Document:

Exhibit 10.1

                                  ANAREN, INC.
                  2004 COMPREHENSIVE LONG-TERM INCENTIVE PLAN,

                                   AS AMENDED

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                                  ANAREN, INC.
                   2004 COMPREHENSIVE LONG-TERM INCENTIVE PLAN

                                Table of Contents

                                                                            Page
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1.   Preamble................................................................  1

2.   Purpose of the Plan.....................................................  2

3.   Eligibility.............................................................  2

4.   Definitions.............................................................  2

5.   Grants of Awards........................................................ 11

6.   Stock Subject to this Plan; Award Limits................................ 14

7.   Option Rights........................................................... 16

8.   Special Rules for Grants of Incentive Stock Options..................... 17

9.   Special Rules for Grants of Non-Statutory Stock Options................. 18

10.  Retroactive Stock Appreciation Rights................................... 19

11.  Restricted Stock and Restricted Stock Units............................. 19

12.  Appreciation Rights..................................................... 21

13.  Performance Units and Performance Shares................................ 23

14.  Other Awards............................................................ 24

15.  Transferability......................................................... 25

16.  Adjustments............................................................. 25

17.  Fractional Shares....................................................... 26

18.  Withholding Taxes....................................................... 26

19.  Foreign Employees....................................................... 26

20.  Administration of the Plan.............................................. 27

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                                Table of Contents
                                   (Continued)

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21.  Change of Control....................................................... 27

22.  Termination of Service, Death and Disability Provisions................. 28

23.  Leave of Absence........................................................ 30

24.  Participant Rights...................................................... 30

25.  Severability of Provisions.............................................. 30

26.  Governing Laws.......................................................... 31

27   Amendments and Termination.............................................. 31

28.  Adjustment of Payments.................................................. 32

29.  Acceptance.............................................................. 32

30.  Miscellaneous........................................................... 32

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                                  ANAREN, INC.
                   2004 COMPREHENSIVE LONG-TERM INCENTIVE PLAN

      1.  Preamble.  The Board of  Directors  of Anaren,  Inc.  ("Company")  has
historically  maintained  an Incentive  Stock Option Plan which  authorized  the
grant of incentive  stock options to officers and other key  employees  ("Option
Plan").  Most  recently,  the  Option  Plan was  replaced  by the  Anaren,  Inc.
Incentive Stock Option Plan for Key Employees,  which became effective  November
2, 2000 ("Key Employee Plan").

      Effective  as of January 1, 2001,  the Board of  Directors  of the Company
adopted a Anaren  Company-Wide  Stock  Option Plan  ("Company-Wide  Plan").  The
Company-Wide  Plan  authorized  the  grant of  incentive  stock  options  to all
employees except those eligible to participate in the Key Employee Plan.

      Effective  as of August 24,  1989,  the Board of  Directors of the Company
adopted a Nonstatutory Stock Option Plan ("Nonstatutory Plan"). The Nonstatutory
Plan  authorized  the grant of  nonstatutory  stock  options  to  members of the
Company's  Board of  Directors,  consultants  to the Company,  and other persons
rendering services to the Company who are not also full-time employees.

      Effective November 2, 1999 and November 2, 2000, the Board of Directors of
the  Company  adopted   Restricted   Stock   Guidelines   which  authorized  the
Compensation  Committee of the Board to grant awards of restricted  stock to key
officers and employees of the Company  during the Company's  fiscal years ending
June 30, 2000 and June 30, 2001, respectively ("Restricted Stock Guidelines").

      This document sets forth the terms of the Anaren,  Inc. 2004 Comprehensive
Long-Term Incentive Plan ("2004 Plan"), which shall amend,  restate, and replace
the Key Employee Plan, the  Company-Wide  Plan,  the  Nonstatutory  Plan and the
Restricted Stock  Guidelines as the basis upon which the Compensation  Committee
of the  Board of  Directors  shall be  authorized  to grant  stock  options  and
restricted  stock.  In  addition,  the 2004 Plan  shall  authorize  the grant of
additional  forms of  incentive  compensation,  including,  but not  limited to,
restricted  stock units,  stock  appreciation  rights,  performance  units,  and
performance shares. The 2004 Plan shall become
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effective as of November 1, 2004,  contingent upon the approval of the 2004 Plan
by the  shareholders of the Company.  Options and other rights described in this
2004  Plan  document  shall be  granted  on or after  November  1,  2004 only in
accordance  with the terms of this 2004 Plan document.  Options and other rights
granted prior to November 1, 2004 shall  continue to be governed by the terms of
the Key Employee Plan, the  Company-Wide  Plan,  the  Nonstatutory  Plan, or the
Restricted Stock Guidelines, as applicable.

      2.  Purpose  of the Plan.  The  purpose  of this 2004 Plan is to  attract,
retain and motivate all employees,  including officers,  directors and other key
employees  of the  Company  and its  subsidiaries,  to provide  to such  persons
competitive   equity  incentives  and  rewards  for  superior   performance  and
contribution,  and to more closely align employee officer and director interests
with those interests of the Company's shareholders.

      3.  Eligibility.   Members  of  the  Board  of  Directors,  employees  and
consultants  of the Company shall be eligible to  participate  in the 2004 Plan,
subject to the limitations  described below.  Participants  shall be selected by
the  Compensation  Committee based upon,  among other factors,  the individual's
past and potential  contributions to the success,  profitability,  and growth of
the Company.  Subject to the discretion of the Committee as described in Section
19,  eligibility to participate in the 2004 Plan shall be limited to individuals
employed by or performing services for the Company and its subsidiaries in North
America.

      4.  Definitions.  Capitalized  terms used herein  shall have the  meanings
assigned to such terms in this Section 4.

            a.  "Affiliate"  has the meaning given such term under Rule 12b-2 of
the General Rules and Regulations under the Exchange Act.

            b.  "Applicable  Laws"  means  the  requirements   relating  to  the
administration  of  equity-based  compensation  plans  under  Federal  and State
corporate laws,  Federal and State securities laws, the Code, any stock exchange
or  quotation  system on which the Common  Shares are listed or quoted,  and the
applicable  laws of any other country or  jurisdiction  where Awards are granted
under the 2004 Plan.

            c.  "Appreciation  Right" (or "Stock  Appreciation  Right")  means a
right granted pursuant to Section 12 of this 2004 Plan.

            d.  "Associate"  has the meaning given such term under Rule 12b-2 of
the General Rules and Regulations under the Exchange Act.

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            e. "Award" means an award granted under this 2004 Plan in one of the
forms provided for in Section 5.

            f.  "Base  Price"  means  the  price  to be  used as the  basis  for
determining the Spread upon the exercise of an Appreciation Right.

            g.  "Beneficial  Owner" has the  meaning  given such term under Rule
13d-3 of the General Rules and Regulations under the Exchange Act.

            h. "Board" means (i) the Board of Directors of the Company,  or (ii)
a committee or  subcommittee  of the Board appointed by the Board from among its
members.

            i. "Cause" shall mean (i) willful  malfeasance or willful misconduct
by the Participant in connection with his employment, (ii) continuing failure to
perform  such  duties as are  requested  by the  Company,  (iii)  failure by the
Participant  to observe  material  policies  of the  Company  applicable  to the
Participant, or (iv) the commission by the Participant of any (A) felony, or (B)
misdemeanor  involving moral turpitude.  The Committee shall  determine,  in its
sole discretion, whether a termination of employment is for Cause.

            j. "Change of Control" shall occur in the event:

                  i.    as the result of, or in connection with any tender offer
                        or  exchange  offer,  consolidation,   merger  or  other
                        business  combination,   sale  of  assets  or  contested
                        election   or   any   combination   of   the   foregoing
                        transactions  (a  "Transaction"),  the  persons who were
                        Directors of the Company  before the  Transaction  shall
                        cease for any reason to  constitute  at least 50% of the
                        Board of  Directors  of the Company or any  successor to
                        the Company; or

                  ii.   any Person,  including a Group,  becomes the  Beneficial
                        Owner, directly or indirectly,  of shares of the Company
                        having  more than 50% of the total  number of votes that
                        may  be  cast  for  the  election  of  Directors  of the
                        Company; or

                  iii.  the  Company  is merged  or  consolidated  with  another
                        company, and as a result of the merger or consolidation,
                        less than 50% of the  outstanding  voting  securities of
                        the  surviving or resulting  Company shall then be owned
                        in the  aggregate  by  the  former  stockholders  of

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                        the Company, other than Affiliates,  or any party to the
                        merger or consolidation; or

                  iv.   a tender offer or exchange offer is made and consummated
                        for  the   ownership  of   securities   of  the  Company
                        representing  more than 50% of the combined voting power
                        of the Company's then outstanding voting securities; or

                  v.    the Company transfers substantially all of its assets to
                        another  company  which  is  not a  direct  or  indirect
                        wholly-owned Subsidiary of the Company.

            k. "Code" means the Internal  Revenue Code of 1986, and  regulations
thereunder, as such law and regulations may be amended from time to time.

            l. "Committee" means the Compensation Committee of the Board or such
other committee described in Section 20 of the 2004 Plan.

            m. "Common Shares" means the common stock, $.01 par value per share,
of the Company,  or any security into which such Common Shares may be changed by
reason of any transaction or event of the type referred to in Section 16 of this
2004  Plan.  Except as  otherwise  provided  herein,  all Common  Shares  issued
pursuant  to the 2004 Plan  shall have the same  rights as all other  issued and
outstanding  Common Shares,  including,  but not limited to, voting rights,  the
right  to  dividends,   if  declared  and  paid,  and  the  right  to  pro  rata
distributions of the Company's assets in the event of liquidation.

            n. "Company" shall mean Anaren,  Inc., a New York  corporation,  and
any Subsidiaries of Anaren, Inc.

            o. "Covered  Employee"  means a Participant who is, or is determined
by the Committee to be likely to become, a "covered employee" within the meaning
of Section 162(m) of the Code (or any successor provision).

            p. "Date of Grant"  means the date  specified  by the  Committee  on
which  a  grant  of  Option  Rights,   Appreciation  Rights,  Retroactive  Stock
Appreciation Rights,  Performance Units, Performance Shares,  Restricted Shares,
Restricted  Stock  Units or other  Awards  under  this  2004 Plan  shall  become
effective.

            q.  "Director"  means a  member  of the  Board of  Directors  of the
Company.

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            r. "Disability" shall mean the Participant's absence from his duties
with the Company on a full-time basis for six consecutive months, or for shorter
periods  aggregating  seven  months  or more  in any  year  as a  result  of the
Participant's  incapacity  due to physical or mental  illness,  unless within 30
days after the  Company  gives  written  notice of  termination  following  such
absence the Participant shall have returned to the full-time  performance of his
duties.  The  determination  of whether a Participant  has suffered a Disability
shall be made by the Board based upon such  evidence as it deems  necessary  and
appropriate,  and  shall  be  conclusive  and  binding  on  the  Participant.  A
Participant shall not be considered disabled unless he furnishes such medical or
other  evidence of the  existence of the  Disability  as the Board,  in its sole
discretion, may require.

            s. "Dollar-Denominated Awards" means Performance Unit Awards and any
other Award the amount of which is based on a specified  amount of money  (other
than an amount of money determined by reference to the Market Value per Share of
a specified number of Common Shares).  Options,  Stock  Appreciation  Rights and
Retroactive Stock Appreciation Rights are not Dollar-Denominated Awards.

            t. "Eligible Employee" means an individual who performs services for
the Company and who is treated by the  Company  for payroll and  employment  tax
purposes as a common law employee of the  Company.  The term  Eligible  Employee
shall not include any  individual  who  performs  services for the Company as an
Independent Contractor or other non-employee  classification,  or any individual
who is treated by the  Company  for payroll  and  employment  tax  purposes as a
non-employee,  even  if any  such  individual  is  reclassified  by a  court  or
regulatory agency as a common law employee of the Company.

            u. "Evidence of Award" means an agreement,  certificate,  resolution
or other type or form of writing or other  evidence  approved  by the  Committee
which sets forth the terms and  conditions  of the Option  Rights,  Appreciation
Rights,  Retroactive Stock Appreciation Rights,  Performance Units,  Performance
Shares,  Restricted Shares, Restricted Stock Units or other Awards granted under
the 2004 Plan.  An  Evidence  of Award may be in an  electronic  medium,  may be
limited to a notation  on the books and  records of the  Company  and,  with the
approval of the Committee, need not be signed by a representative of the Company
or a Participant.

            v. "Exchange Act" means the Securities Exchange Act of 1934, and the
rules and  regulations  thereunder,  as such law, rules and  regulations  may be
amended from time to time.

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            w.  "Group"  means  persons  and  entities  that act in  concert  as
described  in Section  14(d)(2) of the  Exchange Act (other than the Company and
other than any  profit-sharing,  employee stock  ownership or any other employee
benefit plan of the Company,  or any trustee of or fiduciary with respect to any
such plan when acting in such capacity and other than any  executive  officer of
the Company).

            x.  "Incentive  Stock Options" means Option Rights that are intended
to qualify as  "incentive  stock  options"  under Section 422 of the Code or any
successor provision.

            y.  "Management   Objectives"   means  the  measurable   performance
objective or objectives  established pursuant to this 2004 Plan for Participants
who have received grants of Performance Units or Performance  Shares or, when so
determined by the Committee,  Option Rights,  Appreciation  Rights,  Retroactive
Stock Appreciation Rights,  Restricted Shares,  Restricted Stock Units and other
Awards  pursuant to this 2004 Plan.  Management  Objectives  may be described in
terms  of  Company-Wide  objectives  or  objectives  that  are  related  to  the
performance  of  the  individual  Participant  or of the  Subsidiary,  division,
department,  region or function  within the Company or  Subsidiary  in which the
Participant is employed.  The Management  Objectives may be made relative to the
performance of other corporations.  The Management  Objectives applicable to any
Award to a Covered  Employee shall be based on specified  levels of or growth in
one or more of the  following  criteria:  revenues,  earnings  from  operations,
earnings before or after interest and taxes, net income, cash flow, earnings per
share,  debt to capital ratio,  economic  value added,  return on total capital,
return on invested capital,  return on equity, return on assets, total return to
shareholders,  earnings before or after interest, depreciation,  amortization or
extraordinary or special items, return on investment,  free cash flow, cash flow
return on investment (discounted or otherwise), net cash provided by operations,
cash flow in excess of cost of capital,  operating margin,  profit margin, stock
price and/or strategic  business  criteria  consisting of one or more objectives
based on meeting specified product development,  strategic partnering,  research
and development,  market penetration,  geographic business expansion goals, cost
targets, customer satisfaction, employee satisfaction,  management of employment
practices  and employee  benefits,  supervision  of litigation  and  information
technology,  and goals relating to acquisitions or divestitures of Subsidiaries,
affiliates  and  joint  ventures.  Management  Objectives  may  be  stated  as a
combination of the listed factors. If the Committee  determines that a change in
the  business,  operations,  corporate  structure  or capital  structure  of the
Company,  or the manner in which it conducts  its  business,  or other events or

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circumstances  (including those events and circumstances described in Section 16
of this 2004 Plan) render the Management  Objectives  unsuitable,  the Committee
may in its discretion  modify such Management  Objectives or the related minimum
acceptable  level of  achievement,  in whole or in part, as the Committee  deems
appropriate  and  equitable,  except  in the case of a Covered  Employee  to the
extent  that such action  would  result in the loss of the  otherwise  available
exemption of the Award under Section 162(m) of the Code.

            z. "Market  Value per Share" means the closing sale price per Common
Share (or  average of the  quoted  closing  bid and asked  prices if there is no
closing sale price  reported) on the trading day  immediately  prior to the date
specified as reported by the principal  national  exchange or such other trading
system on which Common Shares are then listed or trading, if any. If there is no
reported price  information  for the Common  Shares,  the Market Value per Share
will be determined by the Board or the  Committee,  in its sole  discretion.  In
making such  determination,  the Board or the  Committee  may,  but shall not be
obligated to,  commission and rely upon an  independent  appraisal of the Common
Shares.

            aa.  "Non-Statutory  Stock Option" shall mean the right granted to a
Participant to purchase Common Shares under this 2004 Plan, the grant,  exercise
and disposition of which are not intended to be subject to the  requirements and
limitations of Internal Revenue Code Section 422.

            bb.  "Optionee" means the optionee named in an agreement  evidencing
an outstanding Option Right.

            cc.  "Option  Price"  means  the  purchase  price  payable  upon the
exercise of an Option Right.

            dd. "Option  Right" or "Option"  means the right to purchase  Common
Shares  from the Company  upon the  exercise  of an option  granted  pursuant to
Section 7 of this 2004 Plan.

            ee. "Participant" means a person who is selected by the Committee to
receive  benefits  under  this  2004  Plan  and who is at the  time a  Director,
Eligible  Employee  or  consultant  of the Company  (including  an officer) or a
person  who has been  offered  employment  by the  Company,  provided  that such
prospective  employee may not receive any payment or exercise the right relating
to any Award until such person has commenced employment with the Company.

            ff.   "Performance-Based   Compensation"  means  compensation  which
satisfies the requirements applicable to "performance-based  compensation" under
Section 162(m) of the Code.

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            gg. "Performance  Period" means, in respect of a Performance Unit or
Performance  Share, a period of time established  pursuant to Section 13 of this
2004 Plan within which the Management  Objectives  relating to such  Performance
Share or Performance Unit are to be achieved.

            hh.  "Performance  Share" means a bookkeeping entry that records the
equivalent of one Common Share awarded pursuant to Section 13 of this 2004 Plan.

            ii. "Performance Unit" means a bookkeeping entry that records a unit
equivalent to $1.00 awarded pursuant to Section 13 of this 2004 Plan.

            jj. "Person" shall have the same meaning as defined in Section 13(d)
and  14(d)(2) of the Exchange  Act and  includes  any  individual,  corporation,
partnership  or other  person or entity  and any  Group and all  Affiliates  and
Associates of any such individual, corporation,  partnership, or other person or
entity or Group.

            kk.  "Restricted  Stock  Award"  means  an award  of  Common  Shares
(hereafter  "Restricted  Stock or  Restricted  Shares")  granted  subject to the
restrictions  described in Section 11 of this 2004 Plan and subject to tax under
Section 83 of the Code.

            ll.  "Restricted  Stock Unit Award" means Common Shares that will be
issued to a Participant at a future time or times in accordance with Section 11,
and other applicable provisions of the 2004 Plan.

            mm. "Retirement" means retirement, in good standing, after attaining
normal  retirement age (65) under the  provisions of any retirement  plan of the
Company.

            nn.   "Retroactive   Stock   Appreciation   Rights"   shall  mean  a
Participant's right to receive payments described in Section 10.

            oo.  "Spread"  means the excess of the Market Value per Share on the
date when an Appreciation Right is exercised over the Base Price provided for in
the Appreciation Right.

            pp. "Subsidiary" means a corporation,  company or other entity which
is  designated  by the  Committee,  and in which  the  Company  has a direct  or
indirect  ownership  or  other  equity  interest,  provided,  however,  that for
purposes of determining  whether any person may be a Participant for purposes of
any grant of Incentive  Stock  Options,  "Subsidiary"  means any  corporation in
which,  at the time of the grant,  the  Company  owns or  controls,  directly or
indirectly,  more than 50% of the total combined voting power represented by all
classes of stock issued by such corporation.

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            qq. "Termination" shall mean involuntary  termination by the Company
of the employment of the Participant  with the Company for any reason other than
death,  Disability,  Retirement or Cause,  or the voluntary  resignation  of the
Participant upon the occurrence of either of the following events:

                  i.    A reasonable determination (as defined below) that there
                        has been a significant  change in the nature or scope of
                        the Participant's  authority from that prior to a Change
                        of Control,  a material  reduction in the  Participant's
                        total  compensation  (including  all bonuses,  incentive
                        compensation  and benefits)  from that prior to a Change
                        of  Control,  or a  significant  change in the  location
                        where the  Participant  is required to perform  services
                        from that prior to a Change of Control; or

                  ii.   A reasonable determination (as defined below) that, as a
                        result  of  a  Change  of   Control   and  a  change  in
                        circumstances  thereafter  significantly  affecting  the
                        Participant's  position,  he is unable to  exercise  the
                        authority,  powers,  function or duties  attached to his
                        position.

                  iii.  "Reasonable    Determination."    Termination   of   the
                        Participant's   employment   in  the   judgment  of  the
                        Compensation   Committee's  "reasonable   determination"
                        shall mean termination based on:

                        (A)   subsequent  to a Change of Control of the Company,
                              and  without  the  Participant's  express  written
                              consent,  the  assignment  to him  of  any  duties
                              inconsistent    with   his   positions,    duties,
                              responsibilities   and  status  with  the  Company
                              immediately  prior to a Change  of  Control,  or a
                              change    in    the    Participant's     reporting
                              responsibilities   and  status  with  the  Company
                              immediately  prior to a Change  of  Control,  or a
                              change    in    the    Participant's     reporting
                              responsibilities,   or   offices   as  in   effect
                              immediately  prior to a Change of Control,  or any
                              removal of the Participant from, or any failure to
                              re-elect him to, any of such positions,  except in
                              connection  with

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                              the  termination  of  his  employment  for  Cause,
                              Disability  or  Retirement  or as a result  of his
                              death; or

                        (B)   subsequent  to a Change of Control of the Company,
                              a failure  by the  Company to  continue  any bonus
                              plans  in  which  the   Participant  is  presently
                              entitled to participate (the "Bonus Plans") as the
                              same  may be  modified  from  time  to  time,  but
                              substantially in the forms currently in effect, or
                              a  failure  by  the   Company  to   continue   the
                              Participant as a participant in the Bonus Plans on
                              at   least   the  same   basis  as  he   presently
                              participates  in accordance  with the Bonus Plans;
                              or

                        (C)   subsequent  to a Change of Control of the  Company
                              and  without  the  Participant's  express  written
                              consent,  the Company's  requiring him to be based
                              anywhere other than his present  office  location,
                              except  for  required   travel  on  the  Company's
                              business  to an  extent  substantially  consistent
                              with his present business travel obligations; or

                        (D)   subsequent  to a Change of Control of the Company,
                              the  failure by the  Company to continue in effect
                              any benefit or compensation  plan, stock ownership
                              plan, stock purchase plan, stock option plan, life
                              insurance  plan,   health  and  accident  plan  or
                              disability   plan  in  which  the  Participant  is
                              participating  at the time of Change of Control of
                              the   Company   (or  plans   providing   him  with
                              substantially similar benefits), the taking of any
                              action by the Company which would adversely affect
                              the  Participant's  participation in or materially
                              reduce  his  benefits  under any of such  plans or
                              deprive him of any material fringe benefit enjoyed
                              by him at the time of the  Change of  Control,  or
                              the failure by the Company to provide him with the
                              number of paid  vacation  days to which he is then
                              entitled in accordance  with the

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                              Company's  normal vacation policy in effect on the
                              date hereof; or

                        (E)   subsequent  to a Change of Control of the Company,
                              the   failure   by  the   Company  to  obtain  the
                              assumption or  performance  of agreements  entered
                              into  pursuant to this 2004 Plan by any  successor
                              of the Company.

            For purposes of this subsection  (ii),  "reasonable  determinations"
shall be made by an affirmative  vote of at least 50% of the individuals who are
both (X)  members of the Board  immediately  prior to the  applicable  Change of
Control,  and (Y) members of the board of directors of the  successor  entity by
which the Participant is employed  immediately  prior to his resignation.  If no
individual   is  described  in  both  (X)  and  (Y)  above,   then   "reasonable
determinations" shall be made at the sole discretion of the Participant.

            rr. "Vesting Period" means the vesting period, if any, applicable to
an Award  and  established  by the  Committee  as of the Date of  Grant.  Unless
otherwise  specified  in the 2004 Plan or in an Evidence  of Award,  the Vesting
Period for all Awards granted under this 2004 Plan shall be three years.

      5. Grants of Awards.

            a. Subject to the  provisions of the 2004 Plan, the Committee may at
any time,  and from time to time,  grant  the  following  types of Awards to any
Participant:

                  i.    Options;

                  ii.   Stock   Appreciation   Rights  and   Retroactive   Stock
                        Appreciation Rights; and

                  iii.  Other Awards,  which may but need not be, in the form of
                        Performance  Share  Awards,   Performance  Unit  Awards,
                        Restricted  Stock  Awards,   or  Restricted  Stock  Unit
                        Awards.

Any  provision  above to the contrary  notwithstanding,  the Committee may grant
Incentive Stock Options only to Participants who are Eligible Employees.

            b. Subject to the  provisions  of the 2004 Plan,  after an Award has
been granted,

                  i.    the  Committee  may waive any term or condition  thereof
                        that  could have been  excluded  from such Award when it
                        was granted; and

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                  ii.   with the written  consent of the  affected  Participant,
                        may amend any Award after it has been granted to include
                        (or  exclude)  any  provision   which  could  have  been
                        included  in (or  excluded  from) such Award when it was
                        granted,   and  no  additional   consideration  need  be
                        received by the  Company in exchange  for such waiver or
                        amendment.

            c. Any Award grant may specify  that the amount  payable on exercise
of such  Award may be paid by the  Company in cash,  in Common  Shares or in any
combination  thereof and may either  grant to the  Participant  or retain in the
Committee the right to elect among those alternatives.

            d. Any Award grant may specify  that the amount  payable on exercise
of such Award may not exceed a maximum specified by the Committee at the Date of
Grant.

            e. Any Award grant may specify  waiting  periods before exercise and
permissible exercise dates or periods.  Except as otherwise provided in the 2004
Plan or in an Evidence of Award or other  agreement  between the Committee and a
Participant,  no Award  granted  under  this  2004  Plan  shall  vest or  become
exercisable or payable prior to the third anniversary of the Date of Grant.

            f. No Award grant may provide  for the payment to the  recipient  of
dividend equivalents thereon in cash or Common Shares on a current,  deferred or
contingent basis.

            g. Each Award  grant (if  applicable)  shall  specify a Base  Price,
which shall be equal to or greater  than the Market  Value per Share on the Date
of Grant.

            h.  Successive  Award  grants  may be made to the  same  Participant
regardless of whether any Awards  previously  granted to the Participant  remain
unexercised.

            i. Any Award grant may specify  Management  Objectives  that must be
achieved,  and/or  one or more  Vesting  Periods  that must be  satisfied,  as a
condition to the exercise of rights granted pursuant to the Award.

            j. The  Committee  may (but  need not)  grant  any  Award  linked to
another  Award,   including,   without  limitation,   Options  linked  to  Stock
Appreciation  Rights.  Linked  Awards may be granted as either  alternatives  or
supplements  to one another.  The terms and conditions of any such linked Awards
shall be  determined  by the  Committee,  subject to the  provisions of the 2004
Plan.

            k. No Participant  shall acquire any rights in or to or with respect
to any Award unless and until an  appropriately  completed  Evidence of Award is
delivered  to  him  and  returned  to  the  designated  Company   representative
subscribed by the Participant  within the time, if any,

                                       12
<PAGE>

prescribed therefor by the Committee or its delegate.  Any such instrument shall
be consistent with this 2004 Plan and  incorporate it by reference.  Subscribing
such  instrument and returning it to the designated  Company  representative  as
aforesaid  shall  constitute  the  Participant's  irrevocable  agreement  to and
acceptance of the terms and conditions of the Award set forth in such instrument
and of the 2004 Plan applicable to such Award.

            l. The Committee may grant Awards that qualify as  Performance-Based
Compensation,  as  well  as  Awards  that do not  qualify  as  Performance-Based
Compensation.  Any  provision of the 2004 Plan to the contrary  notwithstanding,
the 2004 Plan shall be  interpreted,  administered  and  construed to permit the
Committee to grant Awards that qualify as Performance-Based Compensation as well
as Awards that do not so qualify, and any provision of the 2004 Plan that cannot
be  so   interpreted,   administered  or  construed  shall  to  that  extent  be
disregarded.

            m. The 2004  Plan is  intended  to  enable  the  Committee  to grant
Options  that  qualify  for the tax  treatment  applicable  to  Incentive  Stock
Options,  as well as Options  and other  Awards that do not qualify for such tax
treatment. Any provision of the 2004 Plan to the contrary  notwithstanding,  the
2004 Plan  shall be  interpreted,  administered  and  construed  to  enable  the
Committee  to grant  Options that qualify for the tax  treatment  applicable  to
Incentive  Stock Options as well as Options and other Awards that do not qualify
for such tax  treatment,  and any  provision  of the 2004 Plan that cannot be so
interpreted, administered or construed shall to that extent be disregarded.

            n.  Except as  provided  below in Section  21 or Section  22, in the
event that any Participant's  service with the Company terminates for any reason
other than involuntary termination without Cause, death, Disability, Retirement,
or in the event that the Committee determines, in its sole discretion,  that any
conduct of a Participant constitutes Grounds for Forfeiture,  all rights of such
Participant  under the 2004 Plan  (including  rights with respect to outstanding
Awards) will terminate.  As used herein, the term "Grounds for Forfeiture" shall
mean any of the following  conduct of any  Participant:  (i) using for profit or
disclosing  confidential   information  or  trade  secrets  of  the  Company  to
unauthorized  persons,  (ii)  breaching any contract with or violating any legal
obligation to the Company,  (iii)  failing to make himself  available to consult
with,  supply  information  to,  or  otherwise  cooperate  with the  Company  at
reasonable  times  and upon a  reasonable  basis,  (iv)  while  employed  by the
Company,  engaging,   directly  or  indirectly,  as  an  officer,  employee,  or
consultant,  or otherwise having, directly or indirectly,  ownership or interest
in any business that is competitive with the

                                       13
<PAGE>

manufacture,  sale or distribution of products and services of the type in which
the  Company  is  engaged  or which may be  developed  or be in the  process  of
development  by the  Company  during  the  Participant's  employment;  provided,
however,  that the Participant may own  beneficially or maintain voting power of
the shares of common stock of companies listed on national securities  exchanges
or  publicly  traded  that do not  exceed 5% of the  outstanding  shares of such
companies,  or (v) engaging in any other activity  which would have  constituted
grounds for his discharge for Cause by the Company.

            o. No Award granted under this 2004 Plan may be exercised  more than
10 years from the Date of Grant.

            p. The 2004 Plan,  and all Award grants issued  pursuant to the 2004
Plan,  shall be structured,  interpreted and applied in all  circumstances  in a
manner that is  consistent  with the intent  that Awards and amounts  earned and
payable  pursuant  to  Awards  shall  not be  subject  to the  premature  income
recognition or adverse tax provisions of Code Section 409A.

      6. Stock  Subject to this Plan;  Award  Limits.  Prior to adoption of this
2004 Plan,  each of the existing  plans (Key Employee Plan,  Company-Wide  Plan,
Nonstatutory  Plan) had separate Common Share  authorizations  which limited the
number of shares  available  for award  grants under each plan.  The  Restricted
Stock Guidelines  limited the number of Common Shares granted in any one year to
25,000.  As of  September  1, 2004,  there were a total of  1,326,488  shares of
Common Shares  available for grant,  but not awarded  under  previous  incentive
compensation plans of the Company.

            a. The total  number of Common  Shares with  respect to which awards
may be granted  under this 2004 Plan shall not exceed an  aggregate of 2,826,488
Common Shares, which equals the sum of (i) the number of Common Shares initially
authorized by the  shareholders  of the Company to be made  available for Awards
under this 2004 Plan  (1,326,488),  plus (ii) 600,000  additional  Common Shares
authorized by the  shareholders  of the Company to be made  available for Awards
effective as of September 8, 2006, plus (iii) 900,000  additional  Common Shares
authorized by the  shareholders  of the Company to be made  available for Awards
effective  as of

                                       14
<PAGE>

November 4, 2009. From the total of 2,826,488  Common Shares,  1,318,495  Common
Shares are  available  for Awards as of November  4, 2009.  Subject to the other
restrictions  in this Section 6, effective as of November 4, 2009, all 1,438,495
Common Shares are available for all types of Awards.

            b.  Subject to the  provisions  below of Sections  6(d) and 6(e) and
Section 16, the maximum  number of Common  Shares with  respect to which  Option
Rights or Stock  Appreciation  Rights may be granted in any calendar year to any
Participant is 100,000 Common Shares.

            c.  Common  Shares  which may be issued  pursuant  to Awards  may be
authorized but unissued shares,  or Common Shares held in the treasury,  whether
acquired by the Company  specifically for use under this 2004 Plan or otherwise,
as the Committee may from time to time determine;  provided,  however,  that any
shares acquired or held by the Company for the purposes of this 2004 Plan shall,
unless and until issued to a Participant or other rightful holder of an Award in
accordance  with the terms and  conditions  of such  Award,  be and at all times
remain treasury  shares of the Company,  irrespective of whether such shares are
entered  in a special  account  for  purposes  of this 2004  Plan,  and shall be
available for any corporate purpose.

            d. Subject to Section 6(f) below,  the maximum  aggregate  number of
shares set forth above shall be charged  only for the number of shares which are
actually  issued under the 2004 Plan; if any Common  Shares  subject to an Award
shall  not be issued  to a  Participant  and  shall  cease to be  issuable  to a
Participant because of the termination,  expiration, forfeiture or cancellation,
in whole or in part,  of such  Award  or for any  other  reason,  or if any such
shares  shall,  after  issuance,  be  reacquired  by the  Company  because  of a
Participant's  failure to comply with the terms and conditions of an Award,  the
shares not so issued,  or the shares so reacquired  by the Company,  as the case
may be, shall no longer be charged  against the  limitations  provided for above
and may again be made subject to Awards.

            e.  Subject to Section 6(f) below,  if the purchase  price of shares
subject to an Option is paid in Common Shares in accordance  with the provisions
of Section 7 below, or if Common Shares that are issued or issuable  pursuant to
an Award are withheld by the Company in accordance with Section 18 below in full
or partial  satisfaction of withholding taxes due in respect of the Award or the
grant, exercise, vesting,  distribution or payment of the Award, then the number
of shares  surrendered  to the Company in payment of the  purchase  price of the
shares  subject to the

                                       15
<PAGE>

Option,  or the number of shares that are  withheld by the Company in payment of
such withholding  taxes, shall not be added back to the maximum aggregate number
of shares which may be issued pursuant to Awards under Section 6(b) above.

            f. If and to the extent that it is determined  that any provision of
this  Section 6 or Section  12(f) below shall cause the Company or the 2004 Plan
to fail to satisfy any listing  standards that apply to the Company from time to
time, or shall prevent  Incentive Stock Options granted under the 2004 Plan from
qualifying  as Incentive  Stock  Options,  then to that extent (and only to that
extent) that provision or provisions of this Section 6 or Section 12(f) shall be
disregarded.

      7. Option Rights. The Committee may, from time to time and upon such terms
and conditions as it may determine,  authorize the granting to  Participants  of
Option Rights to purchase Common Shares.  Each such grant may utilize any or all
of the authorizations, and shall be subject to all of the limitations, contained
in the following provisions:

            a. Each grant shall  specify the number of Common Shares to which it
pertains, subject to adjustments as provided in Section 16 of this 2004 Plan.

            b. Each grant shall  specify an Option Price per share,  which shall
be equal to or greater than the Market Value per Share on the Date of Grant.

            c. Each  grant  shall  specify  whether  the Option  Price  shall be
payable (i) in cash or by check acceptable to the Company, (ii) by the actual or
constructive  transfer to the Company of Common Shares owned by the Optionee not
less than six months, or (iii) by a combination of such methods of payment.

            d. Each grant  shall  specify  the  period or periods of  continuous
service by the Optionee  with the Company,  that is necessary  before the Option
Rights or installments thereof will become exercisable.

            e.  Option  Rights  granted  under this 2004 Plan may be (i) options
including,  without  limitation,  Incentive  Stock  Options that are intended to
qualify  under  particular  provisions  of the Code,  (ii)  options that are not
intended so to qualify, or (iii) combinations of the foregoing.

            f.  The  Committee  may not  provide  for the  payment  of  dividend
equivalents to an Optionee on either a current or deferred or contingent  basis,
nor may the Committee  provide that such  equivalents  shall be credited against
the Option Price.

            g. The Committee may, in its sole discretion, grant an Option to any
holder  of an  option  (hereinafter  referred  to as an  "Original  Option")  to
purchase shares of the stock of any

                                       16
<PAGE>

corporation  (i) the  stock  or  assets  of which  were  acquired,  directly  or
indirectly,  by the Company, or (ii) which was merged with and into the Company,
so that the Original Option is converted into an Option (hereinafter referred to
as a "Conversion Stock Option");  provided,  however, that such Conversion Stock
Option as of the Date of Grant (the  "Conversion  Stock  Option  Date of Grant")
shall have the same economic  value as the Original  Option as of the Conversion
Stock  Option Date of Grant.  In  addition,  unless the  Committee,  in its sole
discretion determines  otherwise,  a Conversion Stock Option which is converting
an Original  Option  intended to qualify as an Incentive Stock Option shall have
the same terms and conditions as applicable to the Original Option in accordance
with  Section  424 of the  Code  and the  regulations  thereunder  so  that  the
conversion  is treated as the  issuance or  assumption  of a stock  option under
Section  424(a) of the Code and is not treated as a  modification,  extension or
renewal of a stock option under Section 424(h) of the Code.

            h.  In  the  event  that  the  Committee,  in its  sole  discretion,
determines  that an Optionee who has left  service  with the Company  engaged in
misconduct which would have constituted  Cause for dismissal if the Optionee was
then providing services to the Company, then the Committee may rescind,  without
the consent of the Optionee,  any or all  unexercised  Option Rights held by the
Optionee.

      8. Special Rules for Grants of Incentive Stock Options.

            a.  Notwithstanding  Section 7(b),  the option price per share of an
Incentive Stock Option shall not be less than 100% of the Market Value per Share
on the Date of Grant of the Option;  provided,  however,  that,  if an Incentive
Stock Option is granted to any Participant who, immediately after such option is
granted,  is  considered to own stock  possessing  more than 10% of the combined
voting   power  of  all  classes  of  stock  of  the   Company  ("a   10-Percent
Shareholder"),  the  Option  Price per share  shall be not less than 110% of the
Market  Value per Share on the Date of Grant of the option,  and such option may
be exercised only within five years of the Date of Grant.

            b. The Committee shall establish the time or times within the Option
Period when the  Incentive  Stock  Option may be  exercised  in whole or in such
parts as may be specified from time to time by the Committee.

                  i.    Unless   otherwise   specified   by  the  Board  or  the
                        Committee,  with  respect  to  Incentive  Stock  Options
                        granted to key  employees,  20% of the shares subject to
                        each  Incentive  Stock  Option  shall  vest  and  become
                        exercisable  in cumulative  fashion on the first through
                        the

                                       17
<PAGE>

                        fifth  anniversaries  of the Date of Grant. No Incentive
                        Stock  Option   granted  to  a  key  employee  shall  be
                        exercisable  at any time  after  the  expiration  of ten
                        years from its Date of Grant; provided, however, that if
                        the Optionee  with respect to an Incentive  Stock Option
                        is a 10-Percent Shareholder on the Date of Grant of such
                        Incentive Stock Option, then such Incentive Stock Option
                        shall not be  exercisable  after the  expiration of five
                        years from the Date of Grant.

                  ii.   Unless   otherwise   specified   by  the  Board  or  the
                        Committee,  with  respect  to  Incentive  Stock  Options
                        granted  to  employees  who  are  not   considered   key
                        employees,  each  Incentive  Stock Option shall vest and
                        become  exercisable on the third anniversary of the Date
                        of Grant,  provided  the Optionee  remains  continuously
                        employed by the Company as an Eligible Employee from the
                        Date  of  Grant  through  such  third  anniversary.   No
                        Incentive  Stock Option granted to an Eligible  Employee
                        who  is  not   considered  a  key   employee   shall  be
                        exercisable  at any time  after  the  expiration  of ten
                        years from its Date of Grant.

            c. No  Incentive  Stock  Options  shall be granted  hereunder to any
Optionee that would allow the  aggregate  fair market value  (determined  at the
time the option is  granted)  of the stock  subject of all  post-1986  incentive
stock  options,  including  the Incentive  Stock Option in question,  which such
Optionee may exercise  for the first time during any  calendar  year,  to exceed
$100,000.  The term  "post-1986  incentive stock options" shall mean all rights,
which are intended to be "incentive stock options" under the Code, granted on or
after  January 1,  1987,  under any stock  option  plan of the  Company.  If the
Company  shall  ever be  deemed  to have a  "parent,"  as such  term is used for
purposes of Section 422 of the Code, then rights intended to be "incentive stock
options"  under the Code,  granted  after  January 1, 1987,  under such parent's
stock  option  plans,  shall be  included  with the terms of the  definition  of
"post-1986 incentive stock options."

      9. Special Rules for Grants of Non-Statutory Stock Options.

            a. The Company shall not issue stock certificates to an Optionee who
exercises a  Non-Statutory  Stock Option,  unless payment of the required lawful
withholding  taxes has been made to the Company by check,  payroll  deduction or
other arrangements satisfactory to the Committee.

                                       18
<PAGE>

            b. The periods during which the Board may grant  Non-Statutory Stock
Options  to any  person  who is a member of the Board  are as  follows:  (i) the
fifteen day period  commencing on the fifth day following the public  release of
the  Company's  earnings for the next  preceding  fiscal  quarter;  and (ii) the
fifteen  day period  commencing  on the fifth day  following  the release of the
Company's  earnings  for the next  preceding  fiscal year.  Non-Statutory  Stock
Options  may be granted to persons who are not members of the Board from time to
time and at such times as the Board may determine.

            c.  Unless  otherwise  specified  by the  Board  or  the  Committee,
one-third of the shares  subject to each  Non-Statutory  Stock Option shall vest
and become  exercisable  in  cumulative  fashion on the first  through the third
anniversaries  of the Date of Grant.  Non-Statutory  Stock  Options shall not be
exercisable at any time after ten years from the Date of Grant.

            d. Non-Statutory Stock Options granted to Directors shall be subject
to the following additional terms and conditions:  (i) no Director shall receive
Non-Statutory  Stock  Options at any time for more than 50,000  Common Shares in
the aggregate;  and (ii) the exercise price of Non-Statutory Stock Options shall
be equal to the Market Value of the Shares determined on the Date of Grant.

      10.  Retroactive  Stock  Appreciation  Rights.  Upon such  conditions  and
limitations it deems advisable, the Committee may authorize (a) the surrender of
the right to exercise all or a portion of a vested  Option Right  granted  under
the 2004 Plan that is exercisable at the time of surrender,  and (b) the payment
in  exchange  for the  surrender  of an amount of up to the excess of the Market
Value per Share at the time of surrender of the shares covered by the Option, or
portion thereof,  surrendered over the Option Price of such shares. Such payment
may be made in Common Shares valued at fair market value or in cash or partly in
cash and partly in Common Shares, at the Committee's sole discretion. The Common
Shares covered by any Option Right, or portion thereof, as to which the right to
purchase has been so  surrendered  shall not again be available  for purposes of
Option Rights under the 2004 Plan.

      11.  Restricted  Stock and  Restricted  Stock  Units.  The  Committee  may
authorize  the  grant  of  Restricted   Stock  or  Restricted   Stock  Units  to
Participants. Each such grant may utilize any or all of the authorizations,  and
shall  be  subject  to all  of  the  limitations,  contained  in  the  following
provisions:

            a.  Notwithstanding  other  provisions  in  this  2004  Plan  to the
contrary,

                                       19
<PAGE>

Common Shares granted  pursuant to a Restricted  Stock Award or Restricted Stock
Unit  Award  may  not  be  sold,  exchanged,  transferred,   assigned,  pledged,
hypothecated, or otherwise disposed of, for a minimum of 36 months (12 months in
the case of grants to Directors)  following the date the Restricted  Stock Award
or  Restricted  Stock Unit Award is granted by the  Committee  (the  "Forfeiture
Period"). Except as provided below or as may be provided by the Committee at the
time of grant, if the Participant's employment with the Company terminates prior
to the  expiration  of the  Forfeiture  Period for any reason,  the  Participant
shall, on the date employment  terminates,  forfeit and surrender to the Company
the number of Common Shares with respect to which the Forfeiture  Period has not
expired as of the date employment  terminates.  During the applicable Forfeiture
Period,  no dividends  shall be paid on Common  Shares that are the subject of a
Restricted Stock Award or Restricted Stock Unit Award.

            b. Each such grant may be made without  additional  consideration or
in  consideration  of a payment by such recipient that is less than Market Value
per Share at the Date of Grant.

            c. Any  grant of  Restricted  Stock or  Restricted  Stock  Units may
specify Management  Objectives that, if achieved,  will result in termination or
early termination of the restrictions  applicable to such shares. Each grant may
specify in respect of such Management  Objectives a minimum  acceptable level of
achievement  and  shall  set  forth a  formula  for  determining  the  number of
Restricted  Shares on which  restrictions will terminate if performance is at or
above the minimum  level,  but falls short of full  achievement of the specified
Management Objectives.

            d. Any such grant of  Restricted  Shares may require that any or all
dividends  or  other  distributions  paid  thereon  during  the  period  of such
restrictions be automatically  deferred and reinvested in additional  Restricted
Shares, which may be subject to the same restrictions as the underlying award.

            e. Unless  otherwise  directed by the  Committee,  all  certificates
representing Restricted Shares shall be held in custody by an escrow agent until
the Forfeiture  Period lapses.  If

                                       20
<PAGE>

not held by an escrow agent,  each  certificate of Common Shares issued pursuant
to the  Restricted  Stock Award  shall bear a legend to reflect  the  Forfeiture
Period until the Forfeiture Period expires.

      12.  Appreciation  Rights. The Committee may grant Appreciation  Rights to
any  Participant.  An Appreciation  Right shall be a right of the Participant to
receive from the Company an amount  determined by the Committee,  which shall be
expressed  as a  percentage  of the Spread (not  exceeding  100%) at the time of
exercise.  Each  grant of  Appreciation  Rights  may  utilize  any or all of the
authorizations,  and shall be subject to all of the  requirements,  contained in
the following provisions:

            a. Appreciation Rights that are granted under the Plan may be linked
to all or any  part  of an  Option  ("Linked  Appreciation  Rights"),  or may be
granted without any linkage to an Option ("Free-Standing  Appreciation Rights").
Linked  Appreciation  Rights may be granted on the Date of Grant of the  related
Option or on any date thereafter, as the Committee may determine.

            b.  Linked   Appreciation   Rights  may  be  granted  either  as  an
alternative  or a  supplement  to the  Option  to  which  they are  linked  (the
"related" Option). Linked Appreciation Rights that are granted as an alternative
to the  related  Option  may  only be  exercised  when  the  related  Option  is
exercisable,  and at no time may a number of such Linked  Appreciation Rights be
exercised  that  exceeds the number of shares with  respect to which the related
Option is then exercisable. Upon exercise of Linked Appreciation Rights that are
granted as an alternative to an Option,  the holder shall be entitled to receive
the amount  determined  pursuant to Section  12(e) below.  Exercise of each such
Linked  Appreciation  Right shall cancel the related  Option with respect to one
Common Share purchasable under the Option.  Linked  Appreciation Rights that are
granted as a  supplement  to the  related  Option  shall  entitle  the holder to
receive the amount  determined  pursuant to Section  12(e) below if and when the
holder  purchases  shares  under the related  Option or at any  subsequent  time
specified in the instrument evidencing such Appreciation Rights.

            c. Appreciation Rights may be granted for such lawful consideration,
including but not limited to money or other property, tangible or intangible, or
labor or services  received or to be received by the Company,  as the  Committee
may determine when the Appreciation  Rights are granted.  The  consideration for
the grant of  Appreciation  Rights may consist of the discharge of an obligation
of the  Company.  Subject  to the  foregoing  and the other  provisions  of this
Section 12, Appreciation Rights may be exercisable upon achievement of specified
Management Objectives and/or satisfaction of one or more Vesting Periods. Unless
the  Evidence  of Award  provides

                                       21
<PAGE>

otherwise,  no  Appreciation  Right  shall be  exercisable  prior  to the  third
anniversary of the Date of Grant.  The Committee may at any time  accelerate the
date  on  which  Appreciation  Rights  become  exercisable,  and  no  additional
consideration need be received by the Company in exchange for such acceleration.
Unless  otherwise  provided in the 2004 Plan or the  instrument  evidencing  the
Appreciation Rights, Appreciation Rights, to the extent they become exercisable,
may be exercised at any time in whole or in part until they expire or terminate.

            d. No  Free-Standing  Appreciation  Rights  or  Linked  Appreciation
Rights  that  are  granted  as a  supplement  to the  related  Option  shall  be
exercisable  after the tenth  anniversary of the date on which the  Appreciation
Rights were granted,  and no Linked  Appreciation  Rights that are granted as an
alternative to the related Option shall be exercisable  after the related Option
ceases to be  exercisable.  If the Committee  grants  Appreciation  Rights for a
lesser term than that permitted by the preceding sentence, the Committee may, at
any time prior to expiration of the  Appreciation  Rights,  extend their term to
the  maximum  term  permitted  by the  preceding  sentence,  and  no  additional
consideration need be received by the Company in exchange for such extension.

            e. Upon exercise of Appreciation Rights, the holder thereof shall be
entitled to receive an amount of money,  or a number  Common  Shares that have a
Market Value per Share on the date of exercise of such Appreciation Rights, or a
combination  of money and Common  Shares valued at the Market Value per Share on
such date,  as the  Committee  may  determine,  equal to the amount by which the
Market  Value per Share of a Common Share on the date of such  exercise  exceeds
the Exercise Price (as hereafter defined) of the Appreciation Rights, multiplied
by the number of Appreciation Rights exercised;  provided that in no event shall
a fractional share be issued unless the instrument  evidencing such Appreciation
Rights expressly provides  otherwise.  In the case of Linked Appreciation Rights
that are granted as an  alternative  to the related  Option,  the Exercise Price
shall be the price at which shares may be purchased under the related Option. In
the case of Linked  Appreciation  Rights that are granted as a supplement to the
related  Option,  and in the  case of  Free-Standing  Appreciation  Rights,  the
Exercise Price shall be the Market Value per Share of a Common Share on the date
the Appreciation Rights were granted.

            f. Subject to Section 6(f) above,  (i) the  limitations set forth in
Section  6 above  shall be  charged  only for the  number  of  shares  which are
actually issued in settlement of Appreciation Rights; and (ii) in the case of an
exercise of Linked  Appreciation  Rights that were granted as an  alternative to
the related Option,  if the number of Common Shares  previously  charged

                                       22
<PAGE>

against  such  limitations  on  account of the  portion  of the  Option  that is
cancelled in  connection  with such  exercise in  accordance  with Section 12(b)
exceeds the number of shares (if any) actually issued pursuant to such exercise,
the excess may be added back to the maximum aggregate number of shares available
for issuance under the Plan.

            g.  Subject to Section  15(a)  below,  Appreciation  Rights shall be
exercisable  during the life of the  Participant  only by him or his guardian or
legal representative, and after death only by his beneficiary.

            h. The  Committee  shall not have the  authority  to reduce the Base
Price of  outstanding  Appreciation  Rights  except as  permitted  by Section 16
below,  nor  shall  the  Committee  have the  authority  to  cancel  outstanding
Appreciation  Rights and replace  such  Appreciation  Rights  with  Appreciation
Rights having a lower Base Price.

      13. Performance Units and Performance  Shares. The Committee may authorize
the granting to  Participants of Performance  Units and Performance  Shares that
will become  payable (or payable  early) to a Participant  upon  achievement  of
specified  Management  Objectives  and/or  satisfaction  of one or more  Vesting
Periods.  Unless  otherwise  specified in the Evidence of Award,  Awards granted
under this Section 13 shall be not be payable prior to the third  anniversary of
the Date of Grant. Each such grant may utilize any or all of the authorizations,
and shall be  subject  to all of the  limitations,  contained  in the  following
provisions:

            a. Each  grant  shall  specify  the number of  Performance  Units or
Performance  Shares  to  which it  pertains,  which  number  may be  subject  to
adjustment  to  reflect  changes in  compensation  or other  factors;  provided,
however, that no such adjustment shall be made in the case of a Covered Employee
where such action would result in the loss of the otherwise  available exemption
of the Award under Section 162(m) of the Code.

            b. The Performance  Period with respect to each  Performance Unit or
Performance  Share shall be such period of time (not less than one year,  except
in the event of a Change of Control)  commencing with the Date of Grant as shall
be determined by the Committee at the time of grant.

            c.  Any  grant of  Performance  Units or  Performance  Shares  shall
specify  Management  Objectives  which,  if achieved,  will result in payment or
early  payment  of the  Award,  and each  grant may  specify  in respect of such
specified  Management  Objectives a minimum  acceptable level of achievement and
shall set forth a formula for  determining  the number of

                                       23
<PAGE>

Performance Units or Performance Shares that will be earned if performance is at
or above the minimum level, but falls short of full achievement of the specified
Management  Objectives.  The grant of Performance  Units or  Performance  Shares
shall specify that, before the Performance  Shares or Performance Units shall be
earned and paid, the Committee  must  determine  that the Management  Objectives
have been satisfied.

            d. Each  grant  shall  specify  the time and  manner of  payment  of
Performance  Units or  Performance  Shares that have been earned.  Any grant may
specify that the amount payable with respect  thereto may be paid by the Company
to the Participant in cash, in Common Shares or in any combination  thereof, and
may either  grant to the  Participant  or retain in the  Committee  the right to
elect among those alternatives.

            e. Any  grant of  Performance  Units  may  specify  that the  amount
payable or the number of Common  Shares  issued  with  respect  thereto  may not
exceed  maximums  specified by the Committee at the Date of Grant.  Any grant of
Performance  Shares may specify that the amount payable with respect thereto may
not exceed a maximum specified by the Committee at the Date of Grant.

            f. The Committee  may, at or after the Date of Grant of  Performance
Shares, provide for the payment of dividend equivalents to the holder thereof on
either  a  current  or  deferred  or  contingent  basis,  either  in  cash or in
additional Common Shares.

      14. Other Awards.

            a.  The  Committee  is  authorized,  subject  to  limitations  under
Applicable Law, to grant to any Participant other Awards that may be denominated
or payable in,  valued in whole or in part by reference  to, or otherwise  based
on, or related to,  Common  Shares or factors  that may  influence  the value of
Common Shares, including,  without limitation,  convertible or exchangeable debt
securities,  other  rights  convertible  or  exchangeable  into  Common  Shares,
purchase rights for Common Shares, Awards with value and payment contingent upon
performance  of the  Company or business  units  thereof,  or any other  factors
designated by the Committee, and Awards valued by reference to the book value of
Common Shares or the value of  securities  of, or the  performance  of specified
Subsidiaries  or  Affiliates  or other  business  units  of,  the  Company.  The
Committee shall determine the terms and conditions of such Awards. Common Shares
delivered  pursuant to an Award in the nature of a purchase  right granted under
this  Section 14 shall be  purchased  for such  consideration,  paid for at such
times, by such methods, and in such forms, including,  without

                                       24
<PAGE>

limitation,  cash, Common Shares, other Awards, notes or other property,  as the
Committee shall determine.

            b. Cash Awards,  as an element of or  supplement  to any other Award
granted under this 2004 Plan, may also be granted pursuant to this Section 14 of
the 2004 Plan.

            c. The Committee is authorized to grant Common Shares as a bonus, or
to grant Common Shares or other Awards in lieu of  obligations of the Company to
pay cash or deliver other  property  under the 2004 Plan or under other plans or
compensatory  arrangements,  subject to such terms as shall be determined by the
Committee.

      15. Transferability.

            a. Except as otherwise determined by the Committee, no Option Right,
Appreciation Right or other derivative  security or Award granted under the 2004
Plan shall be  transferable  by a Participant  other than by will or the laws of
descent and  distribution.  Except as  otherwise  determined  by the  Committee,
Option Rights and Appreciation Rights shall be exercisable during the Optionee's
lifetime only by him or by his guardian or legal representative.

            b. The  Committee  may specify at the Date of Grant that part or all
of the Common  Shares  that are (i) to be issued or  transferred  by the Company
upon the exercise of Option Rights or Appreciation  Rights or upon payment under
any grant of Performance Units or Performance  Shares, or (ii) no longer subject
to the substantial risk of forfeiture and  restrictions on transfer  referred to
in  Section 11 of this 2004 Plan,  shall be subject to further  restrictions  on
transfer.

      16. Adjustments.  The Committee shall make or provide for such adjustments
in  the  numbers  of  Common  Shares  covered  by  outstanding   Option  Rights,
Appreciation Rights,  Retroactive Stock Appreciation Rights, Performance Shares,
and other share-based  Awards described in this 2004 Plan and granted hereunder,
in the Option Price and Base Price provided in outstanding  Appreciation Rights,
and in the kind of  shares  covered  thereby,  as the  Committee  determines  is
equitably  required  to  prevent  dilution  or  enlargement  of  the  rights  of
Participants  or  Optionees  that  otherwise  would  result  from (a) any  stock
dividend, stock split,  combination of shares,  recapitalization or other change
in the capital  structure  of the  Company,  or (b) any  merger,  consolidation,
spin-off,  split-off,  spin-out, split-up,  reorganization,  partial or complete
liquidation or other distribution of assets (including,  without  limitation,  a
special or large  non-recurring  dividend),  issuance  of rights or  warrants to
purchase securities,  or (c) any other corporate  transaction or event having an
effect  similar  to any of the  foregoing.  Moreover,  in the  event of any such
transaction or

                                       25
<PAGE>

event,  the Committee shall provide in  substitution  for any or all outstanding
Awards under this 2004 Plan such  alternative  consideration as it determines to
be equitable in the circumstances,  and may require in connection  therewith the
surrender of all Awards so replaced.  The  Committee  shall also make or provide
for such  adjustments  in the numbers of shares  specified  in Section 6 of this
2004 Plan as the Committee  determines is appropriate to reflect any transaction
or  event  described  in this  Section  16;  provided,  however,  that  any such
adjustment  to the number  specified in Section 6 shall be made,  only if and to
the extent that, such adjustment  would not cause any Option intended to qualify
as an Incentive Stock Option to fail so to qualify.

      17.  Fractional  Shares.  The  Company  shall not be required to issue any
fractional  Common Shares  pursuant to this 2004 Plan. The Committee may provide
for the elimination of fractions or for the settlement of fractions in cash.

      18. Withholding Taxes. The Company shall have the right to deduct from any
payment  under  this 2004 Plan an amount  equal to the  Federal,  State,  local,
foreign and other taxes,  which in the opinion of the Company are required to be
withheld  by it with  respect to such  payment.  To the extent  that the amounts
available to the Company for such  withholding are  insufficient,  it shall be a
condition to the receipt of such payment or the realization of such benefit that
the  Participant  or such other  person make  arrangements  satisfactory  to the
Company for payment of the balance of such taxes required to be withheld. At the
discretion of the Committee,  such arrangements may include  relinquishment of a
portion of such benefit. In no event,  however,  shall the Company accept Common
Shares for payment of taxes in excess of required tax withholding rates,  except
that, in the discretion of the Committee, a Participant or such other person may
surrender  Common  Shares  owned for more than six  months  to  satisfy  any tax
obligations resulting from any such transaction.

      19. Foreign  Employees.  In order to facilitate the making of any grant or
combination  of grants under this 2004 Plan,  the Committee may provide for such
special terms for Awards to  Participants  who are foreign  nationals or who are
employed by the Company outside of the United States of America as the Committee
may consider  necessary or appropriate to accommodate  differences in local law,
tax policy or custom. Moreover, the Committee may approve such supplements to or
amendments,  restatements  or  alternative  versions of this 2004 Plan as it may
consider  necessary or appropriate for such purposes,  without thereby affecting
the  terms  of this  2004  Plan as in  effect  for any  other  purpose,  and the
Corporate  Secretary or other appropriate officer of the Company may certify any
such  document  as having been  approved  and adopted in the same

                                       26
<PAGE>

manner as this 2004 Plan.  No such special  terms,  supplements,  amendments  or
restatements,  however,  shall include any provisions that are inconsistent with
the terms of this 2004 Plan, as then in effect, unless this 2004 Plan could have
been amended to eliminate such  inconsistency  without  further  approval by the
shareholders of the Company.

      20. Administration of the Plan.

            a.  This  2004  Plan  shall  be  administered  by the  Board  or the
Compensation Committee of the Board (or a subcommittee thereof), which Committee
shall  consist of not less than three  Directors  appointed by the Board each of
whom shall be a "non-employee director" as defined in Rule 16b-3 of the Exchange
Act and an "outside director" as defined in the regulations under Section 162(m)
of the Code. A majority of the  Committee  shall  constitute  a quorum,  and the
action of the members of the Committee  present at any meeting at which a quorum
is present,  or acts unanimously  approved in writing,  shall be the acts of the
Committee.  The Board may perform any function of the  Committee  hereunder,  in
which case the term "Committee" shall refer to the Board.

            b.  Evidence  of Award  agreements,  in the forms as approved by the
Board or the Committee, and containing such terms and conditions consistent with
the  provisions  of  this  2004  Plan  as are  determined  by the  Board  or the
Committee,  may be  executed  on behalf of the  Company by the  Chairman  of the
Board,  the President & CEO, Vice President of Finance,  or the Secretary of the
Company.

            c. The  interpretation  and  construction  by the  Committee  of any
provision  of this  2004  Plan or of any  agreement,  notification  or  document
evidencing the grant of Option Rights,  Appreciation  Rights,  Retroactive Stock
Appreciation  Rights,  Restricted  Shares,  Restricted Stock Units,  Performance
Units,  Performance  Shares or any other Awards granted under the 2004 Plan, and
any  determination by the Committee  pursuant to any provision of this 2004 Plan
or of  any  such  agreement,  notification  or  document,  shall  be  final  and
conclusive.  No member of the  Committee  shall be liable for any such action or
determination made in good faith.

      21. Change of Control. Upon the occurrence of a Change of Control,  unless
(i) otherwise  provided in the "Change of Control  Agreement" (as defined below)
or in a  written  agreement,  such as a  severance  agreement  or an  employment
agreement,  between the Company and the Participant;  or (ii) the Committee,  in
its sole discretion, on a case-by-case basis elects otherwise in writing:

                                       27
<PAGE>

            a. Awards  granted under the 2004 Plan shall become  exercisable  or
payable as provided in the  Evidence of Award,  or other  agreement  between the
Company and a Participant.

            b.  Notwithstanding  the  foregoing,  no Award shall be  exercisable
after the expiration of its term.  Any  exercisable  Options  outstanding at the
time of a Change of Control  shall be cashed  out,  converted  to options of the
acquiring  entity,  assumed by the acquiring entity or otherwise  disposed of in
the manner provided in any  shareholder-approved  agreement or plan governing or
providing for such Change of Control ("Change of Control  Agreement");  provided
that any such  cash-out,  conversion,  assumption or  disposition of the Options
shall not  deprive  the  Option  holder of the  inherent  value of his  Options,
measured  solely by the excess of the Market  Value per Share of the  underlying
Option  shares  immediately  prior to the  Change  of  Control  over the  Option
exercise  price.  In the  absence of such  governing  provisions  in a Change of
Control Agreement, the Committee, in its sole discretion,  may on a case-by-case
basis require any exercisable  Options that remain  outstanding upon a Change of
Control to be cashed out and terminated in exchange for a lump sum cash payment,
shares of the acquiring  entity or a  combination  thereof equal in value to the
fair  market  value of the  Option,  measured  in the  manner  described  above,
immediately prior to the Change of Control.

            c. Any exercisable Linked  Appreciation  Rights shall, upon a Change
of Control,  be cashed out,  converted,  assumed or otherwise disposed of in the
same manner as applies to Options under Section 21(b) above.

            d. All  Management  Objectives of all Awards  granted under the 2004
Plan shall be deemed to have been fully earned.

      22.  Termination  of  Service,  Death and  Disability  Provisions.  Unless
otherwise  provided  in the 2004 Plan,  Evidence  of Award,  or other  agreement
between the Company and a Participant:

                                       28
<PAGE>

            a. In the event that a Participant  terminates  employment by reason
of death, Disability or Retirement, (i) the Participant's unvested Options shall
become  immediately  exercisable,  (ii) all of the Participant's  vested Options
shall be  exercisable  until the  earlier of the date the Option  expires or the
date that is eighteen (18) months  following the date of termination,  and (iii)
except as provided in Section 22(d) below, all other of the Participant's Awards
shall be cancelled.

            b. In the  event  that a  Participant  is  involuntarily  terminated
without Cause, (i) the Participant's  unvested Options shall be cancelled,  (ii)
the  Participant's  vested Options shall be exercisable until the earlier of the
date the Option  expires or the date that is three months  following the date of
termination,  and (iii) except as provided in Section 22(d) below,  all other of
the Participant's Awards shall be cancelled.

            c. In the event of a Participant's  voluntary  resignation,  (i) the
Participant's  unvested  Options  shall  be  cancelled,  (ii)  up to 1000 of the
Participant's  vested options shall be exercisable until the earlier of the date
the  Option  expires  or the date  that is three  months  following  the date of
termination,  and (iii) except as provided in Section 22(d) below,  all other of
the Participant's Awards shall be cancelled.

            d. In case of the  involuntary  termination  of  employment  without
Cause,  or by reason  of  death,  Disability  or  Retirement,  or in the case of
hardship  or  other  special  circumstances,  of  a  Participant  who  holds  an
Appreciation  Right or  Retroactive  Stock  Appreciation  Right not  immediately
exercisable,  or any  Restricted  Shares  as to which  the  substantial  risk of
forfeiture or the prohibition or restriction on transfer has not lapsed,  or any
Performance Units or Performance Shares which have not been fully earned, or who
holds Common  Shares  subject to any transfer  restriction  imposed  pursuant to
Section  11 of this  2004  Plan,  the  Committee  may,  in its sole  discretion,
accelerate  the time at which  such  Appreciation  Right  or  Retroactive  Stock
Appreciation  Right may be exercised or the time at which such  substantial risk
of forfeiture or  prohibition  or restriction on transfer will lapse or the time
at which such  Performance  Units or  Performance  Shares will be deemed to have
been fully earned or the time when such transfer restriction will terminate.  In
addition,  the Committee may waive any other limitation or requirement under any
Award  granted  under this 2004 Plan,  except in the case of a Covered  Employee
where such action would result in the loss of the otherwise  available exemption
of the Award under Section 162(m) of the Code. In such case, the Committee shall
not make any  modification  of the Management  Objectives or minimum  acceptable
level of achievement.

                                       29
<PAGE>

            e. The  Committee  may,  in its sole  discretion,  modify any Option
Right or  Appreciation  Right to extend the period  following  termination  of a
Participant's  employment  to the  Company  during  which such Award will remain
outstanding and be exercisable,  provided that no such extension shall result in
any Award being exercisable more than ten years after the Date of Grant.

            f. In the event of a Termination of a Participant's  employment with
the Company within 12 months after a Change of Control,  each  unexpired  Option
and  Appreciation  Right or Retroactive  Stock  Appreciation  Right shall become
exercisable,  all  restrictions  on Restricted  Stock or Restricted  Units shall
lapse,  and  all  Management  Objectives  and/or  vesting  requirements  of  all
Performance  Shares,  Performance  Units and other Awards granted under the 2004
Plan shall be deemed to have been fully earned and/or satisfied.

            g. In the case of a Participant's  termination for Cause, all of the
Participant's  rights  under this 2004 Plan  (whether  or not  vested)  shall be
cancelled upon termination.

      23.  Leave of Absence.  The Board or the  Committee  shall  determine  the
extent to which  military  or  Government  services  or leave of absence for any
other  reason  shall  constitute  termination  of  employment,  directorship  or
consultancy for the purposes of the 2004 Plan or any Awards granted hereunder.

      24.  Participant  Rights.  This  2004  Plan  shall  not  confer  upon  any
Participant any right with respect to continuance of employment with the Company
nor shall it  interfere  in any way with any right the Company  would  otherwise
have to terminate  such  Participant's  employment at any time,  with or without
Cause.  Neither  a  Participant  nor  any  other  person  shall,  by  reason  of
participation in the 2004 Plan, acquire any right or title to any assets,  funds
or property of the Company,  including without  limitation,  any specific funds,
assets or other property which the Company may set aside in  anticipation of any
liability under the 2004 Plan. A Participant shall have only a contractual right
to an Award or the amounts,  if any,  payable under the 2004 Plan,  unsecured by
any  assets  of the  Company,  and  nothing  contained  in the 2004  Plan  shall
constitute a guarantee that the assets of the Company shall be sufficient to pay
any benefits to any person.

      25.  Severability  of Provisions.  If any provision of the 2004 Plan is or
becomes  invalid,  illegal  or  unenforceable  in  any  jurisdiction,  or  would
disqualify the 2004 Plan or any Award under any  Applicable  Law, such provision
shall be  construed  or  deemed  amended  or  limited  in scope  to

                                       30
<PAGE>

conform to Applicable  Laws, or in the discretion of the Committee,  it shall be
fully  severable,  and the 2004 Plan shall be construed  and enforced as if such
provision had never been inserted herein.

      26.  Governing  Laws.  The  validity,  construction,   interpretation  and
administration of the 2004 Plan, each Evidence of Award, and any  determinations
or decisions made  thereunder,  and the rights of all persons having or claiming
to have any interest therein or thereunder, shall be governed by the laws of the
State of New York and the United States, as applicable, without reference to any
conflicts  or  choice  of law  rule or  principle  that  might  otherwise  refer
construction  or  interpretation  of the  2004  Plan to the  substantive  law of
another  jurisdiction.  Without  limiting the generality of the  foregoing,  the
period within which any actions  arising  under or in  connection  with the 2004
Plan must be commenced,  shall be governed by the laws of the State of New York,
irrespective of the place where the act or omission complained of took place and
the  residence of any party to such action and  irrespective  of the place where
the  action  may be  brought.  A  Participant's  acceptance  of any Award  shall
constitute his irrevocable and unconditional waiver of the right to a jury trial
in any action or proceeding concerning the Award, the 2004 Plan or any rights or
obligations of the Participant or the Company under or with respect to the Award
or the 2004 Plan.

      27. Amendments and Termination.

            a. The Board  may at any time and from  time to time  amend the 2004
Plan in whole or in part;  provided,  however,  that any amendment which must be
approved by the  shareholders  of the Company in order to comply with Applicable
Laws,  shall not be effective  unless and until such approval has been obtained.
Without limiting the generality of the foregoing,  the Board may amend this 2004
Plan to eliminate provisions that are no longer necessary as a result of changes
in tax or securities laws or regulations, or in the interpretation thereof.

            b. The  Committee  shall not,  without the  further  approval of the
shareholders of the Company,  authorize the amendment of any outstanding  Option
Right or  Appreciation  Right to  reduce  the  Option  Price or Base  Price  (as
applicable).  Furthermore,  no  Option  Right  or  Appreciation  Right  shall be
cancelled  and replaced  with an Award having a lower Option Price or Base Price
(as  applicable)  without further  approval of the  shareholders of the Company.
This Section 27(b) is intended to prohibit the repricing of "underwater"  Option
Rights and  Appreciation  Rights,  and shall not be  construed  to prohibit  the
adjustments provided for in Section 16 of this 2004 Plan.

                                       31
<PAGE>

            c.  Subject to Section 16,  this 2004 Plan shall  continue in effect
until the date on which all Common  Shares  available  for  issuance or transfer
under this 2004 Plan have been  issued or  transferred  and the  Company  has no
further obligation hereunder.

            d.  Notwithstanding  any  other  provision  of the 2004  Plan to the
contrary,  (i) the 2004 Plan may be terminated at any time by resolutions of the
Board,  and (ii) no rights  shall be  granted  pursuant  to this 2004 Plan after
October 31, 2014.

      28. Adjustment of Payments. In the event that any amount payable under the
2004 Plan, when added to all other amounts payable to the Participant, would, if
made,  constitute an "excess  parachute  payment" within the meaning of Sections
280G and 4999 of the  Code,  the  amounts  payable  hereunder  may,  in the sole
discretion of the Company, be adjusted, reduced or not accelerated by the amount
necessary  to cause the  Participant  to  receive  $1,000  less than 300% of the
Participant's  "base  amount" as that term is used in Section  280G of the Code.
The Committee shall, in its sole  discretion,  determine the manner in which any
such reduction shall be made.

      29.  Acceptance.  By  accepting  any  benefits  under the 2004 Plan,  each
Participant,   and  each  person   claiming  under  or  through  him,  shall  be
conclusively  deemed to have indicated his acceptance and  ratification  of, and
consent to, all provisions of the 2004 Plan and any action or decision under the
2004  Plan by the  Company,  its  agents  and  employees,  and the Board and the
Committee.

      30. Miscellaneous.

            The use of the  masculine  gender  shall  also  include  within  its
meaning the feminine.  The use of the singular  shall include within its meaning
the plural and vice versa.

                                        ANAREN, INC.

                                    By: /s/ Lawrence A. Sala
                                        -------------------------------------
                                        President and Chief Executive Officer

                                       32Exhibit 10.1 to Insignia Systems, Inc. Form 10-K/A for year ended December 31, 2008

Exhibit 10.1 

AMENDMENT NO. 1 TO EXCLUSIVE RESELLER AGREEMENT

by and between

VALASSIS SALES & MARKETING SERVICES, INC.
 and 

INSIGNIA SYSTEMS, INC.

AMENDMENT NO. 1 TO EXCLUSIVE RESELLER AGREEMENT (the “First Amendment”), dated as of December
6, 2006, by and between Valassis Sales & Marketing Services, Inc. (the
“Reseller”) and Insignia Systems, Inc. (the “Company”) (collectively, the
“Parties”). All capitalized terms used but not defined herein shall have the
same meanings as ascribed to them in the Exclusive Reseller Agreement (as
defined below). 

W I T N E S S E T H:  

WHEREAS, on June 12, 2006, the Reseller and the Company entered into the Exclusive Reseller
Agreement (the “Exclusive Reseller Agreement”); 

WHEREAS, the Parties wish to, among other things, extend the initial contract term, finalize
certain appendices and make certain modifications to joint account
compensation; and 

WHEREAS, the Parties have determined to amend the Exclusive Reseller Agreement as herein set forth. 

NOW, THEREFORE, in consideration of the premises and of the covenants and agreements
hereinafter set forth, and other good and valuable consideration, the receipt
and adequacy of which is hereby acknowledged, the parties hereto hereby agree
as follows: 

	
  

 	
  

 	
  

 
	
  

 	
 1.

 	
 Section 4(c)
 shall be hereby amended and restated in its entirety as follows: 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (c)          Company
 Payments. The Company shall provide the Reseller with a calculation of
 all revenue for Joint Sales on a monthly basis, and remit payment to
 Reseller, along with an accounting of the amount due, within 30 days after
 each calendar year during the term. All payments shall be made in U.S.
 Dollars. 

 
	
  

 	
  

 	
  

 
	
  

 	
 2.

 	
 Section
 10(a) is hereby amended and restated in its entirety as follows: 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (a)          Term.
 The term of this Agreement shall commence on the Effective Date and shall
 continue until December 31, 2007 (the “Initial Term”) unless terminated
 earlier pursuant to the provisions of this Section 10. At the end of the
 Initial Term, this Agreement shall renew automatically for additional 12
 month periods unless prior to that time, at the end of each renewal term,
 either party gives the other party 90 days’ written notice of non-renewal. 

 

33

          3.       The
parties hereby agree to replace in its entirety Exhibits B1, B2 and B3 to the
Exclusive Reseller Agreement with Exhibits B1, B2 and B3 attached hereto. 

          4.       The
term “the Effective Date” referred to in the second sentence of subsection (a)
to Exhibit B (Fees) shall be replaced with “January 1, 2007.” 

          5.       Subsection
(b) to Exhibit B (Fees) is hereby amended and restated in its entirety as follows: 

	
  

 	
  

 
	
  

 	
 (b)          Joint
Sales Customers. For customers that the Reseller and the Company agree to
sell together, the parties will agree to share the profit of the annual
aggregate joint customer business during each calendar year of the term that
exceeds the aggregate revenue for those joint customers during the prior
calendar year. The parties have agreed to the joint sales customers listed on
Exhibit B3. The parties agree in good faith to equitably adjust upward the
2006 revenue baseline to take into account the Company’s anticipated addition
of [ * ] stores, to the extent such addition has a material impact on
revenues in 2007. All payments with respect to joint sales customers will be
made within 30 days after each calendar year during the term.  

 
	
  

 	
  

 
	
  

 	
 For illustrative purposes, if the aggregate joint customer sales for 2006 is $5
million and sales for the aggregate joint customer sales during 2007 increase
to $8 million, the Reseller and the Company will share the “Profit” on the
difference ($3 million) on [ * ]. For purposes of this Agreement, “Profit”
means the difference between (x) the actual revenue attributed to the joint
customers during the current calendar year minus the baseline revenue during
the prior calendar year (as may be adjusted as described above) and (y) the
Company’s POPSign Cost times the number of signs. The Company’s POPSign Cost
will be based upon the total incremental joint revenue between the parties as
follow:  

 
	
  

 	
  

 
	
  

 	
 [ * ]

 
	
  

 
	
  

 	
 In addition,
 for certain selected joint accounts, Reseller will be entitled to additional
 commission payments by virtue of the fact that a Reseller salesperson has
 taken over primary responsibilities for such selected joint account. Two of
 these accounts as of the date hereof are [ * ] and [ * ]. For these accounts,
 compensation to 

 

* Confidential treatment requested for this portion. 

34

	
  

 	
  

 
	
  

 	
 Reseller
 will include the payments as indicated in the Exclusive Reseller Agreement
 plus an additional “commission” payment. The “commission” payment will be
 made to the Reseller according to the same schedules the Company uses to pay
 commissions to its salespeople. 

 
	
  

 	
  

 
	
  

 	
 The current
 Company commission schedule is attached to this First Amendment. If at any
 time in the future the Company shall have multiple schedules for commission
 payments, the Reseller will be paid according to the schedule that would be
 most favorable to the Reseller. 

 
	
  

 	
  

 
	
  

 	
 The Company
 will be responsible for billing and collecting all amounts due from the
 Customer in respect of all joint sales accounts, and all sales will be using
 Company purchase orders or other documentation. Invoicing and payment shall
 be in accordance with Section 4 of the Exclusive Reseller Agreement. 

 

          6.       Except
as set forth herein, all of the terms, conditions and provisions of the
Exclusive Reseller Agreement shall remain unchanged and in full force and
effect. 

          7.       Each
Party hereto shall cooperate and take any further actions, and shall execute
and deliver any further documents, that are reasonably requested by a party
hereto in order to effectuate or facilitate the purposes and intents of this
First Amendment. 

          8.       This
First Amendment may be executed in counterparts, each of which shall be deemed
an original and all of which together shall constitute one and the same
agreement. 

          9.       The
Exclusive Reseller Agreement, as amended by this First Amendment, set forth the
entire understanding and agreement of the Parties hereto with respect to the
subject matter thereof, and merges all prior understandings and agreements with
respect to the subject matter thereof. 

35

IN WITNESS WHEREOF, the Parties hereto have caused this Amendment No. 1 to be executed as
of the day and year first above written. 

	
  

 	
  

 	
  

 	
  

 
	
  

 	
 RESELLER:

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 VALASSIS SALES & MARKETING SERVICES, INC.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
 /s/ Rick
 Herpich

 
	
  

 	
  

 	
 Name:

 	
 Rick Herpich

 
	
  

 	
  

 	
 Title:

 	
 President

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 COMPANY:

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 INSIGNIA SYSTEMS, INC.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
 /s/ Scott
 Drill

 
	
  

 	
  

 	
 Name:

 	
 Scott Drill

 
	
  

 	
  

 	
 Title:

 	
 CEO

 

36

2006 Manufacturer Sales
Representative Commissions Schedule 

 [ * ] 

* Confidential treatment requested for this portion. 

37

Exhibit B1 - Strategic Accounts 

 [ * ] 

Note: This list will be
determined mutually by the parties in good faith and may be modified or
supplemented from time to time upon the mutual agreement of the Company and the
Reseller . 

* Confidential treatment requested for this portion. 

38

Exhibit B2 - Reseller Only
Coverage Accounts 

 [ * ] 

Note: Accounts not listed in
exhibits B1, B2, or B3 will be considered Reseller Only Coverage accounts 

Note: This list will be
determined mutually by the parties in good faith and may be modified or
supplemented from time to time upon the mutual agreement of the Company and the
Reseller. 

* Confidential treatment requested for this portion. 

39

Exhibit B3 - Joint Sale Accounts 

 [ * ] 

Note: This list will be
determined mutually by the parties in good faith and may be modified or
supplemented from time to time upon the mutual agreement of the Company and the
Reseller 

* Confidential treatment requested for this portion. 

40

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