Prepared and filed by St Ives Burrups



EXHIBIT 10.5B

NPS
  PHARMACEUTICALS, INC.

1998 STOCK OPTION PLAN

  (reflects all amendments by the Board
  of Directors through December 2002)

	1.	 GENERAL.
	 	 	 	 
	 	1.1	Purpose. The 1998 Stock
      Option Plan has been established by the Company to provide a means by which
      employees, directors, and consultants of the Company and its Affiliates
      may be given the opportunity to benefit from increases in value of NPS stock
      through the granting of Options. NPS seeks to (a) retain the services of
      present employees, directors, and consultants; (b) secure and retain the
      services of new employees, directors, and consultants; and (c) provide incentives
      for such persons to exert maximum efforts for the success of the Company
      and thereby promote the long-term interest of the Company, including the
      growth in value of the Company’s equity and enhancement of long-term
      stockholder return.
	 	 	 	 
	 	1.2 	Types of Options.
      The Company intends that the Options issued under the Plan shall, in the
      discretion of the Board or any Board Committee (see paragraph 3.2), be either
      Incentive Stock Options or Nonstatutory Stock Options (defined below).
	 	 	 	 
	 	1.3	Definitions.
      Unless otherwise defined, capitalized terms shall have the meaning set forth
      in Section 2.
	 	 	 	 
	2.	DEFINITIONS.
	 	 	 	 
	 	2.1	Affiliate means any parent
      corporation or subsidiary corporation of the Company, whether now or hereafter
      existing, as those terms are defined in Sections 424(e) and (f) respectively,
      of the Code.
	 	 	 	 
	 	2.2	Board means
      the Board of Directors of the Company.
	 	 	 	 
	 	2.3	Code means
      the Internal Revenue Code of 1986, as amended.
	 	 	 	 
	 	2.4 	Committee
      means a Committee appointed by the Board in accordance with paragraph 3.2
      herein.
	 	 	 	 
	 	2.5	Company means
      NPS Pharmaceuticals, Inc., a Delaware corporation.
	 	 	 	 
	 	2.6 	Consultant
      means any person (including an advisor) engaged by the Company or an Affiliate
      to render consulting services under arrangements intended to compensate
      such person for such services. The term “Consultant” shall not
      include a Director who is paid only a director’s fee by the Company or who
      is not compensated by the Company for services as a Director.
	 	 	 	 
	 	2.7	Continuous Status
      as an Employee, Director, or Consultant means the employment or relationship
      as an Employee, Director, or Consultant is not interrupted or terminated
      by the Company or any Affiliate. The Board, in its sole discretion, may
      determine whether Continuous Status as an Employee, Director, or Consultant
      shall be considered interrupted in the case of:
	 	 	 	 
	 	 	2.7.1	any leave of absence approved by the Board, including sick
      leave, military leave, or any other personal leave; provided, however, that
      for purposes of Incentive Stock


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	 	 	 	Options, any such leave may not exceed 90 days unless reemployment
      upon the expiration of such leave is guaranteed by contract (including certain
      Company policies) or statute; or
	 	 	 	 
	 	 	2.7.2	 transfers between
        locations of the Company or between the Company, Affiliates or its successor.
    

	 	 	 	 
	 	2.8 	 Day of Determination
        means the date of the occurrence of an event that requires the determination
        of the Fair Market Value of an award made hereunder.

	 	 	 	 
	 	2.9	 Director
        means a member of the Board.

	 	 	 	 
	 	2.10
	Disability means total
        and permanent disability as defined in Section 22(e)(3) of the Code.

	 	 	 	 
	 	2.11 	Employee
        means any person, including Officers and Directors, employed by the Company
        or any Affiliate. Neither service as a Director nor payment of a director’s
        fee by the Company shall be sufficient to constitute “employment”
        by the Company.

	 	 	 	 
	 	2.12	 Exchange Act
        means the Securities Exchange Act of 1934, as amended.

	 	 	 	 
	 	2.13	 Fair Market
        Value means, as of any date, the value of the common stock of the
        Company as determined as follows:

	 	 	 	 
	 	 	2.13.1	

       If the common stock is listed on any established stock exchange
      or a national market system, including without limitation, the National
      Market System of the National Association of Securities Dealers, Inc. Automated
      Quotation (“Nasdaq”) System, the Fair Market Value of a share
      of common stock shall be the closing price for such stock on the Day of
      Determination as quoted on such system as reported in the Wall Street Journal
      or such other source as the Board deems reliable. In the event the Day of
      Determination falls on a date that the Nasdaq system is closed, then the
      Fair Market Value shall be the closing sales price for such stock on the
      last market trading day prior to the Day of Determination as quoted on such
      system as reported in the Wall Street Journal or such other source as the
      Board deems reliable.
	 	 	 	 
	 	 	2.13.2 	 If the common stock is quoted
        on Nasdaq (but not on the National Market System thereof) or is regularly
        quoted by a recognized securities dealer but selling prices are not reported,
        the Fair Market Value of a share of common stock shall be the mean between
        the bid and asked prices for the common stock on the last market trading
        day prior to the day of determination, as reported in the Wall Street
        Journal or such other source as the Board deems reliable;

	 	 	 	 
	 	 	2.13.3	  In the absence of an established
        market for the common stock, the Fair Market Value shall be determined
        in good faith by the Board.

	 	 	 	 
	 	
2.14
	Incentive Stock Option (or
        “ISO”) means an Option intended to qualify as an incentive
        stock option within the meaning of Section 422 of the Code and the
        regulations promulgated thereunder.

	 	 	 	 
	 	2.15 	 Non-Employee
        Director means a Director who is considered to be a “Non-Employee
        Director” in accordance with Rule 16b-3(b)(3), or any other
        applicable rules, regulations or interpretations of the Securities and
        Exchange Commission.




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	 	2.16 	Nonstatutory Stock Option (or “NSO”)
      means an Option not intended to qualify or not eligible to qualify as an
      ISO or an ISO which, subsequent to its date of grant, no longer qualifies
      as an ISO under Section 422 of the Code.
	 	 	 	 
	 	2.17 	Officer means a person
      who is an officer of the Company within the meaning of Section 16a-1(f)
      of the Exchange Act and the rules and regulations promulgated thereunder.
	 	 	 	 
	 	2.18	Option means a stock option
      granted pursuant to the Plan.
	 	 	 	 
	 	2.19	Option Agreement means
      a written agreement between the Company and an Optionee evidencing the terms
      and conditions of an individual Option grant.
	 	 	 	 
	 	2.20	Optionee means an Employee,
      Director, or Consultant who holds an outstanding Option.
	 	 	 	 
	 	2.21	Outside Director means
      a Director who is considered to be an “Outside Director” in
      accordance with Section 162(m) of the Code, or any other applicable Code
      sections, regulations, or interpretations of the IRS.
	 	 	 	 
	 	2.22	Plan means this 1998 Stock
      Option Plan.
	 	 	 	 
	 	2.23	Rule 16b-3 means Rule 16b-3
      of the Exchange Act or any successor to Rule 16b-3, as in effect when
      discretion is being exercised with respect to the Plan.
	 	 	 	 
	 	2.24	Securities Act means the
      Securities Act of 1933, as amended.
	 	 	 	 
	3. 	ADMINISTRATION.
	 	 	 	 
	 	3.1	Powers and Authority. The Plan shall
      be administered by or under the direction of the Board unless and until
      the Board delegates administration to a Committee, as provided in paragraph
      3.2. The Board shall have the power subject to and within the limitations
      of the express provisions of the Plan:
	 	 	 	 
	 	 	3.1.1 	To determine from time to time: (a) which of the persons
      eligible under the Plan shall be granted Options; (b) when and how Options
      shall be granted; (c) whether an Option shall be intended to qualify
      as an ISO; (d) the provisions of each Option granted (which need not
      be identical) including the time or times when a person shall be permitted
      to receive stock pursuant to the exercise of such Option; (e) whether
      a person shall be permitted to exercise such Option; and (f) the number
      of shares with respect to which Options shall be granted to each such person.
	 	 	 	 
	 	 	3.1.2 	To construe and interpret the Plan and Options
      granted under it, and to establish, amend, and revoke rules and regulations
      for its administration. The Board, in the exercise of this power, may correct
      any defect, omission, or inconsistency in the Plan or in any Option Agreement,
      in a manner and to the extent it shall deem necessary or expedient to make
      the Plan fully effective.
	 	 	 	 
	 	 	3.1.3	 To amend the Plan as provided in Section
      12.
	 	 	 	 
	 	 	3.1.4	 Generally, to exercise such powers and to
      perform such acts as the Board deems necessary or expedient to promote the
      best interests of the Company.
	 	 	 	 
	 	3.2	Delegation. The Board may
      delegate administration of the Plan to a Board committee composed of not
      fewer than two members (the “Committee”). All members of the
      Committee 


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  	 	 	shall be Outside Directors or Non-Employee Directors,
        to the extent necessary to comply with the applicable provisions of Rule
        16b-3 and Section 162(m). If administration is delegated to a Committee,
        the Committee shall have, in connection with the administration of the
        Plan, the powers theretofore possessed by the Board (and references in
        this Plan to the Board shall in such event, be to the Committee), subject,
        however, to such resolutions, not inconsistent with the provisions of
        the Plan, as may be adopted from time to time by the Board. The Board
        may abolish the Committee at any time and revest in the Board the administration
        of the Plan.
	 	 	 
	 	3.3	Director Status. Any requirement
        that an administrator of the Plan be a Non-Employee Director or an Outside
        Director shall not apply if the Board or the Committee expressly declares
        that such requirement shall not apply.
	 	 	 
	4.	SHARES SUBJECT TO THE PLAN.
	 	 	 
	 	4.1 	Available Shares. Subject to the provisions of
        Section 11, the number of shares that may be issued pursuant to Options
        granted hereunder shall not exceed in the aggregate four million nine
        hundred thousand (4,900,000) shares of the Company's common stock.
	 	 	 
	 	4.2	Forfeited or Canceled Shares. Any
        shares of stock for which an Option has been granted under the Plan that
        are forfeited because of the failure to meet an Option grant contingency
        or condition shall again be available for delivery pursuant to new grants
        under the Plan. To the extent any shares of stock covered by an Option
        are not delivered to an Optionee or beneficiary because the award is forfeited
        or canceled, or the shares of stock are not delivered because the award
        is settled in cash, such shares shall not be deemed to have been delivered
        for purposes of determining the maximum number of shares of stock available
        for delivery under the Plan.
	 	 	 
	 	4.3	Payment with Shares. If the exercise
        price of any Option granted under the Plan is satisfied by tendering shares
        of stock to the Company (by either actual delivery or by attestation),
        only the number of shares of stock issued net of the shares of stock tendered
        shall be deemed delivered for purposes of determining the maximum number
        of shares of stock available for delivery under the Plan.
	 	 	 
	 	4.4	Plan Limits. Shares of stock delivered
        under the Plan in settlement, assumption, or substitution of outstanding
        awards (or obligations to grant future awards) under the plans or arrangements
        of another entity shall not reduce the maximum number of shares of stock
        available for delivery under the Plan, to the extent that such settlement,
        assumption, or substitution is a result of the Company or Affiliate acquiring
        another entity (or an interest in another entity). Subject to the provisions
        of Section 11, the maximum number of shares that may be covered by grants
        to any one individual shall be 750,000 shares during any three consecutive
        calendar years.
	 	 	 
	5. 	ELIGIBILITY.
	 	 	 
	 	5.1 	Option Type. ISOs may be granted
        only to Employees. NSOs may be granted to Employees, Directors, or Consultants.
	 	 	 
	 	5.2	Section 16 Compliance. No Officer
        or Director shall be eligible for the benefits of the Plan unless at the
        time discretion is exercised in the selection of an Officer or Director
        as a person to whom Options may be granted, or in the determination of
        the number of shares which may be covered by Options granted to the Officer
        or Director, the Plan otherwise complies with the requirements of Rule
        16b-3. This paragraph 5.2 shall not apply if the Board or Committee expressly
        declares that it shall not apply.



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	6.	OPTION PROVISIONS. Each Option shall be in
      such form and shall contain such terms and conditions as the Board shall
      deem appropriate. The provisions of separate Options need not be identical,
      but each Option shall include (through incorporation of provisions hereof
      by reference in the Option or otherwise) the substance of each of the following
      provisions:
	 	 	 	 
	 	6.1	Term. No Option shall be
      exercisable after the expiration of ten years from the date it was granted.
	 	 	 	 
	 	6.2 	Price. The exercise price
      of each Option shall be not less than 100% of the Fair Market Value of the
      stock subject to the Option on the date the Option is granted.
	 	 	 	 
	 	6.3	Consideration. The purchase
      price of stock acquired pursuant to an Option shall be paid, to the extent
      permitted by applicable statutes and regulations:
	 	 	 	 
	 	 	6.3.1	 in cash; or 
	 	 	 	 
	 	 	6.3.2	by delivery of already-owned shares of common
      stock of the Company, held by the Optionee for at least six months, or a
      combination of cash and already-owned shares of common stock of the Company;
      or
	 	 	 	 
	 	 	6.3.3	 according to a deferred payment or other
      arrangement (which may include, without limiting the generality of the foregoing,
      the use of other common stock of the Company) with the person to whom the
      Option is granted or to whom the Option is transferred pursuant to paragraph
      6.4; or
	 	 	 	 
	 	 	6.3.4	 pursuant to a broker assisted exercise same-day
      sales program; or
	 	 	 	 
	 	 	6.3.5	 as required in the discretion of the Board
      or the Committee, either at the time of the grant or exercise of the Option;
      or
	 	 	 	 
	 	 	6.3.6	 any combination of 6.3.1 through 6.3.5 above.
	 	 	 	 
	 	 	 	In the case of any deferred payment arrangement,
      interest shall be payable at least annually and shall be charged at the
      minimum rate of interest necessary to avoid the treatment as interest, under
      any applicable provisions of the Code, of any amounts other than amounts
      stated to be interest under the deferred payment arrangement. 
	 	 	 	 
	 	6.4	Transferability.
	 	 	 	 
	 	 	6.4.1	Incentive Stock Options. In order for an Option
      to qualify for treatment as an ISO, it may not be transferable except by
      will or by the laws of descent and distribution. In the event an Optionee
      transfers such Option, such transfer shall constitute a disqualifying event
      and the Option shall no longer qualify as an ISO but shall be considered
      a NSO under the terms of this Plan.
	 	 	 	 
	 	 	6.4.2	Nonstatutory Stock Option. The Board
      or Committee may, in its discretion, authorize all or a portion of the NSOs
      to be granted to an Optionee to be on terms that permit transfer by such
      Optionee to (a) the spouse, children, or grandchildren of the Optionee (“Immediate
      Family Members”), (b) a trust or trusts for the exclusive benefit
      of such Immediate Family Members, or (c) a partnership in which such Immediate
      Family Members are the only partners, provided that (i) there may be no
      consideration for any such transfer, (ii) the Option Agreement pursuant
      to which such


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  	 	 	 	Options are granted must expressly provide for transferability
        in a manner consistent with this Section, (iii) subsequent transfers of
        transferred Options shall be prohibited except those occurring by will
        or the laws of descent and distribution, and (iv) the Options shall continue
        to be subject to all the terms and conditions that applied prior to transfer
        in the same manner and to the same extent as non-transferred Options,
        including paragraphs 6.5 through 6.9. The Options shall be exercisable
        by the transferee only to the extent, and for the periods specified in
        such sections. The Company expressly disclaims any obligation to provide
        notice to a transferee of the termination of the Option.
	 	 	 	 
	 	 	6.4.3	 Unless transfer by an Optionee is specifically provided
        for in an Option Agreement, a NSO shall not be transferable except by
        will or by the laws of descent and distribution or pursuant to a qualified
        domestic relations order as defined by the Code or Title I of the Employee
        Retirement Income Security Act, or the rules thereunder (a “QDRO”),
        and shall be exercisable during the lifetime of the person to whom the
        NSO is granted only by such person or any transferee pursuant to a QDRO.
	 	 	 	 
	 	6.5 	Vesting.
        The total number of shares of stock subject to an Option may, but need
        not, be allotted in periodic installments (which may, but need not, be
        equal). The Option Agreement may provide that from time to time during
        each of such installment periods, the Option may become exercisable (“vest”)
        with respect to some or all of the shares allotted to that period, and
        may be exercised with respect to some or all of the shares allotted to
        such period and/or any prior period as to which the Option became vested
        but was not fully exercised. The Option may be subject to such other terms
        and conditions on the time or times when it may be exercised (which may
        be based on performance criteria) as the Board may deem appropriate. The
        provisions of this paragraph 6.5 are subject to any Option provisions
        governing the minimum number of shares as to which an Option may be exercised.
	 	 	 	 
	 	6.6 	Securities Law Compliance.
        The Company may require any Optionee, or any person to whom an Option
        is transferred under paragraph 6.4, as a condition of exercising any such
        Option, (a) to give written assurances satisfactory to the Company
        as to the Optionee's knowledge and experience in financial and business
        matters and/or to employ a purchaser representative reasonably satisfactory
        to the Company who is knowledgeable and experienced in financial and business
        matters, and that he or she is capable of evaluating, alone or together
        with the purchaser representative, the merits and risks of exercising
        the Option; and (b) to give written assurances satisfactory to the
        Company stating that such person is acquiring the stock subject to the
        Option for such person's own account and not with any present intention
        of selling or otherwise distributing the stock. These requirements, and
        any assurances given pursuant to such requirements, shall be inoperative
        if (i) the issuance of the shares upon the exercise of the Option
        has been registered under a then currently effective registration statement
        under the Securities Act, or (ii) as to any particular requirement,
        a determination is made by counsel for the Company that such requirement
        need not be met in the circumstances under the then applicable securities
        laws.
	 	 	 	 
	 	6.7	Termination of Employment
        or Relationship as an Employee, Director, or Consultant. In the event
        an Optionee's Continuous Status as an Employee, Director, or Consultant
        terminates (other than upon the Optionee’s death or Disability), the Optionee
        may exercise his or her Option, but only within such period of time as
        is determined by the Board, and only to the extent that the Optionee was
        entitled to exercise at the date of termination (but in no event later
        than the expiration of the term of such Option as set forth in the Option
        Agreement). In the case of an ISO, the Board shall determine such period
        of time (in no event to exceed three months from the date of termination)
        when the Option is granted. If, at the date of termination, the Optionee
        is not entitled to exercise his or her entire Option, the shares




  6





  
  	 	 	 	covered by the unexercisable portion of the Option shall
        revert to the Plan. If, after termination, the Optionee does not exercise
        his or her Option within the time specified in the Option Agreement, the
        Option shall terminate, and the shares covered by such Option shall revert
        to the Plan.
	 	 	 	 
	 	6.8 	Retirement of Optionee. Notwithstanding
        any contrary Plan provision, in the event an Optionee’s employment
        as an Employee, Director, or Consultant terminates due to Optionee’s
        Retirement, the Optionee shall vest in that number of shares subject to
        the Option that would have vested had the Optionee remained an Employee,
        Director or Consultant for an additional two (2) years from the date of
        Retirement. In addition, the Option shall remain exercisable until the
        expiration of its term. For purposes of this paragraph, Retirement shall
        mean the termination of service with the Company or an Affiliate of an
        Optionee on or after the date on which the Optionee’s number of
        completed years of service with the Company or Affiliate and age equal
        or exceed seventy (70) (including termination due to death or Disability
        after such time).
	 	 	 	 
	 	6.9	Disability of Optionee.
        In the event an Optionee’s Continuous Status as an Employee, Director,
        or Consultant terminates as a result of the Optionee’s Disability, the
        Optionee may exercise his or her Option, but only within twelve months
        from the date of such termination (or such shorter period specified in
        the Option Agreement), and only to the extent that the Optionee was entitled
        to exercise at the date of such termination (but in no event later than
        the expiration of the term of such Option as set forth in the Option Agreement).
        If, at the date of termination, the Optionee is not entitled to exercise
        his or her entire Option, the shares covered by the unexercisable portion
        of the Option shall revert to the Plan. If, after termination, the Optionee
        does not exercise his or her Option within the time specified herein,
        the Option shall terminate, and the shares covered by such Option shall
        revert to the Plan.
	 	 	 	 
	 	6.10	Death of Optionee. In
        the event of the death of an Optionee, the Option may be exercised, at
        any time within eighteen months following the date of death (or such shorter
        period specified in the Option Agreement, but in no event later than the
        expiration of the term of such Option as set forth in the Option Agreement),
        by the Optionee’s estate or by a person who acquired the right to exercise
        the Option by bequest or inheritance, but only to the extent the Optionee
        was entitled to exercise the Option at the date of death. If, at the time
        of death, the Optionee was not entitled to exercise his or her entire
        Option, the shares covered by the unexercisable portion of the Option
        shall revert to the Plan. If, after death, the Optionee’s estate or a
        person who acquired the right to exercise the Option by bequest or inheritance,
        or by assignment as provided herein, does not exercise the Option within
        the time specified herein, the Option shall terminate, and the shares
        covered by such Option shall revert to the Plan.
	 	 	 	 
	 	6.11	Early Exercise. The Option
        Agreement may, but need not, include a provision whereby the Optionee
        may elect at any time while an Employee, Director, or Consultant to exercise
        the Option as to any part or all of the shares subject to the Option prior
        to the full vesting of the Option. Any nonvested shares so purchased may
        be subject to a repurchase right in favor of the Company or to any other
        restriction the Board determines to be appropriate.
	 	 	 	 
	 	6.12	Withholding. To the extent
        provided by the terms of an Option Agreement, the Optionee may satisfy
        any federal, state, or local tax withholding obligation relating to the
        exercise of such Option by any of the following means or by a combination
        of such means:
	 	 	 	 
	 	 	6.12.1	 cash payment; or 
	 	 	 	 
	 	 	6.12.2	 authorizing the Company to withhold shares
        from the shares of the common stock otherwise issuable to the participant
        as a result of the exercise of the Option; or 


  7







  


	 	 	 	6.12.3  delivering to the Company owned and unencumbered
      shares of the common stock of the Company. 
	 	 	 	 
	 	7. 	NO REPRICING,
	CANCELLATION, or RE-GRANT
	OF OPTIONS.
	Except for certain adjustments due to corporate transactions described
      in Section 11, the exercise price for any outstanding Option granted under
      the Plan may not be decreased after the Day of Determination for such Option
      grant nor may an outstanding Option granted under the Plan be surrendered
      to the Company as consideration in exchange for the grant of a new Option
      with a lower exercise price.
	 	 	 	 
	 	8. 	COVENANTS OF THE COMPANY
	 	 	 	 
	 	 	8.1 	Stock Availability. During the terms
      of the Option granted under the Plan, the Company shall keep available at
      all times the number of shares of stock required to satisfy such grants
      up to the number of shares of stock authorized under the Plan.
	 	 	 	 
	 	 	8.2 	Authority. The Company shall seek to
      obtain from each regulatory commission or agency having jurisdiction over
      the Plan such authority as may be required to issue and sell shares of stock
      acquired under the grants, provided, however, that this undertaking shall
      not require the Company to register under the Securities Act either the
      Plan or any stock issued or issuable pursuant to any such Option. If, after
      reasonable efforts, the Company is unable to obtain from any such regulatory
      commission or agency, the authority which counsel for the Company deems
      necessary for the lawful issuance and sale of stock under the Plan, the
      Company shall be relieved from any liability for failure to issue and sell
      stock under such Options unless and until such authority is obtained.
	 	 	 	 
	 	9. 	USE OF PROCEEDS FROM STOCK. Proceeds
      from the exercise of Options under the Plan shall constitute general funds
      of the Company.
	 	 	 	 
	 	10. 	MISCELLANEOUS.
	 	 	 	 
	 	 	10.1 	Acceleration. The Board or the Committee
      shall have the power to accelerate the time at which an Option may first
      be exercised or the time during which an Option or any part thereof will
      vest, notwithstanding the provisions in the Option Agreement stating the
      time at which it may first be exercised or the time during which it will
      vest.
	 	 	 	 
	 	 	10.2 	Ownership Rights. Neither an Optionee
      nor any person to whom an Option is transferred under paragraph 6.4 shall
      be deemed to be the holder of, or to have any of the rights of a holder
      with respect to any shares subject to such Option unless and until such
      person has satisfied all requirements for exercise of the Option pursuant
      to its terms.
	 	 	 	 
	 	 	10.3	Employment Rights. Nothing in the Plan
      or any instrument executed pursuant thereto shall confer upon any Employee,
      Director, Consultant, Optionee, or other holder of Options any right to
      continue in the employ of the Company or any Affiliate (or to continue acting
      as a Director or Consultant) or shall affect the right of the Company or
      any Affiliate to terminate the employment or relationship as a Director
      or Consultant of any Employee, Director, Consultant, or Optionee with or
      without cause.
	 	 	 	 
	 	 	10.4	ISO Value Limit. To the extent that
      the aggregate Fair Market Value (determined at the time of grant) of stock
      with respect to which ISOs granted after 1998 are exercisable for the first
      time by any Optionee during any calendar year under all plans of the Company
      and its Affiliates exceeds $100,000, the Options or portions thereof which
      exceed such limit (according to the order in which they were granted) shall
      be treated as NSOs.


8






	11.	 ADJUSTMENTS UPON CHANGES IN STOCK
      AND CORPORATE TRANSACTIONS.
	 	 	 	 
	 	11.1	Stock Adjustments.
      If any change is made in the stock subject to the Plan, or subject to any
      Option (through merger, consolidation, reorganization, recapitalization,
      stock dividend, dividend in property other than cash, stock split, liquidating
      dividend, combination of shares, exchange of shares, change in corporate
      structure or otherwise), the Plan and outstanding Options will be appropriately
      adjusted in the class(es) and maximum number of shares subject to the Plan
      and the class(es) and number of shares and price per share of stock subject
      to outstanding Options.
	 	 	 	 
	 	11.2	Corporate Transactions.
      In the event of: (a) a merger or consolidation in which the Company
      is not the surviving corporation; (b) a reverse merger in which the
      Company is the surviving corporation but the shares of the Company's common
      stock outstanding immediately preceding the merger are converted by virtue
      of the merger into other property, whether in the form of securities, cash,
      or otherwise; (c) a strategic corporate event, such as a merger or acquisition,
      where the Company is technically the surviving entity, but where other elements
      of a change of control are present, i.e. change in management team or board
      composition; (d) a transaction which the Board determines in its sole discretion
      to constitute a change in control of the Company; or (e) any capital
      reorganization in which more than fifty percent (50%) of the shares of the
      Company entitled to vote are exchanged, then, the time during which Options
      outstanding under the Plan become vested shall be accelerated and all outstanding
      Options shall become immediately exercisable upon such event and such Options
      shall continue to be exercisable until the later of (i) twenty-four (24)
      months from the effective date of such event, or (ii) the time specified
      in the Option Agreement during which the Option is exercisable following
      an Optionee’s termination of service; provided, however, that in no
      event shall the Option be exercisable after the expiration of its term.
	 	 	 	 
	12. 	AMENDMENT OF
      THE PLAN.
	 	 	 	 
	 	12.1 	Amendments. The Board at
      any time, and from time to time, may amend the Plan. However, as provided
      in Section 11, no amendment shall be effective unless approved by the stockholders
      of the Company within twelve months before or after the adoption of the
      amendment, where the amendment will:
	 	 	 	 
	 	 	12.1.1	 Increase the number of shares reserved for
      Options under the Plan;
	 	 	 	 
	 	 	12.1.2	 Modify the requirements as to eligibility
      for participation in the Plan to the extent such modification requires stockholder
      approval in order for the Plan to satisfy the requirements of Sections 162(m)
      and 422 of the Code;
	 	 	 	 
	 	 	12.1.3	 Modify the Plan in any other way if such
      modification requires stockholder approval in order for the Plan to satisfy
      the requirements of Section 422 of the Code or to comply with the requirements
      of Rule 16b-3 or Nasdaq or other applicable securities exchange listing
      requirements;
	 	 	 	 
	 	 	12.1.4 	Decrease the minimum exercise price set forth
      in paragraph 6.2; or
	 	 	 	 
	 	 	12.1.5	 Remove the limitation provided in Section
      7.
	 	 	 	 
	 	12.2	Compliance. It is expressly
      contemplated that the Board may amend the Plan in any respect the Board
      deems necessary or advisable to provide under the provisions of the Code
      and the


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	 	 	 	 regulations promulgated thereunder relating
      to ISOs and/or to bring the Plan and/or ISOs granted under it into compliance
      therewith.
	 	 	 	 
	 	 	12.3 	Consent. Rights and obligations under
      any Option granted before amendment of the Plan shall not be altered or
      impaired by any amendment of the Plan unless (a) the Company requests the
      consent of the person to whom the Option was granted and (b) such person
      consents in writing.
	 	 	 	 
	 	13.	 TERMINATION OR SUSPENSION OF
      THE PLAN.
	 	 	 	 
	 	 	13.1 	Termination. The Board may suspend
      or terminate the Plan at any time. Unless sooner terminated, the Plan shall
      terminate on midnight, May 31, 2008. No Options may be granted under the
      Plan while the Plan is suspended or after it is terminated.
	 	 	 	 
	 		13.2	Rights and Obligations. Any Options
      granted while the Plan is in effect shall not be altered or impaired by
      suspension or termination of the Plan, except with the consent of the holder
      of the Options.
	 	 	 	 
	 	14.  	 EFFECTIVE DATE OF PLAN. The Plan
      shall become effective as determined by the Board, but no Options granted
      under the Plan shall be exercisable unless and until the Plan has been approved
      by the stockholders of the Company.


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