Document:

EX-10.12 FORM OF RETIREMENT SECURITY AGREEMENT

 

Exhibit 10.12

INSTEEL INDUSTRIES, INC.

RETIREMENT SECURITY AGREEMENT

     THIS RETIREMENT SECURITY AGREEMENT (the “Agreement”), made and entered
into as of the    day of    , 2004 (the “effective date”), by and
between INSTEEL INDUSTRIES, INC., a corporation located in Mount Airy, North
Carolina (the “Corporation”), and    (the “Executive”);

R E C I T A L S:

     The Corporation desires to provide supplemental retirement benefits to the
Executive separate from and in addition to any other retirement benefits to
which the Executive is or may become entitled under any plan of the Corporation
or any other agreement between the Executive and the Corporation.

     NOW, THEREFORE, the parties hereby agree as follows:

     Section 1. Purpose:

     This Agreement is being entered into by the Corporation to provide the
Executive with additional retirement and death benefits for the Executive and
his beneficiaries. The Agreement is not intended to be a qualified retirement
plan under Section 401(a) of the Internal Revenue Code (the “Code”), but it is
intended to constitute an arrangement to provide nonqualified deferred
compensation within the meaning of Section 409A of the Code. This Agreement is
also intended to be a “plan” for purposes of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”), and to be part of an unfunded plan
maintained by the Corporation primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated employees
of the Corporation within the meaning of Sections 201(2), 301(a)(3) and
401(a)(1) of ERISA.

 

 

     Section 2. Supplemental Retirement Benefit:

     2.1 Normal retirement: If the Executive remains in continuous service
with the Corporation from the effective date of this Agreement until he
completes thirty years of continuous service with the Corporation, the
Corporation shall pay a supplemental retirement benefit to the Executive. The
annual amount of the supplemental retirement benefit shall be fifty percent
(50%) of the Executive’s final average compensation. The supplemental
retirement benefit shall be paid in equal installments in accordance with the
Corporation’s regular payroll practices for executives in effect from time to
time, commencing as of the first payroll period ending coincident with or
immediately following the Executive’s normal retirement date, and continuing
for a term certain of fifteen years. For purposes of this Agreement, unless
otherwise indicated by the context:

     (i) “Compensation” means the annual rate of gross base
compensation in effect for the Executive for service with the
Corporation in effect on the last day of the calendar year;
provided, that for the year in which the Executive’s termination
of employment with the Corporation occurs because of retirement or
otherwise, his compensation shall be the annual base rate in
effect on the date of his termination of employment.

     (ii) “Continuous service” means the Executive’s
uninterrupted service in the employment of the Corporation in a
full-time capacity. The Executive’s continuous service shall not
be deemed to be terminated or interrupted by a leave of absence or
sick leave not exceeding one year granted to the Executive by the
Corporation.

     (iii) “Final average compensation” means the average of the
Executive’s compensation as of the last day of each of the five
consecutive calendar years during the ten calendar years preceding
the Executive’s normal retirement date that produces the highest
average. If the Executive has not worked during at least five
calendar years preceding his normal retirement date, the
Executive’s final average compensation means the average of his
compensation for all of the years he worked for the Corporation

     (iv) “Normal retirement date” means the later of the
Executive’s sixty-fifth birthday or the date the Executive
terminates continuous service with the Corporation after
completing thirty years of continuous service.

     (v) “Year of continuous service” means a twelve-month
period of continuous service by the Executive, beginning on the
Executive’s initial date of

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employment with
the Corporation (and each anniversary thereof), and ending on
the day immediately preceding the anniversary of that date.

     2.2 Early retirement: If the Executive completes at least ten years of
continuous service with the Corporation but his continuous service terminates
for reasons other than death, disability or for “cause” (as defined in Section
2.4) after he attains age fifty-five but prior to his normal retirement date,
the Corporation will pay a supplemental early retirement benefit to the
Executive. The annual amount of the supplemental retirement early benefit
shall be fifty percent (50%) of the Executive’s final average compensation
determined as of the date of his termination of service, reduced by 1/360th
for each full calendar month of continuous service less than 360 that the
Executive has completed as of that date. The Executive’s supplemental early
retirement benefit shall be paid in equal installments in accordance with the
Corporation’s regular payroll practices for executives in effect from time to
time, commencing as of the first payroll period ending coincident with or
immediately following the later of the date the Executive attains age
sixty-five or the date the Executive terminates continuous service, and
continuing for a term certain of fifteen years.

     2.3 Disability retirement: If the Executive completes at least ten years
of continuous service with the Corporation but terminates continuous service
prior to his normal retirement date because of disability, the Corporation
shall pay a supplemental disability benefit to the Executive. The amount of
the supplemental disability benefit shall be as follows: (i) during the
period, if any, that the Executive is receiving benefit payments under a
long-term disability insurance plan for executives of the Corporation (the “LTD
plan”), the amount determined under Section 2.2, treating the date of the
Executive’s disability as his early retirement date, provided that such amount,
when added to the Executive’s benefit under the LTD plan, shall not exceed one
hundred percent (100%) of the Executive’s final average compensation determined
as of the date of his termination of service because of disability; and (ii)
during any period that the Executive is not receiving benefit

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payments under the LTD plan, an amount equal to the greater of the Executive’s
benefit determined under Section 2.2 as of the date of his disability or fifty
percent (50%) of the Executive’s final average compensation. The Executive’s
supplemental disability benefit will be paid in equal installments in
accordance with the Corporation’s regular payroll practices for executives in
effect from time to time, commencing as of the first payroll period ending
coincident with or immediately following the date as of which the Executive’s
disability is deemed to have occurred, and continuing for a term certain of ten
years. For this purpose, “disability” shall mean the inability, by reason of
any medically determinable physical or mental impairment that can be expected
to result in death can be expected to last for a continuous period of not less
than twelve months, or (ii) is, by reason of any medically determinable
physical or medical impairment that can be expected to result in death or that
can be expected to last for a continuous period of not less than twelve months,
receiving income replacement benefits for a period of not less than three
months under an accident or health plan covering employees of the Corporation.
The determination of the existence or nonexistence of disability under (i)
above shall be made by the Executive Compensation Committee of the Board of
Directors of the Corporation (the “Board”) pursuant to a medical examination by
a medical doctor selected or approved by the Executive Compensation Committee
and a medical doctor selected or approved by the Executive; provided, that if
the two medical doctors shall not agree that the Executive is or is not
disabled, the two doctors shall select a third medical doctor to examine the
Executive, and such third doctor’s determination of the Executive’s disability
shall be conclusive.

     2.4 Termination of continuous service for “cause”: Notwithstanding any
other provision of this Agreement, if the Corporation terminates the
Executive’s continuous service for “cause,” no benefit shall be paid by the
Corporation pursuant to this Agreement. For this purpose, “cause” means (i)
willful, deliberate and continued failure by the Executive (other than for
reason of mental or physical illness) to perform his duties as established by
the Board, or fraud or

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dishonesty in connection with such duties, in either case, if such conduct has
a materially detrimental effect on the business operations of the Corporation;
(ii) a material breach by the Executive of his fiduciary duties of loyalty or
care to the Corporation; (iii) the conviction of the Executive of any crime (or
upon entering a plea of guilty or nolo contendere to a charge of any crime)
constituting a felony; (iv) misappropriation of the Corporation’s funds or
property by the Executive; or (v) willful, flagrant, deliberate and repeated
infractions of material published policies and regulations of the Corporation
of which the Executive has actual knowledge. Whether the Executive’s
termination is for “cause” shall be determined by the Executive Compensation
Committee of the Board.

     Section 3. Death of Executive:

     3.1 Death while in continuous service: If the Executive dies while in
continuous service with the Corporation, the Corporation will pay a
supplemental death benefit to the Executive’s beneficiary. The annual amount
of the supplemental death benefit shall be fifty percent (50%) of the
Executive’s final average compensation, determined as of the date of the
Executive’s death. The benefit provided in this Section 3.1 shall be paid in
equal installments in accordance with the Corporation’s regular payroll
practices for executives in effect from time to time, commencing as of the
first payroll period ending coincident with or immediately following the date
of the Executive’s death and continuing for a term certain of ten years.

     3.2 Death after termination of continuous service but before benefit
payments commence or death after benefit payments commence: If the Executive
dies either (i) after his termination of continuous service other than for
“cause” but before benefit payments commence, or (ii) after the date as of
which benefit payments have commenced under this Agreement, payment of the
Executive’s benefit shall commence or continue, as the case may be, to the
Executive’s

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beneficiary following the Executive’s death, treating the Executive’s beneficiary as
the Executive for all purposes under this Agreement.

     Section 4. Vesting:

     4.1 Vesting and forfeiture of benefits: The Executive shall become vested
in his supplemental benefit under this Agreement, to the extent accrued as of
any date, following the first to occur of his completion of ten years of
continuous service with the Corporation, or the date of his termination of
continuous service because of death or disability (as defined in Section 2.3).
The Executive shall not be vested in his supplemental benefit under this
Agreement if he terminates service with the Corporation prior to completing ten
years of continuous service for any reason other than death or disability (as
defined in Section 2.3). The Executive shall forfeit any benefit earned and
vested under this Agreement if his continuous service with the Corporation is
terminated for cause (as defined in Section 2.4).

     4.2 Accelerated vesting: Notwithstanding any other provision of this
Agreement, the Executive Compensation Committee may, with the approval of the
Board, direct that all or part of the Executive’s supplemental retirement
benefit under this Agreement shall be nonforfeitable as of any date prior to
the Executive’s normal retirement date on such terms and conditions as the
Executive Compensation Committee shall determine.

     Section 5. Deferral of Payment Date:

     As of any date that is at least twelve months prior to the Executive’s
normal retirement date (as specified in Section 2.1), the Committee and the
Executive may agree to establish a date following the Executive’s normal
retirement date (referred to herein as his “subsequent normal retirement date”)
as his normal retirement date for purposes of this Agreement; provided, that
such subsequent normal retirement date shall be at least five years following
the date of the agreement between the Committee and the Executive to establish
such subsequent normal retirement date. If a

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subsequent normal retirement date is established pursuant to this Section 5,
this Agreement shall be administered in all respects as if such subsequent
normal retirement date was the normal retirement date specified in Section 2.1,
except that the supplemental retirement benefit described in Section 2.1 shall
be adjusted actuarially by the Committee to reflect any delay in the
commencement of benefits beyond the Executive’s attainment of age 65. For
purposes of making such adjustment, the Committee shall apply actuarial
assumptions agreed to by the Executive at the time the deferral agreement is
entered into.

Section 6. Beneficiary:

The Executive’s beneficiary shall be the person or persons designated by
the Executive on the beneficiary designation form provided by and filed with
the Committee or its designee. If the Executive does not designate a
beneficiary, his beneficiary shall be his surviving spouse. If the Executive
does not designate a beneficiary and has no surviving spouse, the beneficiary
shall be the Executive’s estate. The designation of a beneficiary may be
changed or revoked only by filing a new beneficiary designation form with the
Committee or its designee. If the Executive’s beneficiary dies prior to
asserting a written claim for any death benefit payable under the Agreement,
such benefit shall be payable to the Executive’s estate. If a beneficiary (the
“primary beneficiary”) is receiving or is entitled to receive payments under
the Agreement and dies before receiving all of the payments due him, the
balance to which he is entitled shall be paid to the contingent beneficiary, if
any, named in the Executive’s current beneficiary designation form. If there
is no contingent beneficiary, the balance shall be paid to the estate of the
primary beneficiary. Any beneficiary may disclaim all or any part of any
benefit to which such beneficiary shall be entitled hereunder by filing a
written disclaimer with the Committee at least ten days before payment of such
benefit is to be made. Such a disclaimer shall be made in form satisfactory to
the Committee and shall be irrevocable when filed. Any benefit
disclaimed shall be payable from the Corporation

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under this Agreement in the
same manner as if the beneficiary who filed the disclaimer had died on the date
of such filing.

     Section 7. Administration by Committee:

     7.1 The Committee shall be responsible for the general administration and
interpretation of this Agreement and for carrying out its provisions, except to
the extent all or any of such obligations are specifically imposed on the
Board.

     7.2 The Committee shall maintain full and complete records of its
deliberations and decisions with respect to this Agreement. The minutes of its
proceedings shall be conclusive proof of the facts of the operation of the
Agreement. The records of the Committee with respect to this Agreement shall
contain all relevant data pertaining to the Executive and his rights under the
Agreement.

     7.3 Subject to the limitations of the Agreement, the Committee may from
time to time establish rules or by-laws for the administration of the Agreement
and the transaction of its business. The Committee may correct errors and, so
far as practicable, may adjust any benefit or credit or payment accordingly.
The Committee may in its discretion waive any notice requirements in the
Agreement; provided, that a waiver of notice in one or more cases shall not be
deemed to constitute a waiver of notice in any other case.

     7.4 Subject to the provisions of Section 12, the Committee shall have the
duty and authority to interpret and construe the provisions of this Agreement
and to decide any dispute which may arise regarding the rights of the Executive
hereunder.

     7.5 The Committee may engage an attorney, accountant or any other
technical advisor on matters regarding the operation of the Agreement and to
perform such other duties as shall be required in connection therewith, and may
employ such clerical and related personnel as the Committee shall deem
requisite or desirable in carrying out the provisions of the Agreement. The

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Committee shall from time to time, but no less frequently than annually, review
the financial and liquidity needs of the Corporation under the Agreement. The
Committee shall communicate such needs to the Corporation so that its policies
may be appropriately coordinated to meet such needs.

     7.6 The Committee shall be entitled to reimbursement by the Corporation
for its reasonable expenses properly and actually incurred in the performance
of its duties in the administration of the Agreement.

     7.7 No member of the Committee shall be personally liable by reason of any
contract or other instrument executed by him or on his behalf as a member of
the Committee nor for any mistake of judgment made in good faith, and the
Corporation shall indemnify and hold harmless, directly from its own assets
(including the proceeds of any insurance policy the premiums for which are paid
from the Corporation’s own assets), each member of the Committee and each other
officer, employee, or director of the Corporation to whom any duty or power
relating to the administration or interpretation of the Agreement may be
delegated or allocated, against any unreimbursed or uninsured cost or expense
(including any sum paid in settlement of a claim with the prior written
approval of the Board) arising out of any act or omission to act in connection
with the Agreement unless arising out of such person’s own fraud, bad faith,
willful misconduct or gross negligence.

     Section 8. Funding:

     The obligation of the Corporation to make payments hereunder shall
constitute a liability of the Corporation to the Executive. Notwithstanding
the foregoing, the Corporation may establish a grantor trust (the “Trust”) to
which the Corporation shall contribute according to its terms to pay the
benefits provided for in the Agreement; provided, that to the extent that there
shall not be sufficient funds in the Trust to make one or more payments
provided for under this Agreement, such payments shall be made from the general
funds of the Corporation. Except as otherwise provided herein, the Corporation
shall not be required to establish or maintain any special or separate fund, or

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otherwise to segregate assets to assure that such payments shall be made, and
the Executive shall not have any interest in any particular assets of the
Corporation by reason of its obligations hereunder. When the Trust is
established, a copy of the document shall be attached hereto and its terms
shall be incorporated herein by reference. Nothing contained in this Agreement
or the Trust shall create or be construed as creating a trust of any kind or
any other fiduciary relationship between or among the Corporation, the
Executive, the trustee under the Trust, or any other person. To the extent
that any person acquires a right to receive payment from the Corporation or the
Trust, such right shall be no greater than the right of an unsecured creditor
of the Corporation.

     Section 9. Allocation of Responsibilities:

     The persons responsible for the Agreement and the duties and
responsibilities allocated to each are as follows:

9.1 Board: To amend or terminate this
Agreement in accordance with Section 11.2;

9.2 Committee:

(i) To interpret the provisions of the Agreement and to
determine the rights of the Executive under the Agreement,
except to the extent otherwise provided in Section 12
relating to claims procedure;

(ii) To administer the Agreement in accordance with its
terms, except to the extent powers to administer the
Agreement are specifically delegated to another person or
persons as provided in the Agreement;

(iii) To account for the supplemental retirement benefit of
the Executive; and

(iv) To file such reports as may be required with the United
States Department of Labor, the Internal Revenue Service and
any other government agencies to which reports may be
required to be submitted from time to time.

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     Section 10. Benefits Not Assignable; Facility of Payments:

     10.1 No portion of any benefit credited or paid under this Agreement with
respect to the Executive shall be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any
attempt so to anticipate, alienate, sell, transfer, assign, pledge, encumber or
charge the same shall be void, nor shall any portion of such benefit be in any
manner payable to any assignee, receiver or any one trustee, or be liable for
his debts, contracts, liabilities, engagements or torts, or be subject to any
legal process to levy upon or attach.

     10.2 If any individual entitled to receive a payment under the Agreement
shall be physically, mentally or legally incapable of receiving or
acknowledging receipt of such payment, the Committee, upon the receipt of
satisfactory evidence of his incapacity and satisfactory evidence that another
person or institution is maintaining him and that no guardian or committee has
been appointed for him, may cause any payment otherwise payable to him to be
made to such person or institution so maintaining him. Payment to such person
or institution shall be in full satisfaction of all claims by or through the
Executive to the extent of the amount thereof.

     Section 11. Amendment and Termination of Agreement:

     This Agreement shall not be amended or terminated other than by a writing
signed by the Corporation and the Executive.

     Section 12. Claims Procedure:

     The following claims procedure shall apply with respect to this Agreement:

     12.1 Filing of a claim for benefits: If the Executive or his beneficiary
(the “claimant”) believes that he is entitled to benefits under the Agreement
which are not being paid to him or which are not being accrued for his benefit,
he shall file a written claim therefor with the Committee.

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     12.2 Notification to claimant of decision: Within 90 days after receipt
of a claim by the Committee (or within 180 days if special circumstances
require an extension of time), the
Committee shall notify the claimant of its decision with regard to the claim.
In the event of such special circumstances requiring an extension of time,
there shall be furnished to the claimant prior to expiration of the initial
90-day period written notice of the extension, which notice shall set forth the
special circumstances and the date by which the decision shall be furnished.
If such claim shall be wholly or partially denied, notice thereof shall be in
writing and worded in a manner calculated to be understood by the claimant, and
shall set forth: (i) the specific reason or reasons for the denial; (ii)
specific reference to pertinent provisions of the Agreement on which the denial
is based; (iii) a description of any additional material or information
necessary for the claimant to perfect the claim and an explanation of why such
material or information is necessary; and (iv) an explanation of the procedure
for review of the denial. If the Committee fails to notify the claimant of the
decision in timely manner, the claim shall be deemed denied as of the close of
the initial 90-day period (or the close of the extension period, if
applicable).

     12.3 Procedure for review: Within 60 days following receipt by the
claimant of notice denying his claim, in whole or in part, or, if such notice
shall not be given, within 60 days following the latest date on which such
notice could have been timely given, the claimant shall appeal denial of the
claim by filing a written application for review with the Board. Following
such request for review, the Board shall fully and fairly review the decision
denying the claim. Prior to the decision of the Board, the claimant shall be
given an opportunity to review pertinent documents and to submit issues and
comments in writing.

     12.4 Decision on review: The decision on review of a claim denied in
whole or in part by the Board on initial review shall be made in the following
manner:

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12.4.1 Within 60 days following receipt by the Board of the request for
review (or within 120 days if special circumstances require an extension
of time), the Board shall notify the claimant in writing of its decision
with regard to the claim. In the event of such special circumstances
requiring an extension of time, written notice of the extension shall be
furnished to the claimant prior to the commencement of the extension. If
the decision on review is not furnished in a
timely manner, the claim shall be deemed denied as of the close of the
initial 60-day period (or the close of the extension period, if
applicable).

12.4.2 With respect to a claim that is denied in whole or in part, the
decision on review shall set forth specific reasons for the decision,
shall be written in a manner calculated to be understood by the claimant,
and shall cite specific references to the pertinent Agreement provisions
on which the decision is based.

     12.5 If a dispute remains following the decision of the Board under
Section 12.4, the issue or issues in dispute shall be settled and finally
determined by arbitration in Winston-Salem, North Carolina, under the then
existing rules of the American Arbitration Association; and judgment may be
entered upon the award of the arbitrator by any Court of competent
jurisdiction. The standard of review for such arbitration shall be de novo;
therefore, discretion granted to the Board or the Committee by any other
provision of this Agreement shall be disregarded, and there shall be no
presumption in favor of any decision made by the Board or the Committee. Any
expenses of such arbitration shall be allocated among the parties to this
Agreement by the arbitrator.

     12.6 Action by authorized representative of claimant: All actions set
forth in this Section 12 to be taken by the claimant may likewise be taken by a
representative of the claimant duly authorized by him to act in his behalf on
such matters. The Committee and the Board may require such evidence as either
may reasonably deem necessary or advisable of the authority to act of any such
representative.

     Section 13. Miscellaneous Provisions:

     13.1 Notices: The Executive and each beneficiary shall be responsible for
furnishing the Committee or its designee with their current address for the
mailing of notices and benefit payments. Any notice required or permitted to
be given to the Executive or a beneficiary

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shall be deemed given if directed to
such address and mailed by regular United States mail, first class, postage
prepaid. If any check mailed to such address is returned as undeliverable to
the addressee, mailing of checks will be suspended until the Executive or
beneficiary furnishes the proper address.
This provision shall not be construed as requiring the mailing of any notice or
notification otherwise permitted to be given by posting or by other
publication.

13.2 Lost distributees: A benefit shall be deemed forfeited if the
Committee is unable after a reasonable period of time to locate the Executive
or his beneficiary to whom payment is due; provided, however, that such benefit
shall be reinstated if a valid claim is made by or on behalf of the Executive
or his beneficiary for the forfeited benefit.

13.3 Reliance on data: The Corporation and the Committee shall have the
right to rely on any data provided by the Executive or by any beneficiary.
Representations of such data shall be binding upon any party seeking to claim a
benefit through a Executive, and the Corporation and the Committee shall have
no obligation to inquire into the accuracy of any representation made at any
time by the Executive or his beneficiary.

13.4 Receipt and release for payments: Any payment made from the
Corporation to or with respect to the Executive or his beneficiary, or pursuant
to a disclaimer by a beneficiary, shall, to the extent thereof, be in full
satisfaction of all claims hereunder against the Corporation with respect to
the Agreement. The recipient of any payment may be required by the Committee,
as a condition precedent to such payment, to execute a receipt and release with
respect thereto in such form as shall be acceptable to the Committee.

13.5 Withholding: The Corporation shall withhold from any payments or
benefits under this Agreement all federal, state, or local taxes or other
amounts as shall be required pursuant to any law or governmental regulation or
ruling.

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     13.6 Headings: The headings and subheadings of the Agreement have been
inserted for convenience of reference and are to be ignored in any construction
of the provisions hereof.

     13.7 Continuation of employment: The establishment of the Agreement shall
not be construed as conferring any legal or other rights upon the Executive or
any persons for continuation of
employment, nor shall it interfere with the right of the Corporation to
discharge any employee or to deal with him without regard to the effect thereof
under the Agreement.

     13.8 Binding on successors: The obligations of the parties hereto shall
inure to the benefit of and shall be binding upon their successors and assigns,
including any successor to the Corporation by merger, consolidation or
otherwise that may agree to continue this Agreement.

     13.9 Construction: The provisions of the Agreement shall be construed and
enforced according to the laws of the State of North Carolina.

     IN WITNESS WHEREOF, this Retirement Security Agreement is executed by and
in behalf of the parties hereto as the day and year first above written.

	 	 	 	 	 
	 	 	INSTEEL INDUSTRIES, INC.
	 
	 	 	 	 
	

	 	By:	 	 
	Attest:

	 	 	 	

President
	

	 	 	 	 
	Secretary
	 	 	 	 
	 
	 	 	 	 
	[Corporate Seal]
	 	 	 	 
	 	 	EXECUTIVE
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

(SEAL)

	

	 	 	 	 
	Witness
	 	 	 	 

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                                                                     EXHIBIT 4.3

                     ULTRAVISUAL MEDICAL SYSTEMS CORPORATION

                             2000 STOCK OPTION PLAN

<PAGE>
                                                                               .
                                                                               .
                                                                               .

                     UltraVisual Medical Systems Corporation
                             2000 Stock Option Plan

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                           Page
                                                           ----
<S>                                                        <C>
ARTICLE 1.ESTABLISHMENT, PURPOSE, AND DURATION..........    1

1.1      Establishment of the Plan......................    1

1.2      Purpose of the Plan............................    1

1.3      Duration of the Plan...........................    1

ARTICLE 2.DEFINITIONS...................................    1

ARTICLE 3.ADMINISTRATION................................    5

3.1      The Committee..................................    5

3.2      Authority of the Committee.....................    5

3.3      Decisions Binding..............................    5

3.4      Limitation on Liability........................    6

ARTICLE 4.SHARES SUBJECT TO THE PLAN....................    6

4.1      Maximum Number of Shares Subject to the Plan...    6

4.2      Additional Shares..............................    6

4.3      Adjustments in Authorized Shares and Options...    6

ARTICLE 5.ELIGIBILITY AND PARTICIPATION.................    7

5.1      Eligibility....................................    7

5.2      Actual Participation...........................    7

ARTICLE 6.STOCK OPTIONS.................................    7

6.1      Grant of Options...............................    7

6.2      Option Award Agreement.........................    7

6.3      Option Price...................................    7

6.4      Duration of Options............................    7

6.5      Option Transfer Restrictions...................    8

6.6      Exercise of Option.............................    8

6.7      Payment........................................    8

6.8      Securities Law Requirements....................    9
</TABLE>

                                        i
<PAGE>

<TABLE>
<S>                                                                              <C>
6.9      Shareholders Agreement; Restrictions on Share Transferability........    9

6.10     Termination of Employment Due to Death, Disability or Retirement.....    9

6.11     Termination of Employment for Other Reasons..........................   10

6.12     Termination of Services as a Director................................   10

6.13     Termination of Services as a Consultant..............................   10

6.14     Status as Shareholder................................................   11

6.15     Action by the Company................................................   11

ARTICLE 7.BENEFICIARY DESIGNATION.............................................   11

ARTICLE 8.DEFERRALS...........................................................   11

ARTICLE 9.RIGHTS OF EMPLOYEES.................................................   11

9.1      Employment...........................................................   11

9.2      Participation........................................................   12

ARTICLE 10.CHANGE IN CONTROL..................................................   12

ARTICLE 11.AMENDMENT, MODIFICATION, AND TERMINATION...........................   12

ARTICLE 12.WITHHOLDING........................................................   12

12.1     Tax Withholding......................................................   12

12.2     Share Withholding....................................................   12

ARTICLE 13.INDEMNIFICATION....................................................   12

ARTICLE 14.SUCCESSORS.........................................................   13

ARTICLE 15.LEGAL CONSTRUCTION.................................................   13

15.1     Gender and Number....................................................   13

15.2     Severability.........................................................   13

15.3     Requirements of Law..................................................   13

15.4     Governing Law........................................................   13

15.5     Awards to Foreign Nationals and Employees Outside the United States..   13

15.6     Unfunded Status of the Plan..........................................   14
</TABLE>

                                       ii
<PAGE>

                     ULTRAVISUAL MEDICAL SYSTEMS CORPORATION
                             2000 STOCK OPTION PLAN

                 ARTICLE 1. ESTABLISHMENT, PURPOSE, AND DURATION

      1.1 Establishment of the Plan. UltraVisual Medical Systems Corporation, a
Delaware corporation (the "Company"), hereby establishes a stock option plan to
be known as the UltraVisual Medical Systems Corporation 2000 Stock Option Plan
(the "Plan"), as set forth in this document. The Plan permits the grant of
Incentive Stock Options and Nonqualified Stock Options. Upon approval by the
Board of Directors of the Company, subject to ratification by an affirmative
vote of holders of a majority of the Shares of the Company, the Plan shall
become effective as of June 30, 2000 (the "Effective Date"), and shall remain in
effect as provided in Section 1.3 herein.

      1.2 Purpose of the Plan. The purpose of the Plan is to promote the success
and enhance the value of the Company by linking the personal interests of
Participants to those of those Company shareholders, and by providing
Participants with an incentive for outstanding performance. The Plan is further
intended to provide flexibility to the Company in its ability to motivate,
attract, and retain the services of Participants upon whose judgment, interest,
and special effort the successful conduct of its operation is dependent.

      1.3 Duration of the Plan. Subject to approval by the Board of Directors
and ratification by the shareholders of the Company, the Plan shall commence on
the Effective Date, as described in Section 1.1 herein, and shall remain in
effect, subject to the right of the Board of Directors to terminate the Plan at
any time pursuant to Article 11 herein, until all Shares subject to it have been
purchased according to the Plan's provisions. However, in no event may an Award
be granted under the Plan more than ten years after the Effective Date.

                             ARTICLE 2. DEFINITIONS

      Whenever used in the Plan, the following terms shall have the meanings set
forth below and, when the meaning is intended, the initial letter of the word or
words is capitalized:

      "Affiliate" means (i) a member of a controlled group of corporations of
which the Company is a member; or (ii) an unincorporated trade or business which
is under common control with the Company as determined in accordance with
Section 414(c) of the Code and the regulations issued thereunder; or (iii) any
other entity of which the Company is the direct or indirect beneficial owner of
not less than fifty percent (50%) of all issued and outstanding equity
interests. For purposes hereof, a "controlled group of corporations" shall mean
a controlled group of corporations as defined in Section 1563(a) of the Code
determined without regard to Section 1563(a)(4) and (e)(3)(C).

      "Award" means, individually or collectively, a grant under this Plan of
Nonqualified Stock Options or Incentive Stock Options.

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      "Award Agreement" means an agreement entered into by each Participant and
the Company, setting forth the terms and provisions applicable to an Award
granted to a Participant under this Plan.

      "Beneficial Owner" shall have the meaning ascribed to such term in Rule
13d-3 of the General Rules and Regulations under the Exchange Act.

      "Board" or "Board of Directors" means the board of directors of the
Company.

      "Cause" means, (i) if such Participant has a written employment agreement
with the Company in effect at the time of such Participant's termination of
employment with the Company which includes a definition of "Cause" (or its
like), any meaning assigned to such word (or its like) as defined in said
employment agreement; or (ii) if no such employment agreement is then in effect,
the term "Cause" shall have the following meanings: (A) willful and gross
misconduct on the part of a Participant that is materially and demonstrably
detrimental to the Company, (B) Participant has breached a material provision of
any agreement to which Participant and the Company are parties; (C) the
commission by a Participant of one or more acts which constitute an indictable
crime under United States Federal, state, or local law, or (D) the willful and
continued failure of a Participant to substantially perform his or her duties
with or for the Company or a Subsidiary. "Cause" under either (A), (B), (C) or
(D) shall be determined in good faith by the Committee.

      "Change in Control" of the Company shall be deemed to have occurred,
unless the Participant's employment agreement with the Company's states
otherwise, as of the first day that any one or more of the following conditions
shall have been satisfied:

            (i)   Any Person (other than those Persons in control of the Company
                  as of the Effective Date, or other than a trustee or other
                  fiduciary holding securities under an employee benefit plan of
                  the Company, or a corporation owned directly or indirectly by
                  the stockholders of the Company in substantially the same
                  proportions as their ownership of stock of the Company),
                  becomes the Beneficial Owner, directly or indirectly, of
                  securities of the Company representing fifty-one percent (51%)
                  or more of the combined voting power of the Company's then
                  outstanding securities; or

            (ii)  During any period of two (2) consecutive years (not including
                  2000 or any period prior to the Effective Date), individuals
                  who at the beginning of such period constitute the Board (and
                  any new Director who was nominated by the Board or a Director)
                  cease to constitute a majority thereof at the end of such
                  period; or

            (iii) The stockholders of the Company approve (A) a plan of complete
                  liquidation of the Company, (B) an agreement for the sale or
                  disposition of all or substantially all the Company's assets,
                  or (C) a merger, consolidation, or reorganization of the
                  Company with or involving any other corporation, other than a
                  merger, consolidation, or reorganization

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                   that would result in the voting securities of the Company
                   outstanding immediately prior thereto continuing to represent
                   (either by remaining outstanding or by being converted into
                   voting securities of the surviving entity), at least fifty
                   percent (50%) of the combined voting power of the voting
                   securities of the Company (or such surviving entity)
                   outstanding immediately after such merger, consolidation, or
                   reorganization.

However, in no event shall a "Change in Control" be deemed to have occurred,
with respect to a Participant, if the Participant is part of a purchasing group
that consummates the Change-in-Control transaction. A Participant shall be
deemed "part of a purchasing group" for purposes of the preceding sentence if
the Participant is an equity participant in the purchasing company or group
(except for (i) passive ownership of less than three percent (3%) of the stock
of the purchasing company or (ii) ownership of equity participation in the
purchasing company or group which is otherwise not significant, as determined
prior to the Change in Control by a majority of the nonemployee continuing
Directors).

      "Code" means the Internal Revenue Code of 1986, as amended from time to
time.

      "Committee" means, as applicable, the Board or the committee, as specified
in Article 3, appointed by the Board to administer the Plan with respect to
grants of Awards.

      "Company" means UltraVisual Medical Systems Corporation, a Delaware
corporation, or any successor thereto as provided in Article 14 herein.

      "Consultant" means an individual who performs services for the Company or
an Affiliate, but who is not an Employee or a Director.

      "Director" means any individual who is a member of the Board of Directors.

      "Disability" means, (i) if such Participant has a written employment
agreement with the Company in effect at the time of such Participant's
termination of employment with the Company which includes a definition of
"Disability" (or its like), any meaning assigned to such word (or its like) as
defined in said employment agreement; or (ii) if no such employment agreement is
then in effect, the term "Disability" shall mean a permanent and total
disability, within the meaning of Code Section 22(e)(3), as determined by the
Company in good faith, upon receipt of sufficient competent medical advice from
one or more individuals, selected by the Company, who are qualified to give
professional medical advice.

      "Effective Date" has the meaning set forth in Section 1.1.

      "Employee" means any full-time employee of the Company or an Affiliate.
Directors who are not otherwise employed full-time by the Company shall not be
considered Employees under this Plan.

      "Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, or any successor thereto.

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      "Fair Market Value" means:

            (a) the average of the high and low prices of publicly traded Shares
      on the national securities exchange on which the Shares as listed (if the
      Shares are so listed) or on the NASDAQ National Market System (if the
      Shares are regularly quoted on the NASDAQ National Market System);

            (b) if not so listed or regularly quoted, the mean between the
      closing bid and asked prices of publicly traded Shares in the
      over-the-counter market;

            (c) if such bid and asked prices are not available, as reported by
      an nationally recognized quotation service selected by the Committee; and

            (d) if a nationally recognized quotation service is not available,
      as determined by the Committee in its reasonable discretion.

      "Incentive Stock Option" or "ISO" means an option to purchase Shares,
granted under Article 6 herein, which is designated as an Incentive Stock Option
and is intended to meet the requirements of Section 422 of the Code.

      "Nonqualified Stock Option" or "NQSO" means an option to purchase Shares,
granted under Article 6 herein, which is not intended to be an Incentive Stock
Option.

      "Option" means an Incentive Stock Option or a Nonqualified Stock Option.

      "Option Price" means the price at which a Share may be purchased by a
Participant pursuant to an Option, as determined by the Committee.

      "Participant" means an Employee, a Director or a Consultant who has
outstanding an Award granted under the Plan.

      "Person" shall have the meaning ascribed to such term in Section 3(a)(9)
of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a
"group" as defined in Section 13(d).

      "Plan' has the meaning set forth in Section 1.1.

      "Retirement" shall mean termination of employment after attaining age 65.

      "Shares" means the shares of common stock, par value $0.01 per share, of
the Company.

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                            ARTICLE 3. ADMINISTRATION

      3.1 The Committee. The Plan shall be administered by the Committee
consisting of not less than two (2) Directors. The members of the Committee
shall be appointed from time to time by, and shall serve at the discretion of,
the Board of Directors.

      3.2 Authority of the Committee. Unless otherwise determined by the Board,
the Committee shall have full authority and discretion to establish such rules
and regulations as it sees necessary for the proper administration of the Plan
and to make whatever determinations and interpretations in connection with the
Plan, including, without limitation, the following actions:

            (a)   To interpret the Plan and to apply its provisions;

            (b)   To adopt, amend or rescind rules, procedures and forms
      relating to the Plan;

            (c)   To authorize any person to execute, on behalf of the Company,
      any instrument required to carry out the purposes of the Plan;

            (d)   To determine when Participants are to be granted Awards under
      the Plan;

            (e)   To select the Participants;

            (f)   To determine the number of Shares to be made subject to each
      Option;

            (g)   To prescribe the terms and conditions of each Option,
      including (without limitation) the Exercise Price, to determine whether
      such Option is to be classified as an ISO or as an NSO, and to specify the
      provisions of the Stock Option Agreement relating to such Option;

            (h)   To amend any outstanding Stock Option Agreement subject to
      applicable legal restrictions and to the consent of the Participant who
      entered into such agreement;

            (i)   To prescribe the consideration for the grant of each Option or
      other right under the Plan and to determine the sufficiency of such
      consideration; and

            (j)   To take any other actions deemed necessary or advisable for
      the administration of the Plan.

The interpretation and construction by the Committee of any provisions of the
Plan or of any Option granted under the Plan and any determination by the
Committee under any provision of the Plan or any such Option shall be final and
conclusive. As permitted by law, the Committee may delegate its authority
identified hereunder.

      3.3 Decisions Binding. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan and all determinations,
decisions, related orders or resolutions of the Board pursuant to the provisions
of the Plan shall be final, conclusive, and

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binding on all persons, including the Company, its stockholders, Employees,
Directors, Consultants, Participants, and their estates and beneficiaries.

      3.4 Limitation on Liability. Neither the Board nor the Committee, nor any
member of either, shall be liable for any act, omission, interpretation,
construction or determination made in connection with the Plan in good faith,
and the members of the Board and the members of the Committee shall be entitled
to indemnification and reimbursement by the Company in respect of any claim,
loss, damage or expense (including attorney's fees) arising therefrom to the
full extent permitted by law and under any directors and officers liability
insurance coverage which may be in effect from time to time.

                      ARTICLE 4. SHARES SUBJECT TO THE PLAN

      4.1 Maximum Number of Shares Subject to the Plan. Subject to adjustment as
provided in Section 4.3 herein, the total number of Shares available for grant
under the Plan may not exceed 4,000,000. These 4,000,000 Shares may be either
authorized but unissued or reacquired Shares.

      The following rules will apply for purposes of the determination of the
number of Shares available for grant under the Plan:

            (a)   While an Award is outstanding, it shall be counted against the
      authorized pool of Shares, regardless of its vested status.

            (b)   The grant of an Option shall reduce the Shares available for
      grant under the Plan by the number of Shares subject to such Award.

            (c)   To the extent that an Award is settled in cash rather than in
      Shares, the authorized Share pool shall be credited with the appropriate
      number of Shares represented by the cash settlement of the Award, as
      determined at the sole discretion of the Committee (subject to the
      limitation set forth in Section 4.2 herein).

      4.2 Additional Shares. In the event that any outstanding Option for any
reason expires or is canceled or otherwise terminated, the Shares allocable to
the unexercised portion of such Option shall again be available for the purposes
of the Plan. In the event that Shares issued under the Plan are reacquired by
the Company pursuant to a forfeiture provision, a right of repurchase or a right
of first refusal, such Shares shall again be available for the purposes of the
Plan.

      4.3 Adjustments in Authorized Shares and Options. In the event of any
merger, reorganization, consolidation, recapitalization, separation,
liquidation, stock dividend, split-up, Share combination, or other change in the
corporate structure of the Company affecting the Shares, such adjustment shall
be made in the number and class of Shares which may be delivered under the Plan,
and in the number and class of and/or price of Shares subject to outstanding
Options, granted under the Plan, as may be determined to be appropriate and
equitable by the Committee, in its sole discretion, to prevent dilution or
enlargement of rights; and provided that the number of Shares subject to any
Award shall always be a whole number.

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                    ARTICLE 5. ELIGIBILITY AND PARTICIPATION

      5.1 Eligibility. Persons eligible to participate in the Plan include all
Employees, Directors and Consultants.

      5.2 Actual Participation. Subject to the provisions of the Plan, the
Committee may, from time to time, select from all eligible Employees, Directors,
and Consultants and grant an award to an Employee, Director or Consultant and
determine the nature and amount of such Award.

                            ARTICLE 6. STOCK OPTIONS

      6.1 Grant of Options. Subject to the terms and provisions of the Plan,
Options may be granted to Employees, Directors and Consultants at any time and
from time to time as shall be determined by the Committee. The Committee shall
have discretion in determining the number of Shares subject to Options granted
to each Employee, Director, and Consultant. The Committee may grant ISOs only to
Employees. The aggregate Fair Market Value (determined at the date of the grant)
of the Shares with respect to which ISOs are exercisable by an Employee during
any calendar year (granted under this Plan and all other ISO plans of the
Company, a related corporation or a predecessor corporation) shall not exceed
$100,000 or such other limit as may be prescribed by the Code. Any Option which
is identified as an ISO but exceeds the above annual limit or otherwise fails to
qualify for treatment as an ISO shall not be void but rather shall be a NQSO.

      6.2 Option Award Agreement. Each Option grant shall be evidenced by an
Award Agreement that shall specify the Option Price, the duration of the Option,
the number of Shares to which the Option pertains, a vesting schedule (which may
be different for each Participant) and such other provisions as the Committee
shall determine. The Award Agreement also shall specify whether the Option is
intended to be an ISO within the meaning of Section 422 of the Code, or a NQSO
whose grant is intended not to fall under the Code provisions of Section 422.

      6.3 Option Price. The Option Price for each grant of an Option to an
Employee, Director, or Consultant shall be determined by the Committee. The
Option Price for an ISO shall not be less than the Fair Market Value of the
Shares at the date of grant as determined by the Committee; provided, further
that with respect to ISOs granted to shareholders owning more than ten percent
(10%) of the issued and outstanding Shares, the Option Price shall not be less
than 110% of the Fair Market Value of the Shares at the date of the grant.

      6.4 Duration of Options. Each Option granted shall expire at such time as
the Committee shall determine at the time of grant; provided, however, that no
ISO shall be exercisable later than the tenth (10th) anniversary date of its
grant, that no NQSO shall be exercisable later than the tenth (10th) anniversary
date of its grant, and that no ISO granted to a shareholder owning more than ten
percent (10%) of the issued and outstanding Shares shall be exercisable later
than the fifth (5th) anniversary date of its grant.

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      6.5 Option Transfer Restrictions. Notwithstanding any other provisions of
the Plan, unless the Committee otherwise provides in the Award Agreement, no
option granted under this Plan may be transferred, except upon the death of the
Participant to such Participant's estate or the administrator(s) or executor(s)
of that estate (this exception does not extend to or permit the distribution or
other transfer by that estate or executor(s) or administrator(s) to the
Participant's heirs or other beneficiaries of the estate). In addition, Options
granted under the Plan shall be subject to such other restrictions and
conditions as the Committee shall in each instance approve, which need not be
the same for each grant or for each Participant.

      6.6 Exercise of Option. Each Option shall be exercisable in accordance
with the Award Agreement evidencing the granting of such Option and the
provisions of this Plan. Options shall be exercised by the delivery of a written
notice of exercise in the form attached hereto as Exhibit A (the "Exercise
Notice") to the Secretary of the Company, setting forth the number of Shares
with respect to which the Option is to be exercised, accompanied by full payment
for the Shares and any withholding tax relating to the Option.

      6.7 Payment.

      (a) The Option Price, and any related withholding taxes, upon exercise of
any Option shall be payable to the Company in full either (i) in cash or its
equivalent, (ii) at the discretion of the Committee, by tendering previously
acquired Shares having an aggregate Fair Market Value at the time of exercise
equal to the total Option Price, or (iii) by a combination of (i) and (ii).

      (b) The Committee also may allow cashless exercise as permitted under
Federal Reserve Board's Regulation T, subject to applicable securities law
restrictions, or by any other means which the Committee determines to be
consistent with the Plan's purpose and applicable law.

      (c) The Committee may, but shall not be obligated to, authorize the
Company on such terms and conditions as it deems appropriate in each case, to
accept the surrender by the Participant of the right to exercise an Option
granted under the Plan in consideration for the payment by the Company of an
amount equal to the excess of the fair market value of the shares subject to
such Option (or portion thereof) surrendered over the Option price of such
shares. Such payment, at the discretion of the Committee, may be made in Shares
valued at the then Fair Market Value thereof or in cash or partly in cash and
partly in Shares. Any Option surrendered as provided in this Section 6.7(c)
shall be canceled by the Company and not be subject to further grant.

      (d) As soon as practicable after receipt of a written notification of
exercise and full payment, the Company shall deliver to the Participant, in the
Participant's name, Share certificates in an appropriate amount based upon the
number of Shares purchased under the Option(s); provided, however, that if any
law or regulation requires the Company to take action with respect to the Shares
specified in the Exercise Notice before issuance thereof, the date of delivery
of such Shares shall then be extended for the period necessary to take such
action.

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      6.8 Securities Law Requirements. No Option granted under this Plan may be
exercised unless, at the time of exercise, the Shares to be issued qualify for
exemption from, or are registered pursuant to, applicable federal and state
security laws. In the event there shall not then be on file with the Securities
and Exchange Commission under the Securities Act of 1933, as amended, an
effective registration statement, including a prospectus related to the Shares
subject to the Option, the Participant will execute and deliver to the Company
prior to receipt by him or her of any such Shares under this Plan, an Investment
Representation Statement in the form attached hereto as Exhibit B.

      6.9 Shareholders Agreement; Restrictions on Share Transferability. As a
condition precedent to a Participant's exercise of an Option, such Participant
shall be required to execute a shareholders agreement with the Company and
certain other shareholders. Such shareholders agreement shall contain
restrictions concerning the transferability of Shares and may contain, at the
Company's option, rights of first refusal granted to the Company and other
provisions pertaining to redemption of such Participant's Shares and other types
of restrictions, requirements, and obligations imposed upon Participant.

      6.10 Termination of Employment Due to Death, Disability or Retirement.
Unless a Participant's employment agreement with the Company or the Award
Agreement states otherwise, the following shall apply to each Participant:

            (a) Termination by Death. In the event the employment of an Employee
      is terminated by reason of death, all outstanding Options granted to that
      Employee that are not vested shall be immediately forfeited to the Company
      and all outstanding Options that are vested shall remain exercisable at
      any time prior to their expiration date, or for thirteen (13) months after
      the date of death, whichever period is shorter, by such person or persons
      as shall have been named as the Employee's beneficiary, or by such persons
      that have acquired the Employee's rights under the Option by will or by
      the laws of descent and distribution.

            (b) Termination by Disability. In the event the employment of an
      Employee is terminated by reason of Disability, all outstanding Options
      granted to that Employee that are not vested shall as of the date the
      Committee determines the definition of Disability to have been satisfied
      be immediately forfeited to the Company, and all outstanding Options that
      are vested shall remain exercisable at any time prior to their expiration
      date, or for thirteen (13) months after the date that the Committee
      determines the definition of Disability to have been satisfied, whichever
      period is shorter.

            (c) Termination by Retirement. In the event the employment of an
      Employee is terminated by reason of Retirement, the Committee shall retain
      discretion over the treatment of Options.

            (d) Exercise Limitations on ISOs. In the case of ISOs, the tax
      treatment prescribed under Section 422 of the Code, may not be available
      if the Options are not exercised within the Section 422 prescribed time
      periods after each of the various types of employment termination.

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      6.11 Termination of Employment for Other Reasons. Except as otherwise
provided in a Participant's employment agreement with the Company or in the
Participant's Award Agreement, if the employment of an Employee shall terminate
for any reason other than the reasons set forth in Section 6.10 (and other than
for Cause), all Options held by the Employee that are not vested as of the
effective date of employment termination immediately shall be forfeited to the
Company (and shall once again become available for grant under the Plan).
However, the Committee, in its sole discretion, shall have the right to
immediately vest all or any portion of such Options, subject to such terms as
the Committee, in its sole discretion, deems appropriate.

      Options that are vested as of the effective date of employment termination
may be exercised by the Employee within the period beginning on the effective
date of employment termination, and ending thirty (30) days after such date or
on such later date as is approved by the Committee or as stated in the Award
Agreement. A leave of absence approved in writing by the Board shall not be a
termination of employment for purposes of the Plan, but Options may not be
exercised during any such leave of absence.

      If the employment of an Employee is terminated by the Company for Cause,
all outstanding Options held by the Participant immediately shall be forfeited
to the Company and no additional exercise period shall be allowed, regardless of
the vested status of the Options.

      6.12 Termination of Services as a Director. Except as provided in a
Director's Award Agreement, if a Director's tenure ends because of death,
Disability, Retirement, or for other reasons, all outstanding Options granted to
that Director that are not vested shall be immediately forfeited to the Company
as of the Director's last day of service as a Director of the Company. For
purposes of this Section 6.12, Retirement with respect to a Director shall mean
the date of the Company's annual shareholders meeting at which such Director,
but for said Retirement, would be a nominee for election to the Board. Following
the date on which the Director ceases to serve as a Director, other than as a
result of removal for Cause, all outstanding Options that are vested shall
remain exercisable, to the extent such Options may be exercised pursuant to this
Plan, until the earlier of the following: (i) one year from the date the
Director ceases to serve in such capacity; or (ii) the expiration of the
original Option term. If a Director is removed for Cause, all outstanding
Options held by the Director shall be immediately forfeited to the Company and
no additional exercise period shall be allowed, regardless of the vested status
of the Options.

      6.13 Termination of Services as a Consultant. Except as provided in a
Consultant's consulting agreement with the Company or the Award Agreement, if a
Consultant's engagement ends because of death, Disability, or any other reason,
all outstanding Options granted to that Consultant that are not vested shall be
immediately forfeited to the Company as of the Consultant's last day of service
as a Consultant to the Company. Following the date on which the Consultant
ceases to serve as a Consultant, other than removal for Cause, all outstanding
Options that are vested shall remain exercisable, to the extent such options may
be exercised pursuant to this Plan, until the earlier of the following: (i) six
months from the date the Consultant ceases to serve in such capacity; or (ii)
the expiration of the original option term. If a

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Consultant's services are terminated for Cause, all outstanding options shall be
immediately forfeited to the Company and no additional exercise period shall be
allowed regardless of the vested status of the Options.

      6.14 Status as Shareholder. Neither the Participant nor his executor,
administrator, heirs, or legatees, shall be or have any rights or privileges of
a shareholder of the Company in respect to the Shares issuable upon exercise of
any Option, unless and until the Option has been exercised and certificates
representing such shares shall have been issued and delivered to the
Participant.

      6.15 Action by the Company. The existence of Options shall not impair the
right of the Company or its shareholders to make or effect any adjustments,
recapitalizations, reorganizations or other changes in the Company's capital
structure or its business, or any merger or consolidation of the Company, or any
issue of bonds, debentures, preferred or prior preference stocks ahead of or
affecting the Shares or the rights thereof, or the dissolution or liquidation of
the Company, or any sale or transfer of all or any part of its assets or
business, or any other corporate act or proceeding whether of a similar
character or otherwise.

                       ARTICLE 7. BENEFICIARY DESIGNATION

      Each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or successively) to
whom any benefit under the Plan is to be paid in case of his or her death before
he or she receives any or all of such benefit. Each such designation shall
revoke all prior designations by the same Participant, shall be in a form
prescribed by the Company, and will be effective only when any necessary spousal
consent is obtained and filed by the Participant in writing with the Secretary
of the Company during the Participant's lifetime. In the absence of any such
designation, benefits remaining unpaid at the Participant's death shall be paid
to the Participant's estate.

                              ARTICLE 8. DEFERRALS

      The Committee may permit a Participant to defer such Participant's receipt
of the payment of cash or the delivery of Shares that would otherwise be due to
such Participant by virtue of the exercise of an Option and applicable
withholding taxes related thereto. If any such deferral election is required or
permitted, the Committee shall, in its sole discretion, establish rules and
procedures for such payment deferrals.

                         ARTICLE 9. RIGHTS OF EMPLOYEES

      9.1 Employment. Nothing in the Plan shall interfere with or limit in any
way the right of the Company to terminate any Employee's employment either at
any time, in the case of an at-will employee, or consistent with the terms of
Employee's employment agreement with the Company, nor confer upon any Employee
any right to continue in the employ of the Company. For purposes of the Plan,
transfer of employment of a Participant between the Company and an Affiliate (or
among Affiliates) shall not be deemed a termination of employment.

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      9.2 Participation. No Employee shall have the right to be selected to
receive an Award under this Plan, or, having been so selected, to be selected to
receive a future Award.

                          ARTICLE 10. CHANGE IN CONTROL

      Except as provided in a Participant's employment agreement with the
Company or a Participant's Award Agreement, upon the occurrence of a Change in
Control, unless otherwise specifically prohibited by the terms of the Plan, the
following shall apply:

            (a)   Any and all Options granted hereunder shall become immediately
      exercisable; and

            (b)   Subject to Article 11 herein, the Committee shall have the
      authority to make any modifications to the Awards as determined by the
      Committee to be appropriate before the effective date of the Change in
      Control.

              ARTICLE 11. AMENDMENT, MODIFICATION, AND TERMINATION

      The Board of Directors of the Company may at any time suspend or terminate
the Plan. The Board of Directors of the Company may also at any time amend or
revise the terms and provisions of the Plan. No termination, suspension or
modification of the Plan may, without the consent of the person to whom any
Option shall theretofore have been granted, adversely affect the rights of such
person under such Option, except that the Company may require all of the Options
issued under the Plan be surrendered in connection with a merger, consolidation
or reorganization, or the sale of substantially all of the Company's stock or
assets but only as and to the extent provided under the terms of an Award
Agreement or other agreement with the Participant.

                             ARTICLE 12. WITHHOLDING

      12.1 Tax Withholding. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy Federal, state, and local taxes (including the
Participant's FICA obligation) required by law to be withheld with respect to
any taxable event arising or as a result of this Plan.

      12.2 Share Withholding. With respect to withholding required upon the
exercise of Options or upon any other taxable event hereunder, Participants may
elect, subject to the approval of the Committee, to satisfy the withholding
requirement, in whole or in part, by having the Company withhold Shares having a
Fair Market Value on the date the tax is to be determined equal to the minimum
statutory total tax which could be imposed on the transaction. All elections
shall be irrevocable, made in writing, signed by the Participant.

                           ARTICLE 13. INDEMNIFICATION

      Each person who is or shall have been a member of the Committee, or of the
Board, shall be indemnified and held harmless by the Company against and from
any loss, cost, liability, or

                                       12
<PAGE>

expense that may be imposed upon or reasonably incurred by him or her in
connection with or resulting from any claim, action, suit, or proceeding to
which he or she may be a party or in which he or she may be involved by reason
of any action taken or failure to act under the Plan and against and from any
and all amounts paid by him or her in settlement thereof, with the Company's
approval, or paid by him or her in satisfaction of any judgment in any such
action, suit, or proceeding against him or her, provided he or she shall give
the Company an opportunity, at its own expense, to handle and defend the same
before he or she undertakes to handle and defend it on his or her own behalf.
The foregoing right of indemnification shall not be exclusive of any other
rights of indemnification to which such persons may be entitled under the
Company's Certificate of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.

                             ARTICLE 14. SUCCESSORS

      All obligations of the Company under the Plan, with respect to Awards
granted hereunder, shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.

                         ARTICLE 15. LEGAL CONSTRUCTION

      15.1 Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.

      15.2 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced in
a manner so as to give the maximum valid and enforceable effect to such
provisions.

      15.3 Requirements of Law. The granting of Awards and the issuance of
Shares under the Plan shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.

      15.4 Governing Law. To the extent not preempted by Federal law, the Plan,
and all agreements hereunder, shall be construed in accordance with and governed
by the laws of the State of Delaware.

      15.5 Awards to Foreign Nationals and Employees Outside the United States.
To the extent the Committee deems it necessary, appropriate or desirable to
comply with foreign law of practice and to further the purposes of this Plan,
the Committee may, without amending the Plan, (i) establish rules applicable to
Awards granted to Participants who are foreign nationals, are employed outside
the United States, or both, including rules that differ from those set forth in
this Plan, and (ii) grant Awards to such Participants in accordance with those
rules.

                                       13
<PAGE>

      15.6 Unfunded Status of the Plan. The Plan is intended to constitute an
"unfunded" plan for incentive and deferred compensation. With respect to any
payments or deliveries of Shares not yet made to a Participant by the Company,
nothing contained herein shall give any rights that are greater than those of a
general creditor of the Company. The Committee may authorize the creation of
trusts or other arrangements to meet the obligations created under the Plan to
deliver Shares or payments hereunder consistent with the foregoing.

                                       14
<PAGE>

                                    EXHIBIT A

                     ULTRAVISUAL MEDICAL SYSTEMS CORPORATION
                                 2000 STOCK PLAN

                                 EXERCISE NOTICE

UltraVisual Medical Systems Corporation
131 W. Wilson Street
Madison, WI 53703

Attn: Stock Plan Administrator

1. Exercise of Option. Effective as of today, _________, ________, 20____ the
undersigned ("Optionee") hereby elects to exercise his or her option to purchase
__________ shares of the Common Stock (the "Shares") of UltraVisual Medical
Systems Corporation (the "Company") under and pursuant to the 2000 Stock Plan
(the "Plan") and the Stock Option Award Agreement dated _________ _____, 20___,
(the "Award Agreement"). ___________ Options exercised are Incentive Stock
Options. ___________ Options exercised are Non qualifed Stock Options.

      2. Delivery of Payment/Withholding. Optionee herewith delivers to the
Company the full purchase price of the Shares and any applicable withholding
(unless other arrangements have been made for such withholding), as set forth in
the Award Agreement.

      3. Rights as Shareholder. Until the issuance of the Shares (as evidenced
by the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any
other rights as a shareholder shall exist due to Optionee's exercise of the
Option. The certificate evidencing the Shares shall be issued to Optionee as
soon as practicable after the Option is exercised. No adjustment shall be made
for a dividend or other right for which the record date is prior to the date of
issuance except as provided in the Plan.

      4. Tax Consultation. Optionee understands that Optionee may suffer adverse
tax consequences as a result of Optionee's purchase or disposition of the
Shares. Optionee represents that Optionee has consulted with any tax consultants
Optionee deems advisable in connection with the purchase or disposition of the
Shares and that Optionee is not relying on the Company for any tax advice.

      5. Entire Agreement. The Plan and Award Agreement are incorporated herein
by reference. This Exercise Notice, the Plan, the Award Agreement and the
Investment Representation Statement constitute the entire agreement of the
parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified

                                       A-1
<PAGE>

adversely to the Optionee's interest except by means of a writing signed by the
Company and Optionee.

Submitted by:                          Accepted by:

OPTIONEE                               ULTRAVISUAL MEDICAL SYSTEMS CORPORATION

____________________________________   _______________________________________
Signature                              By

____________________________________   _______________________________________
Print Name                             Title

Address:                               Address:

____________________________________   _______________________________________

____________________________________   _______________________________________

                                       _______________________________________
                                       Date Received

                                       A-2
<PAGE>

                                    EXHIBIT B

                       INVESTMENT REPRESENTATION STATEMENT

OPTIONEE:

COMPANY:          UltraVisual Medical Systems Corporation

SECURITY:         COMMON STOCK

AMOUNT:

DATE:

      In connection with the purchase of the above-listed Securities, the
undersigned Optionee represents to the Company the following:

      (a) Optionee is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Securities. Optionee is
acquiring these Securities for investment for Optionee's own account only and
not with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").

      (b) Optionee acknowledges and understands that the Securities constitute
"restricted securities" under the Securities Act and have not been registered
under the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of Optionee's
investment intent as expressed herein. In this connection, Optionee understands
that, in the view of the Securities and Exchange Commission, the statutory basis
for such exemption may be unavailable if Optionee's representation was
predicated solely upon a present intention to hold these Securities for the
minimum capital gains period specified under tax statues, for a deferred sale,
for or until an increase or decrease in the market price of the Securities, or
for a period of one year or any other fixed period in the future. Optionee
further understands that the Securities must be held indefinitely unless they
are subsequently registered under the Securities Act or an exemption from such
registration is available. Optionee further acknowledges and understands that
the Company is under no obligation to register the Securities. Optionee
understands that the certificate evidencing the Securities with be imprinted
with a legend which prohibits the transfer of the Securities unless they are
registered or such registration is not required in the opinion of counsel
satisfactory to the Company, and any other legend required under applicable
state securities laws.

      (c) Optionee is familiar with the provisions of Rule 701 and Rule 144,
each promulgated under the Securities Act, which, in substance, permit limited
public resale of "restricted securities" acquired, directly or indirectly from
the issuer thereof, in a non-public

                                       B-1
<PAGE>

offering subject to the satisfaction of certain conditions. Rule 701 provides
that if the issuer qualifies under Rule 701 at the time of the grant of the
Option to the Optionee, the exercise will be exempt from registration under the
Securities Act. In the event the Company becomes subject to the reporting
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
ninety (90) days thereafter (or such longer period as any market stand-off
agreement may require) the Securities exempt under Rule 701 may be resold,
subject to the satisfaction of certain of the conditions specified by Rule 144,
including: (1) the resale being made through a broker in an unsolicited
"broker's transaction" or in transactions directly with a market maker (as said
term is defined under the Securities Exchange Act of 1934); and, in the case of
an affiliate, (2) the availability of certain public information about the
Company, (3) the amount of Securities being sold during any three month period
not exceeding the limitations specified in Rule 144(e), and (4) the timely
filing of a Form 144, if applicable.

      In the event that the Company does not qualify under Rule 701 at the time
of grant of the Option, then the Securities may be resold in certain limited
circumstances subject to the provisions of Rule 144, which requires the resale
to occur not less than one year after the later of the date the Securities were
sold by the Company or the date the Securities were sold by an affiliate of the
Company, within the meaning of Rule 144; and, in the case of acquisition of the
Securities by an affiliate, or by a non-affiliate who subsequently holds the
Securities less than two years, the satisfaction of the conditions set forth in
sections (1), (2), (3) and (4) of the paragraph immediately above.

      (d) Optionee further understands that in the event all of the applicable
requirements of Rule 701 or 144 are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules 144
and 701 are not exclusive, the Staff of the Securities and Exchange Commission
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rules 144 or 701 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk. Optionee understands that no assurances can be given that any
such other registration exemption will be available in such event.

                                            Signature of Optionee

                                            ____________________________________

                                            Date:_______________________________

                                       B-2

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