Document:

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                                                                    Exhibit 10.7

                                                               December 13, 2000

                                                       |__|    Employee's Copy
                                                       |__|    Employer's Copy

                           US OFFICE PRODUCTS COMPANY
                        BUSINESS UNIT RETENTION AGREEMENT

To Anne Smyth:

         US Office Products Company (the "COMPANY") wants to retain your
services during the term of this Agreement for itself and for US Office
Products, North America, the business unit (the "BUSINESS UNIT") for which you
principally work and to which more than 50% of your expenses are allocated for
budget purposes. (This Agreement refers to the Company and the Business Unit
collectively as your "EMPLOYER.") Your Employer values your services,
appreciates your dedication, considers you an important part of its operations,
and wants to retain you and also give you additional incentives to assist in any
possible transaction relating to a possible "CHANGE IN CONTROL" (as defined in
Annex A) of the Company or of the Business Unit, should the Company decide to
pursue any such transaction.

         TERM. This Agreement runs from December 1, 2000 (the "EFFECTIVE DATE")
to 5:00 p.m. Eastern Time on November 30, 2002, or if later to the first
anniversary of the first Change in Control that occurs before November 30, 2002
(the "TERM"). Neither you nor your Employer has any obligation to extend the
Term. Even if this Agreement expires or is terminated, you agree to comply with
any paragraphs that state that they continue beyond termination of this
Agreement.

         DUTIES. As part of this Agreement, you agree to (i) continue to perform
all of your current duties and comply with your employment agreement (if any)
with your Employer, as any such agreement exists today or is amended or replaced
in the future (the "EMPLOYMENT AGREEMENT"); (ii) assist with various
non-operating activities, which could include outside investment, financing,
transactions, or business reconfiguration as your Employer requests, including
providing all information your Employer considers necessary or appropriate;
(iii) carry out any other tasks your Employer reasonably requests to facilitate
such activities or any Change in Control; and (iv) perform the duties assigned
to you following any such activities, including any Change in Control.

         RETENTION PAYMENT. To provide you with special incentives to remain
with your Employer through the Term, your Employer will pay you $100,000.00 (the
"RETENTION PAYMENT") on or around January 15, 2001, reduced by any applicable
withholding and payroll taxes. By accepting this Retention Payment, you agree to
remain with your Employer for a period of 12 months. In addition, you agree to
accept this payment in lieu of any payment under the FY 2001 Short Term
Incentive Plan, excluding any short-term incentive payment for which you may be
eligible under the change in control terms specified in that plan. You agree to
repay the "RETENTION PAYMENT AMOUNT" (defined to mean the Retention Payment, net
of taxes paid

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and/or withheld and other payroll deductions) within 10 days after
your employment ends if your employment ends before December 31, 2001, except as
provided in this section. Your Employer will forgive repayment of 25% of the
Retention Repayment Amount if your employment ends after June 30, 2001, 50% if
after September 30, 2001, and 100% if after December 31, 2001. Your Employer
will forgive repayment of 100% of the Retention Repayment Amount if you resign
for "Good Reason" (as defined below) following a change in control, your
Employer ends your employment without Cause, you die, or your employment ends
under a "DISABILITY" as defined in your Employment Agreement. If you do not have
an Employment Agreement or it lacks such a definition, you will have a
"DISABILITY" if, as a result of incapacity due to physical or mental illness or
injury, (i) you have been unable to perform the material duties of your position
on a full-time basis for a period of four consecutive months, or for a total of
four months in any six-month period, (ii) you are unable to resume your
full-time duties within 30 days after written notice to you (given before or
after the end of the preceding periods, but not effective earlier than the last
day of the applicable period) that your Employer will terminate your employment
for Disability, and (iii) your Employer does so terminate your employment.

         CHANGE IN CONTROL. If a Change in Control occurs during the Term, and
if, within 12 months after the Change in Control, either (i) your Employer
subsequently terminates your employment without Cause or (ii) you resign
subsequently for Good Reason during the Term, then your Employer or the
"Successor" (as defined below) will pay you $708,000.00 (the "SEVERANCE")
(reduced by any applicable withholding taxes) within 10 days after your
employment ends. The Severance will be adjusted, as necessary, to be two times
your then current base salary (annualized) if that amount changes.

         If your employment with your Employer terminates for any reason, or
without reason, before the closing of a Change in Control, this CHANGE IN
CONTROL section will terminate on the effective date of such termination of
employment and you will not receive Severance under this Agreement but may still
be eligible for severance under your Employment Agreement (if any) or your
Employer's generally applicable severance policy. However, if your Employer
terminates your employment without Cause within 60 days before, and in
anticipation of, the completion of a Change in Control (that is subsequently
completed), then you will be entitled to receive the Severance as if your
Employer had terminated your employment without Cause after the closing of the
Change in Control (such amounts becoming payable to you after such closing).

         TERMINATION AND SEVERANCE. You and your Employer agree that your
Employer may terminate your employment, with or without Cause, or you may
resign. If you resign other than for Good Reason, you must give your Employer
such amount of prior written notice as your Employment Agreement specifies, or,
if none is specified, 14 days' prior written notice. If you resign for Good
Reason, you must give your Employer such amount of prior written notice of the
basis to resign as your Employment Agreement specifies, or, if none is
specified, 14 days' prior written notice, subject to your Employer's right to
cure the situation within 14 days after receipt of notice. If the situation is
cured in this 14-day period, you will not be entitled to resign for Good Reason.

         FOR CAUSE. Your Employer may terminate your employment for "CAUSE" if
(i) you breach your obligation to keep the details of your Employer's business
activities and any

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potential Changes in Control and related matters confidential both within and
outside the Company, except as otherwise directed by an officer of your
Employer; (ii) you interfere with your Employer's operations, including through
a breach of your duties as specified in this Agreement or in any Employment
Agreement, or (iii) any of the "Cause" definitions in your Employment Agreement,
if any, apply.

         If you do not have an Employment Agreement, CAUSE will also include (i)
your material breach of any confidentiality or noncompete agreement with your
Employer that either cannot be cured or, if curable, is not cured within 10 days
of your receipt of written notice from your Employer specifying the breach; (ii)
your gross negligence in the performance of your duties to your Employer,
intentional nonperformance or mis-performance of such duties, or refusal to
abide by or comply with the directives of the Board of Directors of the Company
(the "BOARD"), your superior officers, or your Employer's policies and
procedures, which actions continue for a period of at least 10 days after your
receipt of written notice of the need to cure or cease; (iii) your willful
dishonesty, fraud, or misconduct with respect to the business or affairs of your
Employer, and that in the judgment of your Employer materially and adversely
affects the operations or reputation of your Employer; (iv) your conviction of a
felony or other crime involving moral turpitude; or (v) your abuse of alcohol or
drugs (legal or illegal) that, in your Employer's judgment, materially impairs
your ability to perform your duties for your Employer.

         GOOD REASON. You may resign from employment for "GOOD REASON" during
the Term and within 12 months after an Change in Control if, during the course
of your duties of employment or as a provision of an offer of employment by a
Successor, you are, without your written consent, subject to:

         -        A material decrease in job duties or scope of responsibility,
                  including revenue responsibility, but excluding a change in
                  title, officer status, and/or reporting relationship;

         -        A reduction in your base salary of greater than 10% on an
                  annual basis or a reduction in your combined annual base
                  salary and short term incentive bonus target of greater than
                  20%;

         -        A change in your principal place of employment after, or in
                  anticipation of, a Change in Control such that your daily
                  commute from your residence as of the date immediately prior
                  to the date on which the place of employment is relocated
                  increases by at least 25 miles;

         -        Your Employment Agreement, if any, (including, without
                  limitation, any severance obligations under this Agreement)
                  (i) not being assumed by a Successor or not otherwise
                  remaining in full force and effect following any Change in
                  Control, or (ii) such assumption or continued effect is for a
                  period less than the greater of your then remaining term under
                  such Employment Agreement or the first anniversary of the
                  Change in Control; or

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         -        A Successor's refusing to offer you a written employment
                  agreement on substantially similar terms as those applicable
                  to persons at your level of employment and you had an
                  Employment Agreement in effect with your Employer before a
                  Change in Control.

         Termination of employment excludes any transfer among the Company and
any entities that are part of its consolidated group.

         Your resignation for Good Reason or termination without Cause will not
entitle you to Severance under this Agreement except as provided under CHANGE IN
CONTROL above.

         If you resign for Good Reason, you must give your Employer written
notice of your resignation within 30 days after the occurrence of the event that
forms the basis of your Good Reason or within 30 days after receiving notice
from a Successor of its decision to (i) not assume or continue your Employment
Agreement; (ii) do so for a period less than the greater of your then remaining
term under such Employment Agreement or the first anniversary of the Change in
Control; or (iii) not offer you a written employment agreement on substantially
similar terms as those applicable to persons at your level of employment.

         REPAYMENTS. You agree to make any repayments provided under this
Agreement to the entity from which you receive the payment or its successor.

         AMENDMENT; WAIVER. Neither you nor your Employer may modify, amend, or
waive the terms of this Agreement other than by a written instrument signed by
you and an executive officer of the Company, with the prior approval of the
Board. Either party's waiver of the other's compliance with any provision of
this Agreement does not waive any other provision of this Agreement or any
subsequent breach by such party of a provision of this Agreement.

         NO MITIGATION OR OFFSET FROM OTHER EMPLOYERS. You are not required to
mitigate the payments under this Agreement by seeking other employment or
otherwise, and your Employer will not offset its obligations under this
Agreement to reflect compensation you receive from other employers.

         GOVERNING LAW. The laws of the state in which your principal place of
employment lies (other than its conflict of laws provisions) govern this
Agreement.

         ASSIGNMENT. Your Employer may assign or otherwise transfer this
Agreement and all of its or their rights, duties, obligations, or interests
under it (i) to any of its or their affiliates or subsidiaries or (ii) to any
business entity that at any time by merger, consolidation, or otherwise acquires
all or substantially all of the Company's stock or assets or to which the
Company transfers all or substantially all of its assets or that acquires
substantially all of the stock or assets of the Business Unit. Upon such
assignment or transfer, any such business entity (the "SUCCESSOR") will be
treated as substituted for your Employer for all purposes. Such a transfer or
assignment will not itself constitute your termination of employment without
Cause. This Agreement binds the Company, its successors or assigns, and your
heirs and the personal representatives of your estate. Without the Company's
prior written consent, you may not assign

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or delegate this Agreement or any or all rights, duties, obligations, or
interests under it. YOU AGREE THAT THE ASSUMPTION OF THIS AGREEMENT AND ANY
OTHER SEVERANCE OBLIGATIONS OWED TO YOU BY A SUCCESSOR IN A CHANGE IN CONTROL
RELEASES THE COMPANY AND THE BUSINESS UNIT, EXCEPT TO THE EXTENT IT IS PART OF
THE SUCCESSOR, FROM ANY OBLIGATIONS UNDER THIS AGREEMENT, INCLUDING ANY
SEVERANCE OBLIGATIONS, AND RELEASES AND WAIVES ANY CLAIMS YOU MAY HAVE AGAINST
THE COMPANY OR THE BUSINESS UNIT, EXCEPT TO THE EXTENT IT IS PART OF THE
SUCCESSOR, FOR THE PAYMENT OF SUCH AMOUNTS.

         EFFECTS ON EMPLOYMENT OR OTHER RELATIONSHIP. Nothing in this Agreement
restricts your Employer's rights or those of any of its or their affiliates to
terminate your employment or other relationship at any time, with or without
Cause. In that event, you agree that the Severance under this Agreement (as set
forth under CHANGE IN CONTROL above), will be in lieu of, and not in addition
to, any severance payment that otherwise would be payable to you under your
Employment Agreement or other applicable severance policy, except that in no
event will you receive a severance payment less than you would have been
entitled to receive under your Employment Agreement or other applicable
severance policy alone. Except as specified under RETENTION PAYMENTS, this
Agreement will not alter or reduce any right you may have to receive any
incentive compensation under any plan of the Company or Business Unit, whether
pursuant to the terms of your Employment Agreement or the terms of any
applicable incentive compensation plan.

         NO EFFECT ON RUNNING BUSINESS. You understand and agree that the
existence of this Agreement will not affect in any way the right or power of the
Company or its stockholders or the Business Unit to make or authorize any
adjustments, recapitalizations, reorganizations, or other changes in Company's
or Business Unit's capital structure or its business, or any merger or
consolidation of the Company or Business Unit, or any issuance of bonds,
debentures, preferred or other stock, with preference ahead of or convertible
into, or otherwise affecting the Company's or Business Unit's common stock or
the rights thereof, or the dissolution or liquidation of the Company or Business
Unit, or any sale or transfer of all or any part of their assets or business, or
any other corporate act or proceeding, whether or not of a similar character to
those described above. Nothing in this Agreement imposes any requirement on the
Company or Business Unit to complete any non-operating activities or any Change
in Control.

         NOTICES. Notices must be given in writing by personal delivery, by
certified mail, return receipt requested, by telecopy, or by overnight delivery.
You should send or deliver your notices to the Company's corporate headquarters,
addressed to the Chief Executive Officer of the Business Unit, with a copy to
the Company's General Counsel (and, to the extent that the Company still
controls the Business Unit, with a copy to the Chief Executive Officer of the
Company at the headquarters office of the Company). Your Employer will send or
deliver any notice given to you at your address as reflected on the Company's
personnel records. You and your Employer may change the address for notice by
like notice to the other. You and your Employer agree that notice is received on
the date it is personally delivered, the date it is received by certified mail,
the date of guaranteed delivery by the overnight service, or the date the fax
machine confirms effective transmission.

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         If you accept the terms of this Agreement, please sign below. We
encourage you to consult with any advisors you choose.

                                                  ------------------------

                                            By:  /s/ Warren D. Feldberg
                                                 ----------------------------
                                                 Warren D. Feldberg
                                                 President and CEO

I accept and agree to the terms set forth in this Agreement:
/s/ Anne Smyth             Dated:   February 19, 2001
-------------------------           -------------------
Anne Smyth

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                                     ANNEX A

A "CHANGE IN CONTROL" means any of the following events after the Effective
Date:

     (i)  any Person, other than one or more Excluded Persons, acquires directly
          or indirectly, in one or a series of transactions, the Beneficial
          Ownership of any voting securities of the Company (the "COMPANY VOTING
          SECURITIES") and immediately after such acquisition, such Person is,
          directly or indirectly, the Beneficial Owner of voting securities
          representing 50% or more of the total voting power of all the
          then-outstanding Company Voting Securities, where

          (I)  "BENEFICIAL OWNERSHIP," "BENEFICIAL OWNER," and "BENEFICIALLY
               OWN" have the meanings provided under, and shall be calculated in
               the manner provided in, Rule 13d-3 under the Securities Exchange
               Act of 1934 ("EXCHANGE ACT"), as amended, but without regard to
               whether a right to acquire securities is exercisable within 60
               days of the date on which ownership is being calculated;

          (II) "EXCLUDED PERSON" means a Person that is or includes (in a Group)
               the Company; any majority-owned subsidiary (whether in corporate
               or other form) of the Company; with respect to the Participant,
               the Participant if he or she has a direct or indirect Beneficial
               Ownership in the acquiring Person of at least 5%; or, solely with
               respect to (i) above, Clayton, Dubilier & Rice; and

         (III) "PERSON" means any individual, entity, or "GROUP" (within the
               meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act);

     (ii) except as provided in subparagraph (ii)(I), the Company completes a
          merger, consolidation, recapitalization, or reorganization of the
          Company (an "EVENT").

          (I)  An Event does not constitute a Change in Control if the
               Beneficial Owners of the Company Voting Securities outstanding
               immediately before such Event ("OLD OWNERS") Beneficially Own
               securities that represent immediately after such Event at least
               50% of the combined voting power of the then outstanding voting
               securities of either the Company or the other surviving entity or
               its ultimate parent (the "RESULTING VOTING SECURITIES") (in other
               words, an Event is not a Change in Control unless Beneficial
               Owners who were not Beneficial Owners pre-Event ("NEW OWNERS")
               have Beneficial Ownership of more than 50% of the Resulting
               Voting Securities).

          (II) For purposes of applying the exception set forth in subparagraph
               (ii)(I) of this definition, if an Old Owner Beneficially Owns a
               greater number of the Resulting Voting Securities immediately
               after the Event than the number the Old Owner received solely as
               a result of the Event, that excess

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               ownership will be treated as held by a New Owner and thus count
               against the 50% continuity test (making it more likely that a
               Change in Control occurred if a Person's Beneficial Ownership
               increased disproportionately in connection with the Event);

    (iii) the Business Unit undergoes a sale, disposition, spin-off, or
          liquidation other than to an Excluded Person, of a Substantial
          Portion, in one or a series of transactions, of the Business Unit's
          assets or, for Business Units that are entities, of at least 75% of
          the stock of the entity, where a "SUBSTANTIAL PORTION" means at
          least 75% of the assets of the business unit measured by their book
          value as compared with the book value of such assets as of April
          27, 2000 (the "STARTING VALUE") (provided that if the book value of
          an asset is reduced or increased after April 27, 2000 due to (X) a
          change in accounting policies or methods, (Y) a write-up or
          write-down in asset value as required by the financial policies of
          the Company or its auditors due to a change in market conditions,
          the value of goodwill, or other similar factors or conditions (but
          not because of the sale or purchase of assets), or (Z) other
          similar accounting or auditing requirements, the Starting Value of
          such asset shall be adjusted to be equal to the adjusted asset
          valuation (less the aggregate amount of any amortization or
          depreciation of such asset from April 27, 2000 through the date of
          revaluation)), where the determination of asset value and any
          decline of asset value for this purpose will be made by the Board,
          by reference to the Company's financial statements and after
          consultation with the Company's independent auditors, WHICH
          DETERMINATION YOU HEREBY AGREE WILL BE FINAL AND BINDING;

     (iv) at any point after the Effective Date, Incumbent Directors cease to
          be a majority of the members of the Board, where an "INCUMBENT
          DIRECTOR" is (I) an individual who is a member of the Board on the
          Effective Date or (II) any new director whose appointment or
          election by the Board or whose nomination for election by the
          stockholders was approved by two-thirds (2/3) of the persons who
          were already Incumbent Directors, other than any individual who
          assumes office initially as a result of an actual or threatened
          election contest with respect to the election or removal of
          directors or other actual or threatened solicitation of proxies or
          consents by or on behalf of a Person other than the Board; or

     (v)  the Board or its Compensation Committee determines that it is
          substantially likely that one of the foregoing events will occur,
          either with respect to the Company or the Business Unit.

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                                                                EXHIBIT 10.1

                       HORIZON ORGANIC HOLDING CORPORATION

                           1998 EQUITY INCENTIVE PLAN

                            ADOPTED OCTOBER 25, 1995
                       AMENDED AND RESTATED APRIL 14, 1998
                     APPROVED BY STOCKHOLDERS APRIL 30, 1998
                       AMENDED AND RESTATED MARCH 31, 2000
                      APPROVED BY STOCKHOLDERS MAY 16, 2000
                      PLAN TERMINATION DATE: APRIL 13, 2008

1.   PURPOSES.

     (a) The purpose of the Plan is to provide a means by which selected
Employees and Directors of and Consultants to the Company and its Affiliates,
may be given an opportunity to benefit from increases in value of the stock of
the Company through the granting of (i) Incentive Stock Options, (ii)
Nonstatutory Stock Options, (iii) stock bonuses and (iv) rights to acquire
restricted stock.

     (b) The Company, by means of the Plan, seeks to retain the services of
persons who are now Employees or Directors of or Consultants to the Company or
its Affiliates, to secure and retain the services of new Employees, Directors
and Consultants, and to provide incentives for such persons to exert maximum
efforts for the success of the Company and its Affiliates.

2.   DEFINITIONS.

     (a)  "AFFILIATE" means any parent corporation or subsidiary corporation of
the Company, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f) respectively, of the Code.

     (b)  "BOARD" means the Board of Directors of the Company.

     (c)  "CODE" means the Internal Revenue Code of 1986, as amended.

     (d)  "COMMITTEE" means a Committee appointed by the Board in accordance
with subsection 3(c) of the Plan.

     (e)  "COMMON STOCK" means the common stock of the Company:

     (f)  "COMPANY" means Horizon Organic Holding Corporation, a Delaware
corporation.

     (g) "CONSULTANT" means any person, including an advisor, (i) engaged by the
Company or an Affiliate to render consulting services and who is compensated for
such services or (ii) who is a member of the Board of Directors of an Affiliate.
However, the term "Consultant" shall not include Directors who are paid only a
director's fee by the Company or who are not compensated by the Company for
their services as Directors.

                                       1.

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     (h) "CONTINUOUS SERVICE" means the Stock Award holder's service with the
Company or an Affiliate, whether as an Employee, Director or Consultant is not
interrupted or terminated. The Board or the chief executive officer of the
Company may determine, in that party's sole discretion, whether Continuous
Service shall be considered interrupted in the case of: (i) any leave of absence
approved by the Board or the chief executive officer of the Company, including
sick leave, military leave, or any other personal leave; or (ii) transfers
between locations of the Company or between the Company, Affiliates or their
successors.

     (i) "COVERED EMPLOYEE" means the chief executive officer and the four (4)
other highest compensated officers of the Company for whom total compensation is
required to be reported to stockholders under the Exchange Act, as determined
for purposes of Section 162(m) of the Code.

     (j)  "DIRECTOR" means a member of the Board of Directors of the Company.

     (k) "DISABILITY" means the inability of a person to perform the normal
duties of the person's position with the Company or an Affiliate of the Company,
provided that such inability to perform must be certified in writing (a
"Physician's Certificate") by a medical doctor, reasonably acceptable to the
Company.

     (l) "EMPLOYEE" means any person employed by the Company or any Affiliate.
Neither service as a Director nor payment of a director's fee by the Company or
an Affiliate shall be sufficient to constitute "employment" by the Company or an
Affiliate.

     (m)  "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

     (n) "FAIR MARKET VALUE" means, as of any date, the value of the Common
Stock of the Company determined as follows:

          (1) If the Common Stock is listed on any established stock exchange or
traded on The Nasdaq National Market or The Nasdaq SmallCap Market, the Fair
Market Value of a share of Common Stock shall be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on such
exchange or market (or the exchange or market with the greatest volume of
trading in the Common Stock) on the last market trading day prior to the day of
determination, as reported in The Wall Street Journal or such other source as
the Board deems reliable; or

          (2) In the absence of an established market for the Common Stock, the
Fair Market Value shall be determined in good faith by the Board.

     (o) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.

     (p) "LISTING DATE" means the first date upon which any security of the
Company is listed (or approved for listing) upon notice of issuance on any
securities exchange, or designated (or approved for designation) upon notice of
issuance as a national market security on an interdealer quotation system.

                                       2.

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     (q) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a
current Employee or Officer of the Company or its parent or subsidiary, does not
receive compensation (directly or indirectly) from the Company or its parent or
subsidiary for services rendered as a consultant or in any capacity other than
as a Director (except for an amount as to which disclosure would not be required
under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act
("Regulation S-K")), does not possess an interest in any other transaction as to
which disclosure would be required under Item 404(a) of Regulation S-K, and is
not engaged in a business relationship as to which disclosure would be required
under Item 404(b) of Regulation S-K; or (ii) is otherwise considered a "non-
employee director" for purposes of Rule 16b-3.

     (r) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify as
an Incentive Stock Option.

     (s) "OFFICER" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

     (t) "OPTION" means an Incentive Stock Option or a Nonstatutory Stock Option
granted pursuant to the Plan.

     (u) "OPTION AGREEMENT" means a written agreement between the Company and an
Optionee evidencing the terms and conditions of an individual Option grant. Each
Option Agreement shall be subject to the terms and conditions of the Plan.

     (v) "OPTIONEE" means a person to whom an Option is granted pursuant to the
Plan, or if applicable, such other person who holds an outstanding Option.

     (w) "OUTSIDE DIRECTOR" means a Director who either (i) is not a current
employee of the Company or an "affiliated corporation" (within the meaning of
the Treasury regulations promulgated under Section 162(m) of the Code), is not a
former employee of the Company or an "affiliated corporation" receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an "affiliated corporation"
at any time, and is not currently receiving direct or indirect remuneration from
the Company or an "affiliated corporation" for services in any capacity other
than as a Director, or (ii) is otherwise considered an "outside director" for
purposes of Section 162(m) of the Code.

     (y)  "PLAN" means this 1998 Equity Incentive Plan.

     (z) "RULE 16B-3" means Rule 16b-3 of the Exchange Act or any successor to
Rule 16b-3, as in effect when discretion is being exercised with respect to the
Plan.

     (aa) "SECURITIES ACT" means the Securities Act of 1933, as amended.

     (bb) "STOCK AWARD" means any right granted under the Plan, including any
Option, a stock bonus and any right to acquire restricted stock.

     (cc) "STOCK AWARD AGREEMENT" means a written agreement between the Company
and a holder of a Stock Award evidencing the terms and conditions of an
individual Stock Award grant. Each Stock Award Agreement shall be subject to the
terms and conditions of the Plan.

                                       3.

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3.   ADMINISTRATION.

     (a) The Plan shall be administered by the Board unless and until the Board
delegates administration to a Committee, as provided in subsection 3(c).

     (b) The Board shall have the power, subject to, and within the limitations
of, the express provisions of the Plan:

          (1) To determine from time to time which of the persons eligible under
the Plan shall be granted Stock Awards; when and how each Stock Award shall be
granted; what type of Stock Award shall be granted; the provisions of each Stock
Award granted (which need not be identical), including the time or times when a
person shall be permitted to receive stock pursuant to a Stock Award; and the
number of shares with respect to which a Stock Award shall be granted to each
such person.

          (2) To construe and interpret the Plan and Stock Awards granted under
it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award Agreement,
in a manner and to the extent it shall deem necessary or expedient to make the
Plan fully effective.

          (3)  To amend the Plan or a Stock Award as provided in Section 12.

     (c) The Board may delegate administration of the Plan to a committee
composed of two (2) or more members (the "Committee"), all of the members of
which Committee may be Non-Employee Directors and/or Outside Directors. If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board including the power to delegate to a subcommittee of two or more
Directors (who may or may not be Outside Directors or Non-Employee Directors)
any of the administrative powers to the Committee is authorized to exercise (and
references in this Plan to the Board shall thereafter mean the Committee or such
a subcommittee), subject, however, to such resolutions, not inconsistent with
the provisions of the Plan, as may be adopted from time to time by the Board.
The Board may abolish the Committee at any time and revest in the Board the
administration of the Plan. Notwithstanding anything in this Section 3 to the
contrary, the Board or the Committee may delegate to a committee of one or more
members of the Board the authority to grant Stock Awards to eligible persons who
(x) are not then subject to Section 16 of the Exchange Act and/or (y) are either
(i) not then Covered Employees and are not expected to be Covered Employees at
the time of recognition of income resulting from such Option, or (ii) not
persons with respect to whom the Company wishes to comply with Section 162(m) of
the Code.

     (d) All actions taken and all interpretations and determinations made by
the Board or Committee in good faith (including determinations of Fair Market
Value) shall be final and binding upon all Optionees, the Company and all other
interested persons. No member of the Board or Committee shall be personally
liable for any action, determination or interpretation made in good faith with
respect to the Plan, and all members of the Board and Committee shall,

                                       4.

<PAGE>

in addition to their right as directors, be fully protected by the Company with
respect to any such action, determination or interpretation.

4. SHARES SUBJECT TO THE PLAN.

     (a) Subject to the provisions of Section 11 relating to adjustments upon
changes in stock, the stock that may be issued pursuant to Stock Awards shall
not exceed in the aggregate one million five hundred thousand (1,500,000) shares
of the Common Stock. If any Stock Award shall for any reason expire or otherwise
terminate, in whole or in part, without having been exercised in full, the stock
not acquired under such Stock Award shall revert to and again become available
for issuance under the Plan. If any shares of Common Stock acquired pursuant to
the exercise of an Option shall for any reason be repurchased by the Company
under a repurchase option provided under the Plan, the stock repurchased by the
Company under such repurchase option shall revert to and again become available
for issuance under the Plan.

     (b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.

5.   ELIGIBILITY.

     (a) Incentive Stock Options may be granted only to Employees. Stock Awards
other than Incentive Stock Options may be granted only to Employees, Directors
or Consultants.

     (b) No person shall be eligible for the grant of an Incentive Stock Option
if, at the time of grant, such person owns (or is deemed to own pursuant to
Section 424(d) of the Code) stock possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or of any of
its Affiliates unless the exercise price of such Incentive Stock Option is at
least one hundred ten percent (110%) of the Fair Market Value of such stock at
the date of grant and the Incentive Stock Option is not exercisable after the
expiration of five (5) years from the date of grant.

     (c) Subject to the provisions of Section 11 relating to adjustments upon
changes in stock, no person shall be eligible to be granted Options covering
more than two hundred fifty thousand (250,000) shares of Common Stock in any
calendar year. This subsection 5(c) shall not apply prior to the Listing Date
and, following the Listing Date, shall not apply until (i) the earliest of: (A)
the first material modification of the Plan (including any increase to the
number of shares reserved for issuance under the Plan in accordance with Section
4); (B) the issuance of all of the shares of Common Stock reserved for issuance
under the Plan; (C) the expiration of the Plan; or (D) the first meeting of
stockholders at which directors are to be elected that occurs after the close of
the third calendar year following the calendar year in which occurred the first
registration of an equity security under section 12 of the Exchange Act; or (ii)
such other date required by Section 162(m) of the Code and the rules and
regulations promulgated thereunder.

6.   OPTION PROVISIONS.

     Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. All Options shall be separately
designated Incentive Stock Options or Nonstatutory Stock Options at the time of
grant, and a separate certificate or

                                       5.

<PAGE>

certificates will be issued for shares purchased on exercise of each type of
Option. The provisions of separate Options need not be identical, but each
Option shall include (through incorporation of provisions hereof by reference in
the Option or otherwise) the substance of each of the following provisions:

     (a)  TERM. No Option shall be exercisable after the expiration of ten (10)
years from the date it was granted.

     (b) PRICE. The exercise price of each Incentive Stock Option shall be not
less than one hundred percent (100%) of the Fair Market Value of the stock
subject to the Incentive Stock Option on the date the Incentive Stock Option is
granted or such greater amount as required by Section 5(b). The exercise price
of each Nonstatutory Stock Option shall be determined by the Board.
Notwithstanding the foregoing, an Option (whether an Incentive Stock Option or a
Nonstatutory Stock Option) may be granted with an exercise price lower than that
set forth in the preceding sentence if such Option is granted pursuant to an
assumption or substitution for another option in a manner satisfying the
provisions of Section 424(a) of the Code.

     (c) CONSIDERATION. The purchase price of stock acquired pursuant to an
Option shall be paid at the time the Option is exercised, to the extent
permitted by applicable statutes and regulations, either (i) in cash or by check
or (ii) at the discretion of the Board, at the time of the grant of the Option,
under one of the following alternatives:

          (1) Provided that at the time of exercise the Common Stock is publicly
traded and quoted regularly in The Wall Street Journal, pursuant to a program
developed under Regulation T as promulgated by the Federal Reserve Board which,
prior to the issuance of Common Stock, results in either the receipt of cash (or
check) by the Company or the receipt of irrevocable instructions to pay the
aggregate exercise price to the Company from the sales proceeds;

          (2) Provided that at the time of exercise the Common Stock is publicly
traded and quoted regularly in The Wall Street Journal, by delivery of
already-owned shares of Common Stock, held for the period required to avoid a
charge to the Company's reported earnings, and owned free and clear of any
liens, claims, encumbrances or security interests, which Common Stock shall be
valued at its fair market value on the date of exercise;

          (3) Pursuant to a deferred payment alternative as described in the
Option Agreement, provided that, at any time that the Company is incorporated in
Delaware, payment of the Common Stock's "par value" (as defined in the Delaware
General Corporation Law) shall not be made by deferred payment;

          (4)  In any other form of legal consideration that may be acceptable
to the Board; or

          (5)  By any combination of the above methods.

     (d) TRANSFERABILITY. An Incentive Stock Option shall not be transferable
except by will or by the laws of descent and distribution, and shall be
exercisable during the lifetime of the person to whom the Option is granted only
by such person. A Nonstatutory Stock Option may

                                       6.

<PAGE>

be transferable to the extent expressly provided in the Option Agreement;
provided, however, that if the Option Agreement does not specifically provide
for transferability, then such Nonstatutory Stock Option shall not be
transferable except by will or by the laws of descent and distribution or
pursuant to a domestic relations order, and shall be exercisable during the
lifetime of the person to whom the Nonstatutory Stock Option is granted only by
such person or any transferee pursuant to a domestic relations order.
Notwithstanding the foregoing, the person to whom the Option is granted may, by
delivering written notice to the Company, in a form satisfactory to the Company,
designate a third party who, in the event of the death of the Optionee, shall
thereafter be entitled to exercise the Option.

     (e) VESTING. The total number of shares of stock subject to an Option shall
vest and become exercisable as provided in the Option Agreement.

     (f) TERMINATION OF CONTINUOUS SERVICE. In the event an Optionee's
Continuous Service terminates (other than upon the Optionee's death or
Disability), the Optionee may exercise his or her Option (to the extent that the
Optionee was entitled to exercise it at the date of termination) but only within
such period of time ending on the earlier of (i) the date three (3) months after
the termination of the Optionee's Continuous Service (or such longer or shorter
period specified in the Option Agreement) or (ii) the expiration of the term of
the Option as set forth in the Option Agreement. If, after termination, the
Optionee does not exercise his or her Option within the time specified in the
Option Agreement, the Option shall terminate, and the shares covered by such
Option shall revert to and again become available for issuance under the Plan.

     An Optionee's Option Agreement may also provide that if the exercise of the
Option following the termination of the Optionee's Continuous Service (other
than upon the Optionee's death or Disability) would be prohibited at any time
solely because the issuance of shares would violate the registration
requirements under the Securities Act or any material regulatory requirements of
any foreign jurisdiction, then the Option shall terminate on the earlier of (i)
the expiration of the term of the Option as set forth in the Option Agreement,
or (ii) the expiration of a period of three (3) months after the termination of
the Optionee's Continuous Service during which the exercise of the Option would
not be in violation of such registration requirements.

     (g) DISABILITY OF OPTIONEE. In the event an Optionee's Continuous Service
terminates as a result of the Optionee's Disability, the Optionee may exercise
his or her Option, but only within such period of time ending on the earlier of
(i) the date twelve (12) months following such termination (or such longer or
shorter period specified in the Option Agreement), or (ii) the expiration of the
term of the Option as set forth in the Option Agreement. If, at the date of
termination, the Optionee is not entitled to exercise the entire Option, the
shares covered by the unexercisable portion of the Option shall revert to and
again become available for issuance under the Plan no later than thirty (30)
days following the date of termination. If, after termination, the Optionee does
not exercise his or her Option within the time specified herein, the Option
shall terminate, and the shares covered by such Option shall revert to and again
become available for issuance under the Plan.

     (h) DEATH OF OPTIONEE. In the event of the death of an Optionee during, or
within the three (3) month or twelve (12) month periods referred to above after
the termination of, the

                                       7.

<PAGE>

Optionee's Continuous Service, the Option may be exercised by the Optionee's
estate, by a person who acquired the right to exercise the Option by bequest or
inheritance or by a person designated to exercise the option upon the Optionee's
death pursuant to subsection 6(d), but only within the period ending on the
earlier of (i) the date twelve (12) months following the date of death (or such
longer or shorter period specified in the Option Agreement), or (ii) the
expiration of the term of such Option as set forth in the Option Agreement. If,
at the time of death, the Optionee was not entitled to exercise the entire
Option, the shares covered by the unexercisable portion of the Option shall
revert to and again become available for issuance under the Plan no later than
thirty (30) days following the date of termination. If, after death, the Option
is not exercised within the time specified herein, the Option shall terminate,
and the shares covered by such Option shall revert to and again become available
for issuance under the Plan.

     (i) QUALIFIED RETIREMENT OF OPTIONEE. In the event an Optionee's Continuous
Service terminates as a result of the Optionee's Qualified Retirement (as
determined by the Board of Directors or the Committee), the Optionee may
exercise his or her Option, but only within such period of time ending on the
expiration of the term of the Option as set forth in the Option Agreement (or
such shorter period specified in the Option Agreement). If, at the date of such
termination, the Optionee is not entitled to exercise the entire Option, the
shares covered by the unexercisable portion of the Option shall revert to and
again become available for issuance under the Plan no later than thirty (30)
days following the date of termination. If, after such termination, the Optionee
does not exercise his or her Option within the time specified herein, the Option
shall terminate, and the shares covered by such Option shall revert to and again
become available for issuance under the Plan.

     (j) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionee may elect at any time before the Optionee's Continuous
Service terminates to exercise the Option as to any part or all of the shares
subject to the Option prior to the full vesting of the Option. Any unvested
shares so purchased shall be subject to a repurchase right in favor of the
Company or any other restriction the Board determines appropriate.

7. TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK.

     (a) Each stock bonus or restricted stock purchase agreement shall be in
such form and shall contain such terms and conditions as the Board shall deem
appropriate. The terms and conditions of stock bonus or restricted stock
purchase agreements may change from time to time, and the terms and conditions
of separate agreements need not be identical, but each stock bonus or restricted
stock purchase agreement shall include (through incorporation of provisions
hereof by reference in the agreement or otherwise) the substance of each of the
following provisions as appropriate:

          (1) PURCHASE PRICE. The purchase price under each restricted stock
purchase agreement shall be such amount as the Board shall determine and
designate in such agreement, but in no event shall the purchase price be less
than eighty-five percent (85%) of the stock's Fair Market Value on the date such
award is made. Notwithstanding the foregoing, the Board may determine that
eligible participants in the Plan may be awarded stock pursuant to a stock bonus
agreement in consideration for past services actually rendered to the Company
for its benefit.

                                       8.

<PAGE>

          (2) TRANSFERABILITY. A stock bonus or restricted stock purchase
agreement may be transferable to the extent expressly provided in the Stock
Award Agreement; provided, however, that if the Stock Award Agreement does not
specifically provide for transferability, then such stock bonus or restricted
stock purchase award shall not be transferable except by will or the laws of
descent and distribution or pursuant to a domestic relations order, and shall be
exercisable during the lifetime of the person to whom the stock bonus or
restricted stock purchase award is granted only by such person or any transferee
pursuant to a domestic relations order, so long as stock awarded under such
agreement remains subject to any restrictions pursuant to the agreement.

          (3) CONSIDERATION. The purchase price of stock acquired pursuant to a
restricted stock purchase agreement shall be paid either: (i) in cash at the
time of purchase; (ii) at the discretion of the Board, according to a deferred
payment or other arrangement with the person to whom the stock is sold; or (iii)
in any other form of legal consideration that may be acceptable to the Board in
its discretion. Notwithstanding the foregoing, the Board may award stock
pursuant to a stock bonus agreement in consideration for past services actually
rendered to the Company or for its benefit.

          (4) VESTING. Shares of stock sold or awarded under the Plan may, but
need not, be subject to a repurchase option or reacquisition right in favor of
the Company in accordance with a vesting schedule to be determined by the Board.

          (5) TERMINATION OF CONTINUOUS SERVICE. In the event a Participant's
Continuous Service terminates, the Company may repurchase or otherwise reacquire
any or all of the shares of stock held by that person which have not vested as
of the date of termination under the terms of the stock bonus or restricted
stock purchase agreement between the Company and such person, subject to the
provisions of Section 11.

8.   COVENANTS OF THE COMPANY.

     (a) During the terms of the Stock Awards, the Company shall keep available
at all times the number of shares of stock required to satisfy such Stock
Awards.

     (b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
grant Stock Awards and to issue and sell shares of Common Stock upon exercise of
the Stock Awards; provided, however, that this undertaking shall not require the
Company to register under the Securities Act the Plan, any Stock Award or any
stock issued or issuable pursuant to any such Stock Award. If, after reasonable
efforts, the Company is unable to obtain from any such regulatory commission or
agency the authority which counsel for the Company deems necessary for the
lawful issuance and sale of stock under the Plan, the Company shall be relieved
from any liability for failure to issue and sell stock upon exercise of such
Stock Awards unless and until such authority is obtained.

9.   USE OF PROCEEDS FROM STOCK.

     Proceeds from the sale of stock pursuant to Stock Awards shall constitute
general funds of the Company.

                                       9.

<PAGE>

10.  MISCELLANEOUS.

     (a) The Board shall have the power to accelerate the time at which a Stock
Award may first be exercised or the time during which a Stock Award or any part
thereof will vest, notwithstanding the provisions in the Stock Award stating the
time at which it may first be exercised or the time during which it will vest.

     (b) No Optionee shall be deemed to be the holder of, or to have any of the
rights of a holder with respect to, any shares subject to such Stock Award
unless and until such person has satisfied all requirements for exercise of the
Stock Award pursuant to its terms.

     (c) Nothing in the Plan or any instrument executed or Stock Award granted
pursuant thereto shall confer upon any Optionee any right to continue in the
employ of the Company or any Affiliate (or to continue acting as a Director or
Consultant) or shall affect the right of the Company or any Affiliate to
terminate the employment of any Employee with or without cause, the right of the
Company's Board of Directors and/or the Company's stockholders to remove any
Director pursuant to the terms of the Company's Bylaws and the provisions of
applicable laws, or the right to terminate the relationship of any Consultant
pursuant to the terms of such Consultant's agreement with the Company or
Affiliate to which such Consultant is providing services.

     (d) To the extent that the aggregate Fair Market Value (determined at the
time of grant) of stock with respect to which Incentive Stock Options are
exercisable for the first time by any Optionee during any calendar year under
all plans of the Company and its Affiliates exceeds one hundred thousand dollars
($100,000), the Options or portions thereof which exceed such limit (according
to the order in which they were granted) shall be treated as Nonstatutory Stock
Options.

     (e) The Company may require any person to whom a Stock Award is granted, or
any person to whom a Stock Award is transferred pursuant to subsection 6(d) or
7(a)(2), as a condition of exercising or acquiring stock under any Stock Award,
(1) to give written assurances satisfactory to the Company as to such person's
knowledge and experience in financial and business matters and/or to employ a
purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters, and that he or
she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Stock Award; and (2) to
give written assurances satisfactory to the Company stating that such person is
acquiring the stock subject to the Stock Award for such person's own account and
not with any present intention of selling or otherwise distributing the stock.
The foregoing requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (i) the issuance of the shares upon the
exercise or acquisition of stock under the Stock Award has been registered under
a then currently effective registration statement under the Securities Act, or
(ii) as to any particular requirement, a determination is made by counsel for
the Company that such requirement need not be met in the circumstances under the
then applicable securities laws. The Company may require the Stock Award holder
to provide such other representations, written assurances or information which
the Company shall determine is necessary, desirable or appropriate to comply
with applicable securities and other laws as a condition of granting a Stock
Award to such Stock Award holder or permitting the

                                      10.

<PAGE>

Stock Award holder to exercise such Stock Award. The Company may, upon advice of
counsel to the Company, place legends on stock certificates issued under the
Plan as such counsel deems necessary or appropriate in order to comply with
applicable securities laws, including, but not limited to, legends restricting
the transfer of the stock.

     (f) To the extent provided by the terms of a Stock Award Agreement, the
Stock Award holder may satisfy any federal, state or local tax withholding
obligation relating to the exercise or acquisition of stock under a Stock Award
by any of the following means or by a combination of such means (in addition to
the Company's right to withhold from any compensation paid to the Stock Award
holder by the Company): (1) tendering a cash payment; (2) authorizing the
Company to withhold shares from the shares of the Common Stock otherwise
issuable to the Optionee as a result of the exercise or acquisition of stock
under the Stock Award; or (3) delivering to the Company owned and unencumbered
shares of the Common Stock of the Company.

11.  ADJUSTMENTS UPON CHANGES IN STOCK.

     (e) If any change is made in the stock subject to the Plan, or subject to
any Stock Award, without the receipt of consideration by the Company (through
merger, consolidation, reorganization, recapitalization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of consideration by the
Company), the Plan will be appropriately adjusted in the class(es) and maximum
number of shares subject to the Plan pursuant to subsection 4(a) and the maximum
number of shares subject to award to any person pursuant to subsection 5(c), and
the outstanding Stock Awards will be appropriately adjusted in the class(es) and
number of shares and price per share of stock subject to such outstanding Stock
Awards. Such adjustments shall be made by the Board, the determination of which
shall be final, binding and conclusive. (The conversion of any convertible
securities of the Company shall not be treated as a "transaction not involving
the receipt of consideration by the Company".)

     (b) In the event of a Change in Control (as defined herein) any surviving
corporation or acquiring corporation shall assume any Stock Awards outstanding
under the Plan or shall substitute similar stock awards (including an award to
acquire the same consideration paid to the stockholders in the transaction
described in this subsection 11(b)) for those outstanding under the Plan. In the
event any surviving or acquiring corporation refuses to assume such Stock Awards
or to substitute similar stock awards for those outstanding under the Plan,
then: (i) with respect to Stock Awards held by persons whose Continuous Service
has not terminated prior to such Change in Control, the vesting (and, if
applicable, the exercisability) of Stock Awards held by such persons shall be
accelerated immediately prior to such event, and the Stock Awards terminated if
not exercised at or prior to such event, and (ii) any Company repurchase option
or reacquisition right with respect to shares acquired by such persons under a
Stock Award shall lapse immediately prior to such event and the shares held by
such persons shall be fully vested. With respect to any other Stock Awards
outstanding under the Plan, such Stock Awards shall terminate if not exercised
prior to such event.

                                      11.

<PAGE>

     For purposes of this Plan, a "Change in Control" shall mean: (i) a sale of
all or substantially all of the assets of the Company; (ii) a merger or
consolidation in which the Company is not the surviving corporation or a reverse
merger in which the Company is the surviving corporation but the shares of the
Common Stock outstanding immediately preceding the merger are converted by
virtue of the merger into other property, whether in the form of securities,
cash or otherwise (other than (a) a merger or consolidation in which
stockholders immediately before the merger or consolidation have, immediately
after the merger or consolidation, greater stock voting power of the acquiring
or controlling corporation, and in no event less than a majority of such stock
voting power, (b) a transaction the principal purpose of which is to change the
State of the Company's incorporation, or (c) a merger of the Company into any of
its wholly owned subsidiaries); or (iii) an acquisition by any person, entity or
group within the meaning of Section 13(d) or 14(d) of the Exchange Act, or any
comparable successor provisions (excluding any employee benefit plan, or related
trust, sponsored or maintained by the Company or an Affiliate) of the beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act,
or comparable successor rule) of securities of the Company representing at least
fifty percent (50%) of the combined voting power entitled to vote in the
election of directors.

     (c) In the event of a dissolution or liquidation of the Company, any Stock
Awards outstanding under the Plan shall terminate if not exercised prior to such
event.

12.  AMENDMENT OF THE PLAN AND STOCK AWARDS.

     (a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in Section 11 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the stockholders of
the Company to the extent stockholder approval is necessary for the Plan to
satisfy the requirements of Section 422 of the Code, Rule 16b-3 or any Nasdaq or
securities exchange listing requirements.

     (b) The Board may in its sole discretion submit any other amendment to the
Plan for stockholder approval, including, but not limited to, amendments to the
Plan intended to satisfy the requirements of Section 162(m) of the Code and the
regulations promulgated thereunder regarding the exclusion of performance-based
compensation from the limit on corporate deductibility of compensation paid to
certain executive officers.

     (c) It is expressly contemplated that the Board may amend the Plan in any
respect the Board deems necessary or advisable to provide Optionees with the
maximum benefits provided or to be provided under the provisions of the Code and
the regulations promulgated thereunder relating to Incentive Stock Options
and/or to bring the Plan and/or Incentive Stock Options granted under it into
compliance therewith.

     (d) Rights and obligations under any Stock Award granted before amendment
of the Plan shall not be impaired by any amendment of the Plan unless (i) the
Company requests the consent of the person to whom the Stock Award was granted
and (ii) such person consents in writing.

                                      12.

<PAGE>

     (e) The Board at any time, and from time to time, may amend the terms of
any one or more Stock Awards; provided, however, that the rights under any Stock
Award shall not be impaired by any such amendment unless (i) the Company
requests the consent of the person to whom the Stock Award was granted and (ii)
such person consents in writing.

13.  TERMINATION OR SUSPENSION OF THE PLAN.

     (a) The Board may suspend or terminate the Plan at any time. Unless sooner
terminated, the Plan shall terminate on the day before the tenth (10th)
anniversary of the date the Plan is adopted by the Board or approved by the
stockholders of the Company, whichever is earlier. No Stock Awards may be
granted under the Plan while the Plan is suspended or after it is terminated.

     (b) Rights and obligations under any Stock Award granted while the Plan is
in effect shall not be impaired by suspension or termination of the Plan, except
with the consent of the person to whom the Stock Award was granted.

14.  EFFECTIVE DATE OF PLAN.

     The Plan shall become effective as of the Listing Date, but no Stock Awards
granted under the Plan shall be exercised (or, in the case of a stock bonus,
shall be granted) unless and until the Plan has been approved by the
stockholders of the Company, which approval shall be within twelve (12) months
before or after the date the Plan is adopted by the Board.

15.  CHOICE OF LAW.

     All questions concerning the construction, validity and interpretation of
this Plan shall be governed by the law of the State of Delaware, without regard
to such state's conflict of laws rules.

                                      13.

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