Document:

Cognos Form 10-K Exhibit 10.23

Exhibit 10.23 

COGNOS INCORPORATED  

RETIREMENT COMPENSATION ARRANGEMENT PLAN

FOR
 CERTAIN EXECUTIVES  

I – PURPOSE  

The purpose of this Retirement
Compensation Arrangement Plan is to provide for retirement benefits for certain Executives
of Cognos Incorporated, as designated by the Board of Directors from time to time, in
recognition of their service and contributions towards the Corporation’s success.
These retirement benefits will be funded through the establishment of Trust Fund. 

II – DEFINITIONS  

In this document the following terms
have the meanings ascribed to them below: 

     “Actuarial(ly) Equivalent” means an equivalency of value as determined by the
          application of a particular set of actuarial assumptions recommended by the
          Actuary, approved by the Corporation and in effect at the time the computation
          is made, provided that where actuarial principles are applicable to a
          determination, accepted actuarial practice principles shall be followed. 

“Actuary” means the
actuary who is a Fellow of the Canadian Institute of Actuaries, or a firm of actuaries
having such a person on its staff selected by the Corporation from time to time. 

“Administrative
Committee” means those officers of the Corporation who are appointed by the HR
Committee from time to time to administer the Plan on behalf of the Corporation. 

“Average Best
Compensation” means the Compensation earned by an Executive during the three
consecutive Fiscal Years in which the Executive’s Compensation is the highest while
the Executive is employed by the Corporation, divided by three, but shall not exceed the
Executive’s average Target Compensation for such Fiscal Years. If the Executive has
less than three Fiscal Years of employment with the Corporation, Average Best Compensation
means the Compensation earned by the Executive during the Fiscal Years he was employed by
the Corporation, divided by his Credited Service for such Fiscal Years (excluding any
additional Credited Service pursuant to Appendix A), but shall not exceed the
Executive’s average Target Compensation for his period of employment with the
Corporation. 

“Beneficiary” means
the beneficiary or beneficiaries designated by the Executive in writing, in accordance
with applicable laws, to receive any benefits payable under the Plan after his death. 

“Board of Directors”
means the Board of Directors of the Corporation. 

“Change in Control”
means the occurrence of any of the following: 

96 

	  	
(a)
the Corporation is amalgamated, merged, consolidated or reorganized into or
          with another corporation or other legal person (excluding an affiliate of the
          Corporation), and as a result the holders of the Corporation’s securities
          entitled to vote for the election of directors of the Corporation (“Voting
          Shares”) immediately prior to that transaction hold less than a majority
of           the Voting Shares after that transaction,  

	  	
(b)
any individual, entity or group acquires or becomes the beneficial owner of,
          directly or indirectly, more than 50% of the voting securities of the
          Corporation, whether through acquisition of previously issued and outstanding
          Voting Shares, or of Voting Shares that have not been previously issued, or any
          combination thereof, or any other transaction of similar effect,  

	  	
(c)
the Corporation sells or otherwise transfers all or substantially all of its
          assets to any other corporation or other legal person, and as a result the
          holders of Voting Shares immediately prior to that transaction hold less than a
          majority of the Voting Shares of the acquiring corporation or person
immediately           after such transaction,  

	  	
(d)
more than 50% of the Voting Shares become subject to a voting trust,  

	  	
(e)
A report is filed pursuant to the Canada Business Corporations Act or under the
Securities Act, Ontario or the Securities Exchange Act of 1934, as amended, disclosing
that any person (as defined in the applicable legislation) has become the
beneficial owner of securities representing more than 50% of the Voting Shares;
or  

	  	
(f)
If during any period of two consecutive years, the individuals who at the
          beginning of that period are the directors of the Corporation cease for any
          reason to be at least a majority of the membership of the Board, unless the
          election, or the nomination for election by the Corporation’s
shareholders,           of each director of the Corporation first elected during that
period was           approved by a vote of at least two-thirds of the directors then
still in office           who were also directors of the Corporation at the beginning of
that period.  

	  	
The
foregoing provisions do not apply if “Change in Control” occurs solely because
any one of the following entities either files or becomes obligated to make a filing or
submit a report contemplated above, namely: (i) the Corporation, (ii) an entity in which
the Corporation directly or indirectly beneficially owns 50% or more of the voting
securities, (iii) any Corporation-sponsored employee stock ownership plan or any other
employee benefit plan of the Corporation, or (iv) any corporation or legal person similar
to the foregoing which is approved by the Board prior to the occurrence of the event
that, absent such approval by the Board, would have constituted a Change in Control.  

“Commuted Value”
means in relation to benefits that a person has a present or future entitlement to
receive, a lump sum amount which is the actuarial present value of those benefits computed
at the rate of interest and using the actuarial tables adopted by the Corporation, on the
recommendation of the Actuary and in accordance with the then current standards of the
Canadian Institute of Actuaries. 

“Compensation” means
an Executive’s base salary from the Corporation, plus his regular bonus, but
excluding all long-term incentive grants, perquisites and benefits. 

97

“Corporation” means
Cognos Incorporated and successors thereto. 

“Credited Service”
means an Executive’s period of employment with the Corporation, after February
28, 2003, calculated in years and fractions thereof, including periods of: 

               (a)    
          approved paid leave of absence, sickness, injury; 

               (b)    
          periods of parental and/or pregnancy leave; and 

               (c)    
          periods of Total and Permanent Disability. 

“Early Retirement
Date” means the date the Executive attains age 55. 

“Effective Date”
means March 1, 2003. 

“Executive” means
each executive of the Corporation, designated by the Board of Directors as a member of the
Plan and listed in Appendix A, as amended from time to time. 

“Fiscal Year” means
the Corporation’s fiscal year for financial statement purposes. 

“HR Committee” means
the Human Resources & Compensation Committee of the Board of Directors, or any
successor to its duties as they apply to this Arrangement. 

“Income Tax Act”
means the Income Tax Act (Canada) and any Regulations thereto, as well as any rules
made pursuant thereto or issued by the Department of Finance and the Canada Customs and
Revenue Agency with respect to retirement compensation arrangements, as amended from time
to time. 

“Normal Retirement Date”
means the date the Executive attains age 60. Provided however, in the case of an
Executive who suffers from a Total and Permanent Disability, Normal Retirement Date means
the date the Executive attains age 65. 

“Plan” means the
Retirement Compensation Arrangement Plan for Certain Executives as described in this
document, as amended from time to time. 

“Refundable Tax
Account” means the refundable tax account held by the Canada Customs and Revenue
Agency with respect to the Plan pursuant to the Income Tax Act. 

“Retirement Account”
means the total cash value of the amounts or assets in the Trust Fund and the Refundable
Tax Account. 

“Retirement Date”
means the date on which the Executive retires from his position as a senior executive of
the Corporation or the date he leaves the employment of the Corporation (whether voluntary
or otherwise), if earlier. 

“Spouse” means
spouse as defined in the Income Tax Act. 

“Target
Compensation” means the sum of the Executive’s base salary and target bonus
opportunity as determined by the HR Committee with respect to a Fiscal Year. 

98 

“Total and Permanent
Disability” means, subject to the Income Tax Act, the Executive being in receipt
of long-term disability benefits from a program sponsored by the Corporation, or under the
Canada Pension Plan or Quebec Pension Plan, as the case may be, as a result of physical or
mental disability. 

“Trust Agreement”
means the agreement entered into between the Corporation and the Trustee for the funding
and administration of the Plan. 

“Trust Fund” means
the assets held by the Trustee with respect to the Plan. 

“Trustee” means the
trustee appointed by the Corporation from time to time. 

Reference to the male gender
will include the female gender unless the context otherwise requires. Words importing the
singular number may be construed to extend to and include the plural number, and words
importing the plural number may be construed to extend to and include the singular number,
unless the context requires otherwise. 

III – CONTRIBUTIONS  

          	1. 	  	
               No employee contributions are required or permitted under the Plan. 

               

          	2. 	  	
               The Corporation shall make contributions to the Plan in such amounts as the HR
               Committee shall determine from time to time after taking into consideration the
               advice of the Actuary, in order to fully fund the benefits on a basis that
               includes the Refundable Tax Account but which does not take into account any
               income taxes payable by an Executive with respect to the benefits under the
               Plan. 

               

          	3. 	  	
               The Corporation will withhold 50% of the amount of the annual contributions to
               the Plan, or such other amount as is required by the Income Tax Act, for
               remittance to Canada Customs and Revenue Agency as refundable tax. 

               

          	4. 	  	
               The Corporation shall be responsible for payment of the fees of the Trustee to
               administer the Plan. 

               

IV – RETIREMENT BENEFITS  

          	1. 	  	
                The benefit payable from the Plan to an Executive is equal to: 

               

	  	
1%
of the Executive’s Average Best Compensation multiplied by the Executive’s
Credited Service.  

          	2. 	  	
               If the Executive retires on his Normal Retirement Date, the benefit provided in
               Section IV.1 above shall be payable in equal monthly instalments, commencing on
               the first day of the month following his Normal Retirement Date. Such monthly
               benefit shall continue until the death of the Executive, provided however, if
               the Executive dies before receiving 120 payments, his designated Beneficiary or,
               if the Executive has not designated a beneficiary, his estate will continue to
               receive payments in the same amount until 120 payments in total have been made. 

               

99 

          	3. 	  	
               Notwithstanding the foregoing, and in lieu of the benefit provided in Section
               IV.2 above, if the Executive has a Spouse on his date of death, 60% of the
               benefit the Executive was receiving will continue to be payable to the Spouse
               without actuarial reduction until the death of the Spouse. 

               

          	4. 	  	
               If the Executive retires on his Early Retirement Date, he shall be entitled to
               receive the benefits as provided in Sections IV.1, 2 and 3 above, however, his
               benefit shall be reduced by 0.25% for each month his Early Retirement Date
               precedes his Normal Retirement Date. 

               

          	5. 	  	
               The benefit under this Section IV may be payable to the Executive on or after
               his Retirement Date in such other form of payment or payments as is agreed to by
               the Executive and the HR Committee prior to his Retirement date. Such form of
               payment will be the Actuarial Equivalent of the benefit otherwise payable to the
               Executive. The HR Committee has the right to have the commuted value of the
               benefit under this Section IV paid in a lump sum to the Executive, the Spouse or
               a Beneficiary, as applicable, but in such circumstances, the amount will be tax
               adjusted by the HR Committee upon the recommendation of the Actuary in order to
               provide approximately the same after-tax monthly benefit as would otherwise be
               receivable from the Plan. The HR Committee’s decisions in this regard will
               be final and binding on the Executive, the Spouse or the Beneficiary, as
               applicable. 

               

          	6. 	  	
               Notwithstanding any other provisions of the Plan, if, at the time an Executive
               or his Spouse or Beneficiary, as the case may be, becomes entitled to a benefit
               in accordance with the provisions of the Plan, and there are insufficient funds
               held by the Trustee on behalf of the Plan in the Trust Fund to make such benefit
               payment, the Corporation shall be liable and responsible for making any such
               payment or payments. 

               

          	7. 	  	
               Payment of the benefit to which an Executive is entitled under this Plan shall
               also be subject to: 

               

          	(a) 	  	
               the Executive executing an agreement or agreements, where requested, between the
               Corporation and Executive relating, in any way, in whole or in part, to any or
               all of the following: 

               

          	(i) 	  	
               restricting the Executive’s ability to have an interest in or involvement
               with any business similar to or in competition with the Corporation following
               the Executive’s retirement or other termination of employment
               (“non-competition agreement”), 

               

          	(ii) 	  	
               restricting the Executive’s ability to solicit employees or independent
               contractors of the Corporation to leave the Corporation and/or to solicit
               consultants, clients or customers or the Corporation either to leave the
               Corporation or to enter into a relationship with any business similar to or in
               competition with the Corporation following the Executive’s retirement or
               other termination of employment (“non-solicitation agreement”), 

               

          	(iii) 	  	
               requiring the Executive to maintain in confidence information gained by virtue
               of his employment concerning the Corporation following the Executive’s
               retirement or other termination of employment (“confidentiality
               agreement”) and; 

               

	(b)  	  	compliance with the terms of any such non-competition agreement,
          non-solicitation agreement or confidentiality agreement. 

100 

	  	
Should
the Corporation (or any person or persons designated by the Corporation for such purpose)
determine that the Executive has breached the terms of any such non-competition
agreement, non-solicitation agreement or confidentiality agreement, it may, in its
discretion and in addition to any other remedies specified under the non-competition
agreement, non-solicitation agreement or confidentiality agreement or otherwise available
at law, temporarily or permanently discontinue the payment of any amounts otherwise
payable under this Plan.  

V – PRE-RETIREMENT BENEFITS  

          	1. 	  	
               If the Executive dies before his Retirement Date, the Executive’s benefits
               under the Plan shall become fully vested in the benefit accrued to the date of
               his death, as provided in Section VI.1, and the Commuted Value of the vested
               benefit accrued to the date of his death shall be payable, in a lump sum, to his
               designated Beneficiary or, if the Executive has not designated a Beneficiary, to
               his estate as soon as practical following the date of his death. 

               

          	2. 	  	
               If the Executive suffers from a Total and Permanent Disability before his
               Retirement Date, such Executive shall continue to accrue Credited Service under
               the terms of the Plan until the earlier of his Normal Retirement Date (age 65)
               and the date he no longer suffers from a Total and Permanent Disability. His
               Average Best Compensation shall be frozen as of the date he is found to suffer
               from a Total and Permanent Disability. The benefit shall be payable to the
               Executive, in accordance with Article IV commencing on the Executive’s
               Normal Retirement Date. 

               

	  	
If
an Executive ceases to suffer from a Total and Permanent Disability, and returns to
employment with the Corporation, he shall continue to accrue benefits under the Plan and
his Average Best Compensation shall cease to be frozen. The Executive’s periods of
employment with the Corporation before and after his disability, plus his period of Total
and Permanent Disability will be treated as one period under the Plan.  

VI –
VESTING CONDITIONS  

     1.            
          The Executive shall be vested in his benefit under the Plan as follows: 

                     (a)       
          100% on retirement on or after his Early Retirement Date; 

                     (b)       
          100% on pre-retirement death at any age; 

                     (c)       
          0% on termination with cause; 

                     (d)       
          100% on Change of Control; 

                     (e)       
          on termination without cause or resignation, based on his attained age as
          follows: 

	  	  	• 	  	0%
if under age 51 

	  	  	• 	  	20%
if age 51 

	  	  	• 	  	40%
if age 52 

101 

	  	  	• 	  	60%
if age 53 

	  	  	• 	  	80%
if age 54 

	  	  	• 	  	100%
if age 55 or more. 

          	2. 	  	
               The Executive shall not be entitled to any benefits under the Plan prior to his
               vesting dates as provided in Section VI.1 above. All benefits to which an
               Executive (or his Spouse or his Beneficiary, as the case may be) is entitled
               under the Plan may not in any manner, in whole or in part, be assigned,
               alienated, sold, transferred, pledged, hypothecated, encumbered or charged, and
               any attempt by the Executive to do so shall result in the Executive forfeiting
               all entitlements under this Plan and, except where otherwise required by law,
               shall not be subject to attachment or otherwise by, and on behalf of, the
               creditors of such person. 

               

          	3. 	  	
               Notwithstanding any other provisions of this Plan, when an order from a court of
               competent jurisdiction or a valid written domestic contract has been received by
               the Corporation requiring division of an Executive’s vested benefits under
               the Plan due to breakdown of marriage or dissolution of common-law relationship,
               such division shall be made in accordance with such order or contract, as
               determined by the Corporation, and subject to any requirements prescribed under
               applicable legislation. Any necessary adjustments shall be made to the
               Executive’s benefit entitlement. 

               

VII – ADMINISTRATION  

          	1. 	  	
               The Administrative Committee shall be responsible for the general administration
               of the Plan and shall perform all administrative functions not delegated to the
               Trustee. The Administrative Committee shall report on its activities to the HR
               Committee at such times and in such detail as the latter deems appropriate 

               

	  	
The
Administrative Committee and the HR Committee may consult with and rely upon the advice
of such counsel, actuaries, accountants and advisors as they deem appropriate in the
circumstances.  

          	2. 	  	
               The Administrative Committee shall establish an investment policy with respect
               to the Plan and the Trustee shall invest the Trust Fund in accordance with such
               policy. 

               

VIII –
TRUSTEE DUTIES

          	1. 	  	
               The duties which may be delegated to the Trustee shall include, but not be
               limited to, maintenance of records and reports, calculation and payment of
               calculated benefits, filing of documents with government officials and ensuring
               that the administration of the Plan is in compliance with applicable legislation
               and such other duties as may be set out in the Trust Agreement. 

               

	2. 	  	
              The
Trustee shall act as the custodian of the assets of the Plan for purposes of
               the Income Tax Act. In this capacity, the Trustee shall remit to the
Canada                Custom and Revenue Agency all annual year-end withholding and
refundable taxes                required by the Income Tax Act to be paid on the
investment income of the Plan                that exceeds any benefit payments for the
applicable year and shall request                refunds from the Canada Customs and
Revenue Agency Refundable Tax Account of                refundable tax each year that the
benefit payments exceed the investment income                of the Plan. The Trustee
shall also be responsible for all income tax reporting                and withholdings
required with respect to any benefit payments under the Plan.

               

102 

          	3. 	  	
               The Trustee shall have the power to borrow such funds as it may deem necessary
               to pay any current benefits under the Plan to the extent that these benefit
               payments exceed the currently available assets of the Trust Fund. The
               Corporation shall assist the Trustee in this connection, either by making loans
               directly to the Trustee or by guaranteeing a third party loan or loans. Such
               borrowings will be repaid to the lender by the Trustee from the refunds it
               receives from the Refundable Tax Account from time to time. 

               

IX –
AMENDMENT OR DISCONTINUANCE
OF THE PLAN  

          	1. 	  	
               It is the intention of the Corporation in establishing the Plan that it operate
               indefinitely. The Corporation, however, reserves the right to change or
               discontinue the Plan in any manner whatsoever providing that such change or
               discontinuance is not contrary to the terms of any applicable laws. 

               

          	2. 	  	
               No Plan change or discontinuance shall reduce the benefits to which the
               Executive has become entitled under the Plan prior to the date of such change or
               discontinuance. 

               

          	3. 	  	
               Any funds remaining in the Trust Fund and/or the Refundable Tax Account after
               the discontinuance of the Plan, after payment has been made to the Executives,
               their Spouses, Beneficiaries and estates, as the case may be, of the vested
               benefits under the Plan, shall be refunded to the Corporation. 

               

X –
GENERAL  

          	1. 	  	
               Nothing contained in the Plan or this document shall confer upon the Executive
               the right to be retained in the service of the Corporation nor shall it
               interfere with the right of the Corporation to discharge or otherwise deal with
               the Executive without regard to the existence of the Plan. 

               

          	2. 	  	
               If the Administrative Committee determines that any person entitled to any
               payment hereunder is incompetent by reason of any physical or mental disability,
               and consequently unable to give a valid receipt, the Administrative Committee
               may cause any payment due to such person to be made to another person for his
               benefit, without responsibility on the part of the Administrative Committee to
               follow the application of such funds. Payment made pursuant to this Section X.3
               shall operate as a complete discharge of the responsibility of the
               Administrative Committee, the HR Committee, the Trustee and the Trust Fund. 

               

          	3. 	  	
               The payment of a benefit to the Executive, his Spouse or to his Beneficiary, is
               subject to satisfactory proof of the existence of the Executive, his Spouse or
               his Beneficiary, as the case may be, as may be required from time to time by the
               Administrative Committee. 

               

          	4. 	  	
               The Plan shall be construed, administered and enforced according to the laws of
               the Province of Ontario and all matters relating to its interpretation,
               administration and enforcement shall be heard solely before the courts of
               Ontario located in the City of Ottawa. 

               

103 

APPENDIX A  

The following employees have been
designated as Executives under the Plan by the Board of Directors, effective as of the
date as noted, and are entitled to benefits under the Plan, plus any additional benefits
as provided in this Appendix A. 

		
		 		 
	Executive  	   	Rob Ashe  	   
	Effective Date  	   	March 1, 2003  	   
	    	   	    	   
	Additional Benefit:  	   	For each year of future Credited Service accrued after February 28, 2003, an additional
one year of past Credited Service will be granted. Provided however, his total years of
Credited Service will not exceed his total years of employment with the Corporation.  	   
	    	   	    	   
	Executive  	   	Tom Manley  	   
	Effective Date  	   	March 1, 2003  	   
	    	   	    	   
	Additional Benefit:  	   	For each year of future Credited Service accrued after February 28, 2003,
an additional one-half (1/2) year of past Credited Service will be granted. Provided however,
his total years of Credited Service will not exceed his total years of employment with the Corporation plus his
years of employment with his previous employment.  	    

104<PAGE>

                                                                    EXHIBIT 10.1

                             SYNETICS SOLUTIONS INC.

                            2001 STOCK INCENTIVE PLAN

         1.       PURPOSE. The purpose of this 2001 Stock Incentive Plan (the
"Plan") is to enable Synetics Solutions Inc. (the "Company") to attract and
retain the services of (i) selected employees, officers and directors of the
Company or any parent or subsidiary of the Company and (ii) selected nonemployee
agents, consultants, advisers and independent contractors of the Company or any
parent or subsidiary of the Company. For purposes of this Plan, a person is
considered to be employed by or in the service of the Company if the person is
employed by or in the service of any entity (the "Employer") that is either the
Company or parent or subsidiary of the Company.

         2.       SHARES SUBJECT TO THE PLAN. Subject to adjustment as provided
below and in Section 9, the shares to be offered under the Plan shall consist of
Common Stock of the Company, and the total number of shares of Common Stock that
may be issued under the Plan shall be 1,000,000 shares. If an option granted
under the Plan expires, terminates or is canceled, the unissued shares subject
to that option shall again be available under the Plan. If shares awarded as a
bonus pursuant to Section 7 or sold pursuant to Section 8 under the Plan are
forfeited to or repurchased by the Company, the number of shares forfeited or
repurchased shall again be available under the Plan.

         3.       EFFECTIVE DATE AND DURATION OF PLAN.

                  3.1      EFFECTIVE DATE. The Plan shall become effective as of
July 20, 2001. No Incentive Stock Option (as defined in Section 5 below) granted
under the Plan shall become exercisable, however, until the Plan is approved by
the affirmative vote of the holders of a majority of the shares of Common Stock
represented at a shareholders meeting at which a quorum is present or by means
of unanimous consent resolutions, and the exercise of any Incentive Stock
Options granted under the Plan before approval shall be conditioned on and
subject to that approval. Subject to this limitation, options may be granted and
shares may be awarded as bonuses or sold under the Plan at any time after the
effective date and before termination of the Plan.

                  3.2      DURATION. The Plan shall continue in effect until all
shares available for issuance under the Plan have been issued and all
restrictions on the shares have lapsed. The Board of Directors may suspend or
terminate the Plan at any time except with respect to options and shares subject
to restrictions then outstanding under the Plan. Termination shall not affect
any outstanding options, any right of the Company to repurchase shares or the
forfeitability of shares issued under the Plan.

         4.       ADMINISTRATION.

                  4.1      BOARD OF DIRECTORS. The Plan shall be administered by
the Board of Directors of the Company, which shall determine and designate the
individuals to whom awards shall be made, the amount of the awards and the other
terms and conditions of the awards.

<PAGE>

Subject to the provisions of the Plan, the Board of Directors may adopt and
amend rules and regulations relating to administration of the Plan, advance the
lapse of any waiting period, accelerate any exercise date, waive or modify any
restriction applicable to shares (except those restrictions imposed by law) and
make all other determinations in the judgment of the Board of Directors
necessary or desirable for the administration of the Plan. The interpretation
and construction of the provisions of the Plan and related agreements by the
Board of Directors shall be final and conclusive. The Board of Directors may
correct any defect or supply any omission or reconcile any inconsistency in the
Plan or in any related agreement in the manner and to the extent it deems
expedient to carry the Plan into effect, and the Board of Directors shall be the
sole and final judge of such expediency.

                  4.2      COMMITTEE. The Board of Directors may delegate to any
committee of the Board of Directors (the "Committee") any or all authority for
administration of the Plan. If authority is delegated to the Committee, all
references to the Board of Directors in the Plan shall mean and relate to the
Committee, except (i) as otherwise provided by the Board of Directors and (ii)
that only the Board of Directors may amend or terminate the Plan as provided in
Sections 3 and 10.

                  4.3      OFFICERS. The Board of Directors may delegate to any
officer or officers of the Company authority to grant awards under the Plan,
subject to any restrictions imposed by the Board of Directors.

         5.       TYPES OF AWARDS, ELIGIBILITY, LIMITATIONS. The Board of
Directors may, from time to time, take the following actions, separately or in
combination, under the Plan: (i) grant Incentive Stock Options, as defined in
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), as
provided in Sections 6.1 and 6.2; (ii) grant options other than Incentive Stock
Options ("Non-Statutory Stock Options") as provided in Sections 6.1 and 6.3;
(iii) award stock bonuses as provided in Section 7; and (iv) sell shares subject
to restrictions as provided in Section 8. Awards may be made to employees,
including employees who are officers or directors, and to other individuals
described in Section 1 selected by the Board of Directors; provided, however,
that only employees of the Company or any parent or subsidiary of the Company
(as defined in subsections 424(e) and 424(f) of the Code) are eligible to
receive Incentive Stock Options under the Plan. The Board of Directors shall
select the individuals to whom awards shall be made and shall specify the action
taken with respect to each individual to whom an award is made. At the
discretion of the Board of Directors, an individual may be given an election to
surrender an award in exchange for the grant of a new award. No employee may be
granted options for more than an aggregated of 200,000 shares of Common Stock in
the calendar year in which the employee is hired or 200,000 shares of Common
Stock in any other calendar year.

         6.       OPTION GRANTS.

                  6.1      GENERAL RULES RELATING TO OPTIONS.

                           6.1-1    TERMS OF GRANT. The Board of Directors may
grant options under the Plan. With respect to each option grant, the Board of
Directors shall determine the number

                                       2
<PAGE>

of shares subject to the option, the exercise price, the period of the option,
the time or times at which the option may be exercised and whether the option is
an Incentive Stock Option or a Non-Statutory Stock Option. At the time of the
grant of an option or at any time thereafter, the Board of Directors may provide
that an optionee who exercised an option with Common Stock of the Company shall
automatically receive a new option to purchase additional shares equal to the
number of shares surrendered and may specify the terms and conditions of such
new options.

                           6.1-2    EXERCISE OF OPTIONS. Except as provided in
Section 6.1-4 or as determined by the Board of Directors, no option granted
under the Plan may be exercised unless at the time of exercise the optionee is
employed by or in the service of the Company and shall have been so employed or
provided such service continuously since the date the option was granted. Except
as provided in Sections 6.1-4 and 9, options granted under the Plan may be
exercised from time to time over the period stated in each option in amounts and
at times prescribed by the Board of Directors, provided that options may not be
exercised for fractional shares. Unless otherwise determined by the Board of
Directors, if an optionee does not exercise an option in any one year for the
full number of shares to which the optionee is entitled in that year, the
optionee's rights shall be cumulative and the optionee may purchase those shares
in any subsequent year during the term of the option.

                           6.1-3    NONTRANSFERABILITY. Each Incentive Stock
Option and, unless otherwise determined by the Board of Directors, each other
option granted under the Plan by its terms (i) shall be nonassignable and
nontransferable by the optionee, either voluntarily or by operation of law,
except by will or by the laws of descent and distribution of the state or
country of the optionee's domicile at the time of death, and (ii) during the
optionee's lifetime, shall be exercisable only by the optionee.

                           6.1-4    TERMINATION OF EMPLOYMENT OR SERVICE.

                                    6.1-4(a) GENERAL RULE. Unless otherwise
determined by the Board of Directors, if an optionee's employment or service
with the Company terminates for any reason other than because of total
disability or death as provided in Sections 6.1-4(b) and (c), his or her option
may be exercised at any time before the expiration date of the option or the
expiration of 30 days after the date of termination, whichever is the shorter
period, but only if and to the extent the optionee was entitled to exercise the
option at the date of termination.

                                    6.1-4(b) TERMINATION BECAUSE OF TOTAL
DISABILITY. Unless otherwise determined by the Board of Directors, if an
optionee's employment or service with the Company terminates because of total
disability, his or her option may be exercised at any time before the expiration
date of the option or before the date 12 months after the date of termination,
whichever is the shorter period, but only if and to the extent the optionee was
entitled to exercise the option at the date of termination. The term "total
disability" means a medically determinable mental or physical impairment that is
expected to result in death or has lasted or is expected to last for a
continuous period of 12 months or more and that, in the opinion of the Company
and two independent physicians, causes the optionee to be unable to perform his
or her duties as an employee, director, officer or consultant of the Employer
and unable to be engaged in any substantial gainful activity. Total disability
shall be deemed to have occurred on the first day

                                       3
<PAGE>

after the two independent physicians have furnished their written opinion of
total disability to the Company and the Company has reached an opinion of total
disability.

                                    6.1-4(c) TERMINATION BECAUSE OF DEATH.
Unless otherwise determined by the Board of Directors, if an optionee dies while
employed by or providing service to the Company, his or her option may be
exercised at any time before the expiration date of the option or before the
date 12 months after the date of death, whichever is the shorter period, but
only if and to the extent the optionee was entitled to exercise the option at
the date of death and only by the person or persons to whom the optionee's
rights under the option shall pass by the optionee's will or by the laws of
descent and distribution of the state or country of domicile at the time of
death.

                                    6.1-4(d) AMENDMENT OF EXERCISE PERIOD
APPLICABLE TO TERMINATION. The Board of Directors may at any time extend the
30-day and 12-month exercise periods any length of time not longer than the
original expiration date of the option. The Board of Directors may at any time
increase the portion of an option that is exercisable, subject to terms and
conditions determined by the Board of Directors.

                                    6.1-4(e) FAILURE TO EXERCISE OPTION. To the
extent that the option of any deceased optionee or any optionee whose employment
or service terminates is not exercised within the applicable period, all further
rights to purchase shares pursuant to the option shall cease and terminate.

                                    6.1-4(f) LEAVE OF ABSENCE. Absence on leave
approved by the Employer or on account of illness or disability shall not be
deemed a termination or interruption of employment or service. Unless otherwise
determined by the Board of Directors, vesting of options shall continue during a
medical, family or military leave of absence, whether paid or unpaid, and
vesting of options shall be suspended during any other unpaid leave of absence.

                           6.1-5    PURCHASE OF SHARES.

                                    6.1-5(a) NOTICE OF EXERCISE. Unless the
Board of Directors determines otherwise, shares may be acquired pursuant to an
option granted under the Plan only upon the Company's receipt of written notice
from the optionee of the optionee's binding commitment to purchase shares,
specifying the number of shares the optionee desires to purchase under the
option and the date on which the optionee agrees to complete the transaction,
and, if required to comply with the Securities Act of 1933, containing a
representation that it is the optionee's intention to acquire the shares for
investment and not with a view to distribution.

                                    6.1-5(b) PAYMENT. Unless the Board of
Directors determines otherwise, on or before the date specified for completion
of the purchase of shares pursuant to an option exercise, the optionee must pay
the Company the full purchase price of those shares in cash or by check or, with
the consent of the Board of Directors, in whole or in part, in Common Stock of
the Company valued at fair market value, restricted stock or other contingent
awards denominated in either stock or cash, promissory notes and other forms of

                                       4
<PAGE>

consideration. Unless otherwise determined by the Board of Directors, any Common
Stock provided in payment of the purchase price must have been previously
acquired and held by the optionee for at least six months. The fair market value
of Common Stock provided in payment of the purchase price shall be the closing
price of the Common Stock last reported before the time payment in Common Stock
is made or, if earlier, committed to be made, if the Common Stock is publicly
traded, or another value of the Common Stock as specified by the Board of
Directors. No shares shall be issued until full payment for the shares has been
made, including all amounts owed for tax withholding. With the consent of the
Board of Directors, an optionee may request the Company to apply automatically
the shares to be received upon the exercise of a portion of a stock option (even
though stock certificates have not yet been issued) to satisfy the purchase
price for additional portions of the option.

                                    6.1-5(c) TAX WITHHOLDING. Each optionee who
has exercised an option shall, immediately upon notification of the amount due,
if any, pay to the Company in cash or by check amounts necessary to satisfy any
applicable federal, state and local tax withholding requirements. If additional
withholding is or becomes required (as a result of exercise of an option or as a
result of disposition of shares acquired pursuant to exercise of an option)
beyond any amount deposited before delivery of the certificates, the optionee
shall pay such amount, in cash or by check, to the Company on demand. If the
optionee fails to pay the amount demanded, the Company or the Employer may
withhold that amount from other amounts payable to the optionee, including
salary, subject to applicable law. With the consent of the Board of Directors,
an optionee may satisfy this obligation, in whole or in part, by instructing the
Company to withhold from the shares to be issued upon exercise or by delivering
to the Company other shares of Common Stock; provided, however, that the number
of shares so withheld or delivered shall not exceed the minimum amount necessary
to satisfy the required withholding obligation.

                                    6.1-5(d) REDUCTION OF RESERVED SHARES. Upon
the exercise of an option, the number of shares reserved for issuance under the
Plan shall be reduced by the number of shares issued upon exercise of the option
(less the number of any shares surrendered in payment for the exercise price or
withheld to satisfy withholding requirements).

                           6.1-6    LIMITATIONS ON GRANTS TO NON-EXEMPT
EMPLOYEES. Unless otherwise determined by the Board of Directors, if an employee
of the Company or any parent or subsidiary of the Company is a non-exempt
employee subject to the overtime compensation provisions of Section 7 of the
Fair Labor Standards Act (the "FLSA"), any option granted to that employee shall
be subject to the following restrictions: (i) the option price shall be at least
85 percent of the fair market value, as described in Section 6.2-4, of the
Common Stock subject to the option on the date it is granted; and (ii) the
option shall not be exercisable until at least six months after the date it is
granted; provided, however, that this six-month restriction on exercisability
will cease to apply if the employee dies, becomes disabled or retires, there is
a change in ownership of the Company, or in other circumstances permitted by
regulation, all as prescribed in Section 7(e)(8)(B) of the FLSA.

                  6.2      INCENTIVE STOCK OPTIONS. Incentive Stock Options
shall be subject to the following additional terms and conditions:

                                       5
<PAGE>

                           6.2-1    LIMITATION ON AMOUNT OF GRANTS. If the
aggregate fair market value of stock (determined as of the date the option is
granted) for which Incentive Stock Options granted under this Plan (and any
other stock incentive plan of the Company or its parent or subsidiary
corporations, as defined in subsections 424(e) and 424(f) of the Code) are
exercisable for the first time by an employee during any calendar year exceeds
$100,000, the portion of the option or options not exceeding $100,000, to the
extent of whole shares, will be treated as an Incentive Stock Option and the
remaining portion of the option or options will be treated as a Non-Statutory
Stock Option. The preceding sentence will be applied by taking options into
account in the order in which they were granted. If, under the $100,000
limitation, a portion of an option is treated as an Incentive Stock Option and
the remaining portion of the option is treated as a Non-Statutory Stock Option,
unless the optionee designates otherwise at the time of exercise, the optionee's
exercise of all or a portion of the option will be treated as the exercise of
the Incentive Stock Option portion of the option to the full extent permitted
under the $100,000 limitation. If an optionee exercises an option that is
treated as in part an Incentive Stock Option and in part a Non-Statutory Stock
Option, the Company will designate the portion of the stock acquired pursuant to
the exercise of the Incentive Stock Option portion as Incentive Stock Option
stock by issuing a separate certificate for that portion of the stock and
identifying the certificate as Incentive Stock Option stock in its stock
records.

                           6.2-2    LIMITATIONS ON GRANTS TO 10 PERCENT
SHAREHOLDERS. An Incentive Stock Option may be granted under the Plan to an
employee possessing more than 10 percent of the total combined voting power of
all classes of stock of the Company or any parent or subsidiary (as defined in
subsections 424(e) and 424(f) of the Code) only if the option price is at least
110 percent of the fair market value, as described in Section 6.2-4, of the
Common Stock subject to the option on the date it is granted and the option by
its terms is not exercisable after the expiration of five years from the date it
is granted.

                           6.2-3    DURATION OF OPTIONS. Subject to Sections
6.1-2, 6.1-4 and 6.2-2, Incentive Stock Options granted under the Plan shall
continue in effect for the period fixed by the Board of Directors, except that
by its terms no Incentive Stock Option shall be exercisable after the expiration
of 10 years from the date it is granted.

                           6.2-4    OPTION PRICE. The option price per share
shall be determined by the Board of Directors at the time of grant. Except as
provided in Section 6.2-2, the option price shall not be less than 100 percent
of the fair market value of the Common Stock covered by the Incentive Stock
Option at the date the option is granted. The fair market value shall be the
closing price of the Common Stock last reported before the time the option is
granted, if the stock is publicly traded, or another value of the Common Stock
as specified by the Board of Directors.

                           6.2-5    LIMITATION ON TIME OF GRANT. No Incentive
Stock Option shall be granted on or after the tenth anniversary of the last
action by the Board of Directors adopting the Plan or approving an increase in
the number of shares available for issuance under the Plan, which action was
subsequently approved within 12 months by the shareholders.

                                       6
<PAGE>

                           6.2-6    EARLY DISPOSITIONS. If within two years
after an Incentive Stock Option is granted or within 12 months after an
Incentive Stock Option is exercised, the optionee sells or otherwise disposes of
Common Stock acquired on exercise of the Option, the optionee shall within 30
days of the sale or disposition notify the Company in writing of (i) the date of
the sale or disposition, (ii) the amount realized on the sale or disposition and
(iii) the nature of the disposition (e.g., sale, gift, etc.).

                  6.3      NON-STATUTORY STOCK OPTIONS. Non-Statutory Stock
Options shall be subject to the following terms and conditions, in addition to
those set forth in Section 6.1 above:

                           6.3-1    OPTION PRICE. The option price for
Non-Statutory Stock Options shall be determined by the Board of Directors at the
time of grant and may be any amount determined by the Board of Directors.

                           6.3-2    DURATION OF OPTIONS. Non-Statutory Stock
Options granted under the Plan shall continue in effect for the period fixed by
the Board of Directors.

         7.       STOCK BONUSES. The Board of Directors may award shares under
the Plan as stock bonuses. Shares awarded as a bonus shall be subject to the
terms, conditions and restrictions determined by the Board of Directors. The
restrictions may include restrictions concerning transferability and forfeiture
of the shares awarded, together with any other restrictions determined by the
Board of Directors. The Board of Directors may require the recipient to sign an
agreement as a condition of the award, but may not require the recipient to pay
any monetary consideration other than amounts necessary to satisfy tax
withholding requirements. The agreement may contain any terms, conditions,
restrictions, representations and warranties required by the Board of Directors.
The certificates representing the shares awarded shall bear any legends required
by the Board of Directors. The Company may require any recipient of a stock
bonus to pay to the Company in cash or by check upon demand amounts necessary to
satisfy any applicable federal, state or local tax withholding requirements. If
the recipient fails to pay the amount demanded, the Company or the Employer may
withhold that amount from other amounts payable to the recipient, including
salary, subject to applicable law. With the consent of the Board of Directors, a
recipient may satisfy this obligation, in whole or in part, by instructing the
Company to withhold from any shares to be issued or by delivering to the Company
other shares of Common Stock; provided, however, that the number of shares so
withheld or delivered shall not exceed the minimum amount necessary to satisfy
the required withholding obligation. Upon the issuance of a stock bonus, the
number of shares reserved for issuance under the Plan shall be reduced by the
number of shares issued, less the number of shares withheld or delivered to
satisfy withholding obligations.

         8.       RESTRICTED STOCK. The Board of Directors may issue shares
under the Plan for any consideration (including promissory notes and services)
determined by the Board of Directors. Shares issued under the Plan shall be
subject to the terms, conditions and restrictions determined by the Board of
Directors. The restrictions may include restrictions concerning transferability,
repurchase by the Company and forfeiture of the shares issued, together with any
other restrictions determined by the Board of Directors. All Common Stock issued
pursuant to this Section 8 shall be subject to a purchase agreement, which shall
be executed by the Company

                                       7
<PAGE>

and the prospective purchaser of the shares before the delivery of certificates
representing the shares to the purchaser. The purchase agreement may contain any
terms, conditions, restrictions, representations and warranties required by the
Board of Directors. The certificates representing the shares shall bear any
legends required by the Board of Directors. The Company may require any
purchaser of restricted stock to pay to the Company in cash or by check upon
demand amounts necessary to satisfy any applicable federal, state or local tax
withholding requirements. If the purchaser fails to pay the amount demanded, the
Company or the Employer may withhold that amount from other amounts payable to
the purchaser, including salary, subject to applicable law. With the consent of
the Board of Directors, a purchaser may satisfy this obligation, in whole or in
part, by instructing the Company to withhold from any shares to be issued or by
delivering to the Company other shares of Common Stock; provided, however, that
the number of shares so withheld or delivered shall not exceed the minimum
amount necessary to satisfy the required withholding obligation. Upon the
issuance of restricted stock, the number of shares reserved for issuance under
the Plan shall be reduced by the number of shares issued, less the number of
shares withheld or delivered to satisfy withholding obligations.

         9.       CHANGES IN CAPITAL STRUCTURE.

                  9.1      STOCK SPLITS, STOCK DIVIDENDS. If the outstanding
Common Stock of the Company is hereafter increased or decreased or changed into
or exchanged for a different number or kind of shares or other securities of the
Company by reason of any stock split, combination of shares, dividend payable in
shares, recapitalization or reclassification, appropriate adjustment shall be
made by the Board of Directors in the number and kind of shares available for
grants under the Plan and in all other share amounts set forth in the Plan. In
addition, the Board of Directors shall make appropriate adjustment in the number
and kind of shares as to which outstanding options, or portions thereof then
unexercised, shall be exercisable, so that the optionee's proportionate interest
before and after the occurrence of the event is maintained. Notwithstanding the
foregoing, the Board of Directors shall have no obligation to effect any
adjustment that would or might result in the issuance of fractional shares, and
any fractional shares resulting from any adjustment may be disregarded or
provided for in any manner determined by the Board of Directors. Any such
adjustments made by the Board of Directors shall be conclusive.

                  9.2      MERGERS, REORGANIZATIONS, ETC. In the event of a
merger, consolidation, plan of exchange, acquisition of property or stock,
split-up, split-off, spin-off, reorganization or liquidation to which the
Company is a party or any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the assets of the Company (each, a "Transaction"), the Board of Directors
shall, in its sole discretion and to the extent possible under the structure of
the Transaction, select one of the following alternatives for treating
outstanding options under the Plan:

                           9.2-1    Outstanding options shall remain in effect
in accordance with their terms.

                           9.2-2    Outstanding options shall be converted into
options to purchase stock in one or more of the corporations, including the
Company, that are the surviving or

                                       8
<PAGE>

acquiring corporations in the Transaction. The amount, type of securities
subject thereto and exercise price of the converted options shall be determined
by the Board of Directors of the Company, taking into account the relative
values of the companies involved in the Transaction and the exchange rate, if
any, used in determining shares of the surviving corporation(s) to be held by
holders of shares of the Company following the Transaction. Unless otherwise
determined by the Board of Directors, the converted options shall be vested only
to the extent that the vesting requirements relating to options granted
hereunder have been satisfied.

                           9.2-3    The Board of Directors shall provide a
period of 30 days or less before the completion of the Transaction during which
outstanding options may be exercised to the extent then exercisable, and upon
the expiration of that period, all unexercised options shall immediately
terminate. The Board of Directors may, in its sole discretion, accelerate the
exercisability of options so that they are exercisable in full during that
period.

                  9.3      DISSOLUTION OF THE COMPANY. In the event of the
dissolution of the Company, options shall be treated in accordance with Section
9.2-3.

                  9.4      RIGHTS ISSUED BY ANOTHER CORPORATION. The Board of
Directors may also grant options and stock bonuses and issue restricted stock
under the Plan with terms, conditions and provisions that vary from those
specified in the Plan, provided that any such awards are granted in substitution
for, or in connection with the assumption of, existing options, stock bonuses
and restricted stock granted, awarded or issued by another corporation and
assumed or otherwise agreed to be provided for by the Company pursuant to or by
reason of a Transaction.

         10.      AMENDMENT OF THE PLAN. The Board of Directors may at any time
modify or amend the Plan in any respect. Except as provided in Section 9,
however, no change in an award already granted shall be made without the written
consent of the holder of the award if the change would adversely affect the
holder.

         11.      APPROVALS. The Company's obligations under the Plan are
subject to the approval of state and federal authorities or agencies with
jurisdiction in the matter. The Company will use its best efforts to take steps
required by state or federal law or applicable regulations, including rules and
regulations of the Securities and Exchange Commission and any stock exchange on
which the Company's shares may then be listed, in connection with the grants
under the Plan. The foregoing notwithstanding, the Company shall not be
obligated to issue or deliver Common Stock under the Plan if such issuance or
delivery would violate state or federal securities laws.

         12.      EMPLOYMENT AND SERVICE RIGHTS. Nothing in the Plan or any
award pursuant to the Plan shall (i) confer upon any employee any right to be
continued in the employment of an Employer or interfere in any way with the
Employer's right to terminate the employee's employment at will at any time, for
any reason, with or without cause, or to decrease the employee's compensation or
benefits, or (ii) confer upon any person engaged by an Employer any right to be
retained or employed by the Employer or to the continuation, extension, renewal
or modification of any compensation, contract or arrangement with or by the
Employer.

                                       9
<PAGE>

         13.      RIGHTS AS A SHAREHOLDER. The recipient of any award under the
Plan shall have no rights as a shareholder with respect to any shares of Common
Stock until the date the recipient becomes the holder of record of those shares.
Except as otherwise expressly provided in the Plan, no adjustment shall be made
for dividends or other rights for which the record date occurs before the date
the recipient becomes the holder of record.

Adopted by Board of Directors:      July 20, 2001
Adopted by Shareholders:            July 27, 2001

Amended by Board of Directors:      April 5, 2004
Amendment adopted by Shareholders:  April 9, 2004

                                       10

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