STARCRAFT CORP /IN/
STARCRAFT 1997 STOCK INCENTIVE PLAN
<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>11
<FILENAME>ex104_0210.txt
<DESCRIPTION>STARCRAFT 1997 STOCK INCENTIVE PLAN
<TEXT>
                                                                    EXHIBIT 10.4

                              STARCRAFT CORPORATION
                            1997 STOCK INCENTIVE PLAN


     1. Purpose.  The purpose of the Starcraft  Corporation 1997 Stock Incentive
Plan (the  "Plan"')  is to  provide to certain  directors,  officers  (including
officers who are members of the Board of  Directors)  and other key employees of
Starcraft   Corporation  (the   "Corporation")   and  its   majority-owned   and
wholly-owned  subsidiaries  (individually a "Subsidiary"  and  collectively  the
"Subsidiaries")  who are materially  responsible for the management or operation
of the business of the Corporation or a Subsidiary,  a favorable  opportunity to
acquire shares of Common Stock,  without par value, of the Corporation  ("Common
Stock"),  thereby  providing  them with an  increased  incentive to work for the
success of the  Corporation and the  Subsidiaries  and better enabling each such
entity to attract and retain capable directors and executive personnel.

     2.  Administration  of the Plan. The Plan shall be administered,  construed
and interpreted by a Committee (the "Committee"). The Committee shall consist of
at least two (2) members of the Board of Directors, who shall be designated from
time to time by the Board of Directors.  The Committee  shall have the authority
to determine, consistent with and subject to the provisions of the Plan:

          (a) the individuals to whom options (the  "Optionees")  and restricted
     share awards shall be granted under the Plan (the "Awardees");

          (b) the time when options or  restricted  shares of Common Stock shall
     be granted hereunder;

          (c) the  number of shares of  Common  Stock of the  Corporation  to be
     covered under each option or  restricted  share grant and the amount of any
     cash awards;

          (d) the option price to be paid upon the exercise of each option;

          (e) the price to be paid, if any, for restricted shares;

          (f) the period  within  which each option may be  exercised  including
     provision for acceleration of exercisability;

          (g) the period of restrictions for restricted share grants;

          (h) the extent to which an option is an  incentive  stock  option or a
     non-qualified stock option; and

          (i) the terms and  conditions of the respective  Option  Agreements or
     Restricted  Share  Agreements  by  which  options  or  restricted   shares,
     whichever is applicable, granted shall be evidenced.

The Committee  shall also have  authority to prescribe,  amend and rescind rules
and  regulations  relating  to the Plan,  and to make all  other  determinations
necessary or advisable in the  administration  of the Plan. The determination of
items (a) through  (i) above,  with  respect to options and awards,  may also be
made by the Board of  Directors.  In addition,  to the extent  authorized by the
Board of Directors or the Committee, a separate committee consisting of at least
one (1) director  shall have authority to make the  determinations  of items (a)
through (i) with respect to  optionees  and awardees  other than  directors  and
executive officers subject to Section 16 of the Securities Exchange Act of 1934,
as amended (the "1934 Act").  Moreover,  determinations of items (a) through (i)
above with respect to optionees who are directors or executive  officers subject
to Section 16 of the 1934 Act shall be made only by the Board of  Directors or a
committee of at least two (2) directors who qualify as "non-employee  directors"
under such Section.

     3.  Eligibility.  The appropriate  committee or the Board of Directors may,
consistent  with the terms hereof,  grant options,  restricted  shares,  or cash
awards (the "Awards") to directors, officers (including officers who are members
of the Board of Directors)  and other key employees of the  Corporation  or of a
Subsidiary  who in the opinion of such  Committee or Board are from time to time
materially  responsible  for the  management or operation of the business of the
Corporation  or of a  Subsidiary;  provided,  however,  that in no event may any
employee who owns (after application of the ownership rules in Section 424(d) of
the Internal  Revenue Code of 1986,  as amended  (the  "Code"))  shares of stock
possessing  more than 10% of the total  combined  voting power of all classes of
stock of the  Corporation  or any of its  Subsidiaries  be granted an  incentive
stock  option  hereunder  unless at the time such  option is granted  the option
price is at least  110% of the fair  market  value of the stock  subject  to the
incentive  stock  option  and such  incentive  stock  option by its terms is not
exercisable  after the expiration of five (5) years from the date such option is
granted.

     4. Stock Subject to the Plan.  The maximum number of shares with respect to
which  options  and  restricted  share  awards  may be made  under  this Plan is
1,000,000 shares of Common Stock,  which shall be authorized but unissued shares
of the Corporation. Subject to Section 7 hereof, the shares for which awards may
be granted  under the Plan shall not exceed that  number.  No  individual  shall
receive  Options or Awards for more than 500,000  Shares under this Plan. If any
option shall expire or terminate for any reason without having been exercised in
full,  or if any  restricted  share grant is forfeited in whole or in part,  the
unpurchased  or forfeited  shares  subject  thereto shall (unless the Plan shall
have terminated) become available for other Awards under the Plan.

     5. Terms of Option.  Each option  granted under the Plan shall be evidenced
by a Stock Option  Agreement  between the Corporation and the Optionee and shall
be subject to the  following  terms and  conditions  and to such other terms and
conditions not inconsistent  therewith as the appropriate committee or the Board
of Directors may deem appropriate in each case:

          (a)  Option  Price.  The price to be paid for shares of stock upon the
     exercise of such option shall be determined as herein  provided at the time
     such option is granted,  but such price in the case of an  incentive  stock
     option shall not be less than the fair market  value,  as determined by the
     appropriate committee or the Board of Directors consistent with Treas. Reg.
     Section  20.2031-2 and the requirements of Section 422 of the Code, of such
     stock on the date on which such option is  granted;  and  provided  further
     that the  appropriate  committee or the Board of Directors  may in no event
     award  non-qualified  stock  options  at a price  less than 85% of the fair
     market value of the Common Stock on the date of grant, as determined by the
     appropriate committee or the Board of Directors consistent with Treas. Reg.
     ss. 2031-2.

          (b) Period for Exercise of Option.  An option shall not be exercisable
     (i) before a six (6) month  period  beginning  on the date of grant or (ii)
     after the expiration of such period as shall be fixed as provided herein at
     the time such option is granted,  but such period in no event shall  exceed
     ten (10)  years  and one (1) day from the  date on  which  such  option  is
     granted; provided,  however, that incentive stock options granted hereunder
     shall have terms not in excess of ten (10) years.  Options shall be subject
     to earlier termination as hereinafter provided.

          (c)  Exercise  of  Options.  The  option  price of each share of stock
     purchased  upon  exercise of an option shall be paid in full (i) in cash at
     the time of such  exercise,  (ii) if the Optionee  may do so in  conformity
     with Regulation T (12 C.F.R.  Section  220.3(e)(4))  and without  violating
     Section  16(b)  or (c) of the  1934  Act and  subject  to  approval  by the
     appropriate  committee  or the Board of  Directors,  pursuant to a broker's
     cashless  exercise  procedure,  by delivering a properly  executed exercise
     notice  together  with  irrevocable  instructions  to a broker  to  deliver
     promptly to the Corporation the total option price in cash and, if desired,
     the amount of any taxes to be withheld from the Optionee's  compensation as
     a result of any withholding tax obligation of the Corporation or any of its
     Subsidiaries, as specified in such notice, or (iii) subject to the approval
     of the appropriate committee or the Board of Directors, by tendering to the
     Corporation whole shares of the Corporation's Common Stock owned by him, or
     any combination of whole shares of the Corporation's  Common Stock owned by
     him and cash,  having a fair market value equal to the cash exercise  price
     of the shares with respect to which the option is being exercised. For this
     purpose,  any shares so tendered  by an Optionee  shall be deemed to have a
     fair market value as determined by the  appropriate  committee or the Board
     of  Directors  consistent  with  Treas.  Reg.  Section  20.2031-2  and  the
     requirements  of Section 422 of the Code.  Options may be granted  that are
     exercisable  in full at any time during their term, or  exercisable in such
     installments at such times during their term as the  appropriate  committee
     or the Board of Directors  may  determine.  Installments  not  purchased in
     earlier  periods  shall be cumulated and be available for purchase in later
     periods.  Subject to the other  provisions  of this Plan,  an option may be
     exercised at any time or from time to time during the term of the option as
     to any or all whole shares which have become  subject to purchase  pursuant
     to the terms of the  option  or the  Plan,  but not at any time as to fewer
     than one hundred (100) shares unless the remaining shares which have become
     subject to purchase are fewer than one hundred (100) shares.  An option may
     be  exercised  only by  written  notice to the  Corporation,  mailed to the
     attention of its Secretary, signed by the Optionee (or such other person or
     persons  as shall  demonstrate  to the  Corporation  his or their  right to
     exercise the option),  specifying  the number of shares in respect of which
     it is being exercised,  and accompanied by payment in full by cash or check
     in the amount of the aggregate option price for the shares,  by delivery of
     the irrevocable broker instructions referred to above or if the appropriate
     committee or the Board of Directors  has approved the use of the stock swap
     feature provided for above, followed as soon as practicable by the delivery
     of the option price for such shares.

          (d) Certificates. The certificate or certificates for the shares as to
     which the option is exercised shall be registered in the name of the person
     or persons so  exercising  the option and shall be delivered to or upon the
     order of such person or persons,  as soon as practicable after such written
     notice is  received  by the  Corporation.  An  Optionee  shall not have any
     rights of a  shareholder  in respect  to the shares of stock  subject to an
     option until such shares are purchased upon exercise of such option.

          (e) Termination of Option. If an Optionee other than a Director who is
     not an employee of the Corporation (an "Outside  Director") ceases to be an
     employee of the Corporation and the  Subsidiaries for any reason other than
     retirement,  permanent  and total  disability  (within  the  meaning of ss.
     22(e)(3) of the Code), or death,  any option granted to him shall forthwith
     terminate;  provided,  that the Committee may authorize an option agreement
     to provide  that the option will  continue to be  exercisable  until a date
     following  termination,  but such date shall not be later than the later of
     (i) the date 30 days after termination of employment,  or (ii) the last day
     of the  month in which the last of the  incentive  stock  options,  if any,
     subject  to the  option  agreement  become  exercisable.  Leave of  absence
     approved by the Committee shall not constitute cessation of employment.  If
     an Optionee  (other than an Outside  Director)  ceases to be an employee of
     the  Corporation and the  Subsidiaries by reason of retirement,  any option
     granted to him may be exercised by him in whole or in part within three (3)
     months  after the date of his  retirement,  whether  or not the  option was
     otherwise exercisable at the date of his retirement. (The term "retirement"
     as used herein means such  termination  of employment as shall entitle such
     individual to early or normal  retirement  benefits under any then existing
     pension plan of the  Corporation  or a Subsidiary).  If an Optionee  (other
     than an Outside  Director)  ceases to be an employee of the Corporation and
     the  Subsidiaries by reason of permanent and total  disability  (within the
     meaning  of ss.  22(e)(3)  of the Code),  any option  granted to him may be
     exercised  by him in whole or in part within one (1) year after the date of
     his termination of employment by reason of such  disability  whether or not
     the option was otherwise  exercisable at the date of such  termination.  In
     the  event  of  the  death  of an  Optionee  while  in  the  employ  of the
     Corporation  or a Subsidiary,  or within three (3) months after the date of
     his  retirement  or  within  one (1)  year  after  the  termination  of his
     employment by reason of permanent and total disability  (within the meaning
     of ss. 22(e)(3) of the Code), any option granted to him may be exercised in
     whole or in part at any time  within  one (1) year  after  the date of such
     death by the  executor or  administrator  of his estate or by the person or
     persons entitled to the option by will or by applicable laws of descent and
     distribution  until the  expiration of the option term as fixed as provided
     herein,  whether or not the option was otherwise exercisable at the date of
     his  death.  Options  granted  to  Outside  Directors  shall  cease  to  be
     exercisable  six (6)  months  after the date such  Outside  Director  is no
     longer a director of the  Corporation  for any reason.  In the event of the
     death of an Optionee who is an Outside Director while serving as a director
     of the  Corporation  or  within  six (6)  months  after he  ceases  to be a
     director of the Corporation,  any option granted to him may be exercised in
     whole or in part at any time  within  one (1) year  after  the date of such
     death by the  executor or  administrator  of his estate or by the person or
     persons entitled to the option by will or by applicable laws of descent and
     distribution  until the  expiration of the option term,  whether or not the
     option was otherwise exercisable at the date of his death.  Notwithstanding
     anything in the foregoing to the contrary,  no option shall in any event be
     exercisable  after the  expiration of the period fixed in  accordance  with
     subsection (b) above.

          (f)  Nontransferability of Option.  Except for transfers  specifically
     approved  in  advance  by the Board of  Directors  only with  respect  to a
     non-qualified  stock  option,  an  Option  may  not be  transferred  by the
     Optionee  otherwise than by will or the laws of descent and distribution or
     pursuant to a qualified  domestic relations order as defined by the Code or
     Title 1 of the Employee Retirement Income Security Act of 1974, as amended,
     and during the lifetime of the Optionee shall be exercisable only by him or
     his guardian or legal representative.

          (g) Maximum  Incentive Stock Options.  The aggregate fair market value
     of stock with respect to which  incentive stock options (within the meaning
     of  Section  422 of the Code)  are  exercisable  for the  first  time by an
     Optionee  during any calendar  year under the Plan or any other plan of the
     Company or its Subsidiaries  shall not exceed  $100,000.  For this purpose,
     the fair market value of such shares shall be determined as of the date the
     option  is  granted  and  shall  be  computed  in such  manner  as shall be
     determined  by  the  appropriate  committee  or  the  board  of  Directors,
     consistent  with  the  requirements  of  Section  422 of the  Code.  If the
     immediate  exercisability  of  incentive  stock  options  arising  from the
     retirement, death or permanent and total disability of an Optionee pursuant
     to Section 5(e) above would cause this  $100,000  limitation to be exceeded
     for an Optionee,  the appropriate committee or the Board of Directors shall
     convert  as of the  date on  which  such  incentive  stock  options  become
     exercisable  all or a portion of the  outstanding  incentive  stock options
     held  by  such  Optionee  to  non-qualified  stock  options  to the  extent
     necessary to comply with the $100,000 limitation.

          (h) Investment Representations. Unless the Shares subject to an option
     are registered  under  applicable  federal and state  securities laws, each
     Optionee by  accepting  an option  shall be deemed to agree for himself and
     his legal  representatives  that any option  granted to him and any and all
     shares of Common Stock  purchased  upon the exercise of the option shall be
     acquired for  investment  and not with a view to, or for sale in connection
     with, any distribution thereof.  Unless the shares subject to an option are
     registered under applicable  federal and state securities laws, each notice
     of the  exercise  of any  portion of an option  shall be  accompanied  by a
     representation   in   writing,   signed  by  the   Optionee  or  his  legal
     representatives,  as the case may be,  that the shares of Common  Stock are
     being  acquired in good faith for investment and not with a view to, or for
     sale in connection  with, any  distribution  thereof (except in case of the
     Optionee's legal representatives for distribution, but not for sale, to his
     legal heirs,  legatees and other  testamentary  beneficiaries).  Any shares
     issued  pursuant to an  exercise of an option may bear a legend  evidencing
     such representations and restrictions.

     6. Incentive Stock Options and Non-Qualified Stock Options. Options granted
under the Plan may be incentive  stock  options under Section 422 of the Code or
non-qualified  stock  options.  All options  granted  hereunder  will be clearly
identified as either incentive stock options or non-qualified  stock options. In
no event shall the  exercise of an incentive  stock  option  affect the right to
exercise  any  non-qualified  stock  option.  nor  shall  the  exercise  of  any
non-qualified  stock  option  affect the right to exercise any  incentive  stock
option.  Nothing  in this  Plan  shall be  construed  to  prohibit  the grant of
incentive  stock  options and  non-qualified  stock  options to the same person;
provided,  however, that incentive stock options and non-qualified stock options
shall not be granted in a manner whereby the exercise of one non-qualified stock
option or incentive stock option affects the exercisability of the other.

     7.  Adjustment  of Shares.  In the event of any change after the  effective
date of the Plan in the  outstanding  stock of the  Corporation by reason of any
reorganization,  recapitalization,  stock split, stock dividend,  combination of
shares, exchange of shares, merger or consolidation,  liquidation,  or any other
change after the effective date of the Plan in the nature of the shares of stock
of the Corporation, the Committee or the Board of Directors shall determine what
changes, if any, are appropriate in the number and kind of shares reserved under
the Plan,  and in the option  price  under and  restricted  share  price and the
number and kind of shares covered by outstanding  Awards granted under the Plan.
Any determination of the Committee or the Board of Directors  hereunder shall be
conclusive.

     8.  Restricted  Share  Awards.  The  appropriate  committee or the Board of
Directors may also grant  restricted  share awards of Common Stock which entitle
Awardees to receive shares of Common Stock. Each restricted share award shall be
evidenced  by a  Restricted  Share  Agreement  between the  Corporation  and the
Awardee  which such  Agreement  shall set forth the terms and  conditions of the
award  to the  extent  not  inconsistent  with the  provisions  of the  Plan.  A
restricted  share award may provide for the  crediting or payment to do Awardee,
on each  dividend  payment  date, of an amount equal to the dividends on awarded
shares. A restricted share award may also provide for the distribution of shares
subject to the following conditions:

          (a) the  shares  may not be  distributed  earlier  than six (6) months
     after grant;

          (b) the  shares  may  not be  transferred  until  the  lapsing  of the
     forfeiture provisions;

          (c)  the  shares  shall  be  deposited   with  the  Secretary  of  the
     Corporation;

          (d) dividends on awarded  shares shall be distributed at such times as
     are determined as provided herein; and

          (e) the shares shall be subject to forfeiture under the  circumstances
     described in the Restricted Share Agreement between the Corporation and the
     Awardee.

Each  restricted  share award shall provide for the  distribution of the awarded
shares  free of all  restrictions  at  such  time or  times  as the  appropriate
committee  or the  Board  of  Directors  shall  determine,  and  specify  in the
Restricted Share Agreement.

     9. Tax  Withholding.  Whenever the  Corporation  proposes or is required to
issue or transfer shares under the Plan, the Corporation shall have the right to
require the Awardee or his legal  representative  to remit to the Corporation an
amount  sufficient  to satisfy any federal,  state and/or local tax  withholding
requirements  prior to the delivery of any certificate or certificates  for such
shares or lifting  the  legends on Common  Stock  subject to  restrictions,  and
whenever under the Plan payments are to be made in cash,  such payments shall be
net  of an  amount  sufficient  to  satisfy  any  federal,  state  and/or  local
withholding  requirements;  provided,  however,  that  to the  extent  expressly
provided  in a  Stock  Option  Agreement  or  Restricted  Share  Agreement,  the
Corporation may make an additional cash payment to the Awardee equal to all or a
portion of his withholding obligation.

     Notwithstanding  the above and to the extent  permitted by the  appropriate
committee or the Board of Directors,  an Optionee may make a written election to
have shares  having an  aggregate  fair market value  sufficient  to satisfy the
applicable  withholding  taxes withheld from the shares otherwise to be received
upon the exercise of the option.  Elections by Optionees to have shares withheld
for this purpose will be subject to the following provisions:

          (a) they must be made  prior to the date as of which the amount of tax
     withheld is determined (the "Tax Date");

          (b) the option price under any option may not be reduced to less, than
     the fair market value,  as determined by the  appropriate  committee or the
     Board of Directors  consistent with the  requirements of Section 422 of the
     Code,  of the stock on the date such option is granted,  except as provided
     in Section 7 hereof;

          (c) they will be irrevocable; and

          (d)  they  will  be  subject  to the  disapproval  of the  appropriate
     committee or the Board of Directors.

     10. Tax Benefit.  The appropriate  committee or the Board of Directors may,
in its  sole  discretion,  include  a  provision  in  any  Option  Agreement  or
Restricted Share Agreement that provides for an additional cash payment from the
Corporation  to the  grantee of such option or award equal to the tax benefit to
be received by the Corporation attributable to its federal income tax deduction,
if any, resulting from the exercise, vesting, cancellation, disposition or other
transaction  involving  the  option  or the  shares  subject  to the  option  or
restricted share award.

     11.  Replacement and Extension of the Terms of Options and Cash Awards. The
appropriate  committee or the Board of Directors from time to time may permit an
Optionee  (other  than an Outside  Director)  under the Plan or any other  stock
option plan heretofore or hereafter adopted by the Corporation or any Subsidiary
to surrender  for  cancellation  any  unexercised  outstanding  stock option and
receive in exchange therefor an option for such number of shares of Common Stock
as may be  designated  by the  appropriate  committee or the Board of Directors.
Such Optionees also may be granted related cash awards as provided in Section 10
hereof.

     12. Amendment. The Board of Directors of the Corporation may amend the Plan
from  time to time  and,  with  the  consent  of the  Optionee,  the  terms  and
provisions of his Awards,  except that without the approval of the holders of at
least a majority of the shares of the  Corporation  voting in person or by proxy
at a duly constituted meeting or adjournment thereof:

          (a) the number of shares of stock which may be reserved  for  issuance
     under the plan may not be increased except as provided in Section 7 hereof;

          (b) the  period  during  which an option may be  exercised  may not be
     extended  beyond  ten (10)  years  and one day  from the day on which  such
     option was granted;

          (c) the class of persons to whom Awards may be granted  under the Plan
     shall not be modified materially.

     No  amendment  of the  Plan,  however,  may,  without  the  consent  of the
Awardees,  make any changes in any outstanding Awards theretofore  granted under
the Plan which would adversely affect the rights of such Awardees.

     13.  Termination.  The Board of Directors of the  Corporation may terminate
the Plan at anytime and no award shall be granted thereafter.  Such termination,
however,  shall not affect the validity of any award  theretofore  granted under
the Plan. In any event,  no incentive stock option may be granted under the Plan
after the  conclusion of a ten (10) year period  commencing on the date the Plan
is adopted  or, if earlier,  the date the Plan is approved by the  Corporation's
shareholders.

     14. Successors.  This Plan shall be binding upon the successors and assigns
of the Corporation.

     15. Governing Law. The terms of any awards granted hereunder and the rights
and obligations hereunder of the Corporation,  the Awardees and their successors
in interest shall,  except to the extent governed by Federal law, be governed by
Indiana law.

     16. No Right to Continued Service. Nothing in this Plan or in any agreement
entered into pursuant hereto shall confer on any person any right to continue in
the employ or  service  of the  Corporation  or its  Subsidiaries  or affect any
rights  that  the  Corporation,   a  Subsidiary,  or  the  shareholders  of  the
Corporation may have to terminate his service at any time.

     17. Government and Other Regulations. The obligations of the Corporation to
issue or transfer and deliver shares under options  granted under the Plan shall
be  subject to  compliance  with all  applicable  laws,  governmental  rules and
regulations, and administrative action.

     18.  Effective  Date.  The Plan shall become  effective on January 1, 1997;
provided,  however, that the granting of any option under the Plan or restricted
share award is  conditional  upon the approval of the Plan by the  Corporation's
shareholders  no later than twelve (12) months after such effective date and the
options  granted  pursuant to the Plan may not be  exercised  until the Board of
Directors of the  Corporation has been advised by counsel that such approval has
been  obtained  and all  other  applicable  legal  requirements  have  been met,
provided, further, that if shareholder approval does not occur, the Plan and all
outstanding options and restricted share awards shall terminate.

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