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                                                                    Exhibit 10.2

                                 FIREPOND, INC.
                                 1997 STOCK PLAN

         SECTION 1. GENERAL PURPOSE OF PLAN; DEFINITIONS

         The name of this plan is the FirePond, Inc. 1997 Stock Plan (the
"Plan"). The purpose of the Plan is to enable FirePond, Inc. (the "Company") to
retain and attract executives and other key employees, directors and consultants
who contribute to the Company's success by their ability, ingenuity and
industry, and to enable such individuals to participate in the long-term success
and growth of the Company by giving them a proprietary interest in the Company.

         For purposes of the Plan, the following terms shall be defined as set
forth below:

         a.       "BOARD" means the Board of Directors of the Company as it may
                  be comprised from time to time.

         b.       "CAUSE" means a felony conviction of a participant, the
                  failure of a participant to contest prosecution for a felony,
                  willful misconduct, dishonesty or intentional violation of a
                  statute, rule or regulation, any of which, in the judgment of
                  the Company, is directly and materially harmful to the
                  business or reputation of the Company, or a repeated refusal
                  of a participant to comply with reasonable directions of the
                  Board of Directors, or the reckless or willful misconduct in
                  the performance of duties assigned by the Board of Directors.

         c.       "CODE" means the Internal Revenue Code of 1986, as amended
                  from time to time, or any successor statute

         d.       "COMMITTEE" means the Committee referred to in Section 2 of
                  the Plan. If at any time no Committee shall be in office, then
                  the functions of the Committee specified in the Plan shall be
                  exercised by the Board, unless the Plan specifically states
                  otherwise.

         e.       "CONSULTANT" means any person, including an advisor, engaged
                  by the Company or a Parent Corporation or a Subsidiary of the
                  Company to render services and who is compensated for such
                  services and who is not an employee of the Company or any
                  Parent Corporation or Subsidiary of the Company. A director
                  who is not an employee may serve as a Consultant.

         f.       "COMPANY" means FirePond, Inc., a corporation organized under
                  the laws of the State of Minnesota (or any successor
                  corporation).


         g.       "DEFERRED STOCK" means an award made pursuant to Section 8
                  below of the right to receive stock at the end of a specified
                  deferral period.



         h.       "DISABILITY" means permanent and total disability as
                  determined by the Committee.



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         i.       "EARLY RETIREMENT" means retirement, with consent of the
                  Committee at the time of retirement, from active employment
                  with the Company and any Subsidiary or Parent Corporation of
                  the Company.

         j.       "FAIR MARKET VALUE" of Stock on any given date shall be
                  determined by the Committee as follows: (a) if the Stock is
                  listed for trading on one or more national securities
                  exchanges, or is traded on The Nasdaq Stock Market, the last
                  reported sales price on the principal such exchange or The
                  Nasdaq Stock Market on the date in question, or if such Stock
                  shall not have been traded on such principal exchange on such
                  date, the last reported sales price on such principal exchange
                  or The Nasdaq Stock Market on the first day prior thereto on
                  which such Stock was so traded, or (b) if the Stock is not
                  listed for trading on a national securities exchange or The
                  Nasdaq Stock Market, but is traded in the over-the-counter
                  market, including The Nasdaq Small Cap Market, the closing bid
                  price for such Stock on the date in question, or if there is
                  no such bid price for such Stock on such date the closing bid
                  price on the first day prior thereto on which such price
                  existed; or (c) if neither (a) or (b) is applicable, by any
                  means fair and reasonable by the Committee, which
                  determination shall be final and binding on all parties.

         k.       "INCENTIVE STOCK OPTION" means any Stock Option intended to be
                  and designated as an "Incentive Stock Option" within the
                  meaning of Section 422 of the Code.

         l.       "NON-EMPLOYEE DIRECTOR" shall have the meaning set forth in
                  Rule 16b-3(b)(3) as promulgated by the Securities and Exchange
                  Commission under the Securities Exchange Act of 1934, as
                  amended, or any successor definition adopted by the
                  Commission.

         m.       "NON-QUALIFIED STOCK OPTION" means any Stock Option that is
                  not an Incentive Stock Option, and is intended to be and is
                  designated as a "Non-Qualified Stock Option."

         n.       "NORMAL RETIREMENT" means retirement from active employment
                  with the Company and any Subsidiary or Parent Corporation of
                  the Company on or after age 65.

         o.       "OUTSIDE DIRECTOR" means a director who (a) is not a current
                  employee of the Company or any member of an affiliated group
                  which includes the Company, (b) is not a former employee of
                  the Company who receives compensation for prior services
                  (other than benefits under a tax-qualified retirement plan)
                  during the taxable year, (c) has not been an officer of the
                  Company; (d) does not receive remuneration from the Company,
                  either directly or indirectly, in any capacity other than as a
                  director, except as otherwise permitted under Code Section
                  162(m) and regulations thereunder. For this purpose,
                  remuneration includes any payment in exchange for goods or
                  services. This definition shall be further governed by the
                  provisions of Code Sections 162(m) and regulations promulgated
                  thereunder.



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

         q.       "RESTRICTED STOCK" means an award of shares of Stock that are
                  subject to restrictions under Section 7 below.

         r.       "RETIREMENT" means Normal Retirement or Early Retirement.

         s.       "STOCK" means the Common Stock of the Company.

         t.       "STOCK APPRECIATION RIGHT" means the right pursuant to an
                  award granted under Section 6 below to surrender to the
                  Company all or a portion of a Stock Option in exchange for an
                  amount equal to the difference between (i) Fair Market Value,
                  as of the date such Stock Option or such portion thereof is
                  surrendered, of the shares of Stock covered by such Stock
                  Option or such portion thereof and (ii) the aggregate exercise
                  price of such Stock Option or such portion thereof.

         u.       "STOCK OPTION" means any option to purchase shares of Stock
                  granted pursuant to Section 5 below.

         v.       "SUBSIDIARY" means any corporation (other than the Company) in
                  an unbroken chain of corporations beginning with the Company
                  if each of the corporations (other than the last corporation
                  in the unbroken chain) owns stock possessing 50% or more of
                  the total combined voting power of all classes of stock in one
                  of the other corporations in the chain.

         SECTION 2. ADMINISTRATION.

         The Plan shall be administered by the Board of Directors or by a
Committee of not less than two directors, all of whom shall be Non-Employee
Directors upon the Company becoming subject to the insider reporting
requirements of Section 16 of the Securities Exchange Act of 1934, as amended,
and also Outside Directors upon the Company becoming subject to the requirements
of Rule 162(m) of the Code. Committee members shall be appointed by the Board of
Directors of the Company and shall serve at the pleasure of the Board. Any and
all functions of the Committee specified in the Plan may be exercised by the
Board, unless the Plan specifically states otherwise.

         The Committee shall have the power and authority to grant to eligible
employees, directors or Consultants, pursuant to the terms of the Plan: (i)
Stock Options, (d) Stock Appreciation Rights, (iii) Restricted Stock, or (iv)
Deferred Stock awards.

         In particular, the Committee shall have the authority:

         (i)      to select the officers, directors and other key employees of
                  the Company and its Subsidiaries and other eligible persons to
                  whom Stock Options,



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                  Stock Appreciation Rights, Restricted Stock and Deferred Stock
                  awards may from time to time be granted hereunder;

         (ii)     to determine whether and to what extent Incentive Stock
                  Options, Non-Qualified Stock Options, Stock Appreciation
                  Rights, Restricted Stock and Deferred Stock awards, or a
                  combination of the foregoing, are to be granted hereunder,

         (iii)    to determine the number of shares to be covered by each such
                  award granted hereunder,

         (iv)     to determine the terms and conditions, not inconsistent with
                  the terms of the Plan, of any award granted hereunder
                  (including but not limited to, any restriction on any Stock
                  Option or other award and/or the shares of Stock relating
                  thereto), which authority shall be exclusively vested in the
                  Committee (and not the Board) for purposes of establishing
                  performance criteria used with Restricted Stock and Deferred
                  Stock awards provided, however, in the event of a merger or
                  asset sale, the applicable provisions of Sections 5(c) and
                  7(c) of the Plan shall govern. the acceleration of the vesting
                  of any Stock option or awards;

         (v)      to determine whether, to what extent and under what
                  circumstances Stock and other amounts payable with respect to
                  an award under this Plan shall be deferred either
                  automatically or at the election of the participant.

         The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
form time to time, deem advisable; to interpret the terms and provisions of the
Plan as it shall, from time to time, deem advisable; to interpret the terms and
provisions of the Plan and any award issued under the Plan (and any agreements
relating thereto); and to otherwise supervise the administration of the Plan.
The Committee may delegate to executive officers of the Company the authority to
exercise the powers specified in (i), (ii), (iii), (iv) and (v) above with
respect to persons who are not executive officers of the Company.

         All decisions made by the Committee pursuant to the provisions of the
Plan shall be final and binding on all persons, including the Company and Plan
participants.

         SECTION 3. STOCK SUBJECT TO PLAN.

         The total number of shares of Stock reserved and available for
distribution under the Plan shall be 14,095,222. Such shares may consist, in
whole or in part, of authorized and unissued shares.

         Subject to paragraph (b)(iv) of Section 6 below, if any shares that
have been optioned cease to be subject to Stock Options or if any shares subject
to any Restricted Stock or Deferred Stock award granted hereunder are forfeited
or such award otherwise terminates without a payment being made to the
participant, such shares shall again be available for distribution in connection
with future awards under the Plan.



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         In the event of any merger; reorganization, consolidation,
recapitalization, stock dividend, other change in corporate structure affecting
the Stock, or spin-off or other distribution of assets to shareholders, such
substitution or adjustment shall be made in the aggregate number of shares
reserved for issuance under the Plan, in the number and option price of shares
subject to outstanding options granted under the Plan, and in the number of
shares subject to Restricted Stock or Deferred Stock awards granted under the
Plan as may be determined by the Committee, in its sole discretion, provided
that the number of shares subject to any award shall always be a whole number.
Such adjusted option price shall also be used to determine the amount payable by
the Company upon the exercise of any Stock Appreciation Right associated with
any Option.

         SECTION 4. ELIGIBILITY

         Officers, directors, other key employees of the Company and
Subsidiaries, and Consultants who are responsible for or contribute to the
management, growth and profitability of the business of the Company and its
Subsidiaries are eligible to be granted Stock Options, Stock Appreciation
Rights, Restricted Stock or Deferred Stock awards under the Plan. The optionees
and participants under the Plan shall be selected from time to time by the
Committee, in its sole discretion, from among those eligible, and the Committee
shall determine, in its sole discretion, the number of shares covered by each
award.

         Notwithstanding the foregoing, upon the Company becoming subject to the
requirements of Section 162(m) of the Code, no person shall receive grants or
awards under this Plan which exceed 1,500,000 shares during any fiscal year of
the Company.

         SECTION 5. STOCK OPTIONS.

         Any Stock Option granted under the Plan shall be in such form as the
Committee may from time to time approve.

         The Stock Options granted under the Plan may be of two types: (i)
Incentive Stock Options and (ii) Non-Qualified Stock Options. No Incentive Stock
Options shall be granted under the Plan after May 7, 2007.

         The Committee shall have the authority to grant any optionee Incentive
Stock Options, Non-Qualified Stock Options, or both types of options (in each
case with or without Stock Appreciation Rights). To the extent that any option
does not qualify its an Incentive Stock Option, it shall constitute a separate
Non-Qualified Stock Option.

         Anything in the Plan to the contrary notwithstanding, no term of this
Plan relating to Incentive Stock Options shall be interpreted, amended or
altered, nor shall any discretion or authority granted under the Plan be so
exercised, so as to disqualify either the Plan or any Incentive Stock Option
under Section 422 of the Code. The preceding sentence shall not preclude any
modification or amendment to an outstanding Incentive Stock Option, whether or
not such modification or amendment results in disqualification of such Stock
Option as an Incentive Stock Option provided the optionee consents in writing to
the modification or amendment.



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         Options granted under the Plan shall be subject to the following terms
and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable.

         (a) OPTION PRICE. The option price per share of Stock purchasable under
a Stock Option shall be determined by the Committee at the time of grant. In no
event shall the option price per share of Stock purchasable under an Incentive
Stock Option be less than 100% of Fair Market Value on the date the option is
granted. 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 or
Subsidiary and an Incentive Stock Option is granted to such employee, the option
price shall be no less than 110% of the Fair Market Value of the Stock on the
date the option is granted.

         (b) OPTION TERM. The term of each Stock Option shall be fixed by the
Committee, but no Incentive Stock Option shall be exercisable more than ten
years after the date the option is granted. If an employee 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 or Subsidiary and an Incentive Stock Option is granted to
such employee, the term of such option shall be no more than five years from the
date of grant.

         (c) EXERCISABILITY. Stock Options shall be exercisable at such time or
times as determined by the Committee at or after grant. If the Committee
provides, in its discretion, that any option is exercisable only in
installments, the Committee may waive such installment exercise provisions at
any time, provided, however, that upon the Company becoming subject to the
requirements of Section 16 of the Securities Exchange Act of 1934, as amended, a
Stock Option granted to an officer, director or 10% shareholder of the Company
shall not be exercisable for a period of six (6) months after the date of grant
unless the Stock Option has been approved by the Board, the Committee or
shareholders of the Company. Notwithstanding anything contained in the Plan to
the contrary, the Committee may, in its discretion, accelerate, extend or vary
the term of any Stock Option or any installment thereof, whether or not the
optionee is then employed by the Company, if such action is deemed to be in the
best interests of the Company

         The grant of an option pursuant to the Plan shall not limit in any way
the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge,
exchange or consolidate or to dissolve, liquidate, sell or transfer all or any
part of its business or assets.

         (d) METHOD OF EXERCISE. Stock Options may be exercised in whole or in
part at any time during the option period by giving written notice of exercise
to the Company specifying the number of shares to be purchased. Such notice
shall be accompanied by payment in full of the purchase price, either by check,
or by any other form of legal consideration deemed sufficient by the Committee
and consistent with the Plan's purpose and applicable law, including promissory
notes or a properly executed exercise notice together with irrevocable
instructions to a broker acceptable to the Company to promptly deliver to the
Company the amount of sale or loan proceeds to pay the exercise price. As
determined by the Committee at the time of grant or exercise, in its sole
discretion, payment in full or in part may also be made in the form of Stock



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already owned by the optionee (which in the case of Stock acquired upon exercise
of an option have been owned for more than six months on the date of surrender)
or, in the case of the exercise of a Non-Qualified Stock Option, Restricted
Stock or Deferred Stock subject to an award hereunder (based, in each case, on
the Fair Market Value of the Stock on the date the option is exercised, as
determined by the Committee), provided, however, that, in the case of an
Incentive Stock Option, the right to make a payment in the form of already owned
shares may be authorized only at the time the option is granted, and provided
further that in the event payment is made in the form of shares of Restricted
Stock or a Deferred Stock award, the optionee will receive a portion of the
option shares in the form of and in an amount equal to, the Restricted Stock or
Deferred Stock award tendered as payment by the optionee. If the terms of an
option so permit, an optionee may elect to pay all or part of the option
exercise price by having the Company withhold from the shares of Stock that
would otherwise be issued upon exercise that number of shares of Stock having a
Fair Market Value equal to the aggregate option exercise price for the shares
with respect to which such election is made. No shares of Stock shall be issued
until full payment therefor has been made. An optionee shall generally have the
rights to dividends and other rights of a shareholder with respect to shares
subject to the option when the optionee has given written notice of exercise,
has paid in full for such shares, and, if requested, has given the
representation described in paragraph (a) of Section 12.

         (e) NON-TRANSFERABILITY OF OPTIONS. No Stock Option shall be
transferable by the optionee otherwise than by will or by the laws of descent
and distribution, and all Stock Options shall be exercisable, during the
optionee's lifetime, only by the optionee.

         (f) TERMINATION BY DEATH. Unless otherwise provided by the Committee,
if an optionee's employment by the Company and any Subsidiary or Parent
Corporation terminates by reason of death, the Stock Option may thereafter be
immediately exercised, to the extent then exercisable, by the legal
representative of the estate or by the legatee of the optionee under the will,
of the optionee, for a Period of three months from the date of such death or
until the expiration of the stated term of the option, whichever period is
shorter.

         (g) TERMINATION BY REASON OF DISABILITY. Unless otherwise provided by
the Committee, if an optionee's employment by the Company and any Subsidiary or
Parent Corporation terminates by reason of Disability, any Stock Option held by
such optionee may thereafter be exercised, to the extent it was exercisable at
the time of termination due to Disability, but may not be exercised after twelve
months from the date of such termination of employment or the expiration of the
stated term of the option, whichever period is the shorter. In the event of
termination of employment by reason of Disability, if an Incentive Stock Option
is exercised after the expiration of the exercise periods that apply for
purposes of Section 422 of the Code, the option will thereafter be treated as a
Non-Qualified Stock Option.

         (h) TERMINATION BY REASON OF RETIREMENT. Unless otherwise provided by
the Committee, if an optionee's employment by the Company and any Subsidiary or
Parent Corporation terminates by reason of Retirement and the terms of the Stock
Option so provide, any Stock Option held by such optionee may thereafter be
exercised to the extent it was exercisable at the time of such Retirement, but
may not be exercised after three months from the date of such termination of
employment or the expiration of the stated term of the option, whichever period
is the shorter. In the event of termination of employment by reason of



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Retirement, if an Incentive Stock Option is exercised after the expiation of the
exercise periods that apply for purposes of Section 422 of the Code, the option
will thereafter be treated as a Non-Qualified Stock Option.

         (i) OTHER TERMINATION. In the event an Optionee's continuous status as
an employee or Consultant terminates (other than upon the optionee's death,
Retirement or Disability), the Optionee may exercise his or her Option, but only
within such period of time as is determined by the Committee, and only to the
extent that the Optionee was entitled to exercise it at the date of termination
(but in no event later than the expiration of the term of such Option as set
forth in the Notice of Grant). In the case of an Incentive Stock Option, the
Committee shall determine such period of time when the Option is granted. If
such period of time with respect to an Incentive Stock Option exceeds 90 days
and the Option is exercised after 90 days from the date of termination, such
Option shall thereafter be treated as a Non-Qualified Stock Option. In the event
an optionee's employment with the Company is terminated for Cause, or under such
other circumstances as the Committee shall define in the option grant, all Stock
Options granted to such optionee shall immediately terminate.

         (j) ANNUAL LIMIT ON INCENTIVE STOCK OPTION. The aggregate Fair Market
Value (determined as of the time the Stock Option is granted) of the Common
Stock with respect to which an Incentive Stock Option under this Plan or any
other plan of the Company and any Subsidiary or Parent Corporation is
exercisable for the first time by an optionee during any calendar year shall not
exceed $100,000.

         (k) DIRECTORS. The Board of Directors may amend this Plan to provide
for annual automatic grants to directors who are not employees of the Company
upon such terms and conditions as the Board deems advisable. In the event
discretionary Stock Options are granted to members of the Committee, such Stock
Options shall be granted by the Board.

         SECTION 6. STOCK APPRECIATION RIGHTS.

         (a) GRANT AND EXERCISE. Stock Appreciation Rights may be granted in
conjunction with all or part of any Stock Option granted under the Plan. In the
case of a Non-Qualified Stock Option, such rights may be granted either at or
after the time of the grant of such Option. In the case of an Incentive Stock
Option, such rights may be granted only at the time of the grant of the Stock
Option.

         In the event Stock Appreciation Rights are granted to members of the
Committee, such rights shall be granted by the Board.

         A Stock Appreciation Right or applicable portion thereof granted with
respect to a given Stock Option shall terminate and no longer be exercisable
upon the termination or exercise of the related Stock Option, except that a
Stock Appreciation Right granted with respect to less than the full number of
shares covered by a related stock Option shall not be reduced until the exercise
or termination of the related Stock Option exceeds the number of shares not
covered by the Stock Appreciation Right.

         A Stock Appreciation Right may be exercised by an optionee, in
accordance with paragraph (b) of this Section 6, by surrendering the applicable
portion of the related Stock



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Option. Upon such exercise and surrender, the optionee shall be entitled to
receive an amount determined in the manner prescribed in paragraph (b) of this
Section 6. Stock Options which have been so surrendered, in whole or in part,
shall no longer be exercisable to the extent the related Stock Appreciation
Rights have been exercised.

         (b) TERMS AND CONDITIONS. Stock Appreciation Rights shall be subject to
such terms and conditions, not inconsistent with the provisions of the Plan, as
shall be determined from time to time by the Committee, including the following:

         Stock Appreciation Rights shall be exercisable only at such time or
times and to the extent that the Stock Options to which they relate shall be
exercisable in accordance with the provisions of Section 5 and this Section 6 of
the Plan.

                  (i) Upon the exercise of a Stock Appreciation Right, an
optionee shall be entitled to receive up to, but not more than, an amount in
cash or shares of Stock equal in value to the excess of the Fair Market Value of
one share of Stock over the option price per share specified in the related
option multiplied by the number of shares in respect of which the Stock
Appreciation Right shall have been exercised, with the Committee having the
right to determine the form of payment.

                  (ii) Stock Appreciation Rights shall be transferable only when
and to the extent that the underlying Stock Option would be transferable under
Section 5 of the Plan.

                  (iii) Upon the exercise of a Stock Appreciation Right, the
Stock Option or part thereof to which such Stock Appreciation Right is related
shall be deemed to have been exercised for the purpose of the limitation set
forth in Section 3 of the Plan on the number of shares of Stock to be issued
under the Plan, but only to the extent of the number of shares issued or
issuable under the Stock Appreciation Right at the time of exercise based on the
value of the Stock Appreciation Right at such time.

                  (iv) A Stock Appreciation Right granted in connection with an
Incentive Stock Option may be exercised only if and when the market price of the
Stock subject to the Incentive Stock Option exceeds the exercise price of such
Option.

         SECTION 7. RESTRICTED STOCK.

         (a) ADMINISTRATION. Shares of Restricted Stock may be issued either
alone or in addition to other awards granted under the Plan. The Committee shall
determine the officers, directors, key employees and Consultants of the Company
and Subsidiaries to whom, and the time or times at which, grants of Restricted
Stock will be made, the number of shares to be awarded, the time or times within
which such awards may be subject to forfeiture, and all other conditions of the
awards. The Committee may also condition the grant of Restricted Stock upon the
attainment of specified performance goals. The provisions of Restricted Stock
awards need not be the same with respect to each recipient.

         In the event Restricted Stock awards are granted to members of the
Committee, such awards shall be granted by the Board.



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         (b) AWARDS AND CERTIFICATES. The prospective recipient of an award of
shares of Restricted Stock shall not have any rights with respect to such award,
unless and until such recipient has executed an agreement evidencing the award
and has delivered a fully executed copy thereof to the Company, and has
otherwise complied with the then applicable terms and conditions.

                  (i) Each participant shall be issued a stock certificate in
respect of shares of Restricted Stock awarded under the Plan. Such certificate
shall be registered in the name of the participant and shall bear an appropriate
legend referring to the terms, conditions, and restrictions applicable to such
award, substantially in the following form:

                  "The transferability of this certificate and the shares of
                  stock represented hereby are subject to the terms and
                  conditions (including forfeiture) of the FirePond, Inc. 1997
                  Stock Plan and an Agreement entered into between the
                  registered owner and FirePond, Inc. Copies of such Plan and
                  Agreement are on file in the offices of FirePond, Inc.,
                  Waltham Woods Corporate Center, 890 Winter Street, Waltham, MA
                  02451."

                  (ii) The Committee shall require that the stock certificates
evidencing such shares be held in custody by the Company until the restrictions
thereon shall have lapsed, and that, as a condition of any Restricted Stock
award, the participant shall have delivered a stock power, endorsed in blank,
relating to the Stock covered by such award.

         (c) RESTRICTIONS AND CONDITIONS. The shares of Restricted Stock awarded
pursuant to the Plan shall be subject to the following restrictions and
conditions:

                  (i) Subject to the provisions of this Plan and the award
agreement, during a period set by the Committee commencing with the date of such
award (the "Restriction Period"), the participant shall not be permitted to
sell, transfer, pledge or assign shares of Restricted Stock awarded under the
Plan. Within these limits, the Committee may provide for the lapse of such
restrictions in installments where deemed appropriate.

                  (ii) Except as provided in paragraph (c)(i) of this Section 7,
the participant shall have, with respect to the shares of Restricted Stock all
of the rights of a shareholder of the Company, including the right to vote the
shares and the right to receive any cash dividends. The Committee, in its sole
discretion, may permit or require the payment of cash dividends to be deferred
and, if the Committee so determines, reinvested in additional shares of
Restricted Stock (to the extent shares are available under Section 3 and subject
to paragraph (f) of Section 12). Certificates for shares of unrestricted Stock
shall be delivered to the grantee promptly after, and only after, the period of
forfeiture shall have expired without forfeiture in respect of such shares of
Restricted Stock.

                  (iii) Subject to the provisions of the award agreement and
paragraph (c)(iv) of this Section 7, upon termination of employment directorship
(if the award was based on services as a director) or consulting relationship
for any reason during the Restriction Period, all shares still subject to
restriction shall be forfeited by the participant.



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                  (iv) In the event of special hardship circumstances of a
participant whose employment is unforeseeable emergency of a participant still
in service, the Committee may, in its sole terminated (other than for Cause),
including death, Disability or Retirement or in the event of an discretion, when
it finds that a waiver would be in the best interest of the Company, waive in
whole or in part any or all remaining restrictions with respect to such
participant's shares of Restricted Stock.

                  (v) Notwithstanding anything contained in the Plan to the
contrary, the Committee may, in its discretion, accelerate, extend or vary the
terms or the lapsing of the restrictions placed on any Restricted Stock award
granted pursuant to this Plan if such action is deemed to be in the best
interests of the Company.

         SECTION 8. DEFERRED STOCK AWARDS.

         (a) ADMINISTRATION. Deferred Stock may be awarded either alone or in
addition to other awards granted under the Plan. The Committee shall determine
the officers, directors, key employees and Consultants of the Company and
Subsidiaries to whom and the time or times at which Deferred Stock shall be
awarded, the number of Shares of Deferred Stock to be awarded to any participant
or group of participants, the duration of the period (the "Deferral Period")
during which and the conditions under which, receipt of the Stock will be
deferred, and the terms and conditions of the award in addition to those
contained in paragraph (b) of this Section 8. The Committee may also condition
the grant of Deferred Stock upon the attainment of specified performance goals.
The provisions of Deferred Stock awards need not be the same with respect to
each recipient.

         In the event Deferred Stock awards are granted to members of the
Committee, such awards shall be granted by the Board.

         (b) TERMS AND CONDITIONS

                  (i) Subject to the provisions of this Plan and the award
agreement, Deferred Stock awards may not be sold, assigned, transferred, pledged
or otherwise encumbered during the Deferral Period. At the expiration of the
Deferral Period (or Elective Deferral Period, where applicable), share
certificates shall be delivered to the participant, or his legal representative,
in a number equal to the shares covered by the Deferred Stock award.

                  (ii) Amounts equal to any dividends declared during the
Deferral Period with respect to the number of shares covered by a Deferred Stock
award will be paid to the participant currently or deferred and deemed to be
reinvested in additional Deferred Stock or otherwise reinvested, all as
determined at the time of the award by the Committee, in its sole discretion.

                  (iii) Subject to the provisions of the award agreement and
paragraph (b)(iv) of this Section 8, upon termination of employment,
directorship (if the award was based on services as a director) or consulting
relationship for any reason during the Deferral Period for a given award, the
Deferred Stock in question shall be forfeited by the participant.

                  (iv) In the event of special hardship circumstances of a
participant whose employment is terminated (other than for Cause) including
death, Disability or Retirement, or in



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<PAGE>   12


the event of an unforeseeable emergency of a participant still in service, the
Committee may, in its sole discretion, when it finds that a waiver would be in
the best interest of the Company, waive in whole or in part any or all of the
remaining deferral limitations imposed hereunder with respect to any or all of
the participant's Deferred Stock.

                  (v) A participant may elect to further defer receipt of the
award for a specified period or until a specified event (the "Elective Deferral
Period"), subject in each case to the Committee's approval and to such terms as
are determined by the Committee, all in its sole discretion. Subject to any
exceptions adopted by the Committee, such election must generally be made prior
to completion of one half of the Deferral Period for a Deferred Stock award (or
for an installment of such an award).

                  (vi) Each award shall be confirmed by, and subject to the
terms of, a Deferred Stock agreement executed by the Company and the
participant.

         SECTION 9. TRANSFER LEAVE OF ABSENCE, ETC.

         For purposes of the Plan, the following events shall not be deemed a
termination of employment:

         (a) a transfer of an employee from the Company to a Parent Corporation
or Subsidiary, or from a Parent Corporation or Subsidiary to the Company, or
from one Subsidiary to another;

         (b) a leave of absence, approved in writing by the Committee, for
military service or sickness, or for any other purpose approved by the Company
if the period of such leave does not exceed ninety (90) days (or such longer
period as the Committee may approve, in its sole discretion); and

         (c) a leave of absence in excess of ninety (90) days, approved in
writing by the Committee, but only if the employee's right to reemployment is
guaranteed either by a statute or by contract, and provided that, in the case of
any leave of absence, the employee returns to work within 30 days after the end
of such leave.

         SECTION 10. AMENDMENTS AND TERMINATION.

         The Board may amend, after, or discontinue the Plan, but no amendment
alteration, or discontinuation shall be made (i) which would adversely impair
the rights of an optionee or participant under a Stock Option, Restricted Stock
or other Stock-based award theretofore granted, without the optionee's or
participant's consent, or (ii) which without the approval of the shareholders of
the Company would cause the Plan to no longer comply with Rule 16b-3 under the
Securities Exchange Act of 1934, Section 422 of the Code or any other regulatory
requirements.

         The Committee may amend the terms of any award or option theretofore
granted, prospectively or retroactively to the extent such amendment is
consistent with the terms of this Plan, but no such amendment shall impair the
rights of any holder without his or her consent except to the extent authorized
under the Plan. The Committee may also substitute new Stock



                                       12
<PAGE>   13


Options for previously granted Stock Options, including previously granted Stock
Options having higher Stock Option prices.

         SECTION 11. UNFUNDED STATUS OF PLAN.

         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 optionee by the Company, nothing contained herein shall give any
such participant or optionee any rights that are greater than those of a general
creditor of the Company. In its sole discretion, the Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Stock or payments in lieu of or with respect to awards
hereunder, provided, however, that the existence of such trusts or other
arrangements is consistent with the unfunded status of the Plan.

         SECTION 12. GENERAL PROVISIONS.

         (a) The Committee may require each person purchasing shares pursuant to
a Stock Option under the Plan to represent to and agree with the Company in
writing that the optionee is acquiring the shares without a view to distribution
thereof. The certificates for such shares may include any legend which the
Committee deems appropriate to reflect any restrictions on transfer.

         All certificates for shares of Stock delivered under the Plan pursuant
to any Restricted Stock, Deferred Stock or other Stock-based awards shall be
subject to such stock-transfer orders and other restrictions as the Committee
may deem, advisable under the rules, regulations, and other requirements of the
Securities and Exchange Commission, any stock exchange upon which the Stock is
then listed, and any applicable Federal or state securities laws, and the
Committee may cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions.

         (b) Subject to paragraph (d) below, recipients of Restricted Stock,
Deferred Stock and other Stock-based awards under the Plan (other than Stock
Options) are not required to make any payment or provide consideration other
than the rendering of services.

         (c) Nothing contained in this Plan shall prevent the Board of Directors
from adopting other or additional compensation arrangements, subject to
stockholder approval if such approval is required; and such arrangements may be
either generally applicable or applicable only in specific cases. The adoption
of the Plan shall not confer upon any employee of the Company or any Subsidiary
any right to continued employment with the Company or a Subsidiary, as the case
may be, nor shall it interfere in any way with the right of the Company or a
Subsidiary to terminate the employment of any of its employees at any time.

         (d) Each participant shall, no later than the date as of which any part
of the value of an award first becomes includible as compensation in the gross
income of the participant for Federal income tax purposes, pay to the Company,
or make arrangements satisfactory to the Committee regarding payment of, any
Federal, state, or local taxes of any kind required by law to be withheld with
respect to the award. The obligations of the Company under the Plan shall be
conditional on such payment or arrangements and the Company and Subsidiaries
shall, to the



                                       13
<PAGE>   14


extent permitted by law, have the right to deduct any such taxes from any
payment of any kind otherwise due to the participant. With respect to any award
under the Plan, if the terms of such award so permit, a participant may elect by
written notice to the Company to satisfy part or all of the withholding tax
requirements associated with the award by (1) authorizing the Company to retain
from the number of shares of Stock that would otherwise be deliverable to the
participant, or (ii) delivering to the Company from shares of Stock already
owned by the participant, that number of shares having an aggregate Fair Market
Value equal to part or all of the tax payable by the participant under this
Section 12(d). Any such election shall be in accordance with, and subject to,
applicable tax and securities laws, regulations and rulings.

         (e) At the time grant, the Committee may provide in connection with any
grant made under this Plan that the shares of Stock received as a result of such
grant shall be subject to a repurchase right in favor of the Company, pursuant
to which the participant shall be required to offer to the Company upon
termination of employment for any reason any shares that the participant
acquired under the Plan, with the price being the then Fair Market Value of the
Stock or, in the case of a termination for Cause, an amount equal to the cash
consideration paid for the Stock, subject to such other terms and conditions as
the Committee may specify at the time of grant. The Committee may, at the time
of the grant of an award under the Plan, provide the Company with the right to
repurchase, or require the forfeiture of shares of Stock acquired pursuant to
the Plan by any participant who at any time within two years after termination
of employment with the Company, directly or indirectly competes with, or is
employed by a competitor of the Company.

         (f) The reinvestment of dividends in additional Restricted Stock (or in
Deferred Stock or other types of Plan awards) at the time of any dividend
payment shall only be permissible in the Committee (or the company's chief
financial officer) certifies in writing that under Section 3 sufficient shares
are available for such reinvestment (taking into account then outstanding Stock
Options and other Plan awards).

         (g) The Plan is expressly made subject to the approval by shareholders
of the Company. If the Plan is not so approved by the shareholders on or before
one year after this Plan's adoption by the Board of Directors, this Plan shall
not come into effect. The offering of the shares hereunder shall be also subject
to the effecting by the Company of any registration or qualification of the
shares under any federal or state law or the obtaining of the consent or
approval of any governmental regulatory body which the Company shall determine,
in its sole discretion, is necessary or desirable as a condition to or in
connection with, the offering or the issue or purchase of the shares covered
thereby.



--------------------------------------------------
Approved by the shareholders on May 7, 1997



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