LIFE USA, INC.

                             2006 STOCK OPTION PLAN

ARTICLE One

                               GENERAL PROVISIONS

I.       PURPOSE OF THE PLAN

                  The  Plan  is  intended  to  promote  the   interests  of  the
Corporation,  by  providing  eligible  persons  in the  Corporation's  employ or
service with the opportunity to hold a proprietary  interest in the Corporation,
as an incentive for them to continue in such employ or service.

II.      STRUCTURE OF THE PLAN

                  This document sets forth the terms of the Plan. The Plan shall
be an option grant program under which  eligible  persons may, at the discretion
of the Plan  Administrator,  be  granted  options to  purchase  shares of Common
Stock.

III.     DEFINITIONS

     The following definitions apply throughout this document, as amended:

     A.   Board. "Board" means the board of directors of the Corporation.

     B.   Code. "Code" means the Internal Revenue Code of 1986, as amended.

     C.   Common Stock. "Common Stock" means the Corporation's common stock.

     D.   Corporation.   "Corporation"   means  LIFE  USA,   INC.,   a  Colorado
          corporation, and any successor corporation.

     E.   Disability. "Disability" means the inability of the Optionee to engage
          in any  substantial  gainful  activity  by  reason  of  any  medically
          determinable physical or mental impairment which is expected to result
          in death or has  lasted or can be  expected  to last for a  continuous
          period of twelve (12) months or more.

     F.   Employee.  "Employee"  means an individual who is in the employ of the
          Corporation  and who is subject to the  control and  direction  of the
          Corporation  as to both the work to be  performed  and the  manner and
          method of performance.

     G.   Exercise  Date.  "Exercise  Date" means the date on which an Option is
          exercised.


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     H.   Fair  Market  Value.  "Fair  Market  Value" is the value of a share of
          Common Stock determined as follows:


          (i)  If the  Common  Stock is listed on any Stock  Exchange,  then the
               Fair  Market  Value as of any date shall be the  closing  selling
               price  per  share  of  Common  Stock  on such  date on the  Stock
               Exchange  determined by the Plan  Administrator to be the primary
               market for the Common Stock,  as such price is officially  quoted
               in the composite tape of  transactions on such Stock Exchange and
               published in The Wall Street Journal (Western Edition).  If there
               is no closing  selling  price for the Common  Stock on such date,
               then the Fair  Market  Value as of such date shall be the closing
               selling price on the last preceding date for which such quotation
               exists.

          (ii) If the Common Stock is neither listed on any Stock Exchange, then
               the Fair Market Value as of any date shall be  determined  by the
               Plan Administrator  after taking into account such factors as the
               Plan Administrator shall deem appropriate.

     I.   Incentive  Option.  "Incentive  Option" means an Option that satisfies
          the requirements of Code Section 422.

     J.   Misconduct.  "Misconduct"  means the  commission  of any act of fraud,
          embezzlement or dishonesty by the Optionee,  any  unauthorized  use or
          disclosure by such person of confidential information or trade secrets
          of the Corporation,  or any other intentional or knowing misconduct by
          such  person  adversely  affecting  the  business  or  affairs  of the
          Corporation.  The foregoing  definition  shall not in any way limit or
          diminish  the right of the  Corporation  to  discharge  or dismiss any
          Optionee or other person in the Service of the Corporation, regardless
          of whether such person has committed Misconduct.

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

     L.   Non-Statutory  Option.  "Non-Statutory  Option" means any Option other
          than an Incentive Option.

     M.   Option. "Option" means an option granted pursuant to the Plan.

     N.   Optionee. "Optionee" means any person to whom an Option is granted.

     O.   Plan.  "Plan" means the  Corporation's  2006 Stock Option Plan, as the
          same may be amended from time to time.

     P.   Plan Administrator.  "Plan  Administrator"  means any committee of the
          Board  that  that  has  been   specifically   authorized   to  act  as
          administrator  of the  Plan  and that  consists  of at  least  two (2)
          persons.   If  no  such   committee   of  the  Board   exists,   "Plan
          Administrator" means the entire Board.



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     Q.   Service.  "Service" means the provision of services to the Corporation
          by a person as an Employee,  as a non-employee member of the Board, or
          as a consultant or independent advisor, except to the extent otherwise
          specifically provided in the documents evidencing the option grant.

     R.   Stock  Exchange.  "Stock  Exchange"  means any public  stock market or
          exchange.

     S.   10%  Shareholder.  "10%  Shareholder"  means  the  owner of stock  (as
          determined under Code Section 424(d)) possessing more than ten percent
          (10%) of the total  combined  voting  power of all classes of stock of
          the Corporation.

IV.      ADMINISTRATION OF THE PLAN

     A.   The Plan shall be  administered  by the Plan  Administrator.  The Plan
          Administrator  shall have full  power and  authority  (subject  to the
          provisions of the Plan) to establish such rules and  regulations as it
          may deem appropriate for proper administration of the Plan and to make
          such  determinations  under,  and issue such  interpretations  of, the
          Plan,  any Option,  and any stock  issued  pursuant to the exercise of
          Options,  as the Plan  Administrator  deems  necessary  or  advisable.
          Decisions of the Plan Administrator  shall be final and binding on all
          parties who have an interest affected thereby.

     B.   The Board may at any time  terminate  the  existence of any  committee
          constituting the Plan  Administrator  and may at any time reassume any
          power or authority  with respect to the Plan  previously  delegated to
          such committee.

     C.   Members of the committee  constituting the Plan  Administrator who are
          either  eligible for Options or have been granted  Options may vote on
          any matters  affecting the  administration of the Plan or the grant of
          any Options, except that no such member shall act upon the granting of
          an Option to himself or herself, but any such member may be counted in
          determining  the  existence  of a quorum  at any  meeting  of the Plan
          Administrator  during  which  action  is  taken  with  respect  to the
          granting of an Option to such member.

     D.   The  foregoing  notwithstanding,  if  in  any  event  the  Corporation
          registers  or is required to register  any class of any common  equity
          security  pursuant to Section 12 of the 1934 Act,  from the  effective
          date of such  registration  or the  requirement  of such  registration
          until six (6) months after the termination of such  registration,  any
          grant of  options to  officers  or  directors  shall be made only by a
          committee  consisting  of two (2) or more  directors  appointed by the
          Board and having full authority to act in the matter,  none of whom is
          eligible to  participate  in the Plan or in any other stock  option or
          stock plan of the  Corporation  or of any of its  affiliates  (as such
          term is  defined  in Rule  12b-2  under  the  1934  Act),  or has been
          eligible to do so at any time within the preceding year, except as may
          be permitted under Rule 16b-3 under the 1934 Act and Section 162(m) of
          the Code and the  regulations  promulgated  thereunder.  Any committee
          administering  the Plan with respect to grants to officers who are not
          also  directors  shall  conform to the  requirements  of the preceding
          sentence.



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V.       ELIGIBILITY

     A.   The persons eligible to participate in the Plan are as follows:

          (i)  Employees,


          (ii) non-employee members of the Board, and

          (iii)consultants and other  independent  advisors who provide services
               to the Corporation.

     B.   The Plan  Administrator  shall have full  authority to  determine  the
          following:  who shall receive Option grants; how many shares of Common
          Stock are covered by each Option;  the status of each Option as either
          an Incentive Option or a Non-Statutory  Option; the time or times when
          each Option is exercisable;  the vesting  schedule (if any) applicable
          to the shares  covered by each Option;  and the maximum term for which
          each Option may remain outstanding.  The Plan Administrator shall have
          absolute discretion in exercising the foregoing authority.

VI.      STOCK SUBJECT TO THE PLAN

     A.   All shares  issuable  pursuant  to the  exercise  of Options  shall be
          shares of  authorized  but unissued or reacquired  Common  Stock.  The
          number of shares of Common  Stock that may be issued  pursuant  to the
          exercise  of  Options  over the term of the Plan  shall not exceed Two
          Million (2,000,000).

     B.   Shares of Common Stock once  subjected to Options may be issued to the
          extent (i) earlier Options expire or terminate for any reason prior to
          exercise in full or (ii) earlier  Options are  cancelled in accordance
          with the  cancellation-regrant  provisions  of Article  Two.  Unvested
          shares  issued  under  the Plan and  subsequently  repurchased  by the
          Corporation,  at the Option exercise price paid per share, pursuant to
          the Corporation's repurchase rights under the Plan shall be added back
          to the number of shares of Common Stock  reserved  for issuance  under
          the Plan and shall accordingly be available for reissuance through one
          or more subsequent Option grants under the Plan.

     C.   If any  change  is made to the  Common  Stock by  reason  of any stock
          split,  stock  dividend,  recapitalization,   combination  of  shares,
          exchange of shares or other change  affecting the  outstanding  Common
          Stock as a class without the  Corporation's  receipt of consideration,
          then appropriate  adjustments  shall be made to (i) the maximum number
          and/or class of securities issuable under the Plan and (ii) the number
          and/or class of securities  and the exercise price per share in effect
          under each  outstanding  Option in order to prevent  the  dilution  or
          enlargement of benefits thereunder.  The adjustments determined by the
          Plan Administrator shall be final, binding and conclusive. In no event
          shall any such  adjustments be made in connection  with the conversion
          of one or more outstanding shares of the Corporation's preferred stock
          into shares of Common Stock.



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                                  ARTICLE TWO

                              OPTION GRANT PROGRAM

I.       OPTION TERMS

                  Each  Option  shall  be  evidenced  by  one  or  more  written
documents in the form  approved by the Plan  Administrator;  provided,  however,
that each such  document  shall  comply  with the terms  specified  below.  Each
Incentive  Option shall,  in addition,  be subject to the provisions of the Plan
applicable to such Options.

     A.   Exercise Price.

          1.   The  exercise  price  per  share  shall  be  fixed  by  the  Plan
               Administrator  but  shall not be less  than one  hundred  percent
               (100%) of the Fair Market  Value per share of Common Stock on the
               Option grant date.

               (i)  The  exercise  price  shall  become   immediately  due  upon
                    exercise of the Option and shall,  subject to the provisions
                    of Section I of Article Three and the  documents  evidencing
                    the  Option,  be  payable  in  immediately  available  funds
                    payable to the  Corporation  or in such  other  manner as is
                    approved by the Plan Administrator.  Payment of the exercise
                    price for the purchased  shares must be made on the Exercise
                    Date.

     B.   Exercise and Term of Options. Each Option shall be exercisable at such
          time or times,  during  such  period and for such  number of shares as
          shall be  determined  by the Plan  Administrator  and set forth in the
          documents evidencing the Option grant. However, no Option shall have a
          term in excess of ten (10) years  measured from the Option grant date.
          The period during which the right to exercise an Option in whole or in
          part vests in the Optionee shall be set by the Plan Administrator, and
          the  Plan  Administrator  may  determine  that  an  Option  may not be
          exercised  in  whole  or in part for a  specified  period  after it is
          granted.  The Plan Administrator shall have the right to accelerate in
          whole or in part, from time to time, conditionally or unconditionally,
          upon written  notice to the  Optionee,  the vesting  provisions of any
          stock option  agreement  and the right to exercise any Option  granted
          hereunder.  Any such acceleration by the Plan Administrator  shall not
          affect the expiration date of an Option.

     C.   Effect of Termination of Service.

          1.   The following provisions shall govern the exercise of any Options
               held by the  Optionee  at the time of  cessation  of  Service  or
               death:

               (i)  Should  the  Optionee  cease to  remain in  Service  for any
                    reason other than death, Disability or Misconduct,  then the
                    Optionee  shall have a period of three (3) months  following
                    the  date of such  cessation  of  Service  during  which  to
                    exercise each outstanding Option held by such Optionee.

               (ii) Should Optionee's Service terminate by reason of Disability,
                    then the Optionee  shall have a period of twelve (12) months
                    following the date of such cessation of Service during which
                    to exercise each outstanding Option held by such Optionee.



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               (iii)If the Optionee  dies while holding an  outstanding  Option,
                    then the personal representative of his or her estate or the
                    person or persons to whom the Option is transferred pursuant
                    to the  Optionee's  will or the laws of  inheritance  or the
                    Optionee's  designated  beneficiary or beneficiaries of that
                    Option shall have a twelve  (12)-month  period following the
                    date of the Optionee's death to exercise such Option.

               (iv) Under  no  circumstances,   however,  shall  any  Option  be
                    exercisable  after the  specified  expiration  of the Option
                    term.

               (v)  During the  applicable  post-Service  exercise  period,  the
                    Option may not be exercised in the  aggregate  for more than
                    the  number  of  vested  shares  for  which  the  Option  is
                    exercisable  on the  date  of the  Optionee's  cessation  of
                    Service.  Upon the  expiration  of the  applicable  exercise
                    period or (if  earlier)  upon the  expiration  of the Option
                    term, the Option shall terminate and cease to be outstanding
                    for any  vested  shares  for which the  Option  has not been
                    exercised.  However, the Option shall,  immediately upon the
                    Optionee's  cessation of Service,  terminate and cease to be
                    outstanding  with  respect to any and all Option  shares for
                    which the Option is not otherwise at the time exercisable or
                    in which the Optionee is not otherwise at that time vested.

               (vi) Should  Optionee's  Service be terminated  for Misconduct or
                    should Optionee otherwise engage in Misconduct while holding
                    one or more  outstanding  Options,  then all  those  Options
                    shall terminate immediately and cease to remain outstanding.

          2.   The Plan  Administrator  shall have the  discretion,  exercisable
               either at the time an Option is  granted or at any time while the
               Option remains outstanding, to:

               (i)  extend  the period of time for which the Option is to remain
                    exercisable  following  Optionee's  cessation  of Service or
                    death from the limited  period  otherwise in effect for that
                    Option  to  such   greater   period  of  time  as  the  Plan
                    Administrator shall deem appropriate, but in no event beyond
                    the expiration of the Option term, and/or

               (ii) permit the  Option to be  exercised,  during the  applicable
                    post-Service  exercise period,  not only with respect to the
                    number of  vested  shares  of  Common  Stock for which  such
                    Option  is   exercisable  at  the  time  of  the  Optionee's
                    cessation  of Service  but also with  respect to one or more
                    additional  installments  in which the  Optionee  would have
                    vested  under  the  Option  had the  Optionee  continued  in
                    Service.

     D.   Shareholder  Rights. The holder of an Option shall have no shareholder
          rights  with  respect to the shares  subject to the Option  until such
          person shall have  exercised the Option,  paid the exercise  price and
          become the recordholder of the purchased shares.

     E.   Unvested Shares. The Plan  Administrator  shall have the discretion to
          grant  Options  which are  exercisable  for unvested  shares of Common
          Stock.  Should the Optionee  cease Service while holding such unvested
          shares,  the  Corporation  shall have the right to repurchase,  at the
          exercise price paid per share, any or all of those unvested shares.



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          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
          Plan  Administrator  and set  forth in the  document  evidencing  such
          repurchase right.

     F.   Shareholder  Agreement.  As a condition to the grant of an Option, the
          Plan Administrator  shall require the recipient to become a party to a
          shareholder  agreement by and among the Corporation,  its shareholders
          and the Participant.  Such  shareholder  agreement may contain certain
          restrictions   and   limitations   on  the  transfer,   assignment  or
          disposition  of shares of Common  Stock,  rights of first  refusal and
          purchase rights in favor of the  Corporation.  When  applicable,  each
          share of Common Stock issued upon  exercise of any Option shall bear a
          legend  stating  that such  shares of Common  Stock are subject to the
          terms  of a  shareholder  agreement,  which  agreement  restricts  the
          transfer of the shares of Common Stock.

     G.   Limited  Transferability  of Options.  An  Incentive  Option  shall be
          exercisable  only by the Optionee during his or her lifetime and shall
          not be assignable or transferable other than by will or by the laws of
          inheritance following the Optionee's death. A Non-Statutory Option may
          be assigned in whole or in part during the Optionee's  lifetime to one
          or more  members of the  Optionee's  family or to a trust  established
          exclusively  for one or more  such  family  members  or to  Optionee's
          former spouse, to the extent such assignment is in connection with the
          Optionee's estate plan or pursuant to a domestic  relations order. The
          assigned  portion may only be  exercised  by the person or persons who
          acquire a proprietary interest in the Non-Statutory Option pursuant to
          the assignment.  The terms applicable to the assigned portion shall be
          the same as those in effect for the Option  immediately  prior to such
          assignment  and  shall be set  forth in such  documents  issued to the
          assignee   as   the   Plan   Administrator   may   deem   appropriate.
          Notwithstanding the foregoing,  the Optionee may also designate one or
          more  persons  as  the  beneficiary  or  beneficiaries  of  his or her
          outstanding  Options, and those Options shall, in accordance with such
          designation,  automatically  be  transferred  to such  beneficiary  or
          beneficiaries  upon the Optionee's  death while holding those Options.
          Such beneficiary or beneficiaries  shall take the transferred  Options
          subject to all the terms and  conditions of the  applicable  agreement
          evidencing   each  such   transferred   Option,   including   (without
          limitation)  the limited  time period  during  which the Option may be
          exercised following the Optionee's death.

II.      INCENTIVE OPTIONS

                  The terms specified below shall be applicable to all Incentive
Options.  Except as  modified  by the  provisions  of this  Section  II, all the
provisions of the Plan shall be applicable to Incentive  Options.  Options which
are specifically designated as Non-Statutory Options shall not be subject to the
terms of this Section II.

     A.   Eligibility. Incentive Options may only be granted to Employees.

     B.   Exercise  Price.  The exercise  price per share shall not be less than
          one  hundred  percent  (100%)  of the Fair  Market  Value per share of
          Common Stock on the Option grant date.

     C.   Dollar  Limitation.  The aggregate  Fair Market Value of the shares of
          Common Stock  (determined as of the respective date or dates of grant)
          for which one or more Options  granted to any Employee  under the Plan
          (or any other option plan of the Corporation)



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          may for the first time become  exercisable as Incentive Options during
          any one (1)  calendar  year shall not  exceed  the sum of One  Hundred
          Thousand Dollars ($100,000).  To the extent the Employee holds two (2)
          or more such options  which become  exercisable  for the first time in
          the same calendar year, the foregoing limitation on the exercisability
          of such options as Incentive  Options shall be applied on the basis of
          the order in which such options are granted.

     D.   10%  Shareholder.  If any  Employee  to whom an  Incentive  Option  is
          granted is a 10% Shareholder,  then the exercise price per share shall
          not be less than one  hundred  ten  percent  (110%) of the Fair Market
          Value per share of Common  Stock on the  Option  grant  date,  and the
          Option term shall not exceed five (5) years  measured  from such grant
          date.

III.     CHANGES IN CAPITAL STRUCTURE, REORGANIZATIONS, MERGER, ETC.

     A.   Corporation's Power to Change Structure,  Reorganize,  Merge, Etc. The
          existence of outstanding Options shall not affect in any way the right
          or  power  of  the  Corporation  or its  shareholders  to  declare  or
          distribute   any  stock   dividend  or  to  make  or   authorize   any
          recapitalization,  reorganization, merger, stock split, combination or
          other change in the Corporation's capital structure or its business or
          the  dissolution  or  liquidation  of the  Corporation  or any sale or
          transfer  of all or any part of its  assets or  business  or any other
          corporate  act  or  proceeding  whether  of  a  similar  character  or
          otherwise.  Except as expressly provided herein, no such corporate act
          and no issuance of  securities  by the  Corporation  shall  affect any
          outstanding Options.

     B.   Adjustment  of Shares.  In the event of any change in the  outstanding
          shares of Common  Stock  through  recapitalization,  reclassification,
          stock  dividend,  stock split or combination of shares,  an adjustment
          shall be made to each  outstanding  Option  such that each such Option
          shall thereafter be exercisable for such securities, cash and/or other
          property  as would  have been  received  in  respect  of the shares of
          Common Stock subject to such Option had such Option been  exercised in
          full immediately prior to such change, and such an adjustment shall be
          made  successively  each time any such change  shall  occur.  The term
          "shares"  shall after any such change  refer to the  securities,  cash
          and/or  property  then  receivable  upon  exercise  of an  Option.  In
          addition,  in the  event of any such  change,  the  maximum  number of
          shares of Common Stock on which  Options may be granted to any one (1)
          employee, and the number of shares of Common Stock and price per share
          subject  to  outstanding  Options  as shall be  equitable  to  prevent
          dilution  or  enlargement  of  rights  under  such  Options,  and  the
          determination  of the Plan  Administrator as to these matters shall be
          conclusive.  Notwithstanding  the foregoing,  (i) each such adjustment
          with  respect to an  Incentive  Option  shall comply with the rules of
          Section  424(a) of the Code, and (ii) in no event shall any adjustment
          be made which would  render any  Incentive  Option  granted  hereunder
          anything other than an incentive  stock Option for purposes of Section
          422 of the Code.

     C.   Merger  or  Consolidation.  Subject  to  any  required  action  by its
          shareholders, if the Corporation shall be the surviving corporation in
          any  merger or  consolidation,  any  Option  granted  hereunder  shall
          pertain to and apply to the securities to which a holder of the number
          of  shares of Common  Stock  subject  to the  Option  would  have been
          entitled in such merger or consolidation.



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     D.   Other Transactions.  A dissolution or a liquidation of the Corporation
          (other  than a  dissolution  of  liquidation  occurring  as  part of a
          transaction  intended to qualify as a reorganization under Section 368
          of the Code) shall cause every  outstanding  Option to terminate as of
          the effective date of such dissolution or liquidation.

IV.      CHANGE IN CONTROL

     For purposes of the Plan, a "change in control" of the Corporation occurs:

               (i)  if  securities  possessing  more than fifty percent (50%) of
                    the  total  combined  voting  power  of  the   Corporation's
                    outstanding securities are issued or transferred to a person
                    or persons  different from the persons holding such combined
                    voting power immediately prior to such transaction, or

               (ii) upon the  consummation  of the sale or other  disposition of
                    all or substantially all of the assets of the Corporation or
                    any merger,  consolidation  or issuance of  securities,  the
                    result  of  which  would  be the  occurrence  of  any  event
                    described in clause (i) above, or

               (iii)if as a result of, or in  connection  with,  any cash tender
                    offer, exchange offer, merger or other business combination,
                    sale of assets or contested election,  or combination of the
                    foregoing, the persons who were directors of the Corporation
                    just  prior  to such  event  shall  cease  to  constitute  a
                    majority of the Board, or

               (iv) if a tender  offer or  exchange  offer is made for shares of
                    the Corporation (other than one made by the Corporation) and
                    shares are acquired thereunder;  provided, however, that the
                    acceleration of the  exercisability  of outstanding  Options
                    upon the  occurrence  of any such  tender  offer or exchange
                    offer shall be within the discretion of the Board.

                    If  the  change  in  control  consists  of  the  Corporation
                    conducting  a public  offering  and sale of its  securities,
                    then that fact  alone  will not  require  or  authorize  any
                    change in any Option.

                    If a change in  control  occurs,  the Board  shall  elect to
                    treat  each  Option  in  accordance  with  either of the two
                    procedures  described  below.  The Board  need not treat all
                    Optionees  in the same  manner  and may  further  treat  any
                    Optionee in a different  manner as to separate  Options held
                    by him or her.  The Board  shall  have full  discretion  and
                    authority to make such  elections and  determinations  under
                    this Section V as it deems appropriate.

     A.   Procedure  One,  Termination  of  Option.  Should  the Board  elect to
          utilize this procedure upon the occurrence of a change in control, the
          Option to which this election applies will terminate immediately prior
          to the closing of the transaction, provided that immediately after the
          closing  the  Optionee  receives a certain  amount  (the  "Spread"  as
          defined  in more  detail  below).  The  Spread  shall  be equal to the
          difference  between (i) the fair  market  value of the shares or other
          consideration  being  paid in the  transaction  for a single  share of
          Common Stock of the Corporation (on a fully-diluted  basis) multiplied
          by the number of shares subject to the vested but unexercised  portion
          of the Option to which this  election  applies and (ii) the sum of the
          exercise price applicable to such shares.



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     B.   Procedure Two, Option Rollover. Should the Board elect to utilize this
          procedure  upon the  occurrence of a change in control,  the Option to
          which this election  applies will terminate  immediately  prior to the
          closing  of the  transaction,  provided  that  immediately  after  the
          closing the Optionee  will  receive a  substitute  right and option to
          purchase the same  aggregate  dollar value of the acquiring  company's
          common  stock  for the same  aggregate  exercise  price as would  have
          applied if the Optionee had  exercised  the Option or Options that are
          then being  terminated..  The terms and  conditions of the  substitute
          right and option,  including the vesting schedules, the exercise price
          and the value of the underlying stock will substantially  preserve the
          Optionee's  rights and benefits as compared with the Option or Options
          that are then being  terminated.  In any  event,  any right and option
          issued  pursuant to this  paragraph as a  substitute  for an Incentive
          Option shall  comply with the  requirements  of Section  424(a) of the
          Code.

V.       SHARE ESCROW/LEGENDS

                  Unvested shares may, in the Plan  Administrator's  discretion,
be held in escrow by the Corporation  until the  Participant's  interest in such
shares  vests or may be issued  directly  to the  Participant  with  restrictive
legends on the certificates evidencing those unvested shares.

                                 ARTICLE THREE

                                  MISCELLANEOUS

I.       EFFECTIVE DATE AND TERM OF PLAN

     A.   The Plan shall  become  effective  when  adopted by the Board,  but no
          Option may be exercised, and no shares shall be issued pursuant to the
          exercise of an Option, until the Plan is approved by the Corporation's
          shareholders.  If such  shareholder  approval is not  obtained  within
          twelve (12) months after the date of the Board's adoption of the Plan,
          then all Options  previously  granted shall  terminate and cease to be
          outstanding,  and no further  Options  shall be granted  and no shares
          shall be issued under the Plan.  Subject to such limitation,  the Plan
          Administrator  may grant  Options  and issue  shares  pursuant  to the
          exercise of Options at any time after the  effective  date of the Plan
          and before the date fixed herein for termination of the Plan.

     B.   The Plan shall  terminate  upon the earliest of (i) the  expiration of
          the ten (10)-year period measured from the date the Plan is adopted by
          the Board,  (ii) the date on which all shares  available  for issuance
          under the Plan  shall have been  issued as vested  shares or (iii) the
          termination of all outstanding  Options in connection with a Corporate
          Transaction.  All Options and unvested stock issuances  outstanding at
          the time of a clause (i) termination event shall continue to have full
          force and effect in  accordance  with the  provisions of the documents
          evidencing those Options or issuances.

II.      AMENDMENT OF THE PLAN

     The Board shall have complete and exclusive power and authority to amend or
modify  the  Plan  in  any  or all  respects.  However,  no  such  amendment  or
modification  shall adversely  affect the rights and obligations with respect to
Options or  unvested  stock  issuances  at the time  outstanding  under the Plan
unless the Optionee  consents to such  amendment or  modification.  In addition,
certain amendments may require shareholder  approval pursuant to applicable laws
and regulations.



<PAGE>




III.     USE OF PROCEEDS

     Any cash proceeds  received by the  Corporation  from the sale of shares of
Common Stock under the Plan shall be used for general corporate purposes.

IV.      WITHHOLDING

     The Corporation may require,  as a condition to any grant under the Plan or
to the delivery of  certificates  for shares of Common  Stock issued  hereunder,
that the Optionee pay to the Corporation,  in cash, any federal,  state or local
taxes of any kind required by law to be withheld with respect to any grant of an
Option or any delivery of any shares of Common Stock upon exercise of an Option.
The  Corporation,  to the extent  permitted  or required by law,  shall have the
right to  deduct  from any  payment  of any kind  (including  salary  or  bonus)
otherwise  due to an  Optionee  any  federal,  state or local  taxes of any kind
required by law to be withheld  with respect to any grant of an Option or to the
delivery of any shares of Common Stock upon exercise of an Option.

V.       REGULATORY APPROVALS

     Notwithstanding any other provision of the Plan or of any option agreement,
the Corporation shall be under no obligation to issue and shall not issue shares
of Common Stock or, in the case of reacquired shares,  transfer shares of Common
Stock under the Plan, except in compliance with all applicable federal and state
laws and  regulations and in compliance with the rules of any stock exchanges or
listing organizations with which the Corporation's shares of Common Stock may be
listed.  The  determination  as to whether the issuance or transfer of shares of
Common Stock under the Plan is in compliance with  applicable  federal and state
laws and  regulations  and rules of stock  exchanges  and listing  organizations
shall be made solely by the Board.

     A.   Use of Restrictive  Legends. Any certificate issued to evidence shares
          issued pursuant to the exercise of an Option may bear such legends and
          statements as the Plan  Administrator  shall deem  advisable to assure
          compliance  with federal and state laws and  regulations.  In addition
          the shares of Common Stock issued upon exercise of any Option may bear
          a legend  stating  that  the  shares  are  subject  to the  terms of a
          shareholder  agreement,  which  agreement may restrict the transfer of
          the shares.

     B.   Representation of Investment  Intent. Any Optionee receiving an Option
          and any Optionee or other person  exercising an Option may be required
          by the Plan  Administrator to give a written  representation  that the
          Option and the  shares  subject to the  Option  will be  acquired  for
          investment  and not  with a view  to  public  distribution;  provided,
          however,  that the Board,  in its sole  discretion,  may  release  any
          person receiving an Option from any such representations  either prior
          to or subsequent to the exercise of an Option.

     C.   Representation of Ownership.  In the case of the exercise of an Option
          by a person or estate  acquiring  the right to exercise such Option by
          bequest or  inheritance  or by reason of the death or  Disability of a
          Optionee, the Plan Administrator may require reasonable evidence as to
          the  ownership of such Option or the  authority of such person and may
          require such consents and releases of taxing  authorities  as the Plan
          Administrator may deem advisable.



<PAGE>



     D.   Compliance  with Laws. This Plan, the granting and vesting of Options,
          the issuance and delivery of shares of Common  Stock,  and the payment
          of money under the Plan are subject to compliance  with all applicable
          federal  and state  laws,  rules and  regulations  (including  but not
          limited  to  state  and  federal  securities  law and  federal  margin
          requirements)  and to such  approvals  by any listing,  regulatory  or
          governmental  authority  as may,  in the  opinion of  counsel  for the
          Corporation,  be necessary or advisable in connection  therewith.  Any
          securities   delivered  under  the  Plan  shall  be  subject  to  such
          restrictions,  and the person  acquiring  such  securities  shall,  if
          requested   by  the   Corporation,   provide   such   assurances   and
          representations  to the  Corporation,  as  the  Corporation  may  deem
          necessary or desirable to assure  compliance with all applicable legal
          requirements.  To the extent permitted by applicable law, the Plan and
          all Options shall be deemed amended to the extent necessary to conform
          to such laws, rules and regulations.

VI.      NO EMPLOYMENT OR SERVICE RIGHTS

     Nothing in the Plan shall confer upon the Optionee any right to continue in
Service  for any period of  specific  duration or  interfere  with or  otherwise
restrict  in any way the rights of the  Corporation  or of the  Optionee,  which
rights are hereby expressly reserved by each, to terminate such person's Service
at any time for any reason, with or without cause.