exv10w2



 






Exhibit 10.2




RTW, INC.

2005 STOCK PLAN

(as amended through June 14, 2006)




     SECTION 1. General Purpose of Plan; Definitions.



     The name of this plan is the RTW, Inc. 2005 Stock Plan (the “Plan”). The purpose of the Plan
is to enable RTW, Inc. (the “Company”) and its Subsidiaries to retain and attract executives and
other key employees, directors and consultants who contribute to the Company’s success by their
ability, ingenuity and industry, and to enable these individuals to participate in the long-term
success and growth of the Company by giving them a proprietary interest in the Company.



     For purposes of the Plan, the following terms are defined as set forth below:




	 	a.	 	“Board” means the Board of Directors of the Company as it may be comprised from
time to time.
	 
	 	b.	 	“Cause” means a felony conviction of a participant or the failure of a
participant to contest prosecution for a felony, willful misconduct, dishonesty or
intentional violation of a statute, rule or regulation, any of which, in the judgment of
the Company, is harmful to the business or reputation of the Company.
	 
	 	c.	 	“Code” means the Internal Revenue Code of 1986, as amended from time to time,
or any successor statute.
	 
	 	d.	 	“Committee” means the Committee referred to in Section 2 of the Plan.
	 
	 	e.	 	“Consultant” means any person performing services for the Company or any Parent
Corporation or Subsidiary of the Company and who is not an employee of the Company or any
Parent Corporation or Subsidiary of the Company.
	 
	 	f.	 	“Company” means RTW, Inc., a corporation organized under the laws of the State
of Minnesota (or any successor corporation).
	 
	 	g.	 	“Deferred Stock” means an award made pursuant to Section 8 below of the right
to receive stock at the end of a specified deferral period.
	 
	 	h.	 	“Disability” means permanent and total disability as determined by the
Committee.
	 
	 	i.	 	“Early Retirement” means retirement, with consent of the Committee at the time
of retirement, from active employment with the Company and any Subsidiary or Parent
Corporation of the Company.
	 
	 	j.	 	“Fair Market Value” of Stock on any given date will be determined by the
Committee as follows: (a) if the Stock is listed for trading on one or more national
securities exchanges, or is traded on the Nasdaq Stock Market, the last reported sale price
on the principal such exchange or the Nasdaq Stock Market on the date in question, or if
the Stock has been traded on such principal exchange on such date, the last reported sales
price on such principal exchange or the Nasdaq Stock Market on the first day prior thereto
on which such Stock was so traded; or (b) if the Stock is not listed for trading on a
national securities exchange or the Nasdaq Stock Market, but is traded in the
over-the-counter market, including the Nasdaq System, the closing bid price for such Stock
on the date in question, or if there is no such bid price for such Stock on such date, the
closing bid price on the first day prior thereto on which such price existed; or (c) if
neither (a) or (b) is applicable, by any means fair and reasonable by the Committee, which
determination will be final and binding on all parties.
	 
	 	k.	 	“Incentive Stock Option” means any Stock Option intended to be and designated
as an “Incentive Stock Option” within the meaning of Section 422 of the Code.




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	 	l.	 	“Non-Employee Director” means a “Non-Employee Director” within the meaning of
Rule 16b-3(b)(3) under the Securities Exchange Act of 1934.
	 
	 	m.	 	“Non-Qualified Stock Option” means any Stock Option that is not an Incentive
Stock Option, and is intended to be and is designated as a “Non-Qualified Stock Option.”
	 
	 	n.	 	“Normal Retirement” means retirement from active employment with the Company
and any Subsidiary or Parent Corporation of the Company on or after age [60].
	 
	 	0.	 	“Outside Director” means a Director who: (a) is not a current
employee of the Company or any member of an affiliated group which includes the
Company; (b) is not a former employee of the Company who receives compensation
for prior services (other than benefits under a tax-qualified retirement plan)
during the taxable year; (c) has not been an officer of the Company; (d) does
not receive remuneration from the Company, either directly or indirectly, in
any capacity other than as a director, except as otherwise permitted under Code
Section 162(m) and regulations thereunder. For this purpose, remuneration
includes any payment in exchange for good or services. This definition will be
further governed by the provisions of Code Section 162(m) and regulations
promulgated thereunder.
	 
	 	p.	 	“Parent Corporation” means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company if each of the corporations (other
than the Company) owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in the chain.
	 
	 	q.	 	“Restricted Stock” means an award of shares of Stock that are subject to
restrictions under Section 7 below.
	 
	 	r.	 	“Retirement” means Normal Retirement or Early Retirement.
	 
	 	s.	 	“Stock” means the Common Stock of the Company.
	 
	 	t.	 	“Stock Appreciation Right” means the right pursuant to an award granted under
Section 6 below to surrender to the Company all or a portion of a Stock Option in exchange
for an amount equal to the difference between (i) Fair Market Value, as of the date such
Stock Option or such portion thereof is surrendered, of the shares of Stock covered by such
Stock Option or such portion thereof, and (ii) the aggregate exercise price of such Stock
Option or such portion thereof.
	 
	 	u.	 	“Stock Option” means any option to purchase shares of Stock granted pursuant to
Section 5 below.
	 
	 	v.	 	“Subsidiary” means any corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company if each of the corporations (other than
the last corporation in the unbroken chain) owns stock possessing 50% or more of the total
combined voting power of all classes of stock in one of the other corporations in the
chain.





     SECTION 2. Administration.



     The Plan will be administered by the Board of Directors or by a Committee appointed by the
Board of Directors, consisting of not less than two Directors, all of whom must be Outside
Directors and Non-Employee Directors, and who serve at the pleasure of the Board. Any or all of
the functions of the Committee specified in the Plan may be exercised by the Board, unless the Plan
specifically states otherwise.



     The Committee has the power and authority to grant to eligible employees, members of the Board
of Directors,



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or Consultants, pursuant to the terms of the Plan: (i) Stock Options, (ii) Stock
Appreciation Rights, (iii) Restricted Stock, or (iv) Deferred Stock awards.




     In particular, the Committee has the authority:




	 	(i)	 	to select the officers and other key employees of the Company and its Subsidiaries and
other eligible persons to whom Stock Options, Stock Appreciation Rights, Restricted Stock
and Deferred Stock awards may from time to time be granted hereunder;
	 
	 	(ii)	 	to determine whether and to what extent Incentive Stock Options, Non-Qualified Stock
Options, Stock Appreciation Rights, Restricted Stock and Deferred Stock awards, or a
combination of the foregoing, are to be granted hereunder;
	 
	 	(iii)	 	to determine the number of shares to be covered by each such award granted hereunder;
	 
	 	(iv)	 	to determine the terms and conditions, not inconsistent with the terms of the Plan, of
any award granted hereunder (including, but not limited to, any restriction on any Stock
Option or other award and the shares of Stock relating thereto); and
	 
	 	(v)	 	to determine whether, to what extent and under what circumstances Stock and other
amounts payable with respect to an award under this Plan may be deferred either
automatically or at the election of the participant.





     The Committee will have the authority to adopt, alter and repeal such administrative rules,
guidelines and practices governing the Plan as it may, from time to time, deem advisable; to
interpret the terms and provisions of the Plan and any award issued under the Plan (and any
agreements relating thereto); and to otherwise supervise the administration of the Plan. The
Committee may delegate to executive officers of the Company the authority to exercise the powers
specified in (i), (ii), (iii), (iv), and (v) above with respect to persons who are not executive
officers of the Company.



     All decisions made by the Committee pursuant to the provisions of the Plan will be final and
binding on all persons, including the Company and Plan participants.



     SECTION 3. Stock Subject to Plan.



     The total number of shares of Stock reserved and available for distribution under the Plan
will be 300,000 shares. These shares may consist, in whole or in part, of authorized and unissued
shares.



     Subject to paragraph (b)(iv) of Section 6 below, if any shares that have been optioned cease
to be subject to Stock Options, or if any shares subject to any Restricted Stock or Deferred Stock
award granted hereunder are forfeited or such award otherwise terminates without a payment being
made to the participant, the shares will again be available for distribution in connection with
future awards under the Plan.



     In the event of any merger, reorganization, consolidation, recapitalization, stock dividend,
other change in corporate structure affecting the Stock, or spin-off or other distribution of
assets to shareholders, such substitution or adjustment will be made in the aggregate number of
shares reserved for issuance under the Plan, in the number and option price of shares subject to
outstanding options granted under the Plan, and in the number of shares subject to Restricted Stock
or Deferred Stock awards granted under the Plan as may be determined to be appropriate by the
Committee, in its sole discretion, with the number of shares subject to any award always being a
whole number. Such adjusted option price will also be used to determine the amount payable by the
Company upon the exercise of any Stock Appreciation Right associated with any Option.


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     SECTION 4. Eligibility.




     Officers, other key employees of the Company and Subsidiaries, Directors and Consultants who
are responsible for or contribute to the management, growth and profitability of the business of
the Company and its Subsidiaries are eligible to be granted Stock Options, Stock Appreciation
Rights, Restricted Stock or Deferred Stock awards under the Plan. The optionees and participants
under the Plan will be selected from time to time by the Committee, in its sole discretion, from
among those eligible, and the Committee may determine, in its sole discretion, the number of shares
covered by each award.



     Notwithstanding the foregoing, no person may, during any fiscal year of the Company, receive
grants of Stock Options, Stock Appreciation Rights, Restricted Stock Awards or Deferred Stock
Awards under this Plan that, in the aggregate, exceed 100,000 shares.



     SECTION 5. Stock Options.



     Any Stock Option granted under the Plan will be in such form as the Committee may from time to
time approve.



     The Stock Options granted under the Plan may be of two types: (i) Incentive Stock Options and
(ii) Non-Qualified Stock Options. No Incentive Stock Options may be granted more than 10 years
after the earlier of (i) the date the Plan is adopted by the Board and (ii) the date the Plan is
approved by the shareholders. If the Plan is amended to increase the number of shares authorized
for issuance, this 10-year period will automatically be extended to allow the granting of Incentive
Stock Option for the additional shares for an additional 10 years from the earlier of (i) the date
the amendment is adopted by the Board and (ii) the date it the amendment is approved by the
shareholders.



     The Committee has the authority to grant any optionee Incentive Stock Options, Non-Qualified
Stock Options, or both types of options (in each case with or without Stock Appreciation Rights).
To the extent that any option does not qualify as an Incentive Stock Option, it will constitute a
separate Non-Qualified Stock Option.



     Anything in the Plan to the contrary notwithstanding, no term of this Plan relating to
Incentive Stock Options may be interpreted, amended or altered, nor may any discretion or authority
granted under the Plan be so exercised, so as to disqualify either the Plan or any Incentive Stock
Option under Section 422 of the Code. The preceding sentence does not preclude any modification or
amendment to an outstanding Incentive Stock Option, whether or not such modification or amendment
results in disqualification of such Option as an Incentive Stock Option if the optionee consents in
writing to the modification or amendment.



     Options granted under the Plan will be subject to the following terms and conditions and may
contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the
Committee deems desirable.



     (a) Option Price. The option price per share of Stock purchasable under a Stock
Option will be determined by the Committee at the time of grant. In no event may the option price
per share of Stock purchasable under a Stock Option be less than 100% of the Fair Market Value of
the Stock on the date of the grant. If an employee owns or is deemed to own (by reason of the
attribution rules applicable under Section 424(d) of the Code) more than 10% of the combined voting
power of all classes of stock of the Company or any Parent Corporation or Subsidiary and an
Incentive Stock Option is granted to such employee, the option price may be no less than 110% of
the Fair Market Value of the Stock on the date the option is granted.



     (b) Option Term. The term of each Stock Option will be fixed by the Committee, but no
Incentive Stock Option may be exercisable more than ten years after the date the option is granted.
If an employee owns or is deemed to own (by reason of the attribution rules of Section 424(d) of
the Code) more than 10% of the combined voting power of all classes of stock of the Company or any
Parent Corporation or Subsidiary and an Incentive Stock Option is granted to such employee, the
term of such option may be no more than five years from the date of grant.



     (c) Exercisability. Stock Options will be exercisable at such time or times as
determined by the Committee at or after grant. If the Committee provides, in its discretion, that
any option is exercisable only in



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installments, the Committee may waive such installment exercise
provisions at any time. Notwithstanding anything contained in the Plan to the contrary, the
Committee may, in its discretion, extend or vary the term of any Stock Option or any installment
thereof, whether or not the optionee is then employed by the Company, if such action is deemed to
be in the best interests of the Company. Notwithstanding anything contained in the Plan to the
contrary, in the event of the sale by the Company of substantially all of its assets and the
consequent discontinuance of its business, or in the event of a merger, exchange, consolidation or
liquidation of the Company, the Board may, in its sole discretion, in connection with the Board’s
adoption of the plan for sale, merger, exchange, consolidation or liquidation, provide for one or
more of the following: (i) the acceleration of the exercisability of any or all outstanding Stock
Options; (ii) the complete termination of this Plan and cancellation of outstanding Stock Options
not exercised prior to a date specified by the Board (which date must give optionees a reasonable
period of time in which to exercise vested options prior to the effectiveness of such sale, merger,
exchange, consolidation or liquidation); and (iii) the continuance of the Plan with respect to the
exercise of options that were outstanding as of the date of adoption by the Board of such plan for
sale, merger, exchange, consolidation or liquidation and provide to optionees holding such options
the right to exercise their respective options as to an equivalent number of shares of stock of the
corporation succeeding the Company by reason of such sale, merger, exchange, consolidation or
liquidation. The grant of an option pursuant to the Plan will not limit in any way the right or
power of the Company to make adjustments, reclassifications, reorganizations or changes of its
capital or business structure or to merge, exchange or consolidate or to dissolve, liquidate, sell
or transfer all or any part of its business or assets.




     (d) Method of Exercise. Stock Options may be exercised in whole or in part at any
time during the option period by giving written notice of exercise to the Company specifying the
number of shares to be purchased. The notice must be accompanied by payment in full of the
purchase price, either by check, or by any other form of legal consideration deemed sufficient by
the Committee and consistent with the Plan’s purpose and applicable law, including a properly
executed exercise notice together with irrevocable instructions to a broker acceptable to the
Company to promptly deliver to the Company the amount of sale or loan proceeds to pay the exercise
price. As determined by the Committee at the time of grant or exercise, in its sole discretion,
payment in full or in part may also be made in the form of Stock already owned by the optionee
(which has been owned for more than six months on the date of surrender) or, in the case of the
exercise of a Non-Qualified Stock Option, by delivery of Restricted Stock or Deferred Stock subject
to an award hereunder (based, in each case, on the Fair Market Value of the Stock on the date the
option is exercised, as determined by the Committee). In the case of an Incentive Stock Option,
the right to make a payment in the form of already owned shares may be authorized only at the time
the option is granted, and that in the event payment is made in the form of shares of Restricted
Stock or a Deferred Stock award, the optionee will receive a portion of the option shares in the
form of, and in an amount equal to, the Restricted Stock or Deferred Stock award tendered as
payment by the optionee. If the terms of an option so permit, an optionee may elect to pay all or
part of the option exercise price by having the Company withhold from the shares of Stock that
would otherwise be issued upon exercise that number of shares of Stock having a Fair Market Value
equal to the aggregate option exercise price for the shares with respect to which such election is
made. No shares of Stock may be issued until full payment for the shares has been made. An
optionee will generally have the rights to dividends and other rights of a shareholder with respect
to shares subject to the option when the optionee has given written notice of exercise, has paid in
full for such shares, and, if requested, has given the representation described in paragraph (a) of
Section 12.



     (e) Non-transferability of Options. (i) No Incentive Stock Option is transferable by
the optionee otherwise than by will or by the laws of descent and distribution, and all Stock
Options will be exercisable, during the optionee’s lifetime, only by the optionee; and (ii) The
Committee may, in its discretion, authorize all or a portion of any Nonqualified Stock Options to
be granted to an optionee to be on terms that permit transfer by such optionee to (A) the spouse,
children or grandchildren of the optionee (“Immediate Family Members”), (B) a trust or trusts for
the exclusive benefit of such Immediate Family Members, or (C) a partnership or partnerships in
which such Immediate Family Members are the only partners, if (1) there may be no consideration for
any such transfer, (2) the Agreement pursuant to which such options are granted must be approved by
the Committee, and must expressly provide for transferability in a manner consistent with this
Section 5(f)(ii), and (3) subsequent transfers of transferred options will be prohibited except
those in accordance with Section 5(f)(i). Following transfer, any such options will continue to be
subject to the same terms and conditions as were applicable immediately prior to transfer, but (i)
the term “optionee” will in such event be deemed to refer to the transferee, and (ii) the events of
termination



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of employment of Sections 5(g), 5(h) and 5(i) hereof will continue to be applied with
respect to the original optionee, following which the options will be exercisable by the transferee
only to the extent, and for the periods specified in such Sections.




     (f) Termination by Death. If an optionee’s employment by the Company and any
Subsidiary or Parent Corporation terminates by reason of death, the Stock Option may thereafter be
immediately exercised, to the extent then exercisable, by the legal representative of the estate or
by the legatee of the optionee under the will of the optionee, for a period of three years from the
date of such death or until the expiration of the stated term of the option, whichever period is
shorter.



     (g) Termination by Reason of Disability. If an optionee’s employment by the Company
and any Subsidiary or Parent Corporation terminates by reason of Disability, any Stock Option held
by such optionee may thereafter be exercised, to the extent it was exercisable at the time of
termination due to Disability, but may not be exercised after one year from the date of such
termination of employment or the expiration of the stated term of the option, whichever period is
the shorter. In the event of termination of employment by reason of Disability, if an Incentive
Stock Option is exercised after the expiration of the exercise periods that apply for purposes of
Section 422 of the Code, the option will thereafter be treated as a Non-Qualified Stock Option.



     (h) Termination by Reason of Retirement. If an optionee’s employment by the Company
and any Subsidiary or Parent Corporation terminates by reason of Retirement, any Stock Option held
by such optionee may thereafter be exercised to the extent it was exercisable at the time of such
Retirement, but may not be exercised after one year from the date of such termination of employment
or the expiration of the stated term of the option, whichever period is the shorter. In the event
of termination of employment by reason of Retirement, if an Incentive Stock Option is exercised
after the expiration of the exercise periods that apply for purposes of Section 422 of the Code,
the option will thereafter be treated as a Non-Qualified Stock Option.



     (i) Other Termination. Unless otherwise determined by the Committee, if an optionee’s
employment by the Company and any Subsidiary or Parent Corporation terminates for any reason other
than death, Disability or Retirement, the Stock Option will thereupon terminate, except that, if
the optionee is involuntarily terminated without Cause by the Company and any Subsidiary or Parent
Corporation, the option may be exercised to the extent it was exercisable at such termination for
the lesser of three months or the balance of the option’s term.



     (j) Annual Limit on Incentive Stock Options. The aggregate Fair Market Value
(determined as of the time the Stock Option is granted) of the Common Stock with respect to which
an Incentive Stock Option under this Plan or any other plan of the Company and any Subsidiary or
Parent Corporation is exercisable for the first time by an optionee during any calendar year may
not exceed $100,000.



     SECTION 6. Stock Appreciation Rights.



     (a) Grant and Exercise. Stock Appreciation Rights may be granted in conjunction with
all or part of any Stock Option granted under the Plan. In the case of a Non-Qualified Stock
Option, these rights may be granted either at or after the time of the grant of such Option. In
the case of an Incentive Stock Option, such rights may be granted only at the time of the grant of
the option.



     A Stock Appreciation Right or applicable portion thereof granted with respect to a given Stock
Option will terminate and no longer be exercisable upon the termination or exercise of the related
Stock Option, except that a Stock Appreciation Right granted with respect to less than the full
number of shares covered by a related stock Option will not be reduced until the exercise or
termination of the related Stock Option exceeds the number of shares not covered by the Stock
Appreciation Right.



     A Stock Appreciation Right may be exercised by an optionee, in accordance with paragraph (b)
of this Section 6, by surrendering the applicable portion of the related Stock Option. Upon such
exercise and surrender, the optionee will be entitled to receive an amount determined in the manner
prescribed in paragraph (b) of this Section 6. Stock Options that have been so surrendered, in
whole or in part, will no longer be exercisable to the extent the



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related Stock Appreciation Rights
have been exercised.




     (b) Terms and Conditions. Stock Appreciation Rights will be subject to such terms and
conditions, not inconsistent with the provisions of the Plan, as may be determined from time to
time by the Committee, including the following:




     (i) Stock Appreciation Rights will be exercisable only at such time or times and to the
extent that the Stock Options to which they relate are exercisable in accordance with the
provisions of Section 5 and this Section 6 of the Plan.




     (ii) Upon the exercise of a Stock Appreciation Right, an optionee will be entitled to
receive up to, but not more than, an amount in cash or shares of Stock equal in value to the
excess of the Fair Market Value of one share of Stock over the option price per share specified
in the related option multiplied by the number of shares in respect of which the Stock
Appreciation Right has been exercised, with the Committee having the right to determine the form
of payment.




     (iii) Stock Appreciation Rights will be transferable only when and to the extent that the
underlying Stock Option would be transferable under Section 5 of the Plan.




     (iv) Upon the exercise of a Stock Appreciation Right, the Stock Option or part thereof to
which such Stock Appreciation Right is related will be deemed to have been exercised for the
purpose of the limitation set forth in Section 3 of the Plan on the number of shares of Stock to
be issued under the Plan, but only to the extent of the number of shares issued or issuable
under the Stock Appreciation Right at the time of exercise based on the value of the Stock
Appreciation Right at such time.




     (v) A Stock Appreciation Right granted in connection with an Incentive Stock Option may be
exercised only if and when the market price of the Stock subject to the Incentive Stock Option
exceeds the exercise price of such Option.



     SECTION 7. Restricted Stock.



     (a) Administration. Shares of Restricted Stock may be issued either alone or in
addition to other awards granted under the Plan. The Committee will determine the officers, key
employees, members of the Board of Directors and Consultants of the Company and Subsidiaries to
whom, and the time or times at which, grants of Restricted Stock will be made, the number of shares
to be awarded, the time or times within which such awards may be subject to forfeiture, and all
other conditions of the awards. The Committee may also condition the grant of Restricted Stock
upon the attainment of specified performance goals. The provisions of Restricted Stock awards need
not be the same with respect to each recipient.



     (b) Awards and Certificates. The prospective recipient of an award of shares of
Restricted Stock will not have any rights with respect to such award, unless and until such
recipient has executed an agreement evidencing the award and has delivered a fully executed copy
thereof to the Company, and has otherwise complied with the then applicable terms and conditions.



          (i) Each participant will be issued a stock certificate in respect of shares of Restricted
Stock awarded under the Plan. Such certificate will be registered in the name of the
participant, and will bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such award, substantially in the following form:




“The transferability of this certificate and the shares of stock represented
hereby are subject to the terms and conditions (including forfeiture) of the
RTW, Inc. 2005 Stock Plan and an Agreement entered into between the
registered owner and RTW, Inc. Copies of such Plan and Agreement are on
file in the offices of RTW, Inc., 8500 Normandale Lake Boulevard,
Minneapolis, MN 55437.”



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     (ii) The Committee must require that the stock certificates evidencing such shares be held
in custody by the Company until the restrictions thereon have lapsed, and that, as a condition
of any Restricted Stock award, the participant must deliver a stock power, endorsed in blank,
relating to the Stock covered by such award.



     (c) Restrictions and Conditions. The shares of Restricted Stock awarded pursuant to
the Plan will be subject to the following restrictions and conditions:




     (i) Subject to the provisions of this Plan and the award agreement, during a period set by
the Committee commencing with the date of such award (the “Restriction Period”), the participant
will not be permitted to sell, transfer, pledge or assign shares of Restricted Stock awarded
under the Plan. In no event may the Restriction Period be less than one (1) year. Within these
limits, the Committee may provide for the lapse of such restrictions in installments where
deemed appropriate.




     (ii) Except as provided in paragraph (c)(i) of this Section 7, the participant will have,
with respect to the shares of Restricted Stock, all of the rights of a shareholder of the
Company, including the right to vote the shares and the right to receive any cash dividends.
The Committee, in its sole discretion, may permit or require the payment of cash dividends to be
deferred and, if the Committee so determines, reinvested in additional shares of Restricted
Stock (to the extent shares are available under Section 3 and subject to paragraph (f) of
Section 12). Certificates for shares of unrestricted Stock will be delivered to the grantee
promptly after, and only after, the period of forfeiture has expired without forfeiture in
respect of such shares of Restricted Stock.




     (iii) Subject to the provisions of the award agreement and paragraph (c)(iv) of this
Section 7, upon termination of employment for any reason during the Restriction Period, all
shares still subject to restriction will be forfeited by the participant.




     (iv) In the event of special hardship circumstances of a participant whose employment is
terminated (other than for Cause), including death, Disability or Retirement, or in the event of
an unforeseeable emergency of a participant still in service, the Committee may, in its sole
discretion, when it finds that a waiver would be in the best interest of the Company, waive in
whole or in part any or all remaining restrictions with respect to such participant’s shares of
Restricted Stock.




     (v) Notwithstanding the foregoing, in the event of the sale by the Company of
substantially all of its assets and the consequent discontinuance of its business, or in the
event of a merger, exchange, consolidation or liquidation of the Company, the Board may, in its
sole discretion, in connection with the Board’s adoption of the plan for sale, merger, exchange,
consolidation or liquidation, provide for one or more of the following with respect to
Restricted Stock Awards that are, on such date, still subject to a Restriction Period: (i) the
removal of the restrictions on any or all outstanding Restricted Stock Awards; (ii) the complete
termination of this Plan and forfeiture of outstanding Restricted Stock Awards prior to a date
specified by the Board; and (iii) the continuance of the Plan with respect to the Restricted
Stock Award that were outstanding as of the date of adoption by the Board of such plan for sale,
merger, exchange, consolidation or liquidation and provide to participants holding Restricted
Stock Awards the right to an equivalent number of restricted shares of stock of the corporation
succeeding the Company by reason of such sale, merger, exchange, consolidation or liquidation.
The grant of a Restricted Stock Award pursuant to the Plan will not limit in any way the right
or power of the Company to make adjustments, reclassifications, reorganizations or changes of
its capital or business structure or to merge, exchange or consolidate or to dissolve,
liquidate, sell or transfer all or any part of its business or assets.



     SECTION 8. Deferred Stock Awards.



     (a) Administration. Deferred Stock may be awarded either alone or in addition to
other awards granted under the Plan. The Committee will determine the officers, key employees,
members of the Board of Directors and Consultants of the Company and Subsidiaries to whom and the
time or times at which Deferred Stock will be



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awarded, the number of Shares of Deferred Stock to be
awarded to any participant or group of participants, the duration of the period (the “Deferral
Period”) during which, and the conditions under which, receipt of the Stock will be deferred, and
the terms and conditions of the award in addition to those contained in paragraph (b) of this
Section 8. The Committee may also condition the grant of Deferred Stock upon the attainment of
specified performance goals. The provisions of Deferred Stock awards need not be the same with
respect to each recipient.





	(b)	 	Terms and Conditions.






     (i) Subject to the provisions of this Plan and the award agreement, Deferred Stock awards
may not be sold, assigned, transferred, pledged or otherwise encumbered during the Deferral
Period. In no event may the Deferral Period be less than one (1) year. At the expiration of
the Deferral Period (or Elective Deferral Period, where applicable), share certificates will be
delivered to the participant, or his legal representative, in a number equal to the shares
covered by the Deferred Stock award.




     (ii) Amounts equal to any dividends declared during the Deferral Period with respect to the
number of shares covered by a Deferred Stock award will be paid to the participant currently or
deferred and deemed to be reinvested in additional Deferred Stock or otherwise reinvested, all
as determined at the time of the award by the Committee, in its sole discretion.




     (iii) Subject to the provisions of the award agreement and paragraph (b)(iv) of this
Section 8, upon termination of employment for any reason during the Deferral Period for a given
award, the Deferred Stock in question will be forfeited by the participant.




     (iv) In the event of special hardship circumstances of a participant whose employment is
terminated (other than for Cause) including death, Disability or Retirement, or in the event of
an unforeseeable emergency of a participant still in service, the Committee may, in its sole
discretion, when it finds that a waiver would be in the best interest of the Company, waive in
whole or in part any or all of the remaining deferral limitations imposed hereunder with respect
to any or all of the participant’s Deferred Stock.




     (v) A participant may elect to further defer receipt of the award for a specified period or
until a specified event (the “Elective Deferral Period”), subject in each case to the
Committee’s approval and to such terms as are determined by the Committee, all in its sole
discretion. Subject to any exceptions adopted by the Committee, such election must generally be
made prior to completion of one half of the Deferral Period for a Deferred Stock award (or for
an installment of such an award).




     (vi) Each award must be confirmed by, and subject to the terms of, a Deferred Stock
agreement executed by the Company and the participant.



     SECTION 9. Transfer, Leave of Absence, etc.



     For purposes of the Plan, the following events will not be deemed a termination of employment:



     (a) a transfer of an employee from the Company to a Parent Corporation or Subsidiary, or from
a Parent Corporation or Subsidiary to the Company, or from one Subsidiary to another;



     (b) a leave of absence, approved in writing by the Committee, for military service or
sickness, or for any other purpose approved by the Company if the period of such leave does not
exceed ninety (90) days (or such longer period as the Committee may approve, in its sole
discretion); and



     (c) a leave of absence in excess of ninety (90) days, approved in writing by the Committee,
but only if the employee’s right to reemployment is guaranteed either by a statute or by contract,
and may, in the case of any leave of absence, the employee returns to work within 30 days after the
end of such leave.




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     SECTION 10. Amendments and Termination.



     The Board may amend, alter, or discontinue the Plan, but no amendment, alteration, or
discontinuation may be made (i) that would impair the rights of an optionee or participant under a
Stock Option, Restricted Stock or other Stock-based award theretofore granted, without the
optionee’s or participant’s consent, or (ii) which without the approval of the shareholders of the
Company would cause the Plan to no longer comply with Rule 16b-3 under the Securities Exchange Act
of 1934, Section 422 of the Code or any other regulatory requirements.



     The Committee may amend the terms of any award or option theretofore granted, prospectively or
retroactively, but no such amendment may impair the rights of any holder without his or her consent
except to the extent authorized under the Plan. The Committee may also substitute new Stock
Options for previously granted options, including previously granted options having higher option
prices.



     SECTION 11. Unfunded Status of Plan.



     The Plan is intended to constitute an “unfunded” plan for incentive and deferred compensation.
With respect to any payments not yet made to a participant or optionee by the Company, nothing
contained herein gives any such participant or optionee any rights that are greater than those of a
general creditor of the Company. In its sole discretion, the Committee may authorize the creation
of trusts or other arrangements to meet the obligations created under the Plan to deliver Stock or
payments in lieu of or with respect to awards hereunder, if the existence of such trusts or other
arrangements is consistent with the unfunded status of the Plan.



     SECTION 12. General Provisions.



     (a) The Committee may require each person purchasing shares pursuant to a Stock Option under
the Plan to represent to and agree with the Company in writing that the optionee is acquiring the
shares without a view to distribution thereof. The certificates for such shares may include any
legend that the Committee deems appropriate to reflect any restrictions on transfer.



     All certificates for shares of Stock delivered under the Plan pursuant to any Restricted
Stock, Deferred Stock or other Stock-based awards will be subject to such stock-transfer orders and
other restrictions as the Committee may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange upon which the Stock is
then listed, and any applicable Federal or state securities laws, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate reference to such
restrictions.



     (b) Subject to paragraph (d) below, recipients of Restricted Stock, Deferred Stock and other
Stock-based awards under the Plan (other than Stock Options) are not required to make any payment
or provide consideration other than the rendering of services.



     (c) Nothing contained in this Plan will prevent the Board of Directors from adopting other or
additional compensation arrangements, subject to shareholder approval if such approval is required,
and such arrangements may be either generally applicable or applicable only in specific cases. The
adoption of the Plan will not confer upon any employee of the Company or any Subsidiary any right
to continued employment with the Company or a Subsidiary, as the case may be, nor will it interfere
in any way with the right of the Company or a Subsidiary to terminate the employment of any of its
employees at any time.



     (d) Each participant must, no later than the date as of which any part of the value of an
award first becomes includible as compensation in the gross income of the participant for Federal
income tax purposes, pay to the Company, or make arrangements satisfactory to the Committee
regarding payment of, any Federal, state, or local taxes of any kind required by law to be withheld
with respect to the award. The obligations of the Company under the Plan will be conditional on
such payment or arrangements and the Company and Subsidiaries will, to the extent permitted by law,
have the right to deduct any such taxes from any payment of any kind otherwise due to the
participant. With respect to any award under the Plan, if the terms of such award so permit, a
participant may elect



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by written notice to the Company to satisfy part or all of the withholding
tax requirements associated with the award by (i) authorizing the Company to retain from the number
of shares of Stock that would otherwise be deliverable to the participant, or (ii) delivering to
the Company from shares of Stock already owned by the participant, that number of shares having an
aggregate Fair Market Value equal to part or all of the tax payable by the participant under this
Section 12(d). Any such election must be in accordance with, and subject to, applicable tax and
securities laws, regulations and rulings.




     (e) At the time of grant, the Committee may provide in connection with any grant made under
this Plan that the shares of Stock received as a result of such grant will be subject to a
repurchase right in favor of the Company, pursuant to which the participant will be required to
offer to the Company upon termination of employment for any reason any shares that the participant
acquired under the Plan, with the price being the then Fair Market Value of the Stock or, in the
case of a termination for Cause, an amount equal to the cash consideration paid for the Stock,
subject to such other terms and conditions as the Committee may specify at the time of grant. The
Committee may, at the time of the grant of an award under the Plan, provide the Company with the
right to repurchase, or require the forfeiture of, shares of Stock acquired pursuant to the Plan by
any participant who, at any time within two years after termination of employment with the Company,
directly or indirectly competes with, or is employed by a competitor of, the Company.



     (f) The reinvestment of dividends in additional Restricted Stock (or in Deferred Stock or
other types of Plan awards) at the time of any dividend payment will only be permissible if the
Committee (or the Company’s chief financial officer) certifies in writing that under Section 3
sufficient shares are available for such reinvestment (taking into account then outstanding Stock
Options and other Plan awards).



     SECTION 13. Effective Date of Plan.



     The Plan will be effective on the date it is approved by a vote of the holders of a majority
of the Stock present and entitled to vote at a meeting of the Company’s shareholders.


Approval by Board of Directors on April 29, 2005

Approved by the Shareholders on June 15, 2005

Amendment No. 1 adopted by Board of Director on March 28, 2006

Amendment No. 1 approved by the Shareholders on June 14, 2006





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