan,
                  a Participant shall agree to be bound by the employment
                  policies of the Company pertaining to the securities of the
                  Company including but not limited to the insider trading
                  restrictions of the Company.
 
                                      B-11
<PAGE>
 
21.      NO RESERVE OR TRUST
         Nothing contained in the Plan shall require the Company to segregate
         any monies from its general funds, or to create any trust or make any
         special deposit in respect of any amounts payable under the Plan to or
         for any Participant or group of Participants. All amounts payable under
         the Plan shall be paid out of the general funds of the Company.
 
 
22.      NO RIGHT TO ASSIGN
         No right or interest of any Participant in the Plan or in any unpaid
         Award shall be assignable or transferable in whole or in part, either
         voluntarily or by operation of law or otherwise, or be subject to
         payment of debts of any Participant by execution, levy, garnishment,
         attachment, pledge, bankruptcy or in any other manner.
 
 
23.      NO EMPLOYMENT RIGHTS CONFERRED
         Nothing contained in the Plan or any Award shall confer upon any
         employee any right with respect to continuation of employment with the
         Company in any capacity or interfere in any way with the right of the
         Company to terminate an employee's employment at any time or guarantee
         any right of participation in any other employee benefit or
         compensation plan of the Company.
 
 
24.      SUCCESSORS AND MERGERS, CONSOLIDATIONS OR CHANGE IN CONTROL
         The terms and conditions of this Plan shall inure to the benefit of and
         bind the Company, the Participants, their successors, assignees, and
         personal representatives. If a Change of Control occurs, then this Plan
         shall immediately terminate.
         Except as otherwise provided in an LTIPA, upon a Change in Control of
         the Company, the Committee, in its sole discretion, may (but shall not
         be required to) make all outstanding Stock Options and SARs fully
         vested and exercisable, all restrictions on Restricted Stock and
         Restricted Stock Units terminated, all performance goals deemed
         achieved at target levels and all other terms and conditions met, and
         deliver all Performance Stock, and pay out all Performance Units and
         Restricted Stock Units. The Committee shall in its sole discretion
         determine the status of achievement of a particular Target Goal and
         shall specify an Adjusted Basic Award based upon its determination of
         achievement of the performance goals under the Awards as of the Change
         in Control ("Change in Control Award"). A Change in Control Award shall
         be modified as outlined below and shall be paid 30 days after the
         consummation of the Change in Control. Any Deferred Award payments
         outstanding upon a Change in Control shall be paid 30 days after the
         Change in Control In the event of a Change in Control, all EVA Awards
         or cash Awards shall be paid on a pro-rated basis (as determined by the
         Committee) based on the portion of the Performance Goals achieved under
         the EVA Awards or cash Awards as of the date of the Change in Control,
         subject to the discretion of the Committee to reduce the EVA Awards.
 
25.      GOVERNING STATE LAW AND COMPLIANCE WITH SECURITIES LAWS
         (a)      The Plan and any actions taken in connection herewith shall be
                  governed by and construed in accordance with the laws of the
                  state of Delaware (without regard to applicable Delaware
                  principles of conflict of laws).
         (b)      The Company shall seek to obtain from each regulatory
                  commission or agency having jurisdiction over the Plan such
                  authority as may be required to grant Stock Awards and to
                  issue and sell shares of Common Stock upon exercise of the
                  Stock Awards; provided, however, that this undertaking shall
                  not require the Company to register under the Securities Act
                  the Plan, any stock Award or any common stock issued or
                  issuable pursuant to any such stock Award. If, after
                  reasonable efforts, the Company is unable to obtain from any
                  such regulatory commission or agency the authority which
                  counsel for the Company deems necessary for the lawful
                  issuance and sale of common stock under the Plan, the Company
                  shall be relieved from any liability for failure to issue and
                  sell common stock upon exercise of such stock Awards unless
                  and until such authority is obtained.
 
                                      B-12
<PAGE>
 
26.      DURATION, AMENDMENT AND TERMINATION
         The Board or the Committee may amend, suspend, terminate or reinstate
         the Plan from time to time or terminate the Plan at any time. However,
         no such action shall reduce the amount of any existing Award (subject
         to the reservation of the authority of the Committee to reduce payments
         on Awards) or change the terms and conditions thereof without the
         Participant's consent. No amendment of the Plan shall be made without
         stockholder approval to the extent stockholder approval is expressly
         required under applicable rules and regulations of the Securities and
         Exchange Commission, the applicable rules of a stock exchange on which
         the securities of the Company are traded as may be established pursuant
         to its rule-making authority of such stock exchange, and the rules and
         regulations of the Internal Revenue Service for plans intended to
         qualify for the performance-based exemption under Section 162(m) of the
         Code.
         Neither the Board nor the Committee may cancel an Award once the Award
         has been granted by the Committee, including any Deferred Award
         Payments. Each year on the anniversary of the LTIPAs, the CEO shall
         present to the Committee any recommendations for changes in the Plan or
         in the LTIPAs previously approved by the Committee (subject to the
         restrictions on the grant of authority to the Committee in Section 3).
 
27.      EFFECTIVE DATE AND TERM OF THE PLAN
         The Plan was adopted by the Board of Directors on January 3, 2005, to
         be effective March 1, 2005, subject to stockholder approval. The Plan
         shall continue for a term of ten years from the date of its adoption.
         The Plan and any Awards granted thereunder shall be null and void if
         stockholder approval is not obtained at the next annual meeting of
         stockholders.
 
                                      B-13
<PAGE>