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                                                                   EXHIBIT 10.20

                           AMARILLO BIOSCIENCES, INC.
                         1996 EMPLOYEE STOCK OPTION PLAN

                           AMENDED AND RESTATED AS OF
                               SEPTEMBER 12, 1998

                              ARTICLE I -- GENERAL

1.01.  PURPOSES.

                  The purposes of this 1996 Employee Stock Option Plan (the
"Plan") are to: (1) closely associate the interests of the management of
AMARILLO BIOSCIENCES, INC. ("ABI") and its Subsidiaries and Affiliates
(collectively referred to as the "Company") with the shareholders by reinforcing
the relationship between participants' rewards and shareholder gains; (2)
provide management with an equity ownership in the Company commensurate with
Company performance, as reflected in increased shareholder value; (3) maintain
competitive compensation levels; and (4) provide an incentive to management for
continuous employment with the Company.

1.02.  ADMINISTRATION.

                  (a)       The Plan shall be administered by a committee of 
directors appointed by the Board of Directors of ABI (the "Committee"), as
constituted from time to time. The Committee shall consist of at least two
members of the Board. Notwithstanding anything in this Section 1.02 to the
contrary, so long as any equity security of the Company is registered under
Section 12 of the Securities Exchange Act of 1934, as amended (the "1934 Act"),
or any successor statute, all authority to exercise discretion with respect to
participation in the Plan by persons who are (i) "officers" within the meaning
of the applicable Securities and Exchange Commission rules and regulations
relating to Section 16 of the 1934 Act, or any successor statute, (ii) directors
of the Company and/or (iii) beneficial owners of more than ten percent (10%) of
any class of equity securities of the Company who are otherwise eligible to
participate in the Plan, and the timing, pricing, amounts and other terms and
conditions of awards granted under the Plan to such officers, directors and
beneficial owners, shall be vested in the Committee, if all of the members of
the Committee are disinterested persons within the meaning ascribed to such term
in Rule 16b-3 promulgated under the 1934 Act, or within any successor definition
or under any successor rule ("disinterested persons").

                  (b)       The Committee shall have the authority, in its sole
discretion and from time to time to:

                      (i)   designate the employees or classes of employees 
                            eligible to participate in the Plan;

                      (ii)  grant awards provided in the Plan in such form and
                            amount, and subject to such vesting, as the 
                            Committee shall determine, provided that in no event
                            shall the period for vesting be longer than that set
                            forth in Section 2.04, below.



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                      (iii) impose such limitations, restrictions and conditions
                            upon any such awards as the Committee shall deem
                            appropriate; and

                      (iv)  interpret the Plan, adopt, amend and rescind rules
                            and regulations relating to the Plan, and make all
                            other determinations and take all other action
                            necessary or advisable for the implementation and
                            administration of the Plan.

                  (c)       Decisions and determinations of the Committee on all
matters relating to the Plan shall be in its sole discretion and shall be
conclusive. No member of the Committee shall be liable for any action taken or
decision made in good faith relating to the Plan or any award thereunder.

                  (d)       With respect to persons subject to Section 16 of the
Securities Exchange act of 1934 (the "1934 Act"), transactions under the Plan
are intended to comply with all applicable conditions of Rule 16b-3 or its
successor under the 1934 Act. To the extent any provision of the Plan or action
by the Board of Directors or the Committee fails to so comply, it shall be
deemed null and void, to the extent permitted by law and deemed advisable by the
Board of Directors or the Committee, as applicable.

                  (e)       All usual and reasonable expenses of the Committee 
shall be paid by the Company, and no member shall receive compensation with
respect to his services for the Committee except as may be authorized by the
Board of Directors. The Board of Directors and the Committee may employ
attorneys, consultants, accountants or other persons, and the Board of
Directors, the Committee, the Company and its officers and directors shall be
entitled to rely upon the advice, opinions or valuations of any such persons.
All actions taken and all interpretations and determinations made by the Board
of Directors or the Committee in good faith shall be final and binding upon all
Employees who have received awards, and upon the Company and all other
interested persons. No member of Board of Directors or the Committee shall be
personally liable for any action, determination, or interpretation taken or made
in good faith with respect to the Plan or awards made thereunder, and the
Company shall indemnify and hold harmless each member of the Board of Directors
or the Committee against all loss, cost, expenses or damages, occasioned by any
act or omission to act in connection with any such action, determination or
interpretation under or of the Plan, consistent with the Company's certificate
of incorporation and bylaws.


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1.03.  ELIGIBILITY FOR PARTICIPATION.

                  Participants in the Plan shall be selected by the Committee
from among the employees of the Company. In making this selection and in
determining the form and amount of awards, the Committee shall consider any
factors deemed relevant, including the individual's functions, responsibilities,
value of services to the Company and past and potential contributions to the
Company's profitability and sound growth.

1.04.  TYPES OF AWARDS UNDER PLAN.

                  Awards under the Plan will be in the form of Incentive Stock
Options, as described in Article II; provided, however, that Limited Rights, as
described in Article III, may be awarded with respect to Options concurrently or
previously awarded.

1.05.  AGGREGATE LIMITATION ON AWARDS.

                  (a)       Shares of stock which may be issued under the Plan 
shall be authorized and unissued or treasury shares of Common Stock of ABI
("Common Stock"). The maximum number of shares of Common Stock which may be
issued under the Plan shall be three hundred ninety thousand (390,000) shares.
The maximum number of shares of Common Stock with respect to which Incentive
Stock Options may be granted in any one year to any employee shall not exceed
one hundred fifty thousand (150,000).

                  (b)       In addition to shares of Common Stock actually 
issued pursuant to the exercise of Incentive Stock Options, there shall be
deemed to have been issued a number of shares equal to the number of shares of
Common Stock in respect of which Limited Rights (as described in Article III)
shall have been exercised.

                  (c)       Any shares of Common Stock subject to an Incentive 
Stock Option which for any reason is terminated unexercised or expires shall
again be available for issuance under the Plan, but shares subject to an
Incentive Stock Option which are not issued as a result of the exercise of
Limited Rights shall not again be available for issuance under the Plan.

1.06.  EFFECTIVE DATE AND TERM OF PLAN.

                  (a)       The Plan shall become effective on the date approved
by the holders of a majority of the shares of Common Stock present in person or
by proxy and entitled to vote at the 1996 Annual Meeting of Shareholders of ABI.

                  (b)       No awards shall be made under the Plan after the 
last day of the Company's 2001 fiscal year provided, however, that the Plan and
all awards made under the Plan prior to such date shall remain in effect until
such awards have been satisfied or terminated in accordance with the Plan and
the terms of such awards.




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                      ARTICLE II -- INCENTIVE STOCK OPTIONS

2.01.  AWARD OF INCENTIVE STOCK OPTIONS.

                  The Committee may, from time to time and subject to the
provisions of the Plan and such other terms and conditions as the Committee may
prescribe, grant to any participant in the Plan one or more "Incentive Stock
Options," intended to qualify as such under the provisions of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code") ("Incentive Stock
Options") to purchase for cash the number of shares of Common Stock allotted by
the Committee. The date an Incentive Stock Option is granted shall mean the date
selected by the Committee as of which the Committee allots a specific number of
shares to a participant pursuant to the Plan.

2.02.  INCENTIVE STOCK OPTION AGREEMENTS.

                  The grant of an Incentive Stock Option shall be evidenced by a
written Incentive Stock Option Agreement, executed by the Company and the holder
of an Incentive Stock Option (the "Optionee"), stating the number of shares of
Common Stock subject to the Incentive Stock Option evidenced thereby, and in
such form as the Committee may from time to time determine.

2.03.  INCENTIVE STOCK OPTION PRICE.

                  The Option Price per share of Common Stock deliverable upon
the exercise of an Incentive Stock Option shall be 100% of the Fair Market Value
of a share of Common Stock on the date the Incentive Stock Option is granted;
provided, however, that with respect to any Optionee who owns stock possessing
more than 10% of the total combined voting power of all classes of stock of ABI
or of its parent or Subsidiary corporation (with such ownership determined in
view of the attribution provisions of Section 424(d) of the Code), the Option
Price per share of Common Stock deliverable upon the exercise of an Incentive
Stock Option shall be 110% of the Fair Market Value of a share of Common Stock
on the date the Incentive Stock Option is granted. The Committee shall determine
the date on which an option is granted, provided that such date is consistent
with the Code and any applicable rules or regulations thereunder; in the absence
of such determination, the date on which the Committee adopts a resolution
granting an option shall be considered the date on which such option is granted,
provided the Employee to whom the option is granted is promptly notified of the
grant and a written option agreement is duly executed as of the date of the
resolution.

2.04.  TERM AND EXERCISE.

                  Each Incentive Stock Option for employees who are not 10%
owners is exercisable during a period of ten years from the date of grant
thereof (the "Option Term"), subject to the Vesting Schedule for Employees who
are not 10% Owners, set forth below. With respect to any Optionee who at the
time the Option is granted owns stock possessing more than 10% of the total
combined voting power of all classes of stock of ABI or of its parent or
Subsidiary corporation (with such ownership determined pursuant to the
attribution rules set forth in Section 424(d) of the Code), each Incentive Stock
Option is exercisable during a period of five years from the date of grant



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thereof, subject to the Vesting Schedule for Employees who are 10% Owners, set
forth below. No Incentive Stock Option shall be exercisable after the expiration
of its Option Term. The Committee may also in its sole discretion accelerate the
exerciseability or vesting of any option or installment thereof at any time.

                  VESTING SCHEDULE FOR EMPLOYEES WHO ARE NOT 10% OWNERS. Options
awarded shall be exercisable, subject to the other terms and conditions of the
Plan, only upon the expiration of the designated number of years of active
employment with the Company from date of award, as provided below:

                        20% of Options awarded - 1 year
                        40% of Options awarded - 2 years
                        60% of Options awarded - 3 years
                        80% of Options awarded - 4 years
                       100% of Options awarded - 5 years

               VESTING SCHEDULE FOR EMPLOYEES WHO ARE 10% OWNERS.

                        25% of Options awarded - 1 year
                        50% of Options awarded - 2 years
                        75% of Options awarded - 3 years
                       100% of Options awarded - 4 years

                  Except as provided in Sections 2.06, 2.07 and 2.08 hereof, no
Incentive Stock Option shall be exercised at any time unless the holder thereof
is then a regular full-time employee of the Company or one of its subsidiaries.

2.05.  MAXIMUM AMOUNT OF INCENTIVE STOCK OPTION GRANT.

                  In no event shall the aggregate Fair Market Value of all
Common Stock (determined at the time the option is granted) with respect to
which Incentive Stock Options are exercisable for the first time by an
individual during any calendar year (under all plans of the Company and its
subsidiaries) exceed $100,000.

2.06.  DEATH OF OPTIONEE.

                  (a) Upon the death of the Optionee, any Incentive Stock Option
exercisable on the date of death may be exercised by the Optionee's estate or by
a person who acquires the right to exercise such Incentive Stock Option by
bequest or inheritance or by reason of the death of the Optionee, provided that
such exercise occurs within both the remaining Option Term of the Incentive
Stock Option and one year after the Optionee's death.




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                  (b) The provisions of this Section shall apply notwithstanding
the fact that the Optionee's employment may have terminated prior to death, but
only to the extent of any Incentive Stock Options exercisable on the date of
death.

2.07.  RETIREMENT OR DISABILITY.

                  Upon the termination of the Optionee's employment by reason of
permanent disability (as defined herein) or retirement (as determined by the
Committee), the Optionee may, within 36 months from the date of such termination
of employment, exercise any Incentive Stock Options to the extent such Incentive
Stock Options were exercisable at the date of such termination of employment.
Notwithstanding the foregoing, the tax treatment available pursuant to Section
422 of the Code upon the exercise of an Incentive Stock Option will not be
available to an Optionee who exercises any Incentive Stock Options more than (i)
12 months after the date of termination of employment due to permanent
disability or (ii) three months after the date of termination of employment due
to retirement. For purposes hereof, "permanent disability" shall have the
meaning set forth in Section 22(e)(3) of the Code or any successor provision
thereto.

2.08.  TERMINATION FOR OTHER REASONS.

                  Except as provided in Sections 2.06 and 2.07 or except as
otherwise determined by the Committee, all Incentive Stock Options shall
terminate upon the termination of the Optionee's employment; provided, however,
that if the Optionee's employment was involuntarily terminated (with or without
cause), Optionee may exercise, during a 90-day period commencing with date of
termination, all Options theretofore vested, or which vest during said 90-day
period, under the Vesting Schedules set forth in Paragraph 2.04, above. At the
end of the 90-day period, all rights of such Optionee under any then outstanding
option or right shall terminate and shall be forfeited immediately as to any
unexercised portion thereof.

2.09.  MANNER OF PAYMENT.

                  Each Stock Option Agreement shall set forth the procedure
governing the exercise of the Stock Option granted thereunder, and shall provide
that, upon such exercise in respect of any shares of Common Stock subject
thereto, the Optionee shall pay to the Company, in full, the Option Price for
such shares with cash or in shares of the Common Stock, valued at the Fair
Market Value per Share on the date of exercise.





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2.10.  ISSUANCE OF SHARES.

                  As soon as practicable after receipt of payment, the Company
shall deliver to the Optionee a certificate or certificates for such shares of
Common Stock. The Optionee shall become a shareholder of the Company with
respect to Common Stock represented by share certificates so issued and as such
shall be fully entitled to receive dividends, to vote and to exercise all other
rights of a shareholder.

2.11.  EFFECT OF EXERCISE.

                  The exercise of any Stock Option shall cancel that number of
related Limited Rights, if any, which is equal to the number of shares of Common
Stock purchased pursuant to said Option.

2.12.  RULE 16b-3 EXEMPTION.

                  Options granted under the Plan shall comply with the
applicable provisions of Rule 16b-3 promulgated under the 1934 Act, or any
successor, and shall contain such additional conditions or restrictions as may
be required thereunder to qualify for the maximum exemption from Section 16 of
the 1934 Act with respect to Plan transactions.

                          ARTICLE III -- LIMITED RIGHTS

3.01.  AWARD OF LIMITED RIGHTS.

                  Concurrently with or subsequent to the award of any Incentive
Stock Option, the Committee may, subject to the provisions of the Plan and such
other terms and conditions as the Committee may prescribe, award to the Optionee
with respect to each Option, a related limited right permitting the Optionee,
during a specified limited time period, to be paid the appreciation on the
Common Stock in lieu of exercising the Option ("Limited Right").

3.02.  LIMITED RIGHTS AGREEMENT.

                  Limited Rights granted under the Plan shall be evidenced by
written agreements in such form as the Committee may from time to time
determine.

3.03.  EXERCISE PERIOD.

                  Limited Rights shall (and must) be exercised immediately
preceding or simultaneous with the date of a Change in Control of ABI (the
"Exercise Period"), and all Limited Rights held by the Optionee shall be
exercised during such Exercise Period, without regard to the Vesting Schedules
set forth in Paragraph 2.04; provided, however, that if a Change in Control
shall have occurred without notice or opportunity for exercise of Limited
Rights, then the Limited Rights shall be exercised as soon as practicable after
a determination has been made that a "Change in Control" has occurred, or has
been deemed to have occurred.



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                  As used in the Plan, a "Change in Control" shall be deemed to 
have occurred if

                  (a)       individuals who were directors of ABI, immediately 
prior to a Control Transaction shall cease, within one year of such Control
Transaction, to constitute a majority of the Board of Directors of ABI (or of
the Board of Directors of any successor to ABI or to all or substantially all
of its assets), or

                  (b)       any entity, person or Group other than ABI or a 
Subsidiary of ABI or Hayashibara Biochemical Laboratories, Inc. or an Affiliate
thereof acquires shares of ABI in a transaction or series of transactions that
result in such entity, person or Group directly or indirectly owning
beneficially fifty-one percent (51%) or more of the outstanding shares.

                  As used herein, "Control Transaction" shall be

                      (i)   any tender offer for or acquisition of capital 
                            stock of ABI,

                      (ii)  any merger, consolidation, or sale of all or
                            substantially all of the assets of ABI which has 
                            been approved by the shareholders,

                      (iii) any contested election of directors of ABI, or

                      (iv)  any combination of the foregoing;

which results in a change in voting power sufficient to elect a majority of the
Board of Directors of ABI. As used herein, "Group" shall mean persons who act in
concert as described in Sections 13(d)(3) and/or 14(d)(2) of the Securities
Exchange Act of 1934, as amended.

3.04.  AMOUNT OF PAYMENT.

                  The amount of payment to which an Optionee shall be entitled
upon the exercise of each Limited Right shall be equal to 100% of the amount, if
any, which is equal to the difference between the Fair Market Value per share of
Common Stock covered by the related Option on the date the Option was granted
and the Market Price of a share of such Common Stock. Market Price is defined to
be the greater of (i) the highest price per share of the Company's Common Stock
paid in connection with any Change in Control and (ii) the highest price per
share of the Company's Common Stock paid pursuant to an unsolicited brokerage
transaction during the 60-day period prior to the Change in Control.

3.05.  FORM OF PAYMENT.

                  Payment of the amount to which an Optionee is entitled upon
the exercise of Limited Rights, as determined pursuant to Section 3.04, shall be
made solely in cash.




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3.06.  EFFECT OF EXERCISE.

                  If Limited Rights are exercised, the Stock Options related to
such Limited Rights cease to be exercisable to the extent of the number of
shares with respect to which the Limited Rights were exercised. Upon the
exercise or termination of the Options related to such Limited Rights, the
Limited Rights granted with respect thereto terminate to the extent of the
number of shares as to which the related Options were exercised or terminated.

3.07.  RETIREMENT OR DISABILITY.

                  Upon termination of the Optionee's employment with the Company
by reason of permanent disability or retirement (as each is determined by the
Committee), the Optionee may, within 36 months from the date of termination,
exercise any Limited Right to the extent such Limited Right is otherwise
exercisable during such 36-month period.

3.08.  DEATH OF OPTIONEE OR TERMINATION FOR OTHER REASONS.

                  Except as provided in Section 3.07, or except as otherwise
determined by the Committee, all Limited Rights granted under the Plan shall
terminate upon the termination of the Optionee's employment with the Company, or
upon the death of the Optionee.

                           ARTICLE IV -- MISCELLANEOUS

4.01.  GENERAL RESTRICTION.

                  Each award under the Plan shall be subject to the requirement
that, if at any time the Committee shall determine that (i) the listing,
registration or qualification of the shares of Common Stock subject or related
thereto upon any securities exchange or under any state or federal law, or (ii)
the consent or approval of any government regulatory body, or (iii) an agreement
by the grantee of an award with respect to the disposition of shares of Common
Stock, is necessary or desirable as a condition of, or in connection with, the
granting of such award or the issue or purchase of shares of Common Stock
thereunder, such award may not be consummated in whole or in part unless such
listing, registration, qualification, consent, approval or agreement shall have
been effected or obtained free of any conditions not acceptable to the
Committee.

4.02.  NON-ASSIGNABILITY.

                  No award under the Plan shall be assignable or transferable by
the recipient thereof, except by will or by the laws of descent and
distribution. During the life of the recipient, such award shall be exercisable
only by such person or by such person's guardian or legal representative.




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4.03.  RIGHT TO TERMINATE EMPLOYMENT.

                  Nothing in the Plan or in any agreement entered into pursuant
to the Plan shall confer upon any participant the right to continue in the
employment of the Company or affect any right which the Company may have to
terminate the employment of such participant.

4.04.  NON-UNIFORM DETERMINATIONS.

                  The Committee's determinations under the Plan (including
without limitation determinations of the persons to receive awards, the form,
amount and timing of such awards, the terms and provisions of such awards and
the agreements evidencing same) need not be uniform and may be made by it
selectively among persons who receive, or are eligible to receive, awards under
the Plan, whether or not such persons are similarly situated.

4.05.  RIGHTS AS A SHAREHOLDER.

                  The recipient of any award under the Plan shall have no rights
as a shareholder with respect thereto unless and until certificates for shares
of Common Stock are issued to him.

4.06.  DEFINITIONS.

                  In this Plan the following definitions (along with other
definitions set forth elsewhere in the Plan) shall apply:

                  (a)       "Affiliate" means any person or entity which 
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with ABI.

                  (b)       "Fair Market Value" means, as of any date, the value
of Common Stock determined as follows:

                           (i)      If the Common Stock is listed on any 
                                    established stock exchange or a national 
                                    market system, including without limitation
                                    the National Market System of the National 
                                    Association of Securities Dealers, Inc.
                                    Automated Quotation ("NASDAQ") System, the 
                                    Fair Market Value of a Share of Common 
                                    Stock shall be the closing sales price
                                    for such stock (or the closing bid, if no 
                                    sales were reported) as quoted on such 
                                    system or exchange (or the exchange with 
                                    the greatest volume of trading in Common
                                    Stock) on the date of grant, as reported in 
                                    The Wall Street Journal or such other 
                                    source as the Board deems reliable; 

                           (ii)     If the Common Stock is quoted on the NASDAQ
                                    System (but not on the National Market
                                    System thereof) or regularly quoted by a
                                    recognized securities dealer but selling
                                    prices are not reported, the Fair Market
                                    Value of a Share of Common Stock shall be
                                    the mean



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                                    between the bid and asked prices for the
                                    Common Stock on the last market trading day
                                    prior to the day of determination, as
                                    reported in The Wall Street Journal or such
                                    other source as the Board deems reliable; or

                           (iii)    In the absence of an established market for
                                    the Common Stock, the Fair Market Value
                                    thereof shall be determined in good faith by
                                    the Committee.

                  (c)       "Option" means Incentive Stock Option.

                  (d)       "Option Price" means the purchase price per share of
Common Stock deliverable upon the exercise of an Incentive Stock Option.

                  (e)       "Subsidiary" means any corporation of which, at the
time more than 50% of the shares entitled to vote generally in an election of
directors are owned directly or indirectly by ABI or any Subsidiary thereof.

4.07.  LEAVES OF ABSENCE.

                  The Committee shall be entitled to make such rules,
regulations and determinations as it deems appropriate under the Plan in respect
of any leave of absence taken by the recipient of any award. Without limiting
the generality of the foregoing, the Committee shall be entitled to determine
(i) whether or not any such leave of absence shall constitute a termination of
employment within the meaning of the Plan and (ii) the impact, if any, of any
such leave of absence on awards under the Plan theretofore made to any recipient
who takes such leave of absence.

4.08.  NEWLY ELIGIBLE EMPLOYEES.

                  The Committee shall be entitled to make such rules,
regulations, determinations and awards as it deems appropriate in respect of any
employee who becomes eligible to participate in the Plan or any portion thereof
after the commencement of an award or incentive period.

4.09.  ADJUSTMENTS.

                  In the event of any change in the outstanding Common Stock by
reason of a stock dividend or distribution, recapitalization, merger,
consolidation, split-up, combination, exchange of shares or the like, the
Committee shall appropriately adjust the number of shares of Common Stock which
may be issued under the Plan, the number of shares of Common Stock subject to
Options theretofore granted under the Plan, the Option Price of Options
theretofore granted under the Plan, the amount and terms of any Limited Rights
theretofore awarded under the Plan, and any and all other matters deemed
appropriate by the Committee.




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4.10.  AMENDMENT OF THE PLAN.

                  (a)       The Committee may, without further action by the
shareholders and without receiving further consideration from the participants,
amend this Plan or condition or modify awards under this Plan in response to
changes in securities or other laws or rules, regulations or regulatory
interpretations thereof applicable to this Plan or to comply with stock exchange
rules or requirements.

                  (b)       The Committee may at any time and from time to time
terminate or modify or amend the Plan in any respect, except that without
shareholder approval the Committee may not (i) increase the maximum number of
shares of Common Stock which may be issued under the Plan (other than increases
pursuant to Section 4.10), (ii) extend the period during which any award may be
granted or exercised, or (iii) extend the term of the Plan. The termination or
any modification or amendment of the Plan, except as provided in subsection (a),
shall not without the consent of a participant, affect his or her rights under
an award previously granted to him or her.

4.11.  DISPOSITION OF OPTION SHARES; WITHHOLDING TAXES.

                  Upon the disposition (within the meaning of Code Section
424(c)) of shares of Common Stock acquired pursuant to the exercise of an
Incentive Stock Option prior to the expiration of the holding period
requirements of Code Section 422(a)(1), the Optionee shall be required to give
notice to the Company of such disposition and the Company shall have the right
to require the Optionee to pay to the Company the amount of any taxes that are
required by law to be withheld with respect to such disposition.




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