IPG PHOTONICS CORP
EX-10.3 2006 INCENTIVE COMPENSATION PLAN
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>4
<FILENAME>b65210ipexv10w3.txt
<DESCRIPTION>EX-10.3 2006 INCENTIVE COMPENSATION PLAN
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.3

                            IPG PHOTONICS CORPORATION
                        2006 INCENTIVE COMPENSATION PLAN
                         (As adopted February 28, 2006)

IPG Photonics Corporation, USA, Inc. (the "Company") hereby establishes the IPG
Photonics Corporation 2006 Incentive Compensation Plan for the benefit of its
eligible Participants (as hereinafter defined) for the purposes hereinafter set
forth. The Plan permits the award of Stock Options, Restricted Stock,
Performance Shares, Performance Units, Stock Units, Cash, and SARs.

1. DEFINITIONS

The following terms shall have the following meanings unless the context
indicates otherwise:

1.1. "Affiliate" shall mean a corporation that, for purposes of Section 422 of
     the Code, is a Parent or Subsidiary of the Company within the meaning of
     Sections 424(e) and 424(f) of the Code.

1.2. "Award" shall mean a Stock Option, a SAR, a Restricted Stock Award, a Stock
     Unit, a Performance Share, a Performance Unit, or a Cash Award.

1.3. "Award Agreement" shall mean a written agreement between the Company and a
     Participant that establishes the terms, conditions, restrictions and/or
     limitations applicable to an Award, in addition to those established by the
     Plan and by the Committee.

1.4. "Board" shall mean the Board of Directors of the Company.

1.5. "Cash Award" shall mean a grant by the Committee to a Participant of an
     award of cash as described in Section 11 below.

1.6. "Cause" shall have the meaning set forth in any employment, consulting, or
     other written agreement between the Participant and the Company, a Group
     Company or Affiliate. If there is no employment, consulting, or other
     written agreement between the Participant and the Company, a Group Company
     or Affiliate, or if such agreement does not define "Cause," then "Cause"
     shall have the meaning specified in the Award Agreement; provided, that if
     the Award Agreement does not so specify, "Cause" shall mean, as determined
     by the Committee in its sole discretion, the Participant: (i) engages in
     conduct that cause financial or reputational injury to the Company a Group
     Company or Affiliate; (ii) engages in any act of dishonesty or misconduct
     that results in damage to the Company, a Group Company or Affiliate, or
     their business or reputation or that the Committee determines to adversely
     affect the value, reliability or performance of the Participant to the
     Company, a Group Company or Affiliate; (iii) refuses or fails to
     substantially comply with the human resources rules, policies, directions
     and/or restrictions relating to harassment and/or discrimination, or with
     compliance or risk management rules, policies, directions and/or
     restrictions of the Company, a Group Company or Affiliate; (iv) fails to
     cooperate with the Company, a Group Company or Affiliate in any internal
     investigation or administrative, regulatory or judicial proceeding; or (v)
     continuously fails to perform his or her duties to the Company, a Group
     Company

<PAGE>

     or Affiliate (which may include any sustained and unexcused absence of the
     Participant from the performance of such duties, which absence has not been
     certified in writing as due to physical or mental illness or Disability),
     after a written demand for performance has been delivered to the
     Participant identifying the manner in which the Participant has failed to
     substantially perform his or her duties. If any part of the definition of
     Cause set forth in clauses (i) through (v) above is deemed applicable to a
     Participant, this shall not preclude or prevent the reliance by the Company
     or the Committee on any other part of the preceding sentence that also may
     be applicable. Unless otherwise defined in the Participant's employment or
     other agreement, an act or omission is "willful" for this purpose if it was
     knowingly done, or knowingly omitted to be done, by the Participant not in
     good faith and without reasonable belief that the act or omission was in
     the best interest of the Company.

1.7. "Change in Control" shall mean the occurrence of any one or more of the
     following:

     (a)  Any "person" (as such term is defined in Section 3(a)(9) of the
          Exchange Act and as used in Sections 13(d)(3) and 14(d)(2) of the
          Exchange Act), including a "group" (as defined in Section 13(d)(3) of
          the Exchange Act), other than (i) the Company, (ii) any wholly-owned
          subsidiary of the Company, or (iii) any employee benefit plan (or
          related trust) sponsored or maintained by the Company or any
          Affiliate, becomes a "beneficial owner" (as defined in Rule 13d-3
          under the Exchange Act), directly or indirectly, of securities of the
          Company having fifty percent (50%) or more of the combined voting
          power of the then-outstanding securities of the Company that may be
          cast for the election of directors of the Company (other than as a
          result of an issuance of securities initiated by the Company in the
          ordinary course of business) (the "Company Voting Securities");
          provided, however, that the event described in this paragraph (a)
          shall not be deemed to be a Change in Control by virtue of any
          underwriter temporarily holding securities pursuant to an offering of
          such securities;

     (b)  During any period of two consecutive years, individuals who at the
          beginning of any such period constitute the Board (the "Incumbent
          Directors") cease for any reason to constitute at least a majority of
          the Board, unless the election, or the nomination for election by the
          stockholders of the Company, of each new director of the Company
          during such period was approved by a vote of at least two-thirds of
          the Incumbent Directors then still in office;

     (c)  As the result of, or in connection with, any cash tender or exchange
          offer, merger or other business combination, sale of all or
          substantially all of the assets or contested election, or any
          combination of the foregoing transactions, less than a majority of the
          combined voting power of the then-outstanding securities of the
          Company or any successor corporation or entity entitled to vote
          generally in the election of the directors of the Company or such
          other corporation or entity after such transaction is held in the
          aggregate by the holders of the securities of the Company entitled to
          vote generally in the election of directors of the Company immediately
          prior to such transaction; or

     (d)  The shareholders of the Company approve a plan of complete liquidation
          of the Company.


                                       -2-

<PAGE>

     Notwithstanding the foregoing, a Change in Control shall not be deemed to
     occur solely because any person acquires beneficial ownership of more than
     fifty percent (50%) of the Company Voting Securities as a result of the
     acquisition of Company Voting Securities by the Company which reduces the
     number of Company Voting Securities outstanding; provided, however, that if
     after such acquisition by the Company such person becomes the beneficial
     owner of additional Company Voting Securities that increases the percentage
     of outstanding Company Voting Securities beneficially owned by such person,
     a Change in Control transaction shall then occur.

1.8. "Code" shall mean the Internal Revenue Code of 1986, as amended from time
     to time.

1.9. "Committee" shall mean (i) the Board or (ii) a committee or subcommittee of
     the Board appointed by the Board from among its members. The Committee may
     be the Board's Compensation Committee. Unless the Board determines
     otherwise, the Committee shall be comprised solely of not less than two
     members who each shall qualify as:

     (a)  a "Non-Employee Director" within the meaning of Rule 16b-3(b)(3) (or
          any successor rule) under the Exchange Act, and

     (b)  an "outside director" within the meaning of Code Section 162(m) and
          the Treasury Regulations thereunder.

1.10. "Common Stock" shall mean the voting, common stock, $0.0001 par value per
     share, of the Company.

1.11. "Company" shall mean IPG Photonics Corporation USA, a Delaware
     corporation.

1.12. "Disability" means the total and permanent disability of a Participant
     (incurred while in the active service of the Company, an Affiliate or a
     Group Company) based on proof satisfactory to the Committee. Total and
     permanent disability shall be as defined in the Company's long-term
     disability plan, if any, or as otherwise provided by the Company.
     Notwithstanding the foregoing, for purposes of determining the period of
     time after termination of Service during which a Participant may exercise
     an ISO, "Disability" will have the meaning set forth in Code Section
     22(e)(3), which is, generally, that the Participant is unable to engage in
     any substantial gainful activity by reason of a medically determinable
     physical or mental impairment that can be expected to result in death or
     that has lasted or can be expected to last for a continuous period of at
     least twelve months.

1.13. "Dividend Equivalent Right" shall mean the right to receive an amount
     equal to the amount of any dividend paid with respect to a share of Common
     Stock multiplied by the number of shares of Common Stock underlying or with
     respect to a Stock Option, a SAR, a Stock Unit or a Performance Unit, and
     which shall be payable in cash, in Common Stock, in the form of Stock Units
     or Performance Units, or a combination of any or all of the foregoing.

1.14. "Effective Date" shall mean the date on which the Board adopts the Plan.

1.15. "Employee" shall mean an employee of the Company or any Affiliate, as
     described in Treasury Regulation Section 1.421-1(h).


                                       -3-

<PAGE>

1.16. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended
     from time to time, including applicable regulations thereunder.

1.17. "Exercise Price" shall mean the price at which each share of Common Stock
     covered by a Stock Option may be purchased.

1.18. "Fair Market Value" shall mean:

     (a)  if the Common Stock is readily tradable on a national securities
          exchange or other market system, the closing price of the Common Stock
          on the date of calculation (or on the last preceding trading date if
          Common Stock was not traded on such date), or

     (b)  if the Common Stock is not readily tradable on a national securities
          exchange or other market system, the value as determined by the
          reasonable and consistent application of a reasonable valuation
          method, in good faith by the Board.

1.19. "Group Company" shall mean any business entity deemed by the Board to be a
     member of the IPG Group, including, but not limited to, any business entity
     that has a significant financial interest in the Company and any business
     entity in which the Company has a significant financial interest, such
     entities to be referred to collectively as the "Group Companies".

1.20. "Group Employee" shall mean any employee of a Group Company who is not an
     Employee.

1.21. "Independent Contractor" shall mean a person (other than a person who is
     an Employee, Group Employee or a Nonemployee Director) or an entity that
     renders services to the Company, an Affiliate or a Group Company.

1.22. "IPO" shall mean the first date that the Common Stock is registered under
     the Securities Act of 1934 and offered for sale to the public.

1.23. "ISO" shall mean a right to purchase a specified number of shares of
     Common Stock at a specified price, which is intended to comply with the
     terms and conditions as an "incentive stock option" as set forth in Code
     Section 422, as such section may be in effect from time to time.

1.24. "Leave of Absence" means any leave of absence approved by the Company.

1.25. "Nonemployee Director" shall mean a member of the Board who is not an
     Employee.

1.26. "Nonqualified Stock Option" shall mean a Stock Option to purchase a
     specified number of shares of Common Stock at a specified price, which does
     not qualify as an ISO.

1.27. "Nonvoting Stock" shall mean the capital stock of any class or classes
     having no voting power to elect the directors of a corporation.

1.28. "Parent" shall mean a corporation or any other business entity that
     directly or indirectly has an ownership interest of 50 percent or more of
     the Voting Stock of the Company.


                                       -4-

<PAGE>

1.29. "Participant" shall mean any Employee, Group Employee, Nonemployee
     Director or Independent Contractor to whom an Award has been granted by the
     Committee under the Plan.

1.30. "Performance-Based Award" shall mean an Award subject to the achievement
     of certain performance goals as described in Section 12 below.

1.31. "Performance Share" shall mean the grant by the Committee to a Participant
     of an Award of shares of Common Stock subject to restrictions on
     transferability, a risk of forfeiture, and certain other terms and
     conditions under the Plan or specified by the Committee, as described in
     Section 10.1 below.

1.32. "Performance Unit" shall mean the grant by the Committee to a Participant
     of an Award of a hypothetical share of the value of the Company,
     represented by a notional account that shall be established and maintained
     (or caused to be established or maintained) by the Company for such
     Participant, as described in Section 10.2 below.

1.33. "Plan" shall mean the IPG Photonics 2006 Incentive Compensation Plan.

1.34. "Prior Plan" shall mean the IPG Photonics 2000 Incentive Compensation
     Plan.

1.35. "Recapitalization" shall mean any stock split, stock dividend,
     recapitalization, combination of shares, exchange of shares or other change
     affecting the Company's outstanding shares of capital stock as a class
     without the Company's receipt of consideration.

1.36. "Reorganization" shall mean any of the following: (a) a merger or
     consolidation in which the Company is not the surviving entity; (b) a sale,
     transfer or other disposition of all or substantially all of the Company's
     assets; (c) a reverse merger in which the Company is the surviving entity
     but in which the Company's outstanding voting securities are transferred in
     whole or in part to a person or persons different from the persons holding
     those securities immediately prior to the merger; or (d) any transaction
     effected primarily to change the state in which the Company is incorporated
     or to create a holding company structure.

1.37. "Restricted Stock Award" shall mean a grant by the Committee to a
     Participant of an Award of shares of Common Stock subject to restrictions
     on transferability, a risk of forfeiture, and certain other terms and
     conditions under the Plan or specified by the Committee, as described in
     Section 9.1 below.

1.38. "Retirement" means retirement from active employment or other Service with
     the Company pursuant to the normal or early retirement policy and
     procedures of the Company.

1.39. "Stock Appreciation Right" or "SAR" shall mean a grant by the Committee to
     a Participant of a the contingent right to receive Common Stock or cash, as
     specified in the Award Agreement, in the future, based on the value, or the
     appreciation in the value, of Common Stock, as described in Section 8
     below.


                                       -5-

<PAGE>

1.40. "Service" means the provision of services to the Company, an Affiliate or
     a Group Company in the capacity of (i) an Employee, (ii) a Group Employee,
     (iii) a Nonemployee Director, or (iv) an Independent Contractor.

1.41. "Stock Option" shall mean a grant by the Committee to a Participant of an
     option or right to purchase a specified number of shares of Common Stock at
     a specified price, as described in Section 7 below.

1.42. "Stock Unit" shall mean a grant by the Committee to a Participant of an
     Award of a hypothetical share of Common Stock represented by a notional
     account established and maintained (or caused to be established or
     maintained) by the Company for such Participant, as described in Section
     9.2 below.

1.43. "Subsidiary" shall mean a corporation of which the Company directly or
     indirectly owns 50 percent or more of the Voting Stock or any other
     business entity in which the Company directly or indirectly has an
     ownership interest of 50 percent or more.

1.44. "Treasury Regulations" shall mean the regulations promulgated under the
     Code by the United States Department of the Treasury, as amended from time
     to time.

1.45. "Vest" shall mean:

     (a)  with respect to Stock Options and SARs, when the Stock Option or SAR
          (or a portion of such Stock Option or SAR) first becomes exercisable
          and remains exercisable subject to the terms and conditions of such
          Stock Option or SAR; or

     (b)  with respect to Awards other than Stock Options and SARs, when the
          Participant has:

          (i)  an unrestricted right, title and interest to receive the
               compensation (whether payable in Common Stock, cash or a
               combination of both) attributable to an Award (or a portion of
               such Award) or to otherwise enjoy the benefits underlying such
               Award; and

          (ii) a right to transfer an Award subject to no Company-imposed
               restrictions or limitations other than restrictions and/or
               limitations imposed by Section 14 below.

1.46. "Vesting Date" shall mean the date or dates on which an Award Vests, at
     which time the Award shall be deemed "Vested."

1.47. "Voting Stock" shall mean the capital stock of any class or classes having
     general voting power under ordinary circumstances, in the absence of
     contingencies, to elect the directors of a corporation.

2.   PURPOSE AND TERM OF PLAN

2.1. PURPOSE. The purpose of the Plan is to motivate certain Employees, Group
     Employees, Nonemployee Directors and Independent Contractors to put forth
     maximum efforts toward the growth, profitability, and success of the
     Company, Affiliates and Group


                                       -6-

<PAGE>

     Companies by providing incentives to such Employees, Group Employees,
     Nonemployee Directors and Independent Contractors through cash payments
     and/or through the ownership and performance of the Common Stock. In
     addition, the Plan is intended to provide incentives that will attract and
     retain highly qualified individuals as Employees, Group Employees and
     Nonemployee Directors and to assist in aligning the interests of such
     Employees, Group Employees and Nonemployee Directors with those of the
     Company's shareholders.

2.2. TERM. The Plan shall be effective as of the Effective Date; provided,
     however, that the Plan shall be approved by the shareholders of the Company
     at an annual meeting or any special meeting of shareholders of the Company
     within 12 months before or after the Effective Date. The Committee may not
     award ISOs before the date the Company's shareholders approve the Plan. The
     Plan shall terminate on the 10th anniversary of the Effective Date, unless
     sooner terminated by the Board under Section 16.1 below.

3.   ELIGIBILITY AND PARTICIPATION

3.1. ELIGIBILITY. All Employees, Group Employees, Nonemployee Directors and
     Independent Contractors shall be eligible to participate in the Plan and to
     receive Awards.

3.2. PARTICIPATION. Participants shall consist of such Employees, Group
     Employees, Nonemployee Directors and Independent Contractors as the
     Committee in its sole discretion designates to receive Awards under the
     Plan. Awards under the Plan shall be made on a one time basis for
     Participants and designation of a Participant in any year shall not require
     the Committee to designate such person or entity to receive an Award in any
     other year or, once designated, to receive the same type or amount of Award
     as granted to the Participant in any other year. The Committee shall
     consider such factors as it deems pertinent in selecting Participants and
     in determining the type and amount of their respective Awards.

4.   ADMINISTRATION

4.1. RESPONSIBILITY. The Committee will administer the Plan. The Committee shall
     have the responsibility, in its sole discretion, to control, operate,
     manage and administer the Plan in accordance with its terms.

4.2. AWARD AGREEMENT. Each Award granted under the Plan shall be evidenced by an
     Award Agreement that shall be signed by the Committee and the Participant;
     provided, however, that in the event of any conflict between a provision of
     the Plan and any provision of an Award Agreement, the provision of the Plan
     shall prevail.

4.3. AUTHORITY OF THE COMMITTEE. The Committee shall have all the discretionary
     authority that may be necessary or desirable to enable it to discharge its
     responsibilities with respect to the Plan, including but not limited to the
     following:

     (a)  to determine eligibility for participation in the Plan;

     (b)  to determine eligibility for and the type and size of an Award granted
          under the Plan;


                                       -7-

<PAGE>

     (c)  to supply any omission, correct any defect, interpret any provision or
          reconcile any inconsistency in the Plan in such manner and to such
          extent as it shall deem appropriate in its sole discretion to carry
          the same into effect;

     (d)  to issue administrative guidelines as an aid to administer the Plan
          and make changes in such guidelines as it, from time to time, deems
          proper;

     (e)  to make rules for carrying out and administering the Plan and make
          changes in such rules as it, from time to time, deems proper;

     (f)  to the extent permitted under the Plan, grant waivers of Plan terms,
          conditions, restrictions, and limitations;

     (g)  to accelerate the Vesting of any Award when such action or actions
          would be in the best interest of the Company;

     (h)  to grant an Award in replacement of Awards previously granted under
          this Plan or any other executive compensation plan of the Company; and

     (i)  to take any and all other actions it deems necessary or desirable for
          the proper operation or administration of the Plan.

4.4. ACTION BY THE COMMITTEE. The Committee may act only by a majority of its
     members. A determination of the Committee may be made, without a meeting,
     by a writing signed by all members of the Committee. In addition, the
     Committee may authorize any one or more of its members to execute and
     deliver documents on behalf of the Committee. Meetings of the Committee may
     be held telephonically or via videoconference, and participation via
     telephone or videoconference shall have the same force and effect as
     physical presence at any Committee meeting.

4.5. DELEGATION OF AUTHORITY. The Committee may delegate to one or more of its
     members, or to one or more agents, such administrative duties as it may
     deem advisable; provided, however, that any such delegation shall be in
     writing. In addition, the Committee, or any person to whom it has delegated
     duties under this Section 4.5, may employ one or more persons to render
     advice with respect to any responsibility the Committee or such person may
     have under the Plan. The Committee may employ such legal or other counsel,
     consultants and agents as it may deem desirable for the administration of
     the Plan and may rely upon any opinion or computation received from any
     such counsel, consultant or agent. Expenses incurred by the Committee in
     the engagement of such counsel, consultant or agent shall be paid by the
     Company, or the Affiliate or Group Company whose employees have benefited
     from the Plan, as determined by the Committee.

     The Board may delegate authority to the Company's Chief Executive Officer
     to grant specified numbers of Options (as determined by the Board from time
     to time and during such time periods determined by the Board) to existing
     or prospective Employees (other than those individuals who are subject to
     Section 16(a) of the Exchange Act at the time of the grant) as the Chief
     Executive Officer determines appropriate without further action of the
     Board, but subject to rules and guidelines established by the Board or the
     Committee.


                                       -8-

<PAGE>

4.6. DETERMINATIONS AND INTERPRETATIONS BY THE COMMITTEE. All determinations and
     interpretations made by the Committee shall be binding and conclusive on
     all Participants and their heirs, successors, and legal representatives.

4.7. LIABILITY. No member of the Board, no member of the Committee and no
     Employee or Group Employee shall be liable for any act or failure to act
     hereunder, except in circumstances involving his or her bad faith, gross
     negligence or willful misconduct, or for any act or failure to act
     hereunder by any other member or employee or by any agent to whom duties in
     connection with the administration of the Plan have been delegated.

4.8. INDEMNIFICATION. Each person who is or has been a member of the Committee
     or the Board, and any individual or individuals to whom the Committee has
     delegated authority under this Section 4, will be indemnified and held
     harmless by the Company, Group Company and Affiliates from and against any
     loss, cost, liability, or expense that may be imposed upon or reasonably
     incurred by him or her in connection with or as a result of any claim,
     action, suit or proceeding to which he or she may be a party or in which he
     or she may be involved by reason of any action taken, or failure to act,
     under the Plan, except in circumstances involving such person's bad faith,
     gross negligence or willful misconduct. Each such person will also be
     indemnified and held harmless by the Company Group Company and Affiliates
     from and against any and all amounts paid by him or her in a settlement
     approved by the Company, or paid by him or her in satisfaction of any
     judgment, of or in a claim, action, suit or proceeding against him or her
     and described in the previous sentence, so long as he or she gives the
     Company an opportunity, at its own expense, to handle and defend the claim,
     action, suit or proceeding before he or she undertakes to handle and defend
     it. The foregoing right of indemnification will not be exclusive of any
     other rights of indemnification to which a person who is or has been a
     member of the Committee or the Board may be entitled under the Articles of
     Incorporation or By-Laws of the Company, Group Company or Affiliate, as a
     matter of law, agreement or otherwise, or any power that the Company may
     have to indemnify him or her or hold him or her harmless.

5.   SHARES SUBJECT TO PLAN

5.1. AVAILABLE SHARES. The aggregate number of shares of Common Stock that shall
     be available under the Plan during its term shall be 4,000,000 shares,
     subject to any adjustments made in accordance with Section 5.2 below. Such
     shares of Common Stock may be either authorized but unissued shares, shares
     of issued stock held in the Company's treasury, or a combination of both,
     at the discretion of the Company. Any shares of Common Stock (i) underlying
     an Award under the Plan or the Prior Plan which expires without being
     exercised, or are forfeited, canceled, settled or otherwise terminated
     without a distribution of Common Stock to the Participant; (ii) that are
     delivered (either actually or by attestation) to or withheld by the Company
     in connection with the exercise of a Stock Option awarded under the Plan or
     the Prior Plan, or in payment of any required income tax withholding for
     the exercise of a Stock Option or the vesting of Restricted Stock awarded
     under the Plan or the Prior Plan, shall again be available under the Plan.
     Awards that are payable only in cash are not subject to this Section 5.1.


                                      -9-

<PAGE>

     (a)  The total number of shares of Common Stock that may be issued in
          connection with the awards of Restricted Stock under the Plan shall
          not exceed 2,333,333. Except as contemplated by the provisions of
          Section 5.2 hereof, the Committee shall not increase the number of
          shares of Common Stock available for issuance in connection with
          Awards under the Plan or to any one individual as set forth above. In
          no event shall Awards be outstanding at any one time that have
          resulted or could result in the issuance of a number of shares of
          Common Stock in excess of the number then remaining reserved and
          available for issuance under the Plan.

     (b)  The maximum number of shares of Common Stock that may be issued to
          Participants in the aggregate under the Plan as ISOs is 833,333.

     (c)  Notwithstanding the foregoing, Awards granted through the assumption
          of, or in substitution or exchange for, similar awards in connection
          with the acquisition of another corporation or business entity shall
          not be counted for purposes of applying the above limitations on
          numbers of shares available for Awards generally or any particular
          kind of Award under the Plan.

5.2. ADJUSTMENT TO SHARES. If there is any change in the Common Stock of the
     Company, through merger, consolidation, Reorganization, recapitalization,
     stock dividend, stock split, reverse stock split, split-up, split-off,
     spin-off, combination of shares, exchange of shares, dividend in kind or
     other like change in capital structure or distribution (other than normal
     cash dividends) to shareholders of the Company, an adjustment shall be made
     to each outstanding Award so that each such Award shall thereafter be with
     respect to or exercisable for such securities, cash and/or other property
     as would have been received in respect of the Common Stock subject to such
     Award had such Award been paid, distributed or exercised in full
     immediately prior to such change or distribution. Such adjustment shall be
     made successively each time any such change or distribution shall occur. In
     addition, in the event of any such change or distribution, in order to
     prevent dilution or enlargement of Participants' rights under the Plan, the
     Committee shall have the authority to adjust, in an equitable manner, the
     number and kind of shares that may be issued under the Plan, the number and
     kind of shares subject to outstanding Awards, the Exercise Price applicable
     to outstanding Stock Options, and the Fair Market Value of the Common Stock
     and other value determinations applicable to outstanding Awards.
     Appropriate adjustments may also be made by the Committee in the terms of
     any Awards granted under the Plan to reflect such changes or distributions
     and to modify any other terms of outstanding Awards on an equitable basis,
     including modifications of performance goals and changes in the length of
     performance periods; provided, however, that any such modifications and/or
     changes to Performance-Based Awards does not disqualify compensation
     attributable to such Awards as "performance-based compensation" under Code
     Section 162(m). In addition, the Committee is authorized to make
     adjustments to the terms and conditions of, and the criteria included in,
     Awards in recognition of unusual or nonrecurring events affecting the
     Company or the financial statements of the Company, or in response to
     changes in applicable laws, regulations, or accounting principles.
     Notwithstanding anything contained in the Plan, any adjustment with respect
     to an ISO due to a change or distribution described in this Section 5.2
     shall comply with the rules of Code Section 424(a), and in no event shall
     any adjustment be


                                      -10-

<PAGE>

     made which would render any ISO granted hereunder to be disqualified as an
     incentive stock option for purposes of Code Section 422.

6.   MAXIMUM INDIVIDUAL AWARDS

6.1. MAXIMUM AGGREGATE NUMBER OF SHARES UNDERLYING STOCK-BASED AWARDS GRANTED
     UNDER THE PLAN TO ANY SINGLE PARTICIPANT IN ANY CALENDAR YEAR. The maximum
     aggregate number of shares of Common Stock underlying all Awards measured
     in shares of Common Stock (whether payable in Common Stock, cash or a
     combination of both) that may be granted to any single Participant in any
     calendar year shall be 1,666,667 shares, subject to adjustment as provided
     in Section 5.2 above. For purposes of the preceding sentence, such Awards
     that are cancelled or repriced shall continue to be counted in determining
     such maximum aggregate number of shares of Common Stock that may be granted
     to any single Participant in any calendar year. The maximum aggregate
     number of shares of Common Stock underlying Awards that may be granted to
     any single Participant in any calendar year as ISOs shall be 133,333.

7.   STOCK OPTIONS

7.1. IN GENERAL. The Committee may, in its sole discretion, grant Stock Options
     to Employees, Group Employees, Nonemployee Directors and/or Independent
     Contractors on or after the Effective Date. The Committee shall, in its
     sole discretion, determine the Employees, Group Employees, Nonemployee
     Directors and Independent Contractors who will receive Stock Options and
     the number of shares of Common Stock underlying each Stock Option. With
     respect to Employees who become Participants, the Committee may grant such
     Participants ISOs or Nonqualified Stock Options or a combination of both.
     With respect to Group Employees, Nonemployee Directors and Independent
     Contractors who become Participants, the Committee may grant such
     Participants only Nonqualified Stock Options. Each Stock Option shall be
     subject to such terms and conditions consistent with the Plan as the
     Committee may impose from time to time and set forth in the Award
     Agreement. In addition, each Stock Option shall be subject to the terms and
     conditions set forth in Sections 7.2 through 7.8 below.

7.2. EXERCISE PRICE. The Committee shall specify the Exercise Price of each
     Stock Option in the Award Agreement; provided, however, that (i) the
     Exercise Price of an ISO shall not be less than 100 percent of the Fair
     Market Value of the Common Stock on the date of grant, and (ii) the
     Exercise Price of a Nonqualified Stock Option shall not be less than 100
     percent of the Fair Market Value of the Common Stock on the date of grant
     unless the Committee in its sole discretion and due to special
     circumstances determines otherwise on the date of grant.

7.3. TERM OF STOCK OPTION. The Committee shall specify the term of each Stock
     Option in the Award Agreement; provided, however, that (i) no ISO shall be
     exercisable after the 10th anniversary of the date of grant of such ISO and
     (ii) no Nonqualified Stock Option shall be exercisable after the 10th
     anniversary of the date of grant of such Nonqualified Stock Option. Each
     Stock Option shall terminate at such earlier times and upon such conditions
     or circumstances as the Committee shall, in its sole discretion, set forth
     in the Award Agreement on the date of grant.


                                      -11-

<PAGE>

7.4. VESTING DATE. The Committee shall specify in the Award Agreement the
     Vesting Date for each Stock Option. The Committee may grant Stock Options
     that are Vested, either in whole or in part, on the date of grant. If the
     Committee fails to specify a Vesting Date in the Award Agreement,
     twenty-five percent (25%) of such Stock Option shall become exercisable on
     each of the first four (4) one-year anniversaries of the date of grant and
     shall remain exercisable following such anniversary date until the Stock
     Option expires in accordance with its terms under the Award Agreement or
     under the terms of the Plan. The Vesting of a Stock Option may be subject
     to such other terms and conditions as shall be determined by the Committee
     and set forth in the Award Agreement, including, without limitation,
     accelerating the Vesting if certain performance goals are achieved or a
     Change in Control of the Company occurs.

7.5. EXERCISE OF STOCK OPTIONS. The Stock Option Exercise Price may be paid in
     cash or, in the sole discretion of the Committee, by delivery to the
     Company of shares of Common Stock then owned by the Participant, or by the
     Company's withholding a portion of the shares of Common Stock for which the
     Stock Option is exercisable, or by a combination of these methods. If the
     Common Stock is readily tradable on a national securities exchange or other
     market system, payment may also be made by delivering a properly executed
     exercise notice to the Company and delivering a copy of irrevocable
     instructions to a broker directing the broker to promptly deliver to the
     Company the amount of sale or loan proceeds to pay the Exercise Price. To
     facilitate the foregoing, the Company may enter into agreements for
     coordinated procedures with one or more brokerage firms. The Committee may
     prescribe any other method of paying the Exercise Price that it determines
     to be consistent with applicable law and the purpose of the Plan,
     including, without limitation, in lieu of the delivery to the Company of
     shares of Common Stock then owned by the Participant, providing the Company
     with a notarized statement attesting to the number of shares owned by the
     Participant, where, upon verification by the Company, the Company would
     issue to the Participant only the number of incremental shares to which the
     Participant is entitled upon exercise of the Stock Option. In determining
     which methods a Participant may utilize to pay the Exercise Price, the
     Committee may consider such factors as it determines are appropriate;
     provided, however, that with respect to ISOs, all such discretionary
     determinations shall be made by the Committee at the time of grant and
     specified in the Award Agreement.

7.6. RESTRICTIONS RELATING TO ISOS. In addition to being subject to the terms
     and conditions of this Section 7, ISOs shall comply with all other
     requirements under Code Section 422. Accordingly, ISOs may be granted only
     to Participants who are employees (as described in Treasury Regulation
     Section 1.421-1(h)) of the Company or of any "Parent Corporation" (as
     defined in Code Section 424(e)) or of any "Subsidiary Corporation" (as
     defined in Code Section 424(f)) on the date of grant. The aggregate market
     value (determined as of the time the ISO is granted) of the Common Stock
     with respect to which ISOs (under all option plans of the Company and of
     any Parent Corporation and of any Subsidiary Corporation) are exercisable
     for the first time by a Participant during any calendar year shall not
     exceed $100,000. For purposes of the preceding sentence, (i) ISOs shall be
     taken into account in the order in which they are granted and (ii) ISOs
     granted before 1987 shall not be taken into account. ISOs shall not be
     transferable by the Participant other than by will or the laws of descent
     and distribution and shall be


                                      -12-

<PAGE>

     exercisable, during the Participant's lifetime, only by such Participant.
     The Committee shall not grant ISOs to any Employee who, at the time the ISO
     is granted, owns stock possessing (after the application of the attribution
     rules of Code Section 424(d)) more than 10 percent of the total combined
     voting power of all classes of stock of the Company or of any Parent
     Corporation or of any Subsidiary Corporation unless the Exercise Price of
     the ISO is fixed at not less than 110 percent of the Fair Market Value of
     the Common Stock on the date of grant and the exercise of such ISO is
     prohibited by its terms after the 5th anniversary of the ISO's date of
     grant.

7.7. CONVERSION STOCK OPTIONS. The Committee may, in its sole discretion, grant
     a Stock Option to any holder of an option (hereinafter referred to as an
     "Original Option") to purchase shares of stock of any corporation:

     (a)  the stock or assets of which were acquired, directly or indirectly, by
          the Company, an Affiliate or Group Company, or

     (b)  which was merged with and into the Company, an Affiliate or Group
          Company,

     so that the Original Option is converted into a Stock Option (hereinafter
     referred to as a "Conversion Stock Option"); provided, however, that such
     Conversion Stock Option as of the date of its grant (the "Conversion Stock
     Option Grant Date") shall have the same economic value as the Original
     Option as of the Conversion Stock Option Grant Date. In addition, unless
     the Committee, in its sole discretion determines otherwise, a Conversion
     Stock Option that is converting an Original Option intended to qualify as
     an ISO shall have the same terms and conditions as applicable to the
     Original Option in accordance with Code Section 424 and the Treasury
     Regulations thereunder so that the conversion (x) is treated as the
     issuance or assumption of a stock option under Code Section 424(a) and (y)
     is not treated as a modification, extension or renewal of a stock option
     under Code Section 424(h).

7.8. RIGHT TO CALL STOCK OPTIONS OR COMMON STOCK. Notwithstanding any other
     provision of this Plan and without regard to the completion of an IPO, any
     Stock Option granted under this Plan shall be subject to a right of call by
     the Committee in the event of termination of the Plan due to merger or
     acquisition of the Company. Prior to an IPO, any Stock held by a
     Participant as a result of an Award under this Plan shall be subject to a
     right of call by the Committee in the event of termination of the Plan due
     to merger or acquisition of the Company or upon the occurrence of Change in
     Control of the Company, whether or not the Plan is terminated. If the
     Committee exercises the right to call the Common Stock, the Participant
     must return the shares of Common Stock to the Company within seven (7) days
     of the call notice.

     (a)  Upon the call of Common Stock, the owner of the Common Stock shall,
          unless otherwise determined by the Committee pursuant to subsection
          (b) below, be entitled to receive from the Company an amount equal to
          the Fair Market Value of the returned Common Stock.

     (b)  Upon the call of a Stock Option, the Committee shall pay the optionee
          an amount equal to the excess of (i) the Fair Market Value the number
          of shares of Common


                                      -13-

<PAGE>

          Stock subject to the Option, over (y) the Exercise Price of such
          shares of Common Stock.

     (c)  The Company shall have the right to defer payment of the proceeds
          under this Section 7.9, and make such payment in the form of single
          lump sum or in installments over such periods as the Committee may
          determine in its discretion, subject to Code Section 409A.

8.   SARS

8.1. IN GENERAL. The Committee may, in its sole discretion, grant SARs to
     Employees, Group Employees, Nonemployee Directors, and/or Independent
     Contractors. A SAR is a right to receive a payment in cash, Common Stock or
     a combination of both, in an amount equal to the excess of (x) the Fair
     Market Value of a specified number of shares of Common Stock on the date
     the SAR is exercised over (y) the Fair Market Value of such shares of
     Common Stock on the date the SAR is granted, all as determined and set
     forth in the Award Agreement by the Committee; provided, however, that if a
     SAR is granted retroactively in tandem with or in substitution for a Stock
     Option, the designated Fair Market Value of the Common Stock in the Award
     Agreement may be the Fair Market Value of the Common Stock on the date such
     Stock Option was granted. Each SAR shall be subject to the terms of the
     Plan and to such terms and conditions, including, but not limited to, the
     Vesting Date, an expiration date and a provision that automatically
     converts a SAR into a Stock Option on a conversion date specified at the
     time of grant, as the Committee shall impose from time to time in its sole
     discretion and set forth in the Award Agreement.

9.   RESTRICTED STOCK AWARDS AND STOCK UNITS

9.1. RESTRICTED STOCK AWARDS. The Committee may, in its sole discretion, grant
     Restricted Stock Awards to Employees, Group Employees, Nonemployee
     Directors, and/or Independent Contractors as additional compensation or in
     lieu of other compensation for services to the Company, an Affiliate or a
     Group Company. A Restricted Stock Award shall consist of shares of Common
     Stock that are subject to such terms and conditions as the Committee in its
     sole discretion determines appropriate and sets forth in the Award
     Agreement including, without limitation, restrictions on the sale or other
     disposition of such shares, the Vesting Date with respect to such shares,
     and the right of the Company to reacquire such shares for no consideration
     upon termination of the Participant's Service within specified periods. The
     Committee may require the Participant to deliver a duly signed stock power,
     endorsed in blank, relating to the Common Stock covered by such Restricted
     Stock Award and/or that the stock certificates evidencing such shares be
     held in custody or bear restrictive legends until the restrictions thereon
     shall have lapsed. With respect to shares of Common Stock subject to a
     Restricted Stock Award, the Participant shall have all of the rights of a
     holder of shares of Common Stock, including the right to receive dividends
     and to vote the shares, unless the Committee determines otherwise on the
     date of grant.

9.2. STOCK UNITS. The Committee may, in its sole discretion, grant Stock Units
     to Employees, Group Employees, Nonemployee Directors, and Independent
     Contractors as additional


                                      -14-

<PAGE>

     compensation or in lieu of other compensation for services to the Company,
     an Affiliate or a Group Company. A Stock Unit is a hypothetical share of
     Common Stock represented by a notional account established and maintained
     (or caused to be established or maintained) by the Company for such
     Participant who receives a grant of Stock Units. Stock Units shall be
     subject to such terms and conditions as the Committee, in its sole
     discretion, determines appropriate and sets forth in the Award Agreement
     including, without limitation, determinations of the Vesting Date with
     respect to such Stock Units and the criteria for the Vesting of such Stock
     Units. Subject to Section 9.3, a Stock Unit granted by the Committee shall
     provide for payment in shares of Common Stock at such time or times as the
     Award Agreement shall specify. The Committee shall determine whether a
     Participant who has been granted a Stock Unit shall also be entitled to a
     Dividend Equivalent Right.

9.3. PAYOUT OF STOCK UNITS. Subject to a Participant's election to defer in
     accordance with Section 17.4 below, upon the Vesting Date of a Stock Unit,
     the shares of Common Stock representing the Stock Unit shall be distributed
     to the Participant, unless the Committee, in its sole discretion, provides
     for the payment of the Stock Unit in cash (or partly in cash and partly in
     shares of Common Stock) equal to the value of the shares of Common Stock
     which would otherwise be distributed to the Participant.

10.  PERFORMANCE SHARES AND PERFORMANCE UNITS

10.1. PERFORMANCE SHARES. The Committee may, in its sole discretion, grant
     Performance Shares to Employees, Group Employees, Nonemployee Directors,
     and/or Independent Contractors as additional compensation or in lieu of
     other compensation for services to the Company, an Affiliate or a Group
     Company. A Performance Share shall consist of a share or shares of Common
     Stock that are subject to such terms and conditions as the Committee, in
     its sole discretion, determines appropriate and sets forth in the Award
     Agreement including, without limitation, determining the performance goal
     or goals that, depending on the extent to which such goals are met, will
     determine the number and/or value of the Performance Shares that will be
     paid out or distributed to the Participant and any other Vesting Date
     criteria. Performance goals may be based on, without limitation,
     Company-wide, divisional and/or individual performance, as the Committee,
     in its sole discretion, may determine, and may be based on the performance
     measures listed in Section 12.3 below.

10.2. PERFORMANCE UNITS. The Committee may, in its sole discretion, grant
     Performance Units to Employees, Group Employees, Nonemployee Directors,
     and/or Independent Contractors as additional compensation or in lieu of
     other compensation for services to the Company, an Affiliate or Group
     Company. A Performance Unit is a hypothetical share of the value of the
     Company, represented by a notional account that the Company shall establish
     and maintain (or caused to be established or maintained) for such
     Participant who receives a grant of Performance Units. Performance Units
     shall be subject to such terms and conditions as the Committee, in its sole
     discretion, determines appropriate and sets forth in the Award Agreement
     including, without limitation, determining the performance goal or goals
     that, depending on the extent to which such goals are met, will determine
     the number and/or value of the Performance Units that will accrue to the
     Participant and any other Vesting Date criteria. Performance goals may be


                                      -15-

<PAGE>

     based on, without limitation, Company-wide, divisional and/or individual
     performance, as the Committee, in its sole discretion, may determine, and
     may be based on the performance measures listed in Section 12.3 below.

10.3. ADJUSTMENT OF PERFORMANCE GOALS. With respect to any Performance Shares or
     Performance Units that are not intended to qualify as Performance-Based
     Awards (as described in Section 12 below), the Committee shall have the
     authority at any time to adjust, as it deems necessary or desirable, the
     performance goals for any outstanding Performance Shares or Performance
     Units unless, at the time of establishment of such performance goals, the
     Committee precludes its authority to make such adjustments.

10.4. PAYOUT OF PERFORMANCE SHARES OR PERFORMANCE UNITS. Subject to a
     Participant's election to defer distribution in accordance with Section
     17.4 below, upon the Vesting of a Performance Share or a Performance Unit,
     the shares of Common Stock representing the Performance Share or the cash
     value of the Performance Unit shall be distributed to the Participant,
     unless the Committee, in its sole discretion, determines to make the
     payment for the Performance Share in cash, or the Performance Unit in
     shares of Common Stock (or partly in cash and partly in shares of Common
     Stock) equal to the value of the shares of Common Stock or cash that would
     otherwise be distributed to the Participant.

11.  CASH AWARDS

11.1. IN GENERAL. The Committee may, in its sole discretion, grant Cash Awards
     to Employees, Group Employees, Nonemployee Directors, and/or Independent
     Contractors as additional compensation or in lieu of other compensation for
     services to the Company, an Affiliate or Group Company. A Cash Award shall
     be subject to such terms and conditions as the Committee, in its sole
     discretion, determines appropriate and sets forth in the Award Agreement
     including, without limitation, determining the Vesting Date with respect to
     such Cash Award, the criteria for the Vesting of such Cash Award, and the
     right of the Company to require the Participant to repay the Cash Award
     (with or without interest) upon termination of the Participant's Service
     within specified periods.

12.  PERFORMANCE-BASED AWARDS

12.1. IN GENERAL. The Committee, in its sole discretion, may designate Awards
     granted under the Plan as Performance-Based Awards (as defined below). An
     Award granted under the Plan may be granted in such a manner that the
     compensation attributable to such Award is intended by the Committee to
     qualify as "performance-based compensation" (as such term is used in Code
     Section 162(m) and the Treasury Regulations thereunder) and thus be exempt
     from the deduction limitation imposed by Code Section 162(m)
     ("Performance-Based Awards").

12.2. QUALIFICATION OF PERFORMANCE-BASED AWARDS. Awards shall qualify as
     Performance-Based Awards under the Plan only if:

          (a)  at the time of grant the Committee is comprised solely of two or
               more "outside directors" (as such term is used in Code Section
               162(m) and the Treasury Regulations thereunder);


                                      -16-

<PAGE>

          (b)  with respect to either the granting or Vesting of an Award (other
               than (i) a Nonqualified Stock Option or (ii) a SAR, which are
               granted with an Exercise Price at or above the Fair Market Value
               of the Common Stock on the date of grant), such Award is subject
               to the achievement of a performance goal or goals based on one or
               more of the performance measures specified in Section 12.3 below;

          (c)  the Committee establishes in writing (i) the objective
               performance-based goals applicable to a given performance period,
               and (ii) the individual employees or class of employees to which
               such performance-based goals apply no later than 90 days after
               the commencement of such performance period (but in no event
               after 25 percent of such performance period has elapsed);

          (d)  no compensation attributable to a Performance-Based Award will be
               paid to or otherwise received by a Participant until the
               Committee certifies in writing that the performance goal or goals
               (and any other material terms) applicable to such performance
               period have been satisfied; and

          (e)  after the establishment of a performance goal, the Committee
               shall not revise such performance goal (unless such revision will
               not disqualify compensation attributable to the Award as
               "performance-based compensation" under Code Section 162(m)) or
               increase the amount of compensation payable with respect to such
               Award upon the attainment of such performance goal.

12.3. PERFORMANCE MEASURES. The Committee may use the following performance
     measures (either individually or in any combination) to set performance
     goals with respect to Awards intended to qualify as Performance-Based
     Awards: net sales; pretax income before allocation of corporate overhead
     and bonus; budget; cash flow; earnings per share; net income; division,
     group or corporate financial goals; return on shareholders' equity; return
     on assets; attainment of strategic and operational initiatives;
     appreciation in and/or maintenance of the price of the Common Stock or any
     other publicly-traded securities of the Company; market share; gross
     profits; earnings before interest and taxes; earnings before interest,
     taxes, depreciation and amortization; economic value-added models;
     comparisons with various stock market indices; increase in number of
     customers; revenue backlog; margins realized on delivered goods or
     services; and/or reductions in costs.

12.4. SHAREHOLDER REAPPROVAL. As required by Treasury Regulation Section
     1.162-27(e)(vi), the material terms of performance goals as described in
     this Section 12 shall be disclosed to and reapproved by the Company's
     shareholders no later than the first shareholder meeting that occurs in the
     5th year following the year in which the Company's shareholders previously
     approved such performance goals.

13.  CHANGE IN CONTROL

13.1. ACCELERATED VESTING. Notwithstanding any other provision of this Plan to
     the contrary, if there is a Change in Control of the Company, the
     Committee, in its sole discretion, may


                                      -17-

<PAGE>

     take such actions as it deems appropriate with respect to outstanding
     Awards, including, without limitation, accelerating the Vesting Date and/or
     payout of such Awards; provided, however, that such action shall not
     conflict with any provision contained in an Award Agreement unless such
     provision is amended in accordance with Section 16.3 below.

13.2. CASHOUT. The Committee, in its sole discretion, may determine that, upon
     the occurrence of a Change in Control of the Company, all or a portion of
     certain outstanding Awards shall terminate within a specified number of
     days after notice to the holders, and each such holder shall receive an
     amount equal to the value of such Award on the date of the Change in
     Control, and with respect to each share of Common Stock subject to a Stock
     Option or SAR, an amount equal to the excess of the Fair Market Value of
     such shares of Common Stock immediately prior to the occurrence of such
     Change in Control of the Company over the Exercise Price per share of such
     Stock Option or SAR. Such amount shall be payable in cash, in one or more
     kinds of property (including the property, if any, payable in the
     transaction) or in a combination thereof, as the Committee, in its sole
     discretion, shall determine.

13.3. ASSUMPTION OR SUBSTITUTION OF AWARDS. Notwithstanding anything contained
     in the Plan to the contrary, the Committee may, in its sole discretion,
     provide that an Award may be assumed by any entity which acquires control
     of the Company or may be substituted by a similar award under such entity's
     compensation plans.

14.  TERMINATION OF SERVICE

14.1. TERMINATION OF SERVICE DUE TO DEATH OR DISABILITY. Subject to any written
     agreement between the Company, an Affiliate or a Group Company and a
     Participant, if a Participant's Service is terminated due to death or
     Disability:

     (a)  all non-Vested portions of Awards held by the Participant on the date
          of the Participant's death or Disability shall immediately Vest; and

     (b)  all Vested portions of Stock Options and SARs held by the Participant
          on the date of the Participant's death or Disability shall remain
          exercisable until the earlier of:

          (i)  the end of the 12-month period following the date of the
               Participant's death or Disability, or

          (ii) the date the Stock Option or SAR would otherwise expire.

14.2. TERMINATION OF SERVICE FOR CAUSE. Subject to any written agreement between
     the Company, an Affiliate or Group Company and a Participant, if a
     Participant's Service is terminated by the Company, the Affiliate or the
     Group Company, as the case may be, for Cause, all Awards held by the
     Participant on the date of the termination of Service, whether Vested or
     non-Vested, shall immediately be forfeited by the Participant as of such
     date, and, in the event a Participant's Service is terminated by the
     Company, an Affiliate or Group Company for Cause prior to an IPO, the
     Company shall have the right to call any shares of Common Stock received by
     the Participant as a result of the exercise of Stock Options under the Plan
     and the Participant shall be entitled to receive from the


                                      -18-

<PAGE>

     Company an amount equal to the Exercise Price paid for such shares. A
     Participant's Service shall be deemed to have terminated for Cause if,
     after the Participant's Service has terminated, facts and circumstances are
     discovered that would have justified a termination for Cause.

14.3. OTHER TERMINATIONS OF SERVICE. Subject to any written agreement between
     the Company, an Affiliate or Group Company and a Participant, if a
     Participant's Service is terminated for any reason other than for Cause or
     other than due to death or Disability:

     (a)  all non-Vested portions of Awards held by the Participant on the date
          of the termination of his or her Service shall immediately be
          forfeited by such Participant as of such date; and

     (b)  all Vested portions of Stock Options and/or SARs held by the
          Participant on the date of the termination of his or her Service shall
          remain exercisable until the earlier of (i) the end of the 90-day
          period following the date of the termination of the Participant's
          Service or (ii) the date the Stock Option or SAR would otherwise
          expire.

     Notwithstanding the foregoing, the Vesting, expiration and forfeiture of
     any Stock Options and/or SARs Awarded to a Independent Contractor shall be
     governed by the terms of the written Award Agreement.

14.4. ISOS. Notwithstanding anything contained in the Plan to the contrary, (i)
     the provisions contained in this Section 14 shall be applied to an ISO only
     if the application of such provision maintains the treatment of such ISO as
     an ISO.

14.5. LEAVE OF ABSENCE. A Participant shall not cease to be an Employee for
     purposes of this Plan solely on account of a Leave of Absence. For purposes
     of ISOs, no such leave may exceed ninety (90) days, unless reemployment
     upon expiration of such leave is guaranteed by statute or contract. If
     reemployment upon expiration of a leave of absence approved by the Company
     is not so guaranteed, on the one hundred eighty-first (181st) day of such
     leave any ISO held by the Participant shall cease to be treated as an ISO
     and shall be treated for tax purposes as a Nonqualified Stock Option.
     Notwithstanding anything in the Plan to the contrary, the Committee, in its
     sole discretion, reserves the right to designate a Participant's leave of
     absence as "Personal Leave;" provided that military leaves and approved
     family or medical leaves shall not be considered Personal Leave. No Awards
     shall be made to a Participant during Personal Leave. A Participant's
     un-Vested Awards shall remain un-Vested during such Personal Leave and the
     time spent on such Personal Leave shall not count towards the vesting of
     such Awards. A Participant's Vested Stock Options that may be exercised
     shall remain exercisable upon commencement of Personal Leave until the
     earlier of (i) a period of one year from the date of commencement of such
     Personal Leave; or (ii) the remaining exercise period of such Stock
     Options. Notwithstanding the foregoing, if a Participant returns to the
     Company from a Personal Leave of less than one year and the Participant's
     Stock Options have not lapsed, the Stock Options shall remain exercisable
     for the remaining exercise period as provided at the time of grant and
     subject to the conditions contained herein.


                                      -19-

<PAGE>

15.  TAXES

15.1. WITHHOLDING TAXES. With respect to Employees and Group Employees, the
     Company, or the applicable Affiliate or Group Company, may require a
     Participant who has Vested in his or her Restricted Stock Award, Stock
     Unit, Performance Share or Performance Unit granted hereunder, or who
     exercises a Stock Option or SAR granted hereunder, to reimburse the
     corporation that employs such Employee or Group Employee for any taxes
     required by any governmental regulatory authority to be withheld or
     otherwise deducted and paid by such corporation or entity in respect of the
     issuance or disposition of such shares or the payment of any amounts. In
     lieu thereof, the corporation that employs such Employee or Group Employee
     shall have the right to withhold the amount of such taxes from any other
     sums due or to become due from such corporation to the Employee or Group
     Employee upon such terms and conditions as the Committee shall prescribe.
     The corporation that employs the Employee or Group Employee may, in its
     discretion, hold the stock certificate to which such Employee or Group
     Employee is entitled upon the vesting of a Restricted Stock Award, Stock
     Unit, Performance Share or Performance Unit or the exercise of a Stock
     Option or SAR as security for the payment of such withholding tax
     liability, until cash sufficient to pay that liability has been
     accumulated.

15.2. USE OF COMMON STOCK TO SATISFY WITHHOLDING OBLIGATION. With respect to
     Employees and Group Employees, at any time that the Company or an Affiliate
     or Group Company that employs such Employee or Group Employee becomes
     subject to a withholding obligation under applicable law with respect to
     the vesting of a Restricted Stock Award, Stock Unit, Performance Share or
     Performance Unit or the exercise of a Nonqualified Stock Option (the "Tax
     Date"), except as set forth below, a holder of such Award may elect to
     satisfy, in whole or in part, the holder's related personal tax liabilities
     (an "Election") by (i) directing the Company, the Affiliate or the Group
     Company that employs such Employee or Group Employee to withhold from
     shares issuable in the related vesting or exercise either a specified
     number of shares, or shares of Common Stock having a specified value in
     each case equal to the related minimum statutory personal withholding tax
     liabilities with respect to the applicable taxing jurisdiction, (ii)
     tendering shares of Common Stock previously issued pursuant to the exercise
     of a Stock Option or other shares of the Common Stock owned by the holder,
     or (iii) combining any or all of the foregoing Elections in any fashion. An
     Election shall be irrevocable. The withheld shares and other shares of
     Common Stock tendered in payment shall be valued at their Fair Market Value
     of the Common Stock on the Tax Date. The Committee may disapprove any
     Election, suspend or terminate the right to make Elections or provide that
     the right to make Elections shall not apply to particular shares or
     exercises. The Committee may impose any additional conditions or
     restrictions on the right to make an Election as it shall deem appropriate,
     including conditions or restrictions with respect to Section 16 of the
     Exchange Act.

15.3. NO GUARANTEE OF TAX CONSEQUENCES. No person connected with the Plan in any
     capacity, including, but not limited to, the Company, an Affiliate or a
     Group Company and their directors, officers, agents and employees makes any
     representation, commitment, or guarantee that any tax treatment, including,
     but not limited to, federal, state and local income, estate and gift tax
     treatment, will be applicable with respect to


                                      -20-

<PAGE>

     amounts deferred under the Plan, or paid to or for the benefit of a
     Participant under the Plan, or that such tax treatment will apply to or be
     available to a Participant on account of participation in the Plan.

16.  AMENDMENT AND TERMINATION

16.1. TERMINATION OF PLAN. The Board may suspend or terminate the Plan at any
     time with or without prior notice; provided, however, that no action
     authorized by this Section 16.1 shall reduce the amount of any outstanding
     Award or change the terms and conditions thereof without the Participants'
     consent, except as expressly provided herein.

16.2. AMENDMENT OF PLAN. The Board may amend the Plan at any time with or
     without prior notice; provided, however, that no action authorized by this
     Section 16.2 shall reduce the amount of any outstanding Award or change the
     terms and conditions thereof without the Participants' consent, except as
     expressly provided herein. No amendment of the Plan shall, without the
     approval of the shareholders of the Company:

     (a)  increase the total number of shares of Common Stock that may be issued
          under the Plan;

     (b)  increase the maximum number of shares with respect to all Awards
          measured in Common Stock that may be granted to any individual under
          the Plan;

     (c)  increase the maximum dollar amount that may be paid with respect to
          all Awards measured in cash; or

     (d)  modify the requirements as to eligibility for Awards under the Plan.

     In addition, the Plan shall not be amended without the approval of such
     amendment by the Company's shareholders if such amendment (i) is required
     under the rules and regulations of the stock exchange or national market
     system on which the Common Stock is listed or (ii) will disqualify any ISO
     granted hereunder.

16.3. AMENDMENT OR CANCELLATION OF AWARD AGREEMENTS. The Committee may amend or
     modify any Award Agreement at any time by mutual agreement between the
     Committee and the Participant or such other persons as may then have an
     interest therein. In addition, by mutual agreement between the Committee
     and a Participant or such other persons as may then have an interest
     therein, Awards may be granted to an Employee, Group Employee, Nonemployee
     Director or Independent Contractor in substitution and exchange for, and in
     cancellation of, any Awards previously granted to such Employee, Group
     Employee, Nonemployee Director or Independent Contractor under the Plan, or
     any award previously granted to such Employee, Group Employee, Nonemployee
     Director or Independent Contractor under any other present or future plan
     of the Company or any present or future plan of an entity which (i) is
     purchased by the Company, (ii) purchases the Company, or (iii) merges into
     or with the Company.


                                      -21-

<PAGE>

17.  MISCELLANEOUS

17.1. OTHER PROVISIONS. Awards granted under the Plan may also be subject to
     such other provisions (whether or not applicable to an Award granted to any
     other Participant) as the Committee determines on the date of grant to be
     appropriate, including, without limitation, for the installment purchase of
     Common Stock under Stock Options, to assist the Participant in financing
     the acquisition of Common Stock, for the forfeiture of, or restrictions on
     resale or other disposition of, Common Stock acquired under any Stock
     Option, for the acceleration of Vesting of Awards in the event of a Change
     in Control of the Company, for the payment of the value of Awards to
     Participants in the event of a Change in Control of the Company, or to
     comply with federal and state securities laws, or understandings or
     conditions as to the Participant's Service in addition to those
     specifically provided for under the Plan.

17.2. RESTRICTIVE COVENANTS AND OTHER TERMS AND CONDITIONS. The Committee may
     provide, by way of the Award Agreement or otherwise, that, notwithstanding
     any other provision of this Plan to the contrary, if the Participant
     breaches the non-compete, non-solicitation, non-disclosure or other terms,
     conditions, restrictions and/or limitations of the Award Agreement, whether
     during or after termination of Service, in addition to any other penalties
     or restrictions that may apply under any employment agreement, state law,
     or otherwise, the Participant will forfeit:

     (a)  any and all Awards granted to him or her under the Plan, including
          Awards that have become Vested and exercisable; and/or

     (b)  forfeit the profit the Participant has realized on the exercise of any
          Stock Options, which is the difference between the Stock Options'
          Exercise Price and the Fair Market Value of any Stock Option the
          Participant exercised after terminating Service and within the six
          month period immediately preceding the Participant's termination of
          Service (the Participant may be required to repay such difference to
          the Company).

17.3. TRANSFERABILITY. Each Award granted under the Plan to a Participant shall
     not be transferable otherwise than by will or the laws of descent and
     distribution, and Stock Options and SARs shall be exercisable, during the
     Participant's lifetime, only by the Participant. In the event of the death
     of a Participant, each Stock Option or SAR theretofore granted to him or
     her shall be exercisable during such period after his or her death as the
     Committee shall, in its sole discretion, set forth in the Award Agreement
     on the date of grant and then only by 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 Stock Option or SAR shall pass by
     will or the laws of descent and distribution. Notwithstanding the
     foregoing, the Committee, in its sole discretion, may permit the
     transferability of a Stock Option (other than an ISO) by a Participant
     solely to members of the Participant's immediate family or trusts or family
     partnerships or other similar entities for the benefit of such persons, and
     subject to such terms, conditions, restrictions and/or limitations, if any,
     as the Committee may establish and include in the Award Agreement.


                                      -22-

<PAGE>

17.4. ELECTION TO DEFER COMPENSATION ATTRIBUTABLE TO AWARD. The Committee may,
     in its sole discretion and subject to Code Section 409A, allow a
     Participant to elect to defer the receipt of any compensation attributable
     to an Award under guidelines and procedures to be established by the
     Committee after taking into account the advice of the Company's tax
     counsel.

17.5. LISTING OF SHARES AND RELATED MATTERS. If at any time the Committee shall
     determine that the listing, registration or qualification of the shares of
     Common Stock subject to an Award on any securities exchange or under any
     applicable law, or the consent or approval of any governmental regulatory
     authority, is necessary or desirable as a condition of, or in connection
     with, the granting of an Award or the issuance of shares of Common Stock
     thereunder, such Award may not be exercised, distributed or paid out, as
     the case may be, in whole or in part, unless such listing, registration,
     qualification, consent or approval shall have been effected or obtained
     free of any conditions not acceptable to the Committee.

17.6. NO RIGHT, TITLE, OR INTEREST IN COMPANY ASSETS. Participants shall have no
     right, title, or interest whatsoever in or to any investments which the
     Company may make to aid it in meeting its obligations under the Plan.
     Nothing contained in the Plan, and no action taken pursuant to its
     provisions, shall create or be construed to create a trust of any kind, or
     a fiduciary relationship between the Company and any Participant,
     beneficiary, legal representative or any other person. To the extent that
     any person acquires a right to receive payments from the Company under the
     Plan, such right shall be no greater than the right of an unsecured general
     creditor of the Company. All payments to be made hereunder shall be paid
     from the general funds of the Company, no special or separate fund shall be
     established, and no segregation of assets shall be made to assure payment
     of such amounts except as expressly set forth in the Plan. The Plan is not
     intended to be subject to the Employee Retirement Income Security Act of
     1974, as amended.

17.7. NO RIGHT TO CONTINUED EMPLOYMENT OR SERVICE OR TO GRANTS. A Participant's
     rights, if any, to continue to serve the Company, an Affiliate or a Group
     Company as a director, officer, employee, independent contractor or
     otherwise, shall not be enlarged or otherwise affected by his or her
     designation as a Participant under the Plan, and the Company, the Affiliate
     and the Group Company reserve the right to terminate the employment or
     Service of any Employee or Group Employee or the services of any
     Independent Contractor or director at any time. The adoption of the Plan
     shall not be deemed to give any Employee, Group Employee, Nonemployee
     Director, Independent Contractor or any other individual any right to be
     selected as a Participant or to be granted an Award.

17.8. AWARDS SUBJECT TO FOREIGN LAWS. The Committee may grant Awards to
     individual Participants who are subject to the tax laws of nations other
     than the United States, and such Awards may have terms and conditions as
     determined by the Committee as necessary to comply with applicable foreign
     laws. The Committee may take any action that it deems advisable to obtain
     approval of such Awards by the appropriate foreign governmental entity;
     provided, however, that no such Awards may be granted pursuant to this
     Section and no action may be taken which would result in a violation of the
     Exchange Act or any other applicable law.


                                      -23-

<PAGE>

17.9. GOVERNING LAW. The Plan, all Awards granted hereunder, and all actions
     taken in connection herewith shall be governed by and construed in
     accordance with the laws of the State of Delaware without reference to
     principles of conflict of laws, except as superseded by applicable federal
     law. Participants, the Company, a Group Company and Affiliate each submit
     and consent to the jurisdiction of the courts in the Commonwealth of
     Massachusetts, County of Worster, including the Federal Courts located
     therein, should Federal jurisdiction requirements exist in any action
     brought to enforce (or otherwise relating to) this Plan or an Award
     Agreement.

17.10. OTHER BENEFITS. No Award granted under the Plan shall be considered
     compensation for purposes of computing benefits under any retirement plan
     of the Company, an Affiliate or a Group Company nor affect any benefits or
     compensation under any other benefit or compensation plan of the Company,
     and Affiliate or a Group Company, now or subsequently in effect.

17.11. NO FRACTIONAL SHARES. No fractional shares of Common Stock shall be
     issued or delivered pursuant to the Plan or any Award. The Committee shall
     determine whether cash, Common Stock, Stock Options, or other property
     shall be issued or paid in lieu of fractional shares or whether such
     fractional shares or any rights thereto shall be forfeited or otherwise
     eliminated.

17.12. COMPLIANCE WITH CODE SECTION 409A. Any provision of the Plan that becomes
     subject to Code Section 409A, will be interpreted and applied consistent
     with that Section and the applicable Treasury Regulations.


                                      -24-
</TEXT>
</DOCUMENT>
