Document:

EXHIBIT 10.3

                              SMARTDISK CORPORATION

                        1999 INCENTIVE COMPENSATION PLAN

                   (AMENDED AND RESTATED AS OF MARCH 24, 2000)

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                              SMARTDISK CORPORATION

                        1999 INCENTIVE COMPENSATION PLAN

1.  Purpose....................................................................1
2.  Definitions................................................................1
3.  Administration.............................................................4
    (a)      Authority of the Committee........................................4
    (b)      Manner of Exercise of Committee Authority.........................5
    (c)      Limitation of Liability...........................................5
4.  Stock Subject to Plan......................................................5
    (a)      Limitation on Overall Number of Shares Subject to Awards..........5
    (b)      Application of Limitations........................................6
5.  Eligibility; Per-Person Award Limitations..................................6
6.  Specific Terms of Awards...................................................6
    (a)      General...........................................................6
    (b)      Options...........................................................6
    (c)      Stock Appreciation Rights.........................................9
    (d)      Restricted Stock..................................................9
    (e)      Deferred Stock...................................................10
    (f)      Bonus Stock and Awards in Lieu of Obligations....................11
    (g)      Dividend Equivalents.............................................12
    (h)      Other Stock-Based Awards.........................................12
7.  Certain Provisions Applicable to Awards...................................12
    (a)      Stand-Alone, Additional, Tandem, and Substitute Awards...........12
    (b)      Term of Awards...................................................13
    (c)      Form and Timing of Payment Under Awards; Deferrals...............13
    (d)      Exemptions from Section 16(b) Liability..........................13
8.  Performance and Annual Incentive Awards...................................13
    (a)      Performance Conditions...........................................13
    (b)      Performance Awards Granted to Designated Covered Employees.......14
    (c)      Annual Incentive Awards Granted to Designated
                Covered Employees.............................................15
    (d)      Written Determinations...........................................16
    (e)      Status of Section 8(b) and Section 8(c) Awards Under Code
                Section 162(m)................................................17
9.  Change in Control.........................................................17
    (a)      Effect of "Change in Control."...................................17
    (b)      Definition of "Change in Control.................................18
    (c)      Definition of "Change in Control Price.".........................19
10. General Provisions........................................................19
    (A)      Compliance With Legal and Other Requirements.....................19
    (b)      Limits on Transferability; Beneficiaries.........................19
    (c)      Adjustments......................................................20
    (d)      Taxes............................................................21

                                      (i)

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    (e)      Changes to the Plan and Awards...................................21
    (f)      Limitation on Rights Conferred Under Plan........................21
    (g)      Unfunded Status of Awards; Creation of Trusts....................22
    (h)      Nonexclusivity of the Plan.......................................22
    (i)      Payments in the Event of Forfeitures; Fractional Shares..........22
    (j)      Governing Law....................................................22
    (k)      Plan Effective Date and Stockholder Approval;
                Termination of Plan...........................................22

                                      (ii)

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                              SMARTDISK CORPORATION

                        1999 INCENTIVE COMPENSATION PLAN

         1. PURPOSE. The purpose of this 1999 Incentive Compensation Plan (the
"Plan") is to assist SMARTDISK CORPORATION (the "Company"), its parent
corporation and its subsidiaries in attracting, motivating, retaining and
rewarding employees, officers, Directors and independent contractors by enabling
such persons to acquire or increase a proprietary interest in the Company in
order to strengthen the mutuality of interests between such persons and the
Company's stockholders, and providing such persons with annual and long term
performance incentives to expend their maximum efforts in the creation of
shareholder value. The Plan is also intended to qualify certain compensation
awarded under the Plan for tax deductibility under Section 162(m) of the Code
(as hereafter defined) to the extent deemed appropriate by the Committee (or any
successor committee) of the Board of Directors of the Company.

         2. DEFINITIONS. For purposes of the Plan, the following terms shall be
defined as set forth below, in addition to such terms defined in Section 1
hereof.

                  (a) "Annual Incentive Award" means a conditional right granted
to a Participant under Section 8(c) hereof to receive a cash payment, Stock or
other Award, unless otherwise determined by the Committee, after the end of a
specified fiscal year.

                  (b) "Award" means any Option, SAR (including Limited SAR),
Restricted Stock, Deferred Stock, Stock granted as a bonus or in lieu of another
award, Dividend Equivalent, Other Stock-Based Award, Performance Award or Annual
Incentive Award, together with any other right or interest, granted to a
Participant under the Plan.

                  (c) "Beneficiary" means the person, persons, trust or trusts
which have been designated by a Participant in his or her most recent written
beneficiary designation filed with the Committee to receive the benefits
specified under the Plan upon such Participant's death or to which Awards or
other rights are transferred if and to the extent permitted under Section 10(b)
hereof. If, upon a Participant's death, there is no designated Beneficiary or
surviving designated Beneficiary, then the term Beneficiary means the person,
persons, trust or trusts entitled by will or the laws of descent and
distribution to receive such benefits.

                  (d) "Beneficial Owner", "Beneficially Owning" and "Beneficial
Ownership" shall have the meanings ascribed to such terms in Rule 13d-3 under
the Exchange Act and any successor to such Rule.

                  (e) "Board" means the Company's Board of Directors.

                  (f) "Change in Control" means Change in Control as defined
with related terms in Section 9 of the Plan.

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                  (g) "Change in Control Price" means the amount calculated in
accordance with Section 9(c) of the Plan.

                  (h) "Code" means the Internal Revenue Code of 1986, as amended
from time to time, including regulations thereunder and successor provisions and
regulations thereto.

                  (i) "Committee" means a committee designated by the Board to
administer the Plan; provided, however, that the Committee shall consist of at
least two directors and, after the Publicly-Traded Date, each member of the
Committee shall be (i) a "non-employee director" within the meaning of Rule
16b-3 under the Exchange Act, unless administration of the Plan by "non-employee
directors" is not then required in order for exemptions under Rule 16b-3 to
apply to transactions under the Plan, and (ii) an "outside director" within the
meaning of Section 162(m) of the Code, unless administration of the Plan by
"outside directors" is not then required in order to qualify for tax
deductibility under Section 162(m) of the Code.

                  (j) "Corporate Transaction" means a Corporate Transaction as
defined in Section 9(b)(i) of the Plan.

                  (k) "Covered Employee" means an Eligible Person who is a
Covered Employee as specified in Section 8(e) of the Plan.

                  (l) "Deferred Stock" means a right, granted to a Participant
under Section 6(e) hereof, to receive Stock, cash or a combination thereof at
the end of a specified deferral period.

                  (m) "Director" means a member of the Board.

                  (n) "Disability" means a permanent and total disability
(within the meaning of Section 22(e) of the Code), as determined by a medical
doctor satisfactory to the Committee.

                  (o) "Dividend Equivalent" means a right, granted to a
Participant under Section 6(g) hereof, to receive cash, Stock, other Awards or
other property equal in value to dividends paid with respect to a specified
number of shares of Stock, or other periodic payments.

                  (p) "Effective Date" means the effective date of the Plan,
which shall be July 21, 1999.

                  (q) "Eligible Person" means each Executive Officer of the
Company (as defined under the Exchange Act) and other officers, Directors and
employees of the Company, of any Parent Corporation or of any Subsidiary, and
independent contractors with the Company, any Parent Corporation or any
Subsidiary. The foregoing notwithstanding, only employees of the Company, any
Parent Corporation or any Subsidiary shall be Eligible Persons for purposes of
receiving any Incentive Stock Options. An employee on leave of absence may be
considered as still in the employ of the Company, a Parent Corporation or a
Subsidiary for purposes of eligibility for participation in the Plan.

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                  (r) "Exchange Act" means the Securities Exchange Act of 1934,
as amended from time to time, including rules thereunder and successor
provisions and rules thereto.

                  (s) "Executive Officer" means an executive officer of the
Company as defined under the Exchange Act.

                  (t) "Fair Market Value" means the fair market value of Stock,
Awards or other property as determined by the Committee or the Board, or under
procedures established by the Committee or the Board. Unless otherwise
determined by the Committee or the Board, the Fair Market Value of Stock as of
any reference date shall be the closing sale price per share on the business day
immediately preceding the date of reference, reported on a consolidated basis
for stock listed on the principal stock exchange or market on which Stock is
traded on the date as of which such value is being determined or, if there is no
sale on that date, then on the last previous day on which a sale was reported.

                  (u) "Incentive Stock Option" or "ISO" means any Option
intended to be designated as an incentive stock option within the meaning of
Section 422 of the Code or any successor provision thereto.

                  (v) "Incumbent Board" means the Incumbent Board as defined in
Section 9(b)(iii) of the Plan.

                  (w) "Limited SAR" means a right granted to a Participant under
Section 6(c) hereof.

                  (x) "Option" means a right granted to a Participant under
Section 6(b) hereof, to purchase Stock or other Awards at a specified price
during specified time periods.

                  (y) "Other Stock-Based Awards" means Awards granted to a
Participant under Section 6(h) hereof.

                  (z) "Parent Corporation" means any corporation (other than the
Company) in an unbroken chain of corporations ending with the Company, if each
of the corporations in the chain (other than the Company) owns stock possessing
50% or more of the combined voting power of all classes of stock in one of the
other corporations in the chain.

                  (aa) "Participant" means a person who has been granted an
Award under the Plan which remains outstanding, including a person who is no
longer an Eligible Person.

                  (bb) "Performance Award" means a right, granted to an Eligible
Person under Section 8 hereof, to receive Awards based upon performance criteria
specified by the Committee or the Board.

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

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                  (dd) "Publicly-Traded Date" means the date on which the Stock
of the Company, or the stock of any successor company into which the Stock is
substituted or exchanged, is registered pursuant to Section 12(b) or 12(g) of
the Securities Exchange Act.

                  (ee) "Restricted Stock" means Stock granted to a Participant
under Section 6(d) hereof, that is subject to certain restrictions and to a risk
of forfeiture.

                  (ff) "Retire" or "Retirement" means termination of service as
a Director after having attained at least age 62 and having served as a Director
for at least 5 years, other than by reason of death, Disability or the
Director's willful misconduct or negligence.

                  (gg) "Rule 16b-3" and "Rule 16a-1(c)(3)" means Rule 16b-3 and
Rule 16a-1(c)(3), as from time to time in effect and applicable to the Plan and
Participants, promulgated by the Securities and Exchange Commission under
Section 16 of the Exchange Act

                  (hh) "Stock" means the Company's Common Stock, and such other
securities as may be substituted (or resubstituted) for Stock pursuant to
Section 10(c) hereof.

                  (ii) "Stock Appreciation Rights" or "SAR" means a right
granted to a Participant under Section 6(c) hereof.

                  (jj) "Subsidiary" means any corporation or other entity in
which the Company has a direct or indirect ownership interest of 50% or more of
the total combined voting power of the then outstanding securities or interests
of such corporation or other entity entitled to vote generally in the election
of directors or in which the Company has the right to receive 50% or more of the
distribution of profits or 50% or more of the assets on liquidation or
dissolution.

                  3. ADMINISTRATION.

                  (a) AUTHORITY OF THE COMMITTEE. The Plan shall be administered
by the Committee; provided, however, that except as otherwise expressly provided
in this Plan or in order to comply with Code Section 162(m) or Rule 16b-3 under
the Exchange Act, the Board may exercise any power or authority granted to the
Committee under this Plan. The Committee or the Board shall have full and final
authority, in each case subject to and consistent with the provisions of the
Plan, to select Eligible Persons to become Participants, grant Awards, determine
the type, number and other terms and conditions of, and all other matters
relating to, Awards, prescribe Award agreements (which need not be identical for
each Participant) and rules and regulations for the administration of the Plan,
construe and interpret the Plan and Award agreements and correct defects, supply
omissions or reconcile inconsistencies therein, and to make all other decisions
and determinations as the Committee or the Board may deem necessary or advisable
for the administration of the Plan. In exercising any discretion granted to the
Committee or the Board under the Plan or pursuant to any Award, the Committee or
the Board shall not be required to follow past practices, act in a manner
consistent with past practices, or treat any Eligible Person in a manner
consistent with the treatment of other Eligible Persons.

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                  (b) MANNER OF EXERCISE OF COMMITTEE AUTHORITY. The Committee,
and not the Board, shall exercise sole and exclusive discretion on any matter
relating to a Participant then subject to Section 16 of the Exchange Act with
respect to the Company to the extent necessary in order that transactions by
such Participant shall be exempt under Rule 16b-3 under the Exchange Act. Any
action of the Committee or the Board shall be final, conclusive and binding on
all persons, including the Company, its subsidiaries, Participants,
Beneficiaries, transferees under Section 10(b) hereof or other persons claiming
rights from or through a Participant, and stockholders. The express grant of any
specific power to the Committee or the Board, and the taking of any action by
the Committee or the Board, shall not be construed as limiting any power or
authority of the Committee or the Board. The Committee or the Board may delegate
to officers or managers of the Company or any subsidiary, or committees thereof,
the authority, subject to such terms as the Committee or the Board shall
determine, (i) to perform administrative functions, (ii) with respect to
Participants not subject to Section 16 of the Exchange Act, to perform such
other functions as the Committee or the Board may determine, and (iii) with
respect to Participants subject to Section 16, to perform such other functions
of the Committee or the Board as the Committee or the Board may determine to the
extent performance of such functions will not result in the loss of an exemption
under Rule 16b-3 otherwise available for transactions by such persons, in each
case to the extent permitted under applicable law and subject to the
requirements set forth in Section 8(d). The Committee or the Board may appoint
agents to assist it in administering the Plan.

                  (c) LIMITATION OF LIABILITY. The Committee and the Board, and
each member thereof, shall be entitled to, in good faith, rely or act upon any
report or other information furnished to him or her by any executive officer,
other officer or employee of the Company, a Parent Corporation or a Subsidiary,
the Company's independent auditors, consultants or any other agents assisting in
the administration of the Plan. Members of the Committee and the Board, and any
officer or employee of the Company, a Parent Corporation or a Subsidiary acting
at the direction or on behalf of the Committee or the Board, shall not be
personally liable for any action or determination taken or made in good faith
with respect to the Plan, and shall, to the extent permitted by law, be fully
indemnified and protected by the Company with respect to any such action or
determination.

         4. STOCK SUBJECT TO PLAN.

                  (a) LIMITATION ON OVERALL NUMBER OF SHARES SUBJECT TO AWARDS.
Subject to adjustment as provided in Section 10(c) hereof, the total number of
shares of Stock reserved and available for delivery in connection with Awards
under the Plan shall be the sum of (i). Three Million (3,000,000) shares, which
is comprised of (A) the Two Million Five Hundred Thousand (2,500,000) shares
reserved under the plan as originally adopted and (B) an additional Five Hundred
Thousand (500,000) shares authorized by the Board on March 24, 2000, subject to
stockholder approval at the 2000 Annual Meeting, plus (ii) the number of shares
with respect to Awards previously granted under the Plan that terminate without
being exercised, expire, are forfeited or canceled, and the number of shares of
Stock that are surrendered in payment of any Awards or any tax withholding with
regard thereto, plus (iii) an annual increase to be added on the first trading
day of January each year, commencing 2001 and continuing through 2005, equal to
three percent (3%) of the total number of shares of common stock outstanding on
the last trading day in December of the immediately preceding calendar year, as
authorized by the Board on March 24, 2000, subject to stockholder approval at
the 2000 Annual Meeting. Any shares of Stock delivered under the Plan may
consist, in whole or in part, of authorized and unissued shares or treasury
shares. Subject to adjustment as provided in Section 10(c) hereof, in no event
shall the aggregate number of shares of Stock which may be issued pursuant to
ISOs exceed Five Hundred Thousand (500,000) shares.

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                  (b) APPLICATION OF LIMITATIONS. The limitation contained in
Section 4(a) shall apply not only to Awards that are settleable by the delivery
of shares of Stock but also to Awards relating to shares of Stock but settleable
only in cash (such as cash-only SARs). The Committee or the Board may adopt
reasonable counting procedures to ensure appropriate counting, avoid double
counting (as, for example, in the case of tandem or substitute awards) and make
adjustments if the number of shares of Stock actually delivered differs from the
number of shares previously counted in connection with an Award.

         5. ELIGIBILITY; PER-PERSON AWARD LIMITATIONS. Awards may be granted
under the Plan only to Eligible Persons. In each fiscal year during any part of
which the Plan is in effect, an Eligible Person may not be granted Awards
relating to more than One Hundred Thousand (100,000) shares of Stock, subject to
adjustment as provided in Section 10(c), under each of Sections 6(b), 6(c),
6(d), 6(e), 6(f), 6(g), 6(h), 8(b) and 8(c). In addition, the maximum amount
that may be earned as an Annual Incentive Award or other cash Award in any
fiscal year by any one Participant shall be $10,000,000, and the maximum amount
that may be earned as a Performance Award or other cash Award in respect of a
performance period by any one Participant shall be $20,000,000.

         6. SPECIFIC TERMS OF AWARDS6.SpecificTermsofAwards.

                  (a) GENERAL. Awards may be granted on the terms and conditions
set forth in this Section 6. In addition, the Committee or the Board may impose
on any Award or the exercise thereof, at the date of grant or thereafter
(subject to Section 10(e)), such additional terms and conditions, not
inconsistent with the provisions of the Plan, as the Committee or the Board
shall determine, including terms requiring forfeiture of Awards in the event of
termination of employment by the Participant and terms permitting a Participant
to make elections relating to his or her Award. The Committee or the Board shall
retain full power and discretion to accelerate, waive or modify, at any time,
any term or condition of an Award that is not mandatory under the Plan. Except
in cases in which the Committee or the Board is authorized to require other
forms of consideration under the Plan, or to the extent other forms of
consideration must be paid to satisfy the requirements of Florida law, no
consideration other than services may be required for the grant (but not the
exercise) of any Award.

                  (b) OPTIONS. The Committee and the Board each is authorized to
grant Options to Participants on the following terms and conditions:

                           (i) EXERCISE PRICE. The exercise price per share of
                  Stock purchasable under an Option shall be determined by the
                  Committee or the Board, provided that such exercise price
                  shall not, in the case of Incentive Stock Options, be less
                  than 100% of the Fair Market Value of the Stock on the date of
                  grant of the Option and shall not, in any event, be less than
                  the par value of a share of Stock on the date of grant of such
                  Option. If an employee owns or is deemed to own (by reason of
                  the attribution rules applicable under Section 424(d) of the
                  Code) more than 10% of the combined voting power of all
                  classes of stock of the Company or any Parent Corporation and
                  an Incentive Stock Option is granted to such

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                  employee, the option price of such Incentive Stock Option (to
                  the extent required by the Code at the time of grant) shall be
                  no less than 110% of the Fair Market Value of the Stock on the
                  date such Incentive Stock Option is granted.

                           (ii) TIME AND METHOD OF EXERCISE. The Committee or
                  the Board shall determine the time or times at which or the
                  circumstances under which an Option may be exercised in whole
                  or in part (including based on achievement of performance
                  goals and/or future service requirements), the time or times
                  at which Options shall cease to be or become exercisable
                  following termination of employment or upon other conditions,
                  the methods by which such exercise price may be paid or deemed
                  to be paid (including in the discretion of the Committee or
                  the Board a cashless exercise procedure), the form of such
                  payment, including, without limitation, cash, Stock, other
                  Awards or awards granted under other plans of the Company or
                  any subsidiary, or other property (including notes or other
                  contractual obligations of Participants to make payment on a
                  deferred basis), and the methods by or forms in which Stock
                  will be delivered or deemed to be delivered to Participants.

                           (III) ISOS. The terms of any ISO granted under the
                  Plan shall comply in all respects with the provisions of
                  Section 422 of the Code. Anything in the Plan to the contrary
                  notwithstanding, no term of the Plan relating to ISOs
                  (including any SAR in tandem therewith) shall be interpreted,
                  amended or altered, nor shall any discretion or authority
                  granted under the Plan be exercised, so as to disqualify
                  either the Plan or any ISO under Section 422 of the Code,
                  unless the Participant has first requested the change that
                  will result in such disqualification. Thus, if and to the
                  extent required to comply with Section 422 of the Code,
                  Options granted as Incentive Stock Options shall be subject to
                  the following special terms and conditions:

                                    (A) the Option shall not be exercisable more
                  than ten years after the date such Incentive Stock Option is
                  granted; provided, however, that if a Participant owns or is
                  deemed to own (by reason of the attribution rules of Section
                  424(d) of the Code) more than 10% of the combined voting power
                  of all classes of stock of the Company or any Parent
                  Corporation and the Incentive Stock Option is granted to such
                  Participant, the term of the Incentive Stock Option shall be
                  (to the extent required by the Code at the time of the grant)
                  for no more than five years from the date of grant; and

                                    (B) The aggregate Fair Market Value
                  (determined as of the date the Incentive Stock Option is
                  granted) of the shares of stock with respect to which
                  Incentive Stock Options granted under the Plan and all other
                  option plans of the Company or its Parent Corporation during
                  any calendar year exercisable for the first time by the
                  Participant during any calendar year shall not (to the extent
                  required by the Code at the time of the grant) exceed
                  $100,000.

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                           (IV) FORMULA GRANTS OF OPTIONS TO NON-EMPLOYEE
                  DIRECTORS. Subject to adjustment as provided in the first
                  sentence of Section 10(c) hereof, each non-employee Director
                  shall receive (A) on the date of his or her appointment as a
                  non-employee Director of the Company, an Option to purchase
                  15,000 shares of Stock; (B) on the date of his or her
                  appointment to a committee of the Board, an Option to purchase
                  500 shares of Stock; (C) on the date of his or her election as
                  a chairman of a committee of the Board, an Option to purchase
                  500 shares of Stock; (D) each year, on January 1, an Option to
                  purchase 7,500 shares of Stock (pro rated for non-employee
                  Directors who are elected during that year but subsequent to
                  January 1, based upon the portion of the year they serve as
                  non-employee Directors), (E) for each committee assignment on
                  each January 1, an Option to purchase 2,000 shares of Stock
                  (pro rated for non-employee Directors who are elected during
                  that year but subsequent to January 1, based upon the portion
                  of the year they serve as non-employee Directors), and (F) for
                  each committee chairmanship on January 1, an Option to
                  purchase 1,000 shares of Stock (pro rated for non-employee
                  Directors who are elected during that year but subsequent to
                  January 1, based upon the portion of the year they serve as
                  non-employee Directors). Options granted to non-employee
                  Directors pursuant to this paragraph (iv) shall be for a term
                  of 10 years and shall become exercisable at the rate of 2% per
                  month commencing on the first month immediately following the
                  month in which the Option is granted; provided, however, that
                  the Options shall be fully exercisable in the event that,
                  while serving as a non-employee Director, the non-employee
                  Director dies, suffers a Disability, Retires or in the event
                  of a Change in Control. The per share exercise price of all
                  Options granted to non-employee Directors pursuant to this
                  paragraph (iv) shall be equal to the Fair Market Value of a
                  share of Stock on the last trading day immediately preceding
                  the January 1 on which the Option is granted. Unless otherwise
                  extended in the sole of the discretion of the Committee, the
                  unexercised portion of any Option granted pursuant to this
                  paragraph (iv) shall become null and void (V) three months
                  after the date on which such non-employee Director ceases to
                  be a non-employee Director of the Company for any reason other
                  than the Director's willful misconduct or negligence,
                  Disability, death or Retirement, (W) immediately in the event
                  of the non-employee Director's willful misconduct or
                  negligence, (X) one year after the non-employee Director
                  ceases to be a non-employee Director by reason of his
                  Disability, (Y) at the expiration of its original term, if the
                  non-employee Director ceases to be a non-employee Director by
                  reason of his Retirement, and (Z) twelve months after the date
                  of the non-employee Director's death in the event that such
                  death occurs prior to the time the Option otherwise would
                  become null and void pursuant to this sentence.
                  Notwithstanding the foregoing, with respect to those
                  individuals who are non-employee Directors as of the Effective
                  Date of this Plan, this paragraph (iv) shall apply on or after
                  January 1, 2001. The option grants made to a non-employee
                  Director pursuant to this paragraph (iv) shall not preclude
                  the grant of other Awards to such non-employee Director under
                  this Plan.

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                  (c) STOCK APPRECIATION RIGHTS. The Committee and the Board
each is authorized to grant SAR's to Participants on the following terms and
conditions:

                           (i) RIGHT TO PAYMENT. A SAR shall confer on the
                  Participant to whom it is granted a right to receive, upon
                  exercise thereof, the excess of (A) the Fair Market Value of
                  one share of stock on the date of exercise (or, in the case of
                  a "Limited SAR" that may be exercised only in the event of a
                  Change in Control, the Fair Market Value determined by
                  reference to the Change in Control Price, as defined under
                  Section 9(c) hereof), over (B) the grant price of the SAR as
                  determined by the Committee or the Board. The grant price of
                  an SAR shall not be less than the Fair Market Value of a share
                  of Stock on the date of grant except as provided under Section
                  7(a) hereof.

                           (ii) OTHER TERMS. The Committee or the Board shall
                  determine at the date of grant or thereafter, the time or
                  times at which and the circumstances under which a SAR may be
                  exercised in whole or in part (including based on achievement
                  of performance goals and/or future service requirements), the
                  time or times at which SARs shall cease to be or become
                  exercisable following termination of employment or upon other
                  conditions, the method of exercise, method of settlement, form
                  of consideration payable in settlement, method by or forms in
                  which Stock will be delivered or deemed to be delivered to
                  Participants, whether or not a SAR shall be in tandem or in
                  combination with any other Award, and any other terms and
                  conditions of any SAR. Limited SARs that may only be exercised
                  in connection with a Change in Control or other event as
                  specified by the Committee or the Board, may be granted on
                  such terms, not inconsistent with this Section 6(c), as the
                  Committee or the Board may determine. SARs and Limited SARs
                  may be either freestanding or in tandem with other Awards.

                  (d) RESTRICTED STOCK. The Committee and the Board each is
authorized to grant Restricted Stock to Participants on the following terms and
conditions:

                           (i) GRANT AND RESTRICTIONS. Restricted Stock shall be
                  subject to such restrictions on transferability, risk of
                  forfeiture and other restrictions, if any, as the Committee or
                  the Board may impose, which restrictions may lapse separately
                  or in combination at such times, under such circumstances
                  (including based on achievement of performance goals and/or
                  future service requirements), in such installments or
                  otherwise, as the Committee or the Board may determine at the
                  date of grant or thereafter. Except to the extent restricted
                  under the terms of the Plan and any Award agreement relating
                  to the Restricted Stock, a Participant granted Restricted
                  Stock shall have all of the rights of a stockholder, including
                  the right to vote the Restricted Stock and the right to
                  receive dividends thereon (subject to any mandatory
                  reinvestment or other requirement imposed by the Committee or
                  the Board). During the restricted period applicable to the
                  Restricted Stock, subject to Section 10(b) below, the
                  Restricted Stock may not be sold,

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<PAGE>

                  transferred, pledged, hypothecated, margined or otherwise
                  encumbered by the Participant.

                           (ii) FORFEITURE. Except as otherwise determined by
                  the Committee or the Board at the time of the Award, upon
                  termination of a Participant's employment during the
                  applicable restriction period, the Participant's Restricted
                  Stock that is at that time subject to restrictions shall be
                  forfeited and reacquired by the Company; provided that the
                  Committee or the Board may provide, by rule or regulation or
                  in any Award agreement, or may determine in any individual
                  case, that restrictions or forfeiture conditions relating to
                  Restricted Stock shall be waived in whole or in part in the
                  event of terminations resulting from specified causes, and the
                  Committee or the Board may in other cases waive in whole or in
                  part the forfeiture of Restricted Stock.

                           (iii) CERTIFICATES FOR STOCK. Restricted Stock
                  granted under the Plan may be evidenced in such manner as the
                  Committee or the Board shall determine. If certificates
                  representing Restricted Stock are registered in the name of
                  the Participant, the Committee or the Board may require that
                  such certificates bear an appropriate legend referring to the
                  terms, conditions and restrictions applicable to such
                  Restricted Stock, that the Company retain physical possession
                  of the certificates, and that the Participant deliver a stock
                  power to the Company, endorsed in blank, relating to the
                  Restricted Stock.

                           (iv) DIVIDENDS AND SPLITS. As a condition to the
                  grant of an Award of Restricted Stock, the Committee or the
                  Board may require that any cash dividends paid on a share of
                  Restricted Stock be automatically reinvested in additional
                  shares of Restricted Stock or applied to the purchase of
                  additional Awards under the Plan. Unless otherwise determined
                  by the Committee or the Board, Stock distributed in connection
                  with a Stock split or Stock dividend, and other property
                  distributed as a dividend, shall be subject to restrictions
                  and a risk of forfeiture to the same extent as the Restricted
                  Stock with respect to which such Stock or other property has
                  been distributed.

                  (e) DEFERRED STOCK. The Committee and the Board each is
authorized to grant Deferred Stock to Participants, which are rights to receive
Stock, cash, or a combination thereof at the end of a specified deferral period,
subject to the following terms and conditions:

                           (i) AWARD AND RESTRICTIONS. Satisfaction of an Award
                  of Deferred Stock shall occur upon expiration of the deferral
                  period specified for such Deferred Stock by the Committee or
                  the Board (or, if permitted by the Committee or the Board, as
                  elected by the Participant). In addition, Deferred Stock shall
                  be subject to such restrictions (which may include a risk of
                  forfeiture) as the Committee or the Board may impose, if any,
                  which restrictions may lapse at the expiration of the deferral
                  period or at earlier specified times (including based on
                  achievement of performance goals and/or future service
                  requirements), separately

                                       10
<PAGE>

                  or in combination, in installments or otherwise, as the
                  Committee or the Board may determine. Deferred Stock may be
                  satisfied by delivery of Stock, cash equal to the Fair Market
                  Value of the specified number of shares of Stock covered by
                  the Deferred Stock, or a combination thereof, as determined by
                  the Committee or the Board at the date of grant or thereafter.
                  Prior to satisfaction of an Award of Deferred Stock, an Award
                  of Deferred Stock carries no voting or dividend or other
                  rights associated with share ownership.

                           (ii) FORFEITURE. Except as otherwise determined by
                  the Committee or the Board, upon termination of a
                  Participant's employment during the applicable deferral period
                  thereof to which forfeiture conditions apply (as provided in
                  the Award agreement evidencing the Deferred Stock), the
                  Participant's Deferred Stock that is at that time subject to
                  deferral (other than a deferral at the election of the
                  Participant) shall be forfeited; provided that the Committee
                  or the Board may provide, by rule or regulation or in any
                  Award agreement, or may determine in any individual case, that
                  restrictions or forfeiture conditions relating to Deferred
                  Stock shall be waived in whole or in part in the event of
                  terminations resulting from specified causes, and the
                  Committee or the Board may in other cases waive in whole or in
                  part the forfeiture of Deferred Stock.

                           (iii) DIVIDEND EQUIVALENTS. Unless otherwise
                  determined by the Committee or the Board at date of grant,
                  Dividend Equivalents on the specified number of shares of
                  Stock covered by an Award of Deferred Stock shall be either
                  (A) paid with respect to such Deferred Stock at the dividend
                  payment date in cash or in shares of unrestricted Stock having
                  a Fair Market Value equal to the amount of such dividends, or
                  (B) deferred with respect to such Deferred Stock and the
                  amount or value thereof automatically deemed reinvested in
                  additional Deferred Stock, other Awards or other investment
                  vehicles, as the Committee or the Board shall determine or
                  permit the Participant to elect.

                  (f) BONUS STOCK AND AWARDS IN LIEU OF OBLIGATIONS. The
Committee and the Board each is authorized to grant Stock as a bonus, or to
grant Stock or other Awards in lieu of Company obligations to pay cash or
deliver other property under the Plan or under other plans or compensatory
arrangements, provided that, in the case of Participants subject to Section 16
of the Exchange Act, the amount of such grants remains within the discretion of
the Committee to the extent necessary to ensure that acquisitions of Stock or
other Awards are exempt from liability under Section 16(b) of the Exchange Act.
Stock or Awards granted hereunder shall be subject to such other terms as shall
be determined by the Committee or the Board.

                  (g) DIVIDEND EQUIVALENTS. The Committee and the Board each is
authorized to grant Dividend Equivalents to a Participant entitling the
Participant to receive cash, Stock, other Awards, or other property equal in
value to dividends paid with respect to a specified number of shares of Stock,
or other periodic payments. Dividend Equivalents may be awarded on a
free-standing basis or in connection with another Award. The Committee or the
Board may provide that Dividend Equivalents shall be paid or distributed when
accrued or shall be deemed to have

                                       11
<PAGE>

been reinvested in additional Stock, Awards, or other investment vehicles, and
subject to such restrictions on transferability and risks of forfeiture, as the
Committee or the Board may specify.

                  (h) OTHER STOCK-BASED AWARDS. The Committee and the Board each
is authorized, subject to limitations under applicable law, to grant to
Participants such other Awards that may be denominated or payable in, valued in
whole or in part by reference to, or otherwise based on, or related to, Stock,
as deemed by the Committee or the Board to be consistent with the purposes of
the Plan, including, without limitation, convertible or exchangeable debt
securities, other rights convertible or exchangeable into Stock, purchase rights
for Stock, Awards with value and payment contingent upon performance of the
Company or any other factors designated by the Committee or the Board, and
Awards valued by reference to the book value of Stock or the value of securities
of or the performance of specified subsidiaries or business units. The Committee
or the Board shall determine the terms and conditions of such Awards. Stock
delivered pursuant to an Award in the nature of a purchase right granted under
this Section 6(h) shall be purchased for such consideration, paid for at such
times, by such methods, and in such forms, including, without limitation, cash,
Stock, other Awards or other property, as the Committee or the Board shall
determine. Cash awards, as an element of or supplement to any other Award under
the Plan, may also be granted pursuant to this Section 6(h).

         7. CERTAIN PROVISIONS APPLICABLE TO AWARDS.

                  (a) STAND-ALONE, ADDITIONAL, TANDEM, AND SUBSTITUTE AWARDS.
Awards granted under the Plan may, in the discretion of the Committee or the
Board, be granted either alone or in addition to, in tandem with, or in
substitution or exchange for, any other Award or any award granted under another
plan of the Company, any subsidiary, or any business entity to be acquired by
the Company or a subsidiary, or any other right of a Participant to receive
payment from the Company or any subsidiary. Such additional, tandem, and
substitute or exchange Awards may be granted at any time. If an Award is granted
in substitution or exchange for another Award or award, the Committee or the
Board shall require the surrender of such other Award or award in consideration
for the grant of the new Award. In addition, Awards may be granted in lieu of
cash compensation, including in lieu of cash amounts payable under other plans
of the Company or any subsidiary, in which the value of Stock subject to the
Award is equivalent in value to the cash compensation (for example, Deferred
Stock or Restricted Stock), or in which the exercise price, grant price or
purchase price of the Award in the nature of a right that may be exercised is
equal to the Fair Market Value of the underlying Stock minus the value of the
cash compensation surrendered (for example, Options granted with an exercise
price "discounted" by the amount of the cash compensation surrendered).

                  (b) TERM OF AWARDS. The term of each Award shall be for such
period as may be determined by the Committee or the Board; provided that in no
event shall the term of any Option or SAR exceed a period of ten years (or such
shorter term as may be required in respect of an ISO under Section 422 of the
Code).

                  (c) FORM AND TIMING OF PAYMENT UNDER AWARDS; DEFERRALS.
Subject to the terms of the Plan and any applicable Award agreement, payments to
be made by the Company or

                                       12
<PAGE>

a subsidiary upon the exercise of an Option or other Award or settlement of an
Award may be made in such forms as the Committee or the Board shall determine,
including, without limitation, cash, Stock that have been held for at least 6
months, other Awards or other property, and may be made in a single payment or
transfer, in installments, or on a deferred basis. The settlement of any Award
may be accelerated, and cash paid in lieu of Stock in connection with such
settlement, in the discretion of the Committee or the Board or upon occurrence
of one or more specified events (in addition to a Change in Control).
Installment or deferred payments may be required by the Committee or the Board
(subject to Section 10(e) of the Plan) or permitted at the election of the
Participant on terms and conditions established by the Committee or the Board.
Payments may include, without limitation, provisions for the payment or
crediting of a reasonable interest rate on installment or deferred payments or
the grant or crediting of Dividend Equivalents or other amounts in respect of
installment or deferred payments denominated in Stock.

                  (d) EXEMPTIONS FROM SECTION 16(B) LIABILITY. It is the intent
of the Company that this Plan comply in all respects with applicable provisions
of Rule 16b-3 or Rule 16a-1(c)(3) to the extent necessary to ensure that neither
the grant of any Awards to nor other transaction by a Participant who is subject
to Section 16 of the Exchange Act is subject to liability under Section 16(b)
thereof (except for transactions acknowledged in writing to be non-exempt by
such Participant). Accordingly, if any provision of this Plan or any Award
agreement does not comply with the requirements of Rule 16b-3 or Rule
16a-1(c)(3) as then applicable to any such transaction, such provision will be
construed or deemed amended to the extent necessary to conform to the applicable
requirements of Rule 16b-3 or Rule 16a-1(c)(3) so that such Participant shall
avoid liability under Section 16(b). In addition, the purchase price of any
Award conferring a right to purchase Stock shall be not less than any specified
percentage of the Fair Market Value of Stock at the date of grant of the Award
then required in order to comply with Rule 16b-3.

         8. PERFORMANCE AND ANNUAL INCENTIVE AWARDS.

                  (a) PERFORMANCE CONDITIONS. The right of a Participant to
exercise or receive a grant or settlement of any Award, and the timing thereof,
may be subject to such performance conditions as may be specified by the
Committee or the Board. The Committee or the Board may use such business
criteria and other measures of performance as it may deem appropriate in
establishing any performance conditions, and may exercise its discretion to
reduce the amounts payable under any Award subject to performance conditions,
except as limited under Sections 8(b) and 8(c) hereof in the case of a
Performance Award or Annual Incentive Award intended to qualify under Code
Section 162(m). If and to the extent required under Code Section 162(m), any
power or authority relating to a Performance Award or Annual Incentive Award
intended to qualify under Code Section 162(m), shall be exercised by the
Committee and not the Board.

                  (b) PERFORMANCE AWARDS GRANTED TO DESIGNATED COVERED
EMPLOYEES. If and to the extent that the Committee determines that a Performance
Award to be granted to an Eligible Person who is designated by the Committee as
likely to be a Covered Employee should qualify as "performance-based
compensation" for purposes of Code Section 162(m), the grant,

                                       13
<PAGE>

exercise and/or settlement of such Performance Award shall be contingent upon
achievement of preestablished performance goals and other terms set forth in
this Section 8(b).

                           (i) PERFORMANCE GOALS GENERALLY. The performance
                  goals for such Performance Awards shall consist of one or more
                  business criteria and a targeted level or levels of
                  performance with respect to each of such criteria, as
                  specified by the Committee consistent with this Section 8(b).
                  Performance goals shall be objective and shall otherwise meet
                  the requirements of Code Section 162(m) and regulations
                  thereunder including the requirement that the level or levels
                  of performance targeted by the Committee result in the
                  achievement of performance goals being "substantially
                  uncertain." The Committee may determine that such Performance
                  Awards shall be granted, exercised and/or settled upon
                  achievement of any one performance goal or that two or more of
                  the performance goals must be achieved as a condition to
                  grant, exercise and/or settlement of such Performance Awards.
                  Performance goals may differ for Performance Awards granted to
                  any one Participant or to different Participants.

                           (ii) BUSINESS CRITERIA. One or more of the following
                  business criteria for the Company, on a consolidated basis,
                  and/or specified subsidiaries or business units of the Company
                  (except with respect to the total stockholder return and
                  earnings per share criteria), shall be used exclusively by the
                  Committee in establishing performance goals for such
                  Performance Awards: (1) total stockholder return; (2) such
                  total stockholder return as compared to total return (on a
                  comparable basis) of a publicly available index such as, but
                  not limited to, the Standard & Poor's 500 Stock Index or the
                  S&P Specialty Retailer Index; (3) net income; (4) pretax
                  earnings; (5) earnings before interest expense, taxes,
                  depreciation and amortization; (6) pretax operating earnings
                  after interest expense and before bonuses, service fees, and
                  extraordinary or special items; (7) operating margin; (8)
                  earnings per share; (9) return on equity; (10) return on
                  capital; (11) return on investment; (12) operating earnings;
                  (13) working capital or inventory; and (14) ratio of debt to
                  stockholders' equity. One or more of the foregoing business
                  criteria shall also be exclusively used in establishing
                  performance goals for Annual Incentive Awards granted to a
                  Covered Employee under Section 8(c) hereof that are intended
                  to qualify as "performance-based compensation under Code
                  Section 162(m).

                           (iii) PERFORMANCE PERIOD; TIMING FOR ESTABLISHING
                  PERFORMANCE GOALS. Achievement of performance goals in respect
                  of such Performance Awards shall be measured over a
                  performance period of up to ten years, as specified by the
                  Committee. Performance goals shall be established not later
                  than 90 days after the beginning of any performance period
                  applicable to such Performance Awards, or at such other date
                  as may be required or permitted for "performance-based
                  compensation" under Code Section 162(m).

                                       14
<PAGE>

                           (iv) PERFORMANCE AWARD POOL. The Committee may
                  establish a Performance Award pool, which shall be an unfunded
                  pool, for purposes of measuring Company performance in
                  connection with Performance Awards. The amount of such
                  Performance Award pool shall be based upon the achievement of
                  a performance goal or goals based on one or more of the
                  business criteria set forth in Section 8(b)(ii) hereof during
                  the given performance period, as specified by the Committee in
                  accordance with Section 8(b)(iii) hereof. The Committee may
                  specify the amount of the Performance Award pool as a
                  percentage of any of such business criteria, a percentage
                  thereof in excess of a threshold amount, or as another amount
                  which need not bear a strictly mathematical relationship to
                  such business criteria.

                           (v) SETTLEMENT OF PERFORMANCE AWARDS; OTHER TERMS.
                  Settlement of such Performance Awards shall be in cash, Stock,
                  other Awards or other property, in the discretion of the
                  Committee. The Committee may, in its discretion, reduce the
                  amount of a settlement otherwise to be made in connection with
                  such Performance Awards. The Committee shall specify the
                  circumstances in which such Performance Awards shall be paid
                  or forfeited in the event of termination of employment by the
                  Participant prior to the end of a performance period or
                  settlement of Performance Awards.

                  (c) ANNUAL INCENTIVE AWARDS GRANTED TO DESIGNATED COVERED
EMPLOYEES. If and to the extent that the Committee determines that an Annual
Incentive Award to be granted to an Eligible Person who is designated by the
Committee as likely to be a Covered Employee should qualify as
"performance-based compensation" for purposes of Code Section 162(m), the grant,
exercise and/or settlement of such Annual Incentive Award shall be contingent
upon achievement of preestablished performance goals and other terms set forth
in this Section 8(c).

                           (i) ANNUAL INCENTIVE AWARD POOL. The Committee may
                  establish an Annual Incentive Award pool, which shall be an
                  unfunded pool, for purposes of measuring Company performance
                  in connection with Annual Incentive Awards. The amount of such
                  Annual Incentive Award pool shall be based upon the
                  achievement of a performance goal or goals based on one or
                  more of the business criteria set forth in Section 8(b)(ii)
                  hereof during the given performance period, as specified by
                  the Committee in accordance with Section 8(b)(iii) hereof. The
                  Committee may specify the amount of the Annual Incentive Award
                  pool as a percentage of any such business criteria, a
                  percentage thereof in excess of a threshold amount, or as
                  another amount which need not bear a strictly mathematical
                  relationship to such business criteria.

                           (ii) POTENTIAL ANNUAL INCENTIVE AWARDS. Not later
                  than the end of the 90th day of each fiscal year, or at such
                  other date as may be required or permitted in the case of
                  Awards intended to be "performance-based compensation" under
                  Code Section 162(m), the Committee shall determine the
                  Eligible Persons who will potentially receive Annual Incentive
                  Awards, and the amounts potentially

                                       15
<PAGE>

                  payable thereunder, for that fiscal year, either out of an
                  Annual Incentive Award pool established by such date under
                  Section 8(c)(i) hereof or as individual Annual Incentive
                  Awards. In the case of individual Annual Incentive Awards
                  intended to qualify under Code Section 162(m), the amount
                  potentially payable shall be based upon the achievement of a
                  performance goal or goals based on one or more of the business
                  criteria set forth in Section 8(b)(ii) hereof in the given
                  performance year, as specified by the Committee; in other
                  cases, such amount shall be based on such criteria as shall be
                  established by the Committee. In all cases, the maximum Annual
                  Incentive Award of any Participant shall be subject to the
                  limitation set forth in Section 5 hereof.

                           (iii) PAYOUT OF ANNUAL INCENTIVE AWARDS. After the
                  end of each fiscal year, the Committee shall determine the
                  amount, if any, of (A) the Annual Incentive Award pool, and
                  the maximum amount of potential Annual Incentive Award payable
                  to each Participant in the Annual Incentive Award pool, or (B)
                  the amount of potential Annual Incentive Award otherwise
                  payable to each Participant. The Committee may, in its
                  discretion, determine that the amount payable to any
                  Participant as an Annual Incentive Award shall be reduced from
                  the amount of his or her potential Annual Incentive Award,
                  including a determination to make no Award whatsoever. The
                  Committee shall specify the circumstances in which an Annual
                  Incentive Award shall be paid or forfeited in the event of
                  termination of employment by the Participant prior to the end
                  of a fiscal year or settlement of such Annual Incentive Award.

                  (d) WRITTEN DETERMINATIONS. All determinations by the
Committee as to the establishment of performance goals, the amount of any
Performance Award pool or potential individual Performance Awards and as to the
achievement of performance goals relating to Performance Awards under Section
8(b), and the amount of any Annual Incentive Award pool or potential individual
Annual Incentive Awards and the amount of final Annual Incentive Awards under
Section 8(c), shall be made in writing in the case of any Award intended to
qualify under Code Section 162(m). The Committee may not delegate any
responsibility relating to such Performance Awards or Annual Incentive Awards if
and to the extent required to comply with Code Section 162(m).

                  (e) STATUS OF SECTION 8(B) AND SECTION 8(C) AWARDS UNDER CODE
SECTION 162(M). It is the intent of the Company that Performance Awards and
Annual Incentive Awards under Section 8(b) and 8(c) hereof granted to persons
who are designated by the Committee as likely to be Covered Employees within the
meaning of Code Section 162(m) and regulations thereunder shall, if so
designated by the Committee, constitute "qualified performance-based
compensation" within the meaning of Code Section 162(m) and regulations
thereunder. Accordingly, the terms of Sections 8(b), (c), (d) and (e), including
the definitions of Covered Employee and other terms used therein, shall be
interpreted in a manner consistent with Code Section 162(m) and regulations
thereunder. The foregoing notwithstanding, because the Committee cannot
determine with certainty whether a given Participant will be a Covered Employee
with respect to a fiscal year that has not yet been completed, the term Covered

                                       16
<PAGE>

Employee as used herein shall mean only a person designated by the Committee, at
the time of grant of Performance Awards or an Annual Incentive Award, as likely
to be a Covered Employee with respect to that fiscal year. If any provision of
the Plan or any agreement relating to such Performance Awards or Annual
Incentive Awards does not comply or is inconsistent with the requirements of
Code Section 162(m) or regulations thereunder, such provision shall be construed
or deemed amended to the extent necessary to conform to such requirements.

         9. CHANGE IN CONTROL.

                  (a) EFFECT OF "CHANGE IN CONTROL." If and to the extent
provided in the Award, in the event of a "Change in Control," as defined in
Section 9(b), the following provisions shall apply:

                           (i) Any Award carrying a right to exercise that was
                  not previously exercisable and vested may become exercisable
                  and vested as of the time of the Change in Control, subject
                  only to applicable restrictions set forth in Section 10(a)
                  hereof, to the extent provided in the Award;

                            (ii) Limited SARs (and other SARs if so provided by
                  their terms) may become exercisable for amounts, in cash,
                  determined by reference to the Change in Control Price, to the
                  extent provided in the Award;

                           (iii) The restrictions, deferral of settlement, and
                  forfeiture conditions applicable to any other Award granted
                  under the Plan may lapse and such Awards may be deemed fully
                  vested as of the time of the Change in Control, except to the
                  extent of any waiver by the Participant and subject to
                  applicable restrictions set forth in Section 10(a) hereof, to
                  the extent provided in the Award; and

                           (iv) With respect to any such outstanding Award
                  subject to achievement of performance goals and conditions
                  under the Plan, such performance goals and other conditions
                  may be deemed to be met if and to the extent so provided by
                  the Committee in the Award agreement relating to such Award.

                  (b) DEFINITION OF "CHANGE IN CONTROL. A "Change in Control"
shall be deemed to have occurred upon:

                           (i) Approval by the shareholders of the Company of a
reorganization, merger, consolidation or other form of corporate transaction or
series of transactions, in each case, with respect to which persons who were the
shareholders of the Company immediately prior to such reorganization, merger or
consolidation or other transaction do not, immediately thereafter, own more than
50% of the combined voting power entitled to vote generally in the election of
directors of the reorganized, merged or consolidated company's then outstanding
voting securities, or a liquidation or dissolution of the Company or the sale of
all or substantially all of the assets of the Company (unless such
reorganization, merger, consolidation or other

                                       17
<PAGE>

corporate transaction, liquidation, dissolution or sale (any such event being
referred to as a "Corporate Transaction") is subsequently abandoned);

                           (ii) Approval by the shareholders of the Parent
Corporation of a reorganization, merger, consolidation or other form of
corporate transaction or series of transactions, in each case, with respect to
which persons who were the shareholders of the Parent Corporation immediately
prior to such reorganization, merger or consolidation or other transaction do
not, immediately thereafter, own more than 50% of the combined voting power
entitled to vote generally in the election of directors of the reorganized,
merged or consolidated company's then outstanding voting securities, or a
liquidation or dissolution of the Parent Corporation or the sale of all or
substantially all of the assets of the Parent Corporation (unless such Corporate
Transaction is subsequently abandoned);

                           (iii) Individuals who, as of the date on which the
Award is granted, constitute the Board (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board, provided that any person
becoming a director subsequent to the date on which the Award was granted whose
election, or nomination for election by the Company's shareholders, was approved
by a vote of at least a majority of the directors then comprising the Incumbent
Board (other than an election or nomination of an individual whose initial
assumption of office is in connection with an actual or threatened election
contest relating to the election of the Directors of the Company, as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the Securities
Exchange Act) shall be, for purposes of this Agreement, considered as though
such person were a member of the Incumbent Board; or

                           (iv) the acquisition (other than from the Company) by
any person, entity or "group", within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act, of 30% of either the then outstanding
shares of the Company's Common Stock or the combined voting power of the
Company's then outstanding voting securities entitled to vote generally in the
election of directors (hereinafter referred to as the ownership of a
"Controlling Interest") excluding, for this purpose, any acquisitions by (1) the
Company or its Subsidiaries, (2) any person, entity or "group" that as of the
date on which the Award is granted owns beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Securities Exchange Act) of a Controlling
Interest, (3) Addison Fisher and/or any entities owned and/or controlled by
Addison Fisher, or (4) any employee benefit plan of the Company or its
Subsidiaries.

                  (c) DEFINITION OF "CHANGE IN CONTROL PRICE." The "Change in
Control Price" means an amount in cash equal to the higher of (i) the amount of
cash and fair market value of property that is the highest price per share paid
(including extraordinary dividends) in any Corporate Transaction triggering the
Change in Control under Section 9(b)(i) hereof or any liquidation of shares
following a sale of substantially all of the assets of the Company, or (ii) the
highest Fair Market Value per share at any time during the 60-day period
preceding and the 60-day period following the Change in Control.

                                       18
<PAGE>

         10. GENERAL PROVISIONS.

                  (a) COMPLIANCE WITH LEGAL AND OTHER REQUIREMENTS. The Company
may, to the extent deemed necessary or advisable by the Committee or the Board,
postpone the issuance or delivery of Stock or payment of other benefits under
any Award until completion of such registration or qualification of such Stock
or other required action under any federal or state law, rule or regulation,
listing or other required action with respect to any stock exchange or automated
quotation system upon which the Stock or other Company securities are listed or
quoted, or compliance with any other obligation of the Company, as the Committee
or the Board, may consider appropriate, and may require any Participant to make
such representations, furnish such information and comply with or be subject to
such other conditions as it may consider appropriate in connection with the
issuance or delivery of Stock or payment of other benefits in compliance with
applicable laws, rules, and regulations, listing requirements, or other
obligations. The foregoing notwithstanding, in connection with a Change in
Control, the Company shall take or cause to be taken no action, and shall
undertake or permit to arise no legal or contractual obligation, that results or
would result in any postponement of the issuance or delivery of Stock or payment
of benefits under any Award or the imposition of any other conditions on such
issuance, delivery or payment, to the extent that such postponement or other
condition would represent a greater burden on a Participant than existed on the
90th day preceding the Change in Control.

                  (b) LIMITS ON TRANSFERABILITY; BENEFICIARIES. No Award or
other right or interest of a Participant under the Plan, including any Award or
right which constitutes a derivative security as generally defined in Rule
16a-1(c) under the Exchange Act, shall be pledged, hypothecated or otherwise
encumbered or subject to any lien, obligation or liability of such Participant
to any party (other than the Company or a Subsidiary), or assigned or
transferred by such Participant otherwise than by will or the laws of descent
and distribution or to a Beneficiary upon the death of a Participant, and such
Awards or rights that may be exercisable shall be exercised during the lifetime
of the Participant only by the Participant or his or her guardian or legal
representative, except that Awards and other rights (other than ISOs and SARs in
tandem therewith) may be transferred to one or more Beneficiaries or other
transferees during the lifetime of the Participant, and may be exercised by such
transferees in accordance with the terms of such Award, but only if and to the
extent such transfers and exercises are permitted by the Committee or the Board
pursuant to the express terms of an Award agreement (subject to any terms and
conditions which the Committee or the Board may impose thereon, and further
subject to any prohibitions or restrictions on such transfers pursuant to Rule
16b-3). A Beneficiary, transferee, or other person claiming any rights under the
Plan from or through any Participant shall be subject to all terms and
conditions of the Plan and any Award agreement applicable to such Participant,
except as otherwise determined by the Committee or the Board, and to any
additional terms and conditions deemed necessary or appropriate by the Committee
or the Board.

                  (c) ADJUSTMENTS. In the event that any dividend or other
distribution (whether in the form of cash, Stock, or other property),
recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, share exchange, liquidation,
dissolution or other similar corporate transaction or event affects the Stock
such that

                                       19
<PAGE>

a substitution or adjustment is determined by the Committee or the Board to be
appropriate in order to prevent dilution or enlargement of the rights of
Participants under the Plan, then the Committee or the Board shall, in such
manner as it may deem equitable, substitute or adjust any or all of (i) the
number and kind of shares of Stock which may be delivered in connection with
Awards granted thereafter, (ii) the number and kind of shares of Stock by which
annual per-person Award limitations are measured under Section 5 hereof, (iii)
the number and kind of shares of Stock subject to or deliverable in respect of
outstanding Awards and (iv) the exercise price, grant price or purchase price
relating to any Award and/or make provision for payment of cash or other
property in respect of any outstanding Award. In addition, the Committee (and
the Board if and only to the extent such authority is not required to be
exercised by the Committee to comply with Code Section 162(m)) is authorized to
make adjustments in the terms and conditions of, and the criteria included in,
Awards (including Performance Awards and performance goals, and Annual Incentive
Awards and any Annual Incentive Award pool or performance goals relating
thereto) in recognition of unusual or nonrecurring events (including, without
limitation, events described in the preceding sentence, as well as acquisitions
and dispositions of businesses and assets) affecting the Company, any Subsidiary
or any business unit, or the financial statements of the Company or any
Subsidiary, or in response to changes in applicable laws, regulations,
accounting principles, tax rates and regulations or business conditions or in
view of the Committee's assessment of the business strategy of the Company, any
Subsidiary or business unit thereof, performance of comparable organizations,
economic and business conditions, personal performance of a Participant, and any
other circumstances deemed relevant; provided that no such adjustment shall be
authorized or made if and to the extent that such authority or the making of
such adjustment would cause Options, SARs, Performance Awards granted under
Section 8(b) hereof or Annual Incentive Awards granted under Section 8(c) hereof
to Participants designated by the Committee as Covered Employees and intended to
qualify as "performance-based compensation" under Code Section 162(m) and the
regulations thereunder to otherwise fail to qualify as "performance-based
compensation" under Code Section 162(m) and regulations thereunder.

                  (d) TAXES. The Company and any Subsidiary is authorized to
withhold from any Award granted, any payment relating to an Award under the
Plan, including from a distribution of Stock, or any payroll or other payment to
a Participant, amounts of withholding and other taxes due or potentially payable
in connection with any transaction involving an Award, and to take such other
action as the Committee or the Board may deem advisable to enable the Company
and Participants to satisfy obligations for the payment of withholding taxes and
other tax obligations relating to any Award. This authority shall include
authority to withhold or receive Stock or other property and to make cash
payments in respect thereof in satisfaction of a Participant's tax obligations,
either on a mandatory or elective basis in the discretion of the Committee.

                  (e) CHANGES TO THE PLAN AND AWARDS. The Board may amend,
alter, suspend, discontinue or terminate the Plan, or the Committee's authority
to grant Awards under the Plan, without the consent of stockholders or
Participants, except that any amendment or alteration to the Plan shall be
subject to the approval of the Company's stockholders not later than the annual
meeting next following such Board action if such stockholder approval is
required by any federal

                                       20
<PAGE>

or state law or regulation (including, without limitation, Rule 16b-3 or Code
Section 162(m)) or the rules of any stock exchange or automated quotation system
on which the Stock may then be listed or quoted, and the Board may otherwise, in
its discretion, determine to submit other such changes to the Plan to
stockholders for approval; provided that, without the consent of an affected
Participant, no such Board action may materially and adversely affect the rights
of such Participant under any previously granted and outstanding Award. The
Committee or the Board may waive any conditions or rights under, or amend,
alter, suspend, discontinue or terminate any Award theretofore granted and any
Award agreement relating thereto, except as otherwise provided in the Plan;
provided that, without the consent of an affected Participant, no such Committee
or the Board action may materially and adversely affect the rights of such
Participant under such Award. Notwithstanding anything in the Plan to the
contrary, if any right under this Plan would cause a transaction to be
ineligible for pooling of interest accounting that would, but for the right
hereunder, be eligible for such accounting treatment, the Committee or the Board
may modify or adjust the right so that pooling of interest accounting shall be
available, including the substitution of Stock having a Fair Market Value equal
to the cash otherwise payable hereunder for the right which caused the
transaction to be ineligible for pooling of interest accounting; provided that,
without the consent of an affected Participant, no such Committee or Board
action may materially and adversely affect the rights of such Participant under
any previously granted and outstanding Award.

                  (f) LIMITATION ON RIGHTS CONFERRED UNDER PLAN. Neither the
Plan nor any action taken hereunder shall be construed as (i) giving any
Eligible Person or Participant the right to continue as an Eligible Person or
Participant or in the employ of the Company or a Subsidiary; (ii) interfering in
any way with the right of the Company or a Subsidiary to terminate any Eligible
Person's or Participant's employment at any time, (iii) giving an Eligible
Person or Participant any claim to be granted any Award under the Plan or to be
treated uniformly with other Participants and employees, or (iv) conferring on a
Participant any of the rights of a stockholder of the Company unless and until
the Participant is duly issued or transferred shares of Stock in accordance with
the terms of an Award.

                  (g) UNFUNDED STATUS OF AWARDS; CREATION OF TRUSTS. The Plan is
intended to constitute an "unfunded" plan for incentive and deferred
compensation. With respect to any payments not yet made to a Participant or
obligation to deliver Stock pursuant to an Award, nothing contained in the Plan
or any Award shall give any such Participant any rights that are greater than
those of a general creditor of the Company; provided that the Committee may
authorize the creation of trusts and deposit therein cash, Stock, other Awards
or other property, or make other arrangements to meet the Company's obligations
under the Plan. Such trusts or other arrangements shall be consistent with the
"unfunded" status of the Plan unless the Committee otherwise determines with the
consent of each affected Participant. The trustee of such trusts may be
authorized to dispose of trust assets and reinvest the proceeds in alternative
investments, subject to such terms and conditions as the Committee or the Board
may specify and in accordance with applicable law.

                  (h) NONEXCLUSIVITY OF THE PLAN. Neither the adoption of the
Plan by the Board nor its submission to the stockholders of the Company for
approval shall be construed as creating

                                       21
<PAGE>

any limitations on the power of the Board or a committee thereof to adopt such
other incentive arrangements as it may deem desirable including incentive
arrangements and awards which do not qualify under Code Section 162(m).

                  (i) PAYMENTS IN THE EVENT OF FORFEITURES; FRACTIONAL SHARES.
Unless otherwise determined by the Committee or the Board, in the event of a
forfeiture of an Award with respect to which a Participant paid cash or other
consideration, the Participant shall be repaid the amount of such cash or other
consideration. No fractional shares of Stock shall be issued or delivered
pursuant to the Plan or any Award. The Committee or the Board shall determine
whether cash, other Awards or other property shall be issued or paid in lieu of
such fractional shares or whether such fractional shares or any rights thereto
shall be forfeited or otherwise eliminated.

                  (j) GOVERNING LAW. The validity, construction and effect of
the Plan, any rules and regulations under the Plan, and any Award agreement
shall be determined in accordance with the laws of the State of Delaware without
giving effect to principles of conflicts of laws, and applicable federal law.

                  (k) PLAN EFFECTIVE DATE AND STOCKHOLDER APPROVAL; TERMINATION
OF PLAN. The Plan became effective on the Effective Date, upon adoption by the
Board and approval by the Company's stockholders. The Plan was amended on March
24, 2000 to effect the following changes, which are subject to stockholder
approval at the 2000 Annual Meeting: (i) to increase the number of shares of
Stock reserved and available for delivery in connection with Awards by an
additional Five Hundred Thousand (500,000) shares; and (ii) to implement the
automatic share increase provision in clause (iii) of Section 4(a). Awards may
be granted subject to stockholder approval, but may not be exercised or
otherwise settled in the event stockholder approval is not obtained. The Plan
shall terminate at such time as no shares of Common Stock remain available for
issuance under the Plan and the Company has no further rights or obligations
with respect to outstanding Awards under the Plan.

                                       22EXHIBIT 10.8

                              EMPLOYMENT AGREEMENT

         This Employment Agreement ("Agreement") is made and entered into as of
March 6, 2000 by and between SmartDisk Personal Storage Systems Corporation, a
Delaware corporation formerly known as "VST Acquisition, Inc." (the "Company"),
and Vince Fedele (the "Executive").

                                    RECITALS

         A. The Board of Directors of the Company (the "Board") desires to
ensure the Executive's employment with the Company and to compensate him
therefor.

         B. The Executive's execution and delivery of this Agreement is a
condition to the closing obligations of SmartDisk Corporation, a Delaware
corporation ("SmartDisk"), pursuant to an Agreement and Plan of Merger, dated as
of February 23, 2000, (the "Merger Agreement") among the Company, SmartDisk, VST
Technologies, Inc., a Delaware corporation, and certain "Shareholders" party
thereto.

         C. The execution of this Agreement is a material inducement for Company
and SmartDisk to enter into the Merger Agreement.

         D. The Board has determined that this Agreement will reinforce and
encourage the Executive's attention and dedication to the Company.

         E. The Executive is willing to make his services available to the
Company on the terms and conditions hereinafter set forth.

                                    AGREEMENT

         NOW, THEREFORE, in consideration of the premises and mutual covenants
set forth herein, the parties agree as follows:

         1. EMPLOYMENT.

                  1.1 GENERAL. The Company hereby agrees to employ the
Executive, and the Executive hereby agrees to serve the Company on the terms and
conditions set forth herein.

                  1.2 DUTIES OF EXECUTIVE. During the term of this Agreement,
the Executive shall serve as the Chief Technology Officer of the Company, shall
diligently perform all services as may be assigned to him by or under the
direction of SmartDisk's President and Chief Executive Officer and shall
exercise such power and authority as may from time to time be delegated to him
by the Company's Board of Directors. Without limiting the generality of the
foregoing, Executive shall have general responsibility for all Company product
development, strategic marketing and related communications. The Executive shall
devote substantially all of his business time and attention to the business and
affairs of the Company, render such services to the best of his ability, and use
his best efforts to promote the interests of the Company. By execution below,
SmartDisk also agrees that the Executive is hereby appointed Chief Technology
Officer of SmartDisk.

                  1.3 PLACE OF PERFORMANCE. In connection with his employment by
the Company hereunder, the Executive shall perform his duties and obligations
hereunder primarily from the Company's offices located in Acton, Massachusetts,
except for required travel on the Company's business.

<PAGE>

         2.       TERM.

                  2.1 INITIAL TERM. The initial term of this Agreement, and the
employment of the Executive hereunder, shall be for the two-year period
commencing on the date hereof (the "Initial Term").

                  2.2 RENEWAL TERMS. The Initial Term of this Agreement, and the
employment of the Executive hereunder shall automatically be renewed for
successive one year periods, unless the Company or the Executive provides
written notice to the other at least 30 days prior to the expiration of the
applicable term. The terms and conditions of any renewal term shall be the same
as those contained herein unless otherwise mutually agreed upon by the Company
and the Executive in a written supplement to this Agreement signed by the
Executive and the Company's President (the "Written Supplement"). In the event
that the Company delivers a notice of non-renewal, the Executive shall be
entitled to the compensation and benefits as if terminated pursuant to Section
5.4 and shall be subject to Section 6.1 as if terminated pursuant to Section
5.4.

         3.       COMPENSATION.

                  3.1 BASE SALARY. The Executive shall receive a base salary at
the annual rate of $200,000 (the "Base Salary") during the Initial Term of this
Agreement, with such Base Salary payable in installments consistent with the
Company's normal payroll schedule, subject to applicable withholding and other
taxes. The Base Salary may, by action and in the sole discretion of the Board,
be increased at any time or from time to time. After July 1, 2000, the Board
shall consider the performance of the Executive for a possible merit increase in
the Base Salary; provided that any such increase shall be in the sole discretion
of the Board.

                  3.2 BONUS COMPENSATION. In addition to the Base Salary, the
Executive shall be entitled to receive bonus compensation (the "Bonus
Compensation") during the Initial Term. The Board shall establish a performance
bonus formula with respect to Bonus Compensation pursuant to which the Executive
will be able to receive a target bonus of $60,000 per annum if the Company
achieves the specified level of financial results.

                  3.3 STOCK OPTIONS. Contemporaneously herewith, SmartDisk is
granting the Executive a non-qualified stock option to purchase 80,000 shares of
SmartDisk's common stock, the exercise price of which shall be established in
accordance with the SmartDisk option pricing policy in effect on the date
hereof. The option will be granted pursuant to the Company's 1999 Incentive
Compensation Plan (the "Incentive Plan") and be in customary form; provided that
the option will vest (ie, become exercisable) with respect to twenty-five
percent (25%) of the shares issuable upon exercise of such option on the first
anniversary date of this Agreement and thereafter vest as to six and one-quarter
percent (6.25%) of the subject shares on each subsequent quarter. For example,
such option will be exercisable with respect to 37.5% of the subject shares on
the 18-month anniversary of this Agreement. In the event of a "Change in
Control" (as defined in the Incentive Plan), fifty percent of the unvested
shares underlying the option shall vest on the effective date of a Change in
Control.

         4. EXPENSE REIMBURSEMENT AND OTHER BENEFITS.

                  4.1 REIMBURSABLE EXPENSES. During the term of the Executive's
employment hereunder, the Company, upon the submission of proper substantiation
by the Executive, shall reimburse the Executive for all reasonable expenses
actually and necessarily paid or incurred by the Executive in the course of and
pursuant to the business of the Company.

                  4.2 OTHER BENEFITS. The Executive shall be entitled to
participate in all medical, dental and hospitalization, group life insurance,
and any and all other plans as are presently and hereinafter provided by
SmartDisk to its executives on substantially the same terms as the other
executives and prior

                                       2
<PAGE>

to December 31, 2000 in accordance with Section 7.5 of the Merger Agreement. The
Executive shall be entitled to vacations in accordance with the Company's
prevailing policy for its executives.

                  4.3 WORKING FACILITIES. The Company shall furnish the
Executive with an office, secretarial help and such other facilities and
services suitable to his position and adequate for the performance of his duties
hereunder.

                  4.4 AUTOMOBILE. During the term of Executive's employment
hereunder, the Company shall (x) provide the Executive with a non-accountable
automobile allowance of six hundred fifty dollars ($650.00) per month, which is
intended to compensate Executive for his automobile lease costs, and (y)
reimburse the Executive for all out-of-pocket costs of gasoline, oil, repairs,
maintenance, insurance and other operating costs incurred by Executive by reason
of the use of Executive's automobile for Company business from time to time. The
Company shall also provide Executive with a one-time, non-accountable automobile
allowance of $10,000, which is intended to compensate Executive for his
automobile lease down payment, delivery charges and other acquisition-related
costs.

         5. TERMINATION.

                  5.1 TERMINATION FOR CAUSE. The Company shall at all times have
the right, upon written notice to the Executive, to terminate the Executive's
employment hereunder for "Cause" (as hereinafter defined). For purposes of this
Agreement, the term "Cause" shall mean (i) the failure or refusal of the
Executive to perform the duties or render the services reasonably assigned to
him from time to time by or under direction of the President of the Company
(except during reasonable vacation periods or sick leave), which failure or
refusal is not cured within 15 days of written notice by the Company; (ii) gross
negligence or willful misconduct by the Executive in the performance of his
duties as an employee of the Company, (iii) the conviction of the Executive of a
felony; (iv) the material breach by the Executive of any of the provisions of
Section 6.1, 6.2, 6.3 or 6.4 hereof; (v) the breach by the Executive of his
fiduciary duty or duty of trust to the Company, including the commission by the
Executive of an act of fraud or embezzlement against the Company, (vi) substance
abuse, or (vii) any other material breach by the Executive of any of the
material terms or provisions of this Agreement or any other agreement between
the Company and the Executive related to the Executive's employment, which other
material breach is not cured within ten (10) business days of written notice by
the Company. Upon any termination pursuant to this Section 5.1, the Executive
shall be entitled to receive any salary (other than Bonus Compensation) and
employment benefits which shall have accrued prior to the date of termination,
but shall not be entitled to any bonus or severance payments, salary or
employment benefits relating to periods subsequent to the date of termination,
subject to Executive's rights to continue medical and dental coverage under the
Company's group policy, at Executive's expense, as may be provided by law.

                  5.2 DISABILITY. The Company shall at all times have the right,
upon written notice to the Executive, to terminate the Executive's employment
hereunder, if the Executive shall, as the result of mental or physical
incapacity, illness or disability, become unable to perform his duties hereunder
for in excess of ninety (90) days in any 12-month period. Upon any termination
pursuant to this Section 5.2, the Company shall pay to the Executive (i) the
balance of Executive's salary and other benefits for the remainder of the month
in which disability occurs, and (ii) a pro rata portion of any Bonus
Compensation to which Executive would be otherwise entitled under Section 3.2
based upon the ratio the number of months employed (calculated through the end
of the then current month) bears to the bonus period of twelve (12) months and
the Company shall have no further liability hereunder (other than for
reimbursement for reasonable business expenses incurred prior to the date of
termination, subject, however to the provisions of Section 4.1).

                  5.3 DEATH. In the event of the death of the Executive during
the term of his employment hereunder, the Company shall pay to the estate of the
deceased Executive (i) the balance of Executive's salary and other benefits for
the remainder of the month in which death occurs, and (ii) a pro rata portion of
any Bonus Compensation to which Executive would be otherwise entitled under
Section 3.2

                                       3
<PAGE>

based upon the ratio the number of months employed (calculated through the end
of the then current month) bears to the bonus period of twelve (12) months and
the Company shall have no further liability hereunder (other than for
reimbursement for reasonable business expenses incurred prior to the date of the
Executive's death, subject, however to the provisions of Section 4.1).

                  5.4 TERMINATION BY THE COMPANY WITHOUT CAUSE. At any time, the
Company shall have the right to terminate this Agreement and Executive's
employment with the Company by providing at least 30 days prior written notice
to the Executive; provided, however, that, the Company shall (i) pay to the
Executive any unpaid Base Salary accrued through the effective date of
termination specified in such notice, (ii) pay Executive's Base Salary in the
manner set forth in Section 3.1 hereof until the date which is three months
following such effective date (the "Severance Date") and (iii) pay a pro rata
portion of any Bonus Compensation to which the Executive would be otherwise
entitled under Section 3.2 based upon the ratio the number of months employed
bears to the bonus period of twelve (12) months. Following the effective date of
such termination, the Company shall continue to pay for or provide to the
Executive such benefits as may have been provided to the Executive in accordance
with Section 4.2 immediately prior to such termination (subject to changes in
the terms of such coverage by the provider as may be applicable to the Company
as a whole) for a period ending on the earliest of (A) the date of the
Executive's employment by a third party on a substantially full-time basis, (B)
the death of the Executive and (C) the Severance Date. Except as expressly
provided herein, the Company shall have no further liability hereunder (other
than for reimbursement for reasonable business expenses incurred prior to the
date of termination, subject, however to the provisions of Section 4.1).

                  5.5 TERMINATION BY EMPLOYEE. At any time, the Executive may
terminate this Agreement and Executive's employment with the Company by
providing at least 30 days prior written notice to the Company. Upon termination
of this Agreement pursuant to this Section 5.5., the Executive shall be entitled
to receive any salary (other than Bonus Compensation) and employment benefits
which shall have accrued prior to the date of termination, but shall not be
entitled to any bonus or severance payments, salary or employment benefits
relating to periods subsequent to the date of termination, subject to
Executive's rights to continue medical and dental coverage under the Company's
group policy at Executive's expense, as may be provided by law.

         6. RESTRICTIVE COVENANTS.

                  6.1 NON-COMPETITION. While employed by the Company and for a
period of two years following the later of the date his employment is terminated
hereunder or, if applicable, the Severance Date (the "Restricted Period"), the
Executive shall not, directly or indirectly (whether as owner, principal, agent,
shareholder, employee, partner, lender, venturer with or consultant to any
person, firm, partnership, corporation, limited liability company or other
entity), whether or not compensation is received, engage or participate in any
activity for any business or entity which is or plans to engage in the marketing
and sale of any products or services which are under active development or are
marketed or sold by the Company, SmartDisk, and/or their respective subsidiaries
and affiliates during the term of this Agreement anywhere in the United States;
provided, however, that nothing herein shall be deemed to prevent the Executive
from acquiring through market purchases and owning, solely as an investment,
less than three percent in the aggregate of the equity securities of any class
of any issuer whose shares are registered under ss.12(b) or 12(g) of the
Securities Exchange Act of 1934, as amended, and are listed or admitted for
trading on any United States national securities exchange or are quoted on the
National Association of Securities Dealers Automated Quotations System, or any
similar system of automated dissemination of quotations of securities prices in
common use, so long as the Executive is neither involved in the management or
conduct of the business affairs of such issuer nor a member of any "control
group" (within the meaning of the rules and regulations of the United States
Securities and Exchange Commission) of any such issuer. Notwithstanding the
foregoing, in the event that the Executive's employment hereunder is terminated
pursuant to Section 5.4 or Section 5.5, the Restricted Period shall terminate on
the later of (a) one year after the date Executive's employment is terminated or
(b) two years from the date of execution of this Agreement. The Executive
acknowledges and agrees that the covenants provided for in this Section 6.1

                                       4
<PAGE>

are reasonable and necessary in terms of time, area and line of business to
protect the Company's and SmartDisk's "Trade Secrets" (as hereinafter defined).
The Executive further acknowledges and agrees that such covenants are reasonable
and necessary in terms of time, area and line of business to protect the
Company's and SmartDisk's legitimate business interests, which include their
interests in protecting the Company's and SmartDisk's (i) valuable confidential
business information, (ii) substantial relationships with customers throughout
the United States, and (iii) customer goodwill associated with the ongoing
business of the Company and SmartDisk. The Executive expressly authorizes the
enforcement of the covenants provided for in this Section 6.1 by (A) SmartDisk
and its subsidiaries, (B) SmartDisk's and the Company's permitted assigns, and
(C) any successors to SmartDisk's and the Company's business. To the extent that
the covenant provided for in this Section 6.1 may later be deemed by a court to
be too broad to be enforced with respect to its duration or with respect to any
particular activity or geographic area, the court making such determination
shall have the power to reduce the duration or scope of the provision, and to
add or delete specific words or phrases to or from the provision. The provision
as modified shall then be enforced.

         6.2 NONDISCLOSURE. Executive shall not divulge, communicate, use to the
detriment of the Company, SmartDisk or for the benefit of any other person or
persons, or misuse in any way, any "Confidential Information" pertaining to the
Company or SmartDisk. Any confidential information or data now known or
hereafter acquired by the Executive with respect to the Company or SmartDisk
shall be deemed a valuable, special and unique asset of the Company or SmartDisk
that is received by the Executive in confidence and as a fiduciary, and
Executive shall remain a fiduciary to the Company and SmartDisk with respect to
all of such information. For purposes of this Agreement, the following terms
when used in this Agreement have the meanings set forth below:

         "CONFIDENTIAL INFORMATION" means confidential data and confidential
information relating to the business of the Company or SmartDisk (which does not
rise to the status of a Trade Secret under applicable law) which is or has been
disclosed to the Executive or of which the Executive became aware as a
consequence of or through his employment with the Company and which has value to
the Company or SmartDisk and is not generally known to the competitors of the
Company or SmartDisk. Confidential Information does not include (a) information
that is or becomes generally available to the public other than as a result of
the Executive's disclosure of such information, (b) information that was within
the Executive's possession prior to it being furnished to the Executive by or on
behalf of SmartDisk or its affiliates, including the Company, provided that the
source of such information was not known to the Executive to be bound by a
confidentiality agreement with or other contractual, legal or fiduciary
obligation of confidentiality to SmartDisk or its affiliates, including the
Company, or any other party with respect to such information, (c) information
that becomes available to the Executive on a non-confidential basis from a
source other than SmartDisk or any of its affiliates, including the Company,
provided that such source is not known to the Executive to be bound by a
confidentiality agreement with or other contractual, legal or fiduciary
obligation of confidentiality to the SmartDisk or its affiliates, including the
Company, or any other party with respect to such information, (d) information
the disclosure of which is required by applicable law or judicial process, or
(e) general technical skills or general experience gained by the Executive
during the Executive's employment with the Company.

         "TRADE SECRETS" means information of the Company or SmartDisk
including, but not limited to, technical or nontechnical data, formulas,
patterns, compilations, programs, financial data, financial plans, product or
service plans or lists of actual or potential customers or suppliers which (i)
derives economic value, actual or potential, from not being generally known to,
and not being readily ascertainable by proper means by, other persons who can
obtain economic value from its disclosure or use, and (ii) is the subject of
efforts that are reasonable under the circumstances to maintain its secrecy.

         In addition, during the Initial Term and during the periods described
in the last sentence of this Section 6.2, the Executive (a) will receive and
hold all Confidential Information and Trade Secrets (collectively "Company
Information") in trust and in strictest confidence, (b) will take reasonable
steps to protect the Company Information from disclosure and will in no event
take any action causing, or fail to

                                       5
<PAGE>

take any action reasonably necessary to prevent, any Company Information to lose
its character as Company Information, and (c) except as required by the
Executive's duties in the course of his employment by the Company, will not,
directly or indirectly, use, disseminate or otherwise disclose any Company
Information to any third party without the prior written consent of SmartDisk,
which may be withheld in SmartDisk's absolute discretion. The provisions of this
Section 6.2 shall survive the termination of the Executive's employment (i) for
a period of five years with respect to Confidential Information, and (ii) with
respect to Trade Secrets, for so long as any such information qualifies as a
Trade Secret under applicable law.

                  6.3 NONSOLICITATION OF EMPLOYEES AND CUSTOMERS. While employed
by the Company and for a period of two years following the later of the date his
employment is terminated hereunder by either the Company or the Executive, or,
if applicable, the Severance Date, the Executive shall not, directly or
indirectly, for himself or for any other person, firm, corporation, partnership,
association or other entity, (i) attempt to employ or enter into any contractual
arrangement with any employee or former employee of the Company or SmartDisk,
unless such employee or former employee has not been employed by the Company or
SmartDisk for a period in excess of three months, and/or (ii) divert or take
away, or attempt to divert or take away, the business or prospects of any of the
actual or targeted prospective customers or clients of the Company or SmartDisk,
nor shall the Executive make known the names and addresses of such customers or
any information relating in any manner to the Company's or SmartDisk's trade or
business relationships with such customers.

                  6.4 ASSIGNMENT OF INVENTIONS.

                           (a) ORIGINAL DEVELOPMENT. The Executive represents
         and warrants to the Company that all work that the Executive performs
         for or on behalf of the Company and its clients, and all work product
         that the Executive produces in such capacity, including but not limited
         to software, documentation, memoranda, ideas, designs, inventions,
         processes, algorithms, etc. ("Work Product"), will not knowingly
         infringe upon or violate any patent, copyright, trade secret, or other
         property right of any of his former employers or of any other third
         party. The Executive will not disclose to the Company, or use in any of
         his Work Product, any confidential or proprietary information belonging
         to others, unless both the owner thereof and the Company have consented
         in writing.

                           (b) DISCLOSURE. The Executive will promptly disclose
         to the Company all Work Product developed by him within the scope of
         his employment with the Company or which relates directly to, or
         involve the use of, any Company Information, including but not limited
         to all software, concepts, ideas and designs, and all documentation,
         manuals, letters, pamphlets, drafts, memoranda and other writings or
         tangible things of any kind. The Executive will not disclose them to
         anyone other than authorized Company personnel.

                           (c) COPYRIGHT OWNERSHIP. The Executive acknowledges
         and agrees that all Work Product which is made by him (solely or
         jointly with others) within the scope of his employment and which is
         protectable by copyright is being created at the instance of the
         Company and is "work made for hire," as that term is defined in the
         United States Copyright Act (17 USCA, Section 101).

                           (d) ASSIGNMENT. The Executive hereby assigns to the
         Company all of his other rights, title and interest (including but not
         limited to all patent, copyright and trade secret rights) in and to all
         Work Products prepared by him, whether patentable or not, made or
         conceived in whole or in part by him within the scope of his employment
         hereunder, or that relates directly to, or involves the use of Company
         Information.

                           (e) DOCUMENTS. The Executive agrees to execute all
         documents reasonably requested by the Company to further evidence the
         foregoing assignment and to provide all

                                       6
<PAGE>

         reasonable assistance to the Company (at the Company's expense) in
         perfecting or protecting any or all of the Company's rights in his Work
         Product.

                           (f) PRE-EXISTING INVENTIONS NOT ASSIGNED. The
         Executive represents that the Executive has indicated on Annex III to
         this Agreement all inventions, expression of ideas or other Work
         Product related to the Company's or SmartDisk's business and created
         prior to his employment by the Company in which the Executive has any
         right, title or interest that the Executive does not assign to the
         Company. If the Executive does not have any such inventions,
         expressions of ideas, or work product to indicate, the Executive will
         write "none" on Annex III. The Executive will not assert any rights
         under any inventions as having been made or acquired by him prior to
         his being employed by the Company, unless such inventions are
         identified on Annex I.

         6.5 BOOKS AND RECORDS. All books, records, reports, writings, notes,
notebooks, computer programs, sketches, drawings, blueprints, prototypes,
formulas, photographs, negatives, models, equipment, chemicals, reproductions,
proposals, flow sheets, supply contracts, customer lists and other documents
and/or things belonging to the Company or embodying or relating to any
Confidential Information or Trade Secrets, whether prepared by the Executive or
otherwise coming into the Executive's possession shall not be copied,
duplicated, replicated, transformed, modified or removed from the premises of
the Company except pursuant to the business of the Company and shall be returned
immediately to the Company on termination of the Executive's employment
hereunder or on the Company's request at any time.

         6.6 NO CONFLICT. The Executive represents to the Company that his
execution and performance of this Agreement does not violate the provisions of
any employment, non-competition, confidentiality or other material agreement to
which he is a party or by which he is bound. The Executive also agrees to
indemnify and hold harmless the Company from any and all damages and other
obligations or liabilities incurred by the Company in connection with any breach
of the foregoing representation.

         7. INJUNCTION. It is recognized and hereby acknowledged by the parties
hereto that a breach by the Executive of any of the covenants contained in
Section 6 of this Agreement will cause irreparable harm and damage to SmartDisk
and the Company, the monetary amount of which may be virtually impossible to
ascertain. As a result, the Executive recognizes and hereby acknowledges that
Smart Disk or the Company shall be entitled to seek an injunction from any court
of competent jurisdiction (without posting a bond or other security) enjoining
and restraining any violation of any or all of the covenants contained in
Section 6 of this Agreement by the Executive or any of his affiliates,
associates, partners or agents, either directly or indirectly, and that such
right to injunction shall be cumulative and in addition to whatever other
remedies the Company or the Company may possess.

         8. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida without regard to conflicts of
laws principles thereof and all questions concerning the validity and
construction hereof shall be determined in accordance with the laws of said
state.

         9. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and, upon
its effectiveness, shall supersede all prior agreements, understandings and
arrangements, both oral and written, between the Executive and SmartDisk (or any
of its affiliates, including the Company) with respect to such subject matter.
Except for the obligation to pay all accrued but unpaid salary due the
Executive, all such prior agreements, understandings and arrangements for the
provision of services by the Executive to the Company and the compensation of
the Executive in any form are hereby terminated, and the Executive hereby
releases and forever discharges SmartDisk (as well as the Company and its other
affiliates) from any and all liabilities and obligations of any nature arising
out of or in connection with any and all such prior agreements, understandings
or arrangements. This Agreement may not be modified in any way unless by a
written instrument signed by both the Company and the Executive.

                                       7
<PAGE>

         10. NOTICES. Any notice required or permitted to be given hereunder
shall be deemed given when delivered by hand or when deposited in the United
States mail, by registered or certified mail, return receipt requested, postage
prepaid, (i) if to the Company, c/o SmartDisk Corporation, 3506 Mercantile
Avenue, Naples, Florida 34104, Attention: Daniel E. Reed, Vice President, and
(ii) if to the Executive, to his address as reflected on the payroll records of
the Company, or to such other address as either party hereto may from time to
time give notice of to the other.

         11. BENEFITS; BINDING EFFECT. This Agreement shall be for the benefit
of and binding upon the parties hereto and their respective heirs, personal
representative, legal representatives, successors and, where applicable,
assigns, including, without limitation, any successor to the Company, whether by
merger, consolidation, sale of stock, sale of assets or otherwise; provided,
however that the Executive shall not delegate his employment obligations
hereunder, or any portion thereof, to any other person.

         12. SEVERABILITY. The invalidity of any one or more of the words,
phrases, sentences, clauses or sections contained in this Agreement shall not
affect the enforceability of the remaining portions of this Agreement or any
part thereof, all of which are inserted conditionally on their being valid in
law, and, in the event that any one or more of the words, phrases, sentences,
clauses or sections contained in this Agreement shall be declared invalid, this
Agreement shall be construed as if such invalid word or words, phrase or
phrases, sentence or sentences, clause or clauses, or section or sections had
not been inserted. If such invalidity is caused by length of time or size of
area, or both, the otherwise invalid provision will be considered to be reduced
to a period or area which would cure such invalidity.

         13. WAIVERS. The waiver by either party hereto of a breach or violation
of any term or provision of this Agreement shall not operate nor be construed as
a waiver of any subsequent breach or violation.

         14. DAMAGES. Nothing contained herein shall be construed to prevent the
Company or the Executive from seeking and recovering from the other damages
sustained by either or both of them as a result of its or his breach of any term
or provision of this Agreement. In the event that either party hereto brings
suit for the collection of any damages resulting from, or for the injunction of
any action constituting, a breach of any of the terms or provisions of this
Agreement, then the party found to be at fault shall pay all reasonable court
costs and attorneys' fees of the other.

         15. SECTION HEADINGS. The section headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

         16. NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
other than the Company, the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and assigns, any rights or
remedies under or by reason of this Agreement.

         IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.

                                    SMARTDISK PERSONAL STORAGE SYSTEMS
                                    CORPORATION

                                    By: /s/ MICHAEL S. BATTAGLIA
                                       ---------------------------------------
                                        Michael S. Battaglia,
                                        President and Chief Executive Officer

                                       /s/ VINCE FEDELE
                                       ---------------------------------------
                                           Vince Fedele

                                       8
<PAGE>

                                    SMARTDISK CORPORATION (AS TO SECTION 1.2)

                                    By: /s/ MICHAEL S. BATTAGLIA
                                       ---------------------------
                                        Michael S. Battaglia,
                                        President and Chief Executive Officer

                                       9
<PAGE>

                                     ANNEX I

                             PRE-EXISTING INVENTIONS

                                      None

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