Exhibit 10.2


METHES
ENERGIES INTERNATIONAL LTD.


2012
DIRECTORS, OFFICERS AND EMPLOYEES STOCK OPTION PLAN


          1.
Purpose. The purpose of this 2012
Directors, Officers and Employees Stock Option Plan (the “Plan”) is to enable
Methes Energies International Ltd. (the “Company”) to attract and retain the
services of highly qualified and experienced directors, officers, employees and
consultants, and to give such persons an interest in the success of the Company
and its subsidiaries. For purposes of this Plan, a person is considered to be
employed by or in the service of the Company if the person is employed by or in
the service of any entity (the “Employer”) that is either the Company or a
parent or subsidiary of the Company.


          2.
Shares Subject to the Plan.
Subject to adjustment as provided below and in Section 9, the shares to be
offered under the Plan shall consist of voting Common Stock of the Company, and
the total number of shares of Common Stock that may be issued under the Plan
shall be 400,000 shares. If an option or Performance-Based Award granted under
the Plan expires, terminates or is canceled, the unissued shares subject to
that option or Performance-Based Award shall again be available under the Plan.
If shares awarded as a bonus pursuant to Section 7 or sold pursuant to
Section 8 under the Plan are forfeited to or repurchased by the Company,
the number of shares forfeited or repurchased shall again be available under
the Plan.


          3.
Effective Date and Duration of Plan.


                    3.1
Effective Date.
The Plan shall become effective as of May 2, 2012. No Incentive Stock Option
(as defined in Section 5 below) granted under the Plan shall become
exercisable and no payments shall be made under a Performance-Based Award,
however, until the Plan is approved by the affirmative vote of the holders of a
majority of the shares of Common Stock represented at a shareholders meeting at
which a quorum is present or by means of unanimous consent resolutions, and the
exercise of any Incentive Stock Options granted under the Plan before approval
shall be conditioned on and subject to that approval. Subject to this
limitation, options and Performance-Based Award may be granted and shares may
be awarded as bonuses or sold under the Plan at any time after the effective
date and before termination of the Plan.


                    3.2
Duration.
The Plan shall continue in effect until all shares available for issuance under
the Plan have been issued and all restrictions on the shares have lapsed. The
Board of Directors may suspend or terminate the Plan at any time except with
respect to options, or Performance-Based Awards and shares subject to
restrictions then outstanding under the Plan. Termination shall not affect any
outstanding options, any outstanding Performance-Based Awards or any right of
the Company to repurchase shares or the forfeitability of shares issued under
the Plan.





          4.
Administration.


                    4.1
Board of Directors.
The Plan shall be administered by the Board of Directors of the Company, which
shall determine and designate the individuals to whom awards shall be made, the
amount of the awards and the other terms and conditions of the awards. Subject
to the provisions of the Plan, the Board of Directors may adopt and amend rules
and regulations relating to administration of the Plan, advance the lapse of
any waiting period, accelerate any exercise date, waive or modify any
restriction applicable to shares (except those restrictions imposed by law) and
make all other determinations in the judgment of the Board of Directors
necessary or desirable for the administration of the Plan. The interpretation
and construction of the provisions of the Plan and related agreements by the
Board of Directors shall be final and conclusive. The Board of Directors may
correct any defect or supply any omission or reconcile any inconsistency in the
Plan or in any related agreement in the manner and to the extent it deems
expedient to carry the Plan into effect, and the Board of Directors shall be
the sole and final judge of such expediency.


                     4.2
Committee.
The Board of Directors may delegate to any committee of the Board of Directors
(the “Committee”) any or all authority for administration of the Plan. If
authority is delegated to the Committee, all references to the Board of
Directors in the Plan shall mean and relate to the Committee, except (i) as
otherwise provided by the Board of Directors and (ii) that only the Board of
Directors may amend or terminate the Plan as provided in Sections 3 and
11.


          5.
Types of Awards, Eligibility, Limitations.
The Board of Directors may, from time to time, take the following actions,
separately or in combination, under the Plan: (i) grant Incentive Stock
Options, as defined in Section 422 of the Internal Revenue Code of 1986,
as amended (the “Code”), as provided in Sections 6.1 and 6.2; (ii) grant
options other than Incentive Stock Options (“Non-Statutory Stock Options”) as
provided in Sections 6.1 and 6.3; (iii) award stock bonuses as provided in
Section 7; (iv) sell shares subject to restrictions as provided in
Section 8; and (v) award Performance-Based Awards as provided in Section
10. Awards may be made to employees, including employees who are officers or
directors, and to other individuals described in Section 1 selected by the
Board of Directors; provided, however, that only employees of the Company or
any parent or subsidiary of the Company (as defined in subsections 424(e) and
424(f) of the Code) are eligible to receive Incentive Stock Options under the
Plan. The Board of Directors shall select the individuals to whom awards shall
be made and shall specify the action taken with respect to each individual to
whom an award is made. At the discretion of the Board of Directors, an
individual may be given an election to surrender an award in exchange for the
grant of a new award.


          6.
Option Grants.


                    6.1
General Rules Relating
to Options.


                              6.1-1
Terms of Grant. The Board of
Directors may grant options under the Plan. With respect to each option grant,
the Board of Directors shall determine the number of shares subject to the
option, the exercise price, the period of the option, the time or times at
which the option may be exercised and whether the option is an Incentive Stock
Option or a Non-Statutory Stock Option. At the time of the grant of an option
or at any time thereafter, the Board of Directors may provide that an optionee
who exercised an option with Common Stock of the Company shall automatically
receive a new option to purchase additional shares equal to the number of
shares surrendered and may specify the terms and conditions of such new
options.


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                              6.1-2
Exercise of Options. Except as
provided in Section 6.1-4 or as determined by the Board of Directors, no
option granted under the Plan may be exercised unless at the time of exercise
the optionee is employed by or in the service of the Company and shall have
been so employed or provided such service continuously since the date the
option was granted. Except as provided in Sections 6.1-4 and 9, options
granted under the Plan may be exercised from time to time over the period
stated in each option in amounts and at times prescribed by the Board of
Directors, provided that options may not be exercised for fractional shares.
Unless otherwise determined by the Board of Directors, if an optionee does not
exercise an option in any one year for the full number of shares to which the
optionee is entitled in that year, the optionee’s rights shall be cumulative
and the optionee may purchase those shares in any subsequent year during the
term of the option.


                              6.1-3
Nontransferability. Each Incentive
Stock Option and, unless otherwise determined by the Board of Directors, each
other option granted under the Plan by its terms (i) shall be nonassignable and
nontransferable by the optionee, either voluntarily or by operation of law,
except by will or by the laws of descent and distribution of the state or
country of the optionee’s domicile at the time of death, and (ii) during the
optionee’s lifetime, shall be exercisable only by the optionee.


                              6.1-4
Termination of Employment or Service.


                                        (a)
General Rule. Unless otherwise
determined by the Board of Directors, if an optionee’s employment or service
with the Company terminates for any reason other than because of total
disability or death as provided in Sections 6.1-4(b) and (c), his or her
option may be exercised at any time before the expiration date of the option or
the expiration of 30 days after the date of termination, whichever is the
shorter period, but only if and to the extent the optionee was entitled to
exercise the option at the date of termination.


                                        (b)
Termination Because of Total Disability.
Unless otherwise determined by the Board of Directors, if an optionee’s
employment or service with the Company terminates because of total disability,
his or her option may be exercised at any time before the expiration date of
the option or before the date 12 months after the date of termination,
whichever is the shorter period, but only if and to the extent the optionee was
entitled to exercise the option at the date of termination. The term “total
disability” means a medically determinable mental or physical impairment that
is expected to result in death or has lasted or is expected to last for a
continuous period of 12 months or more and that, in the opinion of the Company
and two independent physicians, causes the optionee to be unable to perform his
or her duties as an employee, director, officer or consultant of the Employer
and unable to be engaged in any substantial gainful activity. Total disability
shall be deemed to have occurred on the first day after the two independent
physicians have furnished their written opinion of total disability to the
Company and the Company has reached an opinion of total disability.


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                                        (c)
Termination Because of Death.
Unless otherwise determined by the Board of Directors, if an optionee dies
while employed by or providing service to the Company, his or her option may be
exercised at any time before the expiration date of the option or before the
date 12 months after the date of death, whichever is the shorter period, but
only if and to the extent the optionee was entitled to exercise the option at
the date of death and only by the person or persons to whom the optionee’s
rights under the option shall pass by the optionee’s will or by the laws of
descent and distribution of the state or country of domicile at the time of
death.


                                        (d)
Amendment of Exercise Period Applicable to
Termination. The Board of Directors may at any time extend the
30-day and 12-month exercise periods any length of time not longer than the
original expiration date of the option. The Board of Directors may at any time
increase the portion of an option that is exercisable, subject to terms and
conditions determined by the Board of Directors.


                                        (e)
Failure to Exercise Option. To the
extent that the option of any deceased optionee or any optionee whose
employment or service terminates is not exercised within the applicable period,
all further rights to purchase shares pursuant to the option shall cease and
terminate.


                                        (f)
Leave of Absence. Absence on leave
approved by the Employer or on account of illness or disability shall not be
deemed a termination or interruption of employment or service. Unless otherwise
determined by the Board of Directors, vesting of options shall continue during
a medical, family or military leave of absence, whether paid or unpaid, and
vesting of options shall be suspended during any other unpaid leave of absence.


                              6.1-5
Purchase of Shares.


                                        (a)
Notice of Exercise. Unless the
Board of Directors determines otherwise, shares may be acquired pursuant to an
option granted under the Plan only upon the Company’s receipt of written notice
from the optionee of the optionee’s binding commitment to purchase shares,
specifying the number of shares the optionee desires to purchase under the
option and the date on which the optionee agrees to complete the transaction,
and, if required to comply with the Securities Act of 1933, containing a
representation that it is the optionee’s intention to acquire the shares for
investment and not with a view to distribution.


                                        (b)
Payment. Unless the Board of
Directors determines otherwise, on or before the date specified for completion
of the purchase of shares pursuant to an option exercise, the optionee must pay
the Company the full purchase price of those shares in cash or by check or,
with the consent of the Board of Directors, in whole or in part, in Common
Stock of the Company valued at fair market value, restricted stock or other
contingent awards denominated in either stock or cash, promissory notes and
other forms of consideration. Unless otherwise determined by the Board of
Directors, any Common Stock provided in payment of the purchase price must have
been previously acquired and held by the optionee for at least six months. The
fair market value of Common Stock provided in payment of the purchase price
shall be the closing price of the Common Stock last reported before the time
payment in Common Stock is made or, if earlier, committed to be made, if the
Common Stock is publicly traded, or another value of the Common Stock as
specified by the Board of Directors. No shares shall be issued until full
payment for the shares has been made, including all amounts owed for tax
withholding. With the consent of the Board of Directors, an optionee may
request the Company to apply automatically the shares to be received upon the
exercise of a portion of a stock option (even though stock certificates have
not yet been issued) to satisfy the purchase price for additional portions of
the option.


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                                        (c)
Tax Withholding. Each optionee who
has exercised an option shall, immediately upon notification of the amount due,
if any, pay to the Company in cash or by check amounts necessary to satisfy any
applicable federal, state and local tax withholding requirements. If additional
withholding is or becomes required (as a result of exercise of an option or as
a result of disposition of shares acquired pursuant to exercise of an option)
beyond any amount deposited before delivery of the certificates, the optionee
shall pay such amount, in cash or by check, to the Company on demand. If the
optionee fails to pay the amount demanded, the Company or the Employer may
withhold that amount from other amounts payable to the optionee, including
salary, subject to applicable law. With the consent of the Board of Directors,
an optionee may satisfy this obligation, in whole or in part, by instructing
the Company to withhold from the shares to be issued upon exercise or by
delivering to the Company other shares of Common Stock; provided, however, that
the number of shares so withheld or delivered shall not exceed the minimum
amount necessary to satisfy the required withholding obligation.


                                        (d)
Reduction of Reserved Shares. Upon
the exercise of an option, the number of shares reserved for issuance under the
Plan shall be reduced by the number of shares issued upon exercise of the
option (less the number of any shares surrendered in payment for the exercise
price or withheld to satisfy withholding requirements).


                              6.1-6
Limitations on Grants to Non-Exempt Employees.
Unless otherwise determined by the Board of Directors, if an employee of the
Company or any parent or subsidiary of the Company is a non-exempt employee
subject to the overtime compensation provisions of Section 7 of the Fair
Labor Standards Act (the “FLSA”), any option granted to that employee shall be
subject to the following restrictions: (i) the option price shall be at least
85 percent of the fair market value, as described in Section 6.2-4, of the
Common Stock subject to the option on the date it is granted; and (ii) the option
shall not be exercisable until at least six months after the date it is
granted; provided, however, that this six-month restriction on exercisability
will cease to apply if the employee dies, becomes disabled or retires, there is
a change in ownership of the Company, or in other circumstances permitted by
regulation, all as prescribed in Section 7(e)(8)(B) of the FLSA.


                    6.2
Incentive Stock Options.
Incentive Stock Options shall be subject to the following additional terms and
conditions:


                              6.2-1
Limitation on Amount of Grants. If
the aggregate fair market value of stock (determined as of the date the option
is granted) for which Incentive Stock Options granted under this Plan (and any
other stock incentive plan of the Company or its parent or subsidiary
corporations, as defined in subsections 424(e) and 424(f) of the Code) are
exercisable for the first time by an employee during any calendar year exceeds
$100,000, the portion of the option or options not exceeding $100,000, to the
extent of whole shares, will be treated as an Incentive Stock Option and the
remaining portion of the option or options will be treated as a Non-Statutory
Stock Option. The preceding sentence will be applied by taking options into
account in the order in which they were granted. If, under the $100,000
limitation, a portion of an option is treated as an Incentive Stock Option and
the remaining portion of the option is treated as a Non-Statutory Stock Option,
unless the optionee designates otherwise at the time of exercise, the
optionee’s exercise of all or a portion of the option will be treated as the
exercise of the Incentive Stock Option portion of the option to the full extent
permitted under the $100,000 limitation. If an optionee exercises an option
that is treated as in part an Incentive Stock Option and in part a
Non-Statutory Stock Option, the Company will designate the portion of the stock
acquired pursuant to the exercise of the Incentive Stock Option portion as
Incentive Stock Option stock by issuing a separate certificate for that portion
of the stock and identifying the certificate as Incentive Stock Option stock in
its stock records.


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                              6.2-2
Limitations on Grants to 10 Percent
Shareholders. An Incentive Stock Option may be granted under the
Plan to an employee possessing more than 10 percent of the total combined
voting power of all classes of stock of the Company or any parent or subsidiary
(as defined in subsections 424(e) and 424(f) of the Code) only if the option
price is at least 110 percent of the fair market value, as described in
Section 6.2-4, of the Common Stock subject to the option on the date it is
granted and the option by its terms is not exercisable after the expiration of
five years from the date it is granted.


                              6.2-3
Duration of Options. Subject to
Sections 6.1-2, 6.1-4 and 6.2-2, Incentive Stock Options granted under the
Plan shall continue in effect for the period fixed by the Board of Directors,
except that by its terms no Incentive Stock Option shall be exercisable after
the expiration of 10 years from the date it is granted.


                              6.2-4
Option Price. The option price per
share shall be determined by the Board of Directors at the time of grant.
Except as provided in Section 6.2-2, the option price shall not be less
than 100 percent of the fair market value of the Common Stock covered by the
Incentive Stock Option at the date the option is granted. The fair market value
shall be the closing price of the Common Stock last reported before the time
the option is granted, if the stock is publicly traded, or another value of the
Common Stock as specified by the Board of Directors.


                              6.2-5
Limitation on Time of Grant. No
Incentive Stock Option shall be granted on or after the tenth anniversary of
the last action by the Board of Directors adopting the Plan or approving an
increase in the number of shares available for issuance under the Plan, which
action was subsequently approved within 12 months by the shareholders.


                              6.2-6
Early Dispositions. If within two
years after an Incentive Stock Option is granted or within 12 months after an
Incentive Stock Option is exercised, the optionee sells or otherwise disposes
of Common Stock acquired on exercise of the Option, the optionee shall within
30 days of the sale or disposition notify the Company in writing of (i) the
date of the sale or disposition, (ii) the amount realized on the sale or disposition
and (iii) the nature of the disposition (e.g., sale, gift, etc.).


                    6.3
Non-Statutory Stock
Options. Non-Statutory Stock Options shall be subject to the
following terms and conditions, in addition to those set forth in
Section 6.1 above:


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                              6.3-1
Option Price. The option price for
Non-Statutory Stock Options shall be determined by the Board of Directors at
the time of grant and may be any amount determined by the Board of Directors.


                              6.3-2
Duration of Options. Non-Statutory
Stock Options granted under the Plan shall continue in effect for the period
fixed by the Board of Directors.


                    6.4
Stock Appreciation
Rights. The Board may, in its discretion, include in the grant
of any Option the right of a grantee (hereinafter referred to as a “stock
appreciation right”) to elect, in the manner described below, in lieu of
exercising his or her Option for all or a portion of the shares of Common Stock
covered by such Option, to relinquish his or her Option for all or a portion of
the such shares and to receive from the Company a payment equal in value to (x)
the fair market value, of a share of Common Stock on the date of such election,
multiplied by the number of shares as to which the grantee shall have made such
election, less (y) the exercise price for that number of shares of Common Stock
for which the grantee shall have made such election under the terms of such
Option. Any such payment shall be paid in cash or shares of Common Stock, at
the Company’s discretion sole and absolute discretion. A stock appreciation
right shall be exercisable at the time the tandem option is exercisable, and
the “expiration date” for the stock appreciation right shall be the amount described
in (x) above exceeds the amount described in (y) above. An election to exercise
stock appreciation rights shall be deemed to have been made on the day written
notice of such election, addressed to the Board, is received by the Company. An
Option or any portion thereof with respect to which a grantee has elected to
exercise a stock appreciation right shall be surrendered to the Company and
such Option shall thereafter remain exercisable according to its terms only
with respect to the number of shares as to which it would otherwise be
exercisable, less the number of shares with respect to which stock appreciation
rights have been exercised. The grant of a stock appreciation right shall be
evidenced by an Agreement. The Agreement evidencing stock appreciation rights
shall be personal and will provide that the stock appreciation rights will not
be transferable by the grantee otherwise than by will or the laws of descent
and distribution and that they will be exercisable, during the lifetime of the
grantee, only by him or her. For purposes of this Plan, the fair market value
of Common Stock price shall be the closing price of the Common Stock last
reported before the time in question if the Common Stock is publicly traded, or
another value of the Common Stock as specified by the Board of Directors.


          7.
Bonuses and Past Salaries and Fees Payable in
Stock. The Board of Directors may award shares under the Plan as
stock bonuses or as salaries and fees otherwise payable by the Company’s to
employees and consultants eligible to participate in this Plan that were
incurred for services rendered at any time to the Company. Shares awarded under
this section, shall be subject to the terms, conditions and restrictions
determined by the Board of Directors. The restrictions may include restrictions
concerning transferability and forfeiture of the shares awarded, together with
any other restrictions determined by the Board of Directors. The Board of
Directors may require the recipient to sign an agreement as a condition of the
award, but may not require the recipient to pay any monetary consideration
other than amounts necessary to satisfy tax withholding requirements. The
agreement may contain any terms, conditions, restrictions, representations and
warranties required by the Board of Directors. The certificates representing
the shares awarded shall bear any legends required by the Board of Directors.
The Company may require any recipient of stock under this section to pay to the
Company in cash or by check upon demand amounts necessary to satisfy any
applicable federal, state or local tax withholding requirements. If the
recipient fails to pay the amount demanded, the Company or the Employer may
withhold that amount from other amounts payable to the recipient, including
salary, subject to applicable law. With the consent of the Board of Directors,
a recipient may satisfy this obligation, in whole or in part, by instructing
the Company to withhold from any shares to be issued or by delivering to the
Company other shares of Common Stock; provided, however, that the number of
shares so withheld or delivered shall not exceed the minimum amount necessary
to satisfy the required withholding obligation. Upon the issuance of stock
under this section, the number of shares reserved for issuance under the Plan
shall be reduced by the number of shares issued, less the number of shares
withheld or delivered to satisfy withholding obligations.


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          8.
Restricted Stock. The Board of
Directors may issue shares under the Plan for any consideration (including
promissory notes and services) determined by the Board of Directors. Shares
issued under the Plan shall be subject to the terms, conditions and
restrictions determined by the Board of Directors. The restrictions may include
restrictions concerning transferability, repurchase by the Company and
forfeiture of the shares issued, together with any other restrictions
determined by the Board of Directors. All Common Stock issued pursuant to this
Section 8 shall be subject to a purchase agreement, which shall be
executed by the Company and the prospective purchaser of the shares before the
delivery of certificates representing the shares to the purchaser. The purchase
agreement may contain any terms, conditions, restrictions, representations and
warranties required by the Board of Directors. The certificates representing
the shares shall bear any legends required by the Board of Directors. The
Company may require any purchaser of restricted stock to pay to the Company in
cash or by check upon demand amounts necessary to satisfy any applicable
federal, state or local tax withholding requirements. If the purchaser fails to
pay the amount demanded, the Company or the Employer may withhold that amount
from other amounts payable to the purchaser, including salary, subject to
applicable law. With the consent of the Board of Directors, a purchaser may
satisfy this obligation, in whole or in part, by instructing the Company to
withhold from any shares to be issued or by delivering to the Company other
shares of Common Stock; provided, however, that the number of shares so
withheld or delivered shall not exceed the minimum amount necessary to satisfy
the required withholding obligation. Upon the issuance of restricted stock, the
number of shares reserved for issuance under the Plan shall be reduced by the
number of shares issued, less the number of shares withheld or delivered to
satisfy withholding obligations.


          9.
Changes in Capital Structure.


                    9.1
Stock Splits, Stock
Dividends. If the outstanding Common Stock of the Company is
hereafter increased or decreased or changed into or exchanged for a different
number or kind of shares or other securities of the Company by reason of any
stock split, combination of shares, dividend payable in shares,
recapitalization or reclassification, appropriate adjustment shall be made by
the Board of Directors in the number and kind of shares available for grants
under the Plan and in all other share amounts set forth in the Plan. In addition,
the Board of Directors shall make appropriate adjustment in the number and kind
of shares as to which outstanding options, or portions thereof then
unexercised, shall be exercisable, so that the optionee’s proportionate
interest before and after the occurrence of the event is maintained.
Notwithstanding the foregoing, the Board of Directors shall have no obligation
to effect any adjustment that would or might result in the issuance of
fractional shares, and any fractional shares resulting from any adjustment may
be disregarded or provided for in any manner determined by the Board of
Directors. Any such adjustments made by the Board of Directors shall be
conclusive.


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                    9.2
Mergers,
Reorganizations, Etc. In the event of a merger, consolidation,
plan of exchange, acquisition of property or stock, split-up, split-off,
spin-off, reorganization or liquidation to which the Company is a party or any
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets of the
Company (each, a “Transaction”), the Board of Directors shall, in its sole
discretion and to the extent possible under the structure of the Transaction,
select one of the following alternatives for treating outstanding options under
the Plan:


                              9.2-1
Outstanding options shall remain in effect in accordance with their terms.


                              9.2-2
Outstanding options shall be converted into options to purchase stock in one or
more of the corporations, including the Company, that are the surviving or
acquiring corporations in the Transaction. The amount, type of securities
subject thereto and exercise price of the converted options shall be determined
by the Board of Directors of the Company, taking into account the relative
values of the companies involved in the Transaction and the exchange rate, if
any, used in determining shares of the surviving corporation(s) to be held by
holders of shares of the Company following the Transaction. Unless otherwise
determined by the Board of Directors, the converted options shall be vested
only to the extent that the vesting requirements relating to options granted
hereunder have been satisfied.


                              9.2-3
The Board of Directors shall provide a period of 30 days or less before the
completion of the Transaction during which outstanding options may be exercised
to the extent then exercisable, and upon the expiration of that period, all
unexercised options shall immediately terminate. The Board of Directors may, in
its sole discretion, accelerate the exercisability of options so that they are
exercisable in full during that period.


                    9.3
Dissolution of the
Company. In the event of the dissolution of the Company, options
shall be treated in accordance with Section 9.2-3.


                    9.4
Rights Issued by Another
Corporation. The Board of Directors may also grant options and
stock bonuses and fees and Performance-Based Award and issue restricted stock
under the Plan with terms, conditions and provisions that vary from those
specified in the Plan, provided that any such awards are granted in
substitution for, or in connection with the assumption of, existing options,
stock bonuses and fees, Performance-Based Award and restricted stock granted,
awarded or issued by another corporation and assumed or otherwise agreed to be
provided for by the Company pursuant to or by reason of a Transaction.


          10.
Performance-Based Awards. The
Board of Directors may grant awards intended to qualify as qualified
performance-based compensation under Section 162(m) of the Code and the
regulations thereunder (“Performance-Based Awards”). Performance-Based Awards
shall be denominated at the time of grant either in Common Stock (“Stock
Performance Awards”) or in dollar amounts (“Dollar Performance Awards”).
Payment under a Stock Performance Award or a Dollar Performance Award shall be
made, at the discretion of the Board of Directors, in Common Stock (“Performance
Shares”), or in cash or in any combination thereof. Performance-Based Awards
shall be subject to the following terms and conditions:


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                    10.1
Award Period.
The Board of Directors shall determine the period of time for which a Performance-Based
Award is made (the “Award Period”).


                    10.2
Performance Goals and
Payment. The Board of Directors shall establish in writing
objectives (“Performance Goals”) that must be met by the Company or any
subsidiary, division or other unit of the Company (“Business Unit”) during the
Award Period as a condition to payment being made under the Performance-Based
Award. The Performance Goals for each award shall be one or more targeted
levels of performance with respect to one or more of the following objective
measures with respect to the Company or any Business Unit: earnings, earnings
per share, stock price increase, total shareholder return (stock price increase
plus dividends), return on equity, return on assets, return on capital, economic
value added, revenues, operating income, inventories, inventory turns, cash
flows or any of the foregoing before the effect of acquisitions, divestitures,
accounting changes, and restructuring and special charges (determined according
to criteria established by the Board of Directors). The Board of Directors
shall also establish the number of Performance Shares or the amount of cash
payment to be made under a Performance-Based Award if the Performance Goals are
met or exceeded, including the fixing of a maximum payment (subject to
Section 9(d)). The Board of Directors may establish other restrictions to
payment under a Performance-Based Award, such as a continued employment
requirement, in addition to satisfaction of the Performance Goals. Some or all
of the Performance Shares may be issued at the time of the award as restricted
shares subject to forfeiture in whole or in part if Performance Goals or, if
applicable, other restrictions are not satisfied.


                    10.3
Computation of Payment.
During or after an Award Period, the performance of the Company or Business
Unit, as applicable, during the period shall be measured against the
Performance Goals. If the Performance Goals are not met, no payment shall be
made under a Performance-Based Award. If the Performance Goals are met or
exceeded, the Board of Directors shall certify that fact in writing and certify
the number of Performance Shares earned or the amount of cash payment to be
made under the terms of the Performance-Based Award.


                    10.4
Tax Withholding.
Each participant who has received Performance Shares shall, upon notification
of the amount due, pay to the Company in cash or by check amounts necessary to
satisfy any applicable federal, state and local tax withholding requirements.
If the participant fails to pay the amount demanded, the Company or the
Employer may withhold that amount from other amounts payable to the
participant, including salary, subject to applicable law. With the consent of
the Board of Directors, a participant may satisfy this obligation, in whole or
in part, by instructing the Company to withhold from any shares to be issued or
by delivering to the Company other shares of Common Stock; provided, however,
that the number of shares so delivered or withheld shall not exceed the minimum
amount necessary to satisfy the required withholding obligation.


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                    10.5
Effect on Shares
Available. The payment of a Performance-Based Award in cash
shall not reduce the number of shares of Common Stock reserved for issuance
under the Plan. The number of shares of Common Stock reserved for issuance
under the Plan shall be reduced by the number of shares issued upon payment of
an award, less the number of shares delivered or withheld to satisfy withholding
obligations.


          11.
Amendment of the Plan. The Board
of Directors may at any time modify or amend the Plan in any respect. Except as
provided in Section 9, however, no change in an award already granted
shall be made without the written consent of the holder of the award if the
change would adversely affect the holder.


          12.
Approvals. The Company’s
obligations under the Plan are subject to the approval of state and federal
authorities or agencies with jurisdiction in the matter. The Company will use
its best efforts to take steps required by state or federal law or applicable
regulations, including rules and regulations of the Securities and Exchange
Commission and any stock exchange on which the Company’s shares may then be
listed, in connection with the grants under the Plan. The foregoing
notwithstanding, the Company shall not be obligated to issue or deliver Common
Stock under the Plan if such issuance or delivery would violate state or
federal securities laws.


          13.
Employment and Service Rights.
Nothing in the Plan or any award pursuant to the Plan shall (i) confer upon any
employee any right to be continued in the employment of an Employer or
interfere in any way with the Employer’s right to terminate the employee’s employment
at will at any time, for any reason, with or without cause, or to decrease the
employee’s compensation or benefits, or (ii) confer upon any person engaged by
an Employer any right to be retained or employed by the Employer or to the
continuation, extension, renewal or modification of any compensation, contract
or arrangement with or by the Employer.


          14.
Rights as a Shareholder. The
recipient of any award under the Plan shall have no rights as a shareholder
with respect to any shares of Common Stock until the date the recipient becomes
the holder of record of those shares. Except as otherwise expressly provided in
the Plan, no adjustment shall be made for dividends or other rights for which
the record date occurs before the date the recipient becomes the holder of
record.


          15.
Section 16 Compliance. With
respect to persons subject to Section 16 of the Securities Exchange Act of
1934, as amended (“1934 Act”), this Plan is intended to comply with all
applicable conditions of Rule 16b-3 (and all subsequent revisions thereof)
(“Rule 16b-3”) promulgated under the 1934 Act. In such instance, to the extent
any provision of this Plan fails to so comply, it shall be deemed null and
void, to the extent permitted bylaw and deemed advisable by the Administrator.
In addition, the Board may amend this Plan from time to time as it deems
necessary in order to meet the requirements of any amendments to Rule 16b-3
without the consent of the shareholders of the Company.


          16.
Miscellaneous Provisions.


                    16.1
This Plan shall be unfunded. The Company shall not be required to establish any
special or separate fund or to make any other segregation of assets to assure
the issuance of shares or the payment of cash upon exercise of any option or
stock appreciation right under this Plan. The expenses of this Plan shall be
borne by the Company.


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                    16.2
The Board may, at any time and from time to time after the granting of an
Option or the award of restricted stock or bonuses payable in Common Stock
hereunder, specify such additional terms, conditions and restrictions with
respect to such Option or stock as may be deemed necessary or appropriate to
ensure compliance with any and all applicable laws, including, but not limited
to, the Code, federal and state securities laws and methods of withholding or
providing for the payment of required taxes.


                    16.3
If at any time the Administrator(s) shall determine in its discretion that the
listing, registration or qualification of shares of Common Stock upon any
national 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 sale or purchase of shares of Common
Stock hereunder, no Option or stock appreciation right may be exercised or
restricted stock or stock bonus may be transferred in whole or in part unless
and until such listing registration, qualification, consent or approval shall
have been effected or obtained, or otherwise provided for, free of any
conditions not acceptable to the Board.


                    16.4
By accepting any benefit under this Plan, each participant and each person
claiming under or through such Participant shall be conclusively deemed to have
indicated his acceptance and ratification, and consent to, any action taken
under this Plan by the Administrator(s), the Company or the Board.


                    16.5
This Plan shall be governed by and construed in accordance with the laws of the
Company’s state of incorporation.


          17.
Limits of Liability.


                    17.1
Any liability of the Company or a subsidiary of the Company to any participant
with respect to any option or award shall be based solely upon contractual
obligations created by this Plan and Agreement.


                    17.2
Neither the Company nor a division or subsidiary of the Company, nor any member
of the Board, nor any other person participating in any determination of any
question under this Plan, or in the interpretation, administration or
application of this Plan, shall have any liability to any party for any action
taken or not taken in connection with this Plan, except as may expressly be
provided by statute.


          18. Other Compensation Plans.


This
Plan shall not be deemed to preclude the implementation by the Company or its
divisions or subsidiaries of other compensation plans which may be in effect
from time to time, nor adversely affect any rights of Participants under any
other compensation plans of the Company or its divisions or subsidiaries.


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