Exhibit 10.1

AMENDED AND RESTATED LONG-TERM STOCK INCENTIVE PLAN

1.  PURPOSE.  The Purposes of the Plan are to provide additional incentive to
those directors, officers and other employees of the Company and its
Subsidiaries whose substantial contributions are essential to the continued
growth and success of the Company’s business in order to strengthen their
commitment to the Company and its Subsidiaries, to motivate such officers and
employees to faithfully and diligently perform their assigned responsibilities
and to attract and retain competent and dedicated individuals whose efforts will
further the long-term growth and profitability of the Company. The purpose of
the Plan is also to secure for the Company and its stockholders the benefits of
the incentive inherent in increased common stock ownership by the members of the
Board who are not employees of the Company or any of its subsidiaries. To
accomplish such purposes, the Plan provides that the Company may grant Incentive
Stock Options, Nonqualified Stock Options, Restricted Stock Awards, Performance
Units or Stock Appreciation Rights.

 2.  DEFINITIONS.  For purposes of this Plan:

 (a) “Award” means a grant of Restricted Stock, Performance Units or Stock
Appreciation Rights, or any or all of them.

 (b) “Award Agreement” means the written agreement between the Company and a
Grantee evidencing the grant of an Award and setting forth the terms and
conditions thereof.

 (c) “Board” means the Board of Directors of the Company.

 (d) “Cause” means the willful failure by an Optionee or Grantee to perform his
duties with the Company or with the Subsidiary or the willful engaging in
conduct, which is injurious to the Company or any Subsidiary, monetarily or
otherwise.

 (e) “Change in Capitalization” means any increase, reduction, change or
exchange of Shares for a different number or kind of shares or other securities
of the Company by reason of a reclassification, re-capitalization, merger,
consolidation, reorganization, issuance of warrants or rights, stock dividend,
stock split or reverse stock split, combination or exchange of shares,
repurchase of shares, change in corporate structure or otherwise.

 (f) “Code” means the Internal Revenue Code of 1986, as amended.

 (g) “Committee” means a committee, consisting of at least two directors of the
Company, which is appointed by the Board to administer the Plan and to perform
the functions set forth herein; provided, however, that if the Committee
consists of less than the entire Board, each member shall be a “non-employee
director” within the meaning of Exchange Act Rule 16b-3; provided, further,
however, that to the extent necessary for any Option or Award intended to
qualify as performance—based compensation under Section 162(m) of the Code to so
qualify, each member of the Committee shall be an “outside director” within the
meaning of Section 162(m) of the Code and the regulations promulgated
thereunder.  Notwithstanding the preceding sentence, the Board may, in its
discretion, establish another committee and delegate to this committee any or
all of the authority and responsibility of the Committee with respect to grants
of Options or Awards to Eligible Participants who are not named executive
officers of the Company on the date such Options or Awards are granted.  Such
other committee may consist of one or more directors.  To the extent that the
Board has delegated the authority and responsibility of the Committee to such
other committee, all references to the Committee in the Plan shall be to such
other committee.

 (h) “Company” means Axsys Technologies, Inc., a Delaware corporation.

 (i) “Disability” means the condition which results when an individual has
become permanently and totally disabled within the meaning of Section 22(e)(3)
of the Code.

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 (j) “Eligible Participant” means any director, officer or employee of the
Company or a Subsidiary designated by the Committee as eligible to receive
Options or Awards subject to the conditions set forth herein.

 (k) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 (l) “Fair Market Value” means the fair market value of the Shares as determined
by the Committee in its sole discretion; provided, however, that (A) if the
Shares are listed on a national securities exchange, including without
limitation the Nasdaq Global Select Market or The Nasdaq Global Market or the
Nasdaq Capital Market of the Nasdaq Stock Market (“Nasdaq”), Fair Market Value
on any date shall be the closing sales price for the Shares (or the closing bid,
if no sales were reported) on such date as such price is officially reported on
Nasdaq or as such price is quoted in the composite tape of transactions on such
exchange; or (B) if the Shares are admitted to quotation on Nasdaq but selling
prices are not reported, Fair Market Value on any date shall be the average of
the high bid and low asked prices on the date of determination, or on the last
day on which there are quoted prices prior to the date of determination.

 (m) “Grantee” means a person to whom an Award has been granted under the Plan.

 (n) “Incentive Stock Option” means an Option that is intended to satisfy the
requirements of Section 422 of the Code and is designated an Incentive Stock
Option at the time of grant.

 (o) “Named Executive Officers” means any officer of the Company as defined by
Section 16(a) of the Securities and Exchange Act of 1934.

 (p) “Non-Employee Director” means any director of the Company who is not an
employee of the Company or any of its Subsidiaries.

 (q) “Nonqualified Stock Option” means an Option, which is designated at the
time of grant as not constituting an Incentive Stock Option.

 (r) “Option” means an Incentive Stock Option, a Nonqualified Stock Option, or
either or both of them.

 (s) “Option Agreement” means the written agreement between the Company and an
Optionee evidencing the grant of an Option and setting forth the terms and
conditions thereof.

 (t) “Optionee” means a person to whom an Option has been granted under the
Plan.

 (u) “Parent” means any corporation that, with respect to the Company, is
described in section 424(e) of the Code.

 (v) “Performance Unit” means a performance unit granted under Section 9 of the
Plan

 (w) “Plan” means the Amended and Restated Long-Term Stock Incentive Plan as set
forth in this instrument and as it may be further amended from time to time.

 (x) “Restricted Stock” means Shares issued or transferred to an Eligible
Participant, which are subject to restrictions as provided in Section 8 hereof.

 (y) “Shares” means the common stock, par value $.01 per share, of the Company
(including any new, additional or different stock or securities resulting from a
Change in Capitalization).

 (z) “Stock Appreciation Right” means a right to receive all or some portion of
the increase in the value of shares of Common Stock as provided in Section 7
hereof.

 (aa) “Subsidiary” means any corporation that, with respect to the Company, is
described in Section 424(f) of the Code.

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 (ab) “Successor Corporation” means a corporation, or a Parent or Subsidiary
thereof, which issues or assumes a stock option in a transaction to which
Section 424(a) of the Code applies.

 3.  ADMINISTRATION.

 (a) The Plan shall be administered by the Committee, which shall hold meetings
at such times as may be necessary for the proper administration of the Plan. The
Committee shall keep minutes of its meetings. A majority of the Committee shall
constitute a quorum and a majority of a quorum may authorize any action. No
member of the Committee shall be personally liable for any action, determination
or interpretation made in good faith with respect to the Plan, the Options or
the Awards, and all members of the Committee shall be fully indemnified and held
harmless by the Company with respect to any such action, determination or
interpretation.

 (b) Subject to the express terms and conditions set forth herein, the Committee
shall have the power from time to time:

 (1) to determine those Eligible Participants to whom Options shall be granted
under the Plan and the number of Shares subject to Incentive Stock Options
and/or Nonqualified Options to be granted to each Eligible Participant and to
prescribe the terms and conditions (which need not be identical) of each Option,
including the purchase price per share of each Option;

 (2) to select those Eligible Participants to whom Awards shall be granted under
the Plan and to determine the number of Performance Units, shares of Restricted
Stock and/or Stock Appreciation Rights to be granted pursuant to each Award, the
terms and conditions of each Award, including the restrictions or performance
criteria relating to such units, shares or rights, the purchase price per share,
if any, of Restricted Stock, the maximum value, if any, of the amount payable
pursuant to each Performance Unit and whether Stock Appreciation Rights will be
granted alone or in conjunction with an Option;

 (3) to construe and interpret the Plan and the Options and Awards granted
thereunder and to establish, amend and revoke rules and regulations for the
administration of the Plan, including, but not limited to, correcting any defect
or supplying any omission, or reconciling any inconsistency in the Plan or in
any Agreement, in the manner and to the extent it shall deem necessary or
advisable to make the Plan fully effective, and all decisions and determinations
by the Committee in the exercise of this power shall be final and binding upon
the Company or a Subsidiary, the Optionees and the Grantees, as the case may be;

 (4) to determine the duration and purposes for leaves of absence which may be
granted to an Optionee or Grantee without constituting a termination of
employment or service for purposes of the Plan; and

 (5) generally, to exercise such powers and to perform such acts as are deemed
necessary or advisable to promote the best interest of the Company with respect
to the Plan.

 4.  STOCK SUBJECT TO PLAN.

 (a) The maximum number of Shares that may be issued or transferred pursuant to
Options and Awards under this Plan is 1,950,000 (or the number and kind of
shares of stock or other securities which are substituted for those Shares or to
which those Shares are adjusted upon a Change in Capitalization) and the Company
shall reserve for the purposes of the Plan, out of its authorized but unissued
Shares or out of Shares held in the Company’s treasury, or partly out of each,
such number of Shares as shall be determined by the Board.  The aggregated
number of shares actually issued or transferred by the Company upon the exercise
of Incentive Stock Options will not exceed 1,950,000.

 (b) Whenever any outstanding Option or portion thereof expires, is cancelled or
is otherwise terminated (other than by exercise of the Option or any related
Stock Appreciation Right), the shares of Common Stock allocable to the
unexercised portion of such Option may again be the subject of Options and
Awards hereunder.

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 (c) Whenever any Shares subject to an Award or Option are resold to the
Company, or are forfeited for any reason pursuant to the terms of the Plan, or
any Shares are delivered to pay the exercise price of an Option or to satisfy
the withholding obligation with respect to an Option or Award, any such Shares
may again be the subject of Options and Awards hereunder.  Upon payment in cash
of the benefit provided by any award granted under the Plan, any shares that
were covered by that Option Award will again be available for issue or transfer
hereunder.

 (d) An eligible participant may not be granted Options and Awards in the
aggregate in respect of more than 90,000 Shares per calendar year.

 5.  ELIGIBILITY.  Subject to the provisions of the Plan, the Committee shall
have full and final authority to select those Eligible Participants who will
receive Options and/or Awards; provided, however, that no Eligible Participant
shall receive any Incentive Stock Option unless he is an employee of the Company
or a Subsidiary at the time the Incentive Stock Option is granted.

 6.  STOCK OPTIONS.  The Committee may grant Options in accordance with the
Plan, the terms and conditions of which shall be set forth in an Option
Agreement.  Each Option and Option Agreement shall be subject to the following
conditions:

 (a) PURCHASE PRICE. The purchase price, which shall not be less than the Fair
Market Value on the date of grant of the Option, or the manner in which the
purchase price is to be determined for Shares under each Option shall be set
forth in the Option Agreement.

 (b) DURATION. Options granted hereunder shall be for such term as the Committee
shall determine.  The Committee may, subsequent to the granting of any Option,
extend the term thereof.  Notwithstanding the foregoing, no option will be
exercisable more than 10 years from the date of the Option.

 (c) NON-TRANSFERABILITY. No Option granted hereunder shall be transferable by
the Optionee to whom granted otherwise than by will or the laws of descent and
distribution, and an Option may be exercised during the life time of such
Optionee only by the Optionee or his guardian or legal representative.  The
terms of such Option shall be binding upon the beneficiaries, executors,
administrators, heirs and successors of the Optionee.

 (d) VESTING. Subject to Section 12(b) hereof, each Option shall be exercisable
in such installments (which need not be equal) and at such times as may be
designated by the Committee and set forth in the Option Agreement.    Any grant
of Options may specify performance objectives that must be achieved as a
condition to the exercise of such Option.  To the extent not exercised,
installments shall accumulate and be exercisable, in whole or in part, at any
time after becoming exercisable, but not later than the date the Option
expires.  The Committee may accelerate the exercisability of any Option or
portion thereof at any time.

 (e) METHOD OF EXERCISE. The exercise of an Option shall be made only by a
written notice delivered in person or by mail to the Secretary of the Company at
the Company’s principal executive office, specifying the number of Shares to be
purchased and accompanied by payment therefore and otherwise in accordance with
the Option Agreement pursuant to which the Option was granted.  The purchase
price for any Shares purchased pursuant to the exercise of an Option shall be
paid in full upon such exercise in cash, by check, or at the discretion of the
Committee and upon such terms and conditions as the Committee shall approve, by
transferring Shares to the Company. Any Shares transferred to the Company as
payment of the purchase price under an Option shall be valued at their Fair
Market Value on the day preceding the date of exercise of such Option. If
requested by the Committee, the Optionee shall deliver the Option Agreement
evidencing the Option and the Option Agreement evidencing any related Stock
Appreciation Right to the Secretary of the Company who shall endorse thereon a
notation of such exercise and return such agreement(s), to the Optionee. No less
than 100 Shares may be purchased at any time upon the exercise of an Option
unless the number of Shares so purchased constitutes the total number of Shares
then purchasable under the Option.

 (f) RIGHTS OF OPTIONEES. No Optionee shall be deemed for any purpose to be the
owner of any Shares subject to any Option unless and until (i) the Option shall
have been exercised pursuant to the terms thereof, (ii)

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the Company shall have issued and delivered the shares to the Optionee, and
(iii) the Optionee’s name shall have been entered as a stockholder of record on
the books of the Company. Thereupon, the Optionee shall have full voting,
dividend and other ownership rights with respect to such Shares.

 (g) TERMINATION OF EMPLOYMENT. In the event that an Optionee ceases to be
employed by the Company or any Subsidiary, any outstanding Options held by such
Optionee shall, unless the Option Agreement evidencing such Option provides
otherwise, terminate on the earliest of the following:

(1) If the Optionee’s termination of employment is due to his death or
Disability, the Option (to the extent exercisable at the time of the Optionee’s
termination of employment) shall be exercisable for a period of one (1) year
following such termination of employment, and shall thereafter terminate;

(2) If the Optionee’s termination of employment is by the Company or a
Subsidiary for Cause, the Option shall terminate on the date of the Optionee’s
termination of employment;

(3)  (a) If the Optionee’s termination of employment is by the Company or any
Subsidiary for any other reason (including an Optionee’s ceasing to be employed
by a Subsidiary as a result of the sale of such Subsidiary or an interest in
such Subsidiary), the Option (to the extent exercisable at the time of the
Optionee’s termination of employment) shall be exercisable for a period of
ninety (90) days following such termination of employment, and shall thereafter
terminate; and (b) If the Optionee’s termination of employment is by the
Optionee (other than as set forth in paragraph (1) above) the Option (to the
extent exercisable at the time of the Optionee’s termination of employment)
shall be exercisable for a period of ten (10) days following such termination of
employment and shall thereafter terminate; and (c) If the Optionee’s employment
terminates due to Disability (as described in paragraph (1) above) or under
circumstances described in paragraph (3)(a) above, and the Optionee dies prior
to the permissible period of exercise for any outstanding Option then held by
the Optionee, the Option (to the extent exercisable at the time of the
Optionee’s termination of employment) shall be exercisable for a period of one
(1) year following the Optionee’s death, and shall thereafter terminate.

(4)  Notwithstanding the foregoing, in no event will the Option be exercisable
beyond the term of the Option.

Notwithstanding the foregoing, the Committee may provide, either at the time an
Option is granted or thereafter, that the Option may be exercised after the
periods provided for in this Section 6(g), but in no event beyond the term of
the Option.

 (h)  Subject to the terms of the Plan, the Committee may modify outstanding
Options or accept the surrender of outstanding Options (to the extent not
exercised) and grant new Options in substitution therefore.  Notwithstanding the
foregoing, no modification of an Option shall alter or impair any rights or
obligations under the Option without the Optionee’s consent.

 7.  STOCK APPRECIATION RIGHTS.  The Committee may, in its discretion, either
alone or in connection with the grant of an Option, grant Stock Appreciation
Rights in accordance with the Plan, the terms and conditions of which shall be
set forth in an Award Agreement.  If granted in connection with an Option, a
Stock Appreciation Right shall cover the same Shares covered by the Option (or
such lesser number of Shares as the Committee may determine) and shall, except
as provided in this Section 7, be subject to the same terms and conditions as
the related Option.

(a) TIME OF GRANT. A Stock Appreciation Right may be granted:

(1) at any time if unrelated to an Option; or

(2) if related to an Option at the time of grant.

(b) STOCK APPRECIATION RIGHTS RELATED TO AN OPTION.

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(i) PAYMENT. A Stock Appreciation Right granted in connection with an Option
shall entitle the holder thereof, upon exercise of the Stock Appreciation Right
or any portion thereof, to receive payment of an amount computed pursuant to
Section 7(b)(iii).

(ii) EXERCISE. A Stock Appreciation Right granted in connection with an Option
shall be exercisable at such time or times and only to the extent that the
related Option is exercisable, and will not be transferable except to the extent
the related Option may be transferable.  A Stock Appreciation Right granted in
connection with an Incentive Stock Option shall be exercisable only if the Fair
Market Value of a Share on the date of exercise exceeds the purchase price
specified in the related Incentive Stock Option.

(iii) AMOUNT PAYABLE. Except as otherwise provided in an Award Agreement (as
contemplated by Section 12, upon the exercise of a Stock Appreciation Right
related to an Option, the Grantee shall be entitled to receive an amount
determined by multiplying (A) the excess of the Fair Market Value of a Share on
the date of exercise of such Stock Appreciation Right over the per Share
purchase price under the related Option, by (b) the number of Shares as to which
such Stock Appreciation Right is being exercised.  Notwithstanding the
foregoing, the Committee may limit in any manner the amount payable with respect
to any Stock Appreciation Right by including such a limit in the Award Agreement
evidencing the Stock Appreciation Right at the time it is granted.

(iv) TREATMENT OF RELATED OPTIONS AND STOCK APPRECIATION RIGHTS UPON EXERCISE.
Upon the exercise of a Stock Appreciation Right granted in connection with an
Option, the Option shall be canceled to the extent of the number of Shares as to
which the Stock Appreciation Right is exercised, and upon the exercise of an
Option granted in connection with a Stock Appreciation Right or the surrender of
such Option as may be provided for in any Option Agreement, the Stock
Appreciation Right shall be cancelled to the extent of the number of Shares as
to which the Option is exercised or surrendered.

(v) CUMULATIVE EXERCISE OF STOCK APPRECIATION RIGHT AND OPTION. Not withstanding
Section 7(b)(iv), the Committee may provide, either at the time a Stock
Appreciation Right is granted in connection with a Nonqualified Stock Option or
thereafter during the term of the Stock Appreciation Right, that, upon exercise
of such Option or the surrender of the Option as may be provided for in any
Option Agreement, the Stock Appreciation Right shall automatically be deemed to
be exercised to the extent of the number of Shares as to which the Option is
exercised or surrendered.  In such event, the Grantee shall be entitled to
receive the amount described in Section 7(b)(iii) or, if otherwise provided for
in the Award Agreement, as set forth therein, in addition to the Shares acquired
or cash received pursuant to the exercise or surrender of the Option.  The
inclusion in an Award Agreement evidencing a Stock Appreciation Right of a
provision described in this Section 7(b)(v) may be in addition to and not in
lieu of the right to exercise the Stock Appreciation Right as otherwise provided
herein and in the Award Agreement.

(c) STOCK APPRECIATION RIGHTS UNRELATED TO AN OPTION. The Committee may grant to
Eligible Participants Stock Appreciation Rights unrelated to Options. Stock
Appreciation Rights unrelated to Options shall contain such terms and conditions
as to exercisability, vesting (including the achievement of the performance
objectives) and duration as the Committee shall determine.  Except as otherwise
provided in an Award Agreement (as contemplated by Section 12), the amount
payable upon exercise of such Stock Appreciation Rights shall be determined in
accordance with Section 7(b)(iii), except that “Fair Market Value of a Share on
the date of the grant of the Stock Appreciation Right” shall be substituted for
“purchase price under the related Option.”  No Stock Appreciation Right
unrelated to an Option will be exercised more than 10 years from the date of a
grant of such Stock Appreciation Right.

(d) METHOD OF EXERCISE. Stock Appreciation Rights shall be exercised by a
Grantee only by a written notice delivered in person or by mail to the Secretary
of the Company at the Company’s principal executive office, specifying the
number of Shares with respect to which the Stock Appreciation Right is being
exercised.  If requested by the Committee, the Grantee shall deliver the Award
Agreement evidencing the Stock Appreciation Right being exercised and the Option
Agreement evidencing any related Option to the Secretary of the Company who
shall endorse thereon a notation of such exercise and return such agreement(s)
to the Grantee.

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(e) FORM OF PAYMENT. Payment of the amount determined under Sections 7(b)(iii)
or 7(c), shall be made, at the sole discretion of the Committee, either (i)
solely in whole shares of Common Stock in a number determined at their Fair
Market Value on the date of exercise of the Stock Appreciation Right, (ii)
solely in cash, (iii) by delivery of a note or other security, or (iv) in a
combination of any of the foregoing.  If the Committee decides to make full
payment in Shares, and the amount payable results in a fractional Share, payment
for the fractional Share will be made in cash.

8.  RESTRICTED STOCK.  The Committee may grant Awards of Restricted Stock which
shall be evidenced by an Award Agreement between the Company and the Grantee.
Each Award Agreement shall contain such restrictions, terms and conditions as
the Committee may require and (without limiting the generality of the foregoing)
such Award Agreements may require that an appropriate legend be placed on Share
certificates.  Awards of Restricted Stock shall be subject to the following
terms and provisions:

 (a) RIGHTS OF GRANTEE.

(i) Shares of Restricted Stock granted pursuant to an Award hereunder shall be
issued in the name of the Grantee as soon as reasonably practicable after the
Award is granted and the purchase price, if any, is paid by the Grantee,
provided that the Grantee has executed an Award Agreement evidencing the Award,
an escrow agreement, appropriate stock powers and any other documents which the
Committee, in its absolute discretion, may require as a condition to the
issuance of such Shares.  If a Grantee shall fail to execute the Award Agreement
evidencing a Restricted Stock Award, an escrow agreement or appropriate blank
stock powers or shall fail to pay the purchase price, if any, for the Restricted
Stock, the Award shall be null and void.  Shares issued in connection with a
Restricted Stock award shall be deposited together with the stock powers with an
escrow agent designated by the Committee.  Except as restricted by the terms of
the Award Agreement, upon delivery of the Shares to the escrow agent, the
Grantee shall have all of the rights of a stockholder with respect to such
Shares, including the right to vote the Shares and to receive all dividends or
other distributions paid or made with respect to the Shares.

(ii) If a Grantee receives any dividends or other distributions with respect to
any Shares which were awarded to him as Restricted Stock prior to the lapsing of
restrictions imposed upon such Shares, such dividends and distributions shall be
held by the escrow agent subject to the restrictions and obligations (including
forfeiture provisions) provided by this Plan. Any such dividends and
distributions shall be held by the escrow agent for the account of the Grantee
prior to the earlier of (i) the lapsing of restrictions imposed upon such Shares
and (ii) the forfeiture of such Shares; and, upon the lapsing of such
restrictions, there shall be credited to the Grantee interest at a rate to be
determined by the Committee on any cash dividend paid thereon for the period
held by the escrow agent pursuant hereto.

(b) NON-TRANSFERABILITY. Until any restrictions upon the Shares of Restricted
Stock awarded to a Grantee shall have lapsed in the manner set forth in Section
8(c), such Shares shall not be sold, transferred or otherwise disposed of and
shall not be pledged or otherwise hypothecated, nor shall they be delivered to
the Grantee.  Upon the termination of employment of the Grantee, all of such
Shares with respect to which restrictions have not lapsed shall be resold by the
Grantee to the Company at the same price, if any, paid by the Grantee for such
Shares or shall be forfeited and automatically transferred to and reacquired by
the Company at no cost to the Company if no purchase price had been paid for
such Shares.  The Committee may also impose such other restrictions and
conditions on the Shares as it deems appropriate.

(c) LAPSE OF RESTRICTIONS.

(i) Restrictions upon Shares of Restricted Stock awarded hereunder shall lapse
at such time or times and on such terms, conditions and satisfaction of
performance objectives (as described in Section 9(a)) as the Committee may
determine; provided, however, that the restrictions upon such Shares shall lapse
only if the Grantee on the date of such lapse is then and has continuously been
an employee or director, as applicable, of the Company or a Subsidiary from the
date the Award was granted.

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(ii) In the event of termination of employment or directorship, as applicable,
as a result of the death or Disability of a Grantee, the Committee, in its
absolute discretion, may determine that the restrictions upon some or all Shares
of Restricted Stock awarded to the Grantee shall thereupon immediately lapse. 
The Committee may also decide at any time, in its absolute discretion and on
such terms and conditions as it deems appropriate, to remove or modify the
restrictions upon Shares of Restricted Stock awarded hereunder.

(d) DELIVERY OF SHARES. Upon the lapse of the restrictions on Shares of
Restricted Stock awarded hereunder, the Committee shall cause a stock
certificate to be delivered to the Grantee with respect to such Shares, free of
all restrictions.

9.  PERFORMANCE UNITS.  The Committee may grant Performance Units, the terms and
conditions of which shall be set forth in an Award Agreement between the Company
and the Grantee. Each Performance Unit shall represent the right to receive a
Share, or a cash payment equal to the Fair Market Value thereof, contingent upon
the Company’s attainment of specified performance objectives within a specified
award period.  Each Award Agreement shall specify the number of the Performance
Units to which it relates, the performance objectives which must be satisfied in
order for the Performance Units to vest, and the award period within which such
objectives must be satisfied.

(a) PERFORMANCE OBJECTIVES. Performance objectives relating to any Option or
Award may be expressed in terms of (a) net earnings or net worth, (b) return on
equity or assets, (c) earnings per Share, (d) Share price, (e) pre-tax profits,
(f) gross revenues, (g) EBITDA, (h) dividends, (i) market share or market
penetration or (j) any combination of the foregoing, and may be determined
before or after accounting changes, special charges, foreign currency effects,
acquisitions, divestitures or other extraordinary events.  Performance
objectives may be absolute or relative to the performance of other companies.   
Each grant may specify in respect of such performance objectives, a minimum
acceptable level of achievement and will set forth the formula for determining
the number of Options or Awards that will be earned if performance is at or
above the minimum level but falls short of full achievement of the specified
performance objectives.

(b) VESTING AND FORFEITURE. A Grantee shall become vested with respect to the
Performance Units to the extent that the performance objectives set forth in the
Award Agreement are satisfied within the award period.  Subject to the terms of
any Award Agreement (as contemplated by Section 12 hereof), if the specified
performance objectives are not satisfied within the award period, the Grantee’s
rights with respect to the Performance Units shall be forfeited.

(c) PAYMENT OF AWARDS. Subject to the terms of any Award Agreement (as
contemplated by Section 12), payments to Grantees in respect of vested
Performance Units shall be made within 2 weeks after the availability of audited
financial statements for the award period to which such Award relates but in no
event later than 2 ½ months after the end of the period; provided, however, that
prior to the vesting, payment, settlement or lapsing of any restrictions with
respect to any Performance Unit intended to qualify as performance-based
compensation under Section 162(m) of the Code, the Committee shall certify in
writing that the applicable performance objectives have been satisfied.  Such
payments may be made entirely in Shares, entirely in cash, or in a combination
of Shares and cash, in each case as the Committee shall determine.  Except as
provided in the terms of any Award Agreement (as contemplated by Section 12), if
payment is made in the form of cash, the amount payable in respect of any Share
shall be equal to the Fair Market Value of such Share on the last day of the
award period.

(d) TERMINATION OF EMPLOYMENT. In the event that a Grantee ceases to be employed
by the Company or a Subsidiary prior to the expiration of an award period for
any reason, any nonvested Performance Units previously awarded to said Eligible
Participant shall be forfeited unless the Committee in its discretion determines
that some part or all of said Performance Units shall continue in effect under
the Plan to the extent the applicable performance objectives are satisfied
within the award period.

(e) NON-TRANSFERABILITY. No amounts payable under this Plan in respect of
Performance Units shall be transferable by the Grantee otherwise than by will or
by the laws of descent and distribution provided that the Grantee may designate
a beneficiary to receive such amounts in the event of the Grantee’s death.

 

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10.  LOANS.

(a) To the extent permitted by law and at the discretion of the Committee the
Company or any Subsidiary may make loans to a Grantee or Optionee in connection
with the purchase of Shares pursuant to an Award or in connection with the
exercise of an Option, subject to the following terms and conditions and such
other terms and conditions not inconsistent with the Plan including the rate of
interest, if any, as the Committee shall impose from time to time.

(b) No loan made under the Plan shall exceed the sum of (i) the aggregate
purchase price payable pursuant to the Option or Award with respect to which the
loan is made plus (ii) the amount of the reasonably estimated income taxes
payable by the Optionee or Grantee with respect to the Option or Award. In no
event may any such loan exceed the Fair Market Value, at the date of exercise,
of any such Shares.

(c) No loan shall have an initial term exceeding ten (10) years; provided, that
loans under the Plan shall be renewable at the discretion of the Committee; and
provided, further, that the indebtedness under each loan shall become due and
payable, as the case may be, on a date no later than (i) one (1) year after
termination of the Optionee’s or Grantee’s employment due to death, retirement
or Disability, or (ii) the date of termination of the Optionee’s or Grantee’s
employment for any reason other than death, retirement or Disability.

(d) Loans under the Plan may be satisfied by an Optionee or Grantee, as
determined by the Committee, in cash or, with the consent of the Committee, in
whole or in part by the transfer to the Company of Shares whose Fair Market
Value on the date of such payment is equal to the cash amount due and payable
under such loans.

(e) A loan shall be secured by a pledge of Shares with a Fair Market Value of
not less than the principal amount of the loan. After partial repayment of a
loan, pledged Shares no longer required as security may, at the discretion of
the Committee, be released to the Optionee or Grantee.

(f) Every loan shall meet all applicable laws, regulations and rules of the
Federal Reserve Board and any other governmental agency having jurisdiction.

11.  ADJUSTMENT UPON CHANGES IN CAPITALIZATION.

(a) In the event of a Change in Capitalization, the Committee shall conclusively
determine the appropriate adjustments, if any, to the maximum number and class
of shares of stock with respect to which Options or Awards may be granted under
the Plan, the number and class of shares or units as to which Options or Awards
may be granted under the Plan, the number and class of shares or units as to
which Options or Awards have been granted under the Plan, and the purchase price
therefor, if applicable.

(b) Any such adjustment in the Shares or other securities subject to outstanding
Incentive Stock Options (including any adjustments in the purchase price) shall
be made in such manner as not to constitute a modification as defined by Section
424(h)(3) of the Code and only to the extent otherwise permitted by Section 422
and 424 of the Code.

(c) If, by reason of a Change in Capitalization, a Grantee of an Award shall be
entitled to new, additional or different shares of stock, securities or
Performance Units (other than rights or warrants to purchase securities), such
new additional or different shares shall thereupon be subject to all of the
conditions, restrictions and performance criteria which were applicable to the
Shares or units pursuant to the Award prior to such Change in Capitalization.

12.  EFFECT OF CERTAIN TRANSACTIONS.

(a) In the event of (i) a merger or consolidation or (ii) the sale or
disposition of all or substantially all of the Company’s assets, the Company
shall have the authority to make provision in connection with such transaction
(x) for the assumption of Options or Awards theretofore granted under the Plan,
or the substitution for such Options or Awards of new options or awards of the
Successor Corporation, with appropriate adjustment as to

 

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the number and kind of shares and the purchase price for shares thereunder, or
(y) for the surrender of outstanding Options and Awards and the payments of cash
in consideration therefor at their fair market value.

 (b) Except as otherwise determined by the Committee at the time of grant of an
Option or Award, upon a Change in Control (as defined below), all outstanding
Options and Stock Appreciation Rights shall become vested and exercisable; all
restrictions on Restricted Stock shall lapse, all performance goals shall be
deemed achieved at target levels and all other terms and conditions are met; and
all Performance Units shall be delivered.  The Committee may, in its sole
discretion, provide or agree to provide for payments in consideration for the
exercise of, surrender or repurchase of an Option or Award (at such times and in
such amounts determined by the Committee in its sole discretion, which amounts,
in the case of a Change in Control, may be based upon the highest price per
share paid in the transaction even if greater than the Fair Market Value at the
time of exercise, surrender or repurchase).  Any such determination by the
Committee may be set forth in the applicable Option Agreement, Award Agreement
or otherwise.  With respect to Options and Awards intended to qualify as
performance based compensation under Section 162(m) of the Code, the Committee
shall set forth in the applicable Option Agreement or Award Agreement any terms
as to acceleration of the exercisability or vesting of the Option or Award
(including, but not limited to, acceleration upon the occurrence of a Change in
Control (as defined in the applicable Option Agreement or Award Agreement)).

A “Change in Control” shall mean the occurrence of any of the following:

(i)            An acquisition (other than directly from the Company) of any
Shares or other voting securities of the Company entitled to vote generally for
the election of directors (the “Voting Securities”) by any “Person” (as the term
“person” is used for purposes of Section 13(d) or 14(d) of the Exchange Act),
immediately after which such Person has “Beneficial Ownership” (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of fifty percent or
more of the then outstanding Shares or the combined voting power of the
Company’s then outstanding Voting Securities; provided, however, in determining
whether a Change in Control has occurred, Shares or Voting Securities which are
acquired in a Non-Control Acquisition (as hereinafter defined) shall not
constitute an acquisition which would cause a Change in Control.  A “Non-Control
Acquisition” shall mean an acquisition by (i) an employee benefit plan (or a
trust forming a part thereof) maintained by (A) the Company or (B) any
corporation or other Person of which a majority of its voting power or its
voting equity securities or equity interest is owned, directly or indirectly, by
the Company (a “Subsidiary”), (ii) the Company or its Subsidiaries, (iii) any
Person in connection with a Non-Control Transaction (as hereinafter defined) or
(iv) an Affiliate;

(ii)           The individuals who, as of the date of this agreement, are
members of the Board (the “Incumbent Board”), cease for any reason to constitute
at least a majority of the members of the Board; provided, however, that if the
election, or nomination for election by the Company’s stockholders, of any new
director was approved by a vote of at least two-thirds of the Incumbent Board,
such new director shall, for purposes of this Agreement, be considered a member
of the Incumbent Board; provided further, however, that no individual shall be
considered a member of the Incumbent Board if such individual initially assumed
office as a result of either an actual or threatened “Election Contest” (as
described in Rule 14a-11 promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board (a “Proxy Contest”) including by reason of any agreement intended
to avoid or settle any Election Contest or Proxy Contest; or

(iii)          The consummation of:

(A)  A merger, consolidation, reorganization or other business combination with
or into the Company or in which securities of the Company are issued, unless
such merger, consolidation, reorganization or other business combination is a
“Non-Control Transaction.”  A “Non-Control Transaction” shall mean a merger,
consolidation, reorganization or other business combination with or into the
Company or in which securities of the Company are issued where:

(1)   the stockholders of the Company, immediately before such merger,
consolidation, reorganization or other business combination own directly or
indirectly immediately following such merger, consolidation,

 

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reorganization or other business combination, at least fifty percent of the
combined voting power of the outstanding voting securities of the corporation
resulting from such merger or consolidation, reorganization or other business
combination (the “Surviving Corporation”) in substantially the same proportion
as their ownership of the Voting Securities immediately before such merger,
consolidation, reorganization, or other business combination,

(2)   the individuals who were members of the Incumbent Board immediately prior
to the execution of the agreement providing for such merger, consolidation,
reorganization or other business combination constitute at least two-thirds of
the members of the board of directors of the Surviving Corporation, or a
corporation beneficially directly or indirectly owning a majority of the
combined voting power of the outstanding voting securities of the Surviving
Corporation, and

(3)   no Person other than (i) the Company, (ii) any Subsidiary, (iii) any
employee benefit plan (or any trust forming a part thereof) that, immediately
prior to such merger, consolidation, reorganization or other business
combination was maintained by the Company, the Surviving Corporation, or any
Subsidiary, or (iv) any Person who, immediately prior to such merger,
consolidation, reorganization or other business combination had Beneficial
Ownership of fifty percent or more of the then outstanding Voting Securities or
common stock of the Company, has Beneficial Ownership of fifty percent or more
of the combined voting power of the Surviving Corporation’s then outstanding
voting securities or its common stock.

(B)   A complete liquidation or dissolution of the Company; or

(C)   The sale or other disposition of all or substantially all of the assets of
the Company to any Person (other than (i) any such sale or disposition that
results in at least fifty percent of the Company’s assets being owned by a
Subsidiary or Subsidiaries or (ii) a distribution to the Company’s stockholders
of the stock of a Subsidiary or any other assets); provided, however, that no
transaction or series of transactions by which Stephen W. Bershad, or any Person
in which Stephen W. Bershad has Beneficial Ownership, directly or indirectly, of
25 percent of the outstanding ownership interests or voting power, acquires
fifty percent or more of the then outstanding Shares or the combined voting
power of the Company’s then outstanding Voting Securities shall constitute a
Change in Control for purposes of this Agreement (regardless of the form of
transaction or series of transactions by which such acquisition occurs
(including, without limitation, any acquisition described in clause (a) hereof
or any merger or other transaction described in clause (c) hereof)).

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because any Person (the “Subject Person”) acquired Beneficial Ownership
of more than the permitted amount of the then outstanding Shares or Voting
Securities as a result of the acquisition of Shares or Voting Securities by the
Company which, by reducing the number of Shares or Voting Securities then
outstanding, increases the proportional number of shares Beneficially Owned by
the Subject Person, provided that if a Change in Control would occur (but for
the operation of this sentence) as a result of the acquisition of Shares or
Voting Securities by the Company, and after such share acquisition by the
Company, the Subject Person becomes the Beneficial Owner of any additional
Shares or Voting Securities which increase the percentage of the then
outstanding Shares or Voting Securities Beneficially Owned by the Subject
Person, then a Change in Control shall occur.

13.  RELEASE OF FINANCIAL INFORMATION.  A copy of the Company’s annual report to
stockholders shall be delivered to each Optionee and Grantee at the time such
report is distributed to the Company’s stockholders.  Upon request, the Company
shall furnish to each Optionee and Grantee a copy of its most recent annual
report and each quarterly report and current report filed under the Exchange
Act, since the end of the Company’s prior fiscal year.

14.  TERMINATION AND AMENDMENT OF THE PLAN.

(a) The Plan shall terminate on August 31, 2011 and no Option or Award may be
granted thereafter.  The Board may sooner terminate or amend the Plan at any
time, and from time to time and in any manner provided, however, that any
amendment which must be approved by the stockholders of the Company in order to
comply with applicable law or the rules of the NASDAQ Stock Market or, if the
Common Shares are not traded under

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the NASDAQ Stock Market, the principal national securities exchange upon which
the Common Shares are traded or quoted, will not be effective unless and until
such approval has been obtained.  Except as provided in Sections 11 and 12
hereof, rights and obligations under any Option or Award granted before any
amendment of the Plan shall not be altered or impaired by such amendment, except
with the consent of the Optionee or Grantee, as the case may be.

(b) Neither the Board nor the Committee will, without the further approval of
the shareholders of the Company, authorize the amendment of any outstanding
Option or Stock Appreciation Right to reduce the purchase price of the Option or
Stock Appreciation Rights, as applicable. Furthermore, no Option or Stock
Appreciation Right will be cancelled and replaced with awards having a lower
purchase price of the Option or Stock Appreciation Rights without further
approval of the shareholders of the Company. This Section 14(a) is intended to
prohibit the repricing of “underwater” Options and Stock Appreciation Rights and
will not be construed to prohibit the adjustments provided for in Section 11 of
this Plan.

15.  LIMITATION OF LIABILITY.  As illustrative of the limitations of liability
of the Company, but not intended to be exhaustive thereof, nothing in the Plan
shall be construed to:

(a) give any person any right to be granted an Option or Award other than at the
sole discretion of the Committee;

(b) give any person any rights whatsoever with respect to Shares except as
specifically provided in the Plan;

(c) limit in any way the right of the Company or a Subsidiary to terminate the
employment of any person at any time; or

(d) be evidence of any agreement or understanding, expressed or implied, that
the Company or any Subsidiary will employ any person in any particular position
at any particular rate of compensation or for any particular period of time.

16.  REGULATIONS AND OTHER APPROVALS; GOVERNING LAW.

(a) This Plan and the rights of all persons claiming any interest hereunder
shall be construed and determined in accordance with the laws of the State of
Delaware without giving effect to the choice of law principles thereof, except
to the extent that such law is preempted by federal law.

(b) The obligation of the Company to sell or deliver Shares with respect to
Options and Awards granted under the Plan shall be subject to all applicable
laws, rules and regulations, including all applicable federal and state
securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.

(c) Except as otherwise provided in Section 15, the Board may make such changes
as may be necessary or appropriate to comply with the rules and regulations of
any government authority, or to obtain for Eligible Participants granted
Incentive Stock Options the tax benefits under the applicable provisions of the
Code and regulations promulgated thereunder.

(d) Each Option and Award is subject to the requirement that, if at any time the
Committee determines, in its absolute discretion, that the listing, registration
or qualification of Shares issuable pursuant to the Plan is required by any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the grant of an Option or the issuance of
Shares, no Options shall be granted or payment made or Shares issued, in whole
or in part, unless listing, registration, qualification, consent or approval has
been effected or obtained free of any conditions as acceptable to the Committee.

(e) In the event that the disposition of Shares acquired pursuant to the Plan is
not covered by a then current registration statement under the Securities Act of
1933, as amended, and is not otherwise exempt from such

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registration, such Shares shall be restricted against transfer to the extent
required by the Securities Act of 1933, as amended, or regulations thereunder,
and the Committee may require any individual receiving Shares pursuant to the
Plan, as a condition precedent to receipt of such Shares (including upon
exercise of an Option), to represent to the Company in writing that the Shares
acquired by such individual are acquired for investment only and not with a view
to distribution.

17.  MISCELLANEOUS.

(a) MULTIPLE AGREEMENTS. The terms of each Option or Award may differ from other
Options or Awards granted under the Plan at the same time, or at some other
time.  The Committee may also grant more than one Option or Award to a given
Eligible Participant during the term of the Plan, either in addition to, or in
substitution for, one or more Options or Awards previously granted to that
Eligible Participant.  The grant of multiple Options and/or Awards may be
evidenced by a single Agreement or multiple Agreements, as determined by the
Committee.

(b) WITHHOLDING OF TAXES. The Company shall have the right to deduct from any
distribution of cash to any Optionee or Grantee an amount equal to the federal,
state and local income taxes and other amounts required by law to be withheld
with respect to any Option or Award.  Notwithstanding anything to the contrary
contained herein, if any Optionee or Grantee is entitled to receive Shares upon
exercise of an Option or pursuant to an Award, the Company shall have the right
to require such Optionee or Grantee, prior to the delivery of such Shares, to
pay to the Company the amount of any federal, state or local income taxes and
other amounts which the Company is required by law to withhold.

(c) DESIGNATION OF BENEFICIARY. Each Optionee and Grantee may, with the consent
of the Committee, designate a person or persons to receive in the event of
his/her death, any Option or Award or any amount payable pursuant thereto, to
which he/she would then be entitled.  Such designation will be made upon forms
supplied by and delivered to the Company and may be revoked by the Optionee or
Grantee in writing.  If an Optionee or Grantee fails effectively to designate a
beneficiary, then his/her estate will be deemed to be the beneficiary.

18.  INTERPRETATION.

(a) RULE 16B-3. The Plan is intended to comply with Exchange Act Rule 16b-3 and
the Committee shall interpret and administer the provisions of the Plan or any
Option Agreement or Award Agreement in a manner consistent therewith.  Any
provisions inconsistent with such Rule shall be inoperative and shall not affect
the validity of the Plan.  The Board is authorized to amend the Plan and to make
any such modifications to Option Agreements or Award Agreements to comply with
Exchange Act Rule 16b-3, as it may be amended from time to time, and to make any
other such amendments or modifications deemed necessary or appropriate to better
accomplish the purposes of the Plan in light of any amendments made to Exchange
Act Rule 16b-3.

(b) SECTION 162(M) OF THE CODE. Unless otherwise expressly stated in the
relevant Option Agreement or Award Agreement, each Option, Stock Appreciation
Right and Performance Unit granted under the Plan to a named executive officer
of the Company is intended to be performance-based compensation within the
meaning of Section 162(m)(4)(c) of the Code (except that, upon a Change in
Control (as defined in the applicable Option Agreement or Award Agreement),
payment of an Option or Award to an Eligible Participant who remains a “covered
employee” with respect to such payment within the meaning of Section 162(m)(3)
of the Code may not qualify as performance-based compensation).  The Committee
shall not be entitled to exercise any discretion otherwise authorized hereunder
with respect to such Options and Awards if the ability to exercise such
discretion or the exercise of such discretion itself would cause the
compensation attributable to such Options and Awards to fail to qualify as
performance-based compensation.  Notwithstanding anything to the contrary in the
Plan, the provisions of the Plan may at any time be bifurcated by the Board or
the Committee in any manner so that certain provisions of the Plan or any Option
or Award intended (or required in order) to satisfy the applicable requirements
of Section 162(m) of the Code are only applicable to persons whose compensation
is subject to Section 162(m).

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19.  EFFECTIVE DATE.  The effective date of the Plan shall be the date of its
adoption by the Board, subject only to the approval by the affirmative vote of a
majority of the votes eligible to be cast at a meeting of stockholders of the
Company to be held within twelve (12) months of such adoption.

20.  AWARD AND OPTION GRANTS TO NON-EMPLOYEE DIRECTORS.

(a) The Board may, from time to time, upon such terms and conditions and in such
amounts as it may determine, authorize the granting to Non-Employee Directors
Options to purchase shares of Common Stock, SARs, Restricted Stock and
Performance Units.  Each grant of an Award to a Non-Employee Director will be
upon such terms and conditions as approved by the Board.  If a Non-Employee
Director subsequently becomes an employee of the Company or a Subsidiary while
remaining a member of the Board, any Award or Option held under the Plan by such
individual at the time of such commencement of employment will not be affected
thereby.

(b) TERMINATION OF DIRECTORSHIP.

(i)            In the event that an Optionee ceases to be a Non-Employee
Director of the Company, any outstanding Options held by such Optionee shall
terminate as follows:

(A)          If the Optionee’s termination of directorship is due to his death
or Disability, the Option (to the extent exercisable at the time of the
Optionee’s termination of directorship) shall be exercisable for a period of one
(1) year following such termination of directorship, and shall thereafter
terminate;

(B)           If the Optionee’s termination of directorship is by the Company
for Cause, the Option shall terminate on the date of the Optionee’s termination
of directorship;

(C)           If the Optionee’s directorship terminates for any other reason,
the Option (to the extent exercisable at the time of the Optionee’s termination
of directorship) shall be exercisable for a period of ninety (90) days following
such termination of directorship, and shall thereafter terminate; and

(D)          If the Optionee’s directorship terminates under circumstances
described in paragraph (iii) above, and the Optionee dies prior to the
permissible period of exercise for any outstanding Option then held by the
Optionee, the Option (to the extent exercisable at the time of the Optionee’s
termination of directorship) shall be exercisable for a period of one (1) year
following the Optionee’s death, and shall thereafter terminate.

(ii)           In the event that a Grantee ceases to be a Non-Employee Director
of the Company, all Shares of Restricted Stock with respect to which
restrictions have not lapsed shall be resold by the Grantee to the Company at
the same price, if any, paid by the Grantee for such Shares or shall be
forfeited and automatically transferred to and reacquired by the Company at no
cost to the Company if no purchase price had been paid for such Shares.

(iii)          In the event that a Grantee ceases to be a Non-Employee Director
of the Company prior to the expiration of an award period for any reason, any
nonvested Performance Units previously awarded to said Eligible Participant
shall be forfeited unless the Committee in its discretion determines that some
part or all of said Performance Units shall continue in effect under the Plan to
the extent the applicable performance objectives are satisfied within the award
period.

COMPLIANCE WITH SECTION 409A OF THE CODE.   To the extent applicable, it is
intended that this Plan and any grants made hereunder comply with the provisions
of Section 409A of the Code.  The Plan and any grants made hereunder shall be
administered in a manner consistent with this intent, and any provision that
would cause the Plan or any grant made hereunder to fail to satisfy Section 409A
of the Code shall have no force and effect until amended to comply with Section
409A of the Code (which amendment may be retroactive to the extent permitted by
Section 409A of the Code and may be made by the Company without the consents of
Participants).  Any reference in this Plan to Section 409A of the Code will also
include any proposed, temporary or final regulations, or any other guidance,
promulgated with respect to such Section by the U.S. Department of the Treasury
or the Internal Revenue Service.

 

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