V-ONE CORPORATION
                            1998 INCENTIVE STOCK PLAN

ARTICLE I.  PURPOSE, ADOPTION AND TERM OF THE PLAN

         1.01 PURPOSE. The purpose of the V-ONE Corporation 1998 Incentive Stock
Plan (hereinafter  referred to as the "Plan") is to advance the interests of the
Company (as hereinafter defined) and its Subsidiaries (as hereinafter  defined),
if any, by encouraging  and providing for the  acquisition of an equity interest
in  the  Company  by  non-employee   directors,   officers,  key  employees  and
consultants  through the grant of awards with  respect to shares of Common Stock
(as  hereinafter  defined).  The Plan will  enable  the  Company  to retain  the
services of non-employee directors, officers, key employees and consultants upon
whose  judgment,  interest,  and special  effort the  successful  conduct of its
operations  is  largely   dependent  and  to  compete   effectively  with  other
enterprises for the services of non-employee directors,  officers, key employees
and consultants as may be needed for the continued improvement of its business.

         1.02 ADOPTION AND TERM. The Plan shall become  effective on February 2,
1998  ("Effective  Date"),  subject to the approval of a simple  majority of the
holders of Voting Stock (as hereinafter  defined)  represented,  by person or by
proxy,  and  entitled to vote at an annual or special  meeting of the holders of
Voting Stock. The Plan shall terminate on February 2, 2008, or such earlier date
as shall be determined by the Board (as hereinafter defined); provided, however,
that, in the event the Plan is not approved by a simple  majority of the holders
of Voting  Stock at or before the  Company's  1998 annual  meeting of holders of
Voting  Stock,  the  Plan  shall  terminate  on such  date  and any  Awards  (as
hereinafter defined) made under the Plan prior to such date shall be void and of
no force and effect.

ARTICLE II.  DEFINITIONS

         For purposes of the Plan,  capitalized  terms shall have the  following
meanings:

         2.01  "Award"  means  (a) any  grant  to an  Employee  or a  Consultant
Participant  of any one or a  combination  of  Non-Qualified  Stock  Options  or
Incentive Stock Options  described in Article VI, or Restricted Shares described
in Article VII, or (b) any grant to a  Non-Employee  Director of a  Non-Employee
Director Option described in Article VIII.

         2.02 "Award  Agreement" means a written  agreement  between the Company
and a  Participant  or a written  acknowledgment  from the Company  specifically
setting  forth the terms and  conditions  of an Award  granted to a  Participant
under the Plan.

         2.03 "Beneficiary" means an individual, trust or estate who or that, by
will or the  laws of  descent  and  distribution,  succeeds  to the  rights  and
obligations of the  Participant  under the Plan and an Award  Agreement upon the
Participant's death.

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

         2.05  "Cause"  means,  with  respect to an  Employee  Participant  or a
Consultant  Participant,  termination for, as determined by the Committee in its
sole and absolute  discretion,  (i) dishonest or fraudulent  conduct relating to
the Company or any of its Subsidiaries or their  businesses;  (ii) conviction of
any felony that involves moral turpitude or otherwise reflects on the Company or
any of its  Subsidiaries in a significantly  adverse way; or (iii) gross neglect
by the  Participant in the  performance of his or her duties as an employee or a

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consultant,  or any  material  breach  by a  Participant  under  any  employment
agreement or consulting agreement with the Company or any of its Subsidiaries.

         2.06  "Change in Control"  means the  occurrence,  after the  Effective
Date, of any of the following  events,  directly or indirectly or in one or more
series of transactions:

               (i) Approval of the Company's  shareholders of a consolidation or
         merger of the Company with any Third  Party,  unless the Company is the
         entity surviving such merger or consolidation;

               (ii) Approval of the Company's  shareholders of a transfer of all
         or substantially all of the assets of the Company to a Third Party or a
         complete liquidation or dissolution of the Company;

               (iii) A Third Party (other than James F. Chen and his  affiliates
         or  Advantage  Fund  Limited,  Advantage  Fund  II  Ltd.  and/or  their
         affiliates),  directly or indirectly,  through one or more subsidiaries
         or  transactions  or  acting in  concert  with one or more  persons  or
         entities:

                    (A)  acquires  beneficial  ownership of more than 20% of the
                Voting Stock;

                    (B) acquires  irrevocable proxies representing more than 20%
                of the Voting Stock;

                    (C)  acquires any  combination  of  beneficial  ownership of
                Voting Stock and irrevocable proxies  representing more than 20%
                of the Voting Stock;

                    (D)  acquires  the  ability  to  control  in any  manner the
                election of a majority of the directors of the Company; or

                    (E) acquires the ability to directly or indirectly  exercise
                a controlling  influence  over the management or policies of the
                Company;

               (iv) any  election  has  occurred  of  persons  to the Board that
         causes a majority  of the Board to  consist  of persons  other than (A)
         persons who were members of the Board on the Effective  Date and/or (B)
         persons who were  nominated for election as members of the Board by the
         Board (or a committee  of the Board) at a time when the majority of the
         Board (or of such  committee)  consisted of persons who were members of
         the Board on the Effective Date;  PROVIDED,  HOWEVER,  that any persons
         nominated  for election by the Board (or a committee  of the Board),  a
         majority  of whom are persons  described  in clauses (A) and/or (B), or
         are persons who were themselves nominated by such Board (or a committee
         of such Board), shall for this purpose be deemed to have been nominated
         by a Board composed of persons described in clause (A); or

               (v) A  determination  is made by the  SEC or any  similar  agency
         having regulatory control over the Company that a change in control, as
         defined in the securities  laws or regulations  then  applicable to the
         Company, has occurred.

Notwithstanding  any provision  contained  herein, a Change in Control shall not
include  any of the above  described  events  if they are the  result of a Third
Party's inadvertently acquiring beneficial ownership or irrevocable proxies or a
combination  of both for more than 20% of the Voting Stock,  and the Third Party

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as promptly as practicable  thereafter divests itself of beneficial ownership or
irrevocable proxies for a sufficient number of shares so that the Third Party no
longer has beneficial  ownership or irrevocable proxies or a combination of both
for more than 20% of the Voting Stock.

         2.07 "Code"  means the Internal  Revenue Code of 1986,  as amended from
time to time,  or any  successor  thereto.  References  to a section of the Code
shall include that section and any comparable  section or sections of any future
legislation that amends, supplements, or supersedes said section.

         2.08  "Committee"  means a committee of the Board as may be  appointed,
from time to time,  by the  Board.  The Board  may,  from time to time,  appoint
members of the Committee in  substitution  for those members who were previously
appointed  and  may  fill  vacancies,  however  caused,  in the  Committee.  The
Committee  shall be composed of at least two  directors of the Company,  each of
whom is a  "non-employee  director" as defined in Rule 16b-3,  as promulgated by
the SEC under the Exchange Act, and an "outside  director" within the meaning of
Section  162(m).  The Committee shall have the power and authority to administer
the Plan in  accordance  with  Article  III.  If,  however,  at least two of the
Company's   directors  are  not  both  "non-employee   directors"  and  "outside
directors," the Plan shall be administered by the Board and the term "Committee"
as used herein shall mean the Board.

         2.09 "Common Stock" means the Common Stock,  par value $.001 per share,
of the Company.

         2.10 "Company" means V-ONE Corporation,  a corporation  organized under
the laws of the State of Delaware, and its successors.

         2.11 "Consultant  Participant"  means a Participant who is a consultant
to the Company or one of its Subsidiaries.

         2.12  "Date of  Grant"  means  the date  designated  by the Plan or the
Committee  as the  date as of which an Award  is  granted,  which  shall  not be
earlier  than the date on which the  Committee  approves  the  granting  of such
Award.

         2.13  "Disability"  means any physical or mental injury or disease of a
permanent nature that renders an Employee or a Consultant  Participant incapable
of meeting the requirements of the employment or other work that the Employee or
Consultant  Participant  performed immediately before that disability commenced.
The determination of whether an Employee or a Consultant Participant is disabled
and when an Employee or a Consultant  Participant becomes disabled shall be made
by the Committee in its sole and absolute discretion.

         2.14  "Disability  Date"  means the date which is six months  after the
date on which an  Employee  or a  Consultant  Participant  is first  absent from
active employment or work with the Company due to a Disability.

         2.15 "Employee  Participant"  means a Participant who is an employee of
the Company or one of its Subsidiaries.

         2.16 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.

         2.17  "Exchange  Act" means the  Securities  Exchange  Act of 1934,  as
amended.

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         2.18 "Fair Market  Value" of a share of Common  Stock means,  as of any
given date,  the closing  sales price of a share of Common Stock on such date on
the  principal  national  securities  exchange on which the Common Stock is then
traded  or, if the  Common  Stock is not then  traded on a  national  securities
exchange,  the closing sales price or, if none, the average of the bid and asked
prices of the Common Stock on such date as reported on the National  Association
of Securities Dealers Automated Quotation System ("Nasdaq");  PROVIDED, HOWEVER,
that, if there were no sales  reported as of such date,  Fair Market Value shall
be  computed  as of the  last  date  preceding  such  date on  which a sale  was
reported;  PROVIDED,  FURTHER, that, if any such exchange or quotation system is
closed on any day on which Fair Market  Value is to be  determined,  Fair Market
Value shall be determined as of the first date  immediately  preceding such date
on which such  exchange or quotation  system was open for trading.  In the event
the Common Stock is not admitted to trade on a securities  exchange or quoted on
Nasdaq,  the Fair Market  Value of a share of Common  Stock as of any given date
shall be as  determined  by the  Committee in its sole and absolute  discretion,
which  determination may be based on, among other things,  the opinion of one or
more  independent and reputable  appraisers  qualified to value companies in the
Company's line of business.

         2.19  "Incentive  Stock  Option"  means  an  Option  designated  as  an
incentive  stock  option and that meets the  requirements  of Section 422 of the
Code.

         2.20 "Non-Employee  Director" means each member of the Board who is not
an employee of the Company or of any of its Subsidiaries.

         2.21  "Non-Employee   Director  Option"  means  an  Option  granted  in
accordance with Article VIII.

         2.22  "Non-Qualified  Stock  Option"  means  an  Option  that is not an
Incentive Stock Option.

         2.23  "Option"  means any option to purchase  Common Stock granted to a
Participant  pursuant to Article VI or to a  Non-Employee  Director  pursuant to
Article VIII.

         2.24  "Participant"  means any employee of or consultant to the Company
or any of its Subsidiaries  selected by the Committee to receive an Option under
the Plan in accordance with Article VI and/or  Restricted  Shares under the Plan
in  accordance  with Article VII and,  solely to the extent  provided in Article
VIII, any Non-Employee Director.

         2.25 "Plan" means the V-ONE  Corporation  1998 Incentive  Stock Plan as
set forth herein, and as the same may be amended from time to time.

         2.26  "Reload  Option"  shall  have the  meaning  set forth in  Section
6.03(e) of the Plan.

         2.27  "Restricted  Shares"  means  shares of Common  Stock  subject  to
restrictions imposed in connection with Awards granted under Article VII.

         2.28 "Rule 16b-3" means Rule 16b-3 promulgated by the SEC under Section
16 of the Exchange Act and any successor rule.

         2.29 "SEC" means the Securities and Exchange Commission.

         2.30  "Section  162(m)"  means  Section  162(m)  of the  Code  and  the
regulations thereunder.

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         2.31 "Subsidiary" means a company more than 50% of the equity interests
of which are beneficially owned, directly or indirectly, by the Company.

         2.32 "Ten Percent  Shareholder" means a Participant who, at the time of
grant of an Option,  owns (or is deemed to own under Section 424(d) of the Code)
more than 10% of the Voting Stock.

         2.33  "Termination  of Employment"  means,  with respect to an Employee
Participant,  the  voluntary  or  involuntary  termination  of  a  Participant's
employment  with  the  Company  or any  of  its  Subsidiaries  for  any  reason,
including, without limitation, death, Disability, retirement or as the result of
the sale or other  divestiture  of the  Participant's  employer  or any  similar
transaction in which the Participant's  employer ceases to be the Company or one
of its Subsidiaries. Whether entering military or other government service shall
constitute Termination of Employment, and whether a Termination of Employment is
a result of Disability, shall be determined in each case by the Committee in its
sole and absolute discretion. Termination of Employment means, with respect to a
consultant, termination of his or her services as a consultant to the Company or
one of its Subsidiaries.

         2.34 "Third  Party"  includes a single  person or a group of persons or
entities  acting in concert  not wholly  owned  directly  or  indirectly  by the
Company.

         2.35 "Voting Stock" means the classes of stock of the Company  entitled
to vote generally in the election of directors of the Company.

ARTICLE III.  ADMINISTRATION

         3.01 COMMITTEE. The Plan shall be administered by the Committee,  which
shall have exclusive and final authority in each determination,  interpretation,
or other action  affecting the Plan and its  Participants.  The Committee  shall
have the sole and absolute  discretion  to interpret  the Plan, to establish and
modify  administrative  rules for the Plan,  to select the  officers,  other key
employees and consultants to whom Awards may be granted,  to determine the terms
and provisions of the respective Award Agreements (which need not be identical),
to determine all claims for benefits  under the Plan, to impose such  conditions
and restrictions on Awards as it determines  appropriate,  to determine  whether
the shares  offered with respect to an Award will be treasury  shares or will be
authorized but previously  unissued shares, and to take such steps in connection
with  the  Plan  and  Awards  granted  hereunder  as it may  deem  necessary  or
advisable.  No action of the Committee  will be effective if it  contravenes  or
amends the Plan in any respect.

         3.02  ACTIONS OF THE  COMMITTEE.  Except  when the  "Committee"  is the
"Board" in the circumstance  described on the last sentence of Section 2.08, all
determinations of the Committee shall be made by a majority vote of its members.
Any  decision  or  determination  reduced  to  writing  and signed by all of the
members  shall be fully as  effective  as if it had been made at a meeting  duly
called and held.  The Committee  shall also have express  authorization  to hold
Committee meetings by conference telephone,  or similar communication  equipment
by means of which all persons participating in the meeting can hear each other.

ARTICLE IV.  SHARES OF COMMON STOCK

         4.01 NUMBER OF SHARES OF COMMON STOCK ISSUABLE.  Subject to adjustments
as provided in Section 9.05, 2,500,000 shares of Common Stock shall be available


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for Awards granted under the Plan. The Common Stock to be offered under the Plan
shall be authorized and unissued Common Stock, or issued Common Stock that shall
have been reacquired by the Company and held in its treasury.

         4.02  CALCULATION  OF NUMBER OF SHARES OF COMMON  STOCK  AWARDED TO ANY
PARTICIPANT.  In the event the  purchase  price of an Option is paid,  or tax or
withholding  payments  relating to an Award are  satisfied,  in whole or in part
through the delivery of shares of Common Stock, a Participant  will be deemed to
have received an Award with respect to those shares of Common Stock.

         4.03 SHARES OF COMMON STOCK  SUBJECT TO TERMINATED  AWARDS.  The Common
Stock  covered by any  unexercised  portions of  terminated  Options,  shares of
Common Stock forfeited as provided in Section 7.02(a) and shares of Common Stock
subject to Awards that are  otherwise  surrendered  by the  Participant  without
receiving any payment or other benefit with respect thereto may again be subject
to new Awards under the Plan.

ARTICLE V.  PARTICIPATION

         5.01 ELIGIBLE PARTICIPANTS. Participants in the Plan shall include such
officers,  other  key  employees  of  and  consultants  to  the  Company  or its
Subsidiaries,  whether or not directors of the Company, as the Committee, in its
sole and absolute  discretion,  may designate  from time to time. In making such
designation,  the  Committee  may take into  account the nature of the  services
rendered by the  officers,  key  employees  and  consultants,  their present and
potential contributions to the success of the Company, and such other factors as
the  Committee,  in its sole and absolute  discretion,  may deem  relevant.  The
Committee's  designation  of a  Participant  in any year shall not  require  the
Committee  to  designate  such person to receive  Awards in any other year.  The
Committee  shall  consider  such  factors  as it deems  pertinent  in  selecting
Participants and in determining the type and amount of their respective  Awards.
A Participant  may hold more than one Award  granted under the Plan.  During the
term of the Plan,  no Employee  Participant  may receive  Awards with respect to
more than 500,000 shares of Common Stock.

         Non-Employee  Directors shall receive Non-Employee  Director Options in
accordance  with  Article  VIII,  the  provisions  of which  are  automatic  and
non-discretionary in operation.  Non-Employee Directors shall not be eligible to
receive any other Awards  under the Plan unless they are no longer  Non-Employee
Directors on the Date of Grant of such Awards.

ARTICLE VI.  STOCK OPTIONS

         6.01 GRANT OF OPTION.  Any Option  granted  under this Article VI shall
have such terms as the Committee may, from time to time, approve,  and the terms
and conditions of Options need not be the same with respect to each Participant.
Under this Article VI, the  Committee  may grant to any  Employee or  Consultant
Participant one or more Incentive Stock Options,  Non-Qualified Stock Options or
both types of Options; PROVIDED,  HOWEVER, that Incentive Stock Options may only
be granted to Employee  Participants.  To the extent any Option does not qualify
as an Incentive  Stock Option (whether  because of its  provisions,  the time or
manner of its exercise or  otherwise),  that Option or the portion  thereof that
does not so qualify shall constitute a separate Non-Qualified Stock Option.

         6.02 INCENTIVE STOCK OPTIONS.  In the case of any grant of an Incentive
Stock  Option,  whenever  possible,  each  provision  hereof  and in  any  Award
Agreement  relating to such Option  shall be  interpreted  to entitle the holder
thereof to the tax treatment  afforded by Section 422 of the Code, except (a) in

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connection with the exercise of Options following a Participant's Termination of
Employment,  (b) in accordance  with a specific  determination  of the Committee
with the  consent of the  affected  Participant  and (c) to the extent  that the
operation of Section 9.05 would cause an Option to no longer be entitled to such
treatment. If any provision hereof or that Award Agreement is held not to comply
with requirements  necessary to entitle that Option to that tax treatment,  then
except as otherwise provided in the preceding sentence: (i) that provision shall
be deemed to have  contained  from the outset such  language as is  necessary to
entitle the Option to the tax treatment  afforded under Section 422 of the Code;
and (ii) all other provisions  hereof and of that Award Agreement remain in full
force and effect.  Except as otherwise  specified in the first  sentence of this
Section 6.02, if any Award Agreement covering an Option the Committee designates
to be an Incentive Stock Option  hereunder does not explicitly  include any term
required to entitle that Incentive Stock Option to the tax treatment afforded by
Section  422 of the  Code,  all such  terms  shall  be  deemed  implicit  in the
designation of that Option, and that Option shall be deemed to have been granted
subject to all such terms.

         6.03 TERMS OF OPTIONS.  Options  granted under this Article VI shall be
subject  to the  following  terms and  conditions  and shall be in such form and
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 Common Stock
         purchasable under an Option shall be determined by the Committee at the
         time of grant but,  if the Option is an  Incentive  Stock  Option,  the
         option  price per share  shall not be less than 100% of the Fair Market
         Value  of a share of  Common  Stock  on the  Date of  Grant;  PROVIDED,
         HOWEVER, that, if an Incentive Stock Option is granted to a Ten Percent
         Shareholder,  the option  price per share shall be at least 110% of the
         Fair Market  Value of a share of Common  Stock on the Date of Grant and
         PROVIDED,  FURTHER,  that, except as otherwise  required under the Code
         with respect to Incentive  Stock  Options and as required by Rule 16b-3
         with respect to Options granted to persons subject to Section 16 of the
         Exchange Act, no amendment of an Option shall be deemed to be the grant
         of a new Option for purposes of this Section  6.03(a).  Notwithstanding
         the foregoing,  the option price per share of Common Stock of an Option
         shall never be less than par value per share.

                  (b) OPTION TERM. The term of each Option shall be fixed by the
         Committee, but no Option shall be exercisable more than ten years after
         its Date of Grant;  PROVIDED,  HOWEVER,  that,  if an  Incentive  Stock
         Option is granted to a Ten Percent Shareholder, the Option shall not be
         exercisable more than five years after its Date of Grant.

                  (c) EXERCISABILITY. An Award Agreement with respect to Options
         may contain such performance targets, waiting periods,  exercise dates,
         restrictions on exercise (including,  but not limited to, a requirement
         that  an  Option  is   exercisable  in  periodic   installments),   and
         restrictions on the transfer of the underlying  shares of Common Stock,
         if any, as may be determined by the Committee at the time of grant.  To
         the  extent  not   exercised,   installments   shall  cumulate  and  be
         exercisable,   in  whole  or  in  part,  at  any  time  after  becoming
         exercisable,  subject to the limitations set forth in Sections 6.03(b),
         (g) and (h). If an Option is an Incentive  Stock Option and if required
         by Section 422 of the Code,  the  aggregate  Fair  Market  Value of the
         shares of Common Stock  underlying  such Option and all other incentive
         stock options  granted to the Employee  Participant  (determined at the
         time the Option is granted) that become exercisable in any one calendar
         year shall not exceed $100,000.

                  (d)  METHOD  OF  EXERCISE.  Subject  to  whatever  installment
         exercise and waiting period provisions that apply under Section 6.03(c)


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         above,  Options may be exercised in whole or in part at any time during
         the term of the  Option,  by giving  written  notice of exercise to the
         Company  specifying  the  number  of  shares  of  Common  Stock  to  be
         purchased.  Such notice shall be  accompanied by payment in full of the
         purchase  price in such form as the  Committee  may  accept  (including
         payment in accordance with a cashless  exercise program approved by the
         Committee).  If and to the extent the Committee  determines in its sole
         and absolute  discretion at or after grant,  payment in full or in part
         may also be made in the form of shares of Common Stock already owned by
         the Participant (and for which the Participant has good title, free and
         clear of any liens or  encumbrances)  based on the Fair Market Value of
         the  shares  of  Common  Stock  on the date the  Option  is  exercised;
         PROVIDED, HOWEVER, that any already owned Common Stock used for payment
         must have  been held by the  Participant  for at least six  months.  No
         Common Stock shall be issued on exercise of an Option until payment, as
         provided herein,  therefor has been made. A Participant shall generally
         have the  right to  dividends  or other  rights of a  stockholder  with
         respect to Common  Stock  subject to the Option only when  certificates
         for shares of Common Stock are issued to the Participant.

                  (e) RELOAD OPTIONS.  The Committee shall have the authority to
         specify,  at the time of grant or, with respect to Non-Qualified  Stock
         Options,  at or  after  the  time  of  grant,  that  an  Employee  or a
         Consultant Participant shall be granted a Non-Qualified Stock Option (a
         "Reload Option") in the event such Participant  exercises all or a part
         of an Option (an "Original  Option") by surrendering in accordance with
         Section  6.03(d) of the Plan  already  owned  shares of Common Stock in
         full or  partial  payment  of the  purchase  price  under the  Original
         Option, subject to the availability of shares of Common Stock under the
         Plan at the time of such exercise;  PROVIDED,  HOWEVER,  that no Reload
         Option shall be granted to a Non-Employee Director.  Each Reload Option
         shall  cover a number of shares of Common  Stock equal to the number of
         shares of Common Stock  surrendered  in payment of the  purchase  price
         under such Original  Option,  shall have a purchase  price per share of
         Common  Stock equal to the 100% of the Fair Market  Value of a share of
         Common  Stock on the Date of Grant of such  Reload  Option,  and  shall
         expire on the stated  expiration date of the Original  Option. A Reload
         Option shall be exercisable at any time and from time to time after the
         Date of Grant of such Reload  Option (or, as the  Committee in its sole
         and absolute discretion shall determine, at or after the Date of Grant,
         at such time or times as shall be specified in the Reload Option).  Any
         Reload Option may provide for the grant, when exercised,  of subsequent
         Reload  Options  to the  extent  and upon such  terms  and  conditions,
         consistent with this Section 6.03(e),  as the Committee in its sole and
         absolute discretion shall specify at or after the Date of Grant of such
         Reload  Option.  A Reload  Option  shall  contain  such other terms and
         conditions,  which may include a restriction on the  transferability of
         the shares of Common  Stock  received  upon  exercise  of the  Original
         Option  representing  at  least  the  after-tax  profit  received  upon
         exercise  of the  Original  Option,  as the  Committee  in its sole and
         absolute discretion shall deem desirable, and which may be set forth in
         rules or guidelines adopted by the Committee or in the Award Agreements
         evidencing the Reload Options.

                  (f)   NON-TRANSFERABILITY  OF  OPTIONS.  No  Option  shall  be
         transferable by the  Participant  otherwise than by will or the laws of
         descent and distribution.

                  (g) ACCELERATION OR EXTENSION OF EXERCISE TIME. The Committee,
         in its sole and  absolute  discretion,  shall have the right (but shall
         not in any case be  obligated)  to  permit  purchase  of  Common  Stock
         subject  to  any  Option   granted  to  an  Employee  or  a  Consultant
         Participant  prior to the  time  such  Option  would  otherwise  become
         exercisable  under the terms of the Award Agreement.  In addition,  the
         Committee,  in its sole and absolute  discretion,  shall have the right
         (but shall not in any case be obligated)  to permit any Option  granted


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<PAGE>

         to an Employee or a Consultant  Participant  to be exercised  after its
         expiration  date,  subject,  however  to the  limitation  set  forth in
         Section 6.03(b).

                  (h) EXERCISE OF OPTIONS UPON  TERMINATION OF  EMPLOYMENT.  The
         following   provisions   apply  to  Options  granted  to  Employee  and
         Consultant Participants:

                      (i)  EXERCISE  OF  VESTED   OPTIONS  UPON   TERMINATION OF
                           EMPLOYMENT.

                           (A)  TERMINATION.  Unless the Committee,  in its sole
                       and absolute discretion, provides for a shorter or longer
                       period of time in the Award  Agreement or a longer period
                       of time  in  accordance  with  Section  6.03(g),  upon an
                       Employee or a  Consultant  Participant's  Termination  of
                       Employment  other than by reason of death or  Disability,
                       an Employee or a Consultant Participant may, within three
                       months from the date of such  Termination  of Employment,
                       exercise  all or any part of his or her  Options  as were
                       exercisable  on the date of  Termination of Employment if
                       such  Termination of Employment is not for Cause. If such
                       Termination of Employment is for Cause,  the right of the
                       Employee  or  Consultant  Participant  to  exercise  such
                       Options  shall  terminate on the date of  Termination  of
                       Employment.  In no  event,  however,  may any  Option  be
                       exercised  later  than the date  determined  pursuant  to
                       Section 6.03(b).

                           (B) DISABILITY. Unless the Committee, in its sole and
                       absolute  discretion,  provides  for a shorter  or longer
                       period of time in the Award  Agreement or a longer period
                       of time  in  accordance  with  Section  6.03(g),  upon an
                       Employee or a Consultant  Participant's  Disability Date,
                       the Employee or Consultant  Participant  may,  within one
                       year after the Disability Date, exercise all or a part of
                       his or  her  Options,  whether  or not  such  Option  was
                       exercisable  on the  Disability  Date,  but  only  to the
                       extent not previously  exercised.  In no event,  however,
                       may  any  Option  be   exercised   later  than  the  date
                       determined pursuant to Section 6.03(b).

                           (C)  DEATH.  Unless  the  Committee,  in its sole and
                       absolute  discretion,  provides  for a shorter  or longer
                       period of time in the Award  Agreement or a longer period
                       of time in accordance with Section 6.03(g),  in the event
                       of the death of an Employee or a  Consultant  Participant
                       while employed by the Company or a Subsidiary,  the right
                       of the Employee or Consultant  Participant's  Beneficiary
                       to exercise the Option in full (whether or not all or any
                       part of the  Option  was  exercisable  as of the  date of
                       death of the Employee or Consultant Participant, but only
                       to the extent not previously exercised) shall expire upon
                       the  expiration of one year from the date of the Employee
                       or  Consultant  Participant's  death  or on the  date  of
                       expiration of the Option  determined  pursuant to Section
                       6.03(b), whichever is earlier.

                       (ii) EXPIRATION OF UNVESTED  OPTIONS UPON  TERMINATION OF
                 EMPLOYMENT.  Subject to Sections 6.03(g) and  6.03(h)(i)(B) and
                 (C),  to the extent all or any part of an Option  granted to an
                 Employee or a Consultant  Participant was not exercisable as of
                 the date of Termination of Employment,  such right shall expire
                 at the date of such Termination of Employment.  Notwithstanding


                                       9
<PAGE>

                 the  foregoing,   the  Committee,  in  its  sole  and  absolute
                 discretion  and under such terms as it deems  appropriate,  may
                 permit  an  Employee  or  a  Consultant  Participant  who  will
                 continue  to render  significant  services  to the Company or a
                 Subsidiary  after  his  or her  Termination  of  Employment  to
                 continue  to  accrue  service  with  respect  to the  right  to
                 exercise  his or her  Options  during  the  period in which the
                 individual continues to render such services.

ARTICLE VII.  RESTRICTED SHARES

         7.01 RESTRICTED  SHARE AWARDS.  Restricted  Shares may be issued either
alone or in addition to other Awards  granted under the Plan.  The Committee may
grant to any  Employee or  Consultant  Participant  an Award of shares of Common
Stock in such  number,  and  subject to such terms and  conditions  relating  to
forfeitability  and  restrictions  on delivery  and transfer  (whether  based on
performance  standards,  periods of service or otherwise) as the Committee shall
establish.  The terms of any Restricted Share Award granted under the Plan shall
be set forth in an Award Agreement, which shall contain provisions determined by
the Committee and not  inconsistent  with the Plan. The provisions of Restricted
Share Awards need not be the same for each Participant receiving such Awards.

                  (a)  ISSUANCE OF  RESTRICTED  SHARES.  As soon as  practicable
         after the Date of Grant of a Restricted  Share Award by the  Committee,
         the Company shall cause to be  transferred  on the books of the Company
         shares of Common  Stock,  registered  on behalf of the  Participant  in
         nominee form,  evidencing the  Restricted  Shares covered by the Award,
         but subject to  forfeiture  to the Company  retroactive  to the Date of
         Grant if an Award Agreement delivered to the Participant by the Company
         with respect to the Restricted  Shares covered by the Award is not duly
         executed by the Participant  and timely  returned to the Company.  Each
         Participant, as a condition to the receipt of a Restricted Share Award,
         shall  pay to the  Company  in cash the par  value of a share of Common
         Stock  multiplied  by the number of shares of Common  Stock  covered by
         such  Restricted  Share Award.  All shares of Common  Stock  covered by
         Awards  under this  Article  VII shall be subject to the  restrictions,
         terms and  conditions  contained  in the Plan and the  Award  Agreement
         entered into by and between the Company and the Participant.  Until the
         lapse  or  release  of  all  restrictions  applicable  to an  Award  of
         Restricted Shares, the stock certificates  representing such Restricted
         Shares  shall be held in custody by the Company or its  designee.  Upon
         the lapse or release of all  restrictions  with  respect to an Award as
         described  in  Section  7.01(d),   one  or  more  stock   certificates,
         registered in the name of the Participant, for an appropriate number of
         shares of Common  Stock as  provided  in Section  7.01(d),  free of any
         restrictions  set forth in the Plan and the Award  Agreement,  shall be
         delivered to the Participant.

                  (b) SHAREHOLDER RIGHTS.  Beginning on the Date of Grant of the
         Restricted  Share Award and subject to execution of the Award Agreement
         as  provided  in  Section  7.01(a),  the  Participant  shall  become  a
         shareholder  of the Company  with respect to all shares of Common Stock
         subject  to the Award  Agreement  and shall have all of the rights of a
         shareholder,  including,  but not  limited  to,  the right to vote such
         shares of Common  Stock  and,  except as  otherwise  determined  by the
         Committee and specified in the applicable Award Agreement, the right to
         receive dividends (or dividend  equivalents);  PROVIDED,  HOWEVER, that
         any shares of Common Stock  distributed as a dividend or otherwise with
         respect to any Restricted  Shares as to which the restrictions have not
         yet lapsed shall be subject to the same restrictions as such Restricted
         Shares  and shall be held in custody by the  Company as  prescribed  in
         Section 7.01(a).

                  (c)  RESTRICTION  ON  TRANSFERABILITY.  None of the Restricted


                                       10
<PAGE>

         Shares may be assigned or  transferred  (other than by will or the laws
         of descent and distribution), pledged or sold prior to lapse or release
         of the restrictions applicable thereto.

                  (d)  DELIVERY  OF SHARES  OF  COMMON  STOCK  UPON  RELEASE  OF
         RESTRICTIONS.  Upon expiration or earlier termination of the forfeiture
         period without a forfeiture and the satisfaction of or release from any
         other  conditions   prescribed  by  the  Committee,   the  restrictions
         applicable  to the  Restricted  Shares  shall  lapse.  As  promptly  as
         administratively  feasible  thereafter,  subject to the requirements of
         Section 9.04, the Company shall deliver to the  Participant or, in case
         of the Participant's  death, to the Participant's  Beneficiary,  one or
         more stock  certificates for the appropriate number of shares of Common
         Stock, free of all such restrictions,  except for any restrictions that
         may be imposed by law.

         7.02     TERMS OF RESTRICTED SHARES.

                  (a)  FORFEITURE  OF  RESTRICTED  SHARES.  Subject  to  Section
         7.02(b),  all Restricted  Shares shall be forfeited and returned to the
         Company  and  all  rights  of the  Participant  with  respect  to  such
         Restricted  Shares shall terminate unless the Participant  continues in
         the  service of the  Company  or any  Subsidiary  of the  Company as an
         employee or consultant, as the case may be, until the expiration of the
         forfeiture  period for such Restricted Shares and satisfies any and all
         other  conditions set forth in the Award Agreement.  The Committee,  in
         its sole and absolute discretion, shall determine the forfeiture period
         (which may, but need not,  lapse in  installments)  and any other terms
         and conditions applicable with respect to any Restricted Share Award.

                  (b)  WAIVER OF  FORFEITURE  PERIOD.  Notwithstanding  anything
         contained in this Article VII to the contrary,  the  Committee  may, in
         its sole and absolute  discretion,  waive the forfeiture period and any
         other  conditions set forth in any Award  Agreement  under  appropriate
         circumstances  (including  the death,  Disability  or retirement of the
         Participant  or a material  change in  circumstances  arising after the
         Date of Grant of an Award) and  subject  to such  terms and  conditions
         (including  forfeiture of a proportionate  number of Restricted Shares)
         as the Committee shall deem appropriate,  provided that the Participant
         shall at that time have  completed at least one year of  employment  or
         service as a consultant after the Date of Grant.

ARTICLE VIII.  NON-EMPLOYEE DIRECTOR OPTIONS

         8.01 GRANT OF NON-EMPLOYEE DIRECTOR OPTIONS. On the earlier to occur of
(a) the date a  Non-Employee  Director  is elected as such for the first time by
the  holders of Voting  Stock and (b) the date this Plan is approved by a simple
majority of the holders of Voting Stock,  each  Non-Employee  Director  shall be
granted a  Non-Employee  Director  Option  consisting  of an Option to  purchase
10,000 shares of Common Stock; PROVIDED,  HOWEVER, that (i) directors Charles C.
Chen,  Harry S. Gruner and William E. Odom shall each not be eligible to receive
an Option under this Section 8.01, and (ii) if a Non-Employee Director receives,
after the  Effective  Date of this  Plan,  an option  ("1996  Plan  Option")  to
purchase  shares of Common  Stock under the  Virtual  Open  Network  Environment
Corporation  1996  Incentive  Stock  Plan  ("1996  Plan"),  the number of shares
subject to the Option  granted  under this  Section 8.01 shall be reduced by the
number of shares  covered by the 1996 Plan  Option.  The  option  price for such
Non-Employee  Director  Options  shall  be the Fair  Market  Value of a share of
Common  Stock on the Date of Grant.  All such  Options  shall be  designated  as
Non-Qualified  Stock  Options and shall have a five year term.  Each such Option
shall be exercisable in full on the Date of Grant of such Option.

                                       11
<PAGE>

         If a  Non-Employee  Director's  service with the Company  terminates by
reason of death, any Option held by such Non-Employee  Director may be exercised
for a period of one year from the date of death or until the  expiration  of the
Option,  whichever is shorter.  If a  Non-Employee  Director's  service with the
Company  terminates  other  than by  reason of death,  any  Option  held by such
Non-Employee  Director  may be  exercised  for a period of three months from the
date of such  termination,  or until the  expiration  of the stated  term of the
Option,  whichever is shorter. All applicable provisions of the Plan (other than
Sections 6.03(g) and (h)) not inconsistent with this Section 8.01 shall apply to
Options granted to Non-Employee Directors.

ARTICLE IX.  TERMS APPLICABLE TO ALL AWARDS GRANTED UNDER THE PLAN

         9.01 AWARD  AGREEMENT.  No person shall have any rights under any Award
granted under the Plan unless and until the Company and the  Participant to whom
such Award shall have been granted  shall have  executed and  delivered an Award
Agreement  authorized  by the  Committee  expressly  granting  the Award to such
person and containing provisions setting forth the terms of the Award.

         9.02 PLAN PROVISIONS  CONTROL AWARD TERMS.  The terms of the Plan shall
govern all Awards  granted  under the Plan,  and in no event shall the Committee
have the  power to grant to a  Participant  any  Award  under  the Plan  that is
contrary to any  provisions  of the Plan.  If any  provision  of any Award shall
conflict with any of the terms in the Plan as  constituted  on the Date of Grant
of such Award, the terms in the Plan as constituted on the Date of Grant of such
Award shall control.

         9.03  MODIFICATION  OF AWARD  AFTER  GRANT.  Except as  provided by the
Committee,  in its sole and absolute  discretion,  in the Award  Agreement or as
provided in Section 9.05,  no Award granted under the Plan to a Participant  may
be modified (unless such modification does not materially  decrease the value of
the Award) after the Date of Grant except by express written  agreement  between
the Company and the Participant,  provided that any such change (a) shall not be
inconsistent  with the  terms of the  Plan,  and (b)  shall be  approved  by the
Committee.

         9.04 TAXES.  The Company shall be entitled,  if the Committee  deems it
necessary or desirable,  to withhold (or secure payment from the  Participant in
lieu of withholding)  the amount of any withholding or other tax required by law
to be withheld or paid by the Company with respect to any Award. The Company may
defer  issuance  of  Common  Stock  under an  Award  unless  indemnified  to its
satisfaction  against  any  liability  for any  such  tax.  The  amount  of such
withholding  or tax payment shall be determined by the Committee or its delegate
and  shall  be  payable  by the  Participant  at  such  time  as  the  Committee
determines.  A  Participant  shall be  permitted  to  satisfy  his or her tax or
withholding obligation by (a) having cash withheld from the Participant's salary
or other compensation payable by the Company or a Subsidiary, (b) the payment of
cash by the  Participant  to the  Company,  (c) the  payment in shares of Common
Stock already owned by the Participant  valued at Fair Market Value,  and/or (d)
the withholding  from the Award, at the appropriate  time, of a number of shares
of Common  Stock  sufficient,  based upon the Fair  Market  Value of such Common
Stock, to satisfy such tax or withholding  requirements.  The Committee shall be
authorized,  in its  sole  and  absolute  discretion,  to  establish  rules  and
procedures  relating  to any such  withholding  methods  it deems  necessary  or
appropriate  (including,  without  limitation,  rules and procedures relating to
elections by Participants who are subject to the provisions of Section 16 of the
Exchange Act to have shares of Common Stock withheld from an Award to meet those
withholding obligations).

         9.05     ADJUSTMENTS TO REFLECT CAPITAL CHANGES; CHANGE IN CONTROL.


                                       12
<PAGE>

                  (a) RECAPITALIZATION. The number and kind of shares subject to
         outstanding  Awards,  the  purchase  price  or  exercise  price of such
         Awards,  the amount of Non-Employee  Director  Options to be granted on
         any date under Article  VIII,  the limit set forth in the last sentence
         of the first  paragraph of Section 5.01 of the Plan, and the number and
         kind of shares available for Awards subsequently granted under the Plan
         shall be  appropriately  adjusted to reflect any stock dividend,  stock
         split,  combination  or exchange of shares,  merger,  consolidation  or
         other change in capitalization  with a similar  substantive effect upon
         the Plan or the Awards granted under the Plan. The Committee shall have
         the power and sole and absolute  discretion to determine the nature and
         amount of the adjustment to be made in each case. In no event shall any
         adjustments be made under the provisions of this Section 9.05(a) to any
         outstanding Restricted Share Award if an adjustment has been or will be
         made to the shares of Common  Stock  awarded to a  Participant  in such
         person's capacity as a stockholder.

                  (b) SALE OR REORGANIZATION. After any reorganization,  merger,
         or  consolidation  in  which  the  Company  is or is not the  surviving
         entity, each Participant shall, at no additional cost, be entitled upon
         the  exercise of an Option  outstanding  prior to such event to receive
         (subject to any required action by stockholders), in lieu of the number
         of shares of Common  Stock  receivable  on  exercise  pursuant  to such
         Option,  the number and class of shares of stock or other securities to
         which such Participant  would have been entitled  pursuant to the terms
         of the reorganization, merger, or consolidation if, at the time of such
         reorganization, merger, or consolidation, such Participant had been the
         holder of record  of a number  of shares of Common  Stock  equal to the
         number of shares of Common Stock receivable on exercise of such Option.
         Comparable  rights  shall  accrue to each  Participant  in the event of
         successive reorganizations, mergers, or consolidations of the character
         described above.

                  (c) OPTIONS TO PURCHASE STOCK OF ACQUIRED COMPANIES. After any
         reorganization,  merger, or consolidation in which the Company shall be
         a surviving entity,  the Committee may grant substituted  Options under
         the provisions of the Plan,  replacing old options granted under a plan
         of another party to the reorganization,  merger, or consolidation whose
         stock subject to the old options may no longer be issued following such
         reorganization, merger, or consolidation. The foregoing adjustments and
         manner of application of the foregoing  provisions  shall be determined
         by  the  Committee  in its  sole  and  absolute  discretion.  Any  such
         adjustments may provide for the elimination of any fractional shares of
         Common Stock that might otherwise become subject to any Options.

                  (d)  CHANGE  IN  CONTROL.  Upon a Change  in  Control,  unless
         otherwise specifically prohibited by Rule 16b-3:

                       (1) Any and all Options shall become exercisable in full,
                   to the extent not previously exercised, as of the date of the
                   Change in Control; and

                       (2) The  restrictions on vesting on all Restricted  Share
                   Awards  shall be deemed to have  satisfied  as of the date of
                   the Change in Control.

                  (e) EXISTENCE OF AWARDS.  The existence of outstanding  Awards
         shall not affect the right of the Company or its  stockholders  to make
         or   authorize    any   and   all    adjustments,    recapitalizations,
         reclassifications,  reorganizations  and other changes in the Company's
         capital structure,  the Company's business, any merger or consolidation
         of the Company,  any issue of bonds,  debentures or preferred  stock of
         the Company,  the Company's  liquidation  or  dissolution,  any sale or


                                       13
<PAGE>

         transfer of all or any part of the Company's assets or business, or any
         other  corporate  act or  proceeding,  whether  of a similar  nature or
         otherwise.

         9.06 SURRENDER OF AWARDS.  Any Award granted to a Participant under the
Plan may be  surrendered  to the Company for  cancellation  on such terms as the
Committee and holder approve.

         9.07 NO RIGHT TO AWARD;  NO RIGHT TO EMPLOYMENT.  Except as provided in
Article VIII, no director,  employee,  consultant or other person shall have any
claim or right to be granted  an Award.  Neither  the Plan nor any action  taken
hereunder shall be construed as giving any director,  employee or consultant any
right to be retained by the Company or any of its Subsidiaries.

         9.08 AWARDS NOT INCLUDABLE FOR BENEFIT PURPOSES. Income recognized by a
Participant  pursuant to the provisions of the Plan shall not be included in the
determination  of benefits under any employee pension benefit plan (as such term
is defined in Section 3(2) of ERISA) or group  insurance or other  benefit plans
applicable to the  Participant  that are maintained by the Company or any of its
Subsidiaries,  except  as may be  provided  under  the  terms  of such  plans or
determined by resolution of the Board.

         9.09  GOVERNING LAW. The Plan and all  determinations  made and actions
taken  pursuant  to the Plan  shall  be  governed  by the  laws of the  State of
Delaware  other than the conflict of laws  provisions of such laws, and shall be
construed in accordance therewith.

         9.10 NO STRICT  CONSTRUCTION.  No rule of strict  construction shall be
implied  against  the  Company,  the  Committee,  or  any  other  person  in the
interpretation of any of the terms of the Plan, any Award granted under the Plan
or any rule or procedure established by the Committee.

         9.11 COMPLIANCE WITH RULE 16B-3 AND SECTION 162(M). It is intended that
the Plan be applied  and  administered  in  compliance  with Rule 16b-3 and with
Section  162(m).  If any  provision of the Plan would be in violation of Section
162(m) if applied as written,  such  provision  shall not have effect as written
and shall be given effect so as to comply with Section  162(m) as  determined by
the  Committee in its sole and absolute  discretion.  The Board is authorized to
amend the Plan and the Committee is authorized to make any such modifications to
Award  Agreements to comply with Rule 16b-3 and Section  162(m),  as they may be
amended  from  time  to  time,  and  to  make  any  other  such   amendments  or
modifications  deemed necessary or appropriate to better accomplish the purposes
of the Plan in light of any  amendments  made to Rule 16b-3 or  Section  162(m).
Notwithstanding  the  foregoing,  the  Board  may  amend the Plan so that it (or
certain of its provisions) no longer comply with either or both of Rule 16b-3 or
Section 162(m) if the Board  specifically  determines that such compliance is no
longer  desired and the  Committee may grant Awards that do not comply with Rule
16b-3  and/or  Section  162(m)  if the  Committee  determines,  in its  sole and
absolute discretion, that it is in the interest of the Company to do so.

         9.12 CAPTIONS.  The captions (I.E.,  all Article and Section  headings)
used in the Plan are for convenience only, do not constitute a part of the Plan,
and  shall  not be  deemed  to  limit,  characterize,  or  affect in any way any
provisions of the Plan,  and all provisions of the Plan shall be construed as if
no captions have been used in the Plan.

         9.13 SEVERABILITY.  Whenever  possible,  each provision in the Plan and
every  Award at any time  granted  under the Plan shall be  interpreted  in such

                                       14
<PAGE>

manner as to be effective and valid under  applicable  law, but if any provision
of the Plan or any Award at any time granted  under the Plan shall be held to be
prohibited by or invalid under  applicable law, then (a) such provision shall be
deemed  amended to  accomplish  the  objectives  of the  provision as originally
written to the fullest extent  permitted by law, and (b) all other provisions of
the Plan and every other Award at any time  granted  under the Plan shall remain
in full force and effect.

         9.14 LEGENDS.  All  certificates  for Common Stock  delivered under the
Plan shall be subject to such  transfer  restrictions,  if any, set forth in the
Plan and such other  restrictions  as the Committee may deem advisable under the
rules,  regulations,  and other requirements of the SEC, any stock exchange upon
which the  Common  Stock is then  listed,  and any  applicable  federal or state
securities  law.  The  Committee  may cause a legend or legends to be put on any
such certificates to make appropriate references to such restrictions.

         9.15  INVESTMENT  REPRESENTATION.  The  Committee  may, in its sole and
absolute discretion, demand that any Participant awarded an Award deliver to the
Committee   at  the  time  of  grant  or   exercise  of  such  Award  a  written
representation  that the shares of Common Stock  subject to such Award are to be
acquired for  investment  and not for resale or with a view to the  distribution
thereof.  Upon such  demand,  delivery  of such  written  representation  by the
Participant  prior to the delivery of any shares of Common Stock pursuant to the
grant or  exercise of his or her Award  shall be a  condition  precedent  to the
Participant's right to purchase or otherwise acquire such shares of Common Stock
by such grant or  exercise.  The Company is not  legally  obliged  hereunder  if
fulfillment  of its  obligations  under the Plan would violate  federal or state
securities laws.

         9.16  AMENDMENT AND TERMINATION.

                  (a)  AMENDMENT.  The  Board  shall  have  complete  power  and
         authority  to  amend  the Plan at any time it is  deemed  necessary  or
         appropriate;  provided,  however, that the Board shall not, without the
         affirmative  approval  of a simple  majority  of the  holders of Voting
         Stock,  represented,  by person or by proxy, and entitled to vote at an
         annual or special  meeting of the  holders  of Voting  Stock,  make any
         amendment that requires  stockholder  approval under any applicable law
         or rule,  unless the Board  determines that compliance with such law or
         rule is no longer  desired  with  respect to the Plan as a whole or the
         provision to be amended.  No  termination or amendment of the Plan may,
         without  the  consent  of the  Participant  to  whom  any  Award  shall
         theretofore  have been  granted  under the Plan,  adversely  affect the
         right of such individual under such Award; provided,  however, that the
         Committee may, in its sole and absolute  discretion,  make provision in
         an Award Agreement for such  amendments  that, in its sole and absolute
         discretion, it deems appropriate.

                  (b) TERMINATION.  The Board shall have the right and the power
         to terminate  the Plan at any time. No Award shall be granted under the
         Plan after the termination of the Plan, but the termination of the Plan
         shall not have any other effect and any Award  outstanding  at the time
         of the  termination  of the Plan may be amended and  exercised  and may
         vest after  termination of the Plan at any time prior to the expiration
         date of such  Award to the same  extent  such  Award  could  have  been
         amended  or  would  have  been  exercisable  or vest  had the  Plan not
         terminated.

         9.17  COSTS  AND   EXPENSES.   All  costs  and  expenses   incurred  in
administering the Plan shall be borne by the Company.

         9.18 UNFUNDED PLAN.  The Plan shall be unfunded.  The Company shall not

                                       15
<PAGE>

be  required  to  establish  any  special  or  separate  fund or make any  other
segregation of assets to assure the payment of any Award under the Plan.

         9.19 LOANS.  The Committee  shall be entitled to grant to  Participants
granted  Non-Qualified Stock Options (other than Non-Employee  Director Options)
the right to pay the  exercise  price of such Options by delivery to the Company
of an amount of cash equal to the par value per share of Common Stock  purchased
on exercise and a recourse  promissory note. Each such recourse  promissory note
shall have the following  terms and  conditions:  (a) such promissory note shall
bear  interest at 2% over the prime rate of Citibank on the date the  promissory
note is issued, (b) interest shall be due and payable quarterly in arrears,  (c)
the principal  amount shall be due in full on the second  anniversary  date, (d)
principal and accrued  interest may be prepaid at any time, in whole or in part,
without  penalty,  (e) in the event of a default in the payment of  principal or
interest  when due and the  continuance  of such default for ten (10) days,  the
full principal  amount of the promissory  note plus accrued and unpaid  interest
shall become immediately due and payable,  and (vi) the promissory note shall be
secured by a pledge to the  Corporation  of shares of Common Stock having a Fair
Market Value at all times at least equal to 110% of the principal  amount of the
promissory note.







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