Document:

<PAGE>
                                                                    Exhibit 10.1

                            PILOT THERAPEUTICS, INC.

                             1998 STOCK OPTION PLAN

              (AS AMENDED AND RESTATED EFFECTIVE DECEMBER 19, 2000)

<PAGE>

                            PILOT THERAPEUTICS, INC.
                             1998 STOCK OPTION PLAN

1.       PURPOSE

         The purpose of the Pilot Therapeutics, Inc. 1998 Stock Option Plan, as
amended and restated (formerly, the Pilot Biotechnologies, Inc. 1998 Stock
Option Plan) (the "Plan"), is to encourage and enable selected employees,
directors, independent contractors, consultants and advisors in the service of
Pilot Therapeutics, Inc. (the "Company") or a related corporation to acquire or
to increase their holdings of common stock of the Company, $0.001 par value per
share (the "Common Stock"), in order to promote a closer identification of their
interests with those of the Company and its shareholders, thereby further
stimulating their efforts to enhance the efficiency, soundness, profitability,
growth and shareholder value of the Company. This purpose will be carried out
through the granting of incentive stock options ("Incentive Options") intended
to qualify under Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"), and nonqualified stock options ("Nonqualified Options"). Incentive
Options and Nonqualified Options shall be referred to herein collectively as
"Options."

2.       ADMINISTRATION OF THE PLAN

                  (a)      The Plan shall be administered by the Board of
         Directors of the Company (the "Board" or the "Board of Directors"),
         unless the Board delegates all or part of such authority to the
         Compensation Committee of the Board (the "Committee"). For the purposes
         herein, unless the authority of the Board is delegated to the Committee
         as contemplated by the preceding sentence, all references to the
         "Committee" herein shall be deemed references to the Board. To the
         extent the Company is or becomes subject to the Securities Exchange Act
         of 1934, as amended (the "Exchange Act"), the Committee shall include
         no fewer than the minimum number of "non-employee directors," as such
         term is defined in Rule 16b-3 promulgated under the Exchange Act, as
         may be required by Rule 16b-3 or any successor rule, unless the Board
         determines that such Committee composition is not necessary or
         advisable. Further, in the event that the Company becomes subject to
         the requirements of Section 162(m) of the Code, the Committee shall,
         unless the Board determines otherwise, be comprised solely of two or
         more "outside directors," as such term is defined under Section 162(m)
         or the regulations thereunder, or otherwise in accordance with Section
         162(m) and such regulations.

                  (b)      Any action of the Committee may be taken by a written
         instrument signed by all of the members of the Committee and any action
         so taken by written consent shall be as fully effective as if it had
         been taken by a majority of the members at a meeting duly held and
         called. Subject to the provisions of the Plan, the Committee shall have
         full and final authority, in its discretion, to take any action with
         respect to the Plan including, without limitation, the following: (i)
         to determine the individuals to receive Options, the nature of each
         Option as an Incentive Option or a Nonqualified Option, the times when
         Options shall be granted, the number of shares to be subject to each
         Option, the Option price (determined in accordance with Section 6(b)),
         the Option period, the time or times when each Option shall be
         exercisable and the other terms, conditions, restrictions and
         limitations of an Option; (ii) to prescribe the form or forms of the
         agreements evidencing any Options granted under the Plan

<PAGE>

         ("Option Agreements"); (iii) to establish, amend and rescind rules and
         regulations for the administration of the Plan; and (iv) to construe
         and interpret the Plan, the rules and regulations, and the Option
         Agreements evidencing Options granted under the Plan, to correct any
         defect, supply any omission or reconcile any inconsistency in the Plan
         or any Option Agreement and to make all other determinations deemed
         necessary or advisable for administering the Plan. In addition, the
         Committee shall have complete authority, in its discretion, to
         accelerate the date that any Option which is not otherwise exercisable
         shall become exercisable in whole or in part, without any obligation to
         accelerate such date with respect to any other Option granted to any
         person. All determinations of the Committee with respect to the Plan
         will be final and binding on the Company and all persons having or
         claiming an interest in any Option awarded under the Plan. In addition,
         the Committee shall have the authority and discretion to establish
         terms and conditions of Options as the Committee determines to be
         necessary or appropriate to conform to the applicable requirements or
         practices of jurisdictions outside of the United States. No member of
         the Board or Committee, as applicable, shall be liable for any action
         or determination made in good faith with respect to the Plan or any
         Option or Option Agreement.

                  (c)      Notwithstanding the other provisions of Section 2,
         the Committee may delegate to the Chief Executive Officer or President
         of the Company the authority to grant Options to eligible persons, and
         to make any or all of the determinations reserved for the Committee in
         the Plan and summarized in Section 2(b) with respect to such Options
         (subject to such terms and restrictions as may be established by the
         Committee); provided, however, that, to the extent required by Section
         16 of the Exchange Act or Section 162(m) of the Code, an Optionee, at
         the time of said grant or other determination: (i) is not deemed to be
         an officer or director of the Company within the meaning of Section 16
         of the Exchange Act; and (ii) is not deemed to be a "covered employee"
         (as defined in Section 162(m) of the Code and related regulations). To
         the extent that the Committee has delegated authority to grant Options
         pursuant to this Section 2(c) to the Chief Executive Officer or
         President, references to the Committee shall include references to such
         person, subject, however, to the requirements of the Plan, Rule 16b-3
         and other applicable law.

3.       EFFECTIVE DATE

         The effective date of the Plan shall be December 11, 1998. The Plan was
amended on April 28, 1999 and amended and restated effective December 19, 2000.
Options may be granted under the Plan on and after the effective date, but not
after December 10, 2008.

4.       OPTIONS; SHARES OF STOCK SUBJECT TO THE PLAN

         Both Incentive Options and Nonqualified Options, as designated by the
Committee, may be granted under the Plan. Subject to adjustment as provided in
Section 9, the shares of Common Stock that may be issued and sold pursuant to
Options shall not exceed in the aggregate 900,000 shares of authorized but
unissued or reacquired shares of the Common Stock of the Company. The Company
hereby reserves sufficient authorized shares of Common Stock to provide for the
exercise of Options granted hereunder. Any shares of Common Stock subject to an
Option which, for any reason, expires or is terminated unexercised as to such
shares may again be subject to an Option granted under the Plan. No Optionee may
be granted Options in any calendar year for more than 500,000 shares of Common
Stock (subject to adjustment as provided in Section 9).

                                       2
<PAGE>

5.       ELIGIBILITY

         An Option may be granted only to a person who satisfies the following
eligibility requirements on the date the Option is granted:

                  (a)      The person is either (i) a employee of the Company or
         a related corporation or (ii) an independent contractor, consultant or
         advisor (collectively, "independent contractors") providing bona fide
         services to the Company or a related corporation. Directors of the
         Company or a related corporation who are otherwise eligible to
         participate in the Plan may be granted Options under the Plan. For this
         purpose, an individual shall be considered to be an "employee" only if
         there exists between the individual and the Company or a related
         corporation the legal and bona fide relationship of employer and
         employee. In determining whether such a relationship exists, the
         regulations of the United States Treasury Department relating to the
         determination of the employment relationship for the purpose of
         collection of income tax on wages at the source shall be applied.

                  (b)      With respect to the grant of an Incentive Option, the
         person is an employee who does not own, immediately before the time
         that the Incentive Option is granted, stock possessing more than ten
         percent (10%) of the total combined voting power of all classes of
         stock of the Company or a related corporation; provided, that an
         individual owning more than ten percent (10%) of the total combined
         voting power of all classes of stock of the Company or a related
         corporation may be granted an Incentive Option if the price at which
         such Option may be exercised is greater than or equal to 110% of the
         fair market value of the shares on the date the Option is granted and
         the Option period does not exceed five years. For this purpose, an
         individual will be deemed to own stock which is attributed to him under
         Section 424(d) of the Code.

                  (c)      The person, being otherwise eligible under this
         Section 5, is selected by the Committee as a person to whom an Option
         shall be granted (an "Optionee").

6.       GRANT OF OPTIONS; OPTION PRICE

                  (a)      Subject to the limitations of the Plan, the Committee
         may in its sole and absolute discretion grant Options to such eligible
         persons in such numbers, upon such terms and at such times as the
         Committee shall determine. Both Incentive Options and Nonqualified
         Options may be granted under the Plan; provided, however, that
         Incentive Options may only be granted to employees of the Company or a
         related corporation. To the extent that a Option is designated as an
         Incentive Option but does not qualify as such under Section 422 of the
         Code, the Option (or portion thereof) shall be treated as a
         Nonqualified Option.

                  (b)      The price per share at which an Option may be
         exercised (the "Option price") shall be established by the Committee at
         the time the Option is granted and shall be set forth in the terms of
         the Option Agreement evidencing the Option; provided, that, (i) the
         Option price per share shall be not less than the par value per share
         of the Common Stock; and (ii) in the case of an Incentive Option, the
         Option price shall be equal to or greater than the fair market value
         per share of the Common Stock on the date the Option is granted. In
         addition, the following rules shall apply:

                                       3
<PAGE>

                           (i)      An Incentive Option shall be considered to
                  be granted on the date that the Committee acts to grant the
                  Option, or on any later date specified by the Committee as the
                  date of grant of the Option. A Nonqualified Option shall be
                  considered to be granted on the date the Committee acts to
                  grant the Option or any other date specified by the Committee
                  as the date of grant of the Option.

                           (ii)     The "fair market value" per share of the
                  Common Stock shall be determined in good faith by the
                  Committee, and, unless the Committee determines otherwise, the
                  fair market value shall be determined in accordance with the
                  following provisions: (A) if the shares of Common Stock are
                  listed for trading on the American Stock Exchange or the New
                  York Stock Exchange or included in the Nasdaq National Market,
                  the fair market value shall be the closing sales price of the
                  Common Stock on the American Stock Exchange or the New York
                  Stock Exchange or as reported on the Nasdaq National Market
                  (as applicable) on the date immediately preceding the date the
                  Option is granted or such other date as to which a
                  determination is made (the "valuation date"), or, if there is
                  no transaction on such date, then on the trading date nearest
                  preceding the valuation date for which closing price
                  information is available; (B) if the shares of Common Stock
                  are quoted on the Nasdaq Small Cap Market of the Nasdaq Stock
                  Market but are not listed for trading on the New York Stock
                  Exchange or American Stock Exchange or included in the Nasdaq
                  National Market, the average of the closing bid and asked
                  prices on the date immediately preceding the valuation date;
                  or (C) if the shares of Common Stock are not listed or
                  reported in any of the foregoing, then fair market value shall
                  be determined by the Committee in good faith in accordance
                  with the applicable provisions of Section 20.2031-2 of the
                  Federal Estate Tax Regulations, or in any other manner
                  consistent with the Code and accompanying regulations.

                           (iii)    In no event shall there first become
                  exercisable by the Optionee in any one calendar year Incentive
                  Options granted by the Company or any related corporation with
                  respect to shares having an aggregate fair market value
                  (determined in accordance with Section 6(b)(ii) at the time an
                  Option is granted) greater than $100,000; provided, that if
                  such limit is exceeded, then the first $100,000 of shares to
                  become exercisable in such calendar year will be Incentive
                  Options and the Options for shares with a value in excess of
                  $100,000 that first became exercisable in that calendar year
                  will be Nonqualified Options. In the event the Code or the
                  regulations promulgated thereunder are amended after the
                  effective date of this Plan to provide for a different limit
                  on the fair market value of shares permitted to be subject to
                  Incentive Options, then such different limit shall be
                  automatically incorporated herein and will apply to any
                  Incentive Option granted after the date of such amendment.

7.       OPTION PERIOD AND LIMITATIONS ON THE RIGHT TO EXERCISE OPTIONS

                  (a)      The term of an Option (the "Option period") shall be
         determined by the Committee when the Option is granted and shall not
         extend more than ten (10) years from the date on which the Option is
         granted. An Option shall be exercisable on such date or dates, during
         such period, for such number of shares, and subject to such conditions
         as shall be determined by the Committee and set forth in the Option
         Agreement, subject to the right of the Committee to accelerate the time
         when Options may be exercised at any time and for any

                                       4
<PAGE>

         reason. Any Option or portion thereof not exercised before the
         expiration of the Option period shall terminate.

                  (b)      An Option may be exercised by giving written notice
         of at least ten (10) days to the Committee or its designee at such
         place and upon such terms and conditions as the Committee shall direct.
         Such notice shall specify the number of shares to be purchased pursuant
         to an Option and the aggregate purchase price to be paid therefor, and
         shall be accompanied by the payment of such purchase price. Unless an
         Option Agreement provides otherwise, such payment shall be in cash (or
         in the form of a check) and, where expressly approved for the Optionee
         by the Committee and where permitted by law, payment may also be made:

                           (i)      by cancellation of indebtedness of the
                  Company to the Optionee;

                           (ii)     by surrender of shares of Common Stock
                  (valued at the date of exercise at their fair market value by
                  the Committee by applying the provisions of Section 6(b)(ii))
                  that have been owned by Optionee for more than six (6) months,
                  have been paid for within the meaning of SEC Rule 144 and are
                  otherwise acceptable to the Committee (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);

                           (iii)    by withholding shares of Common Stock
                  (valued at the date of exercise at their fair market value by
                  the Committee by applying the provisions of Section 6(b)(ii))
                  otherwise issuable upon exercise of the Option;

                           (iv)     by tender of a full recourse promissory note
                  having such terms as may be approved by the Committee and
                  bearing interest at a rate sufficient to avoid imputation of
                  income under Sections 483 and 1274 of the Code; provided,
                  however, that Optionees who are not employees or directors of
                  the Company will not be entitled to purchase shares with a
                  promissory note unless the note is adequately secured by
                  collateral other than the shares; provided, further, that the
                  portion of the purchase price equal to the par value of the
                  shares must be paid in cash or other legal consideration
                  permitted by North Carolina Business Corporation Act;

                           (v)      by waiver of compensation due or accrued to
                  the Optionee for services rendered to the Company;

                           (vi)     with respect only to purchases upon exercise
                  of an Option after a public market for the Common Stock
                  exists:

                                    (A)      through a "same day sale"
                           commitment from the Optionee and a broker-dealer that
                           is a member of the National Association of Securities
                           Dealers (an "NASD Dealer") whereby the Optionee
                           irrevocably elects to exercise the Option and to sell
                           a portion of the shares so purchased to pay for the
                           exercise price, and whereby the NASD Dealer
                           irrevocably commits upon receipt of such shares to
                           forward the exercise price directly to the Company;
                           or

                                       5
<PAGE>

                                    (B)      through a "margin" commitment from
                           the Optionee and an NASD Dealer whereby the Optionee
                           irrevocably elects to exercise the Option and to
                           pledge the shares so purchased to the NASD Dealer in
                           a margin account as security for a loan from the NASD
                           Dealer in the amount of the exercise price, and
                           whereby the NASD Dealer irrevocably commits upon
                           receipt of such shares to forward the exercise price
                           directly to the Company; or

                           (vii)    by any combination of the foregoing.

         For the purposes herein, a "public market" for the Common Stock shall
         be deemed to exist (i) upon consummation of a firm commitment
         underwritten public offering of the Common Stock pursuant to an
         effective registration statement under the Securities Act of 1933, as
         amended (the "Securities Act"), or (ii) if the Committee otherwise
         determines that there is an established public market for the Common
         Stock.

                  (c)      Unless the Committee determines otherwise, no Option
         granted to an Optionee who was an employee at the time of grant shall
         be exercised unless the Optionee is, at the time of exercise, an
         employee as described in Section 5(a), and has been an employee
         continuously since the date the Option was granted, subject to the
         following:

                           (i)      An Option shall not be affected by any
                  change in the terms, conditions or status of the Optionee's
                  employment, provided that the Optionee continues to be an
                  employee of the Company or a related corporation.

                           (ii)     The employment relationship of an Optionee
                  shall be treated as continuing intact for any period that the
                  Optionee is on military or sick leave or other bona fide leave
                  of absence; provided, that the period of such leave does not
                  exceed ninety (90) days, or, if longer, as long as the
                  Optionee's right to re-employment is guaranteed either by
                  statute or by contract. The employment relationship of an
                  Optionee shall also be treated as continuing intact while the
                  Optionee is not in active service because of disability. For
                  purposes of the Plan, "disability" shall mean the inability of
                  the Optionee to engage in any substantial gainful activity by
                  reason of any medically determinable physical or mental
                  impairment which can be expected to result in death, or which
                  has lasted or can be expected to last for a continuous period
                  of not less than twelve (12) months. The Committee shall
                  determine whether an Optionee is disabled within the meaning
                  of this paragraph and, if applicable, the date of an
                  Optionee's termination of employment or service for any reason
                  (the "termination date").

                           (iii)    Unless the applicable Option Agreement
                  provides otherwise, if the employment of an Optionee is
                  terminated because of disability within the meaning of
                  subparagraph (ii) above, or if the Optionee dies while he or
                  she is an employee or dies within ninety (90) days after the
                  date of termination of his or her employment (the "termination
                  date") because of disability, the Option may be exercised only
                  to the extent that it was exercisable on the termination date,
                  except that the Committee may in its discretion accelerate the
                  date for exercising all or any part of the Option which was
                  not otherwise exercisable on the termination date. The Option
                  must be exercised, if at all, prior to the first to occur of
                  the following, whichever shall be

                                       6
<PAGE>

                  applicable: (A) in the case of Options granted prior to
                  December 19, 2000, the close of the period of ninety (90) days
                  next succeeding the termination date, and in the case of
                  options granted on or after December 19, 2000, the close of
                  the period of twelve (12) months next succeeding the
                  termination date (or, in either case, such other time period
                  as may be specified in the Option Agreement); or (B) the close
                  of the Option period. In the event of the Optionee's death,
                  such Option shall be exercisable by such person or persons as
                  shall have acquired the right to exercise the Option by will
                  or by the laws of intestate succession.

                           (iv)     Unless the applicable Option Agreement
                  provides otherwise, if the employment of the Optionee is
                  terminated for any reason other than disability (as defined in
                  subparagraph (ii) above) or death or for "cause," his or her
                  Option may be exercised to the extent exercisable on the
                  termination date, except that the Committee may in its
                  discretion accelerate the date for exercising all or any part
                  of the Option that was not otherwise exercisable on the
                  termination date. The Option must be exercised, if at all,
                  prior to the first to occur of the following, whichever shall
                  be applicable: (A) in the case of Options granted prior to
                  December 19, 2000, the close of the period of thirty (30) days
                  next succeeding the termination date, and in the case of
                  options granted on or after December 19, 2000, the close of
                  the period of ninety (90) days next succeeding the termination
                  date (or, in either case, such other time period as may be
                  specified in the Option Agreement); or (B) the close of the
                  Option period. If the Optionee dies following such termination
                  of employment and prior to the earlier of the dates specified
                  in (A) or (B) of this subparagraph (iv), the Optionee shall be
                  treated as having died while employed under subparagraph (iii)
                  immediately preceding (treating for this purpose the
                  Optionee's date of termination of employment as the
                  termination date). In the event of the Optionee's death, such
                  Option shall be exercisable by such person or persons as shall
                  have acquired the right to exercise the Option by will or by
                  the laws of intestate succession.

                           (v)      Unless the applicable Option Agreement
                  provides otherwise, if the employment of the Optionee is
                  terminated for "cause," his or her Option shall lapse and no
                  longer be exercisable as of the effective time of his or her
                  termination of employment, as determined by the Committee. For
                  purposes of this subparagraph (v) and subparagraph (iv) and
                  Section 7(d), the Optionee's termination shall be for "cause"
                  if such termination results from any one or more of the
                  following events, circumstances or occurrences: (A) the
                  Optionee's material breach of any written employment,
                  consulting, advisory, proprietary information, nondisclosure
                  or other agreement with the Company and his or her subsequent
                  failure to cure such breach to the satisfaction of the
                  Committee within the cure period provided in such agreement,
                  if any; (B) the Optionee's conviction of, or entry of a plea
                  of guilty or nolo contendere to, a felony or any misdemeanor
                  involving moral turpitude if the Committee reasonably
                  determines that such conviction or plea materially adversely
                  affects the Company; (C) the commission of an act of fraud or
                  dishonesty by the Optionee if the Board reasonably determines
                  that such act materially adversely affects the Company; or (D)
                  Optionee's intentional damage or destruction of substantial
                  property of the Company. The determination of "cause" shall be
                  made by the Committee and its determination shall be final and
                  conclusive.

                                       7
<PAGE>

                           (vi)     Notwithstanding the foregoing, the Committee
                  shall have authority, in its sole discretion, to accelerate
                  the date for exercising all or any part of an Option held by
                  an employee that was not otherwise exercisable on the
                  termination date, extend the period during which an Option may
                  be exercised, modify the other terms and conditions of
                  exercise, or any combination of the foregoing; provided that,
                  in the event that any such extension or modification shall
                  cause an Incentive Option to be designated as a Nonqualified
                  Option, no such extension or modification shall be made
                  without the consent of the Optionee.

                  (d)      Unless the applicable Option Agreement provides
         otherwise, an Option granted to an Optionee who was an independent
         contractor or non-employee director of the Company or a related
         corporation at the time of grant (and who does not thereafter become an
         employee, in which case he shall be subject to the provisions of
         Section 7(c) herein) may be exercised (unless the termination was for
         cause) only to the extent exercisable on the date of the Optionee's
         termination of service to the Company or a related corporation as
         determined by the Committee, and must be exercised, if at all, prior to
         the first to occur of the following, as applicable: (A) the close of
         the period of ninety (90) days next succeeding the termination date (or
         such other time period as may be specified in the Option Agreement); or
         (B) the close of the Option period. If the services of an independent
         contractor are terminated for cause or a non-employee director is
         removed for cause (as defined in Section 7(c)(v) herein), the Option
         shall lapse and no longer be exercisable as of the effective time of
         his termination of services, as determined by the Committee.
         Notwithstanding the foregoing, the Committee may in its sole discretion
         accelerate the date for exercising all or any part of an Option held by
         an independent contractor or non-employee director that was not
         otherwise exercisable on the termination date, extend the period during
         which such an Option may be exercised, modify the other terms and
         conditions of exercise, or any combination of the foregoing.

                  (e)      A certificate or certificates for shares of Common
         Stock acquired upon exercise of an Option will be issued in the name of
         the Optionee (or his beneficiary) and delivered to the Optionee (or his
         beneficiary) as soon as practical following receipt of notice of
         exercise and payment of the Option price. An Optionee or his legal
         representative, legatees or distributees shall not be deemed to be the
         holder of any shares subject to an Option unless and until certificates
         for such shares are issued to him or them under the Plan.

                  (f)      Nothing in the Plan shall confer upon the Optionee
         any right to continue in the service of the Company or a related
         corporation as an employee, director, advisor, consultant or
         independent contractor, as the case may be, or to interfere in any way
         with the right of the Company or a related corporation to terminate the
         Optionee's employment or service at any time.

8.       NONTRANSFERABILITY OF OPTIONS AND SHARES

         Incentive Options granted pursuant to the Plan shall not be
transferable (including by pledge or hypothecation) other than by will or the
laws of intestate succession. Nonqualified Options granted pursuant to the Plan
shall not be transferable (including by pledge or hypothecation) other than by
will or the laws of intestate succession, except as may be permitted by the
Committee in a manner consistent with the registration provisions of the
Securities Act. In connection with any permitted transfer of an Option, the
Committee may condition such transfer on the imposition of

                                       8
<PAGE>

transfer restrictions, rights of first refusal and other similar restrictions it
deems advisable. Except in the case of permitted transfers of Nonqualified
Options in accordance with this Section 8, an Option shall be exercisable during
the Optionee's lifetime only by him. To the extent required by Section 16 of the
Exchange Act, shares acquired upon the exercise of an Option shall not, without
the consent of the Committee, be transferable (including by pledge or
hypothecation) until the expiration of six months after the date the Option was
granted.

9.       DILUTION OR OTHER ADJUSTMENTS

         If the number of outstanding shares of Common Stock of the Company is
changed as a result of a reorganization, recapitalization, stock dividend, stock
split, reverse stock split, subdivision, combination, reclassification or other
change in the capital stock structure of the Company without consideration, then
the Committee shall make such adjustments to the exercise price and number of
shares subject to Options, to the number of shares reserved for issuance and
issuable under the Plan, and to any provisions of this Plan as the Committee
deems equitable to prevent dilution or enlargement of Options or otherwise
advisable to reflect such change.

10.      ASSUMPTION OR REPLACEMENT OF OPTIONS

                  (a)      Except to the extent an individual Option Agreement
         provides otherwise, the following provisions set forth in this Section
         10(a) shall apply:

                           (1)      In the event of (i) a dissolution or
                  liquidation of the Company, (ii) a merger or consolidation in
                  which the Company is not the surviving corporation (other than
                  a merger or consolidation into a wholly owned subsidiary, a
                  reincorporation of the Company in a different jurisdiction, or
                  other transaction in which there is no substantial change in
                  the shareholders of the Company or their relative stock
                  holdings and in which the Options granted under this Plan are
                  assumed, converted or replaced by the successor corporation on
                  the terms provided in this Section 10, which assumption will
                  be binding on all Optionees), (iii) a merger in which the
                  Company is the surviving corporation but after which the
                  shareholders of the Company immediately prior to such merger
                  (other than any shareholder which merges, or which owns or
                  controls another corporation which merges, with the Company in
                  such merger) cease to own their shares or other equity
                  interests in the Company, or (iv) the sale of substantially
                  all of the assets of the Company, any or all outstanding
                  Options may be assumed, converted or replaced by the successor
                  corporation (if any) on the terms provided in this Section 10,
                  which assumption, conversion or replacement will be binding on
                  all Optionees.

                           (2)      In order to assume, convert or replace
                  outstanding Options, the successor corporation may either
                  substitute equivalent Options or provide substantially similar
                  consideration to Optionees as was provided to shareholders in
                  the transaction (after taking into account the existing
                  provisions of the Options). The successor corporation may also
                  issue, in place of outstanding shares of Common Stock of the
                  Company held by the Optionee, substantially similar shares or
                  other property subject to repurchase restrictions and other
                  provisions no less favorable to the Optionee than those which
                  applied to such outstanding shares under this Plan and the
                  Option Agreement immediately prior to such transaction or
                  event described in this Section 10(a).

                                       9
<PAGE>

                           (3)      In the event such successor corporation (if
                  any) refuses to assume or substitute Options as provided above
                  pursuant to a transaction described in Section 10(a)(1), then
                  notwithstanding any other provision in this Plan to the
                  contrary, (i) all such Options outstanding as of the date the
                  Company's shareholders act to approve the first event or
                  transaction described in Section 10(a)(1) to occur shall
                  become fully exercisable whether or not all or a portion of
                  such Options were then otherwise exercisable; and (ii) the
                  Company (or the surviving or successor corporation, as the
                  case may be) shall provide Optionees with an opportunity prior
                  to the closing or effective time of the applicable transaction
                  or event to exercise such Options and, upon consummation of
                  such transaction or event, such Options shall expire (subject
                  to such conditions as the Committee may determine).

                  (b)      Subject to any greater rights granted to Optionees
         under the foregoing provisions of this Section 10, in the event of the
         occurrence of any transaction described in Section 10(a), any
         outstanding Options will be treated as provided in the applicable
         agreement or plan of merger, consolidation, dissolution, liquidation or
         sale of assets.

                  (c)      The Company, from time to time, also may substitute
         or assume outstanding options granted by another company, whether in
         connection with an acquisition of such other company or otherwise, by
         either (i) granting an Option under this Plan in substitution of such
         other company's options or (ii) assuming such option as if it had been
         granted under this Plan if the terms of such assumed option could be
         applied to an Option granted under this Plan. Such substitution or
         assumption will be permissible if the holder of the substituted or
         assumed option would have been eligible to be granted an Option under
         this Plan if the other company had applied the rules of this Plan to
         such grant. In the event the Company assumes an option granted by
         another company, unless otherwise determined by the Committee, the
         terms and conditions of such option will remain unchanged (except that
         the exercise price and the number and nature of shares issuable upon
         exercise of any such option will be adjusted appropriately pursuant to
         Section 424(a) of the Code). In the event the Company elects to grant a
         new Option rather than assuming an existing option, such new Option may
         be granted with a similarly adjusted exercise price.

11.      WITHHOLDING

         Prior to the delivery or transfer of any certificate for shares upon
the exercise of an Option or any other benefit conferred under the Plan, the
Company shall require the recipient of shares to pay to the Company in cash the
amount of any local, state or federal withholding tax or other amount required
by any governmental authority to be withheld and paid over by the Company to
such authority for the account of such Optionee. Notwithstanding the foregoing,
the Committee may, in its sole discretion, allow the Optionee to satisfy such
obligation in whole or in part, and any other local, state or federal income tax
obligations relating to the exercise of an Option, by electing to have the
Company withhold shares of Common Stock from the shares to which the Optionee is
entitled in accordance with such procedures as may be established by the
Committee.

                                       10
<PAGE>

12.      CERTAIN DEFINITIONS

         For purposes of the Plan, the following terms shall have the meanings
indicated:

                  (a)      "Related corporation" means any parent, subsidiary or
         predecessor of the Company.

                  (b)      "Parent" or "parent corporation" shall mean any
         corporation (other than the Company) in an unbroken chain of
         corporations ending with the Company if, at the time that the Option is
         granted, each corporation other than the Company owns stock possessing
         fifty percent (50%) or more of the total combined voting power of all
         classes of stock in another corporation in the chain.

                  (c)      "Subsidiary" or "subsidiary corporation" means any
         corporation (other than the Company) in an unbroken chain of
         corporations beginning with the Company if, at the time that the Option
         is granted, each corporation other than the last corporation in the
         unbroken chain owns stock possessing fifty percent (50%) or more of the
         total combined voting power of all classes of stock in another
         corporation in the chain.

                  (d)      "Predecessor" or "predecessor corporation" means a
         corporation which was a party to a transaction described in Section
         424(a) of the Code (or which would be so described if a substitution or
         assumption under that Section had occurred) with the Company, or a
         corporation which is a parent or subsidiary of the Company, or a
         predecessor of any such corporation.

         In general, terms used in the Plan shall, where appropriate, be given
the meaning ascribed to them under the provisions of the Code applicable to
Incentive Options.

13.      STOCK OPTION AGREEMENT

         The grant of any Option under the Plan shall be evidenced by the
execution of an Option Agreement between the Company and the Optionee. Such
Option Agreement shall set forth the date of grant of the Option, the Option
price, the Option period, the designation of the Option as an Incentive Option
or a Nonqualified Option, and the time or times when and the conditions upon the
happening of which the Option shall become exercisable. Such Option Agreement
shall also set forth the restrictions, if any, with respect to which the shares
to be purchased thereunder shall be subject, and such other terms and conditions
as the Committee shall determine that are consistent with the provisions of the
Plan and applicable law and regulations.

14.      LEGAL RESTRICTIONS ON OPTIONS AND SHARES

                  (a)      An Option will not be effective unless such Option is
         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
         of Common Stock may then be listed or quoted, as they are in effect on
         the date of grant of the Option 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, deliver or transfer
         certificates for shares under this Plan or to take any other action
         with respect to the Plan prior to (i) obtaining any approvals from
         governmental agencies that the Company determines are

                                       11
<PAGE>

         necessary or advisable, and (ii) compliance with any exemption,
         completion of any registration or other qualification of such shares
         under any state or federal law or ruling of any governmental body that
         the Company determines to be necessary or advisable. The Company will
         be under no obligation to register the shares of Common Stock with the
         SEC or to effect compliance with the exemption, 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.

                  (b)      The Company may impose such restrictions on any
         shares acquired upon exercise of Options granted under the Plan as it
         may deem advisable, including, without limitation, restrictions
         necessary to ensure compliance with the Securities Act, under the
         requirements of any applicable stock exchange, automated quotation
         system or self-regulatory organization and under any blue sky or state
         securities laws applicable to such shares. The Company may cause a
         restrictive legend to be placed on any certificate issued pursuant to
         the exercise of an Option in such form as may be prescribed from time
         to time by applicable laws and regulations or as may be advised by
         legal counsel to the Company.

15.      AMENDMENT OR TERMINATION

                  (a)      The Plan may be amended or terminated at any time by
         action of the Board; provided, that (i) the approval of the
         shareholders of the Company shall be required for any amendment to the
         Plan for which shareholder approval is required under applicable law;
         and (ii) the approval of the Committee shall be required for any
         amendment that would have the effect of reducing the Committee's
         authority or rights under the Plan.

                  (b)      The Committee may amend, modify, extend, renew or
         terminate outstanding Options or authorize the grant of new Options in
         substitution therefor; provided, that no outstanding Option shall be
         amended, modified, extended, renewed or terminated without the consent
         of the Optionee if such action would adversely impair the Optionee's
         rights with respect to such Option.

                  (c)      The Committee may reduce the exercise price of
         outstanding Options without the consent of Optionees by a written
         notice to them; provided, that the exercise price shall not be reduced
         below the minimum exercise price that would be permitted under Section
         6(b)(ii) for Options granted on the date the action is taken to reduce
         the exercise price.

16.      APPLICABLE LAW

         The Plan shall be construed and enforced according to the laws of the
State of North Carolina, without regard to the principles of conflicts of laws.

                                       12
<PAGE>

17.      SECTION 16(B) COMPLIANCE

         To the extent that participants in the Plan are subject to Section
16(b) of the Exchange Act, it is the intention of the Company that transactions
under the Plan shall comply with Rule 16b-3 under the Exchange Act and, if any
Plan provision is later found not to be in compliance with Section 16 of the
Exchange Act, the provision shall be deemed null and void, and in all events the
Plan shall be construed in favor of Plan transactions meeting the requirements
of Rule 16b-3 or successor rules applicable to the Plan.

18.      SHAREHOLDER APPROVAL

         The Plan is subject to the approval of the shareholders of the Company,
which approval must occur, if at all, within twelve months of the effective date
of the Plan. All Incentive Options granted prior to shareholder approval shall
be conditioned upon such approval, and no Incentive Option shall be exercisable
prior to such approval.

19.      CODE SECTION 162(M) PERFORMANCE-BASED COMPENSATION COMPLIANCE

         To the extent that Section 162(m) of the Code is applicable, the
Committee shall have discretion to determine the extent, if any, that Options
conferred under the Plan to covered employees, as such term is defined in
Section 162(m) of the Code and related regulations, are intended to comply with
the qualified performance-based compensation exception to employer compensation
deductions set forth in Section 162(m) of the Code.

20.      UNFUNDED PLAN; NOT A RETIREMENT PLAN

                  (a)      Neither an Optionee nor any other person shall, by
         reason of the Plan, acquire any right in or title to any assets, funds
         or property of the Company or any related corporation including,
         without limitation, any specific funds, assets or other property which
         the Company or any related corporation, in their discretion, may set
         aside in anticipation of a liability under the Plan. An Optionee shall
         have only a contractual right to the Common Stock or amounts, if any,
         distributable or payable under the Plan, unsecured by any assets of the
         Company or any related corporation. Nothing contained in the Plan shall
         constitute a guarantee that the assets of such corporations shall be
         sufficient to pay any benefits to any person.

                  (b)      In no event shall any amounts accrued, distributable
         or payable under the Plan be treated as compensation for the purpose of
         determining the amount of contributions or benefits to which any person
         shall be entitled under any retirement plan sponsored by the Company or
         a related corporation that is intended to be a qualified plan within
         the meaning of Section 401(a) of the Code.

                                       13
<PAGE>

         IN WITNESS WHEREOF, this Pilot Therapeutics, Inc. 1998 Stock Option
Plan, as amended and restated by the authority of the Board of Directors of the
Company, is executed in behalf of the Company, the 19th day of December, 2000.

                                         PILOT THERAPEUTICS, INC.

                                         By:   /s/ Floyd H. Chilton
                                              --------------------------------
                                                  Floyd H. Chilton
                                                  Chief Executive Officer

Attest:

 /s/ Beth Fordham-Meier
-----------------------------------
Beth Fordham-Meier, Secretary

[Corporate Seal]

                                       14<PAGE>
                                                                    EXHIBIT 10.2

                             INTERALLIED GROUP, INC.

                            2001 STOCK INCENTIVE PLAN

<PAGE>

                             INTERALLIED GROUP, INC.
                            2001 STOCK INCENTIVE PLAN

Section 1.  Purpose.

The purpose of the Plan is to promote the interests of the Company and its
shareholders by aiding the Company in attracting and retaining employees,
officers, consultants, independent contractors and non-employee directors
capable of assuring the future success of the Company, to offer such persons
incentives to put forth maximum efforts for the success of the Company's
business and to afford such persons an opportunity to acquire a proprietary
interest in the Company.

Section 2.  Definitions.

As used in the Plan, the following terms shall have the meanings set forth
below:

         (a)      "Affiliate" shall mean (i) any entity that, directly or
indirectly through one or more intermediaries, is controlled by the Company and
(ii) any entity in which the Company has a significant equity interest, in each
case as determined by the Committee.

         (b)      "Award" shall mean any Option, Stock Appreciation Right,
Restricted Stock, Restricted Stock Unit, Performance Award, Other Stock Grant or
Other Stock-Based Award granted under the Plan.

         (c)      "Award Agreement" shall mean any written agreement, contract
or other instrument or document evidencing any Award granted under the Plan.

         (d)      "Board" shall mean the Board of Directors of the Company.

         (e)      "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and any regulations promulgated thereunder.

         (f)      "Committee" shall mean a committee of Directors designated by
the Board to administer the Plan. The Committee shall be comprised of not less
than such number of Directors as shall be required to permit Awards granted
under the Plan to qualify under Rule 16b-3, and each member of the Committee
shall be a "Non-Employee Director" within the meaning of Rule 16b-3 and an
"outside director" within the meaning of Section 162(m) of the Code. The Company
expects to have the Plan administered in accordance with the requirements for
the award of "qualified performance-based compensation" within the meaning of
Section 162(m) of the Code.

         (g)      "Company" shall mean Interallied Group Inc., a North Carolina
corporation, and any successor corporation.

         (h)      "Director" shall mean a member of the Board.

                                       1
<PAGE>

         (i)      "Eligible Person" shall mean any employee, officer,
consultant, independent contractor or Director providing services to the Company
or any Affiliate whom the Committee determines to be an Eligible Person.

         (j)      "Fair Market Value" shall mean, with respect to any property
(including, without limitation, any Shares or other securities), the fair market
value of such property determined by such methods or procedures as shall be
established from time to time by the Committee. Notwithstanding the foregoing,
unless otherwise determined by the Committee, the Fair Market Value of Shares as
of a given date shall be, if the Shares are then quoted on The Nasdaq Stock
Market, Inc., the average of the high and low sales price as reported on The
Nasdaq Stock Market, Inc. on such date or, if The Nasdaq Stock Market, Inc. is
not open for trading on such date, on the most recent preceding date when it is
open for trading.

         (k)      "Incentive Stock Option" shall mean an option granted under
Section 6(a) of the Plan that is intended to meet the requirements of Section
422 of the Code or any successor provision.

         (l)      "Non-Qualified Stock Option" shall mean an option granted
under Section 6(a) of the Plan that is not intended to be an Incentive Stock
Option.

         (m)      "Option" shall mean an Incentive Stock Option or a
Non-Qualified Stock Option, and shall include Reload Options.

         (n)      "Other Stock Grant" shall mean any right granted under Section
6(e) of the Plan.

         (o)      "Other Stock-Based Award" shall mean any right granted under
Section 6(f) of the Plan.

         (p)      "Participant" shall mean an Eligible Person designated to be
granted an Award under the Plan.

         (q)      "Performance Award" shall mean any right granted under Section
6(d) of the Plan.

         (r)      "Person" shall mean any individual, corporation, partnership,
association or trust.

         (s)      "Plan" shall mean the Interallied Group, Inc. 2001 Stock
Incentive Plan, as amended from time to time, the provisions of which are set
forth herein.

         (t)      "Reload Option" shall mean any Option granted under Section
6(a)(iv) of the Plan.

         (u)      "Restricted Stock" shall mean any Shares granted under Section
6(c) of the Plan.

         (v)      "Restricted Stock Unit" shall mean any unit granted under
Section 6(c) of the Plan evidencing the right to receive a Share (or a cash
payment equal to the Fair Market Value of a Share) at some future date.

                                       2
<PAGE>

         (w)      "Rule 16b-3" shall mean Rule 16b-3 promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of 1934, as
amended, or any successor rule or regulation.

         (x)      "Shares" shall mean shares of Common Stock, $0.01 par value
per share, of the Company or such other securities or property as may become
subject to Awards pursuant to an adjustment made under Section 4(c) of the Plan.

         (y)      "Stock Appreciation Right" shall mean any right granted under
Section 6(b) of the Plan.

Section 3.  Administration.

         (a)      Power and Authority of the Committee. The Plan shall be
administered by the Committee. Subject to the express provisions of the Plan and
to applicable law, the Committee shall have full power and authority to: (i)
designate Participants; (ii) determine the type or types of Awards to be granted
to each Participant under the Plan; (iii) determine the number of Shares to be
covered by (or with respect to which payments, rights or other matters are to be
calculated in connection with) each Award; (iv) determine the terms and
conditions of any Award or Award Agreement; (v) amend the terms and conditions
of any Award or Award Agreement and accelerate the exercisability of Options or
the lapse of restrictions relating to Restricted Stock, Restricted Stock Units
or other Awards; (vi) determine whether, to what extent and under what
circumstances Awards may be exercised in cash, Shares, other securities, other
Awards or other property, or canceled, forfeited or suspended; (vii) determine
whether, to what extent and under what circumstances cash, Shares, promissory
notes, other securities, other Awards, other property and other amounts payable
with respect to an Award under the Plan shall be deferred either automatically
or at the election of the holder thereof or the Committee; (viii) interpret and
administer the Plan and any instrument or agreement, including an Award
Agreement, relating to the Plan; (ix) establish, amend, suspend or waive such
rules and regulations and appoint such agents as it shall deem appropriate for
the proper administration of the Plan; and (x) make any other determination and
take any other action that the Committee deems necessary or desirable for the
administration of the Plan. Unless otherwise expressly provided in the Plan, all
designations, determinations, interpretations and other decisions under or with
respect to the Plan or any Award shall be within the sole discretion of the
Committee, may be made at any time and shall be final, conclusive and binding
upon any Participant, any holder or beneficiary of any Award and any employee of
the Company or any Affiliate.

         (b)      Delegation. The Committee may delegate its powers and duties
under the Plan to one or more Directors or a committee of Directors, subject to
such terms, conditions and limitations as the Committee may establish in its
sole discretion.

         (c)      Power and Authority of the Board of Directors. Notwithstanding
anything to the contrary contained herein, the Board may, at any time and from
time to time, without any further action of the Committee, exercise the powers
and duties of the Committee under the Plan.

                                       3
<PAGE>

Section 4.  Shares Available for Awards.

         (a)      Shares Available. Subject to adjustment as provided in Section
4(c) of the Plan, the aggregate number of Shares that may be issued under all
Awards under the Plan shall be 1,200,000. Shares to be issued under the Plan may
be either authorized but unissued Shares or Shares acquired in the open market
or otherwise. Any Shares that are used by a Participant as full or partial
payment to the Company of the purchase price relating to an Award, or in
connection with the satisfaction of tax obligations relating to an Award, shall
again be available for granting Awards (other than Incentive Stock Options)
under the Plan. In addition, if any Shares covered by an Award or to which an
Award relates are not purchased or are forfeited, or if an Award otherwise
terminates without delivery of any Shares, then the number of Shares counted
against the aggregate number of Shares available under the Plan with respect to
such Award, to the extent of any such forfeiture or termination, shall again be
available for granting Awards under the Plan. Notwithstanding the foregoing, the
number of Shares available for granting Incentive Stock Options under the Plan
shall not exceed 1,200,000, subject to adjustment as provided in the Plan and
subject to the provisions of Section 422 or 424 of the Code or any successor
provision.

         (b)      Accounting for Awards. For purposes of this Section 4, if an
Award entitles the holder thereof to receive or purchase Shares, the number of
Shares covered by such Award or to which such Award relates shall be counted on
the date of grant of such Award against the aggregate number of Shares available
for granting Awards under the Plan.

         (c)      Adjustments. In the event that the Committee shall determine
that any dividend or other distribution (whether in the form of cash, Shares,
other securities or other property), recapitalization, stock split, reverse
stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase or exchange of Shares or other securities of the
Company, issuance of warrants or other rights to purchase Shares or other
securities of the Company or other similar corporate transaction or event
affects the Shares such that an adjustment is determined by the Committee to be
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust any or all of
(i) the number and type of Shares (or other securities or other property) that
thereafter may be made the subject of Awards, (ii) the number and type of Shares
(or other securities or other property) subject to outstanding Awards and (iii)
the purchase or exercise price with respect to any Award; provided, however,
that the number of Shares covered by any Award or to which such Award relates
shall always be a whole number.

         (d)      Award Limitations Under the Plan. No Eligible Person may be
granted any Award or Awards under the Plan, the value of which Award or Awards
is based solely on an increase in the value of the Shares after the date of
grant of such Award or Awards, for more than 100,000 Shares (subject to
adjustment as provided for in Section 4(c) of the Plan), in the aggregate in any
calendar year. The foregoing annual limitation specifically

                                       4
<PAGE>

includes the grant of any Award or Awards representing "qualified
performance-based compensation" within the meaning of Section 162(m) of the
Code.

Section 5.  Eligibility.

Any Eligible Person shall be eligible to be designated a Participant. In
determining which Eligible Persons shall receive an Award and the terms of any
Award, the Committee may take into account the nature of the services rendered
by the respective Eligible Persons, their present and potential contributions to
the success of the Company or such other factors as the Committee, in its
discretion, shall deem relevant. Notwithstanding the foregoing, an Incentive
Stock Option may only be granted to full or part-time employees (which term as
used herein includes, without limitation, officers and Directors who are also
employees), and an Incentive Stock Option shall not be granted to an employee of
an Affiliate unless such Affiliate is also a "subsidiary corporation" of the
Company within the meaning of Section 424(f) of the Code or any successor
provision.

Section 6.  Awards.

         (a)      Options. The Committee is hereby authorized to grant Options
to Participants with the following terms and conditions and with such additional
terms and conditions not inconsistent with the provisions of the Plan as the
Committee shall determine:

                  (i)      Exercise Price. The purchase price per Share
         purchasable under an Option shall be determined by the Committee;
         provided, however, that such purchase price shall not be less than 100%
         of the Fair Market Value of a Share on the date of grant of such
         Option.

                  (ii)     Option Term. The term of each Option shall be fixed
         by the Committee.

                  (iii)    Time and Method of Exercise. The Committee shall
         determine the time or times at which an Option may be exercised in
         whole or in part and the method or methods by which, and the form or
         forms (including, without limitation, cash, Shares, promissory notes,
         other securities, other Awards or other property, or any combination
         thereof, having a Fair Market Value on the exercise date equal to the
         relevant exercise price) in which, payment of the exercise price with
         respect thereto may be made or deemed to have been made.

                  (iv)     Reload Options. The Committee may grant Reload
         Options, separately or together with another Option, pursuant to which,
         subject to the terms and conditions established by the Committee, the
         Participant would be granted a new Option when the payment of the
         exercise price of a previously granted option is made by the delivery
         of Shares owned by the Participant pursuant to Section 6(a)(iii) of the
         Plan or the relevant provisions of another plan of the Company, and/or
         when Shares are tendered or withheld as payment of the amount to be
         withheld under applicable income tax laws in connection with the
         exercise of an Option, which new Option would be an Option to purchase
         the number of Shares not exceeding the sum of (A) the number of Shares
         so provided as consideration upon the exercise of the previously
         granted option to which such Reload

                                       5
<PAGE>

         Option relates and (B) the number of Shares, if any, tendered or
         withheld as payment of the amount to be withheld under applicable tax
         laws in connection with the exercise of the option to which such Reload
         Option relates pursuant to the relevant provisions of the plan or
         agreement relating to such option. Reload Options may be granted with
         respect to Options previously granted under the Plan or any other stock
         option plan of the Company or may be granted in connection with any
         Option granted under the Plan or any other stock option plan of the
         Company at the time of such grant. Such Reload Options shall have a per
         share exercise price equal to the Fair Market Value of one Share as of
         the date of grant of the new Option. Any Reload Option shall be subject
         to availability of sufficient Shares for grant under the Plan.

         (b)      Stock Appreciation Rights. The Committee is hereby authorized
         to grant Stock Appreciation Rights to Participants subject to the terms
         of the Plan and any applicable Award Agreement. A Stock Appreciation
         Right granted under the Plan shall confer on the holder thereof a right
         to receive upon exercise thereof the excess of (i) the Fair Market
         Value of one Share on the date of exercise (or, if the Committee shall
         determine, at any time during a specified period before or after the
         date of exercise) over (ii) the grant price of the Stock Appreciation
         Right as specified by the Committee, which price shall not be less than
         100% of the Fair Market Value of one Share on the date of grant of the
         Stock Appreciation Right. Subject to the terms of the Plan and any
         applicable Award Agreement, the grant price, term, methods of exercise,
         dates of exercise, methods of settlement and any other terms and
         conditions of any Stock Appreciation Right shall be as determined by
         the Committee. The Committee may impose such conditions or restrictions
         on the exercise of any Stock Appreciation Right as it may deem
         appropriate.

         (c)      Restricted Stock and Restricted Stock Units. The Committee is
         hereby authorized to grant Restricted Stock and Restricted Stock Units
         to Participants with the following terms and conditions and with such
         additional terms and conditions not inconsistent with the provisions of
         the Plan as the Committee shall determine:

                  (i)      Restrictions. Shares of Restricted Stock and
         Restricted Stock Units shall be subject to such restrictions as the
         Committee may impose (including, without limitation, a waiver by the
         Participant of the right to vote or to receive any dividend or other
         right or property with respect thereto), which restrictions may lapse
         separately or in combination at such time or times, in such
         installments or otherwise as the Committee may deem appropriate.

                  (ii)     Stock Certificates. Any Restricted Stock granted
         under the Plan shall be registered in the name of the Participant and
         shall bear an appropriate legend referring to the terms, conditions and
         restrictions applicable to such Restricted Stock. In the case of
         Restricted Stock Units, no Shares shall be issued at the time such
         Awards are granted.

                  (iii)    Forfeiture. Except as otherwise determined by the
         Committee, upon termination of employment (as determined under criteria
         established by the Committee) during the applicable restriction period,
         all Shares of Restricted Stock and all Restricted Stock Units at such
         time subject to restriction shall be forfeited and reacquired by the
         Company; provided, however, that the Committee may, when it finds that
         a waiver would

                                       6
<PAGE>

         be in the best interest of the Company, waive in whole or in part any
         or all remaining restrictions with respect to Shares of Restricted
         Stock or Restricted Stock Units. Upon the lapse or waiver of
         restrictions and the restricted period relating to Restricted Stock
         Units evidencing the right to receive Shares, such Shares shall be
         issued and delivered to the holders of the Restricted Stock Units.

         (d)      Performance Awards. The Committee is hereby authorized to
         grant Performance Awards to Participants subject to the terms of the
         Plan and any applicable Award Agreement. A Performance Award granted
         under the Plan (i) may be denominated or payable in cash, Shares
         (including, without limitation, Restricted Stock and Restricted Stock
         Units), other securities, other Awards or other property and (ii) shall
         confer on the holder thereof the right to receive payments, in whole or
         in part, upon the achievement of such performance goals during such
         performance periods as the Committee shall establish. Subject to the
         terms of the Plan and any applicable Award Agreement, the performance
         goals to be achieved during any performance period, the length of any
         performance period, the amount of any Performance Award granted, the
         amount of any payment or transfer to be made pursuant to any
         Performance Award and any other terms and conditions of any Performance
         Award shall be determined by the Committee.

         (e)      Other Stock Grants. The Committee is hereby authorized,
         subject to the terms of the Plan and any applicable Award Agreement, to
         grant to Participants Shares without restrictions thereon as are deemed
         by the Committee to be consistent with the purpose of the Plan.

         (f)      Other Stock-Based Awards. The Committee is hereby authorized
         to grant to Participants subject to the terms of the Plan and any
         applicable Award Agreement, such other Awards that are denominated or
         payable in, valued in whole or in part by reference to, or otherwise
         based on or related to, Shares (including, without limitation,
         securities convertible into Shares), as are deemed by the Committee to
         be consistent with the purpose of the Plan. Shares or other securities
         delivered pursuant to a purchase right granted under this Section 6(f)
         shall be purchased for such consideration, which may be paid by such
         method or methods and in form or forms (including, without limitation,
         cash, Shares, promissory notes, other securities, other Awards or other
         property or any combination thereof), as the Committee shall determine,
         the value of which consideration, as established by the Committee,
         shall not be less than 100% of the Fair Market Value of such Shares or
         other securities as of the date such purchase right is granted.

         (g)      General.

                  (i)      No Cash Consideration for Awards. Awards shall be
         granted for no cash consideration or for such minimal cash
         consideration as may be required by applicable law.

                  (ii)     Awards May Be Granted Separately or Together. Awards
         may, in the discretion of the Committee, be granted either alone or in
         addition to, in tandem with or in substitution for any other Award or
         any award granted under any plan of the Company

                                       7
<PAGE>

         or any Affiliate other than the Plan. Awards granted in addition to or
         in tandem with other Awards or in addition to or in tandem with awards
         granted under any such other plan of the Company or any Affiliate may
         be granted either at the same time as or at a different time from the
         grant of such other Awards or awards.

                  (iii)    Forms of Payment under Awards. Subject to the terms
         of the Plan and of any applicable Award Agreement, payments or
         transfers to be made by the Company or an Affiliate upon the grant,
         exercise or payment of an Award may be made in such form or forms as
         the Committee shall determine (including, without limitation, cash,
         Shares, promissory notes, other securities, other Awards or other
         property or any combination thereof), and may be made in a single
         payment or transfer, in installments or on a deferred basis, in each
         case in accordance with rules and procedures established by the
         Committee. Such rules and procedures may include, without limitation,
         provisions for the payment or crediting of reasonable interest on
         installment or deferred payments or the grant or crediting of dividend
         equivalents with respect to installment or deferred payments.

                  (iv)     Limits on Transfer of Awards. No Award (other than
         Other Stock Grants) and no right under any such Award shall be
         transferable by a Participant otherwise than by will or by the laws of
         descent and distribution; provided, however, that, if so determined by
         the Committee, a Participant may, in the manner established by the
         Committee, transfer Options (other than Incentive Stock Options) or
         designate a beneficiary or beneficiaries to exercise the rights of the
         Participant and receive any property distributable with respect to any
         Award upon the death of the Participant. Each Award or right under any
         Award shall be exercisable during the Participant's lifetime only by
         the Participant or, if permissible under applicable law, by the
         Participant's guardian or legal representative. No Award or right under
         any such Award may be pledged, alienated, attached or otherwise
         encumbered, and any purported pledge, alienation, attachment or
         encumbrance thereof shall be void and unenforceable against the Company
         or any Affiliate.

                  (v)      Term of Awards. The term of each Award shall be for
         such period as may be determined by the Committee.

                  (vi)     Restrictions; Securities Exchange Listing. All Shares
         or other securities delivered under the Plan pursuant to any Award or
         the exercise thereof shall be subject to such restrictions as the
         Committee may deem advisable under the Plan, applicable federal or
         state securities laws and regulatory requirements, and the Committee
         may cause appropriate entries to be made or legends to be affixed to
         reflect such restrictions. If any securities of the Company are traded
         on a securities exchange, the Company shall not be required to deliver
         any Shares or other securities covered by an Award unless and until
         such Shares or other securities have been admitted for trading on such
         securities exchange.

Section 7.  Amendment and Termination; Adjustments.

                                       8
<PAGE>

         (a)      Amendments to the Plan. The Board may amend, alter, suspend,
discontinue or terminate the Plan at any time; provided, however, that,
notwithstanding any other provision of the Plan or any Award Agreement, without
the approval of the shareholders of the Company, no such amendment, alteration,
suspension, discontinuation or termination shall be made that, absent such
approval:

                  (i)      would violate the rules or regulations of The Nasdaq
         Stock Market, Inc. or any securities exchange upon which the Shares are
         listed; or

                  (ii)     would cause the Company to be unable, under the Code,
         to grant Incentive Stock Options under the Plan.

         (b)      Amendments to Awards. The Committee may waive any conditions
of or rights of the Company under any outstanding Award, prospectively or
retroactively. Except as otherwise provided herein or in the Award Agreement,
the Committee may not amend, alter, suspend, discontinue or terminate any
outstanding Award, prospectively or retroactively, if such action would
adversely affect the rights of the holder of such Award, without the consent of
the Participant or holder or beneficiary thereof.

         (c)      Correction of Defects, Omissions and Inconsistencies. The
Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent it shall
deem desirable to carry the Plan into effect.

Section 8.  Income Tax Withholding; Tax Bonuses.

         (a)      Withholding. In order to comply with all applicable federal or
state income tax laws or regulations, the Company may take such action as it
deems appropriate to ensure that all applicable federal or state payroll,
withholding, income or other taxes, which are the sole and absolute
responsibility of a Participant, are withheld or collected from such
Participant. In order to assist a Participant in paying all or a portion of the
federal and state taxes to be withheld or collected upon exercise or receipt of
(or the lapse of restrictions relating to) an Award, the Committee, in its
discretion and subject to such additional terms and conditions as it may adopt,
may permit the Participant to satisfy such tax obligation by (i) electing to
have the Company withhold a portion of the Shares otherwise to be delivered upon
exercise or receipt of (or the lapse of restrictions relating to) such Award
with a Fair Market Value equal to the amount of such taxes or (ii) delivering to
the Company Shares other than Shares issuable upon exercise or receipt of (or
the lapse of restrictions relating to) such Award with a Fair Market Value equal
to the amount of such taxes. The election, if any, must be made on or before the
date that the amount of tax to be withheld is determined.

         (b)      Tax Bonuses. The Committee, in its discretion, shall have the
authority, at the time of grant of any Award under this Plan or at any time
thereafter, to approve cash bonuses to designated Participants to be paid upon
their exercise or receipt of (or the lapse of restrictions relating to) Awards
in order to provide funds to pay all or a portion of federal and state taxes due
as a result of such exercise or receipt (or the lapse of such

                                       9
<PAGE>

restrictions). The Committee shall have full authority in its discretion to
determine the amount of any such tax bonus.

Section 9.  General Provisions.

         (a)      No Rights to Awards. No Eligible Person, Participant or other
Person shall have any claim to be granted any Award under the Plan, and there is
no obligation for uniformity of treatment of Eligible Persons, Participants or
holders or beneficiaries of Awards under the Plan. The terms and conditions of
Awards need not be the same with respect to any Participant or with respect to
different Participants.

         (b)      Award Agreements. No Participant will have rights under an
Award granted to such Participant unless and until an Award Agreement shall have
been duly executed on behalf of the Company and, if requested by the Company,
signed by the Participant.

         (c)      No Limit on Other Compensation Arrangements. Nothing contained
in the Plan shall prevent the Company or any Affiliate from adopting or
continuing in effect other or additional compensation arrangements, and such
arrangements may be either generally applicable or applicable only in specific
cases.

         (d)      No Right to Employment. The grant of an Award shall not be
construed as giving a Participant the right to be retained in the employ of the
Company or any Affiliate, nor will it affect in any way the right of the Company
or an Affiliate to terminate such employment at any time, with or without cause.
In addition, the Company or an Affiliate may at any time dismiss a Participant
from employment free from any liability or any claim under the Plan or any
Award, unless otherwise expressly provided in the Plan or in any Award
Agreement.

         (e)      Governing Law. The validity, construction and effect of the
Plan or any Award, and any rules and regulations relating to the Plan or any
Award, shall be determined in accordance with the laws of the State of Vermont.

         (f)      Severability. If any provision of the Plan or any Award is or
becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction
or would disqualify the Plan or any Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to
applicable laws, or if it cannot be so construed or deemed amended without, in
the determination of the Committee, materially altering the purpose or intent of
the Plan or the Award, such provision shall be stricken as to such jurisdiction
or Award, and the remainder of the Plan or any such Award shall remain in full
force and effect.

         (g)      No Trust or Fund Created. Neither the Plan nor any Award shall
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Affiliate and a Participant or
any other Person. To the extent that any Person acquires a right to receive
payments from the Company or any Affiliate pursuant to an Award, such right
shall be no greater than the right of any unsecured general creditor of the
Company or any Affiliate.

                                       10
<PAGE>

         (h)      No Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the Committee shall determine
whether cash shall be paid in lieu of any fractional Shares or whether such
fractional Shares or any rights thereto shall be canceled, terminated or
otherwise eliminated.

         (i)      Headings. Headings are given to the Sections and subsections
of the Plan solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.

Section 10.  Effective Date of the Plan.

The Plan was approved by the Board on August 24, 2001, subject to approval by
the shareholders of the Company within twelve (12) months thereafter. Any Award
granted under the Plan prior to shareholder approval of the Plan shall be
subject to shareholder approval of the Plan.

Section 11.  Term of the Plan.

No Award shall be granted under the Plan after August 23, 2011 or any earlier
date of discontinuation or termination established pursuant to Section 7(a) of
the Plan. However, unless otherwise expressly provided in the Plan or in an
applicable Award Agreement, any Award theretofore granted may extend beyond such
date.

                                       11

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00031-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00031-of-00352.parquet"}]]