Exhibit 10.1

                             AFP Imaging Corporation

                           2004 Equity Incentive Plan


ARTICLE 1.  GENERAL PURPOSE OF PLAN; DEFINITIONS.

1.1. Purpose. The purposes of this 2004 Equity Incentive Plan are (a) to enable
     the Company, and the Company's subsidiaries and affiliates, to attract and
     retain highly qualified personnel who will contribute to the success of the
     Company, including the Company's subsidiaries and certain affiliates, and
     (b) to provide incentives to participants in this 2004 Equity Incentive
     Plan that are linked directly to increases in shareholder value which will
     therefore inure to the benefit of all shareholders of the Company.

1.2. Definitions. For purposes of this Plan, except as otherwise defined in this
     Plan, capitalized terms shall have the meanings assigned to them in this
     Section 1.2.

          "Administrator" means the Board or, if and to the extent the Board
     elects to delegate the administration of the Plan or does not administer
     the Plan, the Committee.

          "Affiliate" means any entity or person that directly, or indirectly
     through one or more intermediaries, controls, is controlled by, or is under
     common control with, another entity, where "control" (including the terms
     "controlled by" and "under common control with") means the possession,
     directly or indirectly, of the power to cause the direction of the
     management and policies of the entity, whether through the ownership of
     voting securities, by contract or otherwise.

          "Associated Award" shall have the meaning assigned to the term in
     Section 8.2.

          "Award" means any award granted under the Plan.

          "Award Agreement" means, with respect to each Award, the signed
     written agreement between the Company and the Participant setting forth the
     terms and conditions of the Award.

          "Board" means the Board of Directors of the Company.

          "Cause" means the commission of any act of a theft, embezzlement or
     fraud involving the Company or any Parent, Subsidiary or Affiliate of the
     Company or otherwise, or a breach of fiduciary duty to the Company or any
     Parent, Subsidiary or Affiliate of the Company. An Award Agreement or any
     employment agreement with an Eligible Recipient may further define the term
     "Cause" with respect to any Award granted under the Plan to such Eligible
     Recipient.

          "Change of Control" shall have the meaning assigned to such term in
     Section 15.2.

          "Code" means the Internal Revenue Code of 1986, as amended from time
     to time, or any successor thereto.

          "Committee" means the compensation committee of the Board or other any
     committee which the Board may appoint to administer the Plan. To the extent
     necessary and desirable, the Committee shall be composed entirely of
     individuals who meet the qualifications referred to in Section 162(m) of
     the Code, Rule 16b-3 under the Exchange Act and the applicable rules of
     Nasdaq, any stock exchange or automated quotation system on which the
     Common Stock is primarily quoted or listed. If at any time or to any extent
     the Board shall not administer the Plan, then the functions of the Board as
     specified in the Plan shall be exercised by the Committee.

          "Common Stock" means the common stock, with a par value $0.01 per
     share as of the date of adoption of the Plan by the Board, of the Company.

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          "Company" means AFP Imaging Corporation, a New York corporation, or
     any successor corporation.

          "Control" shall have the meaning assigned to the term in the
     definition of Affiliate in this Section 1.2.

          "Disability" means the inability of a Participant to perform
     substantially his or her duties and responsibilities to the Company or to
     any Parent, Subsidiary or Affiliate by reason of a physical or mental
     disability or infirmity for a continuous period of six months, as
     determined by the Administrator. The date of such Disability shall be the
     last day of such six-month period or the date on which the Participant
     submits such medical evidence, satisfactory to the Company, that the
     Participant has a physical or mental disability or infirmity that will
     likely prevent the Participant from performing the Participant's work
     duties for a continuous period of six months or longer, as the case may be.
     An Award Agreement or any employment agreement with an Eligible Recipient
     may further define the term "Disability" with respect to any Award granted
     under the Plan to such Eligible Recipient.

          "Eligible Recipient" means an officer, director, employee, consultant
     or advisor of the Company or of any Parent, Subsidiary or Affiliate. For
     purposes of the Plan, the term "employee" shall include all those
     individuals whose service with or for the Company and/or any Parent,
     Subsidiary or Affiliate of the Company, is within the definition of
     "employee" in the "Rule as to the Use of Form S-8" contained in the General
     Instructions for the registration statement on Form S-8 promulgated by the
     Securities and Exchange Commission.

          "Employee Director" means any director of the Company who is also an
     employee of the Company or of any Parent, Subsidiary or Affiliate.

          "Exchange Act" means the Securities Exchange Act of 1934, as amended
     from time to time.

          "Exercise Price" means the per share price at which a holder of an
     Award may purchase the Shares issuable upon exercise of such Award.

          "Fair Market Value" as of a particular date shall mean the fair market
     value of a share of Common Stock as determined by the Administrator;
     provided, however, that Fair Market Value shall mean (i) if the Common
     Stock is listed or admitted to trade on a national securities exchange, the
     closing price of the Common Stock, as published in The Wall Street Journal,
     of the principal national securities exchange on which the Common Stock is
     so listed or admitted to trade, on such date, or, if there is no trading of
     the Common Stock on such date, then the closing price of the Common Stock
     as quoted on the next preceding date on which there was trading in such
     shares; (ii) if the Common Stock is not listed or admitted to trade on a
     national securities exchange but is listed and quoted on Nasdaq, the last
     sale price for the Common Stock on such date as reported by Nasdaq, or, if
     there is no reported trading of the Common Stock on such date, then the
     last sale price for the Common Stock on the next preceding date on which
     there was trading in the Common Stock; (iii) if the Common Stock is not
     listed or admitted to trade on a national securities exchange and is not
     listed and quoted on Nasdaq, the last sale price, or, if a last sale price
     is not quoted, the mean between the closing bid and asked prices for the
     Common Stock on such date, in either case, as furnished by NASD; (iv) if
     the Common Stock is not listed or admitted to trade on a national
     securities exchange, not listed and quoted on Nasdaq and the last sale
     price and closing bid and asked prices are not furnished by the NASD, the
     last sale price, or, if a last sale price is not quoted, the mean between
     the closing bid and asked prices for the Common Stock on such date, in
     either case, as furnished by the Pink Sheets, or similar organization; (v)
     if the stock is not listed or admitted to trade on a national securities
     exchange, not listed and quoted on Nasdaq and if the last sale price and
     bid and asked prices for the Common Stock are not furnished by the NASD,
     Pink Sheets or a similar organization, the value established in good faith
     by the Administrator; and (vi) in the case of a Limited Stock Appreciation
     Right, the Fair Market Value of a share of Common Stock shall be the
     "Change in Control Price" (as defined in the Award Agreement evidencing
     such Limited Stock Appreciation Right) of a share of Common Stock as of the
     date of exercise.

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          "Family Member" means, with respect to any Participant, any of the
     following:
          (a) such Participant's child, stepchild, grandchild, parent,
     stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
     mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law,
     sister-in-law, including any such person with such relationship to the
     Participant by adoption;
          (b) any person (other than a tenant or employee) sharing such
     Participant's household;
          (c) a trust in which the persons identified in clauses (a) and (b)
     above have more than fifty percent of the beneficial interest;
          (d) a foundation in which the persons identified in clauses (a) and
     (b) above or the Participant control the management of assets; or
          (e) any other entity in which the persons identified in clauses (a)
     and (b) above or the Participant own more than fifty percent of the voting
     interest.

          "Incentive Stock Option" means any Option intended to be designated as
     an "incentive stock option" within the meaning of Section 422 of the Code.

          "Incumbent Board" means (i) all individuals serving on the Board on
     September 23, 2004, to the extent that they continue to serve as members of
     the Board, and (ii) all individuals who become members of the Board after
     September 23, 2004, if such individuals' election or nomination for
     election as directors was approved by a vote of at least a majority of the
     Board prior to such election, to the extent they continue to serve as
     members of the Board.

          "Limited Stock Appreciation Right" means a Stock Appreciation Right
     that can be exercised only in the event of a "Change in Control" (as
     defined in the Award Agreement evidencing such Limited Stock Appreciation
     Right).

          "Maximum Value" shall have the meaning assigned to the term in Section
     8.2.

          "NASD" means the National Association of Securities Dealers, Inc.

          "Nasdaq" means The Nasdaq Stock Market.

          "Non-Employee Director" means a director of the Company who is not an
     employee of the Company or of any Parent, Subsidiary or Affiliate.

          "Non-Qualified Stock Option" means any Option that is not an Incentive
     Stock Option, including, but not limited to, any Option that provides (as
     of the time such Option is granted) that it will not be treated as an
     Incentive Stock Option.

          "Option" means an option to purchase Shares granted pursuant to
     Article 5 of the Plan.

          "Parent" means any corporation (other than the Company) in an unbroken
     chain of corporations ending with the Company, if each of the corporations
     in the chain (other than the Company) owns stock possessing 50% or more of
     the combined voting power of all classes of stock in one of the other
     corporations in the chain.

          "Participant" means any Eligible Recipient selected by the
     Administrator, pursuant to the Administrator's authority to receive grants
     of Options, Stock Appreciation Rights, Limited Stock Appreciation Rights,
     awards of Restricted Stock, Performance Shares, other types of awards, or
     any combination of the foregoing.

          "Performance Grant" shall have the meaning assigned to the term in
     Section 8.1.

          "Performance Grant Actual Value" shall have the meaning assigned to
     the term in Section 8.1.

          "Performance Grant Award Period" shall have the meaning assigned to
     the term in Section 8.3.

          "Performance Shares" means Shares that are subject to restrictions
     based upon the attainment of specified performance objectives granted
     pursuant to Article 8.

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          "Permitted Transfer" means, as authorized by the Plan and the
     Administrator, with respect to an interest in a Non-Qualified Stock Option,
     any transfer effected by the Participant during the Participant's lifetime
     of an interest in such Non-Qualified Stock Option but only such transfers
     which are by gift or pursuant to domestic relations orders. A permitted
     transfer does not include any transfer for value and neither transfers
     under a domestic relations order in settlement of marital property rights
     or to an entity in which more than 50% of the voting interests are owned by
     Family Members or the Participant in exchange for an interest in that
     entity are deemed transfers for value.

          "Pink Sheets" means Pink Sheets, LLC.

          "Plan" means this 2004 Equity Incentive Plan.

          "Related Employment" means the employment or performance of services
     by an individual for an employer that is neither the Company, any Parent,
     Subsidiary nor Affiliate, provided that (i) such employment or performance
     of services is undertaken by the individual at the request of the Company
     or any Parent, Subsidiary or Affiliate, (ii) immediately prior to
     undertaking such employment or performance of services, the individual was
     employed by or performing services for the Company or any Parent,
     Subsidiary or Affiliate or was engaged in Related Employment, and (iii)
     such employment or performance of services is in the best interests of the
     Company and is recognized by the Administrator, as Related Employment. The
     death or Disability of an individual during a period of Related Employment
     shall be treated, for purposes of this Plan, as if the death or onset of
     Disability had occurred while the individual was employed by or performing
     services for the Company or a Parent, Subsidiary or Affiliate.

          "Restricted Stock" means Shares subject to certain restrictions
     granted pursuant to Article 7.

          "Restricted Period" means the period of time Restricted Stock remains
     subject to restrictions imposed on the Award of such Restricted Stock.

          "Rule 16b-3" shall have the meaning assigned to the term in Section
     2.1.

          "Securities Act" means the Securities Act of 1933, as amended from
     time to time.

          "Shares" means shares of Common Stock reserved for issuance under or
     issued pursuant to the Plan, as adjusted pursuant to Article 4, and any
     successor security.

          "Stock Appreciation Right" means the right pursuant to an Award
     granted under Article 6 to receive an amount equal to the excess, if any,
     of (i) the Fair Market Value, as of the date such Stock Appreciation Right
     or portion thereof is surrendered, of the Shares covered by such right or
     such portion thereof, over (ii) the aggregate exercise price of such right
     or such portion thereof as established by the Administrator at the time of
     the grant of such Award (or such other exercise price thereafter
     established by the Administrator with the consent of the Participant
     granted such Award where required by the Plan).

          "Stock Bonus" means an Award granted pursuant to Article 9.

          "Subsidiary" means any corporation (other than the Company) in an
     unbroken chain of corporations beginning with the Company, if each of the
     corporations (other than the last corporation) in the unbroken chain owns
     stock possessing 50% or more of the total combined voting power of all
     classes of stock in one of the other corporations in the chain.

          "Ten Percent Shareholder" shall have the meaning assigned to the term
     in Section 5.4.

          "Termination" or "Terminated" means, for purposes of the Plan with
     respect to a Participant, that such Participant has for any reason ceased
     to provide services as an employee, officer, director, consultant,
     independent contractor, or advisor to the Company or any Parent, Subsidiary
     or Affiliate of the Company. A Participant will not be deemed to have
     ceased to provide services in the case of (i) sick leave, (ii) military
     leave, or (iii) any other leave of absence approved by the Administrator,
     provided, that such leave is for a period of not more than 90 days, unless
     reemployment or reinstatement upon the expiration of such leave is
     guaranteed by contract or statute. In the case of any Participant on an
     approved leave of absence, the Administrator may make such provisions
     respecting suspension of vesting of any Award previously granted to such
     Participant while such Participant is on leave from the Company or any
     Parent, Subsidiary or Affiliate of the Company as the Administrator may
     deem appropriate, except that in no event may an Option be exercised after
     the expiration of the term set forth in the Award Agreement with respect to
     such Option. The Administrator will have sole discretion to determine
     whether a Participant has ceased to provide services and the applicable
     Termination Date.

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          "Termination Date" means the effective date of Termination, as
     determined by the Administrator.


ARTICLE 2. ADMINISTRATION.

2.1. Administration in Accordance with the Code and Exchange Act. The Plan shall
     be administered in accordance with the requirements of Section 162(m) of
     the Code (but only to the extent necessary and desirable to maintain
     qualification of Awards under the Plan under Section 162(m) of the Code)
     and, to the extent applicable, Rule 16b-3 under the Exchange Act ("Rule
     16b-3") or the rules of the Nasdaq, any stock exchange or automated
     quotation system on which the Common Stock is primarily quoted or listed,
     by the Board or, at the Board's sole discretion, by the Committee, which
     shall be appointed by the Board, and which shall serve at the pleasure of
     the Board.

2.2. Administrator's Powers. Subject to the general purposes, terms and
     conditions of this Plan, the Administrator will have full power to
     implement and carry out this Plan. The Administrator will have the
     authority to:
          (a)  construe and interpret this Plan, any Award Agreement and any
               other agreement or document executed pursuant to this Plan;
          (b)  prescribe, amend and rescind rules and regulations relating to
               this Plan or any Award;
          (c)  select persons to receive Awards;
          (d)  determine the form and terms of Awards;
          (e)  determine the number of Shares or other consideration subject to
               Awards;
          (f)  determine whether Awards will be granted singly, in combination
               with, in tandem with, in replacement of, or as alternatives to,
               other Awards under this Plan or any other incentive or
               compensation plan of the Company or any Parent, Subsidiary or
               Affiliate of the Company;
          (g)  grant waivers of Plan or Award conditions;
          (h)  determine the vesting, exercisability and payment of Awards;
          (i)  correct any defect, supply any omission or reconcile any
               inconsistency in the Plan, any Award or any Award Agreement;
          (j)  make any adjustments necessary or desirable as a result of the
               granting of an Award to an Eligible Participant located outside
               the United States;
          (k)  determine whether an Award has been earned; and
          (l)  make all other determinations necessary or advisable for the
               administration of the Plan.

2.3. Administrator's Discretion Final. Any determination made by the
     Administrator with respect to any Award will be made in the Administrator's
     sole discretion at the time of grant of the Award or, unless in
     contravention of any express term of the Plan or Award, at any later time,
     and such determination will be final and binding on the Company and on all
     persons having an interest in any Award under the Plan.

2.4. Administrator's Method of Acting; Liability. The Administrator may act only
     by a majority of its members then in office, except that the members
     thereof may authorize any one or more of their members or any officer of
     the Company to execute and deliver documents or to take any other
     ministerial action on behalf of the Committee with respect to Awards made
     or to be made to Eligible Participants. No member of the Administrator and
     no officer of the Company shall be liable for anything done or omitted to
     be done by such member or officer, by any other member of the Administrator
     or by any officer of the Company in connection with the performance of
     duties under the Plan, except for such member's or officer's own willful
     misconduct or as expressly provided by law.


ARTICLE 3. PARTICIPATION.

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3.1. Affiliates. If a Parent, Subsidiary or Affiliate of the Company wishes to
     participate in the Plan and its participation shall have been approved by
     the Board, the board of directors or other governing body of the Parent,
     Subsidiary or Affiliate, as the case may be, shall adopt a resolution in
     form and substance satisfactory to the Administrator authorizing
     participation by the Parent, Subsidiary or Affiliate in the Plan. A Parent,
     Subsidiary or Affiliate participating in the Plan may cease to be a
     participating company at any time by action of the Board or by action of
     the board of directors or other governing body of such Parent, Subsidiary
     or Affiliate, which latter action shall be effective not earlier than the
     date of delivery to the Secretary of the Company of a certified copy of a
     resolution of the Parent, Subsidiary or Affiliate's board of directors or
     other governing body taking such action. If the participation in the Plan
     of a Parent, Subsidiary or Affiliate shall terminate, such termination
     shall not relieve the Parent, Subsidiary or Affiliate of any obligations
     theretofore incurred by the Parent, Subsidiary or Affiliate, except as may
     be approved by the Administrator.

3.2. Participants. Incentive Stock Options may only be granted to employees
     (including officers and directors who are also employees) of the Company,
     or any Parent, Subsidiary or Affiliate of the Company. All other Awards may
     be granted to employees, officers, directors, consultants, independent
     contractors and advisors of the Company or any Parent, Subsidiary or
     Affiliate of the Company; provided, that such consultants, contractors and
     advisors render bona fide services to the Company or such Parent,
     Subsidiary or Affiliate of the Company not in connection with the offer and
     sale of securities in a capital-raising transaction. An Eligible
     Participant may be granted more than one Award under the Plan.


ARTICLE 4. AWARDS UNDER THE PLAN.

4.1. Types of Awards. Awards under the Plan may include, but need not be limited
     to, one or more of the following types, either alone or in any combination
     thereof:
          (a)  Options;
          (b)  Stock Appreciation Rights;
          (c)  Restricted Stock;
          (d)  Performance Grants;
          (e)  Stock Bonuses; and
          (f)  any other type of Award deemed by the Committee to be consistent
               with the purposes of the Plan (including, but not limited to,
               Awards of, or options or similar rights granted with respect to,
               unbundled stock units or components thereof, and Awards to be
               made to participants who are foreign nationals or are employed or
               performing services outside the United States).

4.2. Number of Shares Available Under the Plan. Subject to Section 4.4, the
     total number of Shares reserved and available for grant and issuance
     pursuant to the Plan will be 600,000. To the extent that any Award payable
     in Shares is forfeited, canceled, returned to the Company for failure to
     satisfy vesting requirements or upon the occurrence of other forfeiture
     events, or otherwise terminates without payment being made thereunder, the
     Shares covered by such Award will no longer be charged against the
     foregoing 600,000 Share maximum limitation and may again be made subject to
     Award(s) under the Plan.

     Shares may consist, in whole or in part, of authorized and unissued shares
     or treasury shares.

     The number of Shares which are transferred to the Company by a Participant
     to pay the exercise or purchase price of an Award will be subtracted from
     the number of Shares issued with respect to such Award for the purpose of
     counting Shares used under the Plan. Shares withheld to pay withholding
     taxes in connection with the exercise or repayment of an Award will be
     counted as used under the Plan. In addition, shares covered by an Award
     which is settled in cash will not be counted as used under the Plan.

4.3. Reservation of Shares. At all times, the Company shall reserve and keep
     available a sufficient number of Shares as shall be required to satisfy the
     requirements of all outstanding Options granted under the Plan and all
     other outstanding but unexercised Awards granted under the Plan.

4.4. Adjustment in Number of Shares Available Under the Plan. In the event that
     the number of outstanding shares of Common Stock is changed by a stock
     dividend, recapitalization, stock split, reverse stock split, subdivision,
     combination, reclassification or similar change in the capital structure of
     the Company without consideration, then (a) the number of Shares reserved
     for issuance under the Plan, (b) the number of Shares that may be granted
     pursuant to the Plan, and (c) the Exercise Prices of and number of Shares
     subject to outstanding Options and other Awards, will be proportionately
     adjusted, subject to any required action by the Board or the shareholders
     of the Company and compliance with applicable securities laws; provided,
     however, that, upon occurrence of such an event, fractions of a Share will
     not be issued upon exercise of an Award but will, upon such exercise,
     either be replaced by a cash payment equal to the Fair Market Value of such
     fraction of a Share on the effective date of such an event or will be
     rounded down to the nearest whole Share, as determined by the
     Administrator.

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4.5. Rights with Respect to Common Shares and Other Securities.

          (a) Unless otherwise determined by the Administrator, a Participant to
     whom an Award of Restricted Stock has been made (and any person succeeding
     to such Participant's rights with respect to such Award pursuant to the
     Plan) shall have, after issuance of a certificate or copy thereof for the
     number of Shares so awarded and prior to the expiration of the Restricted
     Period or the earlier repurchase of such Shares as provided in the Plan or
     Award Agreement with respect to such Award of Restricted Stock, ownership
     of such Shares, including the right to vote the same and to receive
     dividends or other distributions made or paid with respect to such Shares
     (provided that such Shares, and any new, additional or different shares, or
     other securities or property of the Company, or other forms of
     consideration which the Participant may be entitled to receive with respect
     to such Shares as a result of a stock split, stock dividend or any other
     change in the corporate or capital structure of the Company, shall be
     subject to the restrictions of the Plan as determined by the
     Administrator), subject, however, to the options, restrictions and
     limitations imposed thereon pursuant to the Plan. Notwithstanding the
     foregoing, unless otherwise determined by the Administrator, a Participant
     with whom an Award Agreement is made to issue Shares in the future shall
     have no rights as a shareholder with respect to Shares related to such
     Award Agreement until a stock certificate evidencing such Shares is issued
     to such Participant.

          (b) Unless otherwise determined by the Administrator, a Participant to
     whom a grant of Stock Options, Stock Appreciation Rights, Performance
     Grants or any other Award is made (and any person succeeding to such
     Participant's rights pursuant to the Plan) shall have no rights as a
     shareholder with respect to any Shares or as a holder with respect to other
     securities, if any, issuable pursuant to any such Award until the date a
     stock certificate evidencing such Shares or other instrument of ownership,
     if any, is issued to such Participant. Except as provided in Section 4.4,
     no adjustment shall be made for dividends, distributions or other rights
     (whether ordinary or extraordinary, and whether in cash, securities, other
     property or other forms of consideration, or any combination thereof) for
     which the record date is prior to the date such stock certificate or other
     instrument of ownership, if any, is issued.


ARTICLE 5. STOCK OPTIONS.

5.1. Grant; Determination of Type of Option. The Administrator may grant one or
     more Options to an Eligible Participant and will determine (a) whether each
     such Option will be an Incentive Stock Option or a Non-Qualified Stock
     Option, (b) the number of Shares subject to each such Option, (c) the
     Exercise Price of each such Option, (d) the period during which each such
     Option may be exercised, and (e) all other terms and conditions of each
     such Option, subject to the terms and conditions of this Article 5. The
     Administrator may grant an Option either alone or in conjunction with Stock
     Appreciation Rights, Performance Grants or other Awards, either at the time
     of grant or by amendment thereafter. The maximum number of Shares that may
     be granted under Options to any Participant during any calendar year shall
     be limited to 150,000 Shares (subject to adjustment as provided in Section
     4.4).

5.2. Form of Option Award Agreement. Each Option granted under the Plan will be
     evidenced by an Award Agreement which will expressly identify the Option as
     an Incentive Stock Option or a Non-Qualified Stock Option, and will be in
     such form and contain such provisions (which need not be the same for each
     Participant or Option) as the Administrator may from time to time approve,
     and which will comply with and be subject to the terms and conditions of
     the Plan.

5.3. Date of Grant. The date of grant of an Option will be the date on which the
     Administrator makes the determination to grant such Option, unless
     otherwise specified by the Administrator.

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5.4. Exercise Period. Each Option shall be exercisable within the times or upon
     the occurrence of one or more events determined by the Administrator and
     set forth in the Award Agreement governing such Option; provided, however,
     that no Option will be exercisable after the expiration of ten years from
     the date the Option is granted; and provided, further, however, that no
     Incentive Stock Option granted to a person who directly or by attribution
     owns more than 10% of the total combined voting power of all classes of
     stock of the Company or of any Parent, Subsidiary or Affiliate of the
     Company (each, a "Ten Percent Shareholder") will be exercisable after the
     expiration of five years from the date such Incentive Stock Option is
     granted. The Administrator also may provide for an Option to become
     exercisable at one time or from time to time, periodically or otherwise, in
     such number of Shares or percentage of Shares as the Administrator
     determines. Unless otherwise determined by the Administrator, an Option
     shall be exercisable as follows:
          (a)  up to 25% of the number of Shares subject to such Option
               commencing on the first anniversary of the date of grant of such
               Option;
          (b)  up to an additional 25% of the number of Shares subject to such
               Option commencing on the second anniversary of the date of grant
               of such Option;
          (c)  up to an additional 25% of the number of Shares subject to such
               Option commencing on the third anniversary of the date of grant
               of such Option; and
          (d)  up to an additional 25% of the number of Shares subject to such
               Option commencing on the fourth anniversary of the date of grant
               of such Option.

5.5. Exercise Price. The Exercise Price of an Option will be determined by the
     Administrator when the Option is granted and may be not less than 85% of
     the per share Fair Market Value of the Shares subject to such Option on the
     date of grant of such Option; provided, however, that: (a) the Exercise
     Price of an Incentive Stock Option will be not less than 100% of the per
     share Fair Market Value of such Shares on the date of such grant and (b)
     the Exercise Price of any Incentive Stock Option granted to a Ten Percent
     Shareholder will not be less than 110% of the per share Fair Market Value
     of such Shares on the date of such grant. Payment for the Shares purchased
     shall be made in accordance with Article 10 of the Plan.

5.6. Method of Exercise. An Option may be exercised only by delivery to the
     Company of an irrevocable written exercise notice (a) identifying the
     Option being exercised, (b) stating the number of Shares being purchased,
     (c) providing any other matters required by the Award Agreement with
     respect to such Option, and (d) containing such representations and
     agreements regarding Participant's investment intent and access to
     information and other matters, if any, as may be required or desirable by
     the Company to comply with applicable securities laws. Such exercise notice
     shall be accompanied by payment in full of the Exercise Price for the
     number of Shares being purchased in accordance with Article 10 and the
     executed Award Agreement with respect to such Option.

5.7. Termination. Unless otherwise provided in an Award Agreement, exercise of
     Options shall be subject to the following:

          (a) If the Participant is Terminated for any reason except death or
     Disability, then the Participant may exercise each of such Participant's
     Options (i) only to the extent that such Options would have been
     exercisable on the Termination Date and (ii) no later than three months
     after the Termination Date (or such longer time period not exceeding five
     years as may be determined by the Administrator, with any exercise beyond
     three months after the Termination Date deemed to be an exercise of an
     Non-Qualified Stock Option), but in any event, no later than the original
     expiration date of such Option;
          (b) If the Participant is Terminated because of Participant's death or
     Disability (or the Participant dies within three months after a Termination
     other than for Cause or because of Participant's Disability), then each of
     such Participant's Options (i) may be exercised only to the extent that
     such Option would have been exercisable by Participant on the Termination
     Date and (ii) must be exercised by Participant (or Participant's legal
     representative or authorized assignee) no later than twelve months after
     the Termination Date (or such longer time period not exceeding five years
     as may be determined by the Administrator, with any such exercise beyond
     (A) three months after the Termination Date when the Termination is for any
     reason other than the Participant's death or Disability or (B) twelve
     months after the Termination Date when the Termination is because of
     Participant's death or Disability, deemed to be an exercise of a
     Non-Qualified Stock Option), but in any event no later than the original
     expiration date of such Option;
          (c) Notwithstanding the provisions in paragraphs 5.7(a) and 5.7(b), if
     a Participant is terminated for Cause, neither the Participant, the
     Participant's estate nor such other person who may then hold an Option
     shall be entitled to exercise such Option whatsoever, whether or not, after
     the Termination Date, the Participant may receive payment from the Company
     or any Parent, Subsidiary or Affiliate of the Company for vacation pay, for
     services rendered prior to the Termination Date, for services rendered for
     the day on which Termination occurs, for salary in lieu of notice, for
     severance or for any other benefits; provided, however, in making such a
     determination, the Administrator shall give the Participant an opportunity
     to present to the Administrator evidence on Participant's behalf that the
     provisions of this paragraph 5.7(c) should not apply and, in the
     alternative, paragraph 5.7(a) or 5.7(b) shall apply; provided, further,
     however, that, for the purpose of this paragraph 5.7(c), Termination shall
     be deemed to occur on the date when the Company dispatches notice or advice
     to the Participant that such Participant is Terminated.

                                       8
<PAGE>

5.8. Limitations on Exercise. The Administrator may specify a reasonable minimum
     number of Shares that may be purchased on any exercise of an Option,
     provided, that such minimum number will not prevent Participant from
     exercising the Option for the full number of Shares for which the Option is
     then exercisable.

5.9. Limitations on Incentive Stock Options. The aggregate Fair Market Value (as
     determined as of the date of grant) of Shares with respect to which an
     Incentive Stock Option are exercisable for the first time by a Participant
     during any calendar year (under the Plan or under any other incentive stock
     option plan of the Company, and any Parent, Subsidiary and Affiliate of the
     Company) will not exceed $100,000. This $100,000 limitation shall be
     applied by taking Options into account in the order in which granted. An
     Incentive Stock Option shall be deemed to be a Non-Qualified Stock Option
     to the extent that the foregoing $100,000 limitation is exceeded. In the
     event that the Code or the regulations promulgated thereunder are amended
     after the effective date of the Plan to provide for a different limit on
     the Fair Market Value of Shares permitted to be subject to Incentive Stock
     Options, such different limit will be automatically incorporated herein and
     will apply to any Options granted after the effective date of such
     amendment.

5.10. Modification, Extension or Renewal. The Administrator may modify, extend
     or renew any outstanding Option and authorize the grant of one or more new
     Options in substitution therefor; provided that any such action may not,
     without the written consent of a Participant, impair any of such
     Participant's rights under any Option previously granted. Any outstanding
     Incentive Stock Option that is modified, extended, renewed or otherwise
     altered will be treated in accordance with Section 424(h) and other
     applicable provisions of the Code.

5.11. No Disqualification. Notwithstanding any other provision in the Plan, no
     term of the Plan relating to an Incentive Stock Option will be interpreted,
     amended or altered, nor will any discretion or authority granted under the
     Plan be exercised, so as to disqualify the Plan under Section 422 of the
     Code or, without the consent of the Participant affected, to disqualify any
     Incentive Stock Option under Section 422 of the Code.

5.12. Prohibition Against Transfer. No Option may be sold, assigned,
     transferred, pledged, hypothecated or otherwise disposed of, except by will
     or the laws of descent and distribution or pursuant to a domestic relations
     order, and a Participant's Option shall be exercisable during such
     Participant's lifetime only by such Participant or such person receiving
     such Option pursuant to a domestic relations order.


ARTICLE 6. STOCK APPRECIATION RIGHTS.

6.1. Grant of Stock Appreciation Rights.
          (a) The Administrator may grant Stock Appreciation Rights either
     alone, or in conjunction with the grant of an Option, Performance Grant or
     other Award, either at the time of grant or by amendment thereafter. Each
     Award of Stock Appreciation Rights granted under the Plan shall be
     evidenced by an instrument in such form as the Administrator shall
     prescribe from time to time in accordance with the Plan and shall comply
     with the following terms and conditions, and with such other terms and
     conditions, including, but not limited to, restrictions upon the Award of
     Stock Appreciation Rights or the Shares issuable upon exercise thereof, as
     the Administrator shall establish.
          (b) The Administrator shall determine the number of Shares to be
     subject to each Award of Stock Appreciation Rights. The number of Shares
     subject to an outstanding Award of Stock Appreciation Rights may be reduced
     on a share-for-share or other appropriate basis, as determined by the
     Administrator, to the extent that Shares under such Award of Stock
     Appreciation Rights are used to calculate the cash, Shares, or other
     securities or property of the Company, or other forms of payment, or any
     combination thereof, received pursuant to exercise of an Option attached to
     such Award of Stock Appreciation Rights, or to the extent that any other
     Award granted in conjunction with such Award of Stock Appreciation Rights
     is paid.

6.2. Prohibition Against Transfer. No Award of Stock Appreciation Rights may be
     sold, assigned, transferred, pledged, hypothecated or otherwise disposed
     of, except by will or the laws of the descent and distribution or pursuant
     to a domestic relations order, and Stock Appreciation Rights Awarded to a
     Participant shall be exercisable during such Participant's lifetime only by
     such Participant or such person receiving such Option pursuant to a
     domestic relations order. Unless the Administrator determines otherwise,
     the Award of Stock Appreciation Rights to a Participant shall not be
     exercisable for at least six months after the date of grant, unless such
     Participant is Terminated before the expiration of such six-month period by
     reason of such Participant's Disability or death.

                                       9
<PAGE>


6.3. Exercise. The Award of Stock Appreciation Rights shall not be exercisable:
          (a) in the case of any Award of Stock Appreciation Rights that are
     attached to an Incentive Stock Option granted to a Ten Percent Employee,
     after the expiration of five years from the date such Incentive Stock
     Option is granted, and, in the case of any other Award of Stock
     Appreciation Rights, after the expiration of ten years from the date of
     such Award. Any Award of Stock Appreciation Rights may be exercised during
     such period only at such time or times and in such installments as the
     Administrator may establish;
          (b) unless the Option or other Award to which the Award of Stock
     Appreciation Rights is attached is at the time exercisable; and
          (c) unless the Participant exercising the Award of Stock Appreciation
     Rights has been, at all times during the period beginning with the date of
     the grant thereof and ending on the date of such exercise, employed by or
     otherwise performing services for the Company or any Parent, Subsidiary or
     Affiliate of the Company, except that
          (i) in the case of any Award of Stock Appreciation Rights (other than
     those attached to an Incentive Stock Option), if such Participant is
     Terminated solely by reason of a period of Related Employment, the
     Participant may, during such period of Related Employment, exercise the
     Award of Stock Appreciation Rights as if such Participant had not been
     Terminated;
          (ii) if such Participant is Terminated by reason of such Participant's
     Disability or early, normal or deferred retirement under an approved
     retirement program of the Company or any Parent, Subsidiary or Affiliate of
     the Company (or such other plan or arrangement as may be approved by the
     Administrator for this purpose) while holding an Award of Stock
     Appreciation Rights which has not expired and has not been fully exercised,
     such Participant may, at any time within three years (or such other period
     determined by the Administrator) after the Termination Date (but in no
     event after the Award of Stock Appreciation Rights has expired), exercise
     the Award of Stock Appreciation Rights with respect to any Shares as to
     which such Participant could have exercised the Award of Stock Appreciation
     Rights on the Termination Date, or with respect to such greater number of
     Shares as determined by the Administrator;
          (iii) if such Participant is Terminated for reasons other than Related
     Employment, Disability, early, normal or deferred retirement or death while
     holding an Award of Stock Appreciation Rights which has not expired and has
     not been fully exercised, such person may exercise the Award of Stock
     Appreciation Rights at any time during the period, if any, which the
     Administrator approves (but in no event after the Award of Stock
     Appreciation Rights expires) following such Participant's Termination Date
     with respect to any Shares as to which such Participant could have
     exercised the Award of Stock Appreciation Rights on such Participant's
     Termination Date or as otherwise permitted by the Administrator; or
          (iv) if any Participant to whom an Award of Stock Appreciation Rights
     has been granted shall die holding an Award of Stock Appreciation Rights
     which has not expired and has not been fully exercised, such Participant's
     executors, administrators, heirs or distributees, as the case may be, may,
     at any time within one year (or such other period determined by the
     Administrator) after the date of death (but in no event after the Award of
     Stock Appreciation Rights has expired), exercise the Award of Stock
     Appreciation Rights with respect to any Shares as to which the decedent
     Participant could have exercised the Award of Stock Appreciation Rights at
     the time of such death, or with respect to such greater number of Shares as
     may be determined by the Administrator.

6.4. Exercise.
          (a) An Award of Stock Appreciation Rights shall entitle the
     Participant (or any person entitled to act under the provisions of clause
     (iv) of Paragraph 6.3(c)) to either (i) exercise such Award and receive
     payment in accordance with such Award or (ii) surrender unexercised the
     Option (or other Award) to which the Stock Appreciation Rights is attached
     (or any portion of such Option or other Award) to the Company and to
     receive from the Company in exchange therefor, without payment to the
     Company, that number of Shares having an aggregate value equal to the
     excess of the Fair Market Value of one Share, at the time of such exercise,
     over the Exercise Price per share, times the number of Shares subject to
     the Award or the Option (or other Award), or portion thereof, which is so
     exercised or surrendered, as the case may be. The Administrator shall be
     entitled to elect to settle the obligation arising out of the exercise of
     Stock Appreciation Rights by the payment of cash or other securities or
     property of the Company, or other forms of payment, or any combination
     thereof, as determined by the Administrator, equal to the aggregate value
     of the Shares the Company would otherwise be obligated to deliver. Any such
     election by the Administrator shall be made as soon as practicable after
     the receipt by the Company of written notice of the exercise of such Stock
     Appreciation Rights. The value of a Share, other securities or property of
     the Company, or other forms of payment determined by the Administrator for
     this purpose shall be the Fair Market Value of a Share on the last business
     day next preceding the date of the election to exercise such Stock
     Appreciation Rights, unless the Administrator determines otherwise and is
     set forth in the Award Agreement with respect to such Stock Appreciation
     Rights.

                                       10
<PAGE>

          (b) An Award of Stock Appreciation Rights may provide that such Stock
     Appreciation Rights shall be deemed to have been exercised at the close of
     business on the business day preceding the expiration date of such Stock
     Appreciation Rights or of the related Option (or other Award), or such
     other date as specified by the Administrator, if at such time such Stock
     Appreciation Rights has a positive value. Such deemed exercise shall be
     settled or paid in the same manner as a regular exercise thereof as
     provided in Paragraph 6.4(a).

6.5. Fractional Shares. No fractional shares may be delivered under this Article
     6, but, in lieu thereof, a cash or other adjustment shall be made as
     determined by the Administrator.


ARTICLE 7. RESTRICTED STOCK.

7.1. Grant. An Award of Restricted Stock is an offer by the Company to sell to
     an Eligible Participant Shares that are subject to restrictions. The
     Administrator will determine to whom an offer will be made, the number of
     Shares the person may purchase, the Exercise Price to be paid, the
     restrictions to which the Shares will be subject, and all other terms and
     conditions of the Restricted Stock Award, subject to the provisions of this
     Article 7.

7.2. Form of Restricted Stock Award. All purchases under an Award of Restricted
     Stock will be evidenced by an Award Agreement that will be in such form
     (which need not be the same for each Award of Restricted Stock or
     Participant) as the Administrator will from time to time approve, and will
     comply with and be subject to the terms and conditions of the Plan. The
     offer of Restricted Stock will be accepted by the Participant's execution
     and delivery of the Award Agreement evidencing the offer to purchase the
     Restricted Stock and full payment for the Shares to the Company within 30
     days from the date such Award Agreement is tendered to such Eligible
     Participant. If such Eligible Participant does not execute and deliver such
     Award Agreement along with full payment for the Shares to the Company
     within such 30 day period, then such offer will terminate, unless otherwise
     determined by the Administrator.

7.3. Purchase Price. The Exercise Price of Shares sold pursuant to an Award of
     Restricted Stock will be determined by the Administrator on the date such
     Award is granted, except in the case of a sale to a Ten Percent
     Shareholder, in which case the Exercise Price will be 100% of the per share
     Fair Market Value on the date such Award is granted of the Shares subject
     to the Award. Payment of the Exercise Price may be made in accordance with
     Article 10 of the Plan.

7.4. Terms of Restricted Stock Awards. Each Award of Restricted Stock shall be
     subject to such restrictions as the Administrator may impose. These
     restrictions may be based upon completion of a specified number of years of
     service with the Company or upon completion of the performance goals as set
     out in advance in the Participant's individual Award Agreement. Awards of
     Restricted Stock may vary from Participant to Participant and between
     groups of Participants. Prior to the grant of an Award of Restricted Stock,
     the Administrator shall:
          (a)  determine the nature, length and starting date of any performance
               period for the Restricted Stock Award;
          (b)  select from among the performance factors to be used to measure
               performance goals, if any; and
          (c)  determine the number of Shares that may be awarded to the
               Participant.

     Prior to the payment of any Restricted Stock pursuant to an Award, the
     Administrator shall determine the extent to which such Restricted Stock
     Award has been earned. Performance periods may overlap and Participants may
     participate simultaneously with respect to Restricted Stock Awards that are
     subject to different performance periods and having different performance
     goals and other criteria.

7.5. Termination During Performance Period. If a Participant is Terminated
     during a performance period with respect to any Award of Restricted Stock
     for any reason, then such Participant will be entitled to payment (whether
     in Shares, cash or otherwise) with respect to the Restricted Stock Award
     only to the extent earned as of the date of Termination in accordance with
     the Award Agreement with respect to such Restricted Stock, unless the terms
     of such Award Agreement provide otherwise or the Administrator determines
     otherwise.


ARTICLE 8. PERFORMANCE GRANTS.

8.1. Award. The Award of a Performance Grant to a Participant will entitle such
     Participant to receive a specified amount (the "Performance Grant Actual
     Value") as determined by the Administrator; provided that the terms and
     conditions specified in the Plan and in the Award of such Performance Grant
     are satisfied. Each Award of a Performance Grant shall be subject to the
     terms and conditions set forth in this Article 8 and such other terms and
     conditions, including, but not limited to, restrictions upon any cash,
     Shares, other securities or property of the Company, or other forms of
     payment, or any combination thereof, issued in respect of the Performance
     Grant, as the Administrator shall establish, shall be embodied in an Award
     Agreement in such form and substance as is approved by the Administrator.

                                       11
<PAGE>


8.2. Terms. The Administrator shall determine the value or range of values of a
     Performance Grant to be awarded to each Participant selected for an Award
     of a Performance Grant and whether or not such Performance Grant is granted
     in conjunction with an Award of Options, Stock Appreciation Rights,
     Restricted Stock or other type of Award, or any combination thereof, under
     the Plan (which may include, but need not be limited to, deferred Awards)
     concurrently or subsequently granted to such Participant (the "Associated
     Award"). As determined by the Administrator, the maximum value of each
     Performance Grant (the "Maximum Value") shall be: (a) an amount fixed by
     the Administrator at the time the award is made or amended thereafter; (b)
     an amount which varies from time to time based in whole or in part on the
     then current Fair Market Value of a Share, other securities or property of
     the Company, or other securities or property, or any combination thereof;
     or (c) an amount that is determinable from criteria specified by the
     Administrator.

     Performance Grants may be issued in different classes or series having
     different names, terms and conditions. In the case of a Performance Grant
     awarded in conjunction with an Associated Award, the Performance Grant may
     be reduced on an appropriate basis to the extent that the Associated Award
     has been exercised, paid to or otherwise received by the participant, as
     determined by the Administrator.

8.3. Award Period. The award period ("Performance Grant Award Period") in
     respect of any Performance Grant shall be a period determined by the
     Administrator. At the time each Performance Grant is made, the
     Administrator shall establish performance objectives to be attained within
     the Performance Grant Award Period as the means of determining the
     Performance Grant Actual Value of such Performance Grant. The performance
     objectives shall be based on such measure or measures of performance, which
     may include, but need not be limited to, the performance of the
     Participant, the Company, one or more Subsidiary, Parent or Affiliate of
     the Company, or one or more of divisions or units thereof, or any
     combination of the foregoing, as the Administrator shall determine, and may
     be applied on an absolute basis or be relative to industry or other
     indices, or any combination thereof. Each Performance Grant Actual Value of
     a Performance Grant shall be equal to the Performance Grant Maximum Value
     of such Performance grant only if the performance objectives are attained
     in full, but the Administrator shall specify the manner in which the
     Performance Grant Actual Value shall be determined if the performance
     objectives are met in part. Such performance measures, the Performance
     Grant Actual Value or the Performance Grant Maximum Value, or any
     combination thereof, may be adjusted in any manner by the Administrator at
     any time and from time to time during or as soon as practicable after the
     Performance Grant Award Period, if it determines that such performance
     measures, the Performance Grant Actual Value or the Performance Grant
     Maximum Value, or any combination thereof, are not appropriate under the
     circumstances.

8.4. Termination. The rights of a Participant in Performance Grants awarded to
     such Participant shall be provisional and may be canceled or paid in whole
     or in part, all as determined by the Administrator, if such Participant's
     continuous employment or performance of services for the Company, any
     Parent, Subsidiary and Affiliate of the Company shall terminate for any
     reason prior to the end of the Performance Grant Award Period, except
     solely by reason of a period of Related Employment.

8.5. Determination of Performance Grant Actual Values. The Committee shall
     determine whether the conditions of Sections 8.2 or 8.3 have been met and,
     if so, shall ascertain the Performance Grant Actual Value of Performance
     Grants. If a Performance Grant has no Performance Grant Actual Value, the
     Award of such Performance Grant shall be deemed to have been canceled and
     the Associated Award, if any, may be canceled or permitted to continue in
     effect in accordance with such Associated Award's terms. If a Performance
     Grant has a Performance Grant Actual Value and:
          (a) was not awarded in conjunction with an Associated Award, the
     Administrator shall cause an amount equal to the Performance Grant Actual
     Value of such Performance Grant to be paid to the Participant or the
     Participant's beneficiary as provided below; or
          (b) was awarded in conjunction with an Associated Award, the
     Administrator shall determine, in accordance with criteria specified by the
     Administrator, whether to (i) to cancel such Performance Grant, in which
     event no amount in respect thereof shall be paid to the Participant or the
     Participant's beneficiary, and the Associated Award may be permitted to
     continue in effect in accordance with the Associated Award's terms, (ii)
     pay the Performance Grant Actual Value to the Participant or the
     Participant's beneficiary as provided below, in which event such Associated
     Award may be canceled, or (iii) pay to the Participant or the Participant's
     beneficiary as provided below, the Performance Grant Actual Value of only a
     portion of such Performance Grant, in which case a complementary portion of
     the Associated Award may be permitted to continue in effect in accordance
     with its terms or be canceled, as determined by the Administrator.

                                       12
<PAGE>

     Such determination by the Administrator shall be made as promptly as
     practicable following the end of the Performance Grant Award Period or upon
     the earlier termination of employment or performance of services, or at
     such other time or times as the Administrator shall determine, and shall be
     made pursuant to criteria specified by the Administrator.

8.6. Payment. Payment of any amount in respect of the Performance Grants which
     the Administrator determines to pay as provided in this Article 8 shall be
     made by the Company as promptly as practicable after the end of the
     Performance Grant Award Period or at such other time or times as the
     Administrator shall determine, and may be made in cash, Shares, other
     securities or property of the Company, or other forms of payment, or any
     combination thereof or in such other manner, as determined by the
     Administrator. Notwithstanding anything in this Article 8 to the contrary,
     the Administrator may determine and pay out a Performance Grant Actual
     Value of a Performance Grant at any time during the Performance Grant Award
     Period.

ARTICLE 9. STOCK BONUSES.

9.1. Awards of Stock Bonuses. A Stock Bonus is an Award of Shares (which may
     consist of Restricted Stock) for services rendered to the Company or any
     Parent, Subsidiary or Affiliate of the Company. A Stock Bonus may be
     awarded for services previously rendered to the Company, or any Parent,
     Subsidiary or Affiliate of the Company, pursuant to an Award Agreement that
     will be in such form (which need not be the same for each Participant) as
     the Administrator will from time to time approve, and will comply with and
     be subject to the terms and conditions of the Plan. A Stock Bonus may be
     awarded upon satisfaction of such performance goals as are set out in
     advance in the Participant's individual Award Agreement that will be in
     such form (which need not be the same for each Participant) as the
     Administrator will from time to time approve, and will comply with and be
     subject to the terms and conditions of the Plan. Stock Bonuses may vary
     from Participant to Participant and between groups of Participants, and may
     be based upon the achievement of the Company, any Parent, Subsidiary or
     Affiliate of the Company and/or individual performance factors or upon such
     other criteria as the Administrator may determine.

9.2. Terms of Stock Bonuses. The Administrator will determine the number of
     Shares to be awarded to the Participant. If the Stock Bonus is being earned
     upon the satisfaction of performance goals set forth in an Award Agreement,
     then the Administrator will:
          (a)  determine the nature, length and starting date of any performance
               period for each Stock Bonus;
          (b)  select from among the performance factors to be used to measure
               the performance, if any; and
          (c)  determine the number of Shares that may be awarded to the
               Participant

     Prior to the payment of any Stock Bonus, the Administrator shall determine
     the extent to which such Stock Bonuses have been earned. Performance
     periods may overlap and Participants may participate simultaneously with
     respect to Stock Bonuses that are subject to different performance periods
     and different performance goals and other criteria. The number of Shares
     may be fixed or may vary in accordance with such performance goals and
     criteria as may be determined by the Administrator. The Administrator may
     adjust the performance goals applicable to the Stock Bonuses to take into
     account changes in law and accounting or tax rules and to make such
     adjustments as the Administrator deems necessary or appropriate to reflect
     the impact of extraordinary or unusual items, events or circumstances to
     avoid windfalls or hardships.

9.3. Form of Payment. The earned portion of a Stock Bonus shall be paid
     currently or on a deferred basis with such interest or dividend equivalent,
     if any, as the Administrator may determine. Payment may be made in the form
     of cash or whole Shares or a combination thereof, either in a lump sum
     payment or in installments, all as the Administrator will determine.


ARTICLE 10. PAYMENT FOR SHARE PURCHASES.

10.1. Payment. Payment for Shares purchased pursuant to this Plan may be made in
     cash (by check) or, where expressly approved for the Participant by the
     Administrator and where permitted by law:
          (a) by cancellation of indebtedness of the Company to the Participant;
          (b) by surrender of shares of Common Stock that either (i) have been
     owned by the Participant for more than six months and have been paid for
     within the meaning of Rule 144 promulgated under the Securities Act (and,
     if such shares were purchased from the Company by use of a promissory note,
     such note has been fully paid with respect to such shares) or (ii) were
     obtained by Participant in the public market;

                                       13
<PAGE>


          (c) by tender of a full recourse promissory note having such terms as
     may be approved by the Administrator and bearing interest at a rate
     sufficient to avoid imputation of income under Sections 483 and 1274 of the
     Code; provided, however, that Participants who are not employees or
     directors of the Company will not be entitled to purchase Shares with a
     promissory note unless the note is secured by collateral other than the
     Shares satisfactory to the Administrator;
          (d) by waiver of compensation due or accrued to the Participant for
     services rendered;
          (e) with respect only to purchases upon exercise of an Option, and
     provided that a public market for the Company's stock exists, (i) through a
     "same day sale" commitment from the Participant and a broker-dealer that is
     a member of the NASD whereby the Participant irrevocably elects to exercise
     the Option and to sell a portion of the Shares so purchased to pay for the
     Exercise Price, and whereby such broker-dealer irrevocably commits upon
     receipt of such Shares to forward the Exercise Price directly to the
     Company, or (ii) through a "margin" commitment from the Participant and
     such broker-dealer whereby the Participant irrevocably elects to exercise
     the Option and to pledge the Shares so purchased to such broker-dealer in a
     margin account as security for a loan from such broker-dealer in the amount
     of the Exercise Price, and whereby such broker-dealer irrevocably commits
     upon receipt of such Shares to forward the Exercise Price directly to the
     Company; or
          (f) by any combination of the foregoing.

10.2. Loan Guarantees. The Company, in its sole discretion, may assist a
     Participant in paying for Shares purchased under the Plan by authorizing a
     guarantee by the Company of a third-party loan to the Participant.


ARTICLE 11. DEFERRAL OF COMPENSATION.

11.1. Deferral of Compensation. The Administrator shall determine whether or not
     an Award to a Participant shall be made in conjunction with deferral of
     such Participant's salary, bonus or other compensation, or any combination
     thereof, and whether or not such deferred amounts may be:
          (a) forfeited to the Company or to other Participants, or any
     combination thereof, under certain circumstances (which may include, but
     need not be limited to, certain types of Termination of employment or
     performance of services for the Company, or any Parent, Subsidiary or
     Affiliate of the Company);
          (b) subject to increase or decrease in value based upon the attainment
     of or failure to attain, respectively, certain performance measures; and/or
          (c) credited with income equivalents (which may include, but need not
     be limited to, interest, dividends or other rates of return) until the date
     or dates of payment of such Award, if any.


ARTICLE 12. DEFERRED PAYMENT OF AWARDS.

12.1. Deferred Payment of Awards. The Administrator may specify that the payment
     of all or any portion of cash, Shares, other securities or property of the
     Company, or any other form of payment, or any combination thereof, under an
     Award shall be deferred until a later date. Deferrals shall be for such
     periods or until the occurrence of such events, and upon such terms, as the
     Administrator shall determine. Deferred payments of Awards may be made by
     undertaking to make payment in the future based upon the performance of
     certain investment equivalents (which may include, but need not be limited
     to, government securities, Shares, other securities, property or
     consideration, or any combination thereof), together with such additional
     amounts of income equivalents (which may be compounded and may include, but
     need not be limited to, interest, dividends or other rates of return, or
     any combination thereof) as may accrue thereon until the date or dates of
     payment, such investment equivalents and such additional amounts of income
     equivalents to be determined by the Administrator.


ARTICLE 13. AMENDMENT OR SUBSTITUTION OF AWARDS UNDER THE PLAN.

13.1. Amendment or Substitution of Awards Under the Plan. The terms of any
     outstanding Award under the Plan may be amended from time to time by the
     Administrator in any manner that the Administrator deems appropriate
     (including, but not limited to, acceleration of the date of exercise of any
     Award and/or payments thereunder, or reduction of the Exercise Price of an
     Award); provided, however, that no such amendment shall adversely affect in
     a material manner any right of a Participant under such Award without the
     Participant's written consent. The Administrator may permit or require
     holders of Awards to surrender outstanding Awards as a condition precedent
     to the grant of new Awards under the Plan.

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ARTICLE 14. DESIGNATION OF BENEFICIARY BY PARTICIPANT.

14.1. Designation of Beneficiary by Participant. A Participant may designate one
     or more beneficiaries to receive any rights and payments to which such
     Participant may be entitled in respect of any Award in the event of such
     Participant's death. Such designation shall be on a written form acceptable
     to and filed with the Administrator. The Administrator shall have the right
     to review and approve beneficiary designations. A Participant may change
     the Participant's beneficiary(ies) from time to time in the same manner as
     the original designation, unless such Participant has made an irrevocable
     designation. Any designation of beneficiary under the Plan (to the extent
     it is valid and enforceable under applicable law) shall be controlling over
     any other disposition, testamentary or otherwise, as determined by the
     Administrator. If no designated beneficiary survives the Participant and is
     living on the date on which any right or amount becomes payable to such
     Participant's beneficiary(ies), such payment will be made to the legal
     representatives of the Participant's estate, and the term "beneficiary" as
     used in the Plan shall be deemed to include such person or persons. If
     there is any question as to the legal right of any beneficiary to receive a
     distribution under the Plan, the Administrator may determine that the
     amount in question be paid to the legal representatives of the estate of
     the Participant, in which event the Company, the Administrator, the Board
     and the Committee and the members thereof will have no further liability to
     any person or entity with respect to such amount.


ARTICLE 15. CHANGE IN CONTROL.

15.1. Effect of a Change in Control. An Award Agreement may provide that, upon a
     Change in Control, all or any portion of the Award shall automatically
     become immediately vested and exercisable, that restrictions relating to
     the Award shall lapse or that the Award shall become immediately payable.

15.2. Change of Control. For this purpose, a Change in Control shall be deemed
     to occur when and only when any of the following events first occurs:
          (a) any person who is not currently a shareholder of the Company (or
     does not currently have the right to acquire pursuant to any agreement, or
     upon exercise of conversion rights, warrants, options or otherwise,
     securities of the Company) becomes the beneficial owner, directly or
     indirectly, of securities of the Company representing 50% or more of the
     combined voting power of the Company's then outstanding voting securities;
          (b) members of the Incumbent Board cease to constitute a majority of
     the Board without the approval of the remaining members of the Incumbent
     Board; or
          (c) any merger (other than a merger where the Company is the survivor
     and there is no accompanying Change in Control under clauses (a) or (b) of
     this Section 15.2), consolidation, liquidation or dissolution of the
     Company, or the sale of all or substantially all of the assets of the
     Company.

     Notwithstanding the foregoing, a Change in Control shall not be deemed to
     occur pursuant to clause (a) of this Section 15.2 solely because 50% or
     more of the combined voting power of the Company's outstanding securities
     is acquired by one or more employee benefit plans maintained by the Company
     or by any other employer, the majority interest in which is held, directly
     or indirectly, by the Company. For purposes of this Article 15, the terms
     "person" and "beneficial owner" shall have the meaning set forth in
     Sections 3(a) and 13(d) of the Exchange Act, and in the regulations
     promulgated thereunder.


ARTICLE 16. PLAN AMENDMENT OR SUSPENSION.

16.1. Plan Amendment or Suspension. The Plan may be amended or suspended in
     whole or in part at any time and from time to time by the Board, but no
     amendment shall be effective unless and until the same is approved by
     shareholders of the Company where the failure to obtain such approval would
     adversely affect the compliance of the Plan with Sections 162 and 422 of
     the Code, Rule 16b-3 and/or with any other applicable law, rule or
     regulation. No amendment of the Plan shall adversely affect in a material
     manner any right of any Participant with respect to any Award theretofore
     granted without such Participant's written consent.


ARTICLE 17. PLAN TERMINATION.

17.1. Method of Plan Termination. The Plan shall terminate upon the earlier of
     the following dates or events to occur:
          (a)  upon the adoption of a resolution of the Board terminating the
               Plan; or

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<PAGE>


          (b)  September 22, 2014.

17.2. Effect of Termination on Outstanding Awards. No termination of the Plan
     shall materially alter or impair any of the rights or obligations of any
     person, without such person's consent, under any Award theretofore granted
     under the Plan, except that subsequent to termination of the Plan, the
     Administrator may make amendments permitted under Article 13.


ARTICLE 18. SHAREHOLDER APPROVAL.

18.1. Shareholder Approval. The Plan shall be submitted to the shareholders of
     the Company for their approval at a meeting of the shareholders of the
     Company to be duly held on or before September 22, 2005.

18.2. Effectiveness of Plan Prior to Shareholder Approval. The Plan shall not be
     effective and no Award shall be made hereunder unless and until the Plan
     has been approved by the shareholders of the Company as provided in Section
     18.1. The shareholders shall be deemed to have approved and adopted the
     Plan only if it is approved at a duly held meeting of the shareholders by
     vote taken in the manner required by the laws of the State of New York and
     the applicable federal securities laws.


ARTICLE 19. TRANSFERABILITY.

19.1. Transferability. Except as may be approved by the Administrator where such
     approval shall not adversely affect compliance of the Plan with Sections
     162 and 422 of the Code and/or Rule 16b-3, a Participant's rights and
     interest under the Plan may not be assigned or transferred, hypothecated or
     encumbered in whole or in part either directly or by operation of law or
     otherwise (except in the event of a Participant's death) including, but not
     by way of limitation, execution, levy, garnishment, attachment, pledge,
     bankruptcy or in any other manner; provided, however, except as may be
     approved by the Administrator, that any Option or similar right (including,
     but not limited to, a Stock Appreciation Right) offered pursuant to the
     Plan shall not be transferable other than by will or the laws of descent or
     pursuant to a domestic relations order and shall be exercisable during the
     Participant's lifetime only by such Participant or such person receiving
     such Option or similar right pursuant to a domestic relations order.


ARTICLE 20. PRIVILEGES OF STOCK OWNERSHIP; RESTRICTIONS ON SHARES.

20.1. Voting and Dividends. No Participant will have any of the rights of a
     shareholder with respect to any Shares subject to or issued pursuant to the
     Plan until such Shares are issued to the Participant. After Shares are
     issued to the Participant, the Participant will be a shareholder and have
     all the rights of a shareholder with respect to such Shares, including the
     right to vote and receive all dividends or other distributions made or paid
     with respect to such Shares; provided, however, that if such Shares are
     Restricted Stock, then any new, additional or different securities the
     Participant may become entitled to receive with respect to such Shares by
     virtue of a stock dividend, stock split or any other change in the
     corporate or capital structure of the Company will be subject to the same
     restrictions as the Restricted Stock; provided, however, further, that the
     Participant will have no right to retain such stock dividends or stock
     distributions with respect to Restricted Stock that is repurchased at the
     Participant's Exercise Price in accordance with an Award Agreement with
     respect to such Restricted Stock.

20.2. Financial Statements. The Company will provide financial statements to
     each Participant prior to such Participant's purchase of Shares under the
     Plan, and to each Participant annually during the period such Participant
     has Awards outstanding; provided, however, that the Company will not be
     required to provide such financial statements to Participants whose
     services in connection with the Company assure them access to equivalent
     information.

20.3. Restrictions on Shares. At the discretion of the Administrator, the
     Company may reserve to itself and/or its assignee(s) in the Award Agreement
     a right to repurchase a portion of or all Shares issued pursuant to such
     Award Agreement and held by a Participant following such Participant's
     Termination at any time within 90 days after the later of Participant's
     Termination Date or the date Participant purchases Shares under the Plan,
     for cash and/or cancellation of purchase money indebtedness, at the
     Participant's Exercise Price or such other price as the Administrator may
     determine at the time of the grant of the Award.


ARTICLE 21. CERTIFICATES.

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<PAGE>


21.1. Certificates. All Shares or other securities delivered under this Plan
     will be subject to such stock transfer orders, legends and other
     restrictions as the Administrator may deem necessary or advisable,
     including restrictions under any applicable federal, state or foreign
     securities law, or any rules, regulations and other requirements
     promulgated under such laws or any stock exchange or automated quotation
     system upon which the Shares may be listed or quoted and each stock
     certificate evidencing such Shares and other certificates shall be
     appropriately legended.


ARTICLE 22. DEPOSIT OF SHARES; ESCROW.

22.1. Deposit of Shares; Escrow. To enforce any restrictions on a Participant's
     Shares, the Committee may require the Participant to deposit all stock
     certificates evidencing Shares, together with stock powers or other
     instruments of transfer approved by the Administrator, appropriately
     endorsed in blank, with the Company or an agent designated by the Company
     to hold in escrow until such restrictions have lapsed or terminated, and
     the Administrator may cause a legend or legends referencing such
     restrictions to be placed on the certificates. Any Participant who is
     permitted to execute a promissory note as partial or full consideration for
     the purchase of Shares under the Plan will be required to pledge and
     deposit with the Company all or part of the Shares so purchased as
     collateral to secure the payment of Participant's obligation to the Company
     under the promissory note; provided, however, that the Administrator may
     require or accept other or additional forms of collateral to secure the
     payment of such obligation and, in any event, the Company will have full
     recourse against the Participant under the promissory note notwithstanding
     any pledge of the Participant's Shares or other collateral. In connection
     with any pledge of the Shares, Participant will be required to execute and
     deliver a written pledge agreement in such form as the Administrator may
     from time to time approve. The Shares purchased with the promissory note
     may be released from the pledge on a pro rata basis as the promissory note
     is paid.


ARTICLE 23. EXCHANGE AND BUYOUT OF AWARDS.

23.1. Exchange. The Administrator may, at any time or from time to time,
     authorize the Company, with the consent of the respective Participants, to
     issue new Awards in exchange for the surrender and cancellation of any or
     all outstanding Awards.

23.2. Buyout of Awards. The Administrator may, at any time or from time to time,
     authorize the Company to buy from a Participant an Award previously granted
     with payment in cash, Shares (including Restricted Stock) or other
     consideration, based on such terms and conditions as the Administrator and
     the Participant may agree.


ARTICLE 24. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE.

24.1. Compliance with Applicable Laws. An Award will not be effective unless
     such Award is made in compliance with all applicable federal and state
     securities laws, rules and regulations of any governmental body, and the
     requirements of any stock exchange or automated quotation system upon which
     the Shares may then be listed or quoted, as they are in effect on the date
     of grant of the Award and also on the date of exercise or other issuance.
     Notwithstanding any other provision in this Plan, the Company will have no
     obligation to issue or deliver stock certificates for Shares under this
     Plan prior to: (a) obtaining any approvals from governmental agencies that
     the Administrator determines are necessary or advisable; and/or (b)
     completion of any registration or other qualification of such Shares under
     any state or federal law or ruling of any governmental body that the
     Administrator determines to be necessary or advisable.

24.2. No Obligation to Register Shares or Awards. The Company will be under no
     obligation to register the Shares under the Securities Act or to effect
     compliance with the registration, qualification or listing requirements of
     any state securities laws, stock exchange or automated quotation system,
     and the Company will have no liability for any inability or failure to do
     so.


ARTICLE 25. NO RIGHT TO EMPLOYMENT OR CONTINUATION OF RELATIONSHIP.

25.1. No Right to Employment or Continuation of Relationship. Nothing in this
     Plan or any Award granted under the Plan will confer or be deemed to confer
     on any Participant any right to continue in the employ of, or to continue
     any other relationship with, the Company or any Parent, Subsidiary or
     Affiliate of the Company or limit in any way the right of the Company or
     any Parent, Subsidiary or Affiliate of the Company to terminate
     Participant's employment or other relationship at any time, with or without
     cause.

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<PAGE>


ARTICLE 26. NON-EXCLUSIVITY OF THE PLAN.

26.1. Non-Exclusivity of the Plan. Neither the adoption of the Plan by the
     Board, the submission of the Plan to the shareholders of the Company for
     approval, nor any provision of this Plan will be construed as creating any
     limitations on the power of the Board or the Committee to adopt such
     additional compensation arrangements as the Board may deem desirable,
     including, without limitation, the granting of stock options and bonuses
     otherwise than under the Plan, and such arrangements may be either
     generally applicable or applicable only in specific cases.


ARTICLE 27. MISCELLANEOUS PROVISIONS.

27.1. No Rights Unless Specifically Granted. No Eligible Participant, employee
     or other person shall have any claim or right to be granted an Award under
     the Plan under any contract, agreement or otherwise. Determinations made by
     the Administrator under the Plan need not be uniform and may be made
     selectively among Eligible Participants under the Plan, whether or not such
     Eligible Participants are similarly situated.

27.2. No Rights Until Written Evidence Delivered. No Participant or other person
     shall have any right with respect to the Plan, the Shares reserved for
     issuance under the Plan or in any Award, contingent or otherwise, until
     written evidence of the Award, in the form of an Award Agreement, shall
     have been delivered to the recipient and all the terms, conditions and
     provisions of the Plan and the Award applicable to such recipient (and each
     person claiming under or through such recipient) have been met.

27.3. Compliance with Applicable Law. No Shares, other Company securities or
     property, other securities or property, or other forms of payment shall be
     issued hereunder with respect to any Award unless counsel for the Company
     shall be satisfied that such issuance will be in compliance with applicable
     federal, state, local and foreign legal, securities exchange and other
     applicable requirements.

27.4. Compliance with Rule 16b-3. It is the intent of the Company that the Plan
     comply in all respects with Rule 16b-3 under the Exchange Act, that any
     ambiguities or inconsistencies in construction of the Plan be interpreted
     to give effect to such intention and that if any provision of the Plan is
     found not to be in compliance with Rule 16b-3, such provision shall be
     deemed null and void to the extent required to permit the Plan to comply
     with Rule 16b-3.

27.5. Right to Withhold Payments. The Company and any Parent, Subsidiary and
     Affiliate of the Company shall have the right to deduct from any payment
     made under the Plan, any federal, state, local or foreign income or other
     taxes required by law to be withheld with respect to such payment. It shall
     be a condition to the obligation of the Company to issue Shares, other
     securities or property of the Company, other securities or property, or
     other forms of payment, or any combination thereof, upon exercise,
     settlement or payment of any Award under the Plan, that the Participant (or
     any beneficiary or person entitled to act) pay to the Company, upon its
     demand, such amount as may be requested by the Company for the purpose of
     satisfying any liability to withhold federal, state, local or foreign
     income or other taxes. If the amount requested is not paid, the Company may
     refuse to issue Shares, other securities or property of the Company, other
     securities or property, or other forms of payment, or any combination
     thereof. Notwithstanding anything in the Plan to the contrary, the
     Administrator may permit a Participant (or any beneficiary or person
     entitled to act) to elect to pay a portion or all of the amount requested
     by the Company for such taxes with respect to such Award, at such time and
     in such manner as the Administrator shall deem to be appropriate,
     including, but not limited to, by authorizing the Company to withhold, or
     agreeing to surrender to the Company on or about the date such tax
     liability is determinable, Shares, other securities or property of the
     Company, other securities or property, or other forms of payment, or any
     combination thereof, owned by such person or a portion of such forms of
     payment that would otherwise be distributed, or have been distributed, as
     the case may be, pursuant to such Award to such person, having a fair
     market value equal to the amount of such taxes.

27.6. Expenses of Administration. The expenses of the Plan shall be borne by the
     Company. However, if an Award is made to an individual employed by or
     performing services for a Parent, Subsidiary or Affiliate of the Company:
          (a) if such Award results in payment of cash to the Participant, such
     Parent, Subsidiary or Affiliate shall pay to the Company an amount equal to
     such cash payment unless the Administrator shall otherwise determine;

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<PAGE>


          (b) if the Award results in the issuance by the Company to the
     Participant of Shares, other securities or property of the Company, other
     securities or property, or other forms of payment, or any combination
     thereof, such Parent, Subsidiary or Affiliate of the Company shall, unless
     the Administrator shall otherwise determine, pay to the Company an amount
     equal to the fair market value thereof, as determined by the Administrator,
     on the date such Shares, other securities or property of the Company, other
     securities or property, or other forms of payment, or any combination
     thereof, are issued (or, in the case of the issuance of Restricted Stock or
     of Shares, other securities or property of the Company, or other securities
     or property, or other forms of payment subject to transfer and forfeiture
     conditions, equal to the fair market value thereof on the date on which
     they are no longer subject to such applicable restrictions), minus the
     amount, if any, received by the Company in respect of the purchase of such
     Shares, other securities or property of the Company, other securities or
     property or other forms of payment, or any combination thereof, all as the
     Administrator shall determine; and
          (c) the foregoing obligations of any such Parent, Subsidiary or
     Affiliate of the Company shall survive and remain in effect and binding on
     such entity even if its status as a Parent, Subsidiary or Affiliate of the
     Company should subsequently cease, except as otherwise agreed by the
     Company and such Parent, Subsidiary or Affiliate.

27.7. Unfunded Plan. The Plan shall be unfunded. The Company shall not be
     required to establish any special or separate fund or to make any other
     segregation of assets to assure the payment of any Award under the Plan,
     and rights to the payment of Awards shall be no greater than the rights of
     the Company's general creditors.

27.8. Acceptance of Award Deemed Consent. By accepting any Award or other
     benefit under the Plan, each Participant and each person claiming under or
     through such Participant shall be conclusively deemed to have indicated
     such Participant's (or other person's) acceptance and ratification of, and
     consent to, any action taken by the Company, Administrator, Board or
     Committee or their respective delegates under the Plan.

27.9. Fair Market Value Determined By the Administrator. Fair market value in
     relation to other securities or property of the Company, other securities
     or property or other forms of payment of Awards under the Plan, or any
     combination thereof, as of any specific time, shall mean such value as
     determined by the Administrator in accordance with the Plan and applicable
     law.

27.10. Use of Terms. For the purposes of the Plan, in the use of any term, the
     singular includes the plural and the plural includes the singular wherever
     appropriate.

27.11. Filing of Reports. The appropriate officers of the Company shall cause to
     be filed any reports, returns or other information regarding Awards
     hereunder or any Shares issued pursuant hereto as may be required by
     Section 13 or 15(d) of the Exchange Act (or any successor provision) or any
     other applicable statute, rule or regulation.

     27.12. Validity; Construction; Interpretation. The validity, construction,
            interpretation, administration and effect of the Plan, and of its
            rules and regulations, and rights relating to the Plan and Award
            Agreements and to Awards granted under the Plan, shall be governed
            by the substantive laws, but not the choice of law rules, of the
            State of New York.

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