Document:

Exhibit 10.2

                 2003 STOCK INCENTIVE PLAN
                            OF
                    MICRONETICS, INC.

1. PURPOSE

The purpose of the 2003 Stock Incentive Plan of Micronetics,
Inc. (the "PLAN") is to encourage and enable selected
employees, directors and independent contractors of
Micronetics, Inc. (Micronetics, Inc., together with any
successor corporation thereto, being referred to herein as
the "CORPORATION") and its related entities to acquire or to
increase their holdings of common stock of the Corporation
(the "COMMON STOCK") and other proprietary interests in the
Corporation in order to promote a closer identification of
their interests with those of the Corporation and its
shareholders, thereby further stimulating their efforts to
enhance the efficiency, soundness, profitability, growth and
shareholder value of the Corporation. This purpose will be
carried out through the granting of benefits (collectively
referred to herein as "AWARDS") to selected employees,
independent contractors and directors, including the
granting to selected participants of incentive stock options
("INCENTIVE OPTIONS") intended to qualify under Section 422
of the Internal Revenue Code of 1986, as amended (the
"CODE"), nonqualified stock options ("NONQUALIFIED
OPTIONS"), stock appreciation rights ("SARS"), restricted
awards in the form of restricted stock awards ("RESTRICTED
STOCK AWARDS") and restricted stock units ("RESTRICTED STOCK
UNITS"), and performance awards in the form of performance
shares ("PERFORMANCE shares") and performance units
("PERFORMANCE UNITS"). Incentive options and nonqualified
options shall be referred to herein collectively as
"OPTIONS." Restricted stock awards and restricted stock
units shall be referred to herein collectively as
"RESTRICTED AWARDS." Performance shares and performance
units shall be referred to herein collectively as
"PERFORMANCE AWARDS."

2. ADMINISTRATION OF THE PLAN

(a) The Plan shall be administered by the Board of Directors
of the Corporation (the "BOARD" or the "BOARD OF Directors")
or, upon its delegation, by the Audit and Compensation
Committee of the Board of Directors (the "COMMITTEE").
Unless the Board determines otherwise, the Committee shall
be comprised solely of two or more "NON-EMPLOYEE DIRECTORS,"
as such term is defined in Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), or as
may otherwise be permitted under Rule 16b-3. Further, to the
extent required by Section 162(m) of the Code and related
regulations, the Plan shall be administered by a committee
comprised of two or more "OUTSIDE DIRECTORS" (as such term
is defined in Section 162(m) or related regulations) or as
may otherwise be permitted under Section 162(m) and related
regulations. For the purposes herein, the term
"ADMINISTRATOR" shall refer to the Board and, upon its
delegation to the Committee of all or part of its authority
to administer the Plan, to the Committee.

(b) In addition to action by meeting in accordance with
applicable laws, any action of the Administrator with
respect to the Plan may be taken by a written instrument
signed by all of the members of the Board or Committee, as
appropriate, and any such action so taken by written consent
shall be as fully effective as if it had been taken by a
majority of the members at a meeting duly held and called.
Subject to the provisions of the Plan, the Administrator
shall have full and final authority in its discretion to
take any action with respect to the Plan including, without
limitation, the authority (i) to determine all matters
relating to awards, including selection of individuals to be
granted awards, the types of awards, the number of shares of
the Common Stock, if any, subject to an award, and all
terms, conditions, restrictions and limitations of an award;
(ii) to prescribe the form or forms of the agreements
evidencing any awards granted under the Plan; (iii) to
establish, amend and rescind rules and regulations for the
administration of the Plan; and (iv) to construe and
interpret the Plan, awards and award agreements made under
the Plan, to interpret rules and regulations for
administering the Plan and to make all other determinations
deemed necessary or advisable for administering the Plan.
The Administrator shall also have authority, in its sole
discretion, to accelerate the date that any award which was
not otherwise exercisable, vested or earned shall become
exercisable, vested or earned in whole or in part without
any obligation to accelerate such date with respect to any
other award granted to any recipient. In addition, the
Administrator shall have the authority and discretion to
establish terms and conditions of awards (including but not
limited to the establishment of subplans) as the
Administrator determines to be necessary or appropriate to
conform to the applicable requirements or practices of
jurisdictions outside of the United States. No member of the
Board or Committee, as applicable, shall be liable while
acting as Administrator for any action or determination made
in good faith with respect to the Plan, an award or an award
agreement. The members of the Board or Committee, as
applicable, shall be entitled to indemnification and
reimbursement in the manner provided in the Corporation's
articles of incorporation.

(c) Notwithstanding the other provisions of Section 2, the
Administrator may delegate to one or more officers of the
Corporation the authority to grant awards, and to make any
or all of the determinations reserved for the Administrator
in the Plan and summarized in Section 2(b) herein with
respect to such awards (subject to any restrictions imposed
by applicable laws, rules and regulations and such terms and
conditions as may be established by the Administrator);
provided, however, that, to the extent required by Section
16 of the Exchange Act or Section 162(m) of the Code, the
participant, at the time of said grant or other
determination, (i) is not deemed to be an officer or
director of the Corporation within the meaning of Section 16
of the Exchange Act; and (ii) is not deemed to be a "covered
employee" as defined under Section 162(m) of the Code and
related regulations. To the extent that the Administrator
has delegated authority to grant awards pursuant to this
Section 2(c) to one or more officers of the Corporation,
references to the Administrator shall include references to
such officer or officers, subject, however, to the
requirements of the Plan, Rule 16b-3, Section 162(m) of the
Code and other applicable laws, rules and regulations.

3. EFFECTIVE DATE

The effective date of the Plan shall be July 22, 2003 (the
"EFFECTIVE DATE"). Awards may be granted under the Plan on
and after the Effective Date, but no awards will be granted
after July 21, 2013. Awards which are outstanding on July
21, 2013 (or such earlier termination date as may be
established by the Board pursuant to Section 16(a) herein)
shall continue in accordance with their terms, unless
otherwise provided in the Plan or an award agreement.

4. SHARES OF STOCK SUBJECT TO THE PLAN; AWARD
LIMITATIONS

(a) Shares Available for Awards: Subject to adjustments as
provided in this Section 4(c), the aggregate number of
shares of Common Stock that may be issued pursuant to awards
granted under the Plan shall not exceed the sum of (i)
900,000 shares, plus (ii) any shares of Common Stock (A)
remaining available for issuance as of the Effective Date of
the Plan under the Corporation's 1994 Incentive Stock Option
Plan, First Amended and Restated 1996 Incentive Stock Option
Plan and any other stock incentive plans maintained by the
Corporation (collectively, the "PRIOR PLANS"), and/or (B)
subject to an award granted under a Prior Plan, which award
is forfeited, cancelled, terminated, expires or lapses for
any reason. Shares delivered under the Plan shall be
authorized but unissued shares or shares purchased on the
open market or by private purchase. The Corporation hereby
reserves sufficient authorized shares of Common Stock to
meet the grant of awards hereunder. Notwithstanding any
provision herein to the contrary, the following limitations
shall apply to awards granted under the Plan, in each case
subject to adjustment pursuant to Section 4(c):

(i) The maximum number of shares of Common Stock
that may be issued under the Plan shall not exceed 900,000
shares; and

(ii) No participant may be granted awards in any 12-
month
period for more than 100,000 shares of Common Stock (or the
equivalent value thereof based on the fair market value per
share of the Common Stock on the date of grant of an award).

(b) Shares not subject to limitations: The following will
not be
applied to the share limitations of Section 4(a) above: (i)
dividends, including dividends paid in shares, or dividend
equivalents paid in cash in connection with outstanding
awards, (ii) awards which by their terms are settled in
cash, (iii) shares and any awards that are granted through
the assumption of, or in substitution for, outstanding
awards previously granted as the result of a merger,
consolidation, or acquisition of the employing company (or
an affiliate) pursuant to which it is merged with the
Corporation or becomes a related entity of the Corporation,
(iv) any shares subject to an award under the Plan or Prior
Plan which award is forfeited, cancelled, terminated,
expires or lapses for any reason, and (v) any shares
surrendered by a participant or withheld by the Corporation
to pay the option price for an option or used to satisfy any
tax withholding requirement in connection with the exercise,
vesting or earning of an award if, in accordance with the
terms of the Plan, a participant pays such option price or
satisfies such tax withholding by either tendering
previously owned shares or having the Corporation withhold
shares.

(c) Adjustments: If there is any change in the outstanding
shares of Common Stock because of a merger, consolidation or
reorganization involving the Corporation or a related
entity, or if the Board of Directors of the Corporation
declares a stock dividend, stock split distributable in
shares of Common Stock, reverse stock split, combination or
reclassification of the Common Stock, or if there is a
similar change in the capital stock structure of the
Corporation or a related entity affecting the Common Stock,
the number of shares of Common Stock reserved for issuance
under the Plan shall be correspondingly adjusted, and the
Administrator shall make such adjustments to awards and to
any provisions of this Plan as the Administrator deems
equitable to prevent dilution or enlargement of awards or as
may be otherwise advisable.

5. ELIGIBILITY

An award may be granted only to an individual who satisfies
the following eligibility requirements on the date the award
is granted:

(a) The individual is either (i) an employee of the
Corporation or a related entity, (ii) a director of the
Corporation or a related entity, or (iii) an independent
contractor, consultant or advisor (collectively,
"INDEPENDENT CONTRACTORS") providing services to the
Corporation or a related entity. For this purpose, an
individual shall be considered to be an "EMPLOYEE" only if
there exists between the individual and the Corporation or a
related entity the legal and bona fide relationship of
employer and employee.

(b) With respect to the grant of incentive options, the
individual does not own, immediately before the time that
the incentive option is granted, stock possessing more than
10% of the total combined voting power of all classes of
stock of the Corporation or a related corporation.
Notwithstanding the foregoing, an individual who owns more
than 10% of the total combined voting power of the
Corporation or a related corporation may be granted an
incentive option if the option price is at least 110% of the
fair market value of the Common Stock (as defined in Section
6(c)(ii) herein), and the option period (as defined in
Section 6(d)(i) herein) does not exceed five years. For this
purpose, an individual will be deemed to own stock which is
attributable to him under Section 424(d) of the Code.

(c) With respect to the grant of substitute awards or
assumption of awards in connection with a merger,
consolidation, acquisition, reorganization or similar
business combination involving the Corporation or a related
entity, the recipient is otherwise eligible to receive the
award and the terms of the award are consistent with the
Plan and applicable laws, rules and regulations (including,
to the extent necessary, the federal securities laws
registration provisions and Section 424(a) of the Code).

(d) The individual, being otherwise eligible under this
Section 5, is selected by the Administrator as an individual
to whom an award shall be granted (a "PARTICIPANT").

6. OPTIONS

(a) Grant of Options: Subject to the limitations of the
Plan, the Administrator may in its sole and absolute
discretion grant options to such eligible individuals in
such numbers, subject to such terms and conditions, and at
such times as the Administrator shall determine. Both
incentive options and nonqualified options may be granted
under the Plan, as determined by the Administrator;
provided, however, that incentive options may only be
granted to employees of the Corporation or a related
corporation. To the extent that an option is designated as
an incentive option but does not qualify as such under
Section 422 of the Code, the option (or portion thereof)
shall be treated as a nonqualified option.

(b) Option Price: The price per share at which an option may
be exercised (the "OPTION PRICE") shall be established by
the Administrator and stated in the award agreement
evidencing the grant of the option; provided, that (i) the
option price of an option shall be no less than the fair
market value per share of the Common Stock, as determined in
accordance with Section 6(c)(ii) on the date the option is
granted (or 110% of the fair market value with respect to
incentive options granted to an employee who owns stock
possessing more than 10% of the total voting power of all
classes of stock of the Corporation or a related
corporation, as provided in Section 5(b) herein); and (ii)
in no event shall the option price per share of any option
be less than the par value per share, if any, of the Common
Stock.

(c) Date of Grant; Fair Market Value:

(i) An incentive option shall be considered to be
granted on the date that the Administrator acts to grant the
option, or on any later date specified by the Administrator
as the effective date of the option. A nonqualified option
shall be considered to be granted on the date the
Administrator acts to grant the option or any other date
specified by the Administrator as the date of grant of the
option.

(ii) For the purposes of the Plan, the fair market
value per share of the Common Stock shall be established in
good faith by the Administrator and, except as may otherwise
be determined by the Administrator, the fair market value
shall be determined in accordance with the following
provisions: (A) if the shares of Common Stock are listed for
trading on the New York Stock Exchange or the
American Stock Exchange, the fair market value shall be the
closing sales price per share of the shares on the New York
Stock Exchange or the American Stock Exchange (as
applicable) on the date immediately preceding the date the
option is granted or other determination is made (each, a
"VALUATION DATE"), or, if there is no transaction on such
date, then on the trading date nearest preceding the
valuation date for which closing price information is
available, and, provided further, if the shares are quoted
on the Nasdaq National Market or the Nasdaq SmallCap
Market of the Nasdaq Stock Market but are not listed for
trading on the New York Stock Exchange or the American Stock
Exchange, the fair market value shall be the closing sales
price for such stock (or the closing bid, if no sales were
reported) as quoted on such system on the date immediately
or nearest preceding the valuation date for which such
information is available; or (B) if the shares of Common
Stock are not listed or reported in any of the foregoing,
then the fair market value shall be determined by the
Administrator in accordance with the applicable provisions
of Section 20.2031-2 of the Federal Estate Tax Regulations,
or in any other manner consistent with the Code and
accompanying regulations.

(iii) In no event shall there first become exercisable
by an employee in any one calendar year incentive options
granted by the Corporation or any related corporation with
respect to shares having an aggregate fair market value
(determined at the time an incentive option is granted)
greater than $100,000.

(d) Option Period and Limitations on the Right to Exercise
Options:

(i) The term of an option (the "OPTION PERIOD")
shall be determined by the Administrator at the
time the option is granted and shall be stated in the
individual award agreement. With respect to incentive
options, the option period shall not extend more than 10
years from the date on which the option is granted (or five
years with respect to incentive options granted to an
employee who owns stock possessing more than 10% of the
total combined voting power of all classes of stock of the
Corporation or a related corporation, as provided in Section
5(b) herein). Any option or portion thereof not exercised
before expiration of the option period shall terminate. The
period or periods during which, and conditions pursuant to
which, an option may become exercisable shall be
determined by the Administrator in its discretion, subject
to the terms of the Plan.

(ii) An option may be exercised by giving written
notice to the Corporation in form acceptable to the
Administrator at such place and subject to such conditions
as may be established by the Administrator or its designee.
Such notice shall specify the number of shares to be
purchased pursuant to an option and the aggregate purchase
price to be paid therefore and shall be accompanied by
payment of such purchase price. Unless an individual award
agreement provides otherwise, such payment shall be in the
form of cash or cash equivalent; provided that, where
permitted by the Administrator and applicable laws, rules
and regulations (including but not limited to Section 402 of
the Sarbanes-Oxley Act of 2002), payment may also be made:

(A) By delivery (by either actual delivery or
attestation) of shares of Common Stock owned by the
participant at the time of exercise for a period of at least
six months and otherwise acceptable to the Administrator;

(B) By shares of Common Stock withheld upon
exercise;

(C) By delivery of written notice of exercise
to the Corporation and delivery to a broker of written
notice of exercise and irrevocable
instructions to promptly deliver to the
Corporation the amount of sale or loan proceeds to pay the
option price;

(D) By such other payment methods as may be
approved by the Administrator and which are acceptable under
applicable law; or

(E) By any combination of the foregoing
methods.

Shares tendered or withheld in payment of the exercise of an
option shall be valued at their fair market value on the
date of exercise, as determined by the Administrator by
applying the provisions of Section 6(c)(ii).

(iii) Unless the Administrator determines otherwise,
no option granted to a participant who was an employee at
the time of grant shall be exercised unless the participant
is, at the time of exercise, an employee as
described in Section 5(a), and has been an employee
continuously since the date the option was granted, subject
to the following:

(A) An option shall not be affected by any
change in the terms, conditions or status of the
participant's employment, provided that
the participant continues to be an
employee of the Corporation or a related entity.

(B) The employment relationship of a
participant shall be treated as continuing
intact for any period that the participant
is on military or sick leave or other bona fide
leave of absence, provided that the period of such leave
does not exceed 90 days, or, if longer, as
long as the participant's right to
reemployment is guaranteed either by
statute or by contract. The employment relationship of a
participant shall also be treated as continuing intact while
the participant is not in active service because of
disability. The Administrator shall have sole authority to
determine whether a participant is disabled and, if
applicable, the date of a participant's termination of
employment or service for any reason (the "TERMINATION
DATE").

(C) Unless the Administrator determines
otherwise, if the employment of a participant is terminated
because of disability or death, the option may be exercised
only to the extent exercisable on the participant's
termination date, except that the Administrator may in its
discretion accelerate the date for
exercising all or any part of the option which
was not otherwise exercisable on the termination date. The
option must be exercised, if at all, prior to the first to
occur of the following, whichever shall be applicable: (X)
the close of the period of 12 months next
succeeding the termination date (or such
other period stated in the applicable
award agreement); or (Y) the close of the option
period. In the event of the participant's death, such option
shall be exercisable by such person or persons as shall have
acquired the right to exercise the option by will or by the
laws of intestate succession.

(D) Unless the Administrator determines
otherwise, if the employment of the participant is
terminated for any reason other than disability, death or
for "cause," his option may be exercised to the extent
exercisable on his termination date, except that the
Administrator may in its discretion accelerate the date for
exercising all or any part of the option which was not
otherwise exercisable on the termination date. The option
must be exercised, if at all, prior to the first to occur of
the following, whichever shall be applicable: (X) the close
of the period of 90 days next succeeding the termination
date (or such other period stated in the applicable award
agreement); or (Y) the close of the option period. If the
participant dies following such termination of employment
and prior to the earlier of the dates specified in (X) or
(Y) of this subparagraph (D), the participant shall be
treated as having died while employed under subparagraph (C)
immediately preceding (treating for this purpose the
participant's date of termination of employment as the
termination date). In the event of the participant's death,
such option shall be exercisable by such person or persons
as shall have acquired the right to exercise the option by
will or by the laws of intestate succession.

(E) Unless the Administrator determines
otherwise, if the employment of the participant is
terminated for "CAUSE," his option shall lapse and no longer
be exercisable as of his termination date, as determined by
the Administrator. For purposes of the Plan, unless the
Administrator determines otherwise, a
participant's termination shall be for "cause" if
such termination results from the participant's (X)
termination for "cause" under the participant's employment,
consulting or other agreement with the Corporation or a
related entity, if any, or (Y) if the participant has not
entered into any such employment, consulting or other
agreement, then the participant's termination shall be for
"cause" if termination results due to the participant's (i)
dishonesty; (ii) refusal to perform his duties for the
Corporation; or (iii) engaging in conduct that could be
materially damaging to the Corporation without a reasonable
good faith belief that such conduct was in the best interest
of the Corporation. The determination of "cause" shall be
made by the Administrator and its
determination shall be final and
conclusive.

(F) Notwithstanding the foregoing, the
Administrator may, in its discretion, accelerate the date
for exercising all or any part of an option which was not
otherwise exercisable on the termination date, extend the
period during which an option may be exercised, modify the
terms and conditions to exercise, or any combination of the
foregoing.

(iv) Unless the Administrator determines otherwise, an
option granted to a participant who was a non-employee
director of the Corporation or a related entity at the time
of grant may be exercised only to the extent exercisable on
the date of the participant's termination of service to the
Corporation or a related entity (unless the termination was
for cause), and must be exercised, if at all, prior to the
first to occur of the following, as applicable: (X) the
close of the period of 24 months next succeeding the
termination date (or such other period stated in
the applicable award agreement); or (Y) the close of the
option period. If the services of such a participant are
terminated for cause (as defined in Section 6(a)(iii)(E)
herein), his option shall lapse and no longer be exercisable
as of his termination date, as determined by the
Administrator. Notwithstanding the foregoing, the
Administrator may in its discretion accelerate the date for
exercising all or any part of an option which was not
otherwise exercisable on the termination date,
extend the period during which an option may be exercised,
modify the other terms and conditions to exercise, or any
combination of the foregoing.

(v) Unless the Administrator determines otherwise,
an option granted to a participant who was an independent
contractor of the Corporation or a related entity at the
time of grant (and who does not thereafter become an
employee, in which case he shall be subject to the
provisions of Section 6(d)(iii) herein) may be exercised
only to the extent exercisable on the date of the
participant's termination of service to the Corporation or a
related entity (unless the termination was for
cause), and must be exercised, if at all, prior to the first
to occur of the following, as applicable: (X) the close of
the period of 90 days next succeeding the termination date
(or such other period stated in the applicable award
agreement); or (Y) the close of the option period. If the
services of such a participant are terminated for cause (as
defined in Section 6(d)(iii)(E) herein), his option shall
lapse and no longer be exercisable as of his termination
date, as determined by the Administrator. Notwithstanding
the foregoing, the Administrator may in its
discretion accelerate the date for exercising all or any
part of an option which was not otherwise exercisable on the
termination date, extend the period during which an option
may be exercised, modify the other terms and conditions to
exercise, or any combination of the foregoing.

(vi) A participant or his legal representative,
legatees or distributees shall not be deemed to be the
holder of any shares subject to an option and shall not have
any rights of a shareholder unless and until certificates
for such shares have been issued and delivered to him or
them under the Plan. A certificate or certificates for
shares of Common Stock acquired upon exercise of an option
shall be issued in the name of the participant (or his
beneficiary) and distributed to the participant (or
his beneficiary) as soon as practicable following receipt of
notice of exercise and payment of the purchase price (except
as may otherwise be determined by the Corporation in the
event of payment of the option price pursuant to Section
6(d)(ii)(C) herein).

(vii) If shares of Common Stock acquired upon exercise
of an incentive option are disposed of within two years
following the date of grant or one year following the
transfer of such shares to a participant upon exercise, the
participant shall, promptly following such disposition,
notify the Corporation in writing of the date and terms of
such disposition and provide such other information
regarding the disposition as the Administrator may
reasonably require. In addition the Corporation shall have
the right to include a legend on certificates representing
shares of Common Stock requiring the participants to furnish
this information to the Corporation before being allowed to
transfer shares of Common Stock represented by any such
certificates.

(e) Nontransferability of Options: Incentive options shall
not be transferable (including by sale, assignment, pledge
or hypothecation) other than by will or the laws of
intestate succession. Nonqualified options shall not be
transferable (including by sale, assignment, pledge or
hypothecation) other than by will or the laws of intestate
succession, except as may be permitted by the Administrator
in a manner consistent with the registration provisions of
the Securities Act of 1933, as amended (the "SECURITIES
Act"). Except as may be permitted by the preceding sentence,
an option shall be exercisable during the participant's
lifetime only by him or by his guardian or legal
representative. The designation of a beneficiary does not
constitute a transfer.

7. STOCK APPRECIATION RIGHTS

(a) Grant of SARs: Subject to the limitations of the Plan,
the Administrator may in its sole and absolute discretion
grant SARs to such eligible individuals, in such numbers,
upon such terms and at such times as the Administrator shall
determine. SARs may be granted to the holder of an option
(hereinafter called a "RELATED OPTION") with respect to all
or a portion of the shares of Common Stock subject to the
related option (a "TANDEM SAR") or may be granted separately
to an eligible individual (a "FREESTANDING SAR"). Subject to
the limitations of the Plan, upon the exercise of an SAR, a
participant shall be entitled to receive from the
Corporation, for each share of Common Stock with respect to
which the SAR is being exercised, consideration equal in
value to the excess of the fair market value of a share of
Common Stock on the date of exercise over the base price per
share of such SAR. The base price per share of an SAR shall
be no less than the fair market value per share of the
Common Stock (as determined in accordance with Section
6(c)(ii)) on the date the SAR is granted.

(b) Tandem SARs: A tandem SAR may be granted either
concurrently with the grant of the related option or (if the
related option is a nonqualified option) at any time
thereafter prior to the complete exercise, termination,
expiration or cancellation of such related option. Tandem
SARs shall be exercisable only at the time and to the extent
that the related option is exercisable (and may be subject
to such additional limitations on exercisability as the
Administrator may provide in the agreement), and in no event
after the complete termination or full exercise of the
related option. For purposes of determining the number of
shares of Common Stock that remain subject to such related
option and for purposes of determining the number of shares
of Common Stock in respect of which other awards may be
granted, a related option shall be considered to have been
surrendered upon the exercise of a tandem SAR to the extent
of the number of shares of Common Stock with respect to
which such tandem SAR is exercised. Upon the exercise or
termination of a related option, the tandem SARs with
respect thereto shall be canceled automatically to the
extent of the number of shares of Common Stock with respect
to which the related option was so exercised or terminated.
(c) Freestanding SARs: An SAR may be granted without
relationship to an option (as defined above, a "freestanding
SAR") and, in such case, will be exercisable upon such terms
and subject to such conditions as may be determined by the
Administrator, subject to the terms of the Plan.

(d) Exercise of SARs:

(i) Subject to the terms of the Plan, SARs shall be
exercisable in whole or in part upon such terms and
conditions as may be established by the Administrator and
stated in the applicable award agreement. The period during
which an SAR may be exercisable shall not exceed 10 years
from the date of grant or, in the case of tandem SARs, such
shorter option period as may apply to the related option.
Any SAR or portion thereof not exercised before expiration
of the exercise period established by the Administrator
shall terminate.

(ii) SARs may be exercised by giving written notice
to the Corporation in form acceptable to the Administrator
at such place and subject to such terms and conditions as
may be established by the Administrator or its designee. The
date of exercise of an SAR shall mean the date on which the
Corporation shall have received proper notice from the
participant of the exercise of such SAR.

(iii) Each participant's award agreement shall set
forth the extent to which the participant shall have the
right to exercise an SAR following termination of the
participant's employment or service with the Corporation.
Such provisions shall be determined in the sole discretion
of the Administrator, shall be included in the award
agreement entered into with a participant, need not be
uniform among all SARs issued pursuant to this Section 7,
and may reflect distinctions based on the reasons for
termination of employment. Notwithstanding the foregoing,
unless the Administrator determines otherwise, no
SAR may be exercised unless the participant is, at the time
of exercise, an eligible participant, as described in
Section 5, and has been a participant continuously since the
date the SAR was granted, subject to the provisions of
Sections 6(d)(iii), (iv) and (v) herein.

(e) Consideration: The consideration to be received upon
the exercise of the SAR by the participant shall be paid in
cash, shares of Common Stock (valued at fair market value on
the date of exercise of such SAR in accordance with Section
6(c)(ii) herein) or a combination of cash and shares of
Common Stock, as elected by the Administrator. The
Corporation's obligation arising upon the exercise of the
SAR may be paid currently or on a deferred basis with such
interest or earnings equivalent, if any, as the
Administrator may determine. A certificate or certificates
for shares of Common Stock acquired upon exercise of an SAR
for shares shall be issued in the name of the participant
(or his beneficiary) and distributed to the participant (or
his beneficiary) as soon as practicable following receipt of
notice of exercise. A participant or his legal
representative, legatees or distributees shall not be deemed
to be the holder of any shares subject to an SAR and shall
not have any rights as a shareholder unless and until
certificates for such shares have been issued and delivered
to him or them under the Plan. No fractional shares of
Common Stock will be issuable upon exercise of the SAR and,
unless otherwise provided in the applicable award agreement,
the participant will receive cash in lieu of fractional
shares.

(f) Limitations: The applicable award agreement shall
contain such terms, conditions and limitations consistent
with the Plan as may be specified by the Administrator.
Unless otherwise provided in the applicable award agreement
or the Plan, any such terms, conditions or limitations
relating to a tandem SAR shall not restrict the
exercisability of the related option.

(g) Nontransferability: Unless the Administrator determines
otherwise, SARs shall not be transferable (including by
sale, assignment, pledge or hypothecation) other than by
will or the laws of intestate succession, and SARs may be
exercised during the participant's lifetime only by him or
by his guardian or legal representative. The designation of
a beneficiary does not constitute a transfer.

8. RESTRICTED AWARDS

(a) Grant of Restricted Awards: Subject to the limitations
of the Plan, the Administrator may in its sole and absolute
discretion grant restricted awards to such individuals in
such numbers, upon such terms and at such times as the
Administrator shall determine. Such restricted awards may be
in the form of restricted stock awards and/or restricted
stock units that are subject to certain conditions, which
conditions must be met in order for the restricted award to
vest and be earned (in whole or in part) and no longer
subject to forfeiture. Restricted awards shall be payable in
cash or whole shares of Common Stock (including restricted
stock), or partly in cash and partly in whole shares of
Common Stock, in accordance with the terms of the Plan and
the sole and absolute discretion of the Administrator. The
Administrator shall determine the nature, length and
starting date of the period, if any, during which a
restricted award may be earned (the "RESTRICTION PERIOD"),
and shall determine the conditions which must be met in
order for a restricted award to be granted or to vest or be
earned (in whole or in part), which conditions may include,
but are not limited to, attainment of performance
objectives, continued service or employment for a certain
period of time (or a combination of attainment of
performance objectives and continued service), retirement,
displacement, disability, death, or any combination of such
conditions. In the case of restricted awards based upon
performance criteria, or a combination of performance
criteria and continued service, the Administrator shall
determine the performance objectives to be used in valuing
restricted awards, which performance objectives may vary
from participant to participant and between groups of
participants and shall be based upon such corporate,
business unit or division and/or individual performance
factors and criteria as the Administrator in its sole
discretion may deem appropriate; provided, however, that,
with respect to restricted awards payable to covered
employees which are intended to be eligible for the
compensation deduction limitation exception available under
Section 162(m) of the Code and related regulations, such
performance factors shall be limited to one or more of the
following (as determined by the Administrator in its
discretion): sales goals, earnings per share, return on
equity, return on assets and total return to shareholders.
The Administrator shall have sole authority to determine
whether and to what degree restricted awards have vested and
been earned and are payable and to establish and interpret
the terms and conditions of restricted awards and the
provisions herein. The Administrator shall also determine
the form and terms of payment of restricted awards. The
Administrator, in its sole and absolute discretion, may
accelerate the date that any restricted award granted to the
participant shall be deemed to be vested or earned in whole
or in part, without any obligation to accelerate such date
with respect to other restricted awards granted to any
participant.

(b) Forfeiture of Restricted Awards: Unless the
Administrator determines otherwise, if the employment or
service of a participant shall be terminated for any reason
and all or any part of a restricted award has not vested or
been earned pursuant to the terms of the Plan and the
individual award agreement, such award, to the extent not
then vested or earned, shall be forfeited immediately upon
such termination and the participant shall have no further
rights with respect thereto.

(c) Dividend and Voting Rights; Share Certificates: The
Administrator shall have sole discretion to determine
whether a participant shall have dividend rights, voting
rights or other rights as a shareholder with respect to
shares subject to a restricted award which has not yet
vested or been earned. Unless the Administrator determines
otherwise, a certificate or certificates for shares of
Common Stock subject to a restricted award shall be issued
in the name of the participant (or his beneficiary) and
distributed to the participant (or his beneficiary) as soon
as practicable after the shares subject to the award (or
portion thereof) have vested and been earned.
Notwithstanding the foregoing, the Administrator shall have
the right to retain custody of certificates evidencing the
shares subject to a restricted award and to require the
participant to deliver to the Corporation a stock power,
endorsed in blank, with respect to such award, until such
time as the restricted award vests (or is forfeited).

(d) Nontransferability: Unless the Administrator determines
otherwise, restricted awards that have not vested shall not
be transferable (including by sale, assignment, pledge or
hypothecation) other than by will or the laws of intestate
succession, and the recipient of a restricted award shall
not sell, transfer, assign, pledge or otherwise encumber
shares subject to the award until the restriction period has
expired and until all conditions to vesting have been met.

9. PERFORMANCE AWARDS

(a) Grant of Performance Awards: Subject to the terms of the
Plan, performance awards may be granted to participants upon
such terms and conditions and at such times as shall be
determined by the Administrator. Such performance awards may
be in the form of performance shares and/or performance
units. An award of a performance share is a grant of a right
to receive shares of Common Stock or the cash value thereof
(or a combination thereof) which is contingent upon the
achievement of performance or other objectives during a
specified period and which has a value on the date of grant
equal to the fair market value (as determined in accordance
with Section 6(c)(iii) herein) of a share of Common Stock.
An award of a performance unit is a grant of a right to
receive shares of Common Stock or a designated dollar value
amount of Common Stock which is contingent upon the
achievement of performance or other objectives during a
specified period, and which has an initial value established
by the Administrator at the time of grant. Subject to
Section 4(a), above, the Administrator shall have complete
discretion in determining the number of performance units
and/or performance shares granted to any participant. The
Administrator shall determine the nature, length and
starting date of the period during which a performance award
may be earned (the "PERFORMANCE PERIOD"), and shall
determine the conditions which must be met in order for a
performance award to be granted or to vest or be earned (in
whole or in part), which conditions may include but are not
limited to specified performance objectives, continued
service or employment for a certain period of time, or a
combination of such conditions. The Administrator shall
determine the performance objectives to be used in valuing
performance awards, which performance objectives may vary
from participant to participant and between groups of
participants and shall be based on such corporate, business
unit or division and/or individual performance factors and
criteria as the Administrator in its sole discretion may
deem appropriate; provided, however, that, with respect to
performance awards payable to covered employees which are
intended to be eligible for the compensation deduction
limitation exception available under Section 162(m) of the
Code and related regulations, such performance factors shall
be limited to one or more of the following (as determined by
the Administrator in its discretion): sales goals, earnings
per share, return on equity, return on assets and total
return to shareholders. The Administrator shall have sole
authority to determine whether and to what degree
performance awards have been earned and are payable and to
interpret the terms and conditions of performance awards and
the provisions herein. The Administrator also shall
determine the form and terms of payment of performance
awards. The Administrator, in its sole and absolute
discretion, may accelerate the date that any performance
award granted to a participant shall be deemed to be earned
in whole or in part, without any obligation to accelerate
such date with respect to other awards granted to any
participant.

(b) Form of Payment: Payment of the amount to which a
participant shall be entitled upon earning a performance
award shall be made in cash, shares of Common Stock, or a
combination of cash and shares of Common Stock, as
determined by the Administrator in its sole discretion.
Payment may be made in a lump sum or in installments upon
such terms as may be established by the Administrator.
(c) Forfeiture of Performance Awards: Unless the
Administrator determines otherwise, if the employment or
service of a participant shall terminate for any reason and
the participant has not earned all or part of a performance
award pursuant to the terms of the Plan and individual award
agreement, such award, to the extent not then earned, shall
be forfeited immediately upon such termination and the
participant shall have no further rights with respect
thereto.

(d) Dividend and Voting Rights; Share Certificates: The
Administrator shall have sole discretion to determine
whether a participant shall have dividend rights, voting
rights, or other rights as a shareholder with respect to
shares, if any, which are subject to a performance award
prior to the time the performance award has been earned.
Unless the Administrator determines otherwise, a certificate
or certificates for shares of Common Stock, if any, subject
to a performance award shall be issued in the name of the
participant (or his beneficiary) and distributed to the
participant (or his beneficiary) as soon as practicable
after the award has been earned. Notwithstanding the
foregoing, the Administrator shall have the right to retain
custody of certificates evidencing the shares subject to a
performance award and the right to require the participant
to deliver to the Corporation a stock power, endorsed in
blank, with respect to such award, until such time as the
award is earned (or forfeited).

(e) Nontransferability: Unless the Administrator determines
otherwise, performance awards which have not been earned
shall not be transferable (including by sale, assignment,
pledge or hypothecation) other than by will or the laws of
intestate succession, and the recipient of a performance
award shall not sell, transfer, assign, pledge or otherwise
encumber any shares subject to the award until the
performance period has expired and until the conditions to
earning the award have been met.

10. WITHHOLDING

The Corporation shall withhold all required local, state,
federal, foreign and other taxes from any amount payable in
cash with respect to an award. Prior to the delivery or
transfer of any certificate for shares or any other benefit
conferred under the Plan, the Corporation shall require any
recipient of an award to pay to the Corporation in cash the
amount of any tax or other amount required by any
governmental authority to be withheld and paid over by the
Corporation to such authority for the account of such
recipient. Notwithstanding the foregoing, the Administrator
may establish procedures to permit a recipient to satisfy
such obligation in whole or in part, and any local, state,
federal, foreign or other income tax obligations relating to
such an award, by electing (the "ELECTION") to have the
Corporation withhold shares of Common Stock from the shares
to which the recipient is entitled. The number of shares to
be withheld shall have a fair market value as of the date
that the amount of tax to be withheld is determined as
nearly equal as possible to (but not exceeding) the amount
of such obligations being satisfied. Each election must be
made in writing to the Administrator in accordance with
election procedures established by the Administrator.

11. DIVIDENDS AND DIVIDEND EQUIVALENTS

The Administrator may, in its sole discretion, provide that
the awards granted under the Plan earn dividends or dividend
equivalents. Such dividends or dividend equivalents may be
paid currently or may be credited to a participant's
account. Any crediting of dividends or dividend equivalents
may be subject to such restrictions and conditions as the
Administrator may establish, including reinvestment in
additional shares of Common Stock or share equivalents.

12. SECTION 16(B) COMPLIANCE

To the extent that any participants in the Plan are subject
to Section 16(b) of the Exchange Act, it is the general
intention of the Corporation that transactions under the
Plan shall comply with Rule 16b-3 under the Exchange Act and
that the Plan shall be construed in favor of the Plan
transactions meeting the requirements of Rule 16b-3 or any
successor rules thereto. Notwithstanding anything in the
Plan to the contrary, the Administrator, in its sole and
absolute discretion, may bifurcate the Plan so as to
restrict, limit or condition the use of any provision of the
Plan to participants who are officers or directors subject
to Section 16 of the Exchange Act without so restricting,
limiting or conditioning the Plan with respect to other
participants.

13. CODE SECTION 162(M) PERFORMANCE-BASED COMPENSATION

To the extent to which Section 162(m) of the Code is
applicable, the Corporation intends that compensation paid
under the Plan to covered employees (as such term is defined
in Section 162(m) and related regulations) will, to the
extent practicable, constitute qualified "performance-based
compensation" within the meaning of Section 162(m) and
related regulations, unless otherwise determined by the
Administrator. Accordingly, the provisions of the Plan shall
be administered and interpreted in a manner consistent with
Section 162(m) and related regulations to the extent
practicable to do so.

14. NO RIGHT OR OBLIGATION OF CONTINUED EMPLOYMENT OR
SERVICE

Nothing in the Plan shall confer upon the participant any
right to continue in the service of the Corporation or a
related entity as an employee, director or independent
contractor or to interfere in any way with the right of the
Corporation or a related entity to terminate the
participant's employment or service at any time. Except as
otherwise provided in the Plan or an award agreement, awards
granted under the Plan to employees of the Corporation or a
related entity shall not be affected by any change in the
duties or position of the participant, as long as such
individual remains an employee of, or in service to, the
Corporation or a related entity.

15. UNFUNDED PLAN; RETIREMENT PLANS

(a) Neither a participant nor any other person shall, by
reason of the Plan, acquire any right in or title to any
assets, funds or property of the Corporation or any related
entity, including, without limitation, any specific funds,
assets or other property which the Corporation or any
related entity, in their discretion, may set aside in
anticipation of a liability under the Plan. A participant
shall have only a contractual right to the Common Stock or
amounts, if any, payable under the Plan, unsecured by any
assets of the Corporation or any related entity. Nothing
contained in the Plan shall constitute a guarantee that the
assets of such corporations shall be sufficient to pay any
benefits to any person.

(b) The amount of any compensation deemed to be received by
a participant pursuant to an award shall not constitute
compensation with respect to which any other employee
benefits of such participant are determined, including,
without limitation, benefits under any bonus, pension,
profit sharing, life insurance or salary continuation plan,
except as otherwise specifically provided by the terms of
such plan or as may be determined by the Administrator.

(c) The adoption of the Plan shall not affect any other
stock incentive or other compensation plans in effect for
the Corporation or any related entity, nor shall the Plan
preclude the Corporation from establishing any other forms
of stock incentive or other compensation for employees or
service providers of the Corporation or any related entity.

16. AMENDMENT AND TERMINATION OF THE PLAN

(a) General: The Plan and any award granted under the Plan
may be amended or terminated at any time by the Board of
Directors of the Corporation; provided, that (i) approval of
an amendment to the Plan by the shareholders of the
Corporation shall be required to the extent, if any, that
shareholder approval of such amendment is required by
applicable law, rule or regulation; and (ii) amendment or
termination of an award shall not, without the consent of a
recipient of an award, materially adversely affect the
rights of the recipient with respect to an outstanding
award. Notwithstanding clause (i) of the preceding sentence,
except for adjustments made pursuant to Section 4(c), the
option price for any outstanding option or base price of any
outstanding SAR granted under the Plan may not be decreased
after the date of grant, nor may any outstanding option or
SAR granted under the Plan be surrendered to the Corporation
as consideration for the grant of a new option or SAR with a
lower exercise or base price than the original option or
SAR, as the case may be, without shareholder approval of any
such action.

(b) Adjustment of Awards upon the Occurrence of Certain
Unusual or Nonrecurring Events: The Administrator shall have
authority to make adjustments to the terms and conditions of
awards in recognition of unusual or nonrecurring events
affecting the Corporation or any related entity, or the
financial statements of the Corporation or any related
entity, or of changes in applicable laws, regulations or
accounting principles, if the Administrator determines that
such adjustments are appropriate in order to prevent
dilution or enlargement of the benefits or potential
benefits intended to be made available under the Plan or
necessary or appropriate to comply with applicable laws,
rules or regulations.
(c) Cash Settlement: Notwithstanding any provision of the
Plan, an award or an award agreement to the contrary, the
Administrator may cause any award granted under the Plan to
be canceled in consideration of an alternative award or cash
payment of an equivalent cash value, as determined by the
Administrator, made to the holder of such canceled award.

17. RESTRICTIONS ON AWARDS AND SHARES

The Corporation may impose such restrictions on awards and
shares representing awards hereunder as it may deem
advisable, including without limitation restrictions under
the federal securities laws, the requirements of any stock
exchange or similar organization and any blue sky or state
securities laws applicable to such securities.
Notwithstanding any other Plan provision to the contrary,
the Corporation shall not be obligated to issue, deliver or
transfer shares of Common Stock under the Plan, make any
other distribution of benefits under the Plan, or take any
other action, unless such delivery, distribution or action
is in compliance with all applicable laws, rules and
regulations (including but not limited to the requirements
of the Securities Act). The Corporation may cause a
restrictive legend to be placed on any certificate issued
pursuant to an award hereunder in such form as may be
prescribed from time to time by applicable laws and
regulations or as may be advised by legal counsel.

18. CHANGE OF CONTROL

(a) Notwithstanding any other provision of the Plan to the
contrary, and unless an individual award agreement provides
otherwise, in the event of a change of control (as defined
in Section 18(c) herein):

(i) All options and SARs outstanding as of the date
of such change of control shall become fully exercisable,
whether or not then otherwise exercisable.

(ii) Any restrictions including but not limited to
the restriction period, performance period and/or
performance criteria applicable to any restricted award and
any performance award shall be deemed to have been met, and
such awards shall become fully vested, earned and payable to
the fullest extent of the original grant of the applicable
award.

(b) Notwithstanding the foregoing, in the event of a merger,
share exchange, reorganization or other business combination
affecting the Corporation or a related entity, the
Administrator may, in its sole and absolute discretion,
determine that any or all awards granted pursuant to the
Plan shall not vest or become exercisable on an accelerated
basis, if the Corporation or the surviving or acquiring
corporation, as the case may be, shall have taken such
action, including but not limited to the assumption of
awards granted under the Plan or the grant of substitute
awards (in either case, with substantially similar terms or
equivalent economic benefits as awards granted under the
Plan), as in the opinion of the Administrator is equitable
or appropriate to protect the rights and interests of
participants under the Plan. For the purposes herein, if the
Committee is acting as the Administrator authorized to make
the determinations provided for in this Section 18(b), the
Committee shall be appointed by the Board of Directors, two-
thirds of the members of which shall have been directors of
the Corporation prior to the merger, share exchange,
reorganization or other business combinations affecting the
Corporation or a related entity.

(c) For the purposes herein, a "CHANGE OF CONTROL" shall be
deemed to have occurred on the earliest of the following
dates:

(i) The date any entity or person shall have become
the beneficial owner of, or shall have obtained
voting control over, fifty-one percent (51%) or
more of the outstanding Common Stock of the Corporation;

(ii) The date the shareholders of the Corporation
approve a definitive agreement (A) to merge or consolidate
the Corporation with or into another corporation or other
business entity (each, a "corporation"), in which the
Corporation is not the continuing or surviving corporation
or pursuant to which any shares of Common Stock of the
Corporation would be converted into cash, securities or
other property of another corporation, other than a merger
or consolidation of the Corporation in which holders of
Common Stock immediately prior to the merger or
consolidation have the same proportionate ownership of
Common Stock of the surviving corporation immediately after
the merger as immediately before, or (B) to sell or
otherwise dispose of all or substantially all the assets of
the Corporation; or

(iii) The date there shall have been a change in a
majority of the Board of Directors of the Corporation within
a 12-month period unless the nomination for election by the
Corporation's shareholders of each new director was approved
by the vote of two-thirds of the directors then still in
office who were in office at the beginning of the 12-month
period.
(For purposes herein, the term "PERSON" shall mean any
individual, corporation, partnership, group, association or
other person, as such term is defined in Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act, other than the
Corporation, a subsidiary of the Corporation or any
employee benefit plan(s) sponsored or maintained by the
Corporation or any subsidiary thereof, and the term
"BENEFICIAL OWNER" shall have the meaning given the term in
Rule 13d-3 under the Exchange Act.)

19. APPLICABLE LAW

The Plan shall be governed by and construed in accordance
with the laws of the State of Delaware, without regard to
the conflict of laws provisions of any state.

20. SHAREHOLDER APPROVAL

The Plan is subject to approval by the shareholders of the
Corporation. Awards granted prior to such shareholder
approval shall be conditioned upon and shall be effective
only upon approval of the Plan by such shareholders on or
before such date.

21. DEFERRALS

The Administrator may permit or require a participant to
defer receipt of the delivery of shares of Common Stock or
other benefit that would otherwise be due pursuant to the
exercise, vesting or earning of an award. If any such
deferral is required or permitted, the Administrator shall,
in its discretion, establish rules and procedures for such
deferrals.

22. BENEFICIARY DESIGNATION

The Administrator may permit a participant to designate in
writing a person or persons as beneficiary, which
beneficiary shall be entitled to receive settlement of
awards (if any) to which the participant is otherwise
entitled in the event of death. In the absence of such
designation by a participant, and in the event of the
participant's death, the estate of the participant shall be
treated as beneficiary for purposes of the Plan, unless the
Administrator determines otherwise. The Administrator shall
have sole discretion to approve and interpret the form or
forms of such beneficiary designation.

23. GENDER AND NUMBER

Where the context admits, words in any gender shall include
any other gender, words in the singular shall include the
plural and the plural shall include the singular.

24. SUCCESSORS AND ASSIGNS

The Plan shall be binding upon the Corporation, its
successors and assigns, and participants, their executors,
administrators and permitted transferees and beneficiaries.

25. SEVERABILITY

If any provision of the Plan shall be held illegal or
invalid for any reason, such illegality or invalidity shall
not affect the remaining parts of the Plan, and the Plan
shall be construed and enforced as if the illegal or invalid
provision had not been included.

26. CERTAIN DEFINITIONS

In addition to other terms defined in the Plan, the
following terms shall have the meaning indicated:

(a) "AWARD AGREEMENT" means any written agreement or
agreements between the Corporation and the recipient of an
award pursuant to the Plan relating to the terms, conditions
and restrictions of an award conferred herein. Such award
agreement may also state such other terms, conditions and
restrictions, including but not limited to terms, conditions
and restrictions applicable to shares subject to an award,
as may be established by the Administrator.

(b) "COVERED EMPLOYEE" shall have the meaning given
the term in Section 162(m) of the Code and the regulations
thereunder.

(c) "DISABILITY" shall have the meaning ascribed to
the term in any employment agreement, consulting agreement
or other similar agreement, if any, to which the participant
is a party, or, if no such agreement applies, "disability"
shall mean the inability to engage in any substantial
gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to
result in death, or which has lasted or can be expected to
last for a continuous period of not less than 12 months.

(d) "DISPLACEMENT" shall have the meaning ascribed
to the term in any employment agreement, consulting
agreement or other similar agreement, if any, to which the
participant is a party, or, if no such agreement applies,
"displacement" shall mean the termination of the
participant's employment or service due to the elimination
of the participant's job or position without fault on the
part of the participant.

(e) "PARENT" or "PARENT CORPORATION" shall mean any
corporation (other than the Corporation) in an unbroken
chain of corporations ending with the Corporation if each
corporation other than the Corporation owns stock possessing
50% or more of the total combined voting power of all
classes of stock in another corporation in the chain.

(f) "PREDECESSOR" or "PREDECESSOR CORPORATION" means
a corporation which was a party to a transaction described
in Section 424(a) of the Code (or which would be so
described if a substitution or assumption under Section
424(a) had occurred) with the Corporation, or a corporation
which is a parent or subsidiary of the Corporation, or a
predecessor of any such corporation.

(g) "RELATED CORPORATION" means any parent,
subsidiary or predecessor of the Corporation, and "related
entity" means any related corporation or any other business
entity which is an affiliate controlled by the Corporation;
provided, however, that the term "related entity" shall be
construed in a manner in accordance with the registration
provisions under applicable federal securities laws.

(h) "RESTRICTED STOCK" shall mean shares of Common
Stock which are subject to restricted awards payable in
shares, the vesting of which is subject to restrictions set
forth in the Plan and the applicable award agreement.

(i) "RETIREMENT" shall have the meaning ascribed in
any employment agreement, consulting agreement or other
similar agreement, if any, to which the participant is a
party, or, if no such agreement applies, "retirement" shall
mean retirement in accordance with the retirement policies
and procedures established by the Corporation.

(j) "SUBSIDIARY" or "SUBSIDIARY CORPORATION" means
any corporation (other than the Corporation) in an unbroken
chain of corporations beginning with the Corporation if each
corporation other than the last corporation in the unbroken
chain owns stock possessing 50% or more of the total
combined voting power of all classes of stock in another
corporation in the chain.EXHIBIT 10.1

January 31, 2002

                              CONSULTING AGREEMENT

This Agreement (this "Agreement") is entered into as of January 2, 2003, by and
between Capco Energy, Inc. ("Company") having as its principal place of business
located at 1401 Blake Street, Denver Colorado 80202 and Lawrence I. Kravetz an
individual , having as his principal place of business located at 7825 Fay
Avenue La Jolla , California 92037, ("Consultant").

The parties hereto agree as follows:

1. ENGAGEMENT. Company hereby engages Consultant and Consultant hereby agrees to
hold itself available to render, and to render at the request of Company,
independent financial, advisory and consulting services for Company and its
affiliates, to the best of its ability, upon the terms and conditions
hereinafter set forth.

2. TERM. The term of this Agreement shall begin as of the date of this Agreement
and shall terminate six (6) months from the date first entered above unless
terminated or extended by the parties named above by written notice sent to the
address identified in Paragraph 10 below.

3. COMPENSATION. As compensation for all services rendered by Consultant under
this Agreement, Company shall pay Consultant the following sums:

                  During the term of this Agreement Company shall (1) pay to
         Consultant $2,500 upon signing this agreement, (2) pay to consultant
         the sum of $2,500 per month thereafter commencing February 1, 2003 and
         continuing until this agreement expires. All such compensation shall be
         payable without deduction. In addition to the cash Company shall grant
         to consultant an Option to purchase 300,0000 common shares of the
         company's stock at $0.81 per share said option agreement to be valid
         for three (3) years from the date this agreement is executed by the
         parties. Company agrees to register said shares as S-8 shares
         immediately upon execution of the stock option agreement by Consultant.
         Company shall be responsible for drafting the option agreement. Said
         agreement shall be completed and presented to Consultant no later than
         5:00 P.M. Pacific Time on January 15, 2003.

4. DUTIES. Consultant shall hold itself available to render, and shall render at
the request of Company from time to time, consulting and strategic planning for
the Company. Consultant shall render such services conscientiously and shall
devote its efforts and abilities thereto, at such times during the term hereof,
and in such manner, as Company and Company shall mutually agree, it being
acknowledged that Consultant's services shall be non-exclusive and performed at
such places and at such times as are reasonably convenient to Consultant.
Consultant shall observe all policies and directives promulgated from time to
time by Company's Board of Directors or Officers.

                                       10
<PAGE>

5. EXPENSES. Consultant shall be reimbursed by Company for all reasonable
business expenses which are deductible by Company for U.S. Federal income tax
purposes and which were incurred by Consultant during the performance of its
services hereunder; provided, any such reimbursement in excess of $1,000 in any
month, shall require Company's prior written approval. Company's obligation to
reimburse Consultant pursuant to this subparagraph shall be subject to the
presentation to Company by Consultant of an itemized account of such
expenditures, together with supporting vouchers, in accordance with Company's
policies as in effect from time to time.

6. INDEPENDENT CONTRACTOR. It is expressly agreed that Consultant is acting as
an independent contractor in performing its services hereunder.

7. DISCLOSURE OF INFORMATION.
Consultant shall not disclose or appropriate to its own use, or to the use of
any third party, at any time during or subsequent to the term of this Agreement,
any secret or confidential information of Company or any of Company's affiliates
or subsidiaries of which Consultant has been or hereafter becomes informed,
whether or not developed by Consultant, including, but not limited to,
information pertaining to customer lists, services, methods, processes, prices,
profits, contract terms or operating procedures, except as required in
connection with Consultant's performance of this Agreement, or as required by a
governmental authority. Company shall have the right to obtain injunctive
relief, without bond, for violation of the terms of this paragraph and the terms
of this paragraph shall survive the term of this Agreement.

8. ASSIGNMENT. This Agreement is a personal one, being entered into in reliance
upon and in consideration of the skill and qualifications of Consultant.
Consultant shall therefore not voluntarily or by operation of law assign or
otherwise transfer the obligations incurred on its part pursuant to the terms of
this Agreement without the prior written consent of Company. Any attempted
assignment or transfer by Consultant of its obligation without such consent
shall be wholly void.

9. MODIFICATION OF AGREEMENT. This Agreement may be modified by the parties
hereto only by a written supplemental agreement executed by both parties.

10. NOTICE. Any notice required or permitted to be given hereunder shall be
sufficient if in writing, and if sent by registered or certified mail, postage
prepaid, addressed as follows:

IF TO CONSULTANT:                           IF TO COMPANY:
----------------                            -------------
Lawrence I. Kravetz                         Capco Energy, Inc.
7825 Fey Avenue                             1401 Blake Street
La Jolla, CA 92037                          Denver Colorado 80202
Attention: Lawrence I. Kravetz              Attention: Ilyas Chaudhary

or to such other address as the parties hereto may specify, in writing, from
time to time.

                                       11
<PAGE>

11. WAIVER OF BREACH. The waiver by either party of any breach of any provision
of this Agreement shall not operate or be construed as a waiver of any
subsequent breach.

12. TITLES. The titles of the Sections herein are for convenience of reference
only and are not to be considered in construing this Agreement.

13. GOVERNING LAW. This Agreement has been executed and delivered in the State
of California, and its interpretation, validity, and performance shall be
construed and enforced in accordance with the laws of such State without
reference to its statutes regarding conflict of laws.

14. ENTIRE AGREEMENT. This Agreement contains the entire contract of the parties
with respect to the subject matter hereof and supercedes all agreements and
understandings between the parties concerning the subject matter hereof.

Executed, as of the date first above written.

Lawrence I. Kravetz                            CAPCO ENERGY

/s/ Lawrence I. Kravetz               By     /s/ Ilyas Chaudhary
-----------------------                      -------------------
Lawrence I. Kravetz                          Ilyas Chaudhary
                                             President

                                       12

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