KAL
      Energy, Inc.

    2007
      Stock Incentive Plan

    


    (Adopted
      by the Board of Directors on ___________________;

    Approved
      by the Shareholders on _______________)

    


    
 

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    KAL
      Energy, Inc.

    2007
      Stock Incentive Plan

    


    


    ARTICLE
      1

     

    PURPOSES
      OF THE PLAN

     

    1.1 Purpose.
      The
      purpose of KAL Energy, Inc.’s 2007 Stock Incentive Plan is to further align the
      interests of employees and directors with those of the shareholders by providing
      incentive compensation opportunities tied to the performance of the Common
      Stock
      and by promoting increased ownership of the Common Stock by such individuals.
      The Plan is also intended to advance the interests of the Company and its
      shareholders by attracting, retaining and motivating key personnel upon whose
      judgment, initiative and effort the successful conduct of the Company’s business
      is largely dependent.

    


    ARTICLE
      2

     

    DEFINITIONS

    


    Wherever
      the following capitalized terms are used in the Plan, they shall have the
      meanings specified below:

     

    2.1 Affiliated
      Company. “Affiliated
      Company” means
      any
      entity that would be deemed an “affiliate” of the Company for purposes of Rule
      12b-2 of the Exchange Act..

     

    2.2 Award.
      “Award”
      means an
      award of a Stock Option, Stock Appreciation Right, Restricted Stock Award,
      Restricted Stock Unit Award or Stock Award granted under the Plan.

     

    2.3 Award
      Agreement.
      “Award
      Agreement”
      means a
      written or electronic agreement entered into between the Company and a
      Participant setting forth the terms and conditions of an Award granted to a
      Participant.

     

    2.4 Board.
      “Board”
      means
      the Board of Directors of the Company.

     

    2.5 Change
      in Control. “Change
      in Control” shall
      mean the occurrence of any of the following events: 

    


    (a) The
      acquisition, directly or indirectly, by any person or group (within the meaning
      of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) of
      the
      beneficial ownership of more than fifty percent (50%) of the outstanding
      securities of the Company; 

    


    (b) A
      merger
      or consolidation in which the Company is not the surviving entity, except for
      a
      transaction the principal purpose of which is to change the state in which
      the
      Company is incorporated; 

    


    (c) The
      sale,
      transfer or other disposition of all or substantially all of the assets of
      the
      Company; 

    


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

    


    
      
        
        

      

      
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    (e) Any
      reverse merger in which the Company is the surviving entity but in which
      securities possessing more than fifty percent (50%) of the total combined voting
      power of the Company’s outstanding securities are transferred to a person or
      persons different from the persons holding those securities immediately prior
      to
      such merger.

     

    2.6 Code.
      “Code”
      means
      the Internal Revenue Code of 1986, as amended.

     

    2.7 Common
      Stock.
      “Common
      Stock”
      means
      the Company’s common stock, par value $.0001 per share.

     

    2.8 Committee.
      “Committee”
      means
      the Compensation Committee of the Board, or such other committee of the Board
      appointed by the Board to administer the Plan in accordance with Section 3.1
      below.

     

    2.9 Company.
      “Company”
      means
      KAL Energy, Inc., a Delaware corporation.

     

    2.10 Date
      of Grant.
      “Date
      of Grant”
      means
      the date on which an Award under the Plan is made by the Committee, or such
      later date as the Committee may specify to be the effective date of an
      Award.

     

    2.11 Disability.
      “Disability”
      means a
      Participant being considered “disabled” within the meaning of Section
      409A(a)(2)(C) of the Code, unless otherwise provided in an Award
      Agreement.

     

    2.12 Eligible
      Person.
      “Eligible
      Person”
      means
      any person who is an employee of the Company or any Affiliated Company, or
      any
      person to whom an offer of employment with the Company or any Affiliated Company
      is extended, as determined by the Committee, or any person who is a Non-Employee
      Director or a Service Provider.

     

    2.13 Exchange
      Act.
      “Exchange
      Act”
      means
      the Securities Exchange Act of 1934, as amended.

     

    2.14 Fair
      Market Value. “Fair
      Market Value” on
      any
      given date means the value of one share of Common Stock, determined as
      follows:

    


    (a) If
      the
      Common Stock is then listed or admitted to trading on the Nasdaq market system
      or a stock exchange which reports closing sale prices, the Fair Market Value
      shall be the closing sale price on the date of valuation on such Nasdaq market
      system or principal stock exchange on which the Common Stock is then listed
      or
      admitted to trading, or, if no closing sale price is quoted on such day, then
      the Fair Market Value shall be the closing sale price of the Common Stock on
      such Nasdaq market system or such exchange on the next preceding day for which
      a
      closing sale price is reported.

    


    (b) If
      the
      Common Stock is not then listed or admitted to trading on a Nasdaq market system
      or a stock exchange which reports closing sale prices, the Fair Market Value
      shall be the average of the closing bid and asked prices of the Common Stock
      in
      the over-the-counter market on the date of valuation. 

    


    (c) If
      neither (a) nor (b) is applicable as of the date of valuation, then the Fair
      Market Value shall be determined by the Committee in good faith using any
      reasonable method of evaluation, which determination shall be conclusive and
      binding on all interested parties.

     

    
      
        
        

      

      
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    2.15 Incentive
      Stock Option.“Incentive
      Stock Option” means
      any
      Stock Option designated and qualified as an “incentive stock option” as defined
      in Section 422 of the Code.

    


    2.16 Incentive
      Stock Option Agreement.“Incentive
      Stock Option Agreement”
      means a
      Stock Option Agreement with respect to an Incentive Stock Option.

    


    2.17 Non-Employee
      Director.
      “Non-Employee
      Director”
      means
      any member of the Board who is not an employee of the Company.

     

    2.18 Nonqualified
      Stock Option.
      “Nonqualified
      Stock Option”
      means a
      Stock Option granted under Section 6 hereof that is not intended to be an
      Incentive Stock Option as defined in Section 422 of the Code.

     

    2.19 Optionee. “Optionee”
      means a
      Participant who holds a Stock Option.

    


    2.20 Participant.
      “Participant”
      means
      any Eligible Person who holds an outstanding Award under the Plan.

     

    2.21 Performance-Based
      Exception.
      “Performance-Based
      Exception”
      means
      the performance-based exception from the tax deductibility limitations of
      Section 162(m) of the Code.

     

    2.22 Plan.
      “Plan”
      means
      this KAL Energy, Inc. 2007 Stock Incentive Plan as set forth herein, as amended
      from time to time.

     

    2.23 Restricted
      Stock Award.
      “Restricted
      Stock Award”
      means a
      grant of shares of Common Stock to an Eligible Person under Section 8 hereof
      that is issued subject to such vesting and transfer restrictions as the
      Committee shall determine and set forth in an Award Agreement.

     

    2.24 Restricted
      Stock Unit Award.
      “Restricted
      Stock Unit Award”
      means a
      contractual right granted to an Eligible Person under Section 9 hereof
      representing notional unit interests equal in value to a corresponding number
      of
      shares of Common Stock, payable in shares of Common Stock, to be paid or
      distributed at such times, and subject to such conditions, as are set forth
      in
      the Plan and the applicable Award Agreement.

     

    2.25 Service.
      “Service”
      means a
      Participant’s employment with the Company or any Affiliated Company, or a
      Participant’s service as a Non-Employee Director with the Company, as
      applicable.

     

    2.26 Service
      Provider.“Service
      Provider” means a Consultant or other person or entity the Administrator
      authorizes to become a Participant in the Plan and who provides services to
      (i)
      the Company, (ii) an Affiliated Company, or (iii) any other business venture
      designated by the Administrator in which the Company (or any entity that is
      a
      successor to the Company) or an Affiliated Company has a significant ownership
      interest.

    


    2.27 Stock
      Award.
      “Stock
      Award”
      means a
      grant of shares of Common Stock to an Eligible Person under Section 10 hereof
      that are issued free of transfer restrictions and repurchase
      conditions.

     

    2.28 Stock
      Appreciation Right.
      “Stock
      Appreciation Right”
      means a
      contractual right granted to an Eligible Person under Section 7 hereof
      entitling such Eligible Person to receive a payment representing the difference
      between the base price per share of the right and the Fair Market Value of
      a
      share of Common Stock, payable in shares of the Company’s Common Stock, at such
      time, and subject to such conditions, as are set forth in this Plan and the
      applicable Award Agreement.

     

    
      
        
        

      

      
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    2.29 Stock
      Option.
      “Stock
      Option”
      means a
      contractual right granted to an Eligible Person under Section 6 hereof to
      purchase shares of Common Stock at such time and price, and subject to such
      conditions, as are set forth in the Plan and the applicable Award
      Agreement

    


    2.30 Stock
      Option Agreement.“Stock
      Option Agreement”
      means
      the written agreement entered into between the Company and the Optionee with
      respect to a Stock Option granted under the Plan

    


    ARTICLE
      3

     

    ADMINISTRATION

     

    3.1 Administration
      of Plan.
      Authority to control and manage the operation and administration of the Plan
      shall be vested in the Board, which may delegate such responsibilities in whole
      or in part to one or more Committees. Members of the Committee may be appointed
      from time to time by, and shall serve at the pleasure of, the Board. Without
      limiting the foregoing, the Board may limit the composition of the Committee
      to
      those persons necessary to comply with the requirements of Section 162(m) of
      the
      Code and the regulations promulgated thereunder, and Section 16 and Rule 16b-3
      of the Exchange Act. No member of the Committee shall be liable for any action
      or determination made in good faith by the Committee with respect to the Plan
      or
      any Award thereunder.

     

    3.2 Committee
      Authority. The
      Committee shall have such powers and authority as may be necessary or
      appropriate for the Committee to carry out its functions as described in the
      Plan. Subject to the express limitations of the Plan, the Committee shall have
      authority in its discretion to determine the Eligible Persons to whom, and
      the
      time or times at which, Awards may be granted, the number of shares, units
      or
      other rights subject to each Award, the exercise, base or purchase price of
      an
      Award (if any), the time or times at which an Award will become vested,
      exercisable or payable, the performance goals and other conditions of an Award,
      the duration of the Award, and all other terms of the Award. Subject to the
      terms of the Plan, the Committee shall have the authority to amend the terms
      of
      an Award in any manner that is not inconsistent with the Plan, provided that
      no
      such action shall adversely affect the rights of a Participant with respect
      to
      an outstanding Award without the Participant’s consent. The Committee shall also
      have discretionary authority to interpret the Plan, to make factual
      determinations under the Plan, and to make all other determinations necessary
      or
      advisable for Plan administration, including, without limitation, to correct
      any
      defect, to supply any omission or to reconcile any inconsistency in the Plan
      or
      any Award Agreement hereunder. The Committee may prescribe, amend, and rescind
      rules and regulations relating to the Plan. The Committee’s determinations under
      the Plan need not be uniform and may be made by the Committee selectively among
      Participants and Eligible Persons, whether or not such persons are similarly
      situated. The Committee shall, in its discretion, consider such factors as
      it
      deems relevant in making its interpretations, determinations and actions under
      the Plan, including, without limitation, the recommendations or advice of any
      officer or employee of the Company or such attorneys, consultants, accountants
      or other advisors as it may select. All interpretations, determinations and
      actions by the Committee shall be final, conclusive, and binding upon all
      parties.

     

    
      
        
        

      

      
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    3.3 Delegation
      of Authority.
      The
      Committee shall have the right, from time to time, to delegate to one or more
      officers of the Company the authority of the Committee to grant and determine
      the terms and conditions of Awards granted under the Plan, subject to the
      requirements of Section 157(c) of the Delaware General Corporation Law (or
      any
      successor provision) and such other limitations as the Committee shall
      determine. In no event shall any such delegation of authority be permitted
      with
      respect to Awards to any members of the Board or to any Eligible Person who
      is
      subject to Rule 16b-3 under the Exchange Act or Section 162(m) of the Code.
      The
      Committee shall also be permitted to delegate, to any appropriate officer or
      employee of the Company, responsibility for performing certain ministerial
      functions under the Plan. In the event that the Committee’s authority is
      delegated to officers or employees in accordance with the foregoing, all
      provisions of the Plan relating to the Committee shall be interpreted in a
      manner consistent with the foregoing by treating any such reference as a
      reference to such officer or employee for such purpose. Any action undertaken
      in
      accordance with the Committee’s delegation of authority hereunder shall have the
      same force and effect as if such action was undertaken directly by the Committee
      and shall be deemed for all purposes of the Plan to have been taken by the
      Committee.

    3.4 Grants
      to Non-Employee Directors.
      Any
      Awards or formula for granting Awards under the Plan made to Non-Employee
      Directors shall be approved by the Board. With respect to awards to such
      directors, all rights, powers and authorities vested in the Committee under
      the
      Plan shall instead be exercised by the Board, and all provisions of the Plan
      relating to the Committee shall be interpreted in a manner consistent with
      the
      foregoing by treating any such reference as a reference to the Board for such
      purpose.

    


    ARTICLE
      4

     

    SHARES
      SUBJECT TO THE PLAN

     

    4.1 Maximum
      Share Limitations.
      Subject
      to adjustment pursuant to Section 4.3 hereof, the maximum aggregate number
      of
      shares of Common Stock that may be issued and sold under all Awards granted
      under the Plan shall be twelve million (12,000,000) shares. Shares of Common
      Stock issued and sold under the Plan may be either authorized but unissued
      shares or shares held in the Company’s treasury. To the extent that any Award
      involving the issuance of shares of Common Stock is forfeited, cancelled,
      returned to the Company for failure to satisfy vesting requirements or other
      conditions of the Award, or otherwise terminates without an issuance of shares
      of Common Stock being made thereunder, the shares of Common Stock covered
      thereby will no longer be counted against the foregoing maximum share
      limitations and may again be made subject to Awards under the Plan pursuant
      to
      such limitations.

     

    4.2 Individual
      Participant Limitations.
      The
      maximum number of shares of Common Stock that may be subject to Stock Options,
      Stock Appreciation Rights, Restricted Stock Awards, Restricted Stock Unit Awards
      and Stock Awards, in the aggregate, granted to any one Participant during any
      fiscal year period shall be two million (2,000,000) shares. The foregoing
      limitations shall be applied on an aggregate basis taking into account Awards
      granted to a Participant under the Plan as well as awards of the same type
      granted to a Participant under any other equity-based compensation plan of
      the
      Company or any Affiliated Company.

     

    4.3 Adjustments.
      If
      there shall occur any change with respect to the outstanding shares of Common
      Stock by reason of any recapitalization, reclassification, stock dividend,
      extraordinary dividend, stock split, reverse stock split or other distribution
      with respect to the shares of Common Stock, or any merger, reorganization,
      consolidation, combination, spin-off or other similar corporate change, or
      any
      other change affecting the Common Stock, the Committee may, in the manner and
      to
      the extent that it deems appropriate and equitable to the Participants and
      consistent with the terms of the Plan, cause an adjustment to be made in (i)
      the
      maximum number and kind of shares provided in Section 4.1 and Section 4.2
      hereof, (ii) the number and kind of shares of Common Stock, units, or other
      rights subject to then outstanding Awards, (iii) the exercise or base price
      for
      each share or unit or other right subject to then outstanding Awards, and (iv)
      any other terms of an Award that are affected by the event.

    


    
      
        
        

      

      
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    ARTICLE
      5

     

    PARTICIPATION
      AND AWARDS

     

    5.1 Designations
      of Participants.
      All
      Eligible Persons are eligible to be designated by the Committee to receive
      Awards and become Participants under the Plan. The Committee has the authority,
      in its discretion, to determine and designate from time to time those Eligible
      Persons who are to be granted Awards, the types of Awards to be granted and
      the
      number of shares of Common Stock or units subject to Awards granted under the
      Plan. In selecting Eligible Persons to be Participants and in determining the
      type and amount of Awards to be granted under the Plan, the Committee shall
      consider any and all factors that it deems relevant or appropriate.

     

    5.2 Determination
      of Awards.
      The
      Committee shall determine the terms and conditions of all Awards granted to
      Participants in accordance with its authority under Section 3.2 hereof. An
      Award
      may consist of one type of right or benefit hereunder or of two or more such
      rights or benefits granted in tandem or in the alternative. In the case of
      any
      fractional share or unit resulting from the grant, vesting, payment or crediting
      of dividends or dividend equivalents under an Award, the Committee shall have
      the discretionary authority to (i) disregard such fractional share or unit,
      (ii)
      round such fractional share or unit to the nearest lower or higher whole share
      or unit, or (iii) convert such fractional share or unit into a right to receive
      a cash payment. To the extent deemed necessary by the Committee, an Award shall
      be evidenced by an Award Agreement as described in Section 14.1
      hereof.

    


    ARTICLE
      6

     

    STOCK
      OPTIONS

     

    6.1 Grant
      of Stock Options.
      A Stock
      Option may be granted to any Eligible Person selected by the Committee.
Each
      Stock Option granted pursuant to this Plan shall be evidenced by a Stock Option
      Agreement that shall specify the number of shares subject thereto, the Exercise
      Price per share, and whether the Stock Option is an Incentive Stock Option
      or
      Nonqualified Stock Option. As soon as is practical following the grant of a
      Stock Option, a Stock Option Agreement shall be duly executed and delivered
      by
      or on behalf of the Company to the Optionee to whom such Stock Option was
      granted. Each Stock Option Agreement shall be in such form and contain such
      additional terms and conditions, not inconsistent with the provisions of this
      Plan, as the Administrator shall, from time to time, deem desirable, including,
      without limitation, the imposition of any rights of first refusal and resale
      obligations upon any shares of Common Stock acquired pursuant to a Stock Option
      Agreement. Each Stock Option Agreement may be different from each other Stock
      Option Agreement.

     

    
      
        
        

      

      
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    6.2 Exercise
      Price.
      The
      Exercise Price per share of Common Stock covered by each Stock Option shall
      be
      determined by the Administrator, subject to the following: (a) the Exercise
      Price of an Incentive Stock Option shall not be less than 100% of Fair Market
      Value on the date the Incentive Stock Option is granted, (b) the Exercise Price
      of a Nonqualified Stock Option shall be determined by the Administrator in
      its
      sole discretion, and (c) if the person to whom a Incentive Stock Option is
      granted is a 10% Stockholder on the date of grant, the Exercise Price shall
      not
      be less than 110% of Fair Market Value on the date the Incentive Stock Option
      is
      granted. However, an Incentive Stock Option may be granted with an exercise
      price lower than that set forth in the preceding sentence if such Option is
      granted pursuant to an assumption or substitution for another option in a manner
      satisfying the provisions of Section 424 of the Code.

    


    6.3 Vesting
      of Stock Options.
      The
      Committee shall, in its discretion, prescribe the time or times at which, or
      the
      conditions upon which, a Stock Option, or portion thereof, shall become vested
      and/or exercisable, and may accelerate the vesting or exercisability of any
      Stock Option at any time. The requirements for vesting and exercisability of
      a
      Stock Option may be based on the continued Service of the Participant with
      the
      Company or an Affiliated Company for a specified time period (or periods),
      or on
      the attainment of specified performance goals established by the Committee
      in
      its discretion.

    


    6.4 Term
      and Termination of Stock Options.
      The
      Committee shall, in its discretion, prescribe in an Award Agreement the period
      during which a vested Stock Option may be exercised, provided that the maximum
      term of a Stock Option shall be ten (10) years from the Date of Grant; however,
      an Incentive Stock Option granted to a person who is a 10% Stockholder on the
      date of grant shall not be exercisable more than five (5) years after the date
      it is granted. Except as otherwise provided in this Section 6 or as otherwise
      may be provided by the Committee, no Stock Option may be exercised at any time
      during the term thereof unless the Participant is then in the Service of the
      Company or any Affiliated Company.

     

    6.5 Stock
      Option Exercise; Tax Withholding.
      Subject
      to such terms and conditions as shall be specified in an Award Agreement, a
      Stock Option may be exercised in whole or in part at any time during the term
      thereof by notice in the form required by the Company, together with payment
      of
      the aggregate exercise price therefore and applicable withholding tax. Payment
      of the exercise price shall be made in the manner set forth in the Award
      Agreement, unless otherwise provided by the Committee: (i) in cash or by cash
      equivalent acceptable to the Committee, (ii) by payment in shares of Common
      Stock that have been held by the Participant for at least six months (or such
      period as the Committee may deem appropriate, for accounting purposes or
      otherwise), valued at the Fair Market Value of such shares on the date of
      exercise, (iii) through an open-market, broker-assisted sales transaction
      pursuant to which the Company is promptly delivered the amount of proceeds
      necessary to satisfy the exercise price, (iv) by a combination of the methods
      described above or (v) by such other method as may be approved by the Committee
      and set forth in the Award Agreement. In addition to, and at the time of payment
      of, the exercise price, the Participant shall pay to the Company the full amount
      of any and all applicable income tax, employment tax and other amounts required
      to be withheld in connection with such exercise, payable under such of the
      methods described above for the payment of the exercise price as may be approved
      by the Committee and set forth in the Award Agreement.

     

    6.6 Limited
      Transferability of Stock Options.
      All
      Stock Options shall be nontransferable except (i) upon the Participant’s death,
      in accordance with Section 14.2 hereof or (ii) for the transfer of all or part
      of the Stock Option to a Participant’s “family member” (as defined for purposes
      of the Form S-8 registration statement under the Securities Act of 1933), as
      may
      be approved by the Committee in its discretion at the time of proposed transfer.
      The transfer of a Stock Option may be subject to such terms and conditions
      as
      the Committee may in its discretion impose from time to time. Subsequent
      transfers of a Stock Option shall be prohibited other than in accordance with
      Section 14.2 hereof.

    


    
      
        
        

      

      
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    ARTICLE
      7

     

    STOCK
      APPRECIATION RIGHTS

     

    7.1 Grant
      of Stock Appreciation Rights.
      A Stock
      Appreciation Right may be granted to any Eligible Person selected by the
      Committee. Stock Appreciation Rights may be granted on a basis that allows
      for
      the exercise of the right by the Participant or that provides for the automatic
      payment of the right upon a specified date or event. Stock Appreciation Rights
      shall be exercisable or payable at such time or times and upon conditions as
      may
      be approved by the Committee, provided that the Committee may accelerate the
      exercisability or payment of a Stock Appreciation Right at any
      time.

     

    7.2 Vesting
      of Stock Appreciation Rights.
      Stock
      Appreciation Rights granted under the Plan shall be subject to such vesting
      and
      exercisability requirements as specified by the Committee in an Award Agreement.
      Such vesting and exercisability requirements may be based on the continued
      Service of the Participant with the Company or an Affiliated Company for a
      specified time period (or periods) or on the attainment of specified performance
      goals established by the Committee in its discretion. A Stock Appreciation
      Right
      will be exercisable or payable at such time or times as determined by the
      Committee, provided that the maximum term of a Stock Appreciation Right shall
      be
      ten years from the Date of Grant. The base price of a Stock Appreciation Right
      shall be determined by the Committee in its sole discretion; provided, however,
      that the base price per share of any Stock Appreciation Right shall not be
      less
      than 100 percent of the Fair Market Value of the shares of Common Stock on
      the
      Date of Grant.

     

    7.3 Payment
      of Stock Appreciation Rights.
      A Stock
      Appreciation Right will entitle the holder, upon exercise or other payment
      of
      the Stock Appreciation Right, as applicable, to receive an amount determined
      by
      multiplying: (i) the excess of the Fair Market Value of a share of Common Stock
      on the date of exercise or payment of the Stock Appreciation Right over the
      base
      price of such Stock Appreciation Right, by (ii) the number of shares as to
      which
      such Stock Appreciation Right is exercised or paid. Payment of the amount
      determined under the foregoing shall be made in shares of Common Stock, valued
      at their Fair Market Value on the date of exercise or payment, subject to
      applicable tax withholding requirements.

     

    7.4 Repricing
      Prohibited.
      Subject
      to the anti-dilution adjustment provisions contained in Section 4.3 hereof,
      without the prior approval of the Company’s shareholders, evidenced by a
      majority of votes cast, neither the Committee nor the Board shall cause the
      cancellation, substitution or amendment of a Stock Appreciation Right that
      would
      have the effect of reducing the base price of such a Stock Appreciation Right
      previously granted under the Plan, or otherwise approve any modification to
      such
      a Stock Appreciation Right that would be treated as a “repricing” under the then
      applicable rules, regulations or listing requirements adopted by
      Nasdaq.

     

    
      
        
        

      

      
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    7.5 Compliance
      with Code Section 409A.
      Notwithstanding
      anything in this Article 7 to the contrary, all Awards of Stock Appreciation
      Rights must be structured to satisfy the requirements of Code Section 409A,
      as
      determined by the Committee.

    


    ARTICLE
      8

     

    RESTRICTED
      STOCK AWARDS

     

    8.1 Grant
      of Restricted Stock Awards.
      A
      Restricted Stock Award may be granted to any Eligible Person selected by the
      Committee. The Committee may provide that no payment is required (subject to
      Section 153 of the Delaware General Corporation Law or other applicable law),
      or
      require the payment by the Participant of a specified purchase price, in
      connection with any Restricted Stock Award.

     

    8.2 Vesting
      Requirements; Repurchase Rights.
      The
      restrictions imposed on shares granted under a Restricted Stock Award shall
      lapse in accordance with the vesting requirements specified by the Committee
      in
      the Award Agreement, which may be based on the continued Service of the
      Participant with the Company or an Affiliated Company for a specified time
      period (or periods) or on the attainment of specified performance goals
      established by the Committee, provided that the Committee may accelerate the
      vesting of a Restricted Stock Award at any time. If the vesting requirements
      of
      a Restricted Stock Award shall not be satisfied, the shares of Common Stock
      subject to the Award may be repurchased by the Company, at the Company’s
      election, at a repurchase price set forth in the Restricted Stock Award, but
      not
      less than the purchase price paid by the Participant.

     

    8.3 Restrictions.
      Shares
      granted under any Restricted Stock Award may not be transferred, assigned or
      subject to any encumbrance, pledge, or charge until all applicable restrictions
      are removed or have expired, unless otherwise allowed by the Committee. The
      Committee may require in an Award Agreement that certificates representing
      the
      shares granted under a Restricted Stock Award bear a legend making appropriate
      reference to the restrictions imposed, and that certificates representing the
      shares granted or sold under a Restricted Stock Award will remain in the
      physical custody of an escrow holder until all restrictions are removed or
      have
      expired.

     

    8.4 Rights
      as Shareholder.
      Subject
      to the foregoing provisions of this Section 8 and the applicable Award
      Agreement, the Participant shall have all rights of a shareholder with respect
      to the shares granted to the Participant under a Restricted Stock Award,
      including the right to vote the shares and receive all dividends and other
      distributions paid or made with respect thereto. The Committee may provide
      in an
      Award Agreement for the payment of dividends and distributions to the
      Participant at such times as paid to shareholders generally or at the times
      of
      vesting or other payment of the Restricted Stock Award.

     

    8.5 Section
      83(b) Election.
      If
      a
      Participant makes an election pursuant to Section 83(b) of the Code with respect
      to a Restricted Stock Award, the Participant shall file, within 30 days
      following the Date of Grant, a copy of such election with the Company and with
      the Internal Revenue Service, in accordance with the regulations under Section
      83 of the Code. The Committee may provide in an Award Agreement that the
      Restricted Stock Award is conditioned upon the Participant’s making or
      refraining from making an election with respect to the Award under Section
      83(b)
      of the Code.

    


    
      
        
        

      

      
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    ARTICLE
      9

     

    RESTRICTED
      STOCK UNIT AWARDS

     

    9.1 Grant
      of Restricted Stock Unit Awards.
      A
      Restricted Stock Unit Award may be granted to any Eligible Person selected
      by
      the Committee. The value of each stock unit under a Restricted Stock Unit Award
      is equal to the Fair Market Value of the Common Stock on the applicable date
      or
      time period of determination, as specified by the Committee. A Restricted Stock
      Unit Award shall be subject to such restrictions and conditions as the Committee
      shall determine. A Restricted Stock Unit Award may be granted together with
      a
      dividend equivalent right with respect to the shares of Common Stock subject
      to
      the Award, which may be accumulated and may be deemed reinvested in additional
      stock units, as determined by the Committee in its discretion.

     

    9.2 Vesting
      of Restricted Stock Unit Awards.
      On the
      Date of Grant, the Committee shall in its discretion determine the vesting
      requirements with respect to a Restricted Stock Unit Award, which may include
      the attainment of specified performance goals established by the Committee.
      Such
      vesting requirements shall be set forth in the Award Agreement, provided that
      the Committee may accelerate the vesting of a Restricted Stock Unit Award at
      any
      time. 

     

    9.3 Payment
      of Restricted Stock Unit Awards.
      A
      Restricted Stock Unit Award shall become payable to a Participant at the time
      or
      times determined by the Committee and set forth in the Award Agreement, as
      determined by the Committee. Restricted Stock Unit Awards shall be payable
      in
      shares of Common Stock, subject to applicable tax withholding
      requirements.

     

    9.4 No
      Rights as Shareholder.
      The
      Participant shall not have any rights as a shareholder with respect to the
      shares subject to a Restricted Stock Unit Award until such time as shares of
      Common Stock are delivered to the Participant pursuant to the terms of the
      Award
      Agreement.

    


    ARTICLE
      10

     

    STOCK
      AWARDS

     

    10.1 Grant
      of Stock Awards.
      A Stock
      Award may be granted to any Eligible Person selected by the Committee. A Stock
      Award may be granted for past services, in lieu of bonus or other cash
      compensation, as directors’ compensation or for any other valid purpose as
      determined by the Committee. A Stock Award granted to an Eligible Person
      represents shares of Common Stock that are issued without restrictions on
      transfer and other incidents of ownership and free of forfeiture conditions,
      except as otherwise provided in the Plan and the Award Agreement. The Committee
      may, in connection with any Stock Award, provide that no payment is required,
      or
      require the payment by the Participant of a specified purchase
      price.

     

    10.2 Rights
      as Shareholder.
      Subject
      to the foregoing provisions of this Section 10 and the applicable Award
      Agreement, upon the issuance of the Common Stock under a Stock Award the
      Participant shall have all rights of a shareholder with respect to the shares
      of
      Common Stock, including the right to vote the shares and receive all dividends
      and other distributions paid or made with respect thereto.

    


    
      
        
        

      

      
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    ARTICLE
      11

     

    CHANGE
      IN CONTROL

     

    11.1 Change
      in Control.
      In order
      to preserve a Participant’s rights in the event of a Change in Control of the
      Company:

    


    (a) The
      Committee shall have the discretion to provide in each Award Agreement the
      terms
      and conditions that relate to (i) vesting of such Award in the event of a Change
      in Control, and (ii) assumption of such Awards or issuance of comparable
      securities under an incentive program in the event of a Change in Control.
      The
      aforementioned terms and conditions may vary in each Award
      Agreement.

    


    (b) If
      the
      terms of an outstanding Stock Option provide for accelerated vesting in the
      event of a Change in Control, or to the extent that a Stock Option is vested
      and
      not yet exercised, the Committee in its discretion may provide, in connection
      with the Change in Control transaction, for the purchase or exchange of each
      Stock Option for an amount of cash or other property having a value equal to
      the
      difference (or “spread”) between: (x) the value of the cash or other property
      that the Participant would have received pursuant to the Change in Control
      transaction in exchange for the shares issuable upon exercise of the Stock
      Option had the Stock Option been exercised immediately prior to the Change
      in
      Control, and (y) the Exercise Price of the Stock Option.

    


    (c) If
      the
      terms of an outstanding Stock Appreciation Right provide for accelerated vesting
      in the event of a Change in Control, or to the extent that a Stock Appreciation
      Right is vested and not yet exercised, the Committee in its discretion may
      provide, in connection with the Change in Control transaction, for the purchase
      or exchange of each Stock Appreciation Right for an amount of cash or other
      property having a value equal to the value of the cash or other property that
      the Participant would have received pursuant to the Change in Control
      transaction in exchange for the shares issuable upon exercise of the Stock
      Appreciation Right had the Stock Appreciation Right been exercised immediately
      prior to the Change in Control.

    


    (d) Outstanding
      Stock Options and Stock Appreciation Right shall terminate and cease to be
      exercisable upon consummation of a Change in Control except to the extent that
      the Stock Options or Stock Appreciation Rights are assumed by the successor
      entity (or parent thereof) pursuant to the terms of the Change in Control
      transaction.

    


    (e) The
      Committee shall cause written notice of a proposed Change in Control transaction
      to be given to Participants not less than fifteen (15) days prior to the
      anticipated effective date of the proposed transaction. 

    


    ARTICLE
      12

     

    FORFEITURE
      EVENTS

     

    12.1 General.
      The
      Committee may specify in an Award Agreement at the time of the Award that the
      Participant’s rights, payments and benefits with respect to an Award shall be
      subject to reduction, cancellation, forfeiture or recoupment upon the occurrence
      of certain specified events, in addition to any otherwise applicable vesting
      or
      performance conditions of an Award. Such events shall include, but shall not
      be
      limited to, termination of Service for cause, violation of material Company
      policies, breach of noncompetition, confidentiality or other restrictive
      covenants that may apply to the Participant or other conduct by the Participant
      that is detrimental to the business or reputation of the Company.

     

    
      
        
        

      

      
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    12.2 Termination
      for Cause.
      Unless
      otherwise provided by the Committee and set forth in an Award Agreement, if
      a
      Participant’s employment with the Company or any Affiliated Company shall be
      terminated for “cause,” as defined in any Award Agreement, the Company may, in
      its sole discretion, immediately terminate such Participant’s right to any
      further payments, vesting or exercisability with respect to any Award in its
      entirety. In the event a Participant is party to an employment (or similar)
      agreement with the Company or any Affiliated Company that defines the term
      “cause,” such definition shall apply for purposes of the Plan. The Company shall
      have the power to determine whether the Participant has been terminated for
      cause and the date upon which such termination for cause occurs. Any such
      determination shall be final, conclusive and binding upon the Participant.
      In
      addition, if the Company shall reasonably determine that a Participant has
      committed or may have committed any act which could constitute the basis for
      a
      termination of such Participant’s employment for cause, the Company may suspend
      the Participant’s rights to exercise any option, receive any payment or vest in
      any right with respect to any Award pending a determination by the Company
      of
      whether an act has been committed which could constitute the basis for a
      termination for “cause” as provided in this Section 12.2.

    


    ARTICLE
      13

     

    PERFORMANCE-BASED
      COMPENSATION

    


    13.1 Performance
      Measures.
      The
      Committee may specify that the attainment of the general performance measures
      set forth in this Article 13 may determine the degree of granting, vesting
      and/or payout with respect to Awards (including any related dividends or
      dividend equivalents) that the Committee intends will qualify for the
      Performance-Based Exception. The performance goals to be used for such Awards
      shall be chosen from among the following performance measure(s): revenues,
      earnings per share, pro forma earnings per share (excluding one time and
      nonrecurring items and acquisition related charges and expenses), gross profit
      margins, pro forma gross profit margins, inventory turns, pro forma inventory
      turns, economic value created, market share (actual or targeted growth), net
      income (which may be pro forma and adjusted for nonrecurring items and before
      or
      after taxes), operating income, adjusted net income after capital charge, return
      on assets (actual, pro forma or targeted growth), return on capital (actual,
      pro
      forma or targeted growth), return on equity (actual, pro forma or targeted
      growth), return on investment (actual, pro forma or targeted growth), cash
      flow,
      operating margin, share price, share price growth, total stockholder return,
      and
      strategic business criteria, consisting of one or more objectives based on
      meeting specified market penetration goals, revenue targets, gross margin
      targets, pro forma gross margin targets, net income or pro forma net income
      targets, earnings per share or pro forma earnings per share targets,
      productivity measures, geographic business expansion goals, cost targets,
      customer satisfaction or employee satisfaction goals, goals relating to merger
      synergies, management of employment practices and employee benefits, or
      supervision of litigation and information technology, and goals relating to
      acquisitions or divestitures of subsidiaries, Affiliated Companies or joint
      ventures. The targeted level or levels of performance with respect to such
      performance measures may be established at such levels and on such terms as
      the
      Committee may determine, in its discretion, including in absolute terms, as
      a
      goal relative to performance in prior periods, or as a goal compared to the
      performance of one or more comparable companies or an index covering multiple
      companies. Awards (including any related dividends or dividend equivalents)
      that
      are not intended to qualify for the Performance-Based Exception may be based
      on
      these or such other performance measures as the Committee may
      determine.

    


    
      
        
        

      

      
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    ARTICLE
      14

    


    GENERAL
      PROVISIONS

     

    14.1 Award
      Agreement.
      To the
      extent deemed necessary by the Committee, an Award under the Plan shall be
      evidenced by an Award Agreement in a written or electronic form approved by
      the
      Committee setting forth the number of shares of Common Stock or units subject
      to
      the Award, the exercise price, base price, or purchase price of the Award,
      the
      time or times at which an Award will become vested, exercisable or payable
      and
      the term of the Award. The Award Agreement may also set forth the effect on
      an
      Award of termination of Service under certain circumstances. The Award Agreement
      shall be subject to and incorporate, by reference or otherwise, all of the
      applicable terms and conditions of the Plan, and may also set forth other terms
      and conditions applicable to the Award as determined by the Committee consistent
      with the limitations of the Plan. The grant of an Award under the Plan shall
      not
      confer any rights upon the Participant holding such Award other than such terms,
      and subject to such conditions, as are specified in the Plan as being applicable
      to such type of Award (or to all Awards) or as are expressly set forth in the
      Award Agreement. The Committee need not require the execution of an Award
      Agreement by a Participant, in which case, acceptance of the Award by the
      Participant shall constitute agreement by the Participant to the terms,
      conditions, restrictions and limitations set forth in the Plan and the Award
      Agreement as well as the administrative guidelines of the Company in effect
      from
      time to time.

     

    14.2 No
      Assignment or Transfer; Beneficiaries.
      Except
      as provided in Section 6.6 hereof, Awards under the Plan shall not be assignable
      or transferable by the Participant, except by will or by the laws of descent
      and
      distribution, and shall not be subject in any manner to assignment, alienation,
      pledge, encumbrance or charge. Notwithstanding the foregoing, the Committee
      may
      provide in the terms of an Award Agreement that the Participant shall have
      the
      right to designate a beneficiary or beneficiaries who shall be entitled to
      any
      rights, payments or other benefits specified under an Award following the
      Participant’s death. During the lifetime of a Participant, an Award shall be
      exercised only by such Participant or such Participant’s guardian or legal
      representative, except as provided herein or in any Award Agreement. In the
      event of a Participant’s death, an Award may, to the extent permitted by the
      Award Agreement, be exercised by the Participant’s beneficiary as designated by
      the Participant in the manner prescribed by the Committee or, in the absence
      of
      an authorized beneficiary designation, by the legatee of such Award under the
      Participant’s will or by the Participant’s estate in accordance with the
      Participant’s will or the laws of descent and distribution, in each case in the
      same manner and to the same extent that such Award was exercisable by the
      Participant on the date of the Participant’s death.

     

    14.3 Rights
      as Shareholder.
      A
      Participant shall have no rights as a holder of shares of Common Stock with
      respect to any unissued securities covered by an Award until the date the
      Participant becomes the holder of record of such securities. Except as provided
      in Section 4.3 hereof, no adjustment or other provision shall be made for
      dividends or other shareholder rights, except to the extent that the Award
      Agreement provides for dividend payments or dividend equivalent
      rights.

     

    14.4 Employment
      or Service.
      Nothing
      in the Plan, in the grant of any Award or in any Award Agreement shall confer
      upon any Eligible Person any right to continue in the Service of the Company
      or
      any Affiliated Company, or interfere in any way with the right of the Company
      or
      any Affiliated Company to terminate the Participant’s employment or other
      service relationship for any reason at any time.

     

    
      
        
        

      

      
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    14.5 Tax
      Withholding.
      The
      Participant shall be responsible for payment of any taxes or similar charges
      required by law to be withheld from an Award or an amount paid in satisfaction
      of an Award, which shall be paid by the Participant on or prior to the payment
      or other event that results in taxable income in respect of an Award. The Award
      Agreement may specify the manner in which the withholding obligation shall
      be
      satisfied with respect to the particular type of Award.

     

    14.6 Unfunded
      Plan.
      The
      adoption of the Plan and any reservation of shares of Common Stock or cash
      amounts by the Company to discharge its obligations hereunder shall not be
      deemed to create a trust or other funded arrangement. Except upon the issuance
      of Common Stock pursuant to an Award, any rights of a Participant under the
      Plan
      shall be those of a general unsecured creditor of the Company, and neither
      a
      Participant nor the Participant’s permitted transferees or estate shall have any
      other interest in any assets of the Company by virtue of the Plan.
      Notwithstanding the foregoing, the Company shall have the right to implement
      or
      set aside funds in a grantor trust, subject to the claims of the Company’s
      creditors or otherwise, to discharge its obligations under the
      Plan.

     

    14.7 Severability.
      If any
      provision of the Plan or any Award Agreement shall be determined to be illegal
      or unenforceable by any court of law in any jurisdiction, the remaining
      provisions hereof and thereof shall be severable and enforceable in accordance
      with their terms, and all provisions shall remain enforceable in any other
      jurisdiction.

     

    14.8 Foreign
      Jurisdictions.
      The
      Committee may adopt, amend and terminate such arrangements and grant such
      Awards, not inconsistent with the intent of the Plan, as it may deem necessary
      or desirable to comply with any tax, securities, regulatory or other laws of
      other jurisdictions with respect to Awards that may be subject to such laws.
      The
      terms and conditions of such Awards may vary from the terms and conditions
      that
      would otherwise be required by the Plan solely to the extent the Committee
      deems
      necessary for such purpose. Moreover, the Board may approve such supplements
      to
      or amendments, restatements or alternative versions of the Plan, not
      inconsistent with the intent of the Plan, as it may consider necessary or
      appropriate for such purposes, without thereby affecting the terms of the Plan
      as in effect for any other purpose.

     

    14.9 Substitute
      Awards in Corporate Transactions.
      Nothing
      contained in the Plan shall be construed to limit the right of the Committee
      to
      grant Awards under the Plan in connection with the acquisition, whether by
      purchase, merger, consolidation or other corporate transaction, of the business
      or assets of any corporation or other entity. Without limiting the foregoing,
      the Committee may grant Awards under the Plan to an employee or director of
      another corporation who becomes an Eligible Person by reason of any such
      corporate transaction in substitution for awards previously granted by such
      corporation or entity to such person. The terms and conditions of the substitute
      Awards may vary from the terms and conditions that would otherwise be required
      by the Plan solely to the extent the Committee deems necessary for such
      purpose.

    


    ARTICLE
      15

     

    EFFECTIVE
      DATE; AMENDMENT AND TERMINATION

     

    15.1 Effective
      Date.
      The
      Plan shall become effective following its adoption by the Board and its approval
      by the Company’s shareholders on the date of the 2007 Annual Meeting of
      Shareholders. The term of the Plan shall be ten years from the date of adoption
      by the Board, subject to Section 14.3 hereof.

     

    
      
        
        

      

      
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    15.2 Amendment.
      The
      Board may at any time and from time to time and in any respect, amend or modify
      the Plan. The Board may seek the approval of any amendment or modification
      by
      the Company’s shareholders to the extent it deems necessary or advisable in its
      discretion for purposes of compliance with Section 162(m) or Section 422 of
      the
      Code, the listing requirements of the Nasdaq Stock Market or other exchange
      or
      securities market or for any other purpose. No amendment or modification of
      the
      Plan shall adversely affect any Award theretofore granted without the consent
      of
      the Participant or the permitted transferee of the Award.

     

    15.3 Termination.
      The
      Plan
      shall terminate on the tenth anniversary of the date of its adoption by the
      Board. The Board may, in its discretion and at any earlier date, terminate
      the
      Plan. Notwithstanding the foregoing, no termination of the Plan shall adversely
      affect any Award theretofore granted without the consent of the Participant
      or
      the permitted transferee of the Award.

    


    


    
      
        
        

      

      
        15