<PAGE>
                                                                    EXHIBIT 10.6






                                      FORM
                                       OF
                              BRILLIAN CORPORATION

                        2003 INCENTIVE COMPENSATION PLAN



<PAGE>




                                TABLE OF CONTENTS

<Table>
<Caption>
                                                                                             PAGE
<S>                                                                                          <C>
1.       Purpose .........................................................................     1
2.       Administration ..................................................................     1
         (a)     Authority of the Committee ..............................................     1
         (b)     Manner of Exercise of Committee Authority ...............................     1
         (c)     Limitation of Liability .................................................     1
3.       Stock Subject to Plan ...........................................................     2
         (a)     Limitation on Overall Number of Shares Subject to Awards ................     2
         (b)     Application of Limitations ..............................................     2
4.       Eligibility; Per-Person Award Limitations .......................................     2
5.       Specific Terms of Awards ........................................................     2
         (a)     General .................................................................     2
         (b)     Options .................................................................     2
         (c)     Stock Appreciation Rights ...............................................     3
         (d)     Restricted Stock ........................................................     4
         (e)     Bonus Stock and Awards in Lieu of Obligations ...........................     5
         (f)     Other Stock-Based Awards ................................................     5
6.       Certain Provisions Applicable to Awards .........................................     5
         (a)     Stand-Alone, Additional, Tandem, and Substitute Awards ..................     5
         (b)     Term of Awards ..........................................................     5
         (c)     Form and Timing of Payment Under Awards; Deferrals ......................     6
         (d)     Exemptions from Section 16(b) Liability .................................     6
7.       Change in Control ...............................................................     6
         (a)     Effect of "Change in Control." ..........................................     6
         (b)     Definition of "Change in Control ........................................     6
         (c)     Definition of "Change in Control Price." ................................     7
8.       General Provisions ..............................................................     9
         (a)     Compliance With Legal and Other Requirements ............................     9
         (b)     Limits on Transferability; Beneficiaries ................................     9
         (c)     Adjustments .............................................................     9
         (d)     Taxes ...................................................................    10
         (e)     Changes to the Plan and Awards ..........................................    10
         (f)     Limitation on Rights Conferred Under Plan ...............................    10
         (g)     Unfunded Status of Awards; Creation of Trusts ...........................    11
         (h)     Nonexclusivity of the Plan ..............................................    11
         (i)     Payments in the Event of Forfeitures; Fractional Shares .................    11
         (j)     Governing Law ...........................................................    11
         (k)     Plan Effective Date and Stockholder Approval; Termination of Plan .......    11
9.       Definitions .....................................................................    11
         (a)     "Award" .................................................................    11
         (b)     "Beneficiary" ...........................................................    11
         (c)     "Beneficial Owner", "Beneficially Owning" and "Beneficial Ownership" ....    12
         (d)     "Board" .................................................................    12
         (e)     "Change in Control" .....................................................    12
         (f)     "Change in Control Price" ...............................................    12
         (g)     "Code" ..................................................................    12
         (h)     "Committee" .............................................................    12
         (i)     "Consultant" ............................................................    12
         (j)     "Continuous Service" ....................................................    12
         (k)     "Corporate Transaction" .................................................    12
         (l)     "Director" ..............................................................    12
         (m)     "Effective Date" ........................................................    12
         (n)     "Eligible Person" .......................................................    12
         (o)     "Employee" ..............................................................    13
</Table>


                                       i



<PAGE>
<Table>
<Caption>
                                                                                             PAGE
<S>                                                                                          <C>
         (p)     "Exchange Act" ..........................................................    13
         (q)     "Executive Officer" .....................................................    13
         (r)     "Fair Market Value" .....................................................    13
         (s)     "Incentive Stock Option" ................................................    13
         (t)     "Incumbent Board" .......................................................    13
         (u)     "Limited Stock Appreciation Right" ......................................    13
         (v)     "Option" ................................................................    13
         (w)     "Optionee" ..............................................................    13
         (x)     "Other Stock-Based Awards" ..............................................    13
         (y)     "Parent" ................................................................    13
         (z)     "Participant" ...........................................................    13
         (aa)    "Person" ................................................................    13
         (bb)    "Restricted Stock" ......................................................    13
         (cc)    "Rule 16b-3" and "Rule 16a-1(c)(3)" .....................................    13
         (dd)    "Stock" .................................................................    14
         (ee)    "Stock Appreciation Right" ..............................................    14
         (ff)    "Subsidiary" ............................................................    14
</Table>

                                       ii

<PAGE>


                              BRILLIAN CORPORATION

                        2003 INCENTIVE COMPENSATION PLAN

         1. PURPOSE. The purpose of this 2003 Incentive Compensation Plan (the
"Plan") is to assist Brillian Corporation, a Delaware corporation (the
"Company") and its Related Entities in attracting, motivating, retaining, and
rewarding high-quality executives and other Employees, officers, Directors, and
Consultants by enabling such persons to acquire or increase a proprietary
interest in the Company in order to strengthen the mutuality of interests
between such persons and the Company's stockholders, and providing such persons
with annual and long-term performance incentives to expend their maximum efforts
in the creation of stockholder value. The Plan is intended to qualify certain
compensation awarded under the Plan for tax deductibility under Section 162(m)
of the Code to the extent deemed appropriate by the applicable Committee (or any
successor committee) of the Board of Directors of the Company.

         2. ADMINISTRATION.

                  (a) AUTHORITY OF THE COMMITTEE. The Plan shall be administered
by the Committee; provided, however, that except as otherwise expressly provided
in this Plan or, during the period that the Company is a Publicly Held
Corporation, in order to comply with Code Section 162(m) or Rule 16b-3 under the
Exchange Act, the Board may exercise any power or authority granted to the
Committee under this Plan. The Committee or the Board shall have full and final
authority, in each case subject to and consistent with the provisions of the
Plan, to select Eligible Persons to become Participants, grant Awards, determine
the type, number and other terms and conditions of, and all other matters
relating to, Awards, prescribe Award agreements (which need not be identical for
each Participant) and rules and regulations for the administration of the Plan,
construe and interpret the Plan and Award agreements and correct defects, supply
omissions or reconcile inconsistencies therein, and to make all other decisions
and determinations as the Committee or the Board may deem necessary or advisable
for the administration of the Plan. In exercising any discretion granted to the
Committee or the Board under the Plan or pursuant to any Award, the Committee or
the Board shall not be required to follow past practices, act in a manner
consistent with past practices, or treat any Eligible Person in a manner
consistent with the treatment of other Eligible Persons.

                  (b) MANNER OF EXERCISE OF COMMITTEE AUTHORITY. The Committee,
and not the Board, shall exercise sole and exclusive discretion on any matter
relating to a Participant then subject to Section 16 of the Exchange Act with
respect to the Company to the extent necessary in order that transactions by
such Participant shall be exempt under Rule 16b-3 under the Exchange Act. Any
action of the Committee or the Board shall be final, conclusive, and binding on
all persons, including the Company, its Related Entities, Participants,
Beneficiaries, transferees under Section 9(b) hereof, or other persons claiming
rights from or through a Participant, and stockholders. The express grant of any
specific power to the Committee or the Board, and the taking of any action by
the Committee or the Board, shall not be construed as limiting any power or
authority of the Committee or the Board. The Committee or the Board may delegate
to officers or managers of the Company or any Related Entity, or committees
thereof, the authority, subject to such terms as the Committee or the Board
shall determine, (i) to perform administrative functions, (ii) with respect to
Participants not subject to Section 16 of the Exchange Act, to perform such
other functions as the Committee or the Board may determine, and (iii) with
respect to Participants subject to Section 16, to perform such other functions
of the Committee or the Board as the Committee or the Board may determine to the
extent performance of such functions will not result in the loss of an exemption
under Rule 16b-3 otherwise available for transactions by such persons, in each
case to the extent permitted under applicable law. The Committee or the Board
may appoint agents to assist it in administering the Plan.

                  (c) LIMITATION OF LIABILITY. The Committee and the Board, and
each member thereof, shall be entitled to, in good faith, rely or act upon any
report or other information furnished to him or her by any Executive Officer,
other officer or Employee, the Company's independent auditors, Consultants or
any other agents assisting in the administration of the Plan. Members of the
Committee and the Board, and any officer or Employee acting at the direction or
on behalf of the Committee or the Board, shall not be personally liable for any
action or determination taken or made in good faith with respect to the Plan,
and shall, to the extent permitted by law, be fully indemnified and protected by
the Company with respect to any such action or determination.


<PAGE>

         3. STOCK SUBJECT TO PLAN

                  (a) LIMITATION ON OVERALL NUMBER OF SHARES SUBJECT TO AWARDS.
Subject to adjustment as provided in Section 9(c) hereof, the total number of
shares of Stock reserved and available for delivery in connection with Awards
under the Plan shall be the sum of (i) 1,650,000 shares plus (ii) the number of
shares of Stock with respect to which any Awards previously granted under the
Plan terminated without being exercised, expire, are forfeited or canceled, do
not vest, or are surrendered in payment of any Awards or any tax withholding
with regard thereto. The overall number of the shares of Stock shall be further
increased on the first day of the Company's fiscal year by 4% of the total
number of shares of Stock outstanding on that date, provided that at no time
shall the number of shares of Stock subject to Awards exceed 30% of the then
outstanding shares of Stock unless a greater percentage is approved by a vote of
at least two-thirds of the securities entitled to vote or a determination is
made by counsel for the Company that such restruction is not required by
applicable federal or state securities laws under the circumstances. Any shares
of Stock delivered under the Plan may consist, in whole or in part, of
authorized and unissued shares or treasury shares. Subject to adjustment as
provided in Section 9(c) hereof, the number of shares of Stock that may be
issued pursuant to Incentive Stock Options shall not exceed 1,650,000 shares.

                  (b) APPLICATION OF LIMITATIONS. The limitation contained in
Section 3(a) shall apply not only to Awards that are settleable by the delivery
of shares of Stock but also to Awards relating to shares of Stock but settleable
only in cash (such as cash-only Stock Appreciation Rights). The Committee or the
Board may adopt reasonable counting procedures to ensure appropriate counting,
avoid double counting (as, for example, in the case of tandem or substitute
awards), and make adjustments if the number of shares of Stock actually
delivered differs from the number of shares previously counted in connection
with an Award.

         4. ELIGIBILITY; PER-PERSON AWARD LIMITATIONS. Awards may be granted
under the Plan only to Eligible Persons. In each fiscal year during any part of
which the Plan is in effect, an Eligible Person may not be granted Awards
relating to more than 300,000 shares of Stock, subject to adjustment as provided
in Section 9(c), under each of Sections 5(b), 5(c), 5(d), 5(e), and 5(f).
Directors, who are not Employees, proposed directors, proposed employees, and
independent contractors shall be eligible to receive awards other than Incentive
Stock Options.

         5. SPECIFIC TERMS OF AWARDS.

                  (a) GENERAL. Awards may be granted on the terms and conditions
set forth in this Section 5. In addition, the Committee or the Board may impose
on any Award or the exercise thereof, at the date of grant or thereafter
(subject to Section 9(e)), such additional terms and conditions, not
inconsistent with the provisions of the Plan, as the Committee or the Board
shall determine, including terms requiring forfeiture of Awards in the event of
termination of Continuous Service by the Participant and terms permitting a
Participant to make elections relating to his or her Award. The Committee or the
Board shall retain full power and discretion to accelerate, waive, or modify, at
any time, any term or condition of an Award that is not mandatory under the
Plan.

                  (b) OPTIONS. The Committee and the Board each is authorized to
grant Options to Participants on the following terms and conditions:

                           (i) EXERCISE PRICE. The exercise price per share of
                  Stock purchasable under an Option shall be determined by the
                  Committee or the Board, provided that such exercise price
                  shall not, in the case of Incentive Stock Options, be less
                  than 100% of the Fair Market Value of the Stock on the date of
                  grant of the Option and shall not, in any event, be less than
                  the par value of a share of Stock on the date of grant of such
                  Option. If an employee owns or is deemed to own (by reason of
                  the attribution rules applicable under Section 424(d) of the
                  Code) more than 10% of the combined voting power of all
                  classes of stock of the Company or any Parent Corporation or
                  Subsidiary and an Incentive Stock Option is granted to such
                  employee, the option price of such Incentive Stock Option (to
                  the extent required by the Code at the time of grant) shall be
                  no less than 110% of the Fair Market Value of the Stock on the
                  date such Incentive Stock Option is granted.


                                       2
<PAGE>

                           (ii) TIME AND METHOD OF EXERCISE. The Committee or
                  the Board shall determine the time or times at which or the
                  circumstances under which an Option may be exercised in whole
                  or in part (including based on achievement of performance
                  goals and/or future service requirements), the time or times
                  at which Options shall cease to be or become exercisable
                  following termination of Continuous Service or upon other
                  conditions, the methods by which such exercise price may be
                  paid or deemed to be paid (including in the discretion of the
                  Committee or the Board a cashless exercise procedure), the
                  form of such payment, including, without limitation, cash,
                  Stock, other Awards, or awards granted under other plans of
                  the Company or a Related Entity, or other property (including
                  notes or other contractual obligations of Participants to make
                  payment on a deferred basis), and the methods by or forms in
                  which Stock will be delivered or deemed to be delivered to
                  Participants.

                           (iii) INCENTIVE STOCK OPTIONS. The terms of any
                  Incentive Stock Option granted under the Plan shall comply in
                  all respects with the provisions of Section 422 of the Code.
                  Anything in the Plan to the contrary notwithstanding, no term
                  of the Plan relating to Incentive Stock Options (including any
                  Stock Appreciation Right in tandem therewith) shall be
                  interpreted, amended or altered, nor shall any discretion or
                  authority granted under the Plan be exercised, so as to
                  disqualify either the Plan or any Incentive Stock Option under
                  Section 422 of the Code, unless the Participant has first
                  requested the change that will result in such
                  disqualification. Thus, if and to the extent required to
                  comply with Section 422 of the Code, Options granted as
                  Incentive Stock Options shall be subject to the following
                  special terms and conditions:

                                    (A) the Option shall not be exercisable more
                  than ten years after the date such Incentive Stock Option is
                  granted; provided, however, that if a Participant owns or is
                  deemed to own (by reason of the attribution rules of Section
                  424(d) of the Code) more than 10% of the combined voting power
                  of all classes of stock of the Company or any Parent
                  Corporation and the Incentive Stock Option is granted to such
                  Participant, the term of the Incentive Stock Option shall be
                  (to the extent required by the Code at the time of the grant)
                  for no more than five years from the date of grant; and

                                    (B) The aggregate Fair Market Value
                  (determined as of the date the Incentive Stock Option is
                  granted) of the shares of stock with respect to which
                  Incentive Stock Options granted under the Plan and all other
                  option plans of the Company or its Parent Corporation during
                  any calendar year exercisable for the first time by the
                  Participant during any calendar year shall not (to the extent
                  required by the Code at the time of the grant) exceed
                  $100,000.

                           (iv) REPURCHASE RIGHTS. The Committee and the Board
                  shall have the discretion to grant Options that are
                  exercisable for unvested shares of Stock. Should the
                  Optionee's Continuous Service cease while holding such
                  unvested shares, the Company shall have the right to
                  repurchase, at the exercise price paid per share, any or all
                  of those unvested shares. The terms upon which such repurchase
                  right shall be exercisable (including the period and procedure
                  for exercise and the appropriate vesting schedule for the
                  purchased shares) shall be established by the Committee or the
                  Board and set forth in the document evidencing such repurchase
                  right.

                  (c) STOCK APPRECIATION RIGHTS. The Committee and the Board
each is authorized to grant Stock Appreciation Right's to Participants on the
following terms and conditions:

                           (i) RIGHT TO PAYMENT. A Stock Appreciation Right
                  shall confer on the Participant to whom it is granted a right
                  to receive, upon exercise thereof, the excess of (A) the Fair
                  Market Value of one share of stock on the date of exercise
                  (or, in the case of a "Limited Stock Appreciation Right" that
                  may be exercised only in the event of a Change in Control, the
                  Fair Market Value determined by reference to the Change in
                  Control Price, as defined under Section 7(c) hereof), over (B)
                  the grant price of the Stock Appreciation Right as determined
                  by the Committee or the Board. The grant price of a Stock
                  Appreciation Right shall not be less than the


                                       3
<PAGE>

                  Fair Market Value of a share of Stock on the date of grant
                  except as provided under Section 6(a) hereof.

                           (ii) OTHER TERMS. The Committee or the Board shall
                  determine at the date of grant or thereafter, the time or
                  times at which and the circumstances under which a Stock
                  Appreciation Right may be exercised in whole or in part
                  (including based on achievement of performance goals and/or
                  future service requirements), the time or times at which Stock
                  Appreciation Rights shall cease to be or become exercisable
                  following termination of Continuous Service or upon other
                  conditions, the method of exercise, method of settlement, form
                  of consideration payable in settlement, method by or forms in
                  which Stock will be delivered or deemed to be delivered to
                  Participants, whether or not a Stock Appreciation Right shall
                  be in tandem or in combination with any other Award, and any
                  other terms and conditions of any Stock Appreciation Right.
                  Limited Stock Appreciation Rights that may only be exercised
                  in connection with a Change in Control or other event as
                  specified by the Committee or the Board, may be granted on
                  such terms, not inconsistent with this Section 5(c), as the
                  Committee or the Board may determine. Stock Appreciation
                  Rights and Limited Stock Appreciation Rights may be either
                  freestanding or in tandem with other Awards.

                  (d) RESTRICTED STOCK. The Committee and the Board each is
authorized to grant Restricted Stock to Participants on the following terms and
conditions:

                           (i) GRANT AND RESTRICTIONS. Restricted Stock shall be
                  subject to such restrictions on transferability, risk of
                  forfeiture, and other restrictions, if any, as the Committee
                  or the Board may impose, or as otherwise provided in this
                  Plan. The restrictions may lapse separately or in combination
                  at such times, under such circumstances (including based on
                  achievement of performance goals and/or future service
                  requirements), in such installments, or otherwise, as the
                  Committee or the Board may determine at the date of grant or
                  thereafter. Except to the extent restricted under the terms of
                  the Plan and any Award agreement relating to the Restricted
                  Stock, a Participant granted Restricted Stock shall have all
                  of the rights of a stockholder, including the right to vote
                  the Restricted Stock and the right to receive dividends
                  thereon (subject to any mandatory reinvestment or other
                  requirement imposed by the Committee or the Board). During the
                  restricted period applicable to the Restricted Stock, subject
                  to Section 9(b) below, the Restricted Stock may not be sold,
                  transferred, pledged, hypothecated, margined, or otherwise
                  encumbered by the Participant.

                           (ii) FORFEITURE. Except as otherwise determined by
                  the Committee or the Board at the time of the Award, upon
                  termination of a Participant's Continuous Service during the
                  applicable restriction period, the Participant's Restricted
                  Stock that is at that time subject to restrictions shall be
                  forfeited and reacquired by the Company; provided that the
                  Committee or the Board may provide, by rule or regulation or
                  in any Award agreement, or may determine in any individual
                  case, that restrictions or forfeiture conditions relating to
                  Restricted Stock shall be waived in whole or in part in the
                  event of terminations resulting from specified causes, and the
                  Committee or the Board may in other cases waive in whole or in
                  part the forfeiture of Restricted Stock.

                           (iii) CERTIFICATES FOR STOCK. Restricted Stock
                  granted under the Plan may be evidenced in such manner as the
                  Committee or the Board shall determine. If certificates
                  representing Restricted Stock are registered in the name of
                  the Participant, the Committee or the Board may require that
                  such certificates bear an appropriate legend referring to the
                  terms, conditions, and restrictions applicable to such
                  Restricted Stock, that the Company retain physical possession
                  of the certificates, and that the Participant deliver a stock
                  power to the Company, endorsed in blank, relating to the
                  Restricted Stock.

                           (iv) DIVIDENDS AND SPLITS. As a condition to the
                  grant of an Award of Restricted Stock, the Committee or the
                  Board may require that any cash dividends paid on a share of


                                       4
<PAGE>

                  Restricted Stock be automatically reinvested in additional
                  shares of Restricted Stock or applied to the purchase of
                  additional Awards under the Plan. Unless otherwise determined
                  by the Committee or the Board, Stock distributed in connection
                  with a Stock split or Stock dividend, and other property
                  distributed as a dividend, shall be subject to restrictions
                  and a risk of forfeiture to the same extent as the Restricted
                  Stock with respect to which such Stock or other property has
                  been distributed.

                  (e) BONUS STOCK AND AWARDS IN LIEU OF OBLIGATIONS. The
Committee and the Board each is authorized to grant Stock as a bonus, or to
grant Stock or other Awards in lieu of Company obligations to pay cash or
deliver other property under the Plan or under other plans or compensatory
arrangements, provided that, in the case of Participants subject to Section 16
of the Exchange Act, the amount of such grants remains within the discretion of
the Committee to the extent necessary to ensure that acquisitions of Stock or
other Awards are exempt from liability under Section 16(b) of the Exchange Act.
Stock or Awards granted hereunder shall be subject to such other terms as shall
be determined by the Committee or the Board.

                  (f) OTHER STOCK-BASED AWARDS. The Committee and the Board each
is authorized, subject to limitations under applicable law, to grant to
Participants such other Awards that may be denominated or payable in, valued in
whole or in part by reference to, or otherwise based on, or related to, Stock,
as deemed by the Committee or the Board to be consistent with the purposes of
the Plan, including, without limitation, convertible or exchangeable debt
securities, other rights convertible or exchangeable into Stock, purchase rights
for Stock, Awards with value and payment contingent upon performance of the
Company or any other factors designated by the Committee or the Board, and
Awards valued by reference to the book value of Stock or the value of securities
of or the performance of specified Related Entities or business units. The
Committee or the Board shall determine the terms and conditions of such Awards.
Stock delivered pursuant to an Award in the nature of a purchase right granted
under this Section 5(f) shall be purchased for such consideration (including
without limitation loans from the Company or a Related Entity), paid for at such
times, by such methods, and in such forms, including, without limitation, cash,
Stock, other Awards, or other property, as the Committee or the Board shall
determine. The Committee and the Board shall have the discretion to grant such
other Awards that are exercisable for unvested shares of Stock. Should the
Optionee's Continuous Service cease while holding such unvested shares, the
Company shall have the right to repurchase, at the exercise price paid per
share, any or all of those unvested shares. The terms upon which such repurchase
right shall be exercisable (including the period and procedure for exercise and
the appropriate vesting schedule for the purchased shares) shall be established
by the Committee or the Board and set forth in the document evidencing such
repurchase right. Cash awards, as an element of or supplement to any other Award
under the Plan, may also be granted pursuant to this Section 5(f).

         6. CERTAIN PROVISIONS APPLICABLE TO AWARDS.

                  (a) STAND-ALONE, ADDITIONAL, TANDEM, AND SUBSTITUTE AWARDS.
Awards granted under the Plan may, in the discretion of the Committee or the
Board, be granted either alone or in addition to, in tandem with, or in
substitution or exchange for, any other Award or any award granted under another
plan of the Company, any Related Entity, or any business entity to be acquired
by the Company or a Related Entity, or any other right of a Participant to
receive payment from the Company or any Related Entity. Such additional, tandem,
and substitute or exchange Awards may be granted at any time. If an Award is
granted in substitution or exchange for another Award or award, the Committee or
the Board shall require the surrender of such other Award or award in
consideration for the grant of the new Award. In addition, Awards may be granted
in lieu of cash compensation, including in lieu of cash amounts payable under
other plans of the Company or any Related Entity, in which the value of Stock
subject to the Award is equivalent in value to the cash compensation (for
example, Deferred Stock or Restricted Stock), or in which the exercise price,
grant price or purchase price of the Award in the nature of a right that may be
exercised is equal to the Fair Market Value of the underlying Stock minus the
value of the cash compensation surrendered (for example, Options granted with an
exercise price "discounted" by the amount of the cash compensation surrendered).

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


                                       5
<PAGE>

                  (c) FORM AND TIMING OF PAYMENT UNDER AWARDS; DEFERRALS.
Subject to the terms of the Plan and any applicable Award agreement, payments to
be made to the Company or a Related Entity upon the exercise of an Option or
other Award or settlement of an Award may be made in such forms as the Committee
or the Board shall determine, including, without limitation, cash, other Awards
or other property, and may be made in a single payment or transfer, in
installments, or on a deferred basis. The settlement of any Award may be
accelerated, and cash paid in lieu of Stock in connection with such settlement,
in the discretion of the Committee or the Board or upon occurrence of one or
more specified events (in addition to a Change in Control). Installment or
deferred payments may be required by the Committee or the Board (subject to
Section 9(e) of the Plan) or permitted at the election of the Participant on
terms and conditions established by the Committee or the Board. Payments may
include, without limitation, provisions for the payment or crediting of a
reasonable interest rate on installment or deferred payments or the grant or
crediting of Dividend Equivalents or other amounts in respect of installment or
deferred payments denominated in Stock.

                  (d) EXEMPTIONS FROM SECTION 16(b) LIABILITY. It is the intent
of the Company that this Plan comply in all respects with applicable provisions
of Rule 16b-3 or Rule 16a-1(c)(3) to the extent necessary to ensure that neither
the grant of any Awards to nor other transaction by a Participant who is subject
to Section 16 of the Exchange Act is subject to liability under Section 16(b)
thereof (except for transactions acknowledged in writing to be non-exempt by
such Participant). Accordingly, if any provision of this Plan or any Award
agreement does not comply with the requirements of Rule 16b-3 or Rule
16a-1(c)(3) as then applicable to any such transaction, such provision will be
construed or deemed amended to the extent necessary to conform to the applicable
requirements of Rule 16b-3 or Rule 16a-1(c)(3) so that such Participant shall
avoid liability under Section 16(b). In addition, the purchase price of any
Award conferring a right to purchase Stock shall be not less than any specified
percentage of the Fair Market Value of Stock at the date of grant of the Award
then required in order to comply with Rule 16b-3.

         7. CHANGE IN CONTROL.

                  (a) EFFECT OF "CHANGE IN CONTROL." If and to the extent
provided in the Award, in the event of a "Change in Control," as defined in
Section 7(b):

                           (i) The Committee may, within its discretion,
                  accelerate the vesting and exercisability of any Award
                  carrying a right to exercise that was not previously vested
                  and exercisable as of the time of the Change in Control,
                  subject to applicable restrictions set forth in Section 8(a)
                  hereof;

                           (ii) The Committee may, within its discretion,
                  accelerate the exercisability of any limited Stock
                  Appreciation Rights (and other Stock Appreciation Rights if so
                  provided by their terms) and provide for the settlement of
                  such Stock Appreciation Rights for amounts, in cash,
                  determined by reference to the Change in Control Price; and

                           (iii) The Committee may, within its discretion, lapse
                  the restrictions, deferral of settlement, and forfeiture
                  conditions applicable to any other Award granted under the
                  Plan and such Awards may be deemed fully vested as of the time
                  of the Change in Control, except to the extent of any waiver
                  by the Participant and subject to applicable restrictions set
                  forth in Section 9(a) hereof.

                  (b) DEFINITION OF "CHANGE IN CONTROL. A "Change in Control"
shall be deemed to have occurred upon:

                           (i) Approval by the stockholders of the Company of a
                  reorganization, merger, consolidation, or other form of
                  corporate transaction or series of transactions, in each case,
                  with respect to which persons who were the stockholders of the
                  Company immediately prior to such reorganization, merger,
                  consolidation, or other transaction do not, immediately
                  thereafter, own more than 50% of the combined voting power
                  entitled to vote generally in the election of directors of the
                  reorganized, merged, or consolidated company's then
                  outstanding voting securities, or a liquidation or dissolution
                  of the Company or the sale of all or substantially all of the
                  assets of the


                                       6
<PAGE>

                  Company (unless such reorganization, merger, consolidation or
                  other corporate transaction, liquidation, dissolution or sale
                  (any such event being referred to as a "Corporate
                  Transaction") is subsequently abandoned);

                           (ii) Individuals who, as of the date on which the
                  Award is granted, constitute the Board (the "Incumbent Board")
                  cease for any reason to constitute at least a majority of the
                  Board, provided that any person becoming a director subsequent
                  to the date on which the Award was granted whose election, or
                  nomination for election by the Company's shareholders, was
                  approved by a vote of at least a majority of the directors
                  then comprising the Incumbent Board (other than an election or
                  nomination of an individual whose initial assumption of office
                  is in connection with an actual or threatened election contest
                  relating to the election of the Directors of the Company)
                  shall be, for purposes of this Agreement, considered as though
                  such person were a member of the Incumbent Board; or

                           (iii) the acquisition (other than from the Company)
                  by any person, entity, or "group", within the meaning of
                  Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act,
                  of more than 50% of either the then outstanding shares of the
                  Company's Stock or the combined voting power of the Company's
                  then outstanding voting securities entitled to vote generally
                  in the election of directors (hereinafter referred to as the
                  ownership of a "Controlling Interest") excluding, for this
                  purpose, any acquisitions by (1) the Company or a Related
                  Entity, (2) any person, entity, or "group" that as of the date
                  on which the Award is granted owns beneficial ownership
                  (within the meaning of Rule 13d-3 promulgated under the
                  Securities Exchange Act) of a Controlling Interest or (3) any
                  employee benefit plan of the Company a Related Entity.

                  (c) DEFINITION OF "CHANGE IN CONTROL PRICE." The "Change in
Control Price" means an amount in cash equal to the higher of (i) the amount of
cash and fair market value of property that is the highest price per share paid
(including extraordinary dividends) in any Corporate Transaction triggering the
Change in Control under Section 7(b)(i) hereof or any liquidation of shares
following a sale of substantially all of the assets of the Company, or (ii) the
highest Fair Market Value per share at any time during the 60-day period
preceding and the 60-day period following the Change in Control.

         8. AUTOMATIC GRANT PROGRAM

                  (a) AMOUNT AND DATE OF GRANT. During the term of the Plan, the
Company shall make automatic grants of Options ("Automatic Options") to each
Director (or proposed Director pursuant to Section 8(a)(iii)) who is not
employed by the Company, whether or not such person is a Non-Employee Director
as referred to in Section 2.2 as follows:

                           (i) ANNUAL GRANTS. Each year on the Annual Grant
                  Date, an Automatic Option to acquire 2,000 shares of Stock
                  shall be granted to each Director for as long as shares of
                  Stock are available under Section 3(a) hereof. The "Annual
                  Grant Date" shall be the date of the Company's annual
                  stockholders meeting commencing as of the first annual meeting
                  occurring after the Effective Date. Any Director that was
                  granted an Automatic Option under Section 8(a)(ii) or (iii)
                  within 90 days of an Annual Grant Date shall be ineligible to
                  receive an Automatic Option pursuant to this Section 8(a)(i)
                  on such Annual Grant Date.

                           (ii) INITIAL NEW DIRECTOR GRANTS. On the Initial
                  Grant Date, every new member of the Board, who is an Director
                  and has not previously received an Automatic Option under this
                  Section 8(a)(ii) shall be granted an Automatic Option to
                  acquire 10,000 shares of Stock for as long as shares of Stock
                  are available under Section 3(a) hereof. The "Initial Grant
                  Date" shall be the date that a Director is first appointed or
                  elected to the Board. Any Director who previously received an
                  Automatic Option pursuant to Section 8(a)(iii) shall be
                  ineligible to receive an Automatic Option pursuant to this
                  Section 8(a)(ii).


                                       7
<PAGE>


                           (iii) INITIAL PROPOSED DIRECTOR GRANTS. On the date
                  that shares of Stock first become registered under Section 12
                  of the 1934 Act, the Company shall grant an Automatic Option
                  to acquire 10,000 shares of Stock to each non-employee whose
                  election to the Board is proposed as of such date .

                  (b) EXERCISE PRICE. The exercise price per share of Stock
subject to each Automatic Option granted under Section 8(a)(i) or (ii) shall be
equal to 100 percent of the Fair Market Value per share of the Stock on the date
such Automatic Option was granted. The exercise price per share of Stock subject
to each Automatic Option granted under Section 8(a)(iii) shall be equal to the
average price per share of Stock on the last day of "when issued trading" prior
to the distribution of the Stock.

                  (c) VESTING. Each Automatic Option granted pursuant to Section
8(a)(i) shall vest and become exercisable 12 months after the date of grant.
Each Automatic Option granted pursuant to Section 8(a)(ii) shall vest and become
exercisable in a series of three equal and successive installments with the
first installment vested on the date of grant and the next two installments 12
months and 24 months after the date of grant. Each Automatic Option granted
pursuant to Section 8(a)(iii) shall vest and become exercisable in a series of
three equal and successive installments with the first installment vested on the
date of the recipient's election to the Board and the next two installments 12
months and 24 months after the date of grant. Each Automatic Option shall vest
and become exercisable only if the optionholder has not ceased serving as a
Board member as of such vesting date.

                  (d) TERM OF AUTOMATIC OPTIONS. Each Automatic Option shall
expire on the tenth anniversary (the "Expiration Date") of the date on which
such Automatic Option was granted. Except as determined by the Plan
Administrator, should a Director's service as a Board member cease prior to the
Expiration Date for any reason while an Automatic Option remains outstanding and
unexercised, the Automatic Option term shall immediately be modified and the
Automatic Option shall terminate and cease to be outstanding in accordance with
the following provisions:

                           (i) The Automatic Option shall immediately terminate
                  and cease to be outstanding with respect to any shares that
                  were not vested at the time of the optionholder's cessation of
                  Board service; provided, however, that a proposed director who
                  receives a grant pursuant to Section 8(a)(iii) shall not be
                  treated as ceasing to serve as a Board member for purposes of
                  this Section 7 prior to such individual's election to the
                  Board.

                           (ii) Should an optionholder cease, for any reason
                  other than death, to serve as a member of the Board, then the
                  optionholder shall have 90 days measured from the date of such
                  cessation of Board service in which to exercise his or her
                  Automatic Options that vested prior to the time of such
                  cessation of Board service. In no event, however, may any
                  Automatic Option be exercised after the Expiration Date of
                  such Automatic Option.

                           (iii) Should an optionholder die while serving as a
                  Board member or within 90 days after cessation of Board
                  service, then the personal representative of the
                  optionholder's estate (or the person or persons to whom the
                  Automatic Option is transferred pursuant to the optionholder's
                  will or in accordance with the laws of the descent and
                  distribution) shall have a 90-day period measured from the
                  date of the optionholder's cessation of Board service in which
                  to exercise the Automatic Options that vested prior to the
                  time of such cessation of Board service. In no event, however,
                  may any Automatic Option be exercised after the Expiration
                  Date of such Automatic Option.

                  (e) OTHER TERMS. Except as expressly provided otherwise in
this Section 8, an Automatic Option shall be subject to all of the terms and
conditions of the Plan. Directors shall be entitled to receive other awards
under the Plan or other plans of the Company in accordance with the terms and
conditions thereof.


                                       8
<PAGE>


         9. GENERAL PROVISIONS.

                  (a) COMPLIANCE WITH LEGAL AND OTHER REQUIREMENTS. The Company
may, to the extent deemed necessary or advisable by the Committee or the Board,
postpone the issuance or delivery of Stock or payment of other benefits under
any Award until completion of such registration or qualification of such Stock
or other required action under any federal or state law, rule, or regulation,
listing, or other required action with respect to any stock exchange or
automated quotation system upon which the Stock or other Company securities are
listed or quoted, or compliance with any other obligation of the Company, as the
Committee or the Board, may consider appropriate, and may require any
Participant to make such representations, furnish such information and comply
with or be subject to such other conditions as it may consider appropriate in
connection with the issuance or delivery of Stock or payment of other benefits
in compliance with applicable laws, rules, and regulations, listing
requirements, or other obligations.

                  (b) LIMITS ON TRANSFERABILITY; BENEFICIARIES. No Award or
other right or interest of a Participant under the Plan, including any Award or
right that constitutes a derivative security as generally defined in Rule
16a-1(c) under the Exchange Act, shall be pledged, hypothecated, or otherwise
encumbered or subject to any lien, obligation, or liability of such Participant
to any party (other than the Company or a Subsidiary), or assigned or
transferred by such Participant otherwise than by will or the laws of descent
and distribution or to a Beneficiary upon the death of a Participant, and such
Awards or rights that may be exercisable shall be exercised during the lifetime
of the Participant only by the Participant or his or her guardian or legal
representative, [except that Awards and other rights (other than Incentive Stock
Options and Stock Appreciation Rights in tandem therewith) may be transferred to
one or more Beneficiaries or other transferees during the lifetime of the
Participant, and may be exercised by such transferees in accordance with the
terms of such Award, but only if and to the extent such transfers and exercises
are permitted by the Committee or the Board pursuant to the express terms of an
Award agreement (subject to any terms and conditions which the Committee or the
Board may impose thereon, and further subject to any prohibitions or
restrictions on such transfers pursuant to Rule 16b-3). A Beneficiary,
transferee, or other person claiming any rights under the Plan from or through
any Participant shall be subject to all terms and conditions of the Plan and any
Award agreement applicable to such Participant, except as otherwise determined
by the Committee or the Board, and to any additional terms and conditions deemed
necessary or appropriate by the Committee or the Board.]

                  (c) ADJUSTMENTS.

                           (i) ADJUSTMENTS TO AWARDS. In the event that any
                  dividend or other distribution (whether in the form of cash,
                  Stock, or other property), recapitalization, forward or
                  reverse split, reorganization, merger, consolidation,
                  spin-off, combination, repurchase, share exchange,
                  liquidation, dissolution, or other similar corporate
                  transaction or event affects the Stock and/or such other
                  securities of the Company or any other issuer such that a
                  substitution, exchange, or adjustment is determined by the
                  Committee or the Board to be appropriate, then the Committee
                  or the Board shall, in such manner as it may deem equitable,
                  substitute, exchange, or adjust any or all of (A) the number
                  and kind of shares of Stock that may be delivered in
                  connection with Awards granted thereafter, (B) the number and
                  kind of shares of Stock by which annual per-person Award
                  limitations are measured under Section 4 hereof, (C) the
                  number and kind of shares of Stock subject to or deliverable
                  in respect of outstanding Awards, (D) the exercise price,
                  grant price, or purchase price relating to any Award and/or
                  make provision for payment of cash or other property in
                  respect of any outstanding Award, and (E) any other aspect of
                  any Award that the Committee or Board determines to be
                  appropriate.

                           (ii) ADJUSTMENTS IN CASE OF CERTAIN CORPORATE
                  TRANSACTIONS. In the event of a proposed sale of all or
                  substantially all of the Company's assets or any
                  reorganization, merger, consolidation, or other form of
                  corporate transaction in which the Company does not survive,
                  or in which the shares of Stock are exchanged for or converted
                  into securities issued by another entity, then the successor
                  or acquiring entity or an affiliate thereof may, with the
                  consent of the Committee or the Board, assume each outstanding
                  Option or substitute an equivalent option or right. If the
                  successor or acquiring entity or an affiliate thereof, does
                  not cause such an


                                       9
<PAGE>


                  assumption or substitution, then each Option shall terminate
                  upon the consummation of sale, merger, consolidation, or other
                  corporate transaction. The Committee or the Board shall give
                  written notice of any proposed transaction referred to in this
                  Section 8(c)(ii) a reasonable period of time prior to the
                  closing date for such transaction (which notice may be given
                  either before or after the approval of such transaction), in
                  order that Optionees may have a reasonable period of time
                  prior to the closing date of such transaction within which to
                  exercise any Options that are then exercisable (including any
                  Options that may become exercisable upon the closing date of
                  such transaction). An Optionee may condition his exercise of
                  any Option upon the consummation of the transaction.

                           (iii) OTHER ADJUSTMENTS. In addition, the Committee
                  (and the Board if and only to the extent such authority is not
                  required to be exercised by the Committee to comply with Code
                  Section 162(m)) is authorized to make adjustments in the terms
                  and conditions of, and the criteria included in, Awards in
                  recognition of unusual or nonrecurring events (including,
                  without limitation, acquisitions and dispositions of
                  businesses and assets) affecting the Company, any Related
                  Entity, or any business unit, or the financial statements of
                  the Company or any Related Entity, or in response to changes
                  in applicable laws, regulations, accounting principles, tax
                  rates and regulations, or business conditions or in view of
                  the Committee's assessment of the business strategy of the
                  Company, any Related Entity or business unit thereof,
                  performance of comparable organizations, economic and business
                  conditions, personal performance of a Participant, and any
                  other circumstances deemed relevant; provided that no such
                  adjustment shall be authorized or made if and to the extent
                  that such authority or the making of such adjustment would
                  cause Options, or Stock Appreciation Rights hereof to
                  Participants designated by the Committee as Covered Employees
                  and intended to qualify as "performance-based compensation"
                  under Code Section 162(m) and the regulations thereunder to
                  otherwise fail to qualify as "performance-based compensation"
                  under Code Section 162(m) and regulations thereunder.

                  (d) TAXES. The Company and any Related Entity are authorized
to withhold from any Award granted, any payment relating to an Award under the
Plan, including from a distribution of Stock, or any payroll or other payment to
a Participant, amounts of withholding and other taxes due or potentially payable
in connection with any transaction involving an Award, and to take such other
action as the Committee or the Board may deem advisable to enable the Company
and Participants to satisfy obligations for the payment of withholding taxes and
other tax obligations relating to any Award. This authority shall include
authority to withhold or receive Stock or other property and to make cash
payments in respect thereof in satisfaction of a Participant's tax obligations,
either on a mandatory or elective basis in the discretion of the Committee.

                  (e) CHANGES TO THE PLAN AND AWARDS. The Board may amend,
alter, suspend, discontinue, or terminate the Plan, or the Committee's authority
to grant Awards under the Plan, without the consent of stockholders or
Participants, except that any amendment or alteration to the Plan shall be
subject to the approval of the Company's stockholders not later than the annual
meeting next following such Board action if such stockholder approval is
required by any federal or state law or regulation (including, without
limitation, Rule 16b-3 or Code Section 162(m)) or the rules of any stock
exchange or automated quotation system on which the Stock may then be listed or
quoted, and the Board may otherwise, in its discretion, determine to submit
other such changes to the Plan to stockholders for approval; provided that,
without the consent of an affected Participant, no such Board action may
materially and adversely affect the rights of such Participant under any
previously granted and outstanding Award. The Committee or the Board may waive
any conditions or rights under, or amend, alter, suspend, discontinue, or
terminate any Award theretofore granted and any Award agreement relating
thereto, except as otherwise provided in the Plan; provided that, without the
consent of an affected Participant, no such Committee or the Board action may
materially and adversely affect the rights of such Participant under such Award.

                  (f) LIMITATION ON RIGHTS CONFERRED UNDER PLAN. Neither the
Plan nor any action taken hereunder shall be construed as (i) giving any
Eligible Person or Participant the right to continue as an Eligible Person or
Participant or in the employ of the Company or a Related Entity; (ii)
interfering in any way with the right of the Company or a Related Entity to
terminate any Eligible Person's or Participant's Continuous Service at any time,
(iii) giving an Eligible Person or Participant any claim to be granted any Award
under the Plan or to be treated


                                       10
<PAGE>


uniformly with other Participants and Employees, or (iv) conferring on a
Participant any of the rights of a stockholder of the Company unless and until
the Participant is duly issued or transferred shares of Stock in accordance with
the terms of an Award.

                  (g) UNFUNDED STATUS OF AWARDS; CREATION OF TRUSTS. The Plan is
intended to constitute an "unfunded" plan for incentive and deferred
compensation. With respect to any payments not yet made to a Participant or
obligation to deliver Stock pursuant to an Award, nothing contained in the Plan
or any Award shall give any such Participant any rights that are greater than
those of a general creditor of the Company; provided that the Committee may
authorize the creation of trusts and deposit therein cash, Stock, other Awards,
or other property, or make other arrangements to meet the Company's obligations
under the Plan. Such trusts or other arrangements shall be consistent with the
"unfunded" status of the Plan unless the Committee otherwise determines with the
consent of each affected Participant. The trustee of such trusts may be
authorized to dispose of trust assets and reinvest the proceeds in alternative
investments, subject to such terms and conditions as the Committee or the Board
may specify and in accordance with applicable law.

                  (h) NONEXCLUSIVITY OF THE PLAN. Neither the adoption of the
Plan by the Board nor its submission to the stockholders of the Company for
approval shall be construed as creating any limitations on the power of the
Board or a committee thereof to adopt such other incentive arrangements as it
may deem desirable including incentive arrangements and awards which do not
qualify under Code Section 162(m).

                  (i) PAYMENTS IN THE EVENT OF FORFEITURES; FRACTIONAL SHARES.
Unless otherwise determined by the Committee or the Board, in the event of a
forfeiture of an Award with respect to which a Participant paid cash or other
consideration, the Participant shall be repaid the amount of such cash or other
consideration. No fractional shares of Stock shall be issued or delivered
pursuant to the Plan or any Award. The Committee or the Board shall determine
whether cash, other Awards or other property shall be issued or paid in lieu of
such fractional shares or whether such fractional shares or any rights thereto
shall be forfeited or otherwise eliminated.

                  (j) GOVERNING LAW. The validity, construction and effect of
the Plan, any rules and regulations under the Plan, and any Award agreement
shall be determined in accordance with the laws of the state of Delaware without
giving effect to principles of conflicts of laws, and applicable federal law.

                  (k) PLAN EFFECTIVE DATE AND STOCKHOLDER APPROVAL; TERMINATION
OF PLAN. The Plan shall become effective on the Effective Date, subject to
subsequent approval within 12 months of its adoption by the Board by
stockholders of the Company eligible to vote in the election of directors, by a
vote sufficient to meet the requirements of Code Sections 162(m) (if applicable)
and 422, Rule 16b-3 under the Exchange Act (if applicable), applicable Nasdaq
requirements, and other laws, regulations, and obligations of the Company
applicable to the Plan. Awards may be granted subject to stockholder approval,
but may not be exercised or otherwise settled in the event stockholder approval
is not obtained except with respect to Awards granted by the Company prior to
the Company's first shareholder meeting and that are otherwise in compliance
with Treasury Regulations Section 1.162-27(f)(4)(iii). The Plan shall terminate
at such time as no shares of Stock remain available for issuance under the Plan
and the Company has no further rights or obligations with respect to outstanding
Awards under the Plan.

         10. DEFINITIONS. For purposes of the Plan, the following terms shall be
defined as set forth below, in addition to such terms defined in Section 1
hereof.

                  (a) "Automatic Options" means as defined in Section 8(a).

                  (b) "Award" means any Option, Stock Appreciation Right
(including Limited Stock Appreciation Right), Restricted Stock, Stock granted as
a bonus or in lieu of another award, or Other Stock-Based Award, together with
any other right or interest, granted to a Participant under the Plan.

                  (c) "Beneficiary" means the person, persons, trust, or trusts
that have been designated by a Participant in his or her most recent written
beneficiary designation filed with the Committee to receive the benefits
specified under the Plan upon such Participant's death or to which Awards or
other rights are transferred if and to the


                                       11
<PAGE>

extent permitted under Section 10(b) hereof. If, upon a Participant's death,
there is no designated Beneficiary or surviving designated Beneficiary, then the
term Beneficiary means the person, persons, trust, or trusts entitled by will or
the laws of descent and distribution to receive such benefits.

                  (d) "Beneficial Owner", "Beneficially Owning" and "Beneficial
Ownership" shall have the meanings ascribed to such terms in Rule 13d-3 under
the Exchange Act and any successor to such Rule.

                  (e) "Board" means the Company's Board of Directors.

                  (f) "Change in Control" means a Change in Control as defined
with related terms in Section 8 of the Plan.

                  (g) "Change in Control Price" means the amount calculated in
accordance with Section 7(c) of the Plan.

                  (h) "Code" means the Internal Revenue Code of 1986, as amended
from time to time, including regulations thereunder and successor provisions and
regulations thereto.

                  (i) "Committee" means a committee designated by the Board to
administer the Plan. The Board may designate more than one committee to
administer the Plan as to various categories of Eligible Persons. The Committee
shall consist of at least two directors, and each member of which shall be (i) a
"non-employee director" within the meaning of Rule 16b-3 under the Exchange Act,
unless administration of the Plan by "non-employee directors" is not then
required in order for exemptions under Rule 16b-3 to apply to transactions under
the Plan, and (ii) an "outside director" within the meaning of Section 162(m) of
the Code, unless administration of the Plan by "outside directors" is not then
required in order to qualify for tax deductibility under Section 162(m) of the
Code, provided, when appropriate, a Committee shall satisfy the then
requirements of any stock exchange or automated quotation system upon which the
Stock or other Company securities are listed or quoted.

                  (j) "Consultant" means any person (other than an Employee or a
Director, solely with respect to rendering services in such person's capacity as
a director) who is engaged by the Company or any Related Entity to render
consulting or advisory services to the Company or such Related Entity.

                  (k) "Continuous Service" means uninterrupted provision of
services to the Company in any capacity of Employee, Director, or Consultant.
Continuous Service shall not be considered to be interrupted in the case of (i)
any approved leave of absence, (ii) transfers among the Company, any Related
Entities, or any successor entities, in any capacity of Employee Director, or
Consultant, or (iii) any change in status as long as the individual remains in
the service of the Company or a Related Entity in any capacity of Employee,
Director, or Consultant (except as otherwise provided in the Option Agreement).
An approved leave of absence shall include sick leave, military leave, or any
other authorized personal leave.

                  (l) "Corporate Transaction" means a Corporate Transaction as
defined in Section 7(b)(i) of the Plan.

                  (m) "Director" means a member of the Board or the board of
directors of any Related Entity.

                  (n) "Effective Date" means the effective date of the Plan,
which shall be ____________________.

                  (o) "Eligible Person" means each Executive Officer of the
Company (as defined under the Exchange Act) and other officers, Directors, and
Employees of the Company or of any Related Entity, and Consultants with the
Company or any Related Entity. The foregoing notwithstanding, only employees of
the Company, the Parent, or any Subsidiary shall be Eligible Persons for
purposes of receiving any Incentive Stock Options. An Employee on leave of
absence may be considered as still in the employ of the Company or a Related
Entity for purposes of eligibility for participation in the Plan.


                                       12
<PAGE>


                  (p) "Employee" means any person, including an officer or
Director, who is an employee of the Company or any Related Entity. The Payment
of a director's fee by the Company or a Related Entity shall not be sufficient
to constitute "employment" by the Company.

                  (q) "Exchange Act" means the Securities Exchange Act of 1934,
as amended from time to time, including rules thereunder and successor
provisions and rules thereto.

                  (r) "Executive Officer" means an executive officer of the
Company as defined under the Exchange Act.

                  (s) "Fair Market Value" means the fair market value of Stock,
Awards, or other property as determined by the Committee or the Board, or under
procedures established by the Committee or the Board. Unless otherwise
determined by the Committee or the Board, the Fair Market Value of Stock as of
any given date after which the Company is a Publicly Held Corporation shall be
the closing sale price per share reported on a consolidated basis for stock
listed on the principal stock exchange or market on which Stock is traded on the
date as of which such value is being determined or, if there is no sale on that
date, then on the last previous day on which a sale was reported.

                  (t) "Incentive Stock Option" means any Option intended to be
designated as an incentive stock option within the meaning of Section 422 of the
Code or any successor provision thereto.

                  (u) "Incumbent Board" means the Incumbent Board as defined in
Section 7(b)(ii) of the Plan.

                  (v) "Limited Stock Appreciation Right" means a right granted
to a Participant under Section 6(c) hereof.

                  (w) "Option" means a right granted to a Participant under
Section 5(b) hereof, to purchase Stock or other Awards at a specified price
during specified time periods.

                  (x) "Optionee" means a person to whom an Option or Incentive
Stock Option is granted under this Plan or any person who succeeds to the rights
of such person under this Plan.

                  (y) "Other Stock-Based Awards" means Awards granted to a
Participant under Section 5(f) hereof.

                  (z) "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.

                  (aa) "Participant" means a person who has been granted an
Award under the Plan which remains outstanding, including a person who is no
longer an Eligible Person.

                  (bb) "Person" shall have the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, and shall include a "group" as defined in Section 13(d) thereof.

                  (cc) "Related Entity" means any entity that is directly or
indirectly controlled by the Company or any entity in which the Company has a
significant equity interest, as determined by the Board or the Committee.

                  (dd) "Restricted Stock" means Stock granted to a Participant
under Section 5(d) hereof, that is subject to certain restrictions and to a risk
of forfeiture.

                  (ee) "Rule 16b-3" and "Rule 16a-1(c)(3)" means Rule 16b-3 and
Rule 16a-1(c)(3), as from time to time in effect and applicable to the Plan and
Participants, promulgated by the Securities and Exchange Commission under
Section 16 of the Exchange Act.


                                       13
<PAGE>

                  (ff) "Stock" means the Company's Common Stock, and such other
securities as may be substituted (or resubstituted) for Stock pursuant to
Section 10(c) hereof.

                  (gg) "Stock Appreciation Right" means a right granted to a
Participant under Section 6(c) hereof.

                  (hh) "Subsidiary" means a "subsidiary corporation" whether now
or hereafter existing, as defined in Section 424(f) of the Code.



                                       14