GOSS HOLDINGS INC
EXHIBIT 10.4
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<TYPE>EX-10.4
<SEQUENCE>5
<FILENAME>ex-10_4.txt
<DESCRIPTION>EXHIBIT 10.4
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EXHIBIT 10.4

                           INCENTIVE OPTION AGREEMENT

         INCENTIVE OPTION AGREEMENT (the "Agreement") dated this _____ day of
___________, 2000 providing for the granting of certain options by Goss
Holdings, Inc., a Delaware corporation (the "Corporation"), to ____________,
an [employee of] [consultant to] [non-employee director of] the Corporation
or of a subsidiary of the Corporation (the "Employee").

         As of February 1, 2000, the Corporation has duly adopted the Goss
Holdings, Inc. Management Stock Incentive Plan (the "Plan"), which is
incorporated herein by reference. Unless otherwise expressly stated, all
defined terms herein shall have the same meanings ascribed to them in the
Plan. In accordance with Section 7 of the Plan, the Employee is to be granted
an option under the Plan to buy shares of common stock, par value $.01 per
share (the "Shares"), of the Corporation.

         1. NUMBER OF SHARES; INCENTIVE OPTION PRICE. The Corporation hereby
irrevocably grants to the Employee an option (the "Incentive Option") to
purchase, in the aggregate, _________ Shares (the "Incentive Option Shares")
at an exercise price of $7.41 per Share (the "Option Price") on the terms and
subject to the conditions set forth herein and in the Plan. The Incentive
Option is subject to the Employee executing a Restricted Stock Agreement
substantially in the form attached to the Plan as Exhibit A.

         2. PERIOD OF INCENTIVE OPTION AND CONDITIONS OF EXERCISE. (a) The
Option Period of the Incentive Option (or any portion thereof) shall commence
on the date hereof (the "Date of Grant") and terminate upon the earlier of
the date that is ten (10) years from the Date of Grant (the "Expiration
Date") and the time at which such Incentive Option (or any portion thereof)
is terminated pursuant to the Plan or Section 3 hereof. Upon the termination
of the Incentive Option in accordance with the provisions hereof, all rights
of the Employee with respect to such Incentive Option hereunder and in
connection with such Incentive Option under the Plan shall cease. This
Agreement shall terminate upon the complete termination of the Incentive
Option granted pursuant hereto.

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                  (b) Subject to prior termination thereof, the Incentive
Option granted pursuant hereto shall vest as follows: 25% on November 19,
2000; 25% on November 19, 2001; 25% on November 19, 2002; and 25% on November
19, 2003.

                  (c) Upon the consummation of an Extraordinary Transaction
(as defined below), such portion, if any, of the Incentive Option that has
not vested shall become fully vested.

                  (d) The Employee may exercise the Incentive Option with
respect to all or any portion of the Incentive Option Shares at any time and
from time to time after (and to the extent) the Incentive Option has vested
and before the end of the Option Period with respect to the Incentive Option
or such portion thereof.

                  (e) For purposes of this Agreement, an "Extraordinary
Transaction" means an event as a result of which Stonington Partners, Inc.
and its subsidiaries and affiliates ("Stonington") cease to be the beneficial
owners of at least 50% of the common equity of the Corporation on a fully
diluted basis, or any other event as a result of which: (i) the Corporation
consolidates, enters into a plan of reorganization with, or merges with or
into another corporation or conveys, transfers or leases all or substantially
all of its assets to any person, or any corporation consolidates with or
merges with or into the Corporation, in any such event pursuant to a
transaction in which the outstanding voting common stock of the Corporation
is changed into or exchanged for cash, securities or other property, other
than any such transaction where (A) the outstanding voting common stock of
the Corporation is changed into or exchanged for, in whole or in part, voting
stock of the surviving corporation which is not redeemable capital stock and
(B) the holders of the voting common stock of the Corporation immediately
prior to such transaction own, directly or indirectly, not less than 50% of
the voting stock of the surviving corporation immediately after such
transaction; (ii) at any time, a majority of the members of the Board of
Directors of the Corporation then in office does not consist of (A)
individuals who two years prior to such date were members of the Board of
Directors of the Corporation, (B) new directors whose election to such Board
of Directors or whose nomination for election by the shareholders of the
Corporation was approved by a vote of 66-2/3% of the directors then still in
office who were either directors at the beginning of such two-year period or
whose election or nomination for election was previously approved by
directors elected or nominated in

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accordance with this clause (B) and (C) such other directors as have been
nominated or approved by Stonington; or (iii) the Corporation is liquidated,
dissolved, wound-up or adopts a plan of liquidation.

         3. TERMINATION UPON TERMINATION OF EMPLOYMENT. Except in
circumstances and to the extent specified in the following sentence or the
Plan, the Incentive Option shall terminate immediately upon the Employee's
ceasing to be a full-time employee of, a director of or a consultant to the
Corporation or any of its subsidiaries. The time at which a vested Incentive
Option shall terminate shall be the earliest to occur of (x) the Expiration
Date, or (y) the following dates:

                  (i)      the thirtieth day after the date upon which the
                           Employee ceases to be a full-time employee of, a
                           director of or a consultant to the Corporation or any
                           of its subsidiaries unless he or she ceases to be an
                           employee, director or a consultant in a manner
                           described in subsection (ii) or (iii) below;

                  (ii)     the one hundred and eightieth day after the date of
                           the death, retirement or Disability (as that term is
                           defined in the Company's Salaried Long Term
                           Disability Plan) of the Employee if the Employee
                           dies, retires or becomes disabled before the time at
                           which such Incentive Option otherwise terminates; or

                  (iii)    immediately upon the Employee's voluntary termination
                           of employment, directorship or consultancy (other
                           than (i) due to the death of such Employee or (ii)
                           upon the occasion of his or her retirement or
                           disability or termination of employment, directorship
                           or consultancy by the Corporation or any of its
                           subsidiaries for Cause).

         4. NON-TRANSFERABILITY OF INCENTIVE OPTION; DEATH OF EMPLOYEE. The
Incentive Option and this Agreement (i) may not be assigned, transferred,
pledged or hypothecated in any way, (ii) shall not be assignable by operation
of law (except by will or by the laws of descent and distribution) and (iii)
shall not be subject to execution, attachment or similar process. During the
lifetime of the Employee, the Incentive Option may be exercised only by him
or her. Any

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attempted assignment, transfer, pledge, hypothecation or other disposition of
the Incentive Option contrary to the provisions hereof shall be null and void
and without effect.

         5. PROCEDURE FOR EXERCISE AND PAYMENT FOR SHARES. (a) A Participant
shall exercise an Option by giving notice to the Corporation in the form
attached to the Plan as Schedule II. Such notice shall be deemed sufficient
for this purpose only if delivered to the Corporation at its principal office
and only if it states (i) the number of Shares with respect to which the
Option is being exercised, and (ii) the date, not more than ninety (90) days
after the date of such notice, upon which the Shares shall be purchased and
payment therefor shall be made (the "Exercise Date"). The exercise of an
Option shall be effective only if, on or before the Exercise Date, the
Participant pays the aggregate Option Price of the Shares being purchased in
cash or by certified or bank cashier's check, delivered to the principal
office of the Corporation. The Corporation shall, as soon as practicable
after the Exercise Date, deliver or cause to be delivered to the Participant
a certificate or certificates for the number of Shares with respect to which
the Option is so exercised and payment is so made, registered in the name of
the exercising Participant. Until such certificates have been issued, the
exercising Participant shall not have any of the rights of a shareholder of
the Corporation including, without limitation, the right to vote with respect
to the underlying Shares. Finally, the Corporation will require the
Participant to sign a Restricted Stock Agreement substantially in the form
attached to the Plan as Exhibit A as a condition precedent to receiving any
Shares in exercise of all or a portion of the Option.

                  (b) Notwithstanding the foregoing, if as of the Exercise
Date for an Option (i) the Corporation may not issue Shares with respect to
such Option by reason of any law or contract or (ii) any law or any
regulation of any commission or agency having jurisdiction shall require the
Corporation or the exercising Participant to take any action with respect to
the Shares acquired by the exercise of an Option, then the date upon which
the Corporation shall issue or cause to be issued the certificate or
certificates for the Shares shall be postponed until such issuance is
permitted or full compliance has been made with all such requirements of law
or regulation, as applicable; provided, that the Corporation shall use its
reasonable efforts to take all necessary action to comply with such
requirements of law or regulation. Further, if requested by the Corporation,
at or before the time of the issuance of the Shares with respect to which
exercise of an Option has been made, the exercising Participant shall deliver
to the Corporation his or her written statements satisfactory in form and
content of the Corporation, that he or she intends to

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hold the Shares so acquired by him or her on exercise of his or her Option,
for investment purposes only and not with a view to resale or other
distribution thereof to the public in violation of the Securities Act of
1933, as amended (the "Securities Act"). Moreover, in the event that the
Corporation shall determine that, in compliance with the Securities Act or
other applicable statutes or regulations, it is necessary to register any of
the Shares with respect to which an exercise of an Option has been made, or
to qualify any such Shares for exemption from any of the requirements of the
Securities Act or any other applicable statute or regulation, no Options may
be exercised and no Shares shall be issued to the exercising Participant
until the required action has been completed; provided, that the Corporation
shall use its reasonable efforts to take all necessary action to comply with
such requirements of law or regulation. Notwithstanding anything to the
contrary contained herein, neither the Board of Directors nor the members of
the Compensation Committee owe a fiduciary duty to any Participant in his or
her capacity as such.

         6. WITHHOLDING. No later than the date as of which an amount first
becomes includable in the gross income of the Participant for federal income
tax purposes with respect to any Option hereunder, such Participant shall pay
to the Corporation any federal, state, local or foreign taxes of any kind
required by law to be withheld with respect to such amount. The obligations
of the Corporation hereunder shall be conditional on such payment, and the
Corporation shall, to the extent permitted by law, have the right to deduct
any such taxes from any payment otherwise due the Participant.

         7. SPECIFIC RESTRICTIONS UPON INCENTIVE OPTION SHARES. The Employee
hereby agrees with the Corporation as follows:

                  (a) the Employee shall acquire the Incentive Option Shares
for investment purposes only and not with a view to resale or other
distribution thereof to the public in violation of the Securities Act of
1933, as amended (the "Securities Act"), and shall not dispose of any
Incentive Option Shares in any transaction which, in the opinion of counsel
to the Corporation, may violate the Securities Act, or the rules and
regulations thereunder, or any applicable state securities, or "blue sky",
laws;

                  (b) if any Incentive Option Shares shall be registered
under the Securities Act, no public offering (otherwise than on a national
securities exchange, as defined in the Exchange

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Act) of any Incentive Option Shares shall be made by the Employee (or any
other person) under such circumstances that he or she (or such other person)
may be deemed an underwriter, as defined in the Securities Act; and

                  (c) the Corporation shall have the authority to endorse
upon the certificate or certificates representing the Incentive Option Shares
such legends referring to the foregoing restrictions or any other applicable
restrictions, as the Corporation may deem appropriate.

         8. CASH-OUT OF CERTAIN OPTION. Without limiting any rights of the
Corporation under the Stockholders' Agreement, the Compensation Committee or
the Board of Directors may cancel any outstanding Options in exchange for a
cash payment, or in the discretion of the Compensation Committee or the Board
of Directors payment of other property, to the Participant equal to the
excess of (x) the fair market value (as determined in good faith by the Board
of Directors of the Corporation) of the consideration received per Stonington
Share by Stonington in any Extraordinary Transaction (as defined in paragraph
2(e) above), over (y) the Option Price for such Options, multiplied by the
number of Shares subject to such cancelled Options, in each case effective
upon the consummation of the Extraordinary Transaction.

         9. TERMINATION OF EMPLOYMENT. The employment, consultancy or
directorship of the Employee shall not be deemed to have terminated if the
Employee is absent from such employment, consultancy or directorship by
reason of an approved leave of absence (in accordance with the applicable
policy of the Corporation or the applicable subsidiary) or is transferred to
and becomes an employee, consultant or director of a subsidiary of the
Corporation or the Corporation, and, in the case of a consultant, the
expiration of a consulting arrangement without the prior termination thereof
shall not be deemed a termination of such arrangement (or cessation of being
a consultant) for purposes of this Agreement. If a subsidiary of the
Corporation ceases to be such a subsidiary, the employment, consultancy or
directorship, as applicable, of each employee, consultant and director of
such subsidiary who is not an employee, consultant or director of the
Corporation or of another (remaining) subsidiary of the Corporation
immediately thereafter shall be deemed to have ceased on the date such
subsidiary ceases to be a subsidiary of the Corporation unless proper
provision is made for the conversion of such Participant's Option into option
of the surviving or acquiring company on terms which are

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intended to preserve substantially the economic value thereof as of the date
such subsidiary ceases to be a subsidiary of the Corporation.

         10. PAYMENT. Nothing herein contained or done pursuant hereto shall
obligate the recipient of an Incentive Option to purchase and/or pay for any
Incentive Option Shares except those Incentive Option Shares in respect of
which the holder of the Incentive Option shall have exercised such option to
purchase hereunder in the manner herein above provided.

         11. SOLE AGREEMENT This Agreement, together with the Plan and the
Restricted Stock Agreement, as applicable, form the sole agreement between
the parties to it regarding the matters specified in it, and any and all
prior written or oral understandings regarding those matters are merged into
it. This Agreement may be amended only by written agreement between the
Employee and the Corporation.

         12. BINDING EFFECT. This Agreement shall inure to the benefit of and
be binding upon the parties hereto, their heirs, successors and permitted
assigns.

         13. THE EMPLOYEE HEREBY REPRESENTS, WARRANTS AND ACKNOWLEDGES TO THE
CORPORATION THAT THE EMPLOYEE IS AN [EMPLOYEE OF] [CONSULTANT TO]
[NON-EMPLOYEE DIRECTOR OF] THE CORPORATION OR A SUBSIDIARY OF THE CORPORATION
AND THAT THE [EMPLOYEE] [CONSULTANT] [NON-EMPLOYEE DIRECTOR] WAS NOT AND IS
NOT BEING INDUCED TO ENTER INTO THIS AGREEMENT BY AN EXPECTATION OF
[EMPLOYMENT] [CONSULTANCY][DIRECTORSHIP] OR CONTINUED [EMPLOYMENT]
[CONSULTANCY] [DIRECTORSHIP].

         14. NOTICES. Any notice required or permitted under this Agreement
shall be deemed given when delivered personally, or when deposited in a
United States Post Office as registered mail, postage prepaid, addressed, as
appropriate, to the Employee at his or her address set forth below or such
other address as he or she may designate in writing to the Corporation, or to
the Corporation, c/o Office of Secretary, Goss Holdings, Inc., 700 Oakmont
Lane, Westmont, IL 60559 or such other address(es) as the Corporation may
designate in writing to the Employee.

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         15. FAILURE TO ENFORCE NOT A WAIVER. The failure of the Corporation
to enforce at any time any provision of this Agreement shall in no way be
construed to be a waiver of such provision or of any other provision hereof.

         16. GOVERNING LAW. This Agreement shall be governed by and construed
according to the laws of the State of Delaware, without regard to principles
of conflict of laws.

         17. PROVISIONS OF PLAN. The Incentive Option provided for herein is
granted pursuant to the Plan, and said Incentive Option and this Agreement
are in all respects governed by the Plan and subject to all of the terms and
provisions thereof, whether such terms and provisions are incorporated in
this Agreement solely by reference or are expressly cited herein. In the
event of any inconsistency between this Agreement and the Plan, the terms of
the Plan shall govern to the extent of such inconsistency. For greater
certainty, without limiting the generality of the foregoing, the Employee
agrees to be bound by any amendments to the Plan or this Agreement made by
the Compensation Committee of the Board of Directors of the Corporation or
the Board of Directors of the Corporation in accordance with the provisions
of the Plan to conform the Plan or this Agreement to the rules and
regulations of any appropriate regulatory authority or any national
securities exchange on which the Corporation proposes to list or lists any of
its shares. From and after the date, if any, on which any shares of the
Corporation are listed on any national securities exchange an/or subject to
the rules and regulations of any applicable regulatory authority, the terms
and conditions of this Agreement and the implementation thereof shall be
subject to the rules and regulations of such exchange and/or regulatory
authority, as the case may be, and, in the event of any inconsistency between
the terms and conditions of this Agreement and the rules and regulations of
any such exchange and/or regulatory authority, as the case may be, shall
prevail.

                                     * * * *

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         IN WITNESS WHEREOF, the Corporation has executed this Agreement on
the day and year first above written.

                                          GOSS HOLDINGS, INC.

                                          By:
                                             -------------------------------
                                             Name:  Joseph P. Gaynor, III
                                             Title: Executive Vice President

The undersigned hereby accepts, and agrees to, all terms and provisions of the
foregoing Agreement.

                                      ------------------------------------
                                                     (name)

                                      ------------------------------------

                                      ------------------------------------
                                                    ADDRESS

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