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                                                                   EXHIBIT 10.40

                                 SMARTGATE INC.
                               2002 INCENTIVE PLAN

1.      ESTABLISHMENT, PURPOSE AND TERM OF PLAN.

        1.1     ESTABLISHMENT. The SmartGate Inc. 2002 Incentive Plan (the
"PLAN") is hereby established effective as of January 22, 2002, by adoption of
the Board provided it is approved within 12 months of this date by stockholders
of the Company. Awards may be granted subject to stockholder approval, but may
not be exercised or otherwise settled in the event stockholder approval is not
obtained.

        1.2     PURPOSE. The purpose of the Plan is to advance the interests of
the Participating Company Group and its shareholders by encouraging and
facilitating the ownership of SmartGate Inc. ("COMPANY") common stock by persons
performing services for the Participating Company Group in order to enhance the
ability of SmartGate Inc. to attract, retain and reward such persons and
motivate them to contribute to the growth and profitability of the Participating
Company Group.

        1.3     TERM OF PLAN. The Plan shall be effective from the date that the
Plan is adopted by the Board of Directors of the Company and shall continue in
effect thereafter until the earlier of: (a) its termination by the Board; or (b)
the date on which all of the shares of Stock available for issuance under the
Plan have been issued and all restrictions on such shares under the terms of the
Plan and the agreements evidencing Options granted under the Plan have lapsed;
or (c) ten (10) years from its effective date. All Options shall be granted, if
at all, within ten (10) years from the earlier of the date the Plan is adopted
by the Board or the date the Plan is duly approved by the shareholders of the
Company.

2.      DEFINITIONS AND CONSTRUCTION.

        2.1     DEFINITIONS. Whenever used herein, the following terms shall
have their respective meanings set forth below:

                (a)     "AWARD" means any award or grant of Restricted Shares or
Options under the Plan.

                (b)     "BENEFICIARY" means the person, persons, trust, or
trusts entitled by will or by the laws of descent, to exercise a Participant's
Option or other rights under the Plan after the Participant's death.

                (c)     "BOARD" means the Board of Directors of the Company. If
one or more Committees have been appointed by the Board to administer the Plan,
"BOARD" also means such Committee(s).

                (d)     A "CHANGE IN CONTROL" shall mean an Ownership Change
Event or a series of related Ownership Change Events (collectively, a
"TRANSACTION") wherein the shareholders of the Company immediately before the
Transaction do not retain immediately after the Transaction, in substantially
the same proportions as their ownership of shares of the Company's voting stock
immediately before the Transaction, direct or indirect beneficial ownership of
more than fifty percent (50%) of the total combined voting power of the
outstanding voting securities of the Company or, in the case of a Transaction
involving the sale, exchange or transfer of all or substantially all of the
Company's assets, the corporation or other


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                                                                               2

business entity to which the assets of the Company were transferred (the
"TRANSFEREE"), as the case may be. For purposes of the preceding sentence,
indirect beneficial ownership shall include, without limitation, an interest
resulting from ownership of the voting securities of one or more corporations or
other business entities, which own the Company or the Transferee, as the case
may be, either directly or through one or more subsidiary corporations or other
business entities. The Board shall have the right to determine whether multiple
sales or exchanges of the voting securities of the Company or multiple Ownership
Change Events are related, and its determination shall be final, binding and
conclusive.

                (e)     "CODE" means the Internal Revenue Code of 1986, as
amended, and any applicable regulations promulgated thereunder.

                (f)     "COMMITTEE" means the Compensation Committee or other
committee of the Board duly appointed to administer the Plan and having such
powers as shall be specified by the Board. Unless the powers of the Committee
have been specifically limited, the Committee shall have all of the powers of
the Board granted herein, including, without limitation, the power to amend or
terminate the Plan at any time, subject to the terms of the Plan and any
applicable limitations imposed by law.

                (g)     "COMPANY" means SmartGate Inc., a Nevada corporation, or
any successor corporation thereto.

                (h)     "CONSULTANT" means a person engaged to provide
consulting or advisory services (other than as an Employee or a Director) to a
Participating Company.

                (i)     "DIRECTOR" means a member of the Board or of the board
of directors of any other Participating Company.

                (j)     "DISABILITY" means the inability of the Participant to
perform the major duties of the Participant's position with the Participating
Company Group because of the sickness or injury of the Participant. The
determination of whether or not a Participant is Disabled for purposes of this
Plan shall be made by, and at the sole discretion of, the Committee.

                (k)     "EMPLOYEE" means any person treated as an employee
(including an Officer or a Director who is also treated as an employee) in the
records of a Participating Company and, with respect to any Incentive Stock
Option granted to such person, who is an employee for purposes of Section 422 of
the Code; provided, however, that neither service as a Director nor payment of a
director's fee shall alone be sufficient to constitute employment for purposes
of the Plan. The Company shall determine in good faith and in the sole exercise
of its discretion whether an individual has become or has ceased to be an
Employee and the effective date of such individual's employment or termination
of employment, as the case may be. For purposes of an individual's rights, if
any, under the Plan as of the time of the Company's determination, all such
determinations by the Company shall be final, binding and conclusive,
notwithstanding that the Company or any court of law or governmental agency
subsequently makes a contrary determination.

                (l)     "FAIR MARKET VALUE" means, as of any date, the value of
a share of Stock or other property as determined by the Board, in its
discretion, in good faith without regard to any restriction other than a
restriction which, by its terms, will never lapse.

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                                                                              3


                (m)     "INCENTIVE STOCK OPTION" means an Option intended to be
(as set forth in the Option Agreement), and which qualifies as, an incentive
stock option within the meaning of Section 422(b) of the Code.

                (n)     "NONQUALIFIED STOCK OPTION" means an Option not intended
to be (as set forth in the Option Agreement) or which does not qualify as an
Incentive Stock Option.

                (o)     "OFFICER" means any person designated by the Board as an
officer of the Company.

                (p)     "OPTION" means a right to purchase Stock pursuant to
the terms and conditions of the Plan. An Option may be either an Incentive Stock
Option or a Nonqualified Stock Option.

                (q)     "OPTION AGREEMENT" means a written agreement between the
Company and an Optionee setting forth the terms, conditions and restrictions
pertaining to the Option granted to the Optionee and to any shares of Stock
acquired upon the exercise thereof.

                (r)     "OPTIONEE" means a Participant who has been awarded one
or more Options.

                (s)     An "OWNERSHIP CHANGE EVENT" shall be deemed to have
occurred if any of the following occurs with respect to the Company: (i) the
direct or indirect sale or exchange in a single or series of related
transactions by the shareholders of the Company of more than fifty percent (50%)
of the voting stock of the Company; (ii) a merger or consolidation in which the
Company is a party; (iii) the sale, exchange, or transfer of all or
substantially all of the assets of the Company; or (iv) a liquidation or
dissolution of the Company.

                (t)     "PARENT CORPORATION" means any present or future
"parent corporation" of the Company, as defined in Section 424(e) of the Code.

                (u)     "PARTICIPANT" means any Employee, Consultant or
Director to whom an Award has been made under the Plan.

                (v)     "PARTICIPATING COMPANY" means the Company or any Parent
Corporation or Subsidiary Corporation.

                (w)     "PARTICIPATING COMPANY GROUP" means, at any point in
time, all corporations collectively which are then Participating Companies.

                (x)     "RESTRICTED SHARES" means shares awarded pursuant to a
"RESTRICTED SHARE AGREEMENT" between the Company and Participant setting forth
the terms, conditions or restrictions applicable to an Award of shares of Stock
under the Plan.

                (y)     "SERVICE" means a Participant's employment or service
with the Participating Company Group, whether in the capacity of an Employee, a
Director or a Consultant. A Participant's Service shall not be deemed to have
terminated merely because of a change in the capacity in which the Participant
renders Service to the Participating Company Group or a change in the
Participating Company for which the Participant renders such Service, provided
that there is no interruption or termination of the Participant's Service.
Furthermore, a Participant's Service with the Participating Company Group shall
not be deemed to have terminated if the Participant takes any military leave,
sick leave, or other bona fide leave of absence approved by the Company;
provided, however, that if any such leave exceeds ninety

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(90) days, on the ninety-first (91st) day of such leave the Participant's
Service shall be deemed to have terminated unless the Participant's right to
return to Service with the Participating Company Group is guaranteed by statute
or contract. Notwithstanding the foregoing, unless otherwise designated by the
Company or required by law, a leave of absence shall not be treated as Service
for purposes of determining vesting under the Participant's Option or Restricted
Shares Agreement. The Participant's Service shall be deemed to have terminated
either upon an actual termination of Service or upon the corporation for which
the Participant performs Service ceasing to be a Participating Company. Subject
to the foregoing, the Company, in its discretion, shall determine whether the
Participant's Service has terminated and the effective date of such termination.
..

                (z)     "STOCK" means the common stock of the Company, as
adjusted from time to time in accordance with Section 4.2. Such Stock may be
unrestricted or, at the sole discretion of the Board, be made subject to
restrictions relating to employment and transferability.

                        (aa)    "SUBSIDIARY CORPORATION" means any present or
future "subsidiary corporation" of the Company, as defined in Section 424(f) of
the Code.

                        (bb)    "TEN PERCENT OWNER OPTIONEE" means an Optionee
who, at the time an Option is granted to the Optionee, owns stock possessing
more than ten percent (10%) of the total combined voting power of all classes of
stock of a Participating Company within the meaning of Section 422(b)(6) of the
Code.

                        (cc)    "VEST" or "VESTING", with respect to Options,
means the date, event, or act prior to which an Award is not, in whole or in
part, exercisable except at the sole discretion of the Board. With respect to
Restricted Shares, "Vest" or "Vesting" shall mean the date, event, or act prior
to which an Award is, in whole or in part, forfeitable.

        2.2     CONSTRUCTION. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of the Plan. Except when otherwise indicated by the context, the
singular shall include the plural and the plural shall include the singular. Use
of the term "or" is not intended to be exclusive, unless the context clearly
requires otherwise.

3.      ADMINISTRATION.

        3.1     ADMINISTRATION BY THE BOARD. The Plan shall be administered by
the Board. All questions of interpretation of the Plan or of any Option,
Restricted Share, or other right awarded hereunder shall be determined by the
Board, and such determinations shall be final and binding upon all persons
having an interest in the Plan or in such Option or right.

        3.2     AUTHORITY OF OFFICERS. Any Officer shall have the authority to
act on behalf of the Company with respect to any matter, right, obligation,
determination or election which is the responsibility of, or which is allocated
to, the Company herein, provided the Officer has apparent authority with respect
to such matter, right, obligation, determination or election.

        3.3     POWERS OF THE BOARD. In addition to any other powers set forth
in the Plan and subject to the provisions of the Plan, the Board shall have the
full and final power and authority, in its discretion to:

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                                                                               5


                (a)     determine the persons to whom, and the time or times at
which, Awards shall be granted, the types of Awards to be granted, and the
number of shares of Stock to be subject to each Award;

                (b)     determine the terms, conditions and restrictions
applicable to Awards; approve one or more forms of Option, or Restricted Share
Agreements;

                (c)     amend, modify, extend, cancel or renew any Option or
waive any restrictions or conditions applicable to any Option or applicable to
any shares of Stock awarded or acquired upon the exercise thereof;

                (d)     correct any defect, supply any omission, or reconcile
any inconsistency and take such other actions with respect to the Plan as the
Board may deem advisable to the extent not inconsistent with the provisions of
the Plan or applicable law.

4.      SHARES SUBJECT TO PLAN.

        4.1     MAXIMUM NUMBER OF SHARES ISSUABLE. Subject to adjustment as
provided in Section 4.2, the maximum aggregate number of shares of Stock that
may be issued under the Plan shall be one million five hundred thousand
(1,500,000) and shall consist of authorized but unissued or reacquired shares of
Stock, treasury shares, or any combination thereof. If an outstanding Option for
any reason expires or is terminated or canceled or if shares of Stock are
acquired upon the exercise or Award of an Option or Restricted Share Agreement
subject to a Company repurchase option and are repurchased by the Company, the
shares of Stock allocable to the unexercised portion of such Option or such
repurchased shares of Stock shall again be available for issuance under the
Plan.

        4.2     ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. In the event of
any stock dividend, stock split, reverse stock split, recapitalization,
combination, reclassification or similar change in the capital structure of the
Company, appropriate adjustments shall be made in the number and class of shares
subject to the Plan and to any outstanding Options, in the Share Issuance Limit
set forth in Section 4.1, in the exercise price per share of any outstanding
Options.

5.      ELIGIBILITY AND LIMITATIONS.

        5.1     PERSONS ELIGIBLE. Awards may be granted only to Employees,
Consultants, and Directors. For purposes of the foregoing sentence, "Employees,"
"Consultants", and "Directors" shall include prospective Employees, prospective
Consultants, and prospective Directors to whom Options and Restricted Shares may
be awarded in connection with written offers of an employment or other service
relationship with the Participating Company Group.

        5.2     OPTION AWARD RESTRICTIONS. Any person who is not an Employee on
the effective date of the Award of an Option to such person may be awarded only
a Nonqualified Stock Option. An Incentive Stock Option awarded to a prospective
Employee upon the condition that such person become an Employee shall be deemed
granted effective on the date such person commences Service with a Participating
Company.

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        5.3     FAIR MARKET VALUE LIMITATION. To the extent that Options
designated as Incentive Stock Options (granted under all stock option plans of
the Participating Company Group, including the Plan) become exercisable by an
Optionee for the first time during any calendar year for Stock having a Fair
Market Value greater than One Hundred Thousand Dollars ($100,000), the portions
of such Options which exceed such amount shall be treated as Nonqualified Stock
Options. For purposes of this Section 5.3, Options designated as Incentive Stock
Options shall be taken into account in the order in which they were awarded, and
the Fair Market Value of Stock shall be determined as of the time the Option
with respect to such Stock was awarded. If the Code is amended to provide for a
different limitation from that set forth in this Section 5.3, such different
limitation shall be deemed incorporated herein effective as of the date and with
respect to such Options as required or permitted by such amendment to the Code.
If an Option is treated as an Incentive Stock Option in part and as a
Nonqualified Stock Option in part by reason of the limitation set forth in this
Section 5.3, the Optionee may designate which portion of such Option the
Optionee is exercising. In the absence of such designation, the Optionee shall
be deemed to have exercised the Incentive Stock Option portion of the Option
first. Separate certificates representing each such portion shall be issued upon
the exercise of the Option.

6.      TERMS AND CONDITIONS OF OPTIONS AND RESTRICTED SHARES.

        6.1     AWARD AGREEMENTS. Options shall be evidenced by option
agreements specifying the nature and number of shares of Stock covered thereby,
and shall exist in such form, as the Board shall from time to time establish. An
Award of Restricted Shares shall be evidenced by a Restricted Share Agreement
specifying the number of shares issued and the restrictions thereon, and shall
exist in such form, as the Board shall, from time to time, approve. Such
agreements may incorporate all or any of the terms of the Plan by reference and
shall comply with and be subject to the terms and conditions herein.

        6.2     OPTION VESTING AND EXERCISE PRICE. Each Option Agreement shall
include a Vesting schedule describing the date, event, or act upon which an
Option shall vest, in whole or in part, with respect to all or a specified
portion of the shares covered by such Option. Each Option Agreement shall also
convey the exercise price for each Option or the means by which such price
shall be established, with such exercise price or method of establishment being
established in the discretion of the Board; provided, however, that: (a) the
exercise price per share for an Incentive Stock Option shall be not less than
the Fair Market Value of a share of Stock on the effective date of grant of the
Option, and (b) no Option granted to a Ten Percent Owner Optionee shall have an
exercise price per share less than one hundred ten percent (110%) of the Fair
Market Value of a share of Stock on the effective date of grant of the Option.

        6.3     EXERCISABILITY AND TERM OF OPTIONS. Options shall be
exercisable as shall be determined by the Board and set forth in the Option
Agreement evidencing such Option; provided, however, that (a) no Incentive Stock
Option shall be exercisable after the expiration of ten (10) years after the
effective date of grant of such Option, (b) no Incentive Stock Option awarded to
a Ten Percent Owner Optionee shall be exercisable after the expiration of five
(5) years after the effective date of grant of such Option, (c) no Option
awarded to a prospective Employee, prospective Consultant or prospective
Director may become exercisable prior to the date on which such person commences
Service with a Participating Company.

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        6.4     PAYMENT OF OPTION EXERCISE PRICE.

                (a)     Forms of Consideration Authorized.

                        (i)     Payment of the exercise price for the number of
shares of Stock being purchased pursuant to any Option shall be made in cash,
by check or cash equivalent; or

                        (ii)    By such other consideration as may be approved
by the Board from time to time to the extent permitted by applicable law.

                (b)     Limitations on Forms of Consideration.

                        (i)     CASHLESS EXERCISE. The Company reserves, at any
and all times, the right, in the Company's sole and absolute discretion, to
establish, decline to approve or terminate any program or procedures for the
exercise of Options by means of a Cashless Exercise.

                        (ii)    PAYMENT BY PROMISSORY NOTE. No promissory note
shall be permitted if the exercise of an Option using a promissory note would be
a violation of any law. Any permitted promissory note shall be on such terms, as
the Board shall determine. The Board shall have the authority to permit or
require the Optionee to secure any promissory note used to exercise an Option
with the shares of Stock acquired upon the exercise of the Option or with other
collateral acceptable to the Company.

        6.5     TAX WITHHOLDING. Upon the exercise of an Option or upon the
vesting of Restricted Shares, the Company shall have the right, but not the
obligation, to deduct from the shares of Stock issuable, or to accept from the
Participant the tender of, a number of whole shares of Stock having a Fair
Market Value, as determined by the Company, equal to all or any part of the
federal, state, local and foreign taxes, if any, required by law to be withheld
by the Participating Company Group with respect to such Restricted Stock,
Option, or the Stock acquired upon the exercise thereof. Alternatively or in
addition, in its discretion, the Company shall have the right to require the
Participant, through payroll withholding, cash payment or otherwise, including
by means of a Cashless Exercise, to make adequate provision for any such tax
withholding obligations of the Participating Company Group arising in connection
with the Restricted Stock, Option, or the shares acquired upon the exercise
thereof. The Fair Market Value of any shares of Stock withheld or tendered to
satisfy any such tax withholding obligations shall not exceed the amount
determined by the applicable minimum statutory withholding rates. The Company
shall have no obligation to deliver shares of Stock or to release shares of
Stock from an escrow established pursuant to any Agreement entered hereunder
until the Participating Company Group's tax withholding obligations have been
satisfied by the Participant.

        6.6     STOCK RESTRICTIONS. Shares issued under the Plan shall be
subject to a right of first refusal; one or more repurchase options; and such
other conditions and restrictions as determined by the Board in its discretion
at the time an Option or Restricted Share Award is made.

                (a)     Repurchase Rights. The Company shall have the right to
assign at any time any repurchase right it may have, whether or not such right
is then exercisable, to one or more persons as may be selected by the Company.
Upon request by the Company, each Participant shall execute any agreement
evidencing such transfer restrictions prior to the receipt of shares of Stock
hereunder and shall promptly present to the Company any and all certificates

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representing shares of Stock acquired hereunder for the placement on such
certificates of appropriate legends evidencing any such transfer restrictions.

                (b)     Service Vesting and Transferability. The Company shall
have the right, at the time of the Award, to place restrictions on Awards
including upon shares issued upon the exercise of an Option.

                (c)     Restricted Share Awards. Subject to and consistent with
the provisions of this Plan, each Restricted Share shall be evidenced by a
written Agreement setting forth the terms and conditions pertaining to such
Award, including the number of shares awarded. Unless otherwise required by
statute, Restricted Shares may be awarded with or without payment of
consideration by the Participant. Each Restricted Share Agreement shall include
a Vesting schedule describing the date, event, or act upon which Restricted
Shares shall Vest, in whole or in part, with respect to all or a specified
portion of the Shares covered by the Award. No Restricted Share not yet Vested
is assignable or transferable and any attempt at transfer or assignment of such
Share, and any attempt by a creditor to attach such Share, shall be null and
void. Until the date a Stock certificate is issued to a Participant, a
Participant will have no rights as a stockholder of the Company. No adjustments
shall be made for dividends of any kind or nature, distributions, or other
rights for which the record date is prior to the date such Stock certificate is
issued. Consistent with the provisions of this Plan, the Board may in its
discretion modify, extend, or renew any Restricted Share Agreement, or accept
cancellation of same in exchange for the granting of a new Award. The preceding
not withstanding, no modification of a Restricted Share Agreement which is not
vested shall, absent the consent of the Participant, alter or impair any rights
or obligations with respect to such Agreement.

        6.7     EFFECT OF TERMINATION OF SERVICE.

                (a)     Restricted Shares. If a Participant's Service terminates
for any reason other than as a result of a Change in Control, such Participant's
Restricted Shares, which are not vested at the time of Service, termination
shall be forfeited. If a Participant's service terminates because of a Change of
Control and if an amount to be received by a Participant from this Plan would
otherwise constitute a "parachute payment" as defined in section 280G(b)(2) of
the Code, then any accelerated Vesting due to a Change of Control or subsequent
termination of the Participant's Service shall be limited to the amount of
Vesting that permits the Participant to receive, after application of the excise
tax imposed by section 4999 of the Code, the greater of: (1) A total parachute
payment that equals 2.99 times the Participant's base amount, as determined
under section 280G of the Code; or (2) Full Vesting of all unvested Restricted
Shares as of the date of the Participant's termination of employment.

                (b)     Options. Subject to earlier termination of the Option as
otherwise provided herein, and unless otherwise provided by the Board in an
Award and set forth in the Agreement related thereto, an Option shall be
exercisable after a Participant's termination of Service only during the
applicable time period determined in accordance with the following provisions
of this Section 6.7(b) and thereafter shall terminate:

                        (i)     DISABILITY. If the Participant's Service
terminates because of the Disability of the Participant, an Option, to the
extent unexercised and exercisable on the date on which the Participant's
Service terminated, may be exercised by the Participant (or the Participant's
guardian or legal representative) at any time prior to the expiration of twelve
(12) months after the date on which the Participant's Service terminated, but in
any event no later

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                                                                               9


than the date of expiration of the Option's term as set forth in the Agreement
evidencing such Option (the "Expiration Date").

                        (ii)    DEATH. If the Participant's Service terminates
because of the death of the Participant, an Option, to the extent unexercised
and exercisable on the date on which the Participant's Service terminated, may
be exercised by the Participant's legal representative or other person who
acquired the right to exercise the Option or Right by reason of the
Participant's death at any time prior to the expiration of twelve (12) months
after the date on which the Participant's Service terminated, but in any event
no later than the Expiration Date. The Participant's Service shall be deemed to
have terminated on account of death if the Participant dies within three (3)
months (or such longer period of time as determined by the Board, in its
discretion) after the Participant's termination of Service.

                        (iii)   OTHER TERMINATION OF SERVICE. If the
Participant's Service terminates for any reason, except Disability or death, an
Option, to the extent unexercised and exercisable by the Participant on the date
on which the Participant's Service terminated, may be exercised by the
Participant at any time prior to the expiration of three (3) months (or such
longer period of time as determined by the Board, in its discretion) after the
date on which the Participant's Service terminated, but in no event any later
than the Expiration Date.

                (c)     Reservation of Rights. The grant of Awards under the
Plan shall in no way affect the right of the Company to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.

        6.8     TRANSFERABILITY OF OPTIONS. During the lifetime of the
Participant, an Option shall be exercisable only by the Participant or by the
Participant's guardian or legal representative. No Option shall be assignable or
transferable by the Participant, except by will or by the laws of descent and
distribution. Notwithstanding the foregoing, to the extent permitted by the
Board, in its sole discretion, and as set forth in the Option Agreement
evidencing such Option, a Nonqualified Stock Option shall be assignable or
transferable.

7.      CHANGE IN CONTROL.


        7.1     EFFECT OF CHANGE IN CONTROL ON OPTIONS AND STOCK APPRECIATION
RIGHTS. In the event of a Change in Control, the surviving, continuing,
successor, or purchasing corporation or other business entity or parent thereof,
as the case may be (the "Acquiring Corporation"), may, without the consent of
any Participant, either assume the Company's rights and obligations under
outstanding Options and Stock Appreciation Rights or substitute for such
outstanding Options and Rights substantially equivalent options or rights for,
or in relation to, the Acquiring Corporation's stock.

        7.2     EFFECT OF CHANGE OF CONTROL ON RESTRICTED SHARE RIGHTS.

                (a)     Restricted Shares outstanding under the Plan at the time
of a Change in Control shall automatically Vest in full immediately prior to the
effective date of such Change in Control and will no longer be subject to
forfeiture risk or to any repurchase right. However, Restricted Shares shall not
vest on an accelerated basis as a result of a Change in Control if and to the
extent:

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                        (i)     such Restricted Share Award, having been assumed
by the successor corporation (or parent thereof), is replaced with shares of the
capital stock of the successor corporation subject to substantially equivalent
restrictions or is otherwise continued in full force and effect pursuant to the
terms of the Change in Control transaction, and any repurchase rights of the
Company with respect to any unvested Restricted Shares are concurrently assigned
to such successor corporation (or parent thereof) or otherwise continued in
effect; or

                        (ii)    such Restricted Shares are to be replaced with a
cash incentive program of the Company or any successor corporation which
preserves the value existing on the unvested Restricted Shares at the time of
the Change in Control and provides for subsequent payout in accordance with the
same Vesting schedule applicable to those unvested Restricted Shares; or

                        (iii)   the acceleration of such Restricted Share is
subject to other limitations imposed by the Plan Administrator at the time of
the Restricted Share grant.

                (b)     Should, in the course of a Change in Control, the actual
holders of the Company's outstanding Stock receive cash consideration in
exchange for such Stock, the successor corporation may, in connection with the
replacement of the outstanding Restricted Shares under this Plan, substitute one
or more shares of its own common stock with a fair market value equivalent to
the cash consideration paid per share of Stock in such Change in Control and
subject to substantially equivalent restrictions as were in effect for the
Restricted Shares immediately before the Change in Control.

                (c)     The foregoing notwithstanding, the Board shall have the
discretion, exercisable either at the time the Restricted Shares are granted or
at any time while the Restricted Shares remain unvested, to structure one or
more Restricted Shares so that those Restricted Shares shall automatically
accelerate and Vest in full upon the occurrence of a Change in Control. The
Board shall also have full power and authority, exercisable either at the time
the Restricted Shares are granted or at any time while the Restricted Shares
remain unvested, to structure such Restricted Share so that the shares will
automatically Vest on an accelerated basis should the Participants employment or
service terminate by reason of an Involuntary Termination within a designated
period (not to exceed eighteen (18) months) following the effective date of any
Change in Control in which the Restricted Shares do not otherwise Vest. In
addition, the Plan Administrator may provide that one or more of the Company's
outstanding repurchase rights with respect to Restricted Shares held by the
Participant at the time of such Involuntary Termination shall immediately
terminate on an accelerated basis, and the Restricted Shares subject to those
terminated rights shall accordingly Vest at that time.

                        (i)     For purposes of this Section 7.2(c), an
"INVOLUNTARY TERMINATION" shall mean the termination of the Participant's
service which occurs by reason of: (1) such individual's involuntary dismissal
or discharge by the Company for reasons other than Misconduct, or (2) such
individual's voluntary resignation following (A) a change in his or her position
with the Company which materially reduces his or her duties and responsibilities
or the level of management to which he or she reports, (B) a reduction in his or
her level of compensation (including base salary, fringe benefits and target
bonus under any corporate-performance based bonus or incentive programs) by more
than fifteen percent (15%) or (3) a relocation of such individual's place of
employment by more than fifty (50) miles, provided and only if such change,
reduction or relocation is effected without the individual's consent.

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                                                                             11


                        (ii)    "MISCONDUCT" shall mean the commission of any
act of fraud, embezzlement or dishonesty by the Participant, any unauthorized
use or disclosure by such person of confidential information or trade secrets of
the Company or any other intentional misconduct by such person adversely
affecting the business or affairs of the Company in a material manner. The
foregoing definition shall not be deemed to be inclusive of all the acts or
omissions which the Company may consider as grounds for the dismissal or
discharge of any Participant or other person in the Company's service.

8.      PROVISION OF INFORMATION.

        At least annually, copies of the Company's balance sheet and income
statement for the just completed fiscal year shall be made available to each
Participant.

9.      TERMINATION OR AMENDMENT OF PLAN.

        The Plan shall terminate ten (10) years from its effective date. The
Board may terminate or amend the Plan at any time. No termination or amendment
of the Plan shall affect any then outstanding Award unless expressly provided by
the Board.

10.     REPURCHASE AND FIRST REFUSAL RIGHTS.

        10.1    REPURCHASE RIGHTS. Should the Participant cease to be employed
by or provide services to the Company while holding one or more shares of Stock
issued pursuant to the exercise of an Option granted under this Plan or pursuant
to a Stock Award under the Plan, then those shares, to the extent any Restricted
Shares are no longer subject to forfeiture, shall be subject to repurchase by
the Company, at the Company's sole discretion, at the Fair Market Value of such
shares on the date of such repurchase which cannot be less than six months from
the date of issuance of the shares and the Participant shall have no further
shareholder rights with respect to those shares. The terms and conditions upon
which such repurchase right shall be exercisable (including the period and
procedure for exercise and any exception to the holding period) shall be
established by the Board.

        10.2    FIRST REFUSAL RIGHTS. If imposed in the agreement, the Company
shall have the right of first refusal with respect to any proposed sale or other
disposition by the holder of any shares of Stock issued pursuant to an Award
granted under the Plan. Such right of first refusal shall be exercisable in
accordance with terms and conditions established by the Board.

11.     MISCELLANEOUS PROVISIONS.

        11.1    NO RIGHTS OF SHAREHOLDER. Prior to the date on which an Option
is exercised, neither the Participant, nor a Beneficiary or any other successor
in interest will be, or will have any of the rights and privileges of, a
shareholder with respect to any Stock issuable upon the exercise of such Option.

        11.2    NO RIGHT TO CONTINUED EMPLOYMENT. Nothing contained herein shall
be deemed to give any person any right to employment by the Company or by a
Participating Company, or to interfere with the right of the Company or a
Participating Company to discharge any person at any time without regard to the
effect that such discharge will have upon such person's rights or potential
rights, if any, under the Plan. The provisions of the Plan are in addition to,
and not a limitation on, any rights a Participant may have against the Company
or a Participating Company by reason of any employment or other agreement with
the Company or a Participating Company.

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                                                                              12


        11.3    SEVERABILITY. If any provision of this Plan is held to be
illegal or invalid for any reason, the remaining provisions are to remain in
full force and effect and are to be construed and enforced in accordance with
the purposes of the Plan as if the illegal or invalid provision or provisions
did not exist.

        IN WITNESS WHEREOF, the undersigned officer of the Company certifies
that the foregoing sets forth the SmartGate Inc. 2002 Incentive Plan as duly
adopted by the Board as of January 22, 2002.




                                        /s/ WILLIAM W. DOLAN, AS SECRETARY
                                        ----------------------------------------
                                        William W. Dolan, Secretary




<PAGE>

                    FILING SCHEDULE PURSUANT TO PARAGRAPH 2.
    INSTRUCTIONS TO ITEM 601 UNDER SECTION 229.601 EXHIBITS OF REGULATION S-K


        This 2002 SmartGate Inc. Incentive Plan was attached to all of the Plan
2002 Option Agreements.