8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

Current Report

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  October 25, 2005

STANDEX INTERNATIONAL CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	1-7233	31-0596149
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(IRS Employer Identification No.)

6 Manor Parkway, Salem, New Hampshire	03079
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (603) 893-9701

Not applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 * Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 * Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 * Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 * Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Standex International Corporation

ITEM 1.01  AMENDMENT OF A MATERIAL DEFINITIVE AGREEMENT

Amendment to 1998 Long-Term Incentive Plan

On October 25, 2005 the stockholders of the registrant voted at the Annual Meeting of Stockholders to approve certain amendments to the registrant’s 1998 Long-Term Incentive Plan (the “Plan”) which were recommended by the registrant’s Board of Directors through the Compensation Committee of the Board.  The amended Plan is attached as Exhibit 10.1 and is incorporated by reference into this Item 1.01.

Pursuant to the amendment shares of Common Stock of the registrant which are presently authorized for issuance solely pursuant to grants of stock options may be used for grants of stock awards (as defined in the Plan) as well.  The Plan was also amended to set forth in greater detail the performance criteria which may be used for grants of performance awards under (and as defined in) the Plan and to set forth more clearly that performance awards to certain executive officers may be made in cash or stock-based payments and may apply to annual as well as long-term incentive compensation awards.  A further amendment provides that in no event shall the maximum amount payable pursuant to any particular performance award exceed $1.5 million.  This summary of the amendments to the Plan is not a complete description and is qualified by the terms of the Plan.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

 (c)  Exhibits - The following exhibit is provided as part of the information furnished under Items 1.01 of this Current Report on Form 8-K.

 Exhibit No.    

Description

10.1            

1998 Long Term Incentive Plan

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

STANDEX INTERNATIONAL CORPORATION

(Registrant)

/S/ Christian Storch

Christian Storch

Chief Financial Officer

Date: October 31, 2005

Signing on behalf of the registrant and as principal financial officer

EX-10

Exhibit 10.1

STANDEX INTERNATIONAL CORPORATION

1998 LONG TERM INCENTIVE PLAN

(Amended and Restated as of October 25, 2005)

1.

DEFINITIONS.

"Award" means, individually or collectively, a grant under the Plan of Non-Statutory Stock Options, Incentive Stock Options, Stock Awards and Performance Awards.

"Award Agreement" means an agreement evidencing and setting forth the terms of an Award.

"Board of Directors" means the board of directors of the Company.

"Change in Control" means a change in control as defined below.  Notwithstanding any other provision to the contrary in this Plan, in the event of a Change in Control, all Options outstanding as of the date such Change in Control occurs shall become fully vested and exercisable in full, whether or not otherwise exercisable in accordance with their terms.

A "Change in Control" shall occur or be deemed to have occurred only if any of the following events occur:

(a)

any "person", as such term is used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended, (the “1934 Act”), (other than the Company, any trustee or other fiduciary holding securities under an employee benefit plan of the Company, or any corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportion as their ownership of stock of the Company) is or becomes the "beneficial owner" (as defined in Rule 13(d) under the 1934 Act), directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company's then outstanding securities;

(b)

individuals who, as of July 29, 1998, constitute the Board of Directors of the Company (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 July 29, 1998, whose election, or nomination for election by the Company's stockholders, 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 under the 1934 Act) shall be, for purposes of this Section, considered a member of the Incumbent Board;

(c)

the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than  (i) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or being converted into voting securities of the surviving entity) more than 80% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation or  (ii) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no "person" (as hereinabove defined) acquires more than 20% of the combined voting power of the Company's then outstanding securities; or

(d)

the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets.

"Code" means the Internal Revenue Code of 1986, as amended.

"Committee" means the committee designated by the Board of Directors, pursuant to Section 2 of the Plan.

"Common Stock" means the Common Stock of the  Company, par value, $1.50 per share.

“Company” means Standex International Corporation.

"Date of Grant" means the effective date of an Award.

"Disability" means any mental or physical condition with respect to which the Participant qualifies for and receives benefits for under a long-term disability plan of the Company or any subsidiary corporation, or in the absence of such a long-term disability plan or coverage under such a plan, "Disability" shall mean a physical or mental condition which, in the sole discretion of the Committee, is reasonably expected to be of indefinite duration and to substantially prevent the Participant from fulfilling his duties or responsibilities to the Company or any subsidiary corporation.

"Effective Date" means the date the Plan is approved by a majority of the shareholders, as provided for in Section 19 of the Plan.

"Employee" means any person employed by the Company or any subsidiary corporation. Directors who are employed by the Company or any subsidiary corporation shall be considered Employees under the Plan.

"Exchange Act" or the “1934 Act” means the Securities Exchange Act of 1934, as amended.

"Exercise Price" means the price at which a Participant may purchase a share of Common Stock pursuant to an Option.

"Fair Market Value" means the market price of Common Stock, determined by the Committee as follows:

(a)

If the Common Stock was traded on the date in question on The New York Stock Exchange then the Fair Market Value shall be equal to the closing price quoted for such date by The New York Stock Exchange;

(b)

If the Common Stock was traded on a stock exchange on the date in question, then the Fair Market Value shall be equal to the closing price reported by the applicable composite transactions report for such date; and

(c)

If neither of the foregoing provisions is applicable, then the Fair Market Value shall be determined by the Committee in good faith on such basis as it deems appropriate.

Whenever possible, the determination of Fair Market Value by the Committee shall be based on the prices reported in THE WALL STREET JOURNAL. The Committee's determination of Fair Market Value shall be conclusive and binding on all persons.

"Incentive Stock Option" means a stock option granted to a Participant, pursuant to Section 7 of the Plan, that is intended to meet the requirements of Section 422 of the Code.

"Non-Statutory Stock Option" means a stock option granted to a Participant pursuant to the terms of the Plan, but which is not intended to be and is not identified as an Incentive Stock Option or a stock option granted under the Plan which is intended to be and is identified as an Incentive Stock Option but which does not meet the requirements of Section 422 of the Code.

"Option" means an Incentive Stock Option or Non-Statutory Stock Option.

"Outside Director" means a member of the Board of Directors of the Company or any subsidiary corporation who is not also an Employee of the Company or any subsidiary corporation.

"Participant" means any person who holds an outstanding Award.

"Performance Award" means an Award granted to a Participant pursuant to Section 9

of the Plan.

"Plan" means this Standex International Corporation 1998 Long Term Incentive Plan.

"Retirement" means retirement from employment with the Company or any subsidiary corporation in accordance with the retirement policies of the Company or any subsidiary corporation, as applicable, then in effect.  "Retirement" with respect to an Outside Director means the termination of service from the Board of Directors of the Company or any subsidiary

corporation following written notice to the Board of Directors of such Outside Director's intention to retire.

“Stock Award” means an Award granted to a Participant pursuant to Section 8 of the Plan.

"Termination for Cause" shall mean, in the case of an Outside Director, removal from the Board of Directors or, in the case of an Employee, unless defined differently under any employment agreement with the Company or any subsidiary corporation, termination of employment, because of a material loss or injury to the Company or any subsidiary corporation, or misconduct in the performance of the Employee’s employment duties, as determined by and in the sole discretion of the Board of Directors or its designee(s).

2.

ADMINISTRATION.

(a)

The Committee shall administer the Plan. The Committee shall consist of two or more disinterested directors of the Company, who shall be appointed by the Board of Directors.  A member of the Board of Directors shall be deemed to be "disinterested" only if he satisfies (i) such requirements as the Securities and Exchange Commission may establish for non-employee directors administering plans intended to qualify for exemption under Rule 16b-3 (or its successor) under the Exchange Act and (ii) such requirements as the Internal Revenue Service may establish for outside directors acting under plans intended to qualify for exemption under Section 162(m)(4)(C) of the Code.  The Board of Directors may also appoint one or more separate committees of the Board of Directors, each composed of one or more directors of the Company or any subsidiary corporation who need not be disinterested and who ma y grant Awards and administer the Plan with respect to Employees and Outside Directors who are not considered officers or directors of the Company under Section 16 of the Exchange Act or for whom Awards are not intended to satisfy the provisions of Section 162(m) (or its successor) of the Code.

(b)

The Committee shall (i) select the Employees and Outside Directors who are to receive Awards under the Plan, (ii) determine the type, number, vesting requirements and other features and conditions of such Awards, (iii) interpret the Plan and (iv) make all other decisions relating to the operation of the Plan.  The Committee may adopt such rules or guidelines as it deems appropriate to implement the Plan.  The Committee's determinations under the Plan shall be final and binding on all persons.

(c)

Each Award shall be evidenced by a written agreement ("Award Agreement") containing such provisions as may be approved by the Committee.  Each Award Agreement shall constitute a binding contract between the Company or any subsidiary corporation and the Participant, and every Participant, upon acceptance of the Award Agreement, shall be bound by the terms and restrictions of the Plan and the Award Agreement.  The terms of each Award Agreement shall be in accordance with the Plan, but each Award Agreement may include such additional provisions and restrictions determined by the Committee, in

its discretion, provided that such additional provisions and restrictions are not inconsistent with the terms of the Plan.  In particular and at a minimum, the Committee shall set forth in each Award Agreement  (i) the type of Award granted  (ii) the Exercise Price of any Option,  (iii) the number of shares subject to the Award,  (iv) the expiration date of the Award,  (v) the manner, time, and rate (cumulative or otherwise) of exercise or vesting of such Award, and  (vi) the restrictions, if any, placed upon such Award, or upon shares which may be issued upon exercise of such Award.  The Chairman of the Committee and such other directors and officers as shall be designated, in writing, by the Committee is hereby authorized to execute Award Agreements on behalf of the Company or any subsidiary corporation and to cause them to be delivered to the recipients of Awards.

(d)

The Committee may delegate, in writing, all authority for:  (i) the determination of forms of payment to be made by or received by the Plan and  (ii) the execution of any Award Agreement.  The Committee may rely on the descriptions, representations, reports and estimates provided to it by the management of the Company or any subsidiary corporation for determinations to be made pursuant to the Plan, including the satisfaction of any conditions of a Performance Award.  However, only the Committee or a portion of the Committee may certify the attainment of any conditions of a Performance Award intended to satisfy their requirements of Section 162(m) of the Code.

3.

TYPES OF AWARDS AND RELATED RIGHTS.

The following Awards may be granted under the Plan:

(a)

Non-Statutory Stock Options.

(b)

Incentive Stock Options.

(c)

Stock Awards.

(d)

Performance Awards.

4.

STOCK SUBJECT TO THE PLAN.

Subject to adjustment as provided in Section 14 of the Plan, all of the shares of Common Stock which have been approved prior to October 25, 2005, by the stockholders of the Company for issuance pursuant to the exercise of Options  may also be used for Stock Awards.  The shares of Common Stock issued under the Plan may be either authorized but unissued shares or authorized shares previously issued and acquired or reacquired by the Company.  To the extent that Options are granted under the Plan, the shares underlying such Options will be unavailable for any other use including future grants under the Plan except that, to the extent that such Options terminate,

expire, or are forfeited without having been exercised, new Awards may be made with respect to these shares.

5.

ELIGIBILITY.

Subject to the terms of the Plan, all Employees and Outside Directors shall be eligible to receive Awards under the Plan.  In addition, the Committee may grant eligibility to consultants of the Company or any subsidiary corporation.

6.

NON-STATUTORY STOCK OPTIONS.

The Committee may, subject to the limitations of this Plan and the availability of shares of Common Stock reserved but not previously awarded under the Plan, grant Non-Statutory Stock Options to eligible individuals upon such terms and conditions as it may determine to the extent such terms and conditions are consistent with the following provisions:

(a)

Exercise Price.  The Committee shall determine the Exercise Price of each Non-Statutory Stock Option.  However, the Exercise Price shall not be less than 100% of the Fair Market Value of the Common Stock on the Date of Grant.

(b)

Terms of Non-Statutory Stock Options.  The Committee shall determine the term during which a Participant may exercise a Non-Statutory Stock Option, but in no event may a Participant exercise a Non-Statutory Stock Option, in whole or in part, more than ten (10) years from the Date of Grant.  The Committee shall also determine the date on which each Non-Statutory Stock Option, or any part thereof, first becomes exercisable and any terms or conditions a Participant must satisfy in order to exercise each Non-Statutory Stock Option.  The shares of Common Stock underlying each Non-Statutory Stock Option may be purchased in whole or in part by the Participant at any time during the term of such Non-Statutory Stock Option, or any portion thereof, becomes exercisable.

(c)

Non-Transferability.  Unless otherwise determined by the Committee in accordance with this Section 6(c), a Participant may not transfer, assign, hypothecate, or dispose of in any manner, other than by will or the laws of intestate succession, a Non-Statutory Stock Option.  The Committee may, however, in its sole discretion, permit transferability or assignment of a Non-Statutory Stock Option if such transfer or assignment is, in its sole determination, for valid estate planning purposes and such transfer or assignment is permitted under the Code and Rule 16b-3 under the Exchange Act.  For purposes of this Section 6(c), a transfer for valid estate planning purposes includes, but is not limited to: (a) a transfer to a revocable intervivos trust as to which the Participant is both the settlor and trustee, or (b) a transfer for no consideration to:  (i) any member of the Parti cipant's Immediate Family,  (ii) any trust solely for the benefit of members of the Participant's Immediate Family,  (iii) any partnership whose only partners are members of the Participant's Immediate Family, and  (iv) any limited liability corporation or corporate entity whose only members or equity owners are members of the Participant's Immediate Family.  For purposes of this Section 6(c), "Immediate Family" includes, but is not

limited to the Participant’s spouse, children or grandchildren.  Approval by the Committee to transfer or assign any Non-Statutory Stock Option or portion thereof does not mean that such approval will be given with respect to any other Non-Statutory Stock Option or portion thereof.  The transferee or assignee of any Non-Statutory Stock Option shall be subject to all of the terms and conditions applicable to such Non-Statutory Stock Option immediately prior to the transfer or assignment and shall be subject to any other conditions proscribed by the Committee with respect to such Non-Statutory Stock Option.

(d)

Termination of Employment or Service (General).  Unless otherwise determined by the Committee, upon the termination of a Participant's employment or other service for any reason other than Retirement, Disability or death, a Change in Control, or Termination for Cause, the Participant may exercise only those Non-Statutory Stock Options that were immediately exercisable by the Participant at the date of such termination and only for a period of three (3) months following the date of such termination.

(e)

Termination of Employment or Service (Retirement).  Unless otherwise determined by the Committee, in the event of a Participant's Retirement, the Participant may exercise only those Non-Statutory Stock Options that were immediately exercisable by the Participant at the date of Retirement and only for a period of three (3) years following the date of Retirement.

(f)

Termination of Employment or Service (Disability or Death).  Unless otherwise determined by the Committee, in the event of the termination of a Participant's employment or other service due to Disability or death, all Non-Statutory Stock Options held by such Participant shall immediately become exercisable and remain exercisable for a period three (3) years following the date of such termination.

(g)

Termination of Employment or Service (Change in Control).  Unless otherwise determined by the Committee, in the event of the termination of a Participant's employment or service within twenty-four (24) months of a Change in Control, all Non-Statutory Stock Options held by such Participant shall immediately become exercisable and remain exercisable for a period of three (3) years following the date of such termination.

(h)

Termination of Employment or Service (Termination For Cause).  Unless otherwise determined by the Committee, in the event of a Participant's Termination for Cause, all rights with respect to the Participant's Non-Statutory Stock Options shall expire immediately upon the effective date of such Termination for Cause.

(i)

Payment.  Payment due to a Participant upon the exercise of a Non-Statutory Stock Option shall be made in the form of shares of Common Stock.

(j)

Maximum Individual Award.  No individual Employee shall be granted an  amount of Non-Statutory Stock Options, which exceeds 25% of all Options eligible to be granted under the Plan within any 12-month period.

(k)

Cancellation.  Notwithstanding the foregoing, any Option may be cancelled by the Committee at any time, if in the opinion of the Committee, the Participant engages in activities contrary to the interests of the Company or any of its subsidiaries.

7.

INCENTIVE STOCK OPTIONS.

The Committee may, subject to the limitations of the Plan and the availability of shares of Common Stock reserved but unawarded under this Plan, grant Incentive Stock Options to an Employee upon such terms and conditions as it may determine to the extent such terms and conditions are consistent with the following provisions:

(a)

Exercise Price.  The Committee shall determine the Exercise Price of each Incentive Stock Option.  However, the Exercise Price shall not be less than 100% of the Fair Market Value of the Common Stock on the Date of Grant; provided, however, that if at the time an Incentive Stock Option is granted, the Employee owns or is treated as owning, for purposes of Section 422 of the Code, Common Stock representing more than 10% of the total combined voting securities of the Company ("10% Owner"), the Exercise Price shall not be less than 110% of the Fair Market Value of the Common Stock on the Date of Grant.

(b)

Amounts of Incentive Stock Options.  To the extent the aggregate Fair Market Value of shares of Common Stock with respect to which Incentive Stock Options that are exercisable for the first time by an Employee during any calendar year under the Plan and any other stock option plan of the Company or any subsidiary corporation exceeds $100,000, or such higher value as may be permitted under Section 422 of the Code, such Options in excess of such limit shall be treated as Non-Statutory Stock Options.  Fair Market Value shall be determined as of the Date of Grant with respect to each such Incentive Stock Option.

(c)

Terms of Incentive Stock Options.  The Committee shall determine the term during which a Participant may exercise an Incentive Stock Option, but in no event may a Participant exercise an Incentive Stock Option, in whole or in part, more than ten (10) years from the Date of Grant; provided, however, that if at the time an Incentive Stock Option is granted to an Employee who is a 10% Owner, the Incentive Stock Option granted to such Employee shall not be exercisable after the expiration of five (5) years from the Date of Grant.  The Committee shall also determine the date on which each Incentive Stock Option, or any part thereof, first becomes exercisable and any terms or conditions a Participant must satisfy in order to exercise each Incentive Stock Option.  The shares of Common Stock underlying each Incentive Stock Option may be purchase d in whole or in part at any time during the term of such Incentive Stock Option after such Option becomes exercisable.

(d)

Non-Transferability.  No Incentive Stock Option shall be transferable except by will or the laws of descent and distribution and is exercisable, during his lifetime, only by the Employee to whom the Committee grants the Incentive Stock Option.  The designation of a beneficiary does not constitute a transfer of an Incentive Stock Option.

(e)

Termination of Employment (General).  Unless otherwise determined by the Committee, upon the termination of a Participant's employment or other service for any reason other than Retirement, Disability or death, a Change in Control, or Termination for Cause, the Participant may exercise only those Incentive Stock Options that were immediately exercisable by the Participant at the date of such termination and only for a period of three (3) months following the date of such termination.

(f)

Termination of Employment (Retirement).  Unless otherwise determined by the Committee, in the event of a Participant's Retirement, the Participant may exercise only those Incentive Stock Options that were immediately exercisable by the Participant at the date of Retirement and only for a period of three (3) years following the date of Retirement. Any Option originally designated as an Incentive Stock Option shall be treated as a Non-Statutory Stock Option to the extent the Participant exercises such Option more than three (3) months following the Date of the Participant's Retirement.

(g)

Termination of Employment (Disability or Death).  Unless otherwise determined by the Committee, in the event of the termination of a Participant's employment or other service due to Disability or death, all Incentive Stock Options held by such Participant shall immediately become exercisable and remain exercisable for a period three (3) years following the date of such termination.  Any Option originally designated as an Incentive Stock Option shall be treated as a Non-Statutory Stock Option to the extent the Participant exercises such Option more than one (1) year following the Date of the Participant's Retirement.

(h)

Termination of Employment (Change in Control).  Unless otherwise determined by the Committee, in the event of the termination of a Participant's employment or service within twenty-four (24) months of a Change in Control, all Incentive Stock Options held by such Participant shall become immediately exercisable and remain exercisable for a period of three (3) years following the date of such termination. Any Option originally designated as an Incentive Stock Option shall be treated as a Non-Statutory Stock Option to the extent the Participant exercises such Option more than one (1) year following the Date of the Participant's Retirement.

(i)

Termination of Employment (Termination For Cause).  Unless otherwise determined by the Committee, in the event of an Employee's Termination for Cause, all rights under such Employee's Incentive Stock Options shall expire immediately upon the effective date of such Termination for Cause.

(j)

Payment.  Payment due to a Participant upon the exercise of an Incentive Stock Option shall be made in the form of shares of Common Stock.

(k)

Maximum Individual Award.  No individual Employee shall be granted an amount of Incentive Stock Options, which exceeds 25% of all Options eligible to be granted under the Plan within any 12-month period.

(l)

Disqualifying Dispositions.  Each Award Agreement with respect to an Incentive Stock Option shall require the Participant to notify the Committee of any disposition of shares of Common Stock issued pursuant to the exercise of such Option under the circumstances

described in Section 421(b) of the Code (relating to certain disqualifying dispositions), within 10 days of such disposition.

(m)

Cancellation.  Notwithstanding the foregoing, any Incentive Stock Option may be canceled by the Committee at any time, if in the opinion of the Committee, the Participant engages in activities contrary to the interests of the Company or any of its subsidiaries.

8.

STOCK AWARDS.

The Committee may, subject to the limitations of the Plan, make Stock Awards, which shall consist of the grant of some number of shares of Common Stock to eligible individuals.  Stock Awards shall be made subject to the following terms and conditions:

(a)

Payment of the Stock Award.  Stock Awards may only be made in whole shares of Common Stock.  Stock Awards may only be granted from shares reserved under the Plan and available for award at the time the Stock Award is made to the Participant.

(b)

Terms of the Stock Award.  The Committee shall determine the dates on which Stock Awards granted to a Participant shall vest and any terms or conditions which must be satisfied prior to the vesting of any installment or portion of the Stock Award including, but not limited to achievement of specific business objectives, attainment of growth rates, attainment of profit and/or other performance objectives for the Company or one of its operating units or groups to be achieved by the end of a specified period of time or other measurement of performance.  Any such terms, or conditions shall be determined by the Committee as of the Date of Grant.

(c)

Termination of Employment or Service.  Unless otherwise determined by the Committee, upon the termination of a Participant’s employment or service for any reason other than Termination for Cause, the Participant’s unvested Stock Awards as of the date of termination shall be forfeited and any rights the Participant had to such unvested Stock Awards shall become null and void.  Unless otherwise determined by the Committee, or in the event of the Participant’s Termination for Cause, all unvested Stock Awards held by such Participant as of the effective date of such Termination for Cause shall be forfeited and any rights such Participant had to such unvested Stock Awards shall become null and void.

(d)

Cancellation.  Notwithstanding the foregoing, any Stock Award may be canceled by the Committee at any time, if in the opinion of the Committee, the Participant engages in activities contrary to the interests of the Company or any of its subsidiaries.

(e)

Non-Transferability.  Except to the extent permitted by the Code, the rules promulgated under Section 16(b) of the Exchange Act or any successor statutes or rules:

(i)

The recipient of a Stock Award shall not sell, transfer, assign, pledge, or otherwise encumber shares subject to Stock Award until full vesting of such shares has occurred.  For purposes of this section, the separation of beneficial ownership and

legal title through the use of any “swap” transaction is deemed to be a prohibited encumbrance.

(ii)

Unless determined otherwise by the Committee and except in the event of the Participant’s death or pursuant to a domestic relations order, a Stock Award is not transferable and may be earned in his lifetime only by the Participant to whom it is granted.  Upon the death of a Participant, a Stock Award is transferable by will or the laws of descent and distribution.  The designation of a beneficiary shall not constitute a transfer.

(iii)

If a recipient of a Stock Award is subject to the provisions of Section 16 of the Exchange Act, shares of Common Stock subject to such Stock Award may not, without the written consent of the Committee (which consent may be given in the Award Agreement), be sold or otherwise disposed of within six (6) months following the date of grant of the Stock Award.

(f)

Accrual of Dividends.  Whenever shares of Common Stock underlying a Stock Award are awarded to a Participant or beneficiary thereof under the Plan, such Participant or beneficiary shall also be entitled to receive, with respect to each such share awarded, a payment equal to any cash dividends and the number of shares of Common Stock equal to any stock dividends, declared and paid with respect to a share of the Common Stock if the record date for determining shareholders entitled to receive such dividends falls between the date relevant Stock Award was granted and the date the relevant Stock Award or installment thereof is issued.  

(g)

Voting of Stock Awards.  After a Stock Award has been granted but for which the shares covered by such Stock Award have not yet been vested, earned and distributed to the Participant pursuant to the Plan, the Participant shall be entitled to vote such shares of Common Stock which the Stock Award covers to the rules and procedures adopted by the Committee for this purpose.

(h)

Maximum Individual Award.  No Participant eligible to receive a Stock Award may receive more than 50,000 shares of Common Stock, which Stock Awards cover in any twelve-month period, subject to adjustment as set forth in Section 14.

9.

PERFORMANCE AWARDS.

(a)

The Committee may make Performance Awards under the Plan, which shall be payable in shares of Common Stock, or in the case of those executive officers of the Company who are so designated by the Committee, in cash (which shall include any cash which is required to be used to purchase shares of Common Stock upon conditions established by the Committee), at the end of a performance measurement period determined by the Committee.  Such Performance Awards shall be made subject to the following conditions:

(i)

The amount payable under a Performance Award shall be contingent upon satisfaction of any conditions related to the performance of the Company or any subsidiary corporation by which the eligible individual is employed.  The performance conditions on which any Performance Award is based shall be selected by the Committee from among one or more of the following:  sales or revenues; earnings, including but not limited to reported earnings, earnings from continuing operations, and earnings either before or after specific items set forth in the Company's income statement, such as interest, taxes, and/or depreciation; cash flow, including but not limited to operating cash flow and free cash flow; return on equity; return on capital; return on assets; return on investment; gross or net profit margin; working capital; productivity; operating efficiency; organic growth rates; growth and diversification through acquisitions and similar business strategies; diversification; globalization; strategic objectives, such as, without limitation, management and organizational development and reward systems, technology implementation and supply chain management; and stock price, any of which may be measured in absolute terms, or as compared to a defined benchmark, or as compared to the results of another corporation or group of corporations.  Each separate Performance Award shall set forth the applicable conditions, the maximum amounts payable, which in no event shall exceed $1.5 million for any particular Performance Award, the period over which such performance shall be measured, and such other terms and conditions as are applicable to the Performance Award.  Unless otherwise determined by the Committee, each Performance Award shall be granted and administered to comply with the requirements of Section 162(m) of the Code and subject to the following provisions:

Any Performance Award shall be made the earlier of:  (i) 90 days after the start of the period for which the Performance Award relates, or (ii) the completion of 25% of such period.  All determinations regarding the achievement of any applicable conditions will be made by the Committee.  The Committee may not increase during a year the amount of a Performance Award that would otherwise be payable upon satisfaction of the conditions but may reduce or eliminate the payments as provided for in the Award Agreement.

(b)

Nothing contained in the Plan will be deemed in any way to limit or restrict the Committee from making any Award or payment to any person under any other plan, arrangement or understanding, whether now existing or hereafter in effect.

(c)

No Award or portion thereof that is subject to the satisfaction of any condition shall be considered to be earned or vested until the Committee certifies in writing that the conditions to which the distribution, earning or vesting of such Award is subject have been achieved.

10.

DEFERRED PAYMENTS.

The Committee, in its discretion, may permit a Participant to elect to defer receipt of all or any part of any cash or stock payment under the Plan, or the Committee may determine to defer receipt by some or all Participants, of all or part of any such payment.  The Committee shall

determine the terms and conditions of any such deferral, including the period of deferral, the manner of deferral, and the method for measuring appreciation on deferred amounts until their payout.

11.

 METHOD OF EXERCISE OF OPTIONS.

Subject to any applicable Award Agreement, any Option may be exercised by the Participant in whole or in part at such time or times, and the Participant may make payment of the Exercise Price in such form or forms, including, without limitation, payment by delivery of cash, Common Stock or other consideration (including, where permitted by law and the Committee, Awards) having a Fair Market Value on the exercise date equal to the total Exercise Price, or by any combination of cash, shares of Common Stock and other consideration, including exercise by means of a cashless exercise arrangement with a qualifying broker-dealer or a constructive stock swap, as the Committee may specify in the applicable Award Agreement.

12.

RIGHTS OF PARTICIPANTS.

No Participant shall have any rights as a shareholder with respect to any shares of Common Stock covered by an Option until the date of issuance of a stock certificate for such Common Stock.  Nothing contained herein or in any Award Agreement confers on any person any right to continue in the employ or service of the Company or any subsidiary corporation or interferes in any way with the right of the Company or any subsidiary corporation to terminate a Participant's services.

13.

DESIGNATION OF BENEFICIARY.

A Participant may, with the consent of the Committee, designate a person or persons to receive, in the event of death, any Award to which the Participant would then be entitled.  Such designation will be made upon forms supplied by and delivered to the Company and may be revoked in writing.  If a Participant fails effectively to designate a beneficiary, then the Participant's estate will be deemed to be the beneficiary.

14.

DILUTION AND OTHER ADJUSTMENTS.

In the event of any change in the outstanding shares of Common Stock by reason of any stock dividend or split, recapitalization, merger, consolidation, spin-off, reorganization, combination or exchange of shares, or other similar corporate change, or other increase or decrease in such shares without receipt or payment of consideration by the Company, or in the event an extraordinary capital distribution is made, the Committee may make such adjustments to previously granted Awards, to prevent dilution, diminution, or enlargement of the rights of the Participant, including any or all of the following:

(a)

adjustments in the aggregate number or kind of shares of Common Stock or other securities that may underlie future Awards under the Plan;

(b)

adjustments in the aggregate number or kind of shares of Common Stock or other securities underlying Awards already made under the Plan;

(c)

adjustments in the Exercise Price of outstanding Incentive and/or Non-statutory Stock Options.

No such adjustments may, however, materially change the value of benefits available to a Participant under a previously granted Award.  All Awards under this Plan shall be binding upon any successors or assigns of the Company.  No fractional shares of Common Stock shall be issued under this Plan for any such adjustments.  Notwithstanding the above, in the event of an extraordinary capital distribution, any adjustment under this Section 14 shall be subject to required approval by the Board of Directors.

15.

TAX WITHHOLDING.

(a)

Whenever under this Plan, cash or shares of Common Stock are to be delivered upon exercise of an Award or any other event with respect to rights and benefits hereunder, the Committee shall be entitled to require as a condition of delivery (i) that the Participant remit an amount sufficient to satisfy all federal, state, and local withholding tax requirements related thereto, (ii) that the withholding of such sums come from compensation otherwise due to the Participant or from any shares of Common Stock due to the Participant under this Plan or (iii) any combination of the foregoing provided, however, that no amount shall be withheld from any cash payment or shares of Common Stock relating to an Award which was transferred by the Participant in accordance with this Plan.

(b)

If any disqualifying disposition described in Section 7(l) is made with respect to shares of Common Stock acquired under an Incentive Stock Option granted pursuant to this Plan, or any transfer described in Section 6(c) is made, or an election described in Section 16 is made, then the person making such disqualifying disposition, transfer, or election shall remit to the Company or any subsidiary corporation an amount sufficient to satisfy all federal, state, and local withholding taxes thereby incurred; provided that, in lieu of or in addition to the foregoing, the Company or any subsidiary corporation shall have the right to withhold such sums from compensation otherwise due to the Participant, or, except in the case of any transfer pursuant to Section 6(c), from any shares of Common Stock due to the Participant under this Plan.

16.

NOTIFICATION UNDER SECTION 83(B).

The Committee may, on the Date of Grant or any later date, prohibit a Participant from making the election described below.  If the Committee has not prohibited such Participant from making

such election, and the Participant shall, in connection with the exercise of any Option, or the grant of any Stock Award, make the election permitted under Section 83(b) of the Code (i.e., an election to include in such Participant's gross income in the year of transfer the amounts specified in Section 83(b) of the Code), such Participant shall notify the Committee of such election within 10 days of filing notice of the election with the Internal Revenue Service, in addition to any filing and notification required pursuant to regulations issued under the authority of Section 83(b) of the Code.

17.

AMENDMENT OF THE PLAN AND AWARDS.

(a)

Except as provided in paragraph (c) of this Section 17, the Board of Directors may at any time, and from time to time, modify or amend the Plan in any respect, prospectively or retroactively; provided, however, that provisions governing grants of Incentive Stock Options shall be submitted for shareholder approval to the extent required by law or regulation.  Failure to ratify or approve amendments or modifications by shareholders shall be effective only as to the specific amendment or modification requiring such ratification.  Other provisions of this Plan will remain in full force and effect.  No such termination, modification or amendment may adversely affect the rights of a Participant under an outstanding Award without the written permission of such Participant.

(b)

Except as provided in paragraph (c) of this Section 17, the Committee may amend any Award Agreement, prospectively or retroactively; provided, however, that no such amendment shall adversely affect the rights of any Participant under an outstanding Award without the written consent of such Participant.

(c)

In no event shall the Board of Directors amend the Plan or shall the Committee amend an Award Agreement in any manner that has the effect of:  

(i)

Allowing any Option to be granted with an exercise below the Fair Market Value of the Common Stock on the Date of Grant.

(ii)

Allowing the exercise price of any Option previously granted under the Plan to be reduced subsequent to the Date of Award.

(d)

Notwithstanding anything in this Plan or any Award Agreement to the contrary, if any Award or right under this Plan would cause a transaction to be ineligible for pooling of interest accounting that would, but for such Award or right, be eligible for such accounting treatment, the Committee may modify or adjust the Award or right so that pooling of interest accounting is available.

18.

NO SPECIAL EMPLOYMENT RIGHTS.

Nothing in this Plan or in any Awards granted under this Plan shall confer upon the Award recipient any right or guaranty with respect to the continuation of his or her employment by the Company or any subsidiary corporation, subject to the terms of any separate employment

agreement to the contrary.  The Company reserves the right to increase or decrease the compensation of the Award recipient from the rate in existence at the time of the Award.

19.

EFFECTIVE DATE OF PLAN.

The Plan shall become effective upon approval by the affirmative vote of the holders of a majority of the outstanding Common Stock of the Company.

20.

TERMINATION OF THE PLAN.

The right to grant Awards under the Plan will terminate upon the earlier of: (i) ten (10) years after the Effective Date; (ii) the issuance of a number of shares of Common Stock pursuant to the exercise of Options or the distribution of Stock Awards which is equivalent to the maximum number of shares reserved under the Plan as set forth in Section 4 hereof.  The Board of Directors has the right to suspend or terminate the Plan at any time, provided that no such action will, without the consent of a Participant, adversely affect a Participant's vested rights under a previously granted Award.   

21.

APPLICABLE LAW.

The Plan will be administered in accordance with the laws of the State of Delaware and applicable Federal law.

22.

FOREIGN JURISDICTIONS.  

The Committee may adopt, amend and terminate such arrangements, not inconsistent with the intent of the Plan as it may deem necessary or desirable to make available tax or other benefits of the laws of the foreign jurisdictions to Participants who are subject to such laws.