**EXHIBIT 10.6**

**SI DIAMOND TECHNOLOGY, INC. 2002 EQUITY COMPENSATION PLAN**

**ARTICLE I - GENERAL PROVISIONS**

           1.1        The Plan is designed for the benefit of the Company to secure and retain the servicesof Eligible Participants.  The Board believes the Plan will promote and increase personal interests in the welfare of theCompany by, and provide incentive to, those who are primarily responsible not only for its regular operations but also for shapingand carrying out the long-range plans of the Company and ordering its continued growth and financial success.

           1.2        Awards under the Plan may be made to Participants in the form of (i) Incentive StockOptions; (ii) Nonqualified Stock Options; or (iii) Stock Awards.

           1.3        The Plan shall be effective March 17, 2002 (the “EffectiveDate”).   

**ARTICLE II - DEFINITIONS**

            Except where thecontext otherwise indicates, the following definitions apply:

           2.1        “Act” means the Securities Exchange Act of 1934, as now in effect or ashereafter amended.  All citations to sections of the Act or rules thereunder are to such sections or rules as they may fromtime to time be amended or renumbered.

           2.2        “Agreement” means the written agreement between the Company and theParticipant evidencing each Award granted to a Participant under the Plan.

           2.3        “Award” means an award granted to a Participant under the Plan of a StockOption or a Stock Award.

           2.4        “Board” means the Board of Directors of SI Diamond Technology,Inc.

           2.5        “Code” means the Internal Revenue Code of 1986, as now in effect or ashereafter amended.  All citations to sections of the Code are to such sections as they may from time to time be amended orrenumbered.

           2.6        “Committee” means the Compensation Committee of the Board of Directors ofSI Diamond Technology, Inc. or such other committee consisting of two or more members as may be appointed by the Board toadminister this Plan pursuant to Article III.

           2.7        “Company” means SI Diamond Technology, Inc., a Texas corporation, and itssuccessors and assigns. The term “Company” shall include any company during any period that it is a “parentcorporation” or a “subsidiary corporation” of the Company within the meaning of Code section 424(d).  Withrespect to all purposes of the Plan, including, but not limited to, the establishment, amendment, termination, operation andadministration of the Plan, SI Diamond Technology, Inc. shall be authorized to act on behalf of all other entities included withinthe definition of “Company.”

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           2.8        “Disability,” with respect to any Incentive Stock Option, meansdisability as determined under section 22(e)(3) of the Code, and, with respect to any other Award, means (i) with respect to aParticipant who is eligible to participate in the Company’s program of long-term disability insurance, if any, a conditionwith respect to which the Participant is entitled to commence benefits under such program of long-term disability insurance, and(ii) with respect to any Participant (including a Participant who is eligible to participate in the Company’s program oflong-term disability insurance, if any), a disability as determined under procedures established by the Committee or in anyAward.

           2.9        “Eligible Participant” means an active full-time employee of the Company(including officers), as shall be determined by the Committee, as well as any other person, including members of the Board ofDirectors and consultants who provide services to the Company, subject to limitations as may be provided by the Code, the Act orthe Committee, as shall be determined by the Committee.

           2.10      “Fair Market Value” means the fair market value of a share of Stock, as determinedin good faith by the Committee; provided, however, that

           (a)        if the Stock is listed on a national securities exchange, Fair Market Value on a dateshall be the closing sale price reported for the Stock on such exchange on such date if at least 100 shares of Stock were sold onsuch date or, if fewer than 100 shares of stock were sold on such date, then Fair Market Value on such date shall be the closingsale price reported for the Stock on such exchange on the last prior date on which at least 100 shares were sold, all as reportedin *The Wall Street Journal* or such other source as the Committee deems reliable; and

           (b)        if the Stock is not listed on a national securities exchange but is admitted toquotation on the National Association of Securities Dealers Automated Quotation System or other comparable quotation system, FairMarket Value on a date shall be the last sale price reported for the Stock on such system on such date if at least 100 shares ofStock were sold on such date or, if fewer than 100 shares of Stock were sold on such date, then Fair Market Value on such dateshall be the average of the high bid and low asked prices reported for the Stock on such system on such date or, if no shares ofStock were sold on such date, then Fair Market Value on such date shall be the last sale price reported for the Stock on suchsystem on the last date on which at least 100 shares of Stock were sold, all as reported in *The Wall Street Journal* or suchother source as the Committee deems reliable; and

           (c)        If the Stock is not traded on a national securities exchange or reported by anational quotation system, if any broker-dealer makes a market for the Stock, then the Fair Market Value of the Stock on a dateshall be the average of the highest and lowest quoted selling prices of the Stock in such market on such date if at least 100shares of Stock were sold on such date or, if fewer than 100 shares of Stock were sold on such date, then Fair Market Value on suchdate shall be the average of the high bid and low asked prices for the Stock in such market on such date or, if no prices arequoted on such date, then Fair Market Value on such date shall be the average of the highest and lowest quoted selling prices ofthe Stock in such market on the last date on which at least 100 shares of Stock were sold.

           2.11      “Incentive Stock Option” means a Stock Option granted to an Eligible Participantunder Article IV of the Plan.

           2.12      “Nonqualified Stock Option” means a Stock Option granted to an Eligible Participantunder Article V of the Plan.

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2.13      “Option Grant Date” means, as to any StockOption, the latest of:

                       (a)        the date on which the Committee takes action to grant the Stock Option to theParticipant;

                       (b)        the date the Participant receiving the Stock Option becomes an employee of theCompany, to the extent employment status is a condition of the grant or a requirement of the Code or the Act; or

                       (c)        such other date (later than the dates described in (a) and (b) above) as theCommittee may designate.

           2.14      “Participant” means an Eligible Participant to whom an Award has been granted andwho has entered into an Agreement evidencing the Award.

           2.15      “Plan” means the SI Diamond Technology, Inc. 2002 Equity Compensation Plan, asamended from time to time.

           2.16      “Retirement” means retirement from active employment with the Company or retirementas a member of the Board of Directors of the Company upon the attainment of age 65, or as otherwise determined by theCommittee.

           2.17      “Stock” means the common stock of SI Diamond Technology, Inc., as may be adjustedpursuant to the provisions of Section 3.10 of this Plan.

           2.18      “Stock Award” means an Award of Stock granted in payment of compensation, asprovided in Article VIII of the Plan.

           2.19      “Stock Option” means an Incentive Stock Option or a Nonqualified Stock Option. Stock Options granted under the Plan shall be designated as either Incentive Stock Options or Nonqualified Stock Options, and inthe absence of such designation shall be treated as Nonqualified Stock Options.

           2.20      “Termination of Employment” means the discontinuance of employment of a Participantwith the Company for any reason or, if the Participant is a non-employee member of the Board, the termination of theParticipant’s directorship, or, if the Participant is a consultant to the Company, the termination of the Participant’srelationship as a consultant. The determination of whether a Participant has incurred a Termination of Employment shall be made bythe Committee in its discretion.  In determining whether a Termination of Employment has occurred, the Committee may providethat service as a consultant or service with a business enterprise in which the Company has a significant ownership interest shallbe treated as employment with the Company.  With respect to any Incentive Stock Option, employment shall be interpreted in amanner consistent with section 422 of the Code. A Participant shall not be deemed to have incurred a Termination of Employment ifthe Participant is on military leave, sick leave, or other bona fide leave of absence approved by the Company of 90 days or fewer(or any longer period during which the Participant is guaranteed reemployment by statute or contract.)  In the event aParticipant’s leave of absence exceeds this period, he will be deemed to have incurred a Termination of Employment on the dayfollowing the expiration date of such period.

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**ARTICLE III - ADMINISTRATION**

           3.1        This Plan shall be administered by the Compensation Committee of the Board ofDirectors of SI Diamond Technology, Inc. The Committee, in its discretion, may delegate to one or more of its members such of itspowers as it deems appropriate.  The Committee also may limit the power of any member to the extent necessary to comply withrule 16b-3 under the Act, Code section 162(m) or any other law or for any other purpose.  Members of the Committee shall beappointed originally, and as vacancies occur, by the Board, to serve at the pleasure of the Board.  The Board may serve as theCommittee, if by the terms of the Plan all Board members are otherwise eligible to serve on the Committee.

           3.2        The Committee shall meet at such times and places as it determines.  A majorityof its members shall constitute a quorum, and the decision of a majority of those present at any meeting at which a quorum ispresent shall constitute the decision of the Committee.  A memorandum signed by all of its members shall constitute thedecision of the Committee without necessity, in such event, for holding an actual meeting.

           3.3        The Committee shall have the exclusive right to interpret, construe and administerthe Plan, to select the persons who are eligible to receive an Award, and to act in all matters pertaining to the granting of anAward and the contents of the Agreement evidencing the Award, including without limitation, the determination of the number ofStock Options subject to an Award and the form, terms, conditions and duration of each Award, and any amendment thereof consistentwith the provisions of the Plan.  All acts, determinations and decisions of the Committee made or taken pursuant to grants ofauthority under the Plan or with respect to any questions arising in connection with the administration and interpretation of thePlan, including the severability of any and all of the provisions thereof, shall be conclusive, final and binding upon allParticipants, Eligible Participants and their estates and beneficiaries.

           3.4        The Committee may adopt such rules, regulations and procedures of general applicationfor the administration of this Plan, as it deems appropriate.

           3.5        Subject to adjustment as provided in Plan Section 3.10, the aggregate number ofshares of Stock which are available for issuance pursuant to Awards under the Plan shall be Five Million (5,000,000) shares ofStock.  Such shares of Stock shall be made available from authorized and unissued shares.  If, for any reason, any sharesof Stock awarded or subject to purchase under the Plan are not delivered or purchased, or are reacquired by the Company, forreasons including, but not limited to, a forfeiture of Restricted Stock or termination, expiration or cancellation of a StockOption, such shares of Stock shall not be charged against the aggregate number of shares of Stock available for issuance pursuantto Awards under the Plan and shall again be available for issuance pursuant to Award under the Plan.  If the exercise priceand/or withholding obligation under a Stock Option is satisfied by tendering shares of Stock to the Company (either by actualdelivery or attestation), only the number of shares of Stock issued net of the share of Stock so tendered shall be deemed deliveredfor purposes of determining the maximum number of shares of Stock available for issuance under the Plan.

           3.6        Each Award granted under the Plan shall be evidenced by a written AwardAgreement.  Each Award Agreement shall be subject to and incorporate, by reference or otherwise, the applicable terms andconditions of the Plan, and any other terms and conditions, not inconsistent with the Plan, as may be imposed by theCommittee.

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           3.7        The Company shall not be required to issue or deliver any certificates for shares ofStock prior to:

           (a)        the listing of such shares on any stock exchange on which the Stock may then belisted; and

           (b)        the completion of any registration or qualification of such shares of Stock under anyfederal or state law, or any ruling or regulation of any government body which the Company shall, in its discretion, determine tobe necessary or advisable.

The Company will from time to time, as is necessary to accomplish the purposes of thisPlan, seek to obtain from any regulatory agency having jurisdiction any requisite authority in order to issue and sell shares ofStock hereunder.  The inability of the Company to obtain from any regulatory agency having jurisdiction the authority deemedby the Company’s counsel to be necessary to the lawful issuance and sale of any shares of the Stock hereunder shall relievethe Company of any liability in respect of the nonissuance or sale of the Stock as to which the requisite authority shall not havebeen obtained.

           3.8        All certificates for shares of Stock delivered under the Plan shall also be subjectto such stop-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations, and otherrequirements of the Securities and Exchange Commission, any stock exchange upon which the Stock is then listed and any applicablefederal or state laws, and the Committee may cause a legend or legends to be placed on any such certificates to make appropriatereference to such restrictions.  In making such determination, the Committee may rely upon an opinion of counsel for theCompany.

           3.9        Except as provided otherwise in the Plan or in an Award Agreement, no Participantawarded a Stock Option or Stock Award shall have any right as a shareholder with respect to any shares of Stock covered by his orher Stock Option or Stock Award prior to the date of issuance to him or her of a certificate or certificates for such shares ofStock.

           3.10      If any reorganization, recapitalization, reclassification, stock split, stock dividend, orconsolidation of shares of Stock, merger or consolidation or separation, including a spin-off, of the Company or sale or otherdisposition by the Company of all or a portion of its assets, any other change in the Company’s corporate structure, or anydistribution to shareholders other than a cash dividend results in the outstanding shares of Stock, or any securities exchangedtherefore or received in their place, being exchanged for a different number or class of shares of Stock or other securities of theCompany, or for shares of Stock or other securities of any other corporation; or new, different or additional shares or othersecurities of the Company or of any other corporation being received by the holders of outstanding shares of Stock, then theCommittee may make equitable adjustments in:

           (a)        the limitation on the aggregate number of shares of Stock that may be awarded as setforth in Plan Section 3.5;

           (b)        the number of shares and class of Stock that may be subject to an Award, and whichhave not been issued or transferred under an outstanding Award;

           (c)        the purchase price to be paid per share of Stock under outstanding Stock Options;and

           (d)        the terms, conditions or restrictions of any Award and Award Agreement, including theprice payable for the acquisition of Stock;

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provided, however, that all adjustments made as the result of the foregoing in respect ofeach Incentive Stock Option shall be made so that such Stock Option shall continue to be an Incentive Stock Option within themeaning of Code section 422, unless the Committee takes affirmative action to treat such Stock Option instead as a NonqualifiedStock Option.

           3.11      In addition to such other rights of indemnification as they may have as directors or as membersof the Committee, the members of the Committee shall be indemnified by the Company against reasonable expenses, includingattorney’s fees, actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or inconnection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to actunder or in connection with the Plan or any Award granted there under, and against all amounts paid by them in settlement thereof,provided such settlement is approved by independent legal counsel selected by the Company, or paid by them in satisfaction of ajudgment or settlement in any such action, suit or proceeding, except as to matters as to which the Committee member has beennegligent or engaged in misconduct in the performance of his duties; provided, that within 60 days after institution of any suchaction, suit or proceeding, a Committee member shall in writing offer the Company the opportunity, at its own expense, to handleand defend the same.

           3.12      The Committee may require each person purchasing shares of Stock pursuant to a Stock Option orother Award under the Plan to represent to and agree with the Company in writing that he is acquiring the shares of Stock without aview to distribution thereof.  The certificates for such shares of Stock may include any legend that the Committee deemsappropriate to reflect any restrictions on transfer.

           3.13      The Committee shall be authorized to make adjustments in performance based criteria or in theterms and conditions of other Awards in recognition of unusual or nonrecurring events affecting the Company or its financialstatements or changes in applicable laws, regulations or accounting principles.  The Committee may correct any defect, supplyany omission or reconcile any inconsistency in the Plan or any Award Agreement in the manner and to the extent it shall deemdesirable to carry it into effect.  In the event the Company shall assume outstanding employee benefit awards or the right orobligation to make future such awards in connection with the acquisition of another corporation or business entity, the Committeemay, in its discretion, make such adjustments in the terms of Awards under the Plan as it shall deem appropriate.

           3.14      All outstanding Awards to any Participant may be canceled if (a) the Participant, without theconsent of the Committee, while employed by the Company or after termination of such employment, becomes associated with, employedby, renders services to, or owns any interest in, other than any insubstantial interest, as determined by the Committee, anybusiness that is in competition with the Company or with any business in which the Company has a substantial interest as determinedby the Committee; or (b) the Participant is terminated for cause as determined by the Committee.

           3.15      In connection with any underwritten public offering by the Company of its equity securitiespursuant to an effective registration statement filed under the Securities Act of 1933, a Participant shall not sell, make anyshort sale of, loan, hypothecate, pledge, grant any option for the purchase of, or otherwise dispose or transfer for value orotherwise agree to engage in any of the foregoing transactions with respect to, any Stock acquired under the Plan without the priorwritten consent of the Company or its underwriters.  Such restriction (the “Market Stand-Off”) shall be in effectfor such period of time from and after the effective date of the final prospectus for the offering as may be requested by theCompany or such underwriters.  In no event, however, shall such period exceed the period for which securities owned by theChief Executive Officer of the Company are subject to the same

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restrictions.  Any new, substituted or additional securitiesthat are by reason of any recapitalization or reorganization distributed with respect to Stock acquired under the Plan shall beimmediately subject to the Market Stand-Off, to the same extent the Stock acquired under the Plan is at such time covered by suchprovisions.  In order to enforce the Market Stand-Off, the Company may impose stop-transfer restrictions with respect to theStock acquired under the Plan until the end of the applicable stand-off period.

**ARTICLE IV - INCENTIVE STOCK OPTIONS**

           4.1        Each provision of this Article IV and of each Incentive Stock Option granted underthe Plan shall be construed in accordance with the provisions of Code section 422, and any provision hereof that cannot be soconstrued shall be disregarded.

           4.2        Incentive Stock Options shall be granted only to Eligible Participants who are in theactive employment of the Company, and to individuals to whom grants are conditioned upon active employment, each of whom may begranted one or more such Incentive Stock Options for a reason related to his employment at such time or times determined by theCommittee following the Effective Date through the date which is ten (10) years following the Effective Date, subject to thefollowing conditions:

           (a)        The Incentive Stock Option exercise price per share of Stock shall be set in theAgreement, but shall not be less than 100% of the Fair Market Value of the Stock on the Option Grant Date.  If the EligibleParticipant owns more than 10% of the outstanding Stock (as determined pursuant to Code section 424(d)) on the Option Grant Date,the Incentive Stock Option exercise price per share shall not be less than 110% of the Fair Market Value of the Stock on the OptionGrant Date; provided, however, that if an Incentive Stock Option is granted to such an Eligible Participant at an exercise priceper share that is less than 110% of Fair Market Value of the stock on the Option Grant Date, such Option shall be deemed aNonqualified Stock Option.

           (b)        The Incentive Stock Option may be exercised in whole or in part from time to timewithin ten (10) years from the Option Grant Date (five (5) years if the Eligible Participant owns more than 10% of the Stock on theOption Grant Date), or such shorter period as may be specified by the Committee in the Award; provided, that in any event, theIncentive Stock Option and related Stock right shall lapse and cease to be exercisable upon the expiration of thirty (30) daysafter a Termination of Employment other than as a result of death, disability, a Change in Control, Retirement or within suchperiod following a Termination of Employment as shall have been specified in the Incentive Stock Option Award Agreement.  IfTermination of Employment occurs as a result of death, Disability, Change of Control, or Retirement each unvested or unmaturedIncentive Stock Option Award shall be accelerated; such acceleration shall be effective as of the date of death, Disability, Changeof Control, or Retirement, as appropriate, and each Incentive Stock Option so accelerated shall be exercisable in full for so longas it is still in force and unexpired under its terms.  No period following a Termination of Employment shall extend theoriginal exercise period of the Incentive Stock Option.

           (c)        To the extent the aggregate Fair Market Value, determined as of the Option GrantDate, of the shares of Stock with respect to which Incentive Stock Options (determined without regard to this subsection) are firstexercisable during any calendar year (under this Plan or any other plan of the Company and its parent and subsidiary corporations(within the meaning

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of Code sections 424(e) and 424(f), respectively)), by Participant exceeds $100,000, such Incentive StockOptions granted under the Plan shall be treated as Nonqualified Stock Options granted under Article V.

           (d)        The Committee may adopt any other terms and conditions which it determines should beimposed for the Incentive Stock Option to qualify under Code section 422, as well as any other terms and conditions notinconsistent with this Article IV as determined by the Committee.

           (e)        All or any portion of the shares of Stock authorized for issuance pursuant to Section3.5 herein shall be available for issuance pursuant to Incentive Stock Options granted under this Plan.

           4.3        To the extent an Incentive Stock Option fails to meet the requirements of Codesection 422, it shall be deemed a Nonqualified Stock Option.

           4.4        The Committee may at any time offer to buy out for a payment in cash, Stock, orRestricted Stock an Incentive Stock Option previously granted, based on such terms and conditions as the Committee shall establishand communicate to the Participant at the time that such offer is made.

           4.5        If the Incentive Stock Option Award Agreement so provides, the Committee may requirethat all or part of the shares of Stock to be issued upon the exercise of an Incentive Stock Option shall take the form ofRestricted Stock, which shall be valued on the date of exercise, as determined by the Committee, on the basis of the Fair MarketValue of such Restricted Stock determined without regard to the deferral limitations and/or forfeiture restrictionsinvolved.

           4.6        Any Incentive Stock Option that fails to qualify under section 422 of the Code shallbe treated as a Nonqualified Stock Option granted under Article V.

**ARTICLE V - NONQUALIFIED STOCK OPTIONS**

           5.1        Nonqualified Stock Options may be granted to Eligible Participants to purchase sharesof Stock at such time or times determined by the Committee, following the Effective Date, subject to the terms and conditions setforth in this Article V.

           5.2        The Nonqualified Stock Option exercise price per share of Stock shall be establishedin the Agreement and may be more than, equal to or less than 100% of the Fair Market Value at the time of the grant, but may not beless than par value of the Stock.

           5.3        A Nonqualified Stock Option may be exercised in full or in part from time to timewithin ten(10) years from the Stock Option Grant Date or such shorter period as may be specified by the Committee in the Agreement;provided that the Nonqualified Stock Option shall lapse and cease to be exercisable upon the expiration of thirty (30) days afterTermination of Employment other than as a result of death, disability, Change in Control of the Company, or Retirement, or withinsuch period following a Termination of Employment as shall have been specified in the Nonqualified Stock Option AwardAgreement.  No Termination of Employment pursuant to this Section 5.3 shall extend the original exercise period of theNonqualified Stock Option.

           5.4.       If Termination of Employment is as a result ofdeath, Disability, Change of Control of the Company, or Retirement, each unvested or unmatured Nonqualified Stock Option Awardshall be accelerated.  Such acceleration shall be effective as of the date of death, Disability, Change of Control, orRetirement, as appropriate, and each Nonqualified Stock Option so accelerated shall be exercisable in full for so long as it isstill in force and unexpired under its terms.  No Termination of Employment pursuant to this Section 5.4 shall extend theoriginal exercise period of the Nonqualified Stock Option.

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           5.5.        The Nonqualified Stock Option AwardAgreement may include any other terms and conditions not inconsistent with this Article V, as determined by theCommittee.

#### **ARTICLE VI – AUTOMATIC GRANTS**

           6.1          Beginning in 2003, on the last Monday of each July, each member of the Board of Directorsof SI Diamond Technology, Inc. who is not a salaried employee of or an exclusive full-time consultant to the Company or any of itssubsidiaries shall receive Nonqualified Stock Option award to purchase 50,000 shares of the Company’s common stock pursuantto the provisions of the Plan. If any such Director has not served a full year as a Director of the Company since the last Mondayof July of the previous year, then that Director shall receive that number of Options equivalent to the product of (a) 50,000multiplied by (b) a fraction, the numerator of which is the number of months which have elapsed between the commencement of suchDirector’s service and the month of July relating to any current grant of options, and the denominator of which is12.

           6.2          The purchase price of each share of Common Sstock that is subject to an Option grantedpursuant to this automatic grant shall be 100% of the Fair Market Value of such share of Common Stock on the Date ofGrant

           6.3          The terms of the automatic grant pursuant to this Section VI may be modified by theCommittee.

           6.4          For calendar year 2002 only, since the previous plan covering outside directors expired inMarch 2002, the terms of the automatic grant are as follows. A grant of 50,000 options will be made to each Director eligible toreceive grants pursuant to this Article VI on December 31, 2002. This number of options and the price of the options will becalculated as if the grant was made the last Monday of July 2002 pursuant to the terms of Section 6.1 above, including proratingfor partial years served between July 2001 and July 2002. These options will be priced at the closing price on the last Monday ofJuly 2002.

**ARTICLE VII - INCIDENTS OF STOCK OPTIONS**

           7.1        Each Stock Option shall be granted subject to such terms and conditions, if any, notinconsistent with this Plan, as shall be determined by the Committee, including any provisions as to continued employment asconsideration for the grant or exercise of such Stock Option and any provisions that may be advisable to comply with applicablelaws, regulations or rulings of any governmental authority.

           7.2        The maximum number of shares of Stock that may be covered by Stock Options granted toany one individual during any calendar year (including Stock Options that are subsequently canceled) shall be 500,000 shares. If a Stock Option is canceled, terminated or repriced with respect to an individual, the canceled, terminated or repriced StockOption shall be counted against the maximum number of shares for which Stock Options may be granted to such individual.

           7.3        Except as provided below, a Stock Option shall not be transferable by the Participantother than by will or by the laws of descent and distribution, or, to the extent otherwise allowed by applicable law, pursuant to aqualified domestic relations order as defined by the Code or the Employee Retirement Income Security Act of 1974, as amended, orthe rules there under, and shall be exercisable during the lifetime of the Participant only by him or in the event of his death orDisability, by his guardian or legal representative; provided, however, that a Nonqualified Stock Option  may be transferredand exercised by the transferee to the extent determined by the Committee to be consistent with securities and

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other applicablelaws, rules and regulations and with Company policy.  Notwithstanding any language herein or in any Agreement to the contrary,any restrictions on transfer of a Stock Option in the Plan or an Agreement shall be void and of no effect if the Committeedetermines that a transfer can be made consistent with securities and other applicable laws, rules and regulations.

           7.4        Shares of Stock purchased upon exercise of a Stock Option shall be paid for at thetime of exercise (or, in case of an exercise pursuant to a cashless exercise mechanism described below, as soon as practicableafter such exercise) in cash. The Committee may establish a cashless exercise mechanism by which a Participant may pay the exerciseprice under a Stock Option by irrevocably authorizing a third party to sell shares of Stock (or a sufficient portion of the shares)acquired upon exercise of the Stock Option and remit to the Company a sufficient portion of the sales proceeds to pay the entireexercise price and/or any tax withholding resulting from such exercise. Without limiting the foregoing, the Committee may establishpayment terms for the exercise of Stock Options which permit the Participant to pay for shares received pursuant to the Planthrough a payment plan approved by the committee.

           7.5        No cash dividends shall be paid on shares of Stock subject to unexercised StockOptions.  The Committee may provide, however, that a Participant to whom a Stock Option has been granted which is exercisablein whole or in part at a future time for shares of Stock shall be entitled to receive an amount per share equal in value to thecash dividends, if any, paid per share on issued and outstanding Stock, as of the dividend record dates occurring during the periodbetween the date of the grant and the time each such share of Stock is delivered pursuant to exercise of such Stock Option or StockRight.  Such amounts (herein called “dividend equivalents”) may, in the discretion of the Committee,be:

           (a)        paid in cash or Stock either from time to time prior to, or at the time of thedelivery of, such Stock, or upon expiration of the Stock Option or Stock Right if it shall not have been fully exercised;or

           (b)        converted into contingently credited shares of Stock, with respect to which dividendequivalents may accrue, in such manner, at such value, and deliverable at such time or times, as may be determined by theCommittee.

            Such Stock, whetherdelivered or contingently credited, shall be charged against the limitations set forth in Plan Section 3.5.

           7.6        The Committee, in its sole discretion, may authorize payment of interest equivalentson dividend equivalents which are payable in cash at a future time.

           7.7        In the event of Disability or death, the Committee, with the consent of theParticipant or his legal representative, may authorize payment, in cash or in Stock, or partly in cash and partly in Stock, as theCommittee may direct, of an amount equal to the difference at the time between the Fair Market Value of the Stock subject to aStock Option and the option price in consideration of the surrender of the Stock Option.

           7.8        If a Participant is required to pay to the Company an amount with respect to incomeand employment tax withholding obligations in connection with exercise of a Nonqualified Stock Option, and/or with respect tocertain dispositions of Stock acquired upon the exercise of an Incentive Stock Option, the Committee, in its discretion and subjectto such rules as it may adopt, may permit the Participant to satisfy the obligation, in whole or in part, by surrendering shares ofStock which the Participant already owns or by making an irrevocable election that, in lieu of the issuance of Stock, a portion ofthe total Fair Market Value of the shares of Stock subject to the Nonqualified Stock Option or Stock ight and/or with respect tocertain dispositions of Stock acquired upon the exercise of an Incentive

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Stock Option, be surrendered for cash and that such cashpayment be applied to the satisfaction of the withholding obligations.  The amount to be withheld shall not exceed thestatutory minimum federal and state income and employment tax liability arising from the Stock Option exercisetransaction.

           7.9        The Committee may permit the voluntary surrender of all or a portion of any StockOption granted under the Plan to be conditioned upon the granting to the Participant of a new Stock Option for the same or adifferent number of shares of Stock as the Stock Option surrendered, or may require such surrender as a condition precedent to agrant of a new Stock Option to such Participant.  Subject to the provisions of the Plan, such new Stock Option shall beexercisable at such price, during such period and on such other terms and conditions as are specified by the Committee at the timethe new Stock Option is granted.  Upon surrender, the Stock Options surrendered shall be canceled and the shares of Stockpreviously subject to them shall be available for the grant of other Stock Options.

           7.10      The Committee may provide in any Stock Option Agreement entered into pursuant to the Plan, or byseparate agreement, that if a Participant makes payment upon the exercise of any Stock Option granted hereunder in whole or in partthrough the surrender of shares of Stock, such Participant shall automatically receive a new Stock Option for the number of sharesof Stock so surrendered by him at a price equal to the Fair Market Value of the shares of Stock at the time of surrender,exercisable on the same basis and having the same terms as the underlying Stock Option or on such other basis as the Committeeshall determine and provide in the Stock Option Agreement.

**ARTICLE VIII - STOCK AWARDS**

           8.1        A Stock Award shall be granted only in payment of compensation that has been earnedor as compensation to be earned, including without limitation, compensation awarded concurrently with or prior to the grant of theStock Award.

           8.2        For the purposes of this Plan, in determining the value of a Stock Award, all sharesof Stock subject to such Stock Award shall be valued at not less than 100% of the Fair Market Value of such shares of Stock on thedate such Stock Award is granted, regardless of whether or when such shares of Stock are issued or transferred to the Participantand whether or not such shares of Stock are subject to restrictions which affect their value.

           8.3        Shares of Stock subject to a Stock Award may be issued or transferred to theParticipant at the time the Stock Award is granted, or at any time subsequent thereto, or in installments from time to time, as theCommittee shall determine.  If any such issuance or transfer shall not be made to the Participant at the time the Stock Awardis granted, the Committee may provide for payment to such Participant, either in cash or shares of Stock, from time to time or atthe time or times such shares of Stock shall be issued or transferred to such Participant, of amounts not exceeding the dividendswhich would have been payable to such Participant in respect of such shares of Stock, as adjusted under Section 3.10, if suchshares of Stock had been issued or transferred to such Participant at the time such Stock Award was granted.  Any issuancepayable in shares of Stock under the terms of a Stock Award, at the discretion of the Committee, may be paid in cash on each dateon which delivery of shares of Stock would otherwise have been made, in an amount equal to the Fair Market Value on such date ofthe shares of Stock which would otherwise have been delivered.

           8.4        A Stock Award shall be subject to such terms and conditions, including withoutlimitation, restrictions on the sale or other disposition of the Stock Award or of the shares of Stock issued or transferredpursuant to such Stock Award, as the Committee shall determine; provided, however, that upon the issuance or transfer of sharespursuant to a Stock Award, the Participant, with respect to such shares of Stock, shall be and become a shareholder of the Companyfully entitled to receive dividends, to

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vote to the extent, if any, such shares possess voting rights and to exercise all otherrights of a shareholder except to the extent otherwise provided in the Stock Award.  Each Stock Award shall be evidenced by awritten Award Agreement in such form as the Committee shall determine.

##### **ARTICLE IX – ACCELERATION OF AWARDS**

           9.1.        Stock Options granted under the Plan shallbe accelerated and become fully exercisable or any restrictions on a Stock Award shall lapse upon a Change in Control (ashereinafter defined) of the Company. For purposes of this plan, a “Change in Control” shall be conclusively deemed tohave occurred if (and only if) any of the following events shall have occurred:

> - there shall have occurred an event required to be reported in response to Item 6(e) ofSchedule 14A of Regulation 14A (or in response to any similar item on any similar schedule or form) promulgated under theSecurities Exchange Act of 1934 (the “Exchange Act”), whether or not the Company is then subject to such reportingrequirement.
- Any “person” (as such term is used in Section 13(d) and 14(d) of the ExchangeAct) shall have become the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly orindirectly, of securities of the Company representing 20% or more of the combined voting power of the Company’s thenoutstanding voting securities without prior approval of at least two-thirds of the members of the Board in office immediately priorto such person’s attaining such interest.
- The Company is party to a merger, consolidation, sale of assets, or other reorganization,or a proxy contest as a consequence of which members of the Board in office immediately prior to such transaction or eventconstitute less than a majority of the Board thereafter
- During any period of two consecutive  years, individuals who at the beginning of suchperiod constituted the Board (including for this purpose any new Director whose election or nomination for election by theCompany’s stockholders was approved by a vote of at least two-thirds of the Directors then still in office who were Directorsat the beginning of such period) cease for any reason to constitute at least a majority of the Board.

**ARTICLE X - AMENDMENT AND TERMINATION**

           10.1      The Board at any time and from time to time, may amend or terminate the Plan. To the extentrequired by Code section 422 and/or the rules of the exchange upon which the Stock is traded, no amendment, without approval by theCompany’s shareholders, shall:

           (a)        alter the group of persons eligible to participate in the Plan;

           (b)        except as provided in  Plan Section 3.5, increase the maximum number of sharesof Stock which are available for issuance pursuant to Awards granted under the Plan;

           (c)        extend the period during which Incentive Stock Options may be granted beyond the datewhich is ten (10) years following the Effective Date.

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           (d)        limit or restrict the powers of the Committee with respect to the administration ofthis Plan;

           (e)        change the definition of an Eligible Participant for the purpose of Incentive StockOptions or increase the limit or the value of shares of Stock for which an Eligible Participant may be granted an Incentive StockOption;

           (f)        materially increase the benefits accruing to Participants under this Plan;

           (g)        materially modify the requirements as to eligibility for participation in this Plan;or

           (h)        change any of the provisions of this Article X.

           10.2      No amendment to or discontinuance of this Plan or any provision thereof by the Board or theshareholders of the Company shall, without the written consent of the Participant, adversely affect, as shall be determined by theCommittee, any Award previously granted to such Participant under this Plan; provided, however, the Committee retains the right andpower to treat any outstanding Incentive Stock Option as a Nonqualified Stock Option in accordance with Plan Section4.3.

           10.3      Notwithstanding anything herein to the contrary, if the right to receive or benefit from anyAward, either alone or together with payments that a Participant has the right to receive from the Company, would constitute a“parachute payment” under Code section 280G, all such payments may be reduced, in the discretion of the Committee, tothe largest amount that will avoid an excise tax to the Participant under Code section 280G.

**ARTICLE XI - MISCELLANEOUS PROVISIONS**

           11.1      Nothing in the Plan or any Award granted under the Plan shall confer upon any Participant anyright to continue in the employ of the Company, or to serve as a director thereof, or interfere in any way with the right of theCompany to terminate his or her employment at any time.  Unless agreed by the Board, no Award granted under the Plan shall bedeemed salary or compensation for the purpose of computing benefits under any employee benefit plan or other arrangement of theCompany for the benefit of its employees.  No Participant shall have any claim to an Award until it is actually granted underthe Plan.  To the extent that any person acquires a right to receive payments from the Company under the Plan, such rightshall, except as otherwise provided by the Committee, be no greater than the right of an unsecured general creditor of theCompany.  All payments to be made under the Plan shall be paid from the general funds of the company, and no special orseparate fund shall be established and no segregation of assets shall be made to assure payment of such amounts, except asotherwise provided by the Committee.

           11.2      The Committee may make such provisions and take such steps as it may deem necessary orappropriate for the withholding of any taxes which the Company is required by any law or regulation of any governmental authority,whether federal, state or local, domestic or foreign, to withhold in connection with any Award or the exercise thereof, including,but not limited to, withholding the payment of all or any portion of such Award or another Award under this Plan until theParticipant reimburses the Company for the amount the Company is required to withhold with respect to such taxes, or canceling anyportion of such Award or another Award under this Plan in an amount sufficient to reimburse itself for the amount it is required toso withhold, or selling any property contingently credited by the Company for the purpose of paying such Award or another Awardunder this Plan in order to withhold or reimburse itself for the amount it is required to so withhold.  The amount to bewithheld shall not exceed the statutory minimum federal and state income and employment tax liability arising from the exercisetransaction.

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           11.3      The Plan and the grant of Awards shall be subject to all applicable federal and state laws,rules, and regulations and to such approvals by any United States government or regulatory agency as may be required.

           11.4      The terms of the Plan shall be binding upon the Company, and its successors andassigns.

           11.5      The Plan is intended to constitute an “unfunded” plan for incentive and deferredcompensation.  With respect to any payments not yet made to a Participant by the Company, nothing contained herein shall giveany such Participant any rights that are greater than those of a general creditor of the Company.  In its sole discretion, theCommittee may authorize the creation of trusts or other arrangements to meet the obligations created under the Plan to delivershares of Stock or payments in lieu of or with respect to Awards under the Plan; provided, however, that, unless the Committeeotherwise determines with the consent of the affected Participant, the existence of such trusts or other arrangements is consistentwith the “unfunded” status of the Plan.

           11.6      Each Participant exercising an Award under the Plan agrees to give the Committee prompt writtennotice of any election made by such Participant under Code section 83(b) or any similar provision thereof.

           11.7      If any provision of this Plan or an Award Agreement is or becomes or is deemed invalid, illegalor unenforceable in any jurisdiction, or would disqualify the Plan or any Award Agreement under any law deemed applicable by theCommittee, such provision shall be construed or deemed amended to conform to applicable laws or if it cannot be construed or deemedamended without, in the determination of the Committee, materially altering the intent of the Plan or the Award Agreement, it shallbe stricken and the remainder of the Plan or the Award Agreement shall remain in full force and effect.

            IN WITNESS WHEREOF,this Plan is executed this the 17th  day of May, 2002.

 

|                                                                                                                                                                                                                                                                                                                                                                                            | By: /s/ Marc W.      Eller                                        Name:  Marc W. Eller           Title:     Chief Executive      Officer |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ATTEST:

(Corporate Seal)

  /s/ Douglas P.      Baker                                                       Corporate Secretary |                                                                                                                                                                                                                                                                                                                                                            |