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                                                                     EXHIBIT 4.1

                      2000 STOCK OPTION AND INCENTIVE PLAN

        RateXchange Corporation, a Delaware corporation (the "Company"), sets
forth herein the terms of its 2000 Stock Option and Incentive Plan (the "Plan")
as follows:

1.      PURPOSE

        The Plan is intended to enhance the Company's and its subsidiaries' (as
defined herein) ability to attract and retain highly qualified officers,
directors, key employees, and other persons, and to motivate such officers,
directors, key employees, and other persons to serve the Company and its
affiliates and to expend maximum effort to improve the business results and
earnings of the Company, by providing to such officers, key employees and other
persons an opportunity to acquire or increase a direct proprietary interest in
the operations and future success of the Company. To this end, the Plan provides
for the grant of stock options, restricted stock and restricted stock units in
accordance with the terms hereof. Stock options granted under the Plan may be
non-qualified stock options or incentive stock options, as provided herein.

2.      DEFINITIONS

        For purposes of interpreting the Plan and related documents (including
Award Agreements), the following definitions shall apply:

        2.1     "Affiliate" of, or person "affiliated" with, a person means any
                company or other trade or business that controls, is controlled
                by or is under common control with such person within the
                meaning of Rule 405 of Regulation C under the Securities Act,
                including, without limitation, any Subsidiary.

        2.2     "Award Agreement" means the stock option agreement, restricted
                stock agreement, restricted stock unit agreement or other
                written agreement between the Company and a Grantee that
                evidences and sets out the terms and conditions of a Grant.

        2.3     "Benefit Arrangement" shall have the meaning set forth in
                SECTION 14 hereof.

        2.4     "Board" means the Board of Directors of the Company.

        2.5     "Change of Control" means (i) the dissolution or liquidation of
                the Company or a merger, consolidation, or reorganization of the
                Company with one or more other entities in which the Company is
                not the surviving entity, (ii) a sale of substantially all of
                the assets of the Company to another entity, or (iii) any
                transaction (including without limitation a merger or
                reorganization in which the Company is the surviving entity)
                which results in any person or entity (other than persons who
                are shareholders or affiliates of the Company at the time the
                Plan is approved by the Company's shareholders) owning 80% or
                more of the combined voting power of all classes of stock of the
                Company.

        2.6     "Code" means the Internal Revenue Code of 1986, as now in effect
                or as hereafter amended.

        2.7     "Committee" means a committee of, and designated from time to
                time by resolution of, the Board.

        2.8     "Company" means RateXchange Corporation.

        2.9     "Effective Date" means February 28, 2000, the date the Plan was
                approved by the Board.

        2.10    "Exchange Act" means the Securities Exchange Act of 1934, as now
                in effect or as hereafter amended.

        2.11    "Fair Market Value" means the closing price of the Stock on the
                OTC Bulletin Board, the American Stock Exchange or the Nasdaq
                Stock Market on the Grant Date or such other


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                determination date (or if there is no such reported closing
                price, the Fair Market Value shall be the mean between the
                highest bid and lowest asked prices or between the high and low
                sale prices on such trading day) or, if no sale of Stock is
                reported for such trading day, on the next preceding day on
                which any sale shall have been reported.

        2.12    "Family Member" means a person who is a spouse, child,
                stepchild, grandchild, parent, stepparent, grandparent, sibling,
                niece, nephew, mother-in-law, father-in-law, son-in-law,
                daughter-in-law, brother-in-law, or sister-in-law, including
                adoptive relationships, of the Grantee, any person sharing the
                Grantee's household (other than a tenant or employee), a trust
                in which these persons have more than fifty percent of the
                beneficial interest, a foundation in which these persons (or the
                Grantee) control the management of assets, and any other entity
                in which these persons (or the Grantee) own more than fifty
                percent of the voting interests.

        2.13    "Grant" means an award of an Option, Restricted Stock or
                Restricted Stock Unit under the Plan.

        2.14    "Grant Date" means, as determined by the Board or authorized
                Committee, (i) the date as of which the Board or such Committee
                approves a Grant, (ii) the date on which the recipient of a
                Grant first becomes eligible to receive a Grant under SECTION 6
                hereof, or (iii) such other date as may be specified by the
                Board or such Committee.

        2.15    "Grantee" means a person who receives or holds an Option,
                Restricted Stock or Restricted Stock Unit under the Plan.

        2.16    "Incentive Stock Option" means an "incentive stock option"
                within the meaning of Section 422 of the Code, or the
                corresponding provision of any subsequently enacted tax statute,
                as amended from time to time.

        2.17    "Option" means an option to purchase one or more shares of Stock
                pursuant to the Plan.

        2.18    "Option Period" means the period during which Options may be
                exercised as set forth in SECTION 10 hereof.

        2.19    "Option Price" means the purchase price for each share of Stock
                subject to an Option.

        2.20    "Other Agreement" shall have the meaning set forth in SECTION 14
                hereof.

        2.21    "Plan" means this 2000 Stock Option and Incentive Plan.

        2.22    "Reporting Person" means a person who is required to file
                reports under Section 16(a) of the Exchange Act.

        2.23    "Restricted Period" means the period during which Restricted
                Stock or Restricted Stock Units are subject to restrictions or
                conditions pursuant to SECTION 12.2 hereof.

        2.24    "Restricted Stock" means shares of Stock, awarded to a Grantee
                pursuant to SECTION 12 hereof, that are subject to restrictions
                and to a risk of forfeiture.

        2.25    "Restricted Stock Unit" means a unit awarded to a Grantee
                pursuant to SECTION 12 hereof, which represents a conditional
                right to receive a share of Stock in the future, and which is
                subject to restrictions and to a risk of forfeiture.

        2.26    "Securities Act" means the Securities Act of 1933, as now in
                effect or as hereafter amended.

        2.27    "Stock" means the common stock of the Company.



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        2.28    "Subsidiary" means any "subsidiary corporation" of the Company
                within the meaning of Section 424(f) of the Code.

        2.29    "Termination Date" means the date upon which an Option shall
                terminate or expire, as set forth in SECTION 10.2 hereof.

3.      ADMINISTRATION OF THE PLAN

        3.1     BOARD.

        The Board shall have such powers and authorities related to the
administration of the Plan as are consistent with the Company's certificate of
incorporation and by-laws and applicable law. The Board shall have full power
and authority to take all actions and to make all determinations required or
provided for under the Plan, any Grant or any Award Agreement, and shall have
full power and authority to take all such other actions and make all such other
determinations not inconsistent with the specific terms and provisions of the
Plan that the Board deems to be necessary or appropriate to the administration
of the Plan, any Grant or any Award Agreement. All such actions and
determinations shall be by the affirmative vote of a majority of the members of
the Board present at a meeting or by unanimous consent of the Board executed in
writing in accordance with the Company's certificate of incorporation and
by-laws and applicable law. The interpretation and construction by the Board of
any provision of the Plan, any Grant or any Award Agreement shall be final and
conclusive.

        3.2     COMMITTEE.

        The Board from time to time may delegate to a Committee such powers and
authorities related to the administration and implementation of the Plan, as set
forth in SECTION 3.1 above and in other applicable provisions, as the Board
shall determine, consistent with the certificate of incorporation and by-laws of
the Company and applicable law. In the event that the Plan, any Grant or any
Award Agreement entered into hereunder provides for any action to be taken by or
determination to be made by the Board, such action may be taken by or such
determination may be made by the Committee if the power and authority to do so
has been delegated to the Committee by the Board as provided for in this
Section. Unless otherwise expressly determined by the Board, any such action or
determination by the Committee shall be final, binding and conclusive.

        3.3     GRANTS.

        Subject to the other terms and conditions of the Plan, the Board shall
have full and final authority (i) to designate Grantees, (ii) to determine the
type or types of Grant to be made to a Grantee, (iii) to determine the number of
shares of Stock to be subject to a Grant, (iv) to establish the terms and
conditions of each Grant (including, but not limited to, the exercise price of
any Option, the nature and duration of any restriction or condition (or
provision for lapse thereof) relating to the vesting, exercise, transfer, or
forfeiture of a Grant or the shares of Stock subject thereto, and any terms or
conditions that may be necessary to qualify Options as Incentive Stock Options),
(v) to prescribe the form of each Award Agreement evidencing a Grant, and (vi)
to amend, modify, or supplement the terms of any outstanding Grant. Such
authority specifically includes the authority, in order to effectuate the
purposes of the Plan but without amending the Plan, to modify Grants to eligible
individuals who are foreign nationals or are individuals who are employed
outside the United States to recognize differences in local law, tax policy, or
custom. As a condition to any Grant, the Board shall have the right, at its
discretion, to require Grantees to return to the Company Grants previously
awarded under the Plan. Subject to the terms and conditions of the Plan, any
such subsequent Grant shall be upon such terms and conditions as are specified
by the Board at the time the new Grant is made. The Company may retain the right
in an Award Agreement to cause a forfeiture of the gain realized by a Grantee on
account of actions taken by the Grantee in violation or breach of or in conflict
with any non-competition agreement, any agreement prohibiting solicitation of
employees or clients of the Company or any affiliate thereof or any
confidentiality obligation with respect to the Company or any affiliate thereof
or otherwise in competition with the Company, to the extent specified in such
Award Agreement applicable to the Grantee. Furthermore, the Company may annul a
Grant if the Grantee is an employee of the Company or an affiliate thereof and
is terminated "for cause" as defined in the applicable Award Agreement. The
Board may permit or require the deferral of any award payment, subject to such
rules and procedures as it may establish, which may



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include provisions for the payment or crediting of interest or dividend
equivalents, including converting such credits into deferred Stock equivalents.

        3.4     NO LIABILITY.

        No member of the Board or of the Committee shall be liable for any
action or determination made in good faith with respect to the Plan or any Grant
or Award Agreement.

4.      STOCK SUBJECT TO THE PLAN

        Subject to adjustment as provided in SECTION 17 hereof, the number of
shares of Stock available for issuance under the Plan shall be five million
(5,000,000). Stock issued or to be issued under the Plan shall be authorized but
unissued shares. If any shares covered by a Grant are not purchased or are
forfeited, or if a Grant otherwise terminates without delivery of any Stock
subject thereto, then the number of shares of Stock counted against the
aggregate number of shares available under the Plan with respect to such Grant
shall, to the extent of any such forfeiture or termination, again be available
for making Grants under the Plan.

5.      EFFECTIVE DATE AND TERM OF THE PLAN

        5.1     EFFECTIVE DATE.

        The Plan shall be effective as of the Effective Date, subject to
approval of the Plan within one year of the Effective Date, by a majority of the
votes cast on the proposal at a meeting of shareholders, provided that a quorum
is present or by the written consent of the holders of a majority of the
Company's shares of Stock entitled to vote. Upon approval of the Plan by the
shareholders of the Company as set forth above, all Grants made under the Plan
on or after the Effective Date shall be fully effective as if the shareholders
of the Company had approved the Plan on the Effective Date. If the shareholders
fail to approve the Plan within one year after the Effective Date, any Grants
made hereunder shall be null and void and of no effect.

        5.2     TERM.

        The Plan has no termination date; however, no Incentive Stock Option may
be granted under the Plan on or after the tenth anniversary of the Effective
Date.

6.      OPTION GRANTS

        6.1     EMPLOYEES OR CONSULTANTS.

        Grants (including Grants of Incentive Stock Options, subject to SECTION
7.1) may be made under the Plan to any employee, officer or director of, or any
consultant or advisor to, the Company or any Subsidiary, as the Board shall
determine and designate from time to time.

        6.2     SUCCESSIVE GRANTS.

        An eligible person may receive more than one Grant, subject to such
restrictions as are provided herein.

7.      LIMITATIONS ON GRANTS

        7.1     LIMITATIONS ON INCENTIVE STOCK OPTIONS.

        An Option shall constitute an Incentive Stock Option only (i) if the
Grantee of such Option is an employee of the Company or any Subsidiary of the
Company; (ii) to the extent specifically provided in the related Award
Agreement; and (iii) to the extent that the aggregate Fair Market Value
(determined at the time the Option is granted) of the shares of Stock with
respect to which all Incentive Stock Options held by such Grantee become
exercisable for the first time during any calendar year (under the Plan and all
other plans of the Grantee's employer



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and its affiliates) does not exceed $100,000. This limitation shall be applied
by taking Options into account in the order in which they were granted.

        7.2     LIMITATION ON SHARES OF STOCK SUBJECT TO GRANTS.

        During any time when the Company has a class of equity security
registered under Section 12 of the Exchange Act, the maximum number of shares of
Stock subject to Options that can be awarded under the Plan to any person
eligible for a Grant under Section 6 hereof is one million (1,000,000) per year.

8.      AWARD AGREEMENT

        Each Grant pursuant to the Plan shall be evidenced by an Award
Agreement, in such form or forms as the Board shall from time to time determine.
Award Agreements granted from time to time or at the same time need not contain
similar provisions but shall be consistent with the terms of the Plan. Each
Award Agreement evidencing a Grant of Options shall specify whether such Options
are intended to be non-qualified stock options or Incentive Stock Options, and
in the absence of such specification such options shall be deemed non-qualified
stock options.

9.      OPTION PRICE

        The Option Price of each Option shall be fixed by the Board and stated
in the Award Agreement evidencing such Option. In the case of an Incentive Stock
Option the Option Price shall be the Fair Market Value on the Grant Date of a
share of Stock; provided, however, that in the event that a Grantee would
otherwise be ineligible to receive an Incentive Stock Option by reason of the
provisions of Sections 422(b)(6) and 424(d) of the Code (relating to ownership
of more than ten percent of the Company's outstanding shares of Stock), the
Option Price of an Option granted to such Grantee that is intended to be an
Incentive Stock Option shall be not less than the greater of the par value or
110 percent of the Fair Market Value of a share of Stock on the Grant Date. In
no case shall the Option Price of any Option be less than the par value of a
share of Stock.

10.     VESTING, TERM AND EXERCISE OF OPTIONS

        10.1    VESTING AND OPTION PERIOD.

        Subject to SECTIONS 10.2 and 17.3 hereof, each Option granted under the
Plan shall become exercisable at such times and under such conditions as shall
be determined by the Board and stated in the Award Agreement. For purposes of
this SECTION 10.1, fractional numbers of shares of Stock subject to an Option
shall be rounded down to the next nearest whole number. The period during which
any Option shall be exercisable shall constitute the "Option Period" with
respect to such Option.

        10.2    TERM.

        Each Option granted under the Plan shall terminate, and all rights to
purchase shares of Stock thereunder shall cease, upon the expiration of ten
years from the date such Option is granted, or under such circumstances and on
such date prior thereto as is set forth in the Plan or as may be fixed by the
Board and stated in the Award Agreement relating to such Option; provided,
however, that in the event that the Grantee would otherwise be ineligible to
receive an Incentive Stock Option by reason of the provisions of Sections
422(b)(6) and 424(d) of the Code (relating to ownership of more than ten percent
of the outstanding shares of Stock), an Option granted to such Grantee that is
intended to be an Incentive Stock Option shall not be exercisable after the
expiration of five years from its Grant Date.

        10.3    ACCELERATION.

        Any limitation on the exercise of an Option contained in any Award
Agreement may be rescinded, modified or waived by the Board, in its sole
discretion, at any time and from time to time after the Grant Date of such
Option, so as to accelerate the time at which the Option may be exercised.
Notwithstanding any other provision of the Plan,



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no Option shall be exercisable in whole or in part prior to the date the Plan is
approved by the shareholders of the Company as provided in SECTION 5.1 hereof.

        10.4    TERMINATION OF EMPLOYMENT OR OTHER RELATIONSHIP.

        Unless otherwise provided by the Board, upon the termination of a
Grantee's employment or other relationship with the Company or any Subsidiary
other than by reason of death or "permanent and total disability" (within the
meaning of Section 22(e)(3) of the Code), any Option or portion thereof held by
such Grantee that has not vested in accordance with the provisions of SECTION
10.1 hereof shall terminate immediately, and any Option or portion thereof that
has vested in accordance with the provisions of SECTION 10.1 hereof but has not
been exercised shall terminate at the close of business on the 90th day
following the Grantee's termination of employment or other relationship (or, if
such 90th day is a Saturday, Sunday or holiday, at the close of business on the
next preceding day that is not a Saturday, Sunday or holiday). Upon termination
of an Option or portion thereof, the Grantee shall have no further right to
purchase shares of Stock pursuant to such Option or portion thereof. Whether a
termination of employment or other relationship shall have occurred for purposes
of the Plan shall be determined by the Board, which determination shall be final
and conclusive. For purposes of the Plan, a termination of employment, service
or other relationship shall not be deemed to occur if the Grantee is immediately
thereafter a director of the Company or an affiliate.

        10.5    RIGHTS IN THE EVENT OF DEATH.

        Unless otherwise provided by the Board, if a Grantee dies while employed
by or providing services to the Company or Subsidiary, all Options granted to
such Grantee shall fully vest on the date of death, and the executors or
administrators or legatees or distributees of such Grantee's estate shall have
the right, at any time within one year after the date of such Grantee's death
and prior to termination of the Option pursuant to SECTION 10.2 above, to
exercise any Option held by such Grantee at the date of such Grantee's death.

        10.6    RIGHTS IN THE EVENT OF DISABILITY.

        Unless otherwise provided by the Board, if a Grantee's employment or
other relationship with the Company or Subsidiary is terminated by reason of the
"permanent and total disability" (within the meaning of Section 22(e)(3) of the
Code) of such Grantee, all Options granted to such Grantee shall fully vest on
the date of permanent and total disability, and the Grantee shall have the
right, at any time within one year after the date of such Grantee's permanent
and total disability and prior to termination of the Option pursuant to SECTION
10.2 above, to exercise any Option held by such Grantee. Whether a termination
of employment or service is to be considered by reason of "permanent and total
disability" for purposes of the Plan shall be determined by the Board, which
determination shall be final and conclusive.

        10.7    LIMITATIONS ON EXERCISE OF OPTION.

        Notwithstanding any other provision of the Plan, in no event may any
Option be exercised, in whole or in part, prior to the date the Plan is approved
by the shareholders of the Company as provided herein, or after ten years
following the date upon which the Option is granted, or after the occurrence of
an event referred to in SECTION 17 hereof which results in termination of the
Option.

        10.8    METHOD OF EXERCISE.

        An Option that is exercisable may be exercised by the Grantee's delivery
to the Company of written notice of exercise on any business day, at the
Company's principal office, addressed to the attention of the Board. Such notice
shall specify the number of shares of Stock with respect to which the Option is
being exercised and shall be accompanied by payment in full of the Option Price
of the shares for which the Option is being exercised. The minimum number of
shares of Stock with respect to which an Option may be exercised, in whole or in
part, at any time shall be the lesser of (i) 100 shares or such lesser number
set forth in the applicable Award Agreement and (ii) the maximum number of
shares available for purchase under the Option at the time of exercise. Payment
of the Option Price for the shares purchased pursuant to the exercise of an
Option shall be made (i) in cash or in cash



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equivalents acceptable to the Company; (ii) to the extent permitted by law and
at the Board's discretion, through the tender to the Company of shares of Stock,
which shares, if acquired from the Company, shall have been held for at least
six months at the time of tender and which shall be valued, for purposes of
determining the extent to which the Option Price has been paid thereby, at their
Fair Market Value on the date of exercise; or (iii) to the extent permitted by
law and at the Board's discretion, by a combination of the methods described in
(i) and (ii). In addition and unless the Board provides otherwise in the Award
Agreement, payment in full of the Option Price need not accompany the written
notice of exercise provided that the notice of exercise directs that the
certificate or certificates for the shares of Stock for which the Option is
exercised be delivered to a licensed broker acceptable to the Company as the
agent for the individual exercising the Option and, at the time such certificate
or certificates are delivered, the broker tenders to the Company cash (or cash
equivalents acceptable to the Company) equal to the Option Price for the shares
of Stock purchased pursuant to the exercise of the Option plus the amount (if
any) of federal and/or other taxes which the Company may in its judgment, be
required to withhold with respect to the exercise of the Option. An attempt to
exercise any Option granted hereunder other than as set forth above shall be
invalid and of no force and effect. Unless otherwise stated in the applicable
Award Agreement, an individual holding or exercising an Option shall have none
of the rights of a shareholder (for example, the right to receive cash or
dividend payments or distributions attributable to the subject shares of Stock
or to direct the voting of the subject shares of Stock) until the shares of
Stock covered thereby are fully paid and issued to such individual. Except as
provided in SECTION 17 hereof, no adjustment shall be made for dividends,
distributions or other rights for which the record date is prior to the date of
such issuance.

        10.9    DELIVERY OF STOCK CERTIFICATES.

        Promptly after the exercise of an Option by a Grantee and the payment in
full of the Option Price, such Grantee shall be entitled to the issuance of a
stock certificate or certificates evidencing such Grantee's ownership of the
shares of Stock subject to the Option.

11.     TRANSFERABILITY OF OPTIONS

        11.1    TRANSFERABILITY OF OPTIONS.

        Except as provided in SECTION 11.2, during the lifetime of a Grantee,
only the Grantee (or, in the event of legal incapacity or incompetency, the
Grantee's guardian or legal representative) may exercise an Option. Except as
provided in SECTION 11.2, no Option shall be assignable or transferable by the
Grantee to whom it is granted, other than by will or the laws of descent and
distribution.

        11.2    TRANSFERS.

                A.      FAMILY TRANSFERS

        If authorized in the applicable Award Agreement, a Grantee may transfer,
not for value, all or part of an Option which is not an Incentive Stock Option
to any Family Member. For the purpose of this SECTION 11.2, a "not for value"
transfer is a transfer which is (i) a gift, (ii) a transfer under a domestic
relations order in settlement of marital property rights; or (iii) a transfer to
an entity in which more than fifty percent of the voting interests are owned by
Family Members (or the Grantee) in exchange for an interest in that entity.
Following a transfer under this SECTION 11.2, any such Option shall continue to
be subject to the same terms and conditions as were applicable immediately prior
to transfer. Subsequent transfers of transferred Options are prohibited except
to Family Members of the original Grantee in accordance with this SECTION 11.2
or by will or the laws of descent and distribution. The events of termination of
employment or other relationship of SECTION 10.4 hereof shall continue to be
applied with respect to the original Grantee, following which the Option shall
be exercisable by the transferee only to the extent, and for the periods
specified in SECTIONS 10.4, 10.5, or 10.6.

                B.      COMPANY APPROVED TRANSFERS

        If authorized in the applicable Award Agreement, a Grantee may transfer
all or part of an option which is not an Incentive Stock Option to any employee
or co-worker of such Grantee after written approval of the Board.



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12.     RESTRICTED STOCK AND RESTRICTED STOCK UNITS

        12.1    GRANT OF RESTRICTED STOCK OR RESTRICTED STOCK UNITS.

        The Board may from time to time grant Restricted Stock or Restricted
Stock Units to persons eligible to receive Grants under SECTION 6 hereof,
subject to such restrictions, conditions and other terms as the Board may
determine.

        12.2    RESTRICTIONS.

        At the time a Grant of Restricted Stock or Restricted Stock Units is
made, the Board shall establish a period of time (the "Restricted Period")
applicable to such Restricted Stock or Restricted Stock Units. Each Grant of
Restricted Stock or Restricted Stock Units may be subject to a different
Restricted Period. The Board may, in its sole discretion, at the time a Grant of
Restricted Stock or Restricted Stock Units is made, prescribe restrictions in
addition to or other than the expiration of the Restricted Period, including the
satisfaction of corporate or individual performance objectives, which may be
applicable to all or any portion of the Restricted Stock or Restricted Stock
Units. Such performance objectives shall be established in writing by the Board
prior to the ninetieth day of the year in which the Grant is made and while the
outcome is substantially uncertain. Performance objectives shall be based on a
number of factors including, but not limited to, Stock price, market share,
sales, earnings per share, return on equity or costs. Performance objectives may
include positive results, maintaining the status quo or limiting economic
losses. Subject to the fourth sentence of this SECTION 12.2, the Board also may,
in its sole discretion, shorten or terminate the Restricted Period or waive any
other restrictions applicable to all or a portion of the Restricted Stock or
Restricted Stock Units. Neither Restricted Stock nor Restricted Stock Units may
be sold, transferred, assigned, pledged or otherwise encumbered or disposed of
during the Restricted Period or prior to the satisfaction of any other
restrictions prescribed by the Board with respect to such Restricted Stock or
Restricted Stock Units.

        12.3    RESTRICTED STOCK CERTIFICATES.

        The Company shall issue, in the name of each Grantee to whom Restricted
Stock has been granted, stock certificates representing the total number of
shares of Restricted Stock granted to the Grantee, as soon as reasonably
practicable after the Grant Date. The Board may provide in an Award Agreement
that either (i) the Secretary of the Company shall hold such certificates for
the Grantees' benefit until such time as the Restricted Stock is forfeited to
the Company, or the restrictions lapse, or (ii) such certificates shall be
delivered to the Grantee, provided, however, that such certificates shall bear a
legend or legends that complies with the applicable securities laws and
regulations and makes appropriate reference to the restrictions imposed under
the Plan and the Award Agreement.

        12.4    RIGHTS OF HOLDERS OF RESTRICTED STOCK.

        Unless the Board otherwise provides in an Award Agreement, holders of
Restricted Stock shall have the right to vote such Stock and the right to
receive any dividends declared or paid with respect to such Stock. The Board may
provide that any dividends paid on Restricted Stock must be reinvested in shares
of Stock, which may or may not be subject to the same vesting conditions and
restrictions applicable to such Restricted Stock. All distributions, if any,
received by a Grantee with respect to Restricted Stock as a result of any stock
split, stock dividend, combination of shares or other similar transaction shall
be subject to the restrictions applicable to the original Grant.

        12.5    RIGHTS OF HOLDERS OF RESTRICTED STOCK UNITS.

        Unless the Board otherwise provides in an Award Agreement, holders of
Restricted Stock Units shall have no rights as stockholders of the Company. The
Board may provide in an Award Agreement evidencing a Grant of Restricted Stock
Units that the holder of such Restricted Stock Units shall be entitled to
receive, upon the Company's payment of a cash dividend on its outstanding Stock,
a cash payment for each Restricted Stock Unit held equal to the per-share
dividend paid on the Stock. Such Award Agreement may also provide that such cash
payment



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will be deemed reinvested in additional Restricted Stock Units at a price per
unit equal to the Fair Market Value of a share of Stock on the date that such
dividend is paid.

        12.6    TERMINATION OF EMPLOYMENT OR OTHER RELATIONSHIP.

        Unless otherwise provided by the Board, upon the termination of a
Grantee's employment or other relationship with the Company or Subsidiary other
than by reason of death or "permanent and total disability" (within the meaning
of Section 22(e)(3) of the Code), any shares of Restricted Stock or Restricted
Stock Units held by such Grantee that have not vested, or with respect to which
all applicable restrictions and conditions have not lapsed, shall immediately be
deemed forfeited. Upon forfeiture of Restricted Stock or Restricted Stock Units,
the Grantee shall have no further rights with respect to such Grant, including
but not limited to any right to vote Restricted Stock or any right to receive
dividends with respect to shares of Restricted Stock or Restricted Stock Units.
Whether a termination of employment or other relationship shall have occurred
for purposes of the Plan shall be determined by the Board, which determination
shall be final and conclusive. For purposes of the Plan, a termination of
employment, service or other relationship shall not be deemed to occur if the
Grantee is immediately thereafter a director of the Company or an affiliate.

        12.7    RIGHTS IN THE EVENT OF DEATH.

        Unless otherwise provided by the Board, if a Grantee dies while employed
by the Company or Subsidiary, all Restricted Stock or Restricted Stock Units
granted to such Grantee shall fully vest on the date of death, and the shares of
Stock represented thereby shall be deliverable in accordance with the terms of
the Plan to the executors, administrators, legatees or distributees of the
Grantee's estate.

        12.8    RIGHTS IN THE EVENT OF DISABILITY.

        Unless otherwise provided by the Board, if a Grantee's employment or
other relationship with the Company or Subsidiary is terminated by reason of the
"permanent and total disability" (within the meaning of Section 22(e)(3) of the
Code) of such Grantee, such Grantee's Restricted Stock or Restricted Stock Units
shall continue to vest in accordance with the applicable Award Agreement for a
period of one year after such termination of employment or service, subject to
the earlier forfeiture of such Restricted Stock or Restricted Stock Units in
accordance with the terms of the applicable Award Agreement. Whether a
termination of employment or service is to be considered by reason of "permanent
and total disability" for purposes of the Plan shall be determined by the Board,
which determination shall be final and conclusive.

        12.9    DELIVERY OF STOCK AND PAYMENT THEREFOR.

        Upon the expiration or termination of the Restricted Period and the
satisfaction of any other conditions prescribed by the Board, the restrictions
applicable to shares of Restricted Stock or Restricted Stock Units shall lapse,
and, unless otherwise provided in the Award Agreement, upon payment by the
Grantee to the Company, in cash or by check, of the greater of (i) the aggregate
par value of the shares of Stock represented by such Restricted Stock or
Restricted Stock Units or (ii) the purchase price, if any, specified in the
Award agreement relating to such Restricted Stock or Restricted Stock Units, a
stock certificate for such shares shall be delivered, free of all such
restrictions, to the Grantee or the Grantee's beneficiary or estate, as the case
may be.

13.     CERTAIN PROVISIONS APPLICABLE TO AWARDS

        13.1    STAND-ALONE, ADDITIONAL, TANDEM, AND SUBSTITUTE GRANTS.

        Grants under the Plan may, in the discretion of the Board, be granted
either alone or in addition to, in tandem with or in substitution or exchange
for, any other Grant or any award granted under another plan of the Company, any
affiliate or any business entity to be acquired by the Company or an affiliate,
or any other right of a Grantee to receive payment from the Company or any
affiliate. Such additional, tandem and substitute or exchange Grants may be
awarded at any time. If a Grant is awarded in substitution or exchange for
another Grant, the Board shall require the surrender of such other Grant in
consideration for the new Grant. In addition, Grants may be made



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<PAGE>   10

in lieu of cash compensation, including in lieu of cash amounts payable under
other plans of the Company or any affiliate, in which the value of Stock subject
to the Grant is equivalent in value to the cash compensation (for example,
Restricted Stock), or in which the exercise price, grant price or purchase price
of the Grant in the nature of a right that may be exercised is equal to the Fair
Market Value of the underlying Stock minus the value of the cash compensation
surrendered (for example, Options granted with an exercise price "discounted" by
the amount of the cash compensation surrendered).

        13.2    TERM OF GRANT.

        The term of each Grant shall be for such period as may be determined by
the Board; provided that in no event shall the term of any Option exceed a
period of ten years (or such shorter term as may be required in respect of an
Incentive Stock Option under Section 422 of the Code).

        13.3    FORM AND TIMING OF PAYMENT UNDER GRANTS; DEFERRALS.

        Subject to the terms of the Plan and any applicable Award Agreement,
payments to be made by the Company or an affiliate upon the exercise of an
Option or other Grant may be made in such forms as the Board shall determine,
including, without limitation, cash, Stock, other Grants or other property, and
may be made in a single payment or transfer, in installments, or on a deferred
basis. The settlement of any Grant may be accelerated, and cash paid in lieu of
Stock in connection with such settlement, in the discretion of the Board or upon
occurrence of one or more specified events. Installment or deferred payments may
be required by the Board or permitted at the election of the Grantee on terms
and conditions established by the Board. Payments may include, without
limitation, provisions for the payment or crediting of a reasonable interest
rate on installment or deferred payments or the grant or crediting of dividend
equivalents or other amounts in respect of installment or deferred payments
denominated in Stock.

14.     PARACHUTE LIMITATIONS

        Notwithstanding any other provision of this Plan or of any other
agreement, contract, or understanding heretofore or hereafter entered into by a
Grantee with the Company or any affiliate, except an agreement, contract, or
understanding hereafter entered into that expressly modifies or excludes
application of this paragraph (an "Other Agreement"), and notwithstanding any
formal or informal plan or other arrangement for the direct or indirect
provision of compensation to the Grantee (including groups or classes of
participants or beneficiaries of which the Grantee is a member), whether or not
such compensation is deferred, is in cash or is in the form of a benefit to or
for the Grantee (a "Benefit Arrangement"), if the Grantee is a "disqualified
individual," as defined in Section 280G(c) of the Code, any Option, Restricted
Stock or Restricted Stock Unit held by that Grantee and any right to receive any
payment or other benefit under this Plan shall not become exercisable or vested
(i) to the extent that such right to exercise, vesting, payment or benefit,
taking into account all other rights, payments, or benefits to or for the
Grantee under this Plan, all Other Agreements and all Benefit Arrangements,
would cause any payment or benefit to the Grantee under this Plan to be
considered a "parachute payment" within the meaning of Section 280G(b)(2) of the
Code as then in effect (a "Parachute Payment") and (ii) if, as a result of
receiving a Parachute Payment, the aggregate after-tax amounts received by the
Grantee from the Company under this Plan, all Other Agreements and all Benefit
Arrangements would be less than the maximum after-tax amount that could be
received by the Grantee without causing any such payment or benefit to be
considered a Parachute Payment. In the event that the receipt of any such right
to exercise, vesting, payment or benefit under this Plan, in conjunction with
all other rights, payments or benefits to or for the Grantee under any Other
Agreement or any Benefit Arrangement would cause the Grantee to be considered to
have received a Parachute Payment under this Plan that would have the effect of
decreasing the after-tax amount received by the Grantee as described in clause
(ii) of the preceding sentence, then the Grantee shall have the right, in the
Grantee's sole discretion, to designate those rights, payments or benefits under
this Plan, any Other Agreements and any Benefit Arrangements that should be
reduced or eliminated so as to avoid having the payment or benefit to the
Grantee under this Plan be deemed to be a Parachute Payment.



                                       10
<PAGE>   11

15.     REQUIREMENTS OF LAW

        15.1    GENERAL.

        The Company shall not be required to sell or issue any shares of Stock
under any Grant if the sale or issuance of such shares would constitute a
violation by the Grantee, any other individual exercising a right emanating from
such Grant, or the Company of any provision of any law or regulation of any
governmental authority, including without limitation any federal or state
securities laws or regulations. If at any time the Company shall determine, in
its discretion, that the listing, registration or qualification of any shares
subject to a Grant upon any securities exchange or under any governmental
regulatory body is necessary or desirable as a condition of, or in connection
with, the issuance or purchase of shares hereunder, no shares of Stock may be
issued or sold to the Grantee or any other individual exercising an Option
pursuant to such Grant unless such listing, registration, qualification, consent
or approval shall have been effected or obtained free of any conditions not
acceptable to the Company, and any delay caused thereby shall in no way affect
the date of termination of the Grant. Specifically, in connection with the
Securities Act, upon the exercise of any right emanating from such Grant or the
delivery of any shares of Restricted Stock or Stock underlying Restricted Stock
Units, unless a registration statement under such Act is in effect with respect
to the shares of Stock covered by such Grant, the Company shall not be required
to sell or issue such shares unless the Board has received evidence satisfactory
to it that the Grantee or any other individual exercising an Option may acquire
such shares pursuant to an exemption from registration under the Securities Act.
Any determination in this connection by the Board shall be final, binding and
conclusive. The Company may, but shall in no event be obligated to, register any
securities covered hereby pursuant to the Securities Act. The Company shall not
be obligated to take any affirmative action in order to cause the exercise of an
Option or the issuance of shares of Stock pursuant to the Plan to comply with
any law or regulation of any governmental authority. As to any jurisdiction that
expressly imposes the requirement that an Option shall not be exercisable until
the shares of Stock covered by such Option are registered or are exempt from
registration, the exercise of such Option (under circumstances in which the laws
of such jurisdiction apply) shall be deemed conditioned upon the effectiveness
of such registration or the availability of such an exemption.

        15.2    RULE 16b-3.

        During any time when the Company has a class of equity security
registered under Section 12 of the Exchange Act, it is the intent of the Company
that Grants pursuant to the Plan and the exercise of Options granted hereunder
will qualify for the exemption provided by Rule 16b-3 under the Exchange Act. To
the extent that any provision of the Plan or action by the Board does not comply
with the requirements of Rule 16b-3, it shall be deemed inoperative to the
extent permitted by law and deemed advisable by the Board, and shall not affect
the validity of the Plan. In the event that Rule 16b-3 is revised or replaced,
the Board may exercise its discretion to modify this Plan in any respect
necessary to satisfy the requirements of, or to take advantage of any features
of, the revised exemption or its replacement.

16.     AMENDMENT AND TERMINATION OF THE PLAN

        The Board may, at any time and from time to time, amend, suspend or
terminate the Plan as to any shares of Stock as to which Grants have not been
made; provided, however, that the Board shall not, without approval of the
Company's shareholders, amend the Plan such that it does not comply with the
Code. Except as permitted under this SECTION 16 or SECTION 17 hereof, no
amendment, suspension or termination of the Plan shall, without the consent of
the Grantee, alter or impair rights or obligations under any Grant theretofore
awarded under the Plan.

17.     EFFECT OF CHANGES IN CAPITALIZATION

        17.1    CHANGES IN STOCK.

        If the number of outstanding shares of Stock is increased or decreased
or the shares of Stock are changed into or exchanged for a different number or
kind of shares or other securities of the Company on account of any
recapitalization, reclassification, stock split, reverse split, combination of
shares, exchange of shares, stock dividend or other distribution payable in
capital stock, or other increase or decrease in such shares effected without
receipt of



                                       11
<PAGE>   12

consideration by the Company occurring after the Effective Date, the number and
kinds of shares for which Grants of Options, Restricted Stock and Restricted
Stock Units may be made under the Plan shall be adjusted proportionately and
accordingly by the Company. In addition, the number and kind of shares for which
Grants are outstanding shall be adjusted proportionately and accordingly so that
the proportionate interest of the Grantee immediately following such event shall
be, to the extent practicable, the same as immediately before such event. Any
such adjustment in outstanding Options shall not change the aggregate Option
Price payable with respect to shares that are subject to the unexercised portion
of an Option outstanding but shall include a corresponding proportionate
adjustment in the Option Price per share. The conversion of any convertible
securities of the Company shall not be treated as an increase in shares effected
without receipt of consideration.

        17.2    REORGANIZATION IN WHICH THE COMPANY IS THE SURVIVING ENTITY AND
                IN WHICH NO CHANGE OF CONTROL OCCURS.

        Subject to SECTION 17.3 hereof, if the Company shall be the surviving
entity in any reorganization, merger or consolidation of the Company with one or
more other entities and in which no Change of Control occurs, any Option
theretofore granted pursuant to the Plan shall pertain to and apply to the
securities to which a holder of the number of shares of Stock subject to such
Option would have been entitled immediately following such reorganization,
merger or consolidation, with a corresponding proportionate adjustment of the
Option Price per share so that the aggregate Option Price thereafter shall be
the same as the aggregate Option Price of the shares remaining subject to the
Option immediately prior to such reorganization, merger or consolidation.
Subject to any contrary language in an Award Agreement evidencing a Grant of
Restricted Stock, any restrictions applicable to such Restricted Stock shall
apply as well to any replacement shares received by the Grantee as a result of
the reorganization, merger or consolidation.

        17.3    REORGANIZATION, SALE OF ASSETS OR SALE OF STOCK WHICH INVOLVES A
                CHANGE OF CONTROL.

        Subject to the exceptions set forth in the last sentence of this SECTION
17.3, (i) upon the occurrence of a Change of Control, all outstanding shares of
Restricted Stock and Restricted Stock Units shall be deemed to have vested, and
all restrictions and conditions applicable to such shares of Restricted Stock
and Restricted Stock Units shall be deemed to have lapsed, immediately prior to
the occurrence of such Change of Control, and (ii) fifteen days prior to the
scheduled consummation of a Change of Control, all Options outstanding hereunder
shall become immediately exercisable and shall remain exercisable for a period
of fifteen days. Any exercise of an Option during such fifteen-day period shall
be conditioned upon the consummation of the event and shall be effective only
immediately before the consummation of the event. Upon consummation of any
Change of Control, the Plan and all outstanding but unexercised Options shall
terminate. The Board shall send written notice of an event that will result in
such a termination to all individuals who hold Options not later than the time
at which the Company gives notice thereof to its shareholders. This SECTION 17.3
shall not apply to any Change of Control to the extent that (A) provision is
made in writing in connection with such Change of Control for the assumption of
the Options, Restricted Stock and Restricted Stock Units theretofore granted, or
for the substitution for such Options, Restricted Stock and Restricted Stock
Units of new options, restricted stock and restricted stock units covering the
stock of a successor entity, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kinds of shares or units and exercise prices,
in which event the Plan and Options, Restricted Stock and Restricted Stock Units
theretofore granted shall continue in the manner and under the terms so provided
or (B) a majority of the full Board determines that such Change of Control shall
not trigger application of the provisions of this SECTION 17.3.

        17.4    ADJUSTMENTS.

        Adjustments under this SECTION 17 related to shares of Stock or
securities of the Company shall be made by the Board, whose determination in
that respect shall be final, binding and conclusive. No fractional shares or
other securities shall be issued pursuant to any such adjustment, and any
fractions resulting from any such adjustment shall be eliminated in each case by
rounding downward to the nearest whole share.



                                       12
<PAGE>   13

        17.5    NO LIMITATIONS ON COMPANY.

        The making of Grants pursuant to the Plan shall not affect or 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, consolidate, dissolve or liquidate, or to sell or
transfer all or any part of its business or assets.

18.     DISCLAIMER OF RIGHTS

        No provision in the Plan or in any Grant or Award Agreement shall be
construed to confer upon any individual the right to remain in the employ or
service of the Company or any affiliate, or to interfere in any way with any
contractual or other right or authority of the Company either to increase or
decrease the compensation or other payments to any individual at any time, or to
terminate any employment or other relationship between any individual and the
Company. In addition, notwithstanding anything contained in the Plan to the
contrary, unless otherwise stated in the applicable Award Agreement, no Grant
awarded under the Plan shall be affected by any change of duties or position of
the Grantee, so long as such Grantee continues to be a director, officer,
consultant or employee of the Company or any affiliate. The obligation of the
Company to pay any benefits pursuant to this Plan shall be interpreted as a
contractual obligation to pay only those amounts described herein, in the manner
and under the conditions prescribed herein. The Plan shall in no way be
interpreted to require the Company to transfer any amounts to a third party
trustee or otherwise hold any amounts in trust or escrow for payment to any
participant or beneficiary under the terms of the Plan. No Grantee shall have
any of the rights of a shareholder with respect to the shares of Stock subject
to an Option except to the extent the certificates for such shares of Stock
shall have been issued upon the exercise of the Option.

19.     NONEXCLUSIVITY OF THE PLAN

        Neither the adoption of the Plan nor the submission of the Plan to the
shareholders of the Company for approval shall be construed as creating any
limitations upon the right and authority of the Board to adopt such other
incentive compensation arrangements (which arrangements may be applicable either
generally to a class or classes of individuals or specifically to a particular
individual or particular individuals) as the Board in its discretion determines
desirable, including, without limitation, the granting of stock options
otherwise than under the Plan.

20.     WITHHOLDING TAXES

        The Company or any affiliate, as the case may be, shall have the right
to deduct from payments of any kind otherwise due to a Grantee any Federal,
state or local taxes of any kind required by law to be withheld with respect to
the vesting of or other lapse of restrictions applicable to Restricted Stock or
Restricted Stock Units or upon the issuance of any shares of Stock upon the
exercise of an Option. At the time of such vesting, lapse or exercise, the
Grantee shall pay to the Company or affiliate, as the case may be, any amount
that the Company or affiliate may reasonably determine to be necessary to
satisfy such withholding obligation. Subject to the prior approval of the
Company or the affiliate, which may be withheld by the Company or the affiliate,
as the case may be, in its sole discretion, the Grantee may elect to satisfy
such obligations, in whole or in part, (i) by causing the Company or the
affiliate to withhold shares of Stock otherwise issuable to the Grantee in an
amount equal to the statutory withholding amount or (ii) by delivering to the
Company or the affiliate shares of Stock already owned by the Grantee. The
shares of Stock so delivered or withheld shall have an aggregate Fair Market
Value equal to such withholding obligations. The Fair Market Value of the shares
of Stock used to satisfy such withholding obligation shall be determined by the
Company or the affiliate as of the date that the amount of tax to be withheld is
to be determined. A Grantee who has made an election pursuant to this SECTION 20
may satisfy his or her withholding obligation only with shares of Stock that are
not subject to any repurchase, forfeiture, unfulfilled vesting or other similar
requirements.

21.     CAPTIONS

        The use of captions in this Plan or any Award Agreement is for the
convenience of reference only and shall not affect the meaning of any provision
of the Plan or such Award Agreement.



                                       13
<PAGE>   14

22.     OTHER PROVISIONS

        Each Grant awarded under the Plan may contain such other terms and
conditions not inconsistent with the Plan as may be determined by the Board, in
its sole discretion.

23.     NUMBER AND GENDER

        With respect to words used in this Plan, the singular form shall include
the plural form, the masculine gender shall include the feminine gender, etc.,
as the context requires.

24.     SEVERABILITY

        If any provision of the Plan or any Award Agreement shall be determined
to be illegal or unenforceable by any court of law in any jurisdiction, the
remaining provisions hereof and thereof shall be severable and enforceable in
accordance with their terms, and all provisions shall remain enforceable in any
other jurisdiction.

25.     POOLING

        In the event any provision of the Plan or the Award Agreement would
prevent the use of pooling of interests accounting in a corporate transaction
involving the Company and such transaction is contingent upon pooling of
interests accounting, then that provision shall be deemed amended or revoked to
the extent required to preserve such pooling of interests. The Company may
require in an Award Agreement that a Grantee who receives a Grant under the Plan
shall, upon advice from the Company, take (or refrain from taking, as
appropriate) all actions necessary or desirable to ensure that pooling of
interests accounting is available.

26.     GOVERNING LAW

        The validity and construction of this Plan and the instruments
evidencing the Grants awarded hereunder shall be governed by the laws of the
State of Delaware (excluding the choice of law rules thereof).

27.     NONTRANSFERABILITY OF SHARES

        A Grantee shall not sell, pledge, assign, gift, transfer, or otherwise
dispose of any shares of stock acquired pursuant to a Grant.

28.     BLUE SKY PROVISIONS REQUIRED TO BE SET FORTH IN THE PLAN

        28.1    CALIFORNIA PROVISIONS.

        Notwithstanding the foregoing sections, any Grant made under the Plan to
a Grantee who is a resident of the State of California on the Grant Date shall
be subject to the following additional terms and conditions:

            A.  For the purpose of Grants which are not Incentive Stock Options,
                Fair Market Value shall be determined in a manner not
                inconsistent with Section 260.140.50 of the California Code of
                Regulations or any successor statute, and the exercise price of
                any non-incentive stock option shall not be less than 85% of
                Fair Market Value on the date of grant.

            B.  Grants may not be made under the Plan to Grantees ten years
                after the earlier of: (i) the date the Plan was adopted by the
                Board or (ii) the date the Plan was approved by the shareholders
                of the Company.

            C.  An Option granted under the Plan to a Grantee who is a person
                who owns stock possessing more than ten percent of the combined
                voting power of all classes of stock of the Company or its
                parent or its Subsidiary corporations shall have an Option Price
                of at least 110% of the Fair Market Value of a share of Stock on
                the Grant Date.



                                       14
<PAGE>   15

            D.  Any Option granted under the Plan to a Grantee who is not an
                officer, director, or consultant of the Company or its
                affiliates shall become exercisable at a rate of at least twenty
                percent (20%) of the shares of Stock subject to such Grant per
                year for a period of five years from the Grant Date; provided,
                that, such Option shall be subject to such reasonable forfeiture
                conditions as the Board may choose to impose and which are not
                inconsistent with Section 260.140.41 of the California Code of
                Regulations or any successor statute.

            E.  The Company shall deliver to the Grantee financial statements on
                an annual basis regarding the Company. The financial statements
                so provided shall comply with Section 260.140.46 of the
                California Code of Regulations or any successor statute, but
                need not comply with Section 260.613 of the California Code of
                Regulations or any successor statute.

            F.  Any transfer of an Option granted under the Plan authorized by
                the Board in an Award Agreement must comply with Section
                260.140.41(d) of the California Code of Regulations or any
                successor statute.

            G.  A grant which authorizes a Grantee to purchase Stock under the
                Plan (other than a non-qualified stock option) shall not be
                transferable other than by will or the laws of descent and
                distribution.

            H.  Unless a Grantee's employment is terminated for cause as defined
                by applicable law, the Grantee shall have the right to exercise
                an Option, prior to the termination of the Option in accordance
                with SECTION 10 and only to the extent that the Grantee was
                entitled to exercise such Option on the date employment
                terminates, as follows: (i) at least six (6) months from the
                date of termination if the termination was caused by the
                Grantee's death or "permanent and total disability" (within the
                meaning of Section 22(e)(3) of the Code), and (ii) at least
                thirty (30) days from the date of termination if termination was
                caused by other than death or "permanent and total disability"
                (within the meaning of Section 22(e)(3) of the Code) of the
                Grantee.

            I.  The purchase price for a grant of Restricted Stock or Restricted
                Stock Units shall be at least 85% of the Fair Market Value of
                the Stock on the Grant Date and at least 100% of the Fair Market
                Value of Stock on the Grant Date in the case of a person who
                owns stock possessing more than ten percent of the combined
                voting power of all classes of stock of the Company or its
                parent or its Subsidiary corporations.

            J.  At no time shall the total number of shares of Stock issuable
                upon exercise of all outstanding Options and the total number of
                shares provided for under all stock bonus or similar plans of
                the Company exceed the applicable percentage as calculated in
                accordance with the conditions and exclusions of Section
                260.140.45 of the California Code of Regulations or any
                successor statute.

            K.  Grants may be made only to persons who are employees, directors,
                or consultants of the Company or its affiliates.

        If the Stock is listed on an established national or regional stock
exchange or is admitted to quotation on the National Association of Securities
Dealers Automated Quotation System, or is publicly traded in an established
securities market, the restrictions of this SECTION 28.1 shall terminate as of
the first date that the Stock is so listed, quoted or publicly traded.

        28.2    FLORIDA, VIRGINIA AND MISSOURI PROVISIONS.

        Notwithstanding SECTION 6:

             (a) a resident of Florida or Virginia who is not an employee or
director of the Company or an employee of any wholly-owned subsidiary of the
Company shall not be eligible to receive a Grant under the Plan; and



                                       15
<PAGE>   16

             (b) a resident of Missouri who is not an employee of the Company or
an employee of any wholly-owned subsidiary of the Company shall not be eligible
to receive a Grant under the Plan.

                                      * * *



                                       16