Document:

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                                                                   EXHIBIT 10.15

                               EXCHANGE AGREEMENT

                This EXCHANGE AGREEMENT (this "Agreement") is entered into as of
May __, 2001, by and among Global Power Equipment Group Inc. (the "Company"), a
Delaware corporation, and each of the Persons named on Schedule I attached
hereto (each such Person, a "Purchaser" and, collectively, the "Purchasers").

                Capitalized terms used and not otherwise defined herein shall
have the respective meaning given such term in the Limited Liability Company
Agreement of GEEG Holdings, L.L.C. ("GHLLC"), a Delaware limited liability
company, dated as of August 1, 2000.

                              W I T N E S S E T H:

                WHEREAS, each Purchaser owns the number of Preferred Units and
Class A Common Units (collectively, with respect to such Purchaser, "Units") in
GHLLC set forth opposite such Purchaser's name on Schedule I attached hereto;

                WHEREAS, each Purchaser desires to contribute such Purchaser's
Units to the Company in exchange for shares of common stock (the "Common
Stock"), par value $0.01 per share, of the Company;

                WHEREAS, the Company desires to issue shares of Common Stock to
each such Purchaser in exchange for all of such Purchaser's Units; and

                WHEREAS, with respect to each Purchaser other than GEEG
Acquisition Holdings Corp., the parties hereto intend for the transactions
contemplated hereby to qualify as a tax free contribution under Section 351(d)
of the Internal Revenue Code of 1986, as amended (the "Code") and, with respect
to GEEG Acquisition Holdings Corp., the parties hereto intend for the
transactions contemplated hereby to qualify as a tax free reorganization under
Section 368(a)(1) of the Code.

                NOW, THEREFORE, in consideration of the mutual agreements herein
contained and the mutual benefits hereby provided, the Company and the
Purchasers, intending to be bound legally, hereby agree as follows:

                Section 1.      Exchanges of Units for Common Stock.

                1.1.    Exchanges. Subject to the terms and conditions
hereinafter set forth, each Purchaser hereby agrees to transfer to the Company
such Purchaser's Units and the Company hereby agrees to issue to such Purchaser
shares of Common Stock as follows:

                (a)     Each Common Unit shall be exchanged for a number of
        shares of Common Stock equal to the amount obtained when one (1) is
        multiplied by the quotient resulting from dividing (i) the value of the
        Company (as determined by the underwriters in connection with the
        initial public offering (the "IPO") of shares of Common Stock), less the
        aggregate of the gross cash proceeds received by the Company in the IPO
        and the aggregate capital contribution with respect to the Preferred
        Units, divided by the

<PAGE>   2

        aggregate amount of issued and outstanding Common Units and Common Units
        into which employee stock options granted pursuant to the 2000 Option
        Plan are exercisable on the date of consummation of the IPO (the
        "Effective Date") by (ii) the price per share at which shares of Common
        Stock will be offered in the IPO; and

                (b)     Each Preferred Unit shall be exchanged for the number of
        shares of Common Stock equal to the amount obtained when one hundred
        (100) is divided by the price per share at which shares of Common Stock
        will be offered in the IPO.

                1.2.    No Fractional Shares. No fractional shares of Common
Stock of the Company shall be issued under this Agreement and any fractional
share interests will not entitle the owner thereof to vote or to have any rights
of a holder of Common Stock of the Company. In lieu of any such fractional
shares, each holder of shares of Common Stock of the Company who would otherwise
have been entitled to a fraction of a share of Common Stock of the Company shall
be paid an amount in cash (without interest) equal to the product of (i) such
fractional part of a share of Common Stock of the Company multiplied by (ii) the
price per share at which shares of Common Stock will be offered in the IPO. As
promptly as practicable after the determination of the amount of cash, if any,
to be paid to holders of fractional interests, the Company will forward payments
to such holders of fractional interests subject to and in accordance with the
terms hereof.

                1.3.    Closing. The exchanges referred to in Section 1.1 (the
"Closing") shall take place at the offices of White & Case LLP, 1155 Avenue of
the Americas, New York, New York 10036, or such other place as shall be mutually
agreed to by the parties hereto, on such date and time as shall be mutually
agreed to by the parties hereto. Such date is herein referred to as the "Closing
Date."

                Section 2.      Representations of the Purchasers

                Each Purchaser represents and warrants to the Company as
follows:

                2.1.    Such Purchaser represents that such Purchaser is not
acquiring the Common Stock with a view to, or for resale in connection with, any
distribution of the Common Stock in violation of the Securities Act of 1933 (the
"Securities Act"). Such Purchaser understands that the Common Stock has not been
registered under the Securities Act or the securities laws of any state and that
the Common Stock has been issued to such Purchaser by reason of specific
exemptions under the provisions thereof which depend in part upon the investment
intent of such Purchaser and upon the other representations made by such
Purchaser in this Agreement. Such Purchaser understands that the Company is
relying upon the representations and agreements made by such Purchaser in this
Agreement.

                2.2.    Such Purchaser understands that such Purchaser may not
sell or transfer the Common Stock purchased pursuant to this Agreement unless
the Common Stock is registered pursuant to the requirements of the Securities
Act and of any applicable state or "blue sky" securities laws or regulations,
or, if required by the Company, such Purchaser furnishes an opinion of counsel,
in form and substance satisfactory to the Company, to the effect that
registration is not then required under the Securities Act or under any
applicable state or "blue sky" securities laws

                                      -2-
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or regulations. Such Purchaser further understand that the Company has no
obligation or present intention of so registering the Common Stock, and that
there is no assurance that any exemption from registration under the Securities
Act will be available or, if available, that such exemption will allow such
Purchaser to dispose of or otherwise transfer any or all of the shares of Common
Stock in the amounts or at the times that such Purchaser may propose.

                2.3.    Such Purchaser (i) has such knowledge, sophistication
and experience in business and financial matters that such Purchaser is capable
of evaluating the merits and risks of the exchange referred to in Section 1.1
hereof, (ii) fully understands the nature, scope and duration of the limitations
applicable to the Common Stock, (iii) is able to bear the economic risk of the
exchange referred to in Section 1.1 hereof, and (iv) is an "Accredited Investor"
as defined in Regulation D under the Securities Act.

                Section 3.      Miscellaneous

                3.1.    Effectiveness. This Agreement shall be effective as of
12:01 AM on the Effective Date.

                3.2.    Legend. So long as applicable, each certificate
representing any portion of the shares of Common Stock shall be stamped or
otherwise imprinted with a legend in the following form:

        "The securities represented by this certificate have not been registered
        under the Securities Act of 1933, as amended (the "Securities Act"), and
        such securities may not be offered, sold, pledged or otherwise
        transferred except (1) pursuant to an exemption from, or in a
        transaction not subject to, the registration requirements under the
        Securities Act or (2) pursuant to an effective registration statement
        under the Securities Act, in each case in accordance with any applicable
        securities laws of any State of the United States."

After the above requirement for a legend is no longer applicable because the
shares of Common Stock are freely transferable under the Securities Act, the
Company shall remove such legend upon request from a holder of such shares of
Common Stock, if outside counsel for such holder reasonably determines that the
transfer of such shares of Common Stock is no longer restricted by the
Securities Act and the general counsel of the Company reasonably concurs in such
determination.

                3.3.    Termination, Waiver, Amendment. Neither this Agreement
nor any provisions hereof shall be waived, modified, changed, discharged or
terminated except by an instrument in writing signed by the party against whom
such waiver, modification, change, discharge or termination is sought; provided,
however, that if the transactions contemplated by this Agreement are not
consummated by August 31, 2001, this Agreement shall terminate.

                3.4.    Assignability. Neither this Agreement nor any right,
remedy, obligation or liability arising hereunder or by reason hereof shall be
assignable by either the Company or any Purchaser, without the prior written
consent of the other parties hereto (in the case of a proposed assignment by the
Company) or the Company (in the case of a proposed assignment by such
Purchaser).

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                3.5.    Power of Attorney. (a) Each Purchaser, by its execution
hereof, hereby irrevocably makes, constitutes and appoints the Board of
Directors as its true and lawful agent and attorney-in-fact, with full power of
substitution and full power and authority in its name, place and stead to make,
execute, sign, acknowledge, swear to, record and register all certificates and
other instruments deemed advisable by the Board of Directors to carry out the
provisions of this Agreement.

                (b)     The foregoing power of attorney:

                        (i)     is coupled with an interest, shall be
                irrevocable and shall survive the death, incapacity or
                bankruptcy of each Purchaser; and

                        (ii)    may be exercised by the Board of Directors
                either by authorizing a Person to sign separately as
                attorney-in-fact for each Purchaser or, after listing all of the
                Purchasers executing an instrument, by a single signature of a
                Person authorized by the Board of Directors acting as
                attorney-in-fact for all of them.

                3.6.    Severability. If any provision of this Agreement or the
application of any such provision to any Person or circumstance shall be held
invalid, illegal or unenforceable in any respect by a court of competent
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision hereof.

                3.7.    Section and Other Headings. The section headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.

                3.8.    Entire Agreement. This Agreement contains the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior arrangements or understandings (whether written or
oral) with respect thereto.

                3.9.    Counterparts. For the convenience of the parties, any
number of counterparts of this Agreement may be executed by the parties hereto
and each such executed counterpart shall be deemed to be an original instrument.

                3.10.   Notices. All notices and other communications provided
for herein and all legal process in regard hereto shall be validly given, made
or served, if in writing and delivered by personal delivery, overnight courier,
telecopier or registered or certified mail, return-receipt requested and postage
prepaid addressed as follows:

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                If to a Purchaser, to:

                The address set forth under such Purchaser's
                name on Schedule I attached hereto

                If to the Company, to:

                Global Power Energy Group Inc.
                c/o Harvest Partners, Inc.
                280 Park Avenue, 33rd Floor
                New York, NY 10017
                Attention: Stephen Eisenstein

                Any such communication shall be deemed given, made or served as
of the date so delivered or, in the case of any communication delivered by mail,
as of the date so received.

                3.11.   GOVERNING LAW. THE AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO SUCH STATE'S CHOICE OF LAW PROVISIONS.

                                    * * * * *

                                      -5-
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                IN WITNESS WHEREOF, the Company and each Purchaser has executed
this Agreement as of the date first written above.

                                               GEEG ACQUISITION HOLDINGS CORP.

                                               By:
                                                   ----------------------------
                                                   Name:
                                                   Title:

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                  [Signature page for this Exchange Agreement]

                                               GEEG ACQUISITION HOLDINGS LLC

                                               By:
                                                   ----------------------------
                                                   Name:
                                                   Title:

<PAGE>   8

                  [Signature page for this Exchange Agreement]

                                               GLOBAL POWER EQUIPMENT GROUP INC.

                                               By:
                                                   -----------------------------
                                                   Name:
                                                   Title:

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                  [Signature page for this Exchange Agreement]

                                               SMC POWER HOLDINGS, L.L.C.

                                               By:
                                                   -----------------------------
                                                   Name:
                                                   Title:

<PAGE>   10

                  [Signature page for this Exchange Agreement]

                                               SAW MILL INVESTMENTS, L.L.C.

                                               By:
                                                   -----------------------------
                                                   Name:
                                                   Title:

<PAGE>   11

                  [Signature page for this Exchange Agreement]

                                               CASCADE INVESTMENT PARTNERS,
                                                 L.L.C.

                                               By:
                                                   -----------------------------
                                                   Name:
                                                   Title:

<PAGE>   12

                  [Signature page for this Exchange Agreement]

                                               PARIBAS PRINCIPAL INCORPORATED

                                               By:
                                                   -----------------------------
                                                   Name:
                                                   Title:

<PAGE>   13

                  [Signature page for this Exchange Agreement]

                                               INDOSUEZ GEEG PARTNERS

                                               By:
                                                   -----------------------------
                                                   Name:
                                                   Title:

<PAGE>   14
                  [Signature page for this Exchange Agreement]

                                               By:
                                                   -----------------------------
                                                   William M. Gerstner

<PAGE>   15

                  [Signature page for this Exchange Agreement]

                                               By:
                                                   -----------------------------
                                                   Larry Edwards

<PAGE>   16

                  [Signature page for this Exchange Agreement]

                                               By:
                                                   -----------------------------
                                                   Gary Obermiller

<PAGE>   17

                  [Signature page for this Exchange Agreement]

                                               By:
                                                   -----------------------------
                                                   Gene Schockemoehl

<PAGE>   18

                  [Signature page for this Exchange Agreement]

                                               By:
                                                   -----------------------------
                                                   Michael Hackner

<PAGE>   19

                  [Signature page for this Exchange Agreement]

                                               By:
                                                   -----------------------------
                                                   James Wilson

<PAGE>   20

                  [Signature page for this Exchange Agreement]

                                               By:
                                                   -----------------------------
                                                   Jack Silver

<PAGE>   21

                  [Signature page for this Exchange Agreement]

                                               By:
                                                   -----------------------------
                                                   Albert Breuer

<PAGE>   22

                  [Signature page for this Exchange Agreement]

                                               By:
                                                   -----------------------------
                                                   Tike Wong

<PAGE>   23

                  [Signature page for this Exchange Agreement]

                                               By:
                                                   -----------------------------
                                                   John Rieckman

<PAGE>   24

                  [Signature page for this Exchange Agreement]

                                               By:
                                                   -----------------------------
                                                   Monte Ness

<PAGE>   25

                  [Signature page for this Exchange Agreement]

                                               By:
                                                   -----------------------------
                                                   Kevin Zahler

<PAGE>   26

                  [Signature page for this Exchange Agreement]

                                               By:
                                                   -----------------------------
                                                   Jack McSweeney

<PAGE>   27

                  [Signature page for this Exchange Agreement]

                                               By:
                                                   -----------------------------
                                                   Bengt Sohlen

<PAGE>   28

                                                                      SCHEDULE I

<TABLE>
<CAPTION>
                                                           Preferred Units      Class A Common
          Purchaser                                           Exchanged        Units Exchanged
          ---------                                           ---------        ---------------
<S>                                                        <C>                 <C>
GEEG Acquisition Holdings Corp.
[Address]                                                     558,517.44           620,575.3

GEEG Acquisition Holdings LLC
[Address]                                                     248,850.00           276,500.0

SMC Power Holdings, L.L.C.
[Address]                                                      24,423.81            27,137.5

Saw Mill Investments, L.L.C.
[Address]                                                      26,263.32            29,181.5

Cascade Investment Partners, L.L.C.
[Address]                                                       8,100.00             9,000.0

Paribas Principal Incorporated
[Address]                                                      15,157.63            16,841.8

Indosuez GEEG Partners
[Address]                                                      13,137.09            14,596.8

William M. Gerstner
[Address]                                                       2,918.15             3,242.4

Larry Edwards
[Address]                                                      20,120.06            22,355.6

Gary Obermiller
[Address]                                                      15,638.32            17,375.9

Gene Schockemoehl
[Address]                                                      14,916.36            16,573.7
</TABLE>

<PAGE>   29

                                                                      Schedule I
                                                                          Page 2

<TABLE>
<S>                                                          <C>                 <C>
Michael Hackner
[Adress]                                                        8,130.44             9.033.8

James Wilson
[Address]                                                       6,965.30             7,739.2

Jack Silver
[Address]                                                       4,626.12             5,140.2

Albert Breuer
[Address]                                                       4,515.06             5,016.7

Tike Wong
[Address]                                                       4,415.65             4,906.3

John Rieckman
[Address]                                                       4,570.59             5,078.5

Monte Ness
[Address]                                                       4,920.47             5,467.2

Kevin Zahler
[Address]                                                       4,781.63             5,312.9

Jack McSweeney
[Address]                                                      18,000.00            20,000.0

Bengt Sohlen
[Address]                                                              0             1,205.0
</TABLE><PAGE>   1
                                                                   EXHIBIT 10.16

                        GLOBAL POWER EQUIPMENT GROUP INC.

                             2001 STOCK OPTION PLAN

                  1. Purposes. The purposes of the Global Power Equipment Group
Inc. 2001 Stock Option Plan are:

                  (a) To further the growth, development and success of the
Company and its Affiliates by enabling the executive and other employees and
directors of, and consultants to, the Company and its Affiliates to acquire a
continuing equity interest in the Company, thereby increasing their personal
interests in such growth, development and success and motivating such employees,
directors and consultants to exert their best efforts on behalf of the Company
and its Affiliates; and

                  (b) To maintain the ability of the Company and its Affiliates
to attract and retain employees, directors and consultants of outstanding
ability by offering them an opportunity to acquire a continuing equity interest
in the Company and its Affiliates which will reflect the growth, development and
success of the Company and its Affiliates.

Toward these objectives, the Committee may grant Options to such employees,
directors and consultants, all pursuant to the terms and conditions of the Plan.

                  2. Definitions. As used in the Plan, the following capitalized
terms shall have the meanings set forth below:

                  (a) "Affiliate" - other than the Company, (i) any corporation
or limited liability company in an unbroken chain of corporations or limited
liability companies ending with the Company if each corporation or limited
liability company owns stock or membership interests (as applicable) possessing
more than fifty percent (50%) of the total combined voting power of all classes
of stock in one of the other corporations or limited liability companies in such
chain; (ii) any corporation, trade or business (including, without limitation, a
partnership or limited liability company) which is more than fifty percent (50%)
controlled (whether by ownership of stock, assets or an equivalent ownership
interest or voting interest) by the Company or one of its Affiliates; or (iii)
any other entity, approved by the Committee as an Affiliate under the Plan, in
which the Company or any of its Affiliates has a material equity interest.

                  (b) "Agreement" - a written stock option award agreement
evidencing an Option, as described in Section 3(e).

                  (c) "Award Limit" - 1,500,000 shares of Stock (as adjusted in
accordance with Section 10).

                  (d) "Beneficial Ownership" - (including correlative terms)
shall have the same meaning given such term in Rule 13d-3 promulgated under the
Exchange Act.

                  (e) "Board" - the Board of Directors of the Company.
<PAGE>   2
                  (f) Unless otherwise determined by the Committee and set forth
in the applicable Agreement, "Change in Control" means the occurrence of any of
the following:

                      (i) an acquisition (other than directly from the Company)
         of any Voting Securities by any Person, immediately after which such
         Person has Beneficial Ownership of more than fifty percent (50%) of the
         combined voting power of the Company's then outstanding Voting
         Securities; provided, however, in determining whether a Change in
         Control has occurred, Voting Securities which are acquired in a
         Non-Control Acquisition (as defined in Section 2(n)) shall not
         constitute an acquisition that would cause a Change in Control;

                      (ii) the individuals who, as of the Effective Date, are
         members of the Board (the "Incumbent Board"), cease for any reason to
         constitute at least a majority of the members of the Board; provided,
         however, that if the election, or nomination for election, by the
         Company's common stockholders, of any new director was approved by a
         vote of at least a majority of the Incumbent Board, such new director
         shall, for purposes of the Plan, be considered as a member of the
         Incumbent Board; provided further, however, that no individual shall be
         considered a member of the Incumbent Board if such individual initially
         assumed office as a result of either an actual or threatened "Election
         Contest" (as described in Rule 14a-11 promulgated under the Exchange
         Act) or other actual or threatened solicitation of proxies or consents
         by or on behalf of a Person other than the Board (a "Proxy Contest")
         including by reason of any agreement intended to avoid or settle any
         Election Contest or Proxy Contest; or

                      (iii) the consummation of:

                           (A) a merger, consolidation or reorganization with or
                  into the Company or in which securities of the Company are
                  issued (a "Merger"), unless such Merger is a "Non-Control
                  Transaction;" a "Non-Control Transaction" shall mean a Merger
                  if:

                                    (1) the stockholders of the Company,
                           immediately before such Merger own, directly or
                           indirectly, immediately following such Merger, at
                           least fifty-one percent (51%) of the combined voting
                           power of the outstanding voting securities of the
                           corporation resulting from such Merger (the
                           "Surviving Corporation") in substantially the same
                           proportion as their ownership of the Voting
                           Securities immediately before such Merger;

                                    (2) the individuals who were members of the
                           Incumbent Board immediately prior to the execution of
                           the agreement providing for such Merger constitute at
                           least a majority of the members of the board of
                           directors of the Surviving Corporation, or a
                           corporation beneficially owning, directly or
                           indirectly, a majority of the voting securities of
                           the Surviving Corporation; and

                                    (3) no Person, other than (i) the Company,
                           (ii) any Related Entity (as defined in Section 2(n)),
                           (iii) any employee benefit plan (or any trust forming
                           a part thereof) that, immediately prior to such
                           Merger, was

                                      -2-
<PAGE>   3
                           maintained by the Company or any Related Entity, or
                           (iv) any Person who immediately prior to such Merger
                           had Beneficial Ownership of more than fifty percent
                           (50%) of the then outstanding Voting Securities, has
                           Beneficial Ownership of more than fifty percent (50%)
                           of the combined voting power of the Surviving
                           Corporation's then outstanding voting securities or
                           its common stock;

                           (B) a complete liquidation or dissolution of the
                  Company (not including a "Non-Control Transaction"); or

                           (C) the sale or other disposition of all or
                  substantially all of the assets of the Company to any Person
                  (other than a transfer to a Related Entity or the distribution
                  to the Company's stockholders of the stock of a Subsidiary or
                  any other assets).

                  Notwithstanding the foregoing, a Change in Control shall not
                  be deemed to occur solely because any Person (the "Subject
                  Person") acquired Beneficial Ownership of more than the
                  permitted amount of the then outstanding Voting Securities as
                  a result of the acquisition of Voting Securities by the
                  Company which, by reducing the number of Voting Securities
                  then outstanding, increases the proportional number of shares
                  Beneficially Owned by the Subject Persons, provided that if a
                  Change in Control would occur (but for the operation of this
                  sentence) as a result of the acquisition of Voting Securities
                  by the Company, and after such share acquisition by the
                  Company the Subject Person becomes the Beneficial Owner of any
                  new or additional Voting Securities which increases the
                  percentage of the then outstanding Voting Securities
                  Beneficially Owned by the Subject Person, then a Change in
                  Control shall occur. Solely for purposes of this Section 2(f),
                  (x) "Affiliate" shall mean, with respect to any Person, any
                  other Person that, directly or indirectly, controls, is
                  controlled by, or is under common control with, such Person;
                  (y) any "Relative" (for this purpose, "Relative" means a
                  spouse, child, parent, parent of spouse, sibling or
                  grandchild) of an individual shall be deemed to be an
                  Affiliate of such individual for this purpose; and (z) neither
                  the Company nor any Person controlled by the Company shall be
                  deemed to be an Affiliate of any holder of Stock.

                  (g) "Code" - the Internal Revenue Code of 1986, as it may be
amended from time to time, including regulations and rules thereunder and
successor provisions and regulations and rules thereto.

                  (h) "Committee" - the Compensation Committee of the Board, or
such other Board committee as may be designated by the Board to administer the
Plan.

                  (i) "Company" - Global Power Equipment Group Inc., a Delaware
corporation, or any successor entity.

                  (j) "Effective Date" - the date on which the Plan is
effective, as determined pursuant to Section 15.

                                      -3-
<PAGE>   4
                  (k) "Exchange Act" - the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.

                  (l) "Fair Market Value" - of a share of Stock as of a given
date shall be: (i) if the Stock is listed or admitted to trading on an
established stock exchange (including, for this purpose, the Nasdaq National
Market), the mean of the highest and lowest sale prices for a share of Stock on
the composite tape or in Nasdaq National Market trading as reported in The Wall
Street Journal (or, if not so reported, such other nationally recognized
reporting source as the Committee shall select) for such date, or, if no such
prices are reported for such date, the most recent day for which such prices are
available shall be used; (ii) if the Stock is not then listed or admitted to
trading on such a stock exchange, the mean of the closing representative bid and
asked prices for the Stock on such date as reported by the Nasdaq Small Cap
Market or, if not so reported, by the OTC Bulletin Board (or any successor or
similar quotation system regularly reporting the market value of the Stock in
the over-the-counter market), or, if no such prices are reported for such date,
the most recent day for which such prices are available shall be used; or (iii)
in the event neither of the valuation methods provided for in clauses (i) and
(ii) above are practicable, the fair market value of a share of Stock determined
by such other reasonable valuation method as the Committee shall, in its
discretion, select and apply in good faith as of the given date; provided,
however, that for purposes of paragraphs (a) and (h) of Section 6, such fair
market value shall be determined subject to Section 422(c)(7) of the Code.

                  (m) "ISO" or "Incentive Stock Option" - a right to purchase
Stock granted to an Optionee under the Plan in accordance with the terms and
conditions set forth in Section 6 and which conforms to the applicable
provisions of Section 422 of the Code.

                  (n) "Non-Control Acquisition" - an acquisition by (i) an
employee benefit plan (or a trust forming a part thereof) maintained by (A) the
Company or (B) any corporation or other Person of which a majority of its voting
power or its voting equity securities or equity interests is owned, directly or
indirectly, by the Company (a "Related Entity"); (ii) the Company or any Related
Entity; (iii) Harvest Partners, Inc. or any corporation or other Person of which
a majority of its voting power or its voting equity securities or equity
interests is owned, directly or indirectly, by Harvest Partners, Inc.; or (iv)
any Person in connection with a Non-Control Transaction.

                  (o) "Notice" - written notice actually received by the Company
at its executive offices on the day of such receipt, if received on or before
1:30 p.m., on a day when the Company's executive offices are open for business,
or, if received after such time, such notice shall be deemed received on the
next such day, which notice may be delivered in person to the Company's Chief
Financial Officer or sent to the Company at the address indicated on the
Agreement.

                  (p) "Option" - a right to purchase Stock granted to an
Optionee under the Plan in accordance with the terms and conditions set forth in
Section 6. Options may be either ISOs or stock options other than ISOs.

                  (q) "Optionee" - an individual who is eligible, pursuant to
Section 5, and who has been selected, pursuant to Section 3(c), to participate
in the Plan, and who holds an

                                      -4-
<PAGE>   5
outstanding Option granted to such individual under the Plan in accordance with
the terms and conditions set forth in Section 6.

                  (r) "Person" - "person" as such term is used for purposes of
Section 13(d) or 14(d) of the Exchange Act, including, without limitation, any
individual, corporation, limited liability company, partnership, trust,
unincorporated organization, government or any agency or political subdivision
thereof, or any other entity or any group of such persons.

                  (s) "Plan" - this Global Power Equipment Group Inc. 2001 Stock
Option Plan.

                  (t) "Securities Act" - the Securities Act of 1933, as it may
be amended from time to time, including the regulations and rules promulgated
thereunder and successor provisions and regulations and rules thereto.

                  (u) "Stock" - the common stock, $0.01 par value per share, of
the Company.

                  (v) "Subsidiary" - any present or future corporation which is
or would be a "subsidiary corporation" of the Company as the term is defined in
Section 424(f) of the Code.

                  (w) "Voting Securities" - all the outstanding voting
securities of the Company entitled to vote generally in the election of the
Board.

                  3. Administration of the Plan. (a) The Committee shall have
exclusive authority to operate, manage and administer the Plan in accordance
with its terms and conditions. Notwithstanding the foregoing, in its absolute
discretion, the Board may at any time and from time to time exercise any and all
rights, duties and responsibilities of the Committee under the Plan, including,
but not limited to, establishing procedures to be followed by the Committee,
except with respect to matters which under any applicable law, regulation or
rule, are required to be determined in the sole discretion of the Committee. If
and to the extent that no Committee exists which has the authority to administer
the Plan, the functions of the Committee shall be exercised by the Board.

                  (b) The Committee shall be appointed from time to time by the
Board, and the Committee shall consist of not less than two members of the
Board. Appointment of Committee members shall be effective upon their acceptance
of such appointment. Committee members may be removed by the Board at any time
either with or without cause, and such members may resign at any time by
delivering notice thereof to the Board. Any vacancy on the Committee, whether
due to action of the Board or any other reason, shall be filled by the Board.

                  (c) The Committee shall have full authority to grant, pursuant
to the terms of the Plan, Options to those individuals who are eligible to
receive Options under the Plan. In particular, the Committee shall have
discretionary authority, in accordance with the terms of the Plan, to: determine
eligibility for participation in the Plan; select, from time to time, from among
those eligible, the employees, directors and consultants to whom Options shall
be granted under the Plan, which selection may be based upon information
furnished to the Committee by the

                                      -5-
<PAGE>   6
Company's or an Affiliate's management; determine whether an Option shall take
the form of an ISO or an Option other than an ISO; determine the number of
shares of Stock to be included in any Option and the periods for which Options
will be outstanding; establish and administer any terms, conditions, performance
criteria, restrictions, limitations, forfeiture, vesting or exercise schedule,
and other provisions of or relating to any Option; grant waivers of terms,
conditions, restrictions and limitations under the Plan or applicable to any
Option, or accelerate the vesting or exercisability of any Option; amend or
adjust the terms and conditions of any outstanding Option and/or adjust the
number and/or class of shares of Stock subject to any outstanding Option; at any
time and from time to time after the granting of an Option, specify such
additional terms, conditions and restrictions with respect to any such Option as
may be deemed necessary or appropriate to ensure compliance with any and all
applicable laws or rules, including, but not limited to, terms, restrictions and
conditions for compliance with applicable securities laws, regarding an
Optionee's exercise of Options by tendering shares of Stock or under any
"cashless exercise" program established by the Committee, and methods of
withholding or providing for the payment of required taxes; offer to buy out an
Option previously granted, based on such terms and conditions as the Committee
shall establish with and communicate to the Optionee at the time such offer is
made; and, to the extent permitted under the applicable Agreement, permit the
transfer of an Option or the exercise of an Option by one other than the
Optionee who received the grant of such Option (other than any such transfer or
exercise which would cause any ISO to fail to qualify as an "incentive stock
option" under Section 422 of the Code).

                  (d) The Committee shall have all authority that may be
necessary or helpful to enable it to discharge its responsibilities with respect
to the Plan. Without limiting the generality of the foregoing sentence or
Section 3(a), and in addition to the powers otherwise expressly designated to
the Committee in the Plan, the Committee shall have the exclusive right and
discretionary authority to interpret the Plan and the Agreements; construe any
ambiguous provision of the Plan and/or the Agreements and decide all questions
concerning eligibility for and the amount of Options granted under the Plan. The
Committee may establish, amend, waive and/or rescind rules and regulations and
administrative guidelines for carrying out the Plan and may correct any errors,
supply any omissions or reconcile any inconsistencies in the Plan and/or any
Agreement or any other instrument relating to any Options. The Committee shall
have the authority to adopt such procedures and subplans and grant Options on
such terms and conditions as the Committee determines necessary or appropriate
to permit participation in the Plan by individuals otherwise eligible to so
participate who are foreign nationals or employed outside of the United States,
or otherwise to conform to applicable requirements or practices of jurisdictions
outside of the United States; and take any and all such other actions it deems
necessary or advisable for the proper operation and/or administration of the
Plan. The Committee shall have full discretionary authority in all matters
related to the discharge of its responsibilities and the exercise of its
authority under the Plan. Decisions and actions by the Committee with respect to
the Plan and any Agreement shall be final, conclusive and binding on all persons
having or claiming to have any right or interest in or under the Plan and/or any
Agreement.

                  (e) Each Option shall be evidenced by an Agreement, which
shall be executed by the Company and the Optionee to whom such Option has been
granted, unless the Agreement provides otherwise; two or more Options granted to
a single Optionee may, however, be combined in a single Agreement. An Agreement
shall not be a precondition to the granting of an

                                      -6-
<PAGE>   7
Option; no person shall have any rights under any Option, however, unless and
until the Optionee to whom the Option shall have been granted (i) shall have
executed and delivered to the Company an Agreement or other instrument
evidencing the Option, unless such Agreement provides otherwise, and (ii) has
otherwise complied with the applicable terms and conditions of the Option. The
Committee shall prescribe the form of all Agreements, and, subject to the terms
and conditions of the Plan, shall determine the content of all Agreements. Any
Agreement may be supplemented or amended in writing from time to time as
approved by the Committee; provided that the terms and conditions of any such
Agreement as supplemented or amended are not inconsistent with the provisions of
the Plan.

                  (f) A majority of the members of the entire Committee shall
constitute a quorum and the actions of a majority of the members of the
Committee in attendance at a meeting at which a quorum is present, or actions by
a written instrument signed by all members of the Committee, shall be the
actions of the Committee.

                  (g) The Committee may consult with counsel who may be counsel
to the Company. The Committee may, with the approval of the Board, employ such
other attorneys and/or consultants, accountants, appraisers, brokers and other
persons as it deems necessary or appropriate. In accordance with Section 12, the
Committee shall not incur any liability for any action taken in good faith in
reliance upon the advice of such counsel or other persons.

                  (h) In serving on the Committee, the members thereof shall be
entitled to indemnification as directors of the Company, and to any limitation
of liability and reimbursement as directors with respect to their services as
members of the Committee.

                  (i) Except to the extent prohibited by applicable law,
including, without limitation, the requirements applicable under Section 162(m)
of the Code to any Option intended to be "qualified performance-based
compensation," or the requirements for any Option granted to an officer or
director to be covered by any exemptive rule under Section 16 of the Exchange
Act (including Rule 16b-3, or any successor rule, as the same may be amended
from time to time), or the applicable rules of a stock exchange, the Committee
may, in its discretion, allocate all or any portion of its responsibilities and
powers under this Section 3 to any one or more of its members and/or delegate
all or any part of its responsibilities and powers under this Section 3 to any
person or persons selected by it; provided, however, that the Committee may not
delegate its authority to correct errors, omissions or inconsistencies in the
Plan. Any such authority delegated or allocated by the Committee under this
paragraph (i) of Section 3 shall be exercised in accordance with the terms and
conditions of the Plan and any rules, regulations or administrative guidelines
that may from time to time be established by the Committee, and any such
allocation or delegation may be revoked by the Committee at any time.

                  4. Shares of Stock Subject to the Plan. (a) The shares of
stock subject to Options granted under the Plan shall be shares of Stock. Such
shares of Stock subject to the Plan may be either authorized and unissued shares
(which will not be subject to preemptive rights) or previously issued shares
acquired by the Company or any Subsidiary. The total number of shares of Stock
that may be delivered pursuant to Options granted under the Plan is 1,500,000
shares.

                                      -7-
<PAGE>   8
                  (b) Notwithstanding any of the foregoing limitations set forth
in this Section 4, the number of shares of Stock specified in this Section 4
shall be adjusted as provided in Section 10.

                  (c) Any shares of Stock subject to an Option which for any
reason expires or is terminated or forfeited without having been fully exercised
may again be granted pursuant to an Option under the Plan, subject to the
limitations of this Section 4.

                  (d) If the option exercise price of an Option granted under
the Plan is paid by tendering to the Company shares of Stock already owned by
the holder of such option (or such holder and his or her spouse jointly), only
the number of shares of Stock issued net of the shares of Stock so tendered
shall be deemed delivered for purposes of determining the total number of shares
of Stock that may be delivered under the Plan.

                  (e) Any shares of Stock delivered under the Plan in assumption
or substitution of outstanding stock options, or obligations to grant future
stock options, under plans or arrangements of an entity other than the Company
or an Affiliate in connection with the Company or an Affiliate acquiring such
another entity, or an interest in such an entity, or a transaction otherwise
described in Section 6(j), shall not reduce the maximum number of shares of
Stock available for delivery under the Plan; provided, however, that the maximum
number of shares of Stock that may be delivered pursuant to Incentive Stock
Options granted under the Plan shall be the number of shares set forth in
paragraph (a) of this Section 4, as adjusted pursuant to paragraphs (b) and (c)
of this Section 4.

                  5. Eligibility. Executive employees and other employees,
including officers, of the Company and the Affiliates, directors (whether or not
also employees), and consultants of the Company and the Affiliates, shall be
eligible to become Optionees and receive Options in accordance with the terms
and conditions of the Plan, subject to the limitations on the granting of ISOs
set forth in Section 6(h).

                  6. Terms and Conditions of Stock Options. All Options to
purchase Stock granted under the Plan shall be either ISOs or Options other than
ISOs. To the extent that any Option does not qualify as an ISO (whether because
of its provisions or the time or manner of its exercise or otherwise), such
Option, or the portion thereof which does not so qualify, shall constitute a
separate Option other than an ISO. Each Option shall be subject to all the
applicable provisions of the Plan, including the following terms and conditions,
and to such other terms and conditions not inconsistent therewith as the
Committee shall determine and which are set forth in the applicable Agreement.
Options need not be uniform as to all grants and recipients thereof.

                  (a) The option exercise price per share of shares of Stock
         subject to each Option shall be determined by the Committee and stated
         in the Agreement; provided, however, that, subject to paragraph
         (h)(iii) and/or (j) of this Section 6, if applicable, such option
         exercise price applicable to any Option shall not be less than one
         hundred percent (100%) of the Fair Market Value of a share of Stock at
         the time that the Option is granted.

                                      -8-
<PAGE>   9
                  (b) Each Option shall be exercisable in whole or in such
         installments, at such times and under such conditions, as may be
         determined by the Committee in its discretion in accordance with the
         Plan and stated in the Agreement, and, in any event, over a period of
         time ending not later than ten (10) years from the date such Option was
         granted, subject to paragraph (h)(C) of this Section 6.

                  (c) An Option shall not be exercisable with respect to a
         fractional share of Stock or the lesser of one hundred (100) shares and
         the full number of shares of Stock then subject to the Option. No
         fractional shares of Stock shall be issued upon the exercise of an
         Option.

                  (d) Each Option may be exercised by giving Notice to the
         Company specifying the number of shares of Stock to be purchased, which
         shall be accompanied by payment in full including applicable taxes, if
         any, in accordance with Section 9. Payment shall be in any manner
         permitted by applicable law and prescribed by the Committee, in its
         discretion, and set forth in the Agreement, including, in the
         Committee's discretion, and subject to such terms, conditions and
         limitations as the Committee may prescribe, payment in accordance with
         a "cashless exercise" program (through broker accommodation)
         established by the Committee and/or in Stock owned by the Optionee or
         by the Optionee and his or her spouse jointly.

                  (e) No Optionee or other person shall become the beneficial
         owner of any shares of Stock subject to an Option, nor have any rights
         to dividends or other rights of a shareholder with respect to any such
         shares until he or she has exercised his or her Option in accordance
         with the provisions of the Plan and the applicable Agreement.

                  (f) An Option may be exercised only if at all times during the
         period beginning with the date of the granting of the Option and ending
         on the date of such exercise, the Optionee was an employee, director or
         consultant of the Company or an Affiliate, as applicable.
         Notwithstanding the preceding sentence, the Committee may determine in
         its discretion that an Option may be exercised prior to expiration of
         such Option following termination of such continuous employment,
         directorship or consultancy, whether or not exercisable at the time of
         such termination, to the extent provided in the applicable Agreement.

                  (g) Subject to the terms and conditions and within the
         limitations of the Plan, the Committee may modify, extend or renew
         outstanding Options granted under the Plan, or accept the surrender of
         outstanding Options (up to the extent not theretofore exercised) and
         authorize the granting of new Options in substitution therefor (to the
         extent not theretofore exercised).

                  (h) (i) Each Agreement relating to an Option shall state
         whether such Option will or will not be treated as an ISO. No ISO shall
         be granted unless such Option, when granted, qualifies as an "incentive
         stock option" under Section 422 of the Code. No ISO shall be granted to
         any individual otherwise eligible to participate in the Plan who is not
         an employee of the Company or a Subsidiary on the date of granting of
         such Option. Any

                                      -9-
<PAGE>   10
         ISO granted under the Plan shall contain such terms and conditions,
         consistent with the Plan, as the Committee may determine to be
         necessary to qualify such Option as an "incentive stock option" under
         Section 422 of the Code. Any ISO granted under the Plan may be modified
         by the Committee to disqualify such Option from treatment as an
         "incentive stock option" under Section 422 of the Code.

                           (ii) Notwithstanding any intent to grant ISOs, an
                  Option granted under the Plan will not be considered an ISO to
                  the extent that it, together with any other "incentive stock
                  options" (within the meaning of Section 422 of the Code, but
                  without regard to subsection (d) of such Section) under the
                  Plan and any other "incentive stock option" plans of the
                  Company, any Subsidiary and any "parent corporation" of the
                  Company within the meaning of Section 424(e) of the Code, are
                  exercisable for the first time by any Optionee during any
                  calendar year with respect to Stock having an aggregate Fair
                  Market Value in excess of $100,000 (or such other limit as may
                  be required by the Code) as of the time the Option with
                  respect to such Stock is granted. The rule set forth in the
                  preceding sentence shall be applied by taking Options into
                  account in the order in which they were granted.

                           (iii) No ISO shall be granted to an individual
                  otherwise eligible to participate in the Plan who owns (within
                  the meaning of Section 424(d) of the Code), at the time the
                  Option is granted, more than ten percent (10%) of the total
                  combined voting power of all classes of stock of the Company
                  or a Subsidiary or any "parent corporation" of the Company
                  within the meaning of Section 424(e) of the Code. This
                  restriction does not apply if at the time such ISO is granted
                  the Option exercise price per share of Stock subject to the
                  Option is at least 110% of the Fair Market Value of a share of
                  Stock on the date such ISO is granted, and the ISO by its
                  terms is not exercisable after the expiration of five years
                  from such date of grant.

                  (i) An Option and any shares of Stock received upon the
         exercise of an Option shall be subject to such other transfer and/or
         ownership restrictions and/or legending requirements as the Committee
         may establish in its discretion and which are specified in the
         Agreement and may be referred to on the certificates evidencing such
         shares of Stock. The Committee may require an Optionee to give prompt
         Notice to the Company concerning any disposition of shares of Stock
         received upon the exercise of an ISO within: (i) two (2) years from the
         date of granting such ISO to such Optionee or (ii) one (1) year from
         the transfer of such shares of Stock to such Optionee or (iii) such
         other period as the Committee may from time to time determine. The
         Committee may direct that an Optionee with respect to an ISO undertake
         in the applicable Agreement to give such Notice described in the
         preceding sentence, at such time and containing such information as the
         Committee may prescribe, and/or that the certificates evidencing shares
         of Stock acquired by exercise of an ISO refer to such requirement to
         give such Notice.

                  (j) In the event that a transaction described in Section
         424(a) of the Code involving the Company or a Subsidiary is
         consummated, such as the acquisition of property or stock from an
         unrelated corporation, individuals who become eligible to

                                      -10-
<PAGE>   11
         participate in the Plan in connection with such transaction, as
         determined by the Committee, may be granted Options in substitution for
         options granted by another corporation that is a party to such
         transaction. If such substitute Options are granted, the Committee, in
         its discretion and consistent with Section 424(a) of the Code, if
         applicable, and the terms of the Plan, though notwithstanding paragraph
         (a) of this Section 6, shall determine the option exercise price and
         other terms and conditions of such substitute Options.

                  (k) Notwithstanding any other provision contained in the Plan
         to the contrary, the maximum number of shares of Stock which may be
         subject to Options granted under the Plan to any Optionee in any
         calendar year shall not exceed the Award Limit. To the extent required
         by Section 162(m) of the Code, shares of Stock subject to Options which
         are canceled shall continue to be counted against the Award Limit and
         if, after the grant of an Option, the option exercise price of shares
         subject to such Option is reduced and the transaction is treated as a
         cancellation of the Option and a grant of a new Option, both the Option
         deemed to be canceled and the Option deemed to be granted shall be
         counted against the Award Limit.

                  7. Transfer, Leave of Absence. A transfer of an employee from
the Company to an Affiliate (or, for purposes of any ISO granted under the Plan,
a Subsidiary), or vice versa, or from one Affiliate to another (or in the case
of an ISO, from one Subsidiary to another), and a leave of absence, duly
authorized in writing by the Company or a Subsidiary or Affiliate, shall not be
deemed a termination of employment of the employee for purposes of the Plan or
with respect to any Option (in the case of ISOs, to the extent permitted by the
Code).

                  8. Rights of Employees and Other Persons. (a) No person shall
have any rights or claims under the Plan except in accordance with the
provisions of the Plan and the applicable Agreement.

                  (b) Nothing contained in the Plan or in any Agreement shall be
deemed to (i) give any employee or director the right to be retained in the
service of the Company or any Affiliate nor restrict in any way the right of the
Company or any Affiliate to terminate any employee's employment or any
director's directorship at any time with or without cause or (ii) confer on any
consultant any right of continued relationship with the Company or any
Affiliate, or alter any relationship between them, including any right of the
Company or an Affiliate to terminate its relationship with such consultant.

                  (c) The adoption of the Plan shall not be deemed to give any
employee of the Company or any Affiliate or any other person any right to be
selected to participate in the Plan or to be granted an Option.

                  (d) Nothing contained in the Plan or in any Agreement shall be
deemed to give any employee the right to receive any bonus, whether payable in
cash or in Stock, or in any combination thereof, from the Company or any
Affiliate, nor be construed as limiting in any way the right of the Company or
any Affiliate to determine, in its sole discretion, whether or not it

                                      -11-
<PAGE>   12
shall pay any employee bonuses, and, if so paid, the amount thereof and the
manner of such payment.

                  9. Tax Withholding Obligations. (a) The Company and/or any
Affiliate are authorized to take whatever actions are necessary and proper to
satisfy all obligations of Optionees (including, for purposes of this Section 9,
any other person entitled to exercise an Option pursuant to the Plan or an
Agreement) for the payment of all Federal, state, local and foreign taxes in
connection with any Options (including, but not limited to, actions pursuant to
the following paragraph (b) of this Section 9).

                  (b) Each Optionee shall (and in no event shall Stock be
delivered to such Optionee with respect to an Option until), no later than the
date as of which the value of the Option first becomes includible in the gross
income of the Optionee for income tax purposes, pay to the Company in cash, or
make arrangements satisfactory to the Company, as determined in the Committee's
discretion, regarding payment to the Company of, any taxes of any kind required
by law to be withheld with respect to the Stock or other property subject to
such Option, and the Company and any Affiliate shall, to the extent permitted by
law, have the right to deduct any such taxes from any payment of any kind
otherwise due to such Optionee. Notwithstanding the above, the Committee may, in
its discretion and pursuant to procedures approved by the Committee, permit the
Optionee to (i) elect withholding by the Company of Stock otherwise deliverable
to such Optionee pursuant to his or her Option (provided, however, that the
amount of any Stock so withheld shall not exceed the amount necessary to satisfy
the Company's or any Affiliate's required tax withholding obligations using the
minimum statutory withholding rates for Federal, state and/or local tax
purposes, including payroll taxes, that are applicable to supplemental taxable
income) and/or (ii) tender to the Company Stock owned by such Optionee (or by
such Optionee and his or her spouse jointly) and acquired more than six (6)
months prior to such tender in full or partial satisfaction of such tax
obligations, based, in each case, on the Fair Market Value of the Stock on the
payment date as determined by the Committee.

                  10. Changes in Capital. (a) The existence of the Plan and any
Options granted hereunder shall not affect in any way the right or power of the
Board or the stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, any merger or consolidation of the Company or an
Affiliate, any issue of debt, preferred or prior preference stock ahead of or
affecting Stock, the authorization or issuance of additional shares of Stock,
the dissolution or liquidation of the Company or its Affiliates, any sale or
transfer of all or part of its assets or business or any other corporate act or
proceeding.

                  (b)(i) Upon changes in the outstanding Stock by reason of a
stock dividend, stock split, reverse stock split, subdivision, recapitalization,
reclassification, merger, consolidation (whether or not the Company is a
surviving corporation), combination or exchange of shares of Stock, separation,
or reorganization, or in the event of an extraordinary dividend, "spin-off,"
liquidation, other substantial distribution of assets of the Company or
acquisition of property or stock or other change in capital of the Company, or
the issuance by the Company of shares of its capital stock without receipt of
full consideration therefor, or rights or securities exercisable,

                                      -12-
<PAGE>   13
convertible or exchangeable for shares of such capital stock, or any similar
change affecting the Company's capital structure, the aggregate number, class
and kind of shares of stock available under the Plan as to which Options may be
granted, the Award Limit and the number, class and kind of shares under each
outstanding Option and the exercise price per share applicable to any such
Options shall be appropriately adjusted by the Committee in its discretion to
preserve the benefits or potential benefits intended to be made available under
the Plan or with respect to any outstanding Options or otherwise necessary to
reflect any such change.

                  (ii) Fractional shares of Stock resulting from any adjustment
in Options pursuant to Section 10(b)(i) shall be aggregated until, and
eliminated at, the time of exercise of the affected Options. Notice of any
adjustment shall be given by the Committee to each Optionee whose Option has
been adjusted and such adjustment (whether or not such Notice is given) shall be
effective and binding for all purposes of the Plan.

                  (c) In the event of a Change in Control:

                           (1) Immediately prior thereto, all outstanding
         Options shall automatically be accelerated and become immediately
         exercisable as to all of the shares of Stock covered thereby,
         notwithstanding anything to the contrary in the Plan or the Agreement.

                           (2) In its discretion, and on such terms and
         conditions as it deems appropriate, the Committee may provide, either
         by the terms of the Agreement applicable to any Option or by resolution
         adopted prior to the occurrence of the Change in Control, that any
         outstanding Option shall be adjusted by substituting for each share of
         Stock subject to such Option immediately prior to the transaction
         resulting in the Change in Control the consideration (whether stock or
         other securities of the surviving corporation or any successor
         corporation to the Company, or a parent or subsidiary thereof, or that
         may be issuable by another corporation that is a party to the
         transaction resulting in the Change in Control, or other property)
         received in such transaction by holders of Stock for each share of
         Stock held on the closing or effective date of such transaction, in
         which event, the aggregate exercise price of the Option shall remain
         the same; provided, however, that if such consideration received in the
         transaction is not solely stock of a successor, surviving or other
         corporation, the Committee may provide for the consideration to be
         received upon exercise of the Option, for each share of Stock subject
         to the Option, to be solely stock of the successor, surviving or other
         corporation, as applicable, equal in fair market value, as determined
         by the Committee, to the per share consideration received by holders of
         Stock in the Change in Control transaction.

                           (3) In its discretion, and on such terms and
         conditions as it deems appropriate, the Committee may provide, either
         by the terms of the Agreement applicable to any Option or by resolution
         adopted prior to the occurrence of the Change in Control, that any
         outstanding Option shall be converted into a right to receive cash on
         or following the closing date or expiration date of the transaction
         resulting in the Change in Control in an amount equal to the highest
         value of the consideration to be received in connection with such
         transaction for one share of Stock, or, if higher, the highest Fair
         Market Value of the Stock during the thirty (30) consecutive business
         days immediately prior to the

                                      -13-
<PAGE>   14
         closing date or expiration date of such transaction, less the per share
         exercise price of such Option, multiplied by the number of shares of
         Stock subject to such Option, or a portion thereof.

                           (4) The Committee may, in its discretion, provide
         that an Option cannot be exercised after such a Change in Control, to
         the extent that such Option is or becomes fully exercisable on or
         before such Change in Control or is subject to any acceleration,
         adjustment or conversion in accordance with the foregoing paragraphs
         (1), (2) or (3) of this Section 10.

No Optionee shall have any right to prevent the consummation of any of the
foregoing acts affecting the number of shares of Stock available to such
Optionee. Any actions or determinations of the Committee under this subsection
10(c) need not be uniform as to all outstanding Options, nor treat all Optionees
identically. Notwithstanding the foregoing adjustments, in no event may any
Option be exercised after ten (10) years from the date it was originally
granted, and any changes to ISOs pursuant to this Section 10 shall, unless the
Committee determines otherwise, only be effective to the extent such adjustments
or changes do not cause a "modification" (within the meaning of Section
424(h)(3) of the Code) of such ISOs or adversely affect the tax status of such
ISOs.

                  11. Miscellaneous Provisions. (a) The Plan shall be unfunded.
The Company shall not be required to establish any special or separate fund or
to make any other segregation of assets to assure the issuance of shares of
Stock or the payment of cash upon exercise or payment of any Option. Proceeds
from the sale of shares of Stock pursuant to Options granted under the Plan
shall constitute general funds of the Company.

                  (b) Except as otherwise provided in this paragraph (b) of
Section 11 or by the Committee, an Option by its terms shall be personal and may
not be sold, transferred, pledged, assigned, encumbered or otherwise alienated
or hypothecated otherwise than by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of an Optionee only by
him or her. An Agreement may permit the exercise or payment of an Optionee's
Option (or any portion thereof) after his or her death by or to the beneficiary
most recently named by such Optionee in a written designation thereof filed with
the Company, or, in lieu of any such surviving beneficiary, as designated by the
Optionee by will or by the laws of descent and distribution. In the event any
Option is exercised by the executors, administrators, heirs or distributees of
the estate of a deceased Optionee, or such an Optionee's beneficiary, or the
transferee of an Option, in any such case pursuant to the terms and conditions
of the Plan and the applicable Agreement and in accordance with such terms and
conditions as may be specified from time to time by the Committee, the Company
shall be under no obligation to issue Stock thereunder unless and until the
Committee is satisfied that the person or persons exercising such Option is the
duly appointed legal representative of the deceased Optionee's estate or the
proper legatee or distributee thereof or the named beneficiary of such Optionee,
or the valid transferee of such Option, as applicable.

                  (c) (i) If at any time the Committee shall determine, in its
discretion, that the listing, registration and/or qualification of shares of
Stock upon any securities exchange or under any state or Federal or foreign law,
or the consent or approval of any governmental regulatory

                                      -14-
<PAGE>   15
body, is necessary or desirable as a condition of, or in connection with, the
sale or purchase of shares of Stock hereunder, no Option may be granted,
exercised or paid in whole or in part unless and until such listing,
registration, qualification, consent and/or approval shall have been effected or
obtained, or otherwise provided for, free of any conditions not acceptable to
the Committee.

                  (ii) If at any time counsel to the Company shall be of the
         opinion that any sale or delivery of shares of Stock pursuant to an
         Option is or may be in the circumstances unlawful or result in the
         imposition of excise taxes on the Company or any Affiliate under the
         statutes, rules or regulations of any applicable jurisdiction, the
         Company shall have no obligation to make such sale or delivery, or to
         make any application or to effect or to maintain any qualification or
         registration under the Securities Act, or otherwise with respect to
         shares of Stock or Options and the right to exercise any Option shall
         be suspended until, in the opinion of such counsel, such sale or
         delivery shall be lawful or will not result in the imposition of excise
         taxes on the Company or any Affiliate.

                  (iii) Upon termination of any period of suspension under this
         Section 11(c), any Option affected by such suspension which shall not
         then have expired or terminated shall be reinstated as to all shares
         available before such suspension and as to the shares which would
         otherwise have become available during the period of such suspension,
         but no suspension shall extend the term of any Option.

                  (d) The Committee may require each person receiving Stock in
connection with any Option under the Plan to represent and agree with the
Company in writing that such person is acquiring the shares of Stock for
investment without a view to the distribution thereof. The Committee, in its
absolute discretion, may impose such restrictions on the ownership and
transferability of the shares of Stock purchasable or otherwise receivable by
any person under any Option as it deems appropriate. Any such restrictions shall
be set forth in the applicable Agreement, and the certificates evidencing such
shares may include any legend that the Committee deems appropriate to reflect
any such restrictions.

                  (e) By accepting any benefit under the Plan, each Optionee and
each person claiming under or through such Optionee shall be conclusively deemed
to have indicated their acceptance and ratification of, and consent to, all of
the terms and conditions of the Plan and any action taken under the Plan by the
Committee, the Company or the Board, in any case in accordance with the terms
and conditions of the Plan.

                  (f) In the discretion of the Committee, an Optionee may elect
irrevocably (at a time and in a manner determined by the Committee) prior to
exercising an Option that delivery of shares of Stock upon such exercise shall
be deferred until a future date and/or the occurrence of a future event or
events, specified in such election. Upon the exercise of any such Option and
until the delivery of any deferred shares under this paragraph (f) of Section
11, the number of shares otherwise issuable to the Optionee shall be credited to
a memorandum account in the records of the Company or its designee and any
dividends or other distributions payable on such shares shall be deemed
reinvested in additional shares of Stock, in a manner determined by the
Committee, until all shares of Stock credited to such Optionee's memorandum
account shall become issuable pursuant to the Optionee's election.

                                      -15-
<PAGE>   16
                  (g) The Committee may, in its discretion, extend one or more
loans to Optionees who are directors, key employees or consultants of the
Company or an Affiliate in connection with the exercise or receipt of an Option
granted to any such individual. The terms and conditions of any such loan shall
be established by the Committee.

                  (h) Neither the adoption of the Plan nor anything contained
herein shall affect any other compensation or incentive plans or arrangements of
the Company or any Affiliate, or prevent or limit the right of the Company or
any Affiliate to establish any other forms of incentives or compensation for
their directors, employees or consultants or grant or assume options or other
rights otherwise than under the Plan.

                  (i) The Plan shall be governed by and construed in accordance
with the laws of the State of Delaware, without regard to such state's conflict
of law provisions, and, in any event, except as superseded by applicable Federal
law.

                  (j) The words "Section," "subsection" and "paragraph" herein
shall refer to provisions of the Plan, unless expressly indicated otherwise.
Wherever any words are used in the Plan or any Agreement in the masculine gender
they shall be construed as though they were also used in the feminine gender in
all cases where they would so apply, and wherever any words are used herein in
the singular form they shall be construed as though they were also used in the
plural form in all cases where they would so apply.

                  (k) The Company shall bear all costs and expenses incurred in
administering the Plan, including expenses of issuing Stock pursuant to any
Options granted hereunder.

                  12. Limits of Liability. (a) Any liability of the Company or
an Affiliate to any Optionee with respect to any Option shall be based solely
upon contractual obligations created by the Plan and the Agreement.

                  (b) None of the Company, any Affiliate, any member of the
Committee or the Board or any other person participating in any determination of
any question under the Plan, or in the interpretation, administration or
application of the Plan, shall have any liability, in the absence of bad faith,
to any party for any action taken or not taken in connection with the Plan,
except as may expressly be provided by statute.

                  13. Limitations Applicable to Certain Options Subject to
Exchange Act Section 16 and Code Section 162(m). Unless stated otherwise in an
Optionee's Agreement, notwithstanding any other provision of the Plan, any
Option granted to an officer or director of the Company who is then subject to
Section 16 of the Exchange Act, shall be subject to any additional limitations
set forth in any applicable exemptive rule under Section 16 of the Exchange Act
(including Rule 16b-3, or any successor rule, as the same may be amended from
time to time) that are requirements for the application of such exemptive rule,
and the Plan and applicable Agreement shall be deemed amended to the extent
necessary to conform to such limitations. Furthermore, unless stated otherwise
in an Optionee's Agreement, notwithstanding any other provision of the Plan, any
Option granted to an employee of the Company or an Affiliate intended

                                      -16-
<PAGE>   17
to qualify as "other performance-based compensation" as described in Section
162(m)(4)(C) of the Code shall be subject to any additional limitations set
forth in Section 162(m) of the Code or any regulations or rulings issued
thereunder (including any amendment to any of the foregoing) that are
requirements for qualification as "other performance-based compensation" as
described in Section 162(m)(4)(C) of the Code, and the Plan and applicable
Agreement shall be deemed amended to the extent necessary to conform to such
requirements.

                  14. Amendments and Termination. The Board may, at any time and
with or without prior notice, amend, alter, suspend or terminate the Plan,
retroactively or otherwise; provided, however, unless otherwise required by law
or specifically provided herein, no such amendment, alteration, suspension or
termination shall be made which would impair the previously accrued rights of
any holder of an Option theretofore granted without his or her written consent,
or which, without first obtaining approval of the stockholders of the Company
(where such approval is necessary to satisfy (i) any applicable requirements
under the Code relating to ISOs or for exemption from Section 162(m) of the
Code: (ii) the then-applicable requirements of Rule 16b-3 promulgated under the
Exchange Act, or any successor rule, as the same may be amended from time to
time; or (iii) any other applicable law, regulation or rule), would:

                  (a)      except as is provided in Section 10, increase the
                           maximum number of shares of Stock which may be sold
                           or awarded under the Plan or increase the limitations
                           set forth in Section 6(k) on the maximum number of
                           shares of Stock that may be subject to Options
                           granted to an Optionee;

                  (b)      except as is provided in Section 10, decrease the
                           minimum option exercise price requirements of Section
                           6(a);

                  (c)      change the class of persons eligible to receive
                           Options under the Plan; or

                  (d)      extend the duration of the Plan or the period during
                           which Options may be exercised under Section 6(b).

The Committee may amend the terms of any Option theretofore granted, including
any Agreement, retroactively or prospectively, but no such amendment shall
impair the previously accrued rights of any Optionee without his or her written
consent.

                  15. Duration. Following adoption of the Plan by the Board, the
Plan shall become effective immediately prior to the effective date of the
initial public offering of Stock pursuant to a registration statement under the
Securities Act, subject to the approval of the Plan by the holders of a majority
of the Company's outstanding Stock which is present and voted at a meeting, or
by written consent in lieu of a meeting, which approval must occur within the
period ending twelve (12) months after the date the Plan is adopted by the
Board. The effectiveness of any Options granted prior to such stockholder
approval shall be specifically subject to and conditioned upon, and no such
Option shall be vested or exercisable until, such stockholder approval. If the
Plan is not so approved by the Company's stockholders or the Company's initial
public offering of Stock does not occur prior to December 31, 2001, the Plan
shall not become

                                      -17-
<PAGE>   18
effective, and shall terminate immediately, and any Options previously granted
shall thereupon be automatically canceled and deemed to have been null and void
ab initio. The Plan shall terminate upon the earliest to occur of:

                  (a)      the effective date of a resolution adopted by the
                           Board terminating the Plan;

                  (b)      the date all shares of Stock subject to the Plan are
                           delivered pursuant to the Plan's provisions; or

                  (c)      ten (10) years from the date the Plan is approved by
                           the Company's stockholders.

No Option may be granted under the Plan after the earliest to occur of the
events or dates described in the foregoing paragraphs (a) through (c) of this
Section 15; however, Options theretofore granted may extend beyond such date.

No such termination of the Plan shall affect the previously accrued rights of
any Optionee hereunder and all Options previously granted hereunder shall
continue in force and in operation after the termination of the Plan, except as
they may be otherwise terminated in accordance with the terms of the Plan or the
Agreement.

                                      -18-

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