Document:

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                                                                   Exhibit 4.11

    THIS WARRANT AND THE SHARES OF CAPITAL STOCK ISSUED UPON ANY EXERCISE HEREOF
    HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
    "SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES OR "BLUE-SKY" LAWS AND
    MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, ENCUMBERED OR OTHERWISE
    DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM.

No. ____                                                     For the Purchase
                                                             of 10,000 shares
                                                             of Common Stock

                        WARRANT TO PURCHASE COMMON STOCK

                                       OF

                                   ALLOY, INC.

                            (A DELAWARE CORPORATION)

         ALLOY, INC., a Delaware corporation (the "COMPANY"), for value
received, hereby certifies that Alan M. Weisman (the "Holder"), is entitled,
subject to the terms set forth below, to purchase from the Company, at any time
or from time to time on or before the first to occur of 5:00 p.m. Eastern
Standard Time on November 1, 2004 and the termination of this Warrant as
provided in Section 7 hereof, up to an aggregate of Ten Thousand (10,000) shares
of Common Stock, par value $0.01 per share, of the Company (the "COMMON STOCK"),
at a purchase price equal to $9.62 per share, as may be adjusted upon the
occurrence of certain events as set forth in Section 3 of this Warrant. The
shares of stock issuable upon exercise of this Warrant, and the purchase price
per share, are hereinafter referred to as the "WARRANT STOCK" and the "PURCHASE
PRICE," respectively.

         1. EXERCISE.

                  1.1 MANNER OF EXERCISE; PAYMENT IN CASH. This Warrant may be
         exercised by the Holder, in whole or in part, by surrendering this
         Warrant, with the purchase form appended hereto as EXHIBIT A duly
         executed by the Holder, at the principal office of the Company, or at
         such other place as the Company may designate, accompanied by payment
         in full of the Purchase Price payable in respect of the number of
         shares of Warrant Stock purchased upon such exercise. Payment of the
         Purchase Price shall be in cash or by certified or official bank check
         payable to the order of the Company.

                  1.2 EFFECTIVENESS. Each exercise of this Warrant shall be
         deemed to have been effected immediately prior to the close of business

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         on the day on which this Warrant shall have been surrendered to the
         Company as provided in Section 1.1 above. At such time, the person or
         persons in whose name or names any certificates for Warrant Stock shall
         be issuable upon such exercise as provided in Section 1.3 below shall
         be deemed to have become the holder or holders of record of the Warrant
         Stock represented by such certificates.

                  1.3 DELIVERY OF CERTIFICATES. As soon as practicable after the
         exercise of this Warrant in whole or in part, and in any event within
         twenty (20) days thereafter, the Company at its sole expense will cause
         to be issued in the name of, and delivered to, the Holder, or, subject
         to the terms and conditions hereof, as such Holder (upon payment by
         such Holder of any applicable transfer taxes) may direct:

                           (a) a certificate or certificates for the number of
                  full shares of Warrant Stock to which such Holder shall be
                  entitled upon such exercise plus, in lieu of any fractional
                  share to which such Holder would otherwise be entitled, cash
                  in an amount determined pursuant to Section 2 hereof, and

                           (b) if such exercise is in part only, a new warrant
                  or warrants (dated the date hereof) of like tenor, calling in
                  the aggregate on the face or faces thereof for the number of
                  shares of Warrant Stock (without giving effect to any
                  adjustment therein) equal to the number of such shares called
                  for on the face of this Warrant minus the number of such
                  shares purchased by the Holder upon such exercise as provided
                  in Section 1.1 above.

         2. FRACTIONAL SHARES. No fractional shares of Common Stock are to be
issued upon the exercise of this Warrant, but rather the number of shares of
Common Stock issued upon exercise of this Warrant shall be rounded down to the
nearest whole number, and in lieu of any fractional share to which any holder
would otherwise be entitled upon such exercise, the Company shall pay cash equal
to such fraction multiplied by the closing sale price of the Company`s Common
Stock on the NASDAQ National Market on the trading day immediately preceding the
date the Warrant is exercised.

         3.       CERTAIN ADJUSTMENTS.

                           3.1 CHANGES IN COMMON STOCK. If the Company shall (i)
         combine the outstanding shares of Common Stock into a lesser number of
         shares, (ii) subdivide the outstanding shares of Common Stock into a
         greater number of shares or (iii) issue additional shares of Common
         Stock as a dividend or other distribution with respect to the Common
         Stock, the number of shares of Warrant Stock shall be equal to the
         number of shares which the Holder would have been entitled to receive
         after the happening of any of the events described above if such shares
         had been issued immediately prior to the happening of such event, such
         adjustment to become effective concurrently with the effectiveness of
         such event. The Purchase Price in effect immediately prior to any such
         combination of Common Stock shall, upon the effectiveness of such
         combination, be proportionately increased. The Purchase Price in effect
         immediately prior to any such subdivision of Common Stock or at the
         record date of such dividend shall upon the effectiveness of such
         subdivision or immediately after the record date of such dividend be
         proportionately reduced.

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                  3.2 REORGANIZATIONS AND RECLASSIFICATIONS. If there shall
         occur any capital reorganization or reclassification of the Common
         Stock (other than a change in par value or a subdivision or combination
         as provided for in Section 3.1), then, as part of any such
         reorganization or reclassification, lawful provision shall be made so
         that the Holder shall have the right thereafter to receive upon the
         exercise hereof the kind and amount of shares of stock or other
         securities or property which such Holder would have been entitled to
         receive if, immediately prior to any such reorganization or
         reclassification, such Holder had held the number of shares of Common
         Stock which were then purchasable upon the exercise of this Warrant. In
         any such case, appropriate adjustment (as reasonably determined by the
         Board of Directors of the Company) shall be made in the application of
         the provisions set forth herein with respect to the rights and
         interests thereafter of the Holder such that the provisions set forth
         in this Section 3 (including provisions with respect to adjustment of
         the Purchase Price) shall thereafter be applicable, as nearly as is
         reasonably practicable, in relation to any shares of stock or other
         securities or property thereafter deliverable upon the exercise of this
         Warrant.

                  3.3 MERGER, CONSOLIDATION OR SALE OF ASSETS. Subject to the
         provisions of Section 7, if there shall be a merger or consolidation of
         the Company with or into another corporation (other than a merger or
         reorganization involving only a change in the state of incorporation of
         the Company or the acquisition by the Company of other businesses where
         the Company survives as a going concern), or the sale of all or
         substantially all of the Company`s capital stock or assets to any other
         person, then as a part of such transaction, provision shall be made so
         that the Holder shall thereafter be entitled to receive the number of
         shares of stock or other securities or property of the Company, or of
         the successor corporation resulting from the merger, consolidation or
         sale, to which the Holder would have been entitled if the Holder had
         exercised its rights pursuant to the Warrant immediately prior thereto.
         In any such case, appropriate adjustment shall be made in the
         application of the provisions of this Section 3 to the end that the
         provisions of this Section 3 shall be applicable after that event in as
         nearly equivalent a manner as may be practicable.

                  3.4 CERTIFICATE OF ADJUSTMENT. When any adjustment is required
         to be made in the Purchase Price, the Company shall mail to the Holder
         a certificate setting forth the Purchase Price after such adjustment
         and setting forth a brief statement of the facts requiring such
         adjustment. Delivery of such certificate shall be deemed to be a final
         and binding determination with respect to such adjustment unless
         challenged by the Holder within twenty (20) days of receipt thereof.
         Such certificate shall also set forth the kind and amount of stock or
         other securities or property into which this Warrant shall be
         exercisable following the occurrence of any of the events specified in
         this Section 3.

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         4. COMPLIANCE WITH SECURITIES ACT.

                  4.1 UNREGISTERED SECURITIES. The Holder acknowledges that this
         Warrant and the Warrant Stock have not been registered under the
         Securities Act of 1933, as amended, and the rules and regulations
         thereunder, or any successor legislation (the "SECURITIES ACT"), and
         agrees not to sell, pledge, distribute, offer for sale, transfer or
         otherwise dispose of this Warrant or any Warrant Stock except in
         accordance with the provisions of the Securities Act or pursuant to an
         exemption therefrom. The Company covenants to effect the registration
         of the Warrant Stock under the Securities Act on its next registration
         statement on which such securities are able to be registered, but in
         any event on or prior to November 1, 2003.

                  4.2 INVESTMENT LETTER. Without limiting the generality of
         Section 4.1, unless the offer and sale of any shares of Warrant Stock
         shall have been effectively registered under the Securities Act, the
         Company shall be under no obligation to issue the Warrant Stock unless
         and until the Holder shall have executed an investment letter in form
         and substance reasonably satisfactory to the Company, including a
         warranty at the time of such exercise that the Holder is acquiring such
         shares for its own account, for investment and not with a view to, or
         for sale in connection with, the distribution of any such shares.

                  4.3 LEGEND. Certificates delivered to the Holder pursuant to
         Section 1.3 shall bear the following legend or a legend in
         substantially similar form:

                  "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
                  ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
                  SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE
                  SECURITIES OR "BLUE-SKY" LAWS. THESE SECURITIES MAY NOT BE
                  SOLD, TRANSFERRED, ASSIGNED, PLEDGED, ENCUMBERED OR OTHERWISE
                  DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN
                  EXEMPTION THEREFROM.

         5. RESERVATION OF STOCK. The Company will at all times reserve and keep
available, solely for issuance and delivery upon the exercise of this Warrant,
such shares of Warrant Stock and other stock, securities and property, as from
time to time shall be issuable upon the exercise of this Warrant. The Company
covenants that all shares of Warrant Stock so issuable will, when issued, be
duly and validly issued and fully paid and nonassessable, and the Company shall
pay all taxes in respect of the issuance thereof, other than any income tax or
property tax imposed on the holder thereof or any tax imposed in connection with
any transfer included in the issuance of a certificate for shares of Warrant
Stock or any other securities in any name other than that of the holder hereof.

         6. REPLACEMENT OF WARRANTS. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and (in the case of loss, theft or destruction) upon delivery of an
indemnity agreement (with surety if reasonably required and the holder hereof is
other than the original holder) in an amount reasonably satisfactory to the
Company, or (in the case of mutilation) upon surrender and cancellation of this
Warrant, the Company will issue, in lieu thereof, a new Warrant of like tenor.

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         7. TERMINATION UPON CERTAIN EVENTS. If there shall be a merger or
consolidation of the Company with or into another corporation (other than a
merger or reorganization involving only a change in the state of incorporation
of the Company or the acquisition by the Company of other businesses where the
Company survives as a going concern), or the sale of all or substantially all of
the Company`s capital stock or assets to any other person, or the liquidation or
dissolution of the Company, then as a part of such transaction, at the Company`s
option, either:

                  (a) provision shall be made so that the Holder shall
         thereafter be entitled to receive the number of shares of stock or
         other securities or property of the Company, or of the successor
         corporation resulting from the merger, consolidation or sale, to which
         the Holder would have been entitled if the Holder had exercised its
         rights pursuant to the Warrant immediately prior thereto (and, in such
         case, appropriate adjustment shall be made in the application of the
         provisions of this Section 7(a) to the end that the provisions of this
         Section 3 shall be applicable after that event in as nearly equivalent
         a manner as may be practicable); or

                  (b) this Warrant shall terminate on the effective date of such
         merger, consolidation or sale (the "TERMINATION DATE") and become null
         and void, PROVIDED that if this Warrant shall not have otherwise
         terminated or expired, (1) the Company shall provide the Holder written
         notice of such Termination Date at least ten (10) days prior to the
         occurrence thereof and (2) this Warrant shall then become immediately
         exercisable by the Holder with respect to all of the shares of Common
         Stock for which this Warrant is then exercisable, and the Holder shall
         have the right until 5:00 p.m., Eastern Standard Time, on the day
         immediately prior to the Termination Date to exercise its rights
         hereunder to the extent not previously exercised.

         8. TRANSFERABILITY. Without the prior written consent of the Company,
this Warrant shall not be assigned, pledged or hypothecated in any way (whether
by operation of law or otherwise) and shall not be subject to execution,
attachment or similar process; PROVIDED THAT, this Warrant may be transferred by
the Holder as a dividend, distribution upon liquidation of the Holder or bona
fide gift without consideration or in connection with a transfer not involving a
change in beneficial ownership. Any attempted transfer, assignment, pledge,
hypothecation or other disposition of the Warrant or of any rights granted
hereunder contrary to the provisions of this Section 8, or the levy of any
attachment or similar process upon the Warrant or such rights, shall be null and
void.

         9. NO RIGHTS AS STOCKHOLDER. Until the exercise of this Warrant, the
Holder shall not have or exercise any rights by virtue hereof as a stockholder
of the Company.

         10. NOTICES. All notices, requests and other communications hereunder
shall be in writing, shall be either (i) delivered by hand, (ii) made by
facsimile transmission, (iii) sent by overnight courier, or (iv) sent by
registered mail, postage prepaid, return receipt requested. In the case of
notices from the Company to the Holder, they shall be sent to the address
furnished to the Company in writing by the last Holder who shall have furnished
an address to the Company in writing. All notices from the Holder to the Company
shall be delivered to the Company at its offices at 151 West 26th Street, 11th
Floor, New York, New York 10001, Attn: Chief Executive Officer or such other
address as the Company shall so notify the Holder. All notices, requests and

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other communications hereunder shall be deemed to have been given (i) by hand,
at the time of the delivery thereof to the receiving party at the address of
such party described above, (ii) if made by facsimile transmission, at the time
that receipt thereof has been acknowledged by electronic confirmation or
otherwise, (iii) if sent by overnight courier, on the next business day
following the day such notice is delivered to the courier service, or (iv) if
sent by registered mail, on the fifth business day following the day such
mailing is made.

         11. WAIVERS AND MODIFICATIONS. Any term or provision of this Warrant
may be waived only by written document executed by the party entitled to the
benefits of such terms or provisions. The terms and provisions of this Warrant
may be modified or amended only by written agreement executed by the parties
hereto.

         12. HEADINGS. The headings in this Warrant are for convenience of
reference only and shall in no way modify or affect the meaning or construction
of any of the terms or provisions of this Warrant.

         13. GOVERNING LAW. This Warrant will be governed by and construed in
accordance with and governed by the laws of New York, without giving effect to
the conflict of law principles thereof.

                  [Remainder of Page Intentionally Left Blank]

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         IN WITNESS WHEREOF, this Warrant has be executed by the undersigned as
of the 1st day of November, 2002.

                                              ALLOY, INC.

                                              By: /S/ GINA R. DIGIOIA
                                              ------------------------------
                                              Name: Gina R. DiGioia
                                              Title: VP/General Counsel

                           [SIGNATURE PAGE TO WARRANT]

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                                    EXHIBIT A

                                  PURCHASE FORM

To:      ALLOY, INC.

         The undersigned, pursuant to the provisions set forth in the attached
Warrant (No. ____), hereby irrevocably elects to purchase ________ shares of the
Common Stock, par value $0.01 per share (the "COMMON STOCK") of ALLOY, INC.,
covered by such Warrant and herewith makes payment of $__________, representing
the full purchase price for such shares at the price per share provided for in
such Warrant. The Common Stock for which the Warrant may be exercised shall be
known herein as the "Warrant Stock".

         [INCLUDE IF SHARES ARE NOT REGISTERED AT TIME OF EXERCISE] The
undersigned is aware that the Warrant Stock has not been and will not be
registered under the Securities Act of 1933, as amended (the "SECURITIES ACT")
or any state securities laws. The undersigned understands that reliance by the
Company on exemptions under the Securities Act is predicated in part upon the
truth and accuracy of the statements of the undersigned in this Purchase Form.

         The undersigned represents and warrants that (1) it has been furnished
with all information which it deems necessary to evaluate the merits and risks
of the purchase of the Warrant Stock, (2) it has had the opportunity to ask
questions concerning the Warrant Stock and the Company and all questions posed
have been answered to its satisfaction, (3) it has been given the opportunity to
obtain any additional information it deems necessary to verify the accuracy of
any information obtained concerning the Warrant Stock and the Company and (4) it
has such knowledge and experience in financial and business matters that it is
able to evaluate the merits and risks of purchasing the Warrant Stock and to
make an informed investment decision relating thereto.

         The undersigned hereby represents and warrant that it is purchasing the
Warrant Stock for its own account for investment and not with a view to the sale
or distribution of all or any part of the Warrant Stock.

         [INCLUDE IF SHARES ARE NOT REGISTERED AT TIME OF EXERCISE] The
undersigned understands that because the Warrant Stock has not been registered
under the Securities Act, it must continue to bear the economic risk of the
investment for an indefinite period of time and the Warrant Stock cannot be sold
unless it is subsequently registered under applicable federal and state
securities laws or an exemption from such registration is available.

         The undersigned agrees that it will in no event sell or distribute or
otherwise dispose of all or any part of the Warrant Stock unless (1) there is an
effective registration statement under the Securities Act and applicable state
securities laws covering any such transaction involving the Warrant Stock, or
(2) the Company receives an opinion satisfactory to the Company of the
undersigned`s legal counsel stating that such transaction is exempt from
registration.

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         [INCLUDE IF SHARES ARE NOT REGISTERED AT TIME OF EXERCISE] The
undersigned consents to the placing of a legend on its certificate for the
Warrant Stock stating that the Warrant Stock has not been registered and setting
forth the restriction on transfer contemplated hereby and to the placing of a
stop transfer order on the books of the Company and with any transfer agents
against the Warrant Stock until the Warrant Stock may be legally resold or
distributed without restriction.

         The undersigned has considered the federal and state income tax
implications of the exercise of the Warrant and the purchase and subsequent sale
of the Warrant Stock.

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

                                               Dated:
                                                        -----------------------

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                                                                   Exhibit 10.8

                                   ALLOY, INC.

        AMENDED AND RESTATED 1997 EMPLOYEE, DIRECTOR AND CONSULTANT STOCK
                        OPTION AND STOCK INCENTIVE PLAN

         1. DEFINITIONS. Unless otherwise specified or unless the context
otherwise requires, the following terms, as used in this Alloy, Inc. Amended and
Restated 1997 Employee, Director and Consultant Stock Option and Stock Incentive
Plan, have the following meanings:

         ADMINISTRATOR means the Board of Directors, unless it has delegated
power to act on its behalf to the Committee, in which case the Administrator
means the Committee.

         AFFILIATE means a corporation or other entity which, for purposes of
Section 424 of the Code, is a parent or subsidiary of the Company, direct or
indirect.

         BOARD OF DIRECTORS means the Board of Directors of the Company.

         CODE means the United States Internal Revenue Code of 1986, as amended.

         COMMITTEE means the committee of the Board of Directors to which the
Board of Directors has delegated power to act under or pursuant to the
provisions of the Plan.

         COMMON STOCK means shares of the Company`s common stock, par value $.01
per share.

         COMPANY means Alloy, Inc., a Delaware corporation.

         DEFERRAL AGREEMENT means an agreement delivered pursuant to the Plan
between the Company and a Participant relating to the establishment of a
Deferred Shares Account, in such form as the Administrator shall approve.

         DEFERRED SHARES means Shares in respect of which receipt by the
Participant has been deferred in accordance with the provisions of Paragraph 10
of the Plan.

         DEFERRED SHARES ACCOUNT means an unfunded account created on the books
of the Company in which a Participant`s entitlement to Deferred Shares shall be
recorded. The Company may elect to, but is not required to, actually hold Common
Stock in an amount equal to the number of Shares credited to a Participant`s
Deferred Shares Account.

         DISABILITY or DISABLED means permanent and total disability as defined
in Section 22(e)(3) of the Code.

         FAIR MARKET VALUE of a Share of Common Stock means:

                  (1) If the Common Stock is listed on a national securities
         exchange or traded in the over-the-counter market and sales prices are
         regularly reported for the Common Stock, the closing or last price of
         the Common Stock on the Composite Tape or other comparable reporting
         system for the trading day immediately preceding the applicable date;

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                  (2) If the Common Stock is not traded on a national securities
         exchange but is traded on the over-the-counter market, if sales prices
         are not regularly reported for the Common Stock for the trading day
         referred to in clause (1), and if bid and asked prices for the Common
         Stock are regularly reported, the mean between the bid and the asked
         price for the Common Stock at the close of trading in the
         over-the-counter market for the trading day on which Common Stock was
         traded immediately preceding the applicable date; and

                  (3) If the Common Stock is neither listed on a national
         securities exchange nor traded in the over-the-counter market, such
         value as the Administrator, in good faith, shall determine.

         ISO means an option meant to qualify as an incentive stock option under
Section 422 of the Code.

         KEY EMPLOYEE means an employee of the Company or of an Affiliate
(including, without limitation, an employee who is also serving as an officer or
director of the Company or of an Affiliate), designated by the Administrator to
be eligible to be granted one or more Stock Rights under the Plan.

         NON-QUALIFIED OPTION means an option which is not intended to qualify
as an ISO.

         OPTION means an ISO or Non-Qualified Option granted under the Plan.

         OPTION AGREEMENT means an agreement delivered pursuant to the Plan
between the Company and a Participant relating to the award and exercise of an
Option, in such form as the Administrator shall approve.

         PARTICIPANT means a Key Employee, director or consultant to whom one or
more Options are granted under the Plan. As used herein, "Participant" shall
include "Participant`s Survivors" where the context requires.

         PLAN means this Amended and Restated Alloy, Inc. Restated 1997
Employee, Director and Consultant Stock Option and Stock Incentive Plan.

         SHARES means shares of the Common Stock as to which Stock Rights have
been or may be granted under the Plan or any shares of capital stock into which
the Shares are changed or for which they are exchanged within the provisions of
Paragraph 3 of the Plan. The Shares issued under the Plan may be authorized and
unissued shares or shares held by the Company in its treasury, or both.

         STOCK GRANT means a grant by the Company of Shares under the Plan.

         STOCK GRANT AGREEMENT means an agreement delivered pursuant to the Plan
between the Company and a Participant relating to the award and acceptance of a
Stock Grant, in such form as the Administrator shall approve.

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         STOCK RIGHT means a right to Shares of the Company granted pursuant to
the Plan -- an Option or a Stock Grant.

         SURVIVORS means a deceased Participant`s legal representatives and/or
any person or persons who acquired the Participant`s rights to an Option by will
or by the laws of descent and distribution.

         2. PURPOSES OF THE PLAN. The Plan is intended to encourage ownership of
Shares by Key Employees and directors of and certain consultants to the Company
in order to attract such people, to induce them to work for the benefit of the
Company or of an Affiliate and to provide additional incentive for them to
promote the success of the Company or of an Affiliate. The Plan provides for the
granting of Stock Rights and creation of Deferred Shares Accounts.

         3. SHARES SUBJECT TO THE PLAN. The number of Shares which may be issued
from time to time pursuant to this Plan shall be 8,000,000 or the equivalent of
such number of Shares after the Administrator, in its sole discretion, has
interpreted the effect of any stock split, stock dividend, combination,
recapitalization or similar transaction in accordance with Paragraph 26 of the
Plan. If an Option ceases to be "outstanding", in whole or in part, or if the
Company shall reacquire any Shares issued pursuant to a Stock Grant or set aside
in a Deferred Shares Account, the Shares which were subject to such Option and
any Shares so reacquired by the Company shall be available for the granting of
other Stock Rights under the Plan. Any Stock Right shall be treated as
"outstanding" until such Stock Right is exercised in full, any applicable
repurchase rights lapse, or the Stock Right terminates or expires under the
provisions of the Plan, or by agreement of the parties to the pertinent Option
Agreement or Stock Grant Agreement.

         4. ADMINISTRATION OF THE PLAN. The Administrator of the Plan will be
the Board of Directors, except to the extent the Board of Directors delegates
its authority to the Committee, in which case the Committee shall be the
Administrator. Subject to the provisions of the Plan, the Administrator is
authorized to:

         a.       Interpret the provisions of the Plan or of any Stock Right,
                  Option Agreement, Stock Grant Agreement or Deferral Agreement
                  and to make all rules and determinations which it deems
                  necessary or advisable for the administration of the Plan;

         b.       Determine which employees of the Company or of an Affiliate
                  shall be designated as Key Employees, and which of the Key
                  Employees, directors and consultants shall be granted Stock
                  Rights;

         c.       Determine the number of Shares for which a Stock Right or
                  Stock Rights shall be granted; provided, however, that in no
                  event shall Stock Rights to purchase more than 500,000 Shares
                  be granted to any Participant in any fiscal year of the
                  Company;

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         d.       Specify the terms and conditions upon which a Stock Right or
                  Stock Rights may be granted; and

         e.       Create Deferred Shares Accounts pursuant to which receipt of
                  Shares to be issued hereunder may be deferred;

provided, however, that all such interpretations, rules, determinations, terms
and conditions shall be made and prescribed in the context of preserving the tax
status under Section 422 of the Code of those Options which are designated as
ISOs. Subject to the foregoing, the interpretation and construction by the
Administrator of any provisions of the Plan or of any Stock Right granted under
it or Deferred Shares Accounts created under it shall be final, unless otherwise
determined by the Board of Directors, if the Administrator is the Committee.

         5. ELIGIBILITY FOR PARTICIPATION. The Administrator will, in its sole
discretion, name the Participants in the Plan, provided, however, that each
Participant must be a Key Employee, director or consultant of the Company or of
an Affiliate at the time a Stock Right is granted. Notwithstanding the
foregoing, the Administrator may authorize the grant of a Stock Right to a
person not then an employee, director or consultant of the Company or of an
Affiliate, provided, however, that the actual grant of such Stock Right shall be
conditioned upon such person becoming eligible to become a Participant at or
prior to the time of the delivery of the Option Agreement or Stock Grant
Agreement, as applicable, evidencing such Stock Right. ISOs may be granted only
to Key Employees. Non-Qualified Options and Stock Grants may be granted to any
Key Employee, director or consultant of the Company or an Affiliate. The
granting of any Stock Right to any individual shall neither entitle that
individual to, nor disqualify him or her from, participation in any other grant
of Stock Rights.

         6. TERMS AND CONDITIONS OF OPTIONS. Each Option shall be set forth in
writing in an Option Agreement, duly executed by the Company and, to the extent
required by law or requested by the Company, by the Participant. The
Administrator may provide that Options be granted subject to such terms and
conditions, consistent with the terms and conditions specifically required under
this Plan, as the Administrator may deem appropriate including, without
limitation, subsequent approval by the shareholders of the Company of this Plan
or any amendments thereto.

                  A. NON-QUALIFIED OPTIONS: Each Option intended to be a
         Non-Qualified Option shall be subject to the terms and conditions which
         the Administrator determines to be appropriate and in the best interest
         of the Company, subject to the following minimum standards for any such
         Non-Qualified Option:

                           a. Option Price: Each Option Agreement shall state
                  the option price (per share) of the Shares covered by each
                  Option, which option price shall be determined by the
                  Administrator but shall not be less than the par value per
                  share of Common Stock.

                           b. Each Option Agreement shall state the number of
                  Shares to which it pertains;

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                           c. Each Option Agreement shall state the date or
                  dates on which it first is exercisable and the date after
                  which it may no longer be exercised, and may provide that the
                  Option rights accrue or become exercisable in installments
                  over a period of months or years, or upon the occurrence of
                  certain conditions or the attainment of stated goals or
                  events; and

                           d. Exercise of any Option may be conditioned upon the
                  Participant`s execution of a Share purchase agreement in form
                  satisfactory to the Administrator providing for certain
                  protections for the Company and its other shareholders,
                  including requirements that:

                                    i. The Participant`s or the Participant`s
                           Survivors` right to sell or transfer the Shares may
                           be restricted; and

                                    ii. The Participant or the Participant`s
                           Survivors may be required to execute letters of
                           investment intent and must also acknowledge that the
                           Shares will bear legends noting any applicable
                           restrictions.

                           e. Directors Grants: Each director of the Company who
                  is not an employee of the Company or any Affiliate, who is
                  first elected or appointed to the Board of Directors after the
                  date on which the initial underwritten public offering of the
                  Company`s Common Stock is consummated, upon such election or
                  appointment and upon every fourth anniversary thereof provided
                  that on such dates such director has been in the continued and
                  uninterrupted service of the Company as a director since his
                  or her election or appointment and is a director of the
                  Company and is not an employee of the Company at such times,
                  shall be granted a Non-Qualified Option to purchase 40,000
                  Shares. Any non-employee director serving in office on the
                  date on which the initial underwritten public offering of the
                  Company`s Common Stock is consummated, who has been a member
                  of the Board of Directors prior to such date shall be granted
                  on such date and upon every fourth anniversary thereof, a
                  Non-Qualified Option to purchase 40,000 Shares, provided that
                  on such date such director has been in the continued and
                  uninterrupted service of the Company as a director since his
                  or her election or appointment and is a director of the
                  Company and is not an employee of the Company at such time. If
                  any non-employee director should cease to be a director and
                  thereafter shall be elected or appointed to the Board of
                  Directors, upon such election or appointment and upon every
                  fourth anniversary thereof provided that on such dates such
                  director has been in the continued and uninterrupted service
                  of the Company as a director since his or her election or
                  appointment and is a director of the Company and is not an
                  employee of the Company at such times, shall be granted a
                  Non-Qualified Option to purchase 40,000 Shares. Each such
                  Option shall (i) have an exercise price equal to the Fair
                  Market Value (per share) of the Shares on the date of grant of
                  the Option, (ii) have a term of ten (10) years, and (iii)
                  shall become cumulatively exercisable in four (4) equal annual
                  installments of twenty five percent (25%) each, upon

                                       5
<PAGE>

                  completion of one full year of service on the Board of
                  directors after the date of grant, and continuing on each of
                  the next three (3) full years of service thereafter. Any
                  director entitled to receive an Option grant under this
                  subparagraph may elect to decline the Option.

                           Except as otherwise provided in the pertinent Option
                  Agreement, if a director who received Options pursuant to this
                  subparagraph (e):

                                    i. Ceases to be a member of the Board of
                           Directors for any reason other than death or
                           Disability, any then unexercised Options granted to
                           such director may be exercised by the director within
                           a period of ninety (90) days after the date the
                           director ceases to be a member of the Board of
                           Directors, but only to the extent of the number of
                           shares with respect to which the Options are
                           exercisable on the date the director ceases to be a
                           member of the Board of Directors, and in no event
                           later than the expiration date of the Option; or

                                    ii. Ceases to be a member of the Board of
                           Directors of the Company by reason of his or her
                           death or Disability, any then unexercised Options
                           granted to such director may be exercised by the
                           director (or by the director`s personal
                           representative, or director`s Survivors in the event
                           of death) within a period of one hundred eighty (180)
                           days after the date the director ceases to be a
                           member of the Board of Directors, but only to the
                           extent of the number of Shares with respect to which
                           the Options are exercisable on the date the director
                           ceases to be a member of the Board of Directors, and
                           in no event later than the expiration date of the
                           Option.

                  B. ISOS: Each Option intended to be an ISO shall be issued
         only to a Key Employee and be subject to the following terms and
         conditions, with such additional restrictions or changes as the
         Administrator determines are appropriate but not in conflict with
         Section 422 of the Code and relevant regulations and rulings of the
         Internal Revenue Service:

                           a. Minimum standards: The ISO shall meet the minimum
                  standards required of Non-Qualified Options, as described in
                  Paragraph 6A above, except clause a and clause e thereunder.

                           b. Option Price: Immediately before the Option is
                  granted, if the Participant owns, directly or by reason of the
                  applicable attribution rules in Section 424(d) of the Code:

                                    i. Ten percent (10%) OR LESS of the total
                           combined voting power of all classes of share capital
                           of the Company or an Affiliate, the Option price per
                           share of the Shares covered by each Option shall not
                           be less than one hundred percent (100%) of the Fair
                           Market Value per share of the Shares on the date of
                           the grant of the Option.

                                       6
<PAGE>

                                    ii. More than ten percent (10%) of the total
                           combined voting power of all classes of stock of the
                           Company or an Affiliate, the Option price per share
                           of the Shares covered by each Option shall not be
                           less than one hundred ten percent (110%) of the said
                           Fair Market Value on the date of grant.

                           c. Term of Option: For Participants who own

                                    i. Ten percent (10%) OR LESS of the total
                           combined voting power of all classes of share capital
                           of the Company or an Affiliate, each Option shall
                           terminate not more than ten (10) years from the date
                           of the grant or at such earlier time as the Option
                           Agreement may provide.

                                    ii. More than ten percent (10%) of the total
                           combined voting power of all classes of stock of the
                           Company or an Affiliate, each Option shall terminate
                           not more than five (5) years from the date of the
                           grant or at such earlier time as the Option Agreement
                           may provide.

                           d. Limitation on Yearly Exercise: The Option
                  Agreements shall restrict the amount of Options which may be
                  exercisable in any calendar year (under this or any other ISO
                  plan of the Company or an Affiliate) so that the aggregate
                  Fair Market Value (determined at the time each ISO is granted)
                  of the stock with respect to which ISOs are exercisable for
                  the first time by the Participant in any calendar year does
                  not exceed one hundred thousand dollars ($100,000), provided
                  that this subparagraph (d) shall have no force or effect if
                  its inclusion in the Plan is not necessary for Options issued
                  as ISOs to qualify as ISOs pursuant to Section 422(d) of the
                  Code.

         7. TERMS AND CONDITIONS OF STOCK GRANTS.

         Each offer of a Stock Grant to a Participant shall state the date prior
to which the Stock Grant must be accepted by the Participant, and the principal
terms of each Stock Grant shall be set forth in a Stock Grant Agreement, duly
executed by the Company and, to the extent required by law or requested by the
Company, by the Participant. The Stock Grant Agreement shall be in a form
approved by the Administrator and shall contain terms and conditions which the
Administrator determines to be appropriate and in the best interest of the
Company, subject to the following minimum standards:

         (a)      Each Stock Grant Agreement shall state the purchase price (per
                  share), if any, of the Shares covered by each Stock Grant,
                  which purchase price shall be determined by the Administrator
                  but shall not be less than the par value per share of each
                  Share covered thereby on the date of the grant of the Stock
                  Grant;

         (b)      Each Stock Grant Agreement shall state the number of Shares to
                  which the Stock Grant pertains; and

                                       7
<PAGE>

         (c)      Each Stock Grant Agreement shall include the terms of any
                  right of the Company to restrict or reacquire the Shares
                  subject to the Stock Grant, including the time and events upon
                  which such reacquisition rights shall accrue and the purchase
                  price therefor, if any.

         8. EXERCISE OF OPTIONS AND ISSUE OF SHARES. An Option (or any part or
installment thereof) shall be exercised by giving written notice to the Company
at its principal executive office address, together with provision for payment
of the full purchase price in accordance with this Paragraph for the Shares as
to which the Option is being exercised, and upon compliance with any other
condition(s) set forth in the Option Agreement. Such written notice shall be
signed by the person exercising the Option, shall state the number of Shares
with respect to which the Option is being exercised and shall contain any
representation required by the Plan or the Option Agreement. Payment of the
purchase price for the Shares as to which such Option is being exercised shall
be made (a) in United States dollars in cash or by check, or (b) at the
discretion of the Administrator, through delivery of shares of Common Stock
having a Fair Market Value equal as of the date of the exercise to the cash
exercise price of the Option, or (c) at the discretion of the Administrator, by
having the Company retain from the shares otherwise issuable upon exercise of
the Option, a number of shares having a Fair Market Value equal as of the date
of exercise to the exercise price of the Option, or (d) at the discretion of the
Administrator, by delivery of the grantee`s personal recourse note bearing
interest payable not less than annually at no less than 100% of the applicable
Federal rate, as defined in Section 1274(d) of the Code, or (e) at the
discretion of the Administrator, in accordance with a cashless exercise program
established with a securities brokerage firm, and approved by the Administrator,
or (f) at the discretion of the Administrator, by any combination of (a), (b),
(c), (d) and (e) above. Notwithstanding the foregoing, the Administrator shall
accept only such payment on exercise of an ISO as is permitted by Section 422 of
the Code.

         The Company shall then reasonably promptly deliver the Shares as to
which such Option was exercised to the Participant (or to the Participant`s
Survivors, as the case may be). In determining what constitutes "reasonably
promptly", it is expressly understood that the delivery of the Shares may be
delayed by the Company in order to comply with any law or regulation (including,
without limitation, state securities or "blue sky" laws) which requires the
Company to take any action with respect to the Shares prior to their issuance.
The Shares shall, upon delivery, be evidenced by an appropriate certificate or
certificates for fully paid, non-assessable Shares.

         The Administrator shall have the right to accelerate the date of
exercise of any installment of any Option; provided that the Administrator shall
not accelerate the exercise date of any installment of any Option granted to any
Key Employee as an ISO (and not previously converted into a Non-Qualified Option
pursuant to Paragraph 29) if such acceleration would violate the annual vesting
limitation contained in Section 422(d) of the Code, as described in Paragraph
6.B.d.
         The Administrator may, in its discretion, amend any term or condition
of an outstanding Option provided (i) such term or condition as amended is
permitted by the Plan, (ii) any such amendment shall be made only with the
consent of the Participant to whom the Option was granted, or in the event of

                                       8
<PAGE>

the death of the Participant, the Participant`s Survivors, if the amendment is
adverse to the Participant, and (iii) any such amendment of any ISO shall be
made only after the Administrator, after consulting the counsel for the Company,
determines whether such amendment would constitute a "modification" of any
Option which is an ISO (as that term is defined in Section 424(h) of the Code)
or would cause any adverse tax consequences for the holder of such ISO.

         9. ACCEPTANCE OF STOCK GRANT AND ISSUE OF SHARES.

         A Stock Grant (or any part or installment thereof) shall be accepted by
executing the Stock Grant Agreement and delivering it to the Company or its
designee, together with provision for payment of the full purchase price in
accordance with this Paragraph for the Shares as to which such Stock Grant is
being accepted, and upon compliance with any other conditions set forth in the
Stock Grant Agreement.

         A Stock Grant may be issued in exchange for any consideration which the
Administrator may deem appropriate in each individual instance, including,
without limitation:

                  a. cash or cash equivalents;

                  b. past services rendered to the Company or any Affiliate; or

                  c. future services to be rendered to the Company or any
Affiliate (provided that, in such case, the par value of the stock subject to
such Stock Grant shall be paid in cash or cash equivalents, unless the
Administrator provides otherwise).

         A Stock Grant that is subject to restrictions on transfer and/or
forfeiture provisions may be referred to as an award of "Restricted Stock."

         The Company shall then reasonably promptly deliver the Shares as to
which such Stock Grant was accepted to the Participant (or to the Participant`s
Survivors, as the case may be), subject to any escrow provision set forth in the
Stock Grant Agreement and the provisions of any applicable Deferral
Agreement executed pursuant to the provisions of Paragraph 10. In determining
what constitutes "reasonably promptly," it is expressly understood that the
issuance and delivery of the Shares may be delayed by the Company in order to
comply with any law or regulation (including, without limitation, state
securities or "blue sky" laws) which requires the Company to take any action
with respect to the Shares prior to their issuance.

         The Administrator may, in its discretion, amend any term or condition
of an outstanding Stock Grant or Stock Grant Agreement provided (i) such term or
condition as amended is permitted by the Plan, and (ii) any such amendment shall
be made only with the consent of the Participant to whom the Stock Grant was
made, if the amendment is adverse to the Participant.

         10. DEFERRAL OF AWARDS.

                  The Administrator (in its sole discretion) may permit a
Participant to have Shares that otherwise would be delivered to such Participant
as a result of the exercise of a Stock Option or the settlement of a Stock Grant

                                       9
<PAGE>

credited to a Deferred Shares Account established for such Participant by the
Administrator as an entry on the Company`s books. A Participant for whom such an
Account is established shall have no rights other than those of a general
creditor of the Company. Such a Deferred Shares Account shall represent an
unfunded and unsecured obligation of the Company and shall be subject to the
terms and conditions of the applicable Deferral Agreement between such
Participant and the Company. If the deferral or conversion of Stock Rights is
permitted or required, the Administrator (in its sole discretion) may establish
rules, procedures and forms pertaining to such Stock Rights, including (without
limitation) the settlement of Deferred Shares Accounts established under this
Paragraph 10.

         11. RIGHTS AS A SHAREHOLDER. No Participant to whom a Stock Right has
been granted shall have rights as a shareholder with respect to any Shares
covered by such Stock Right, except after due exercise of the Option or
acceptance of the Stock Grant and tender of the full purchase price, if any, for
the Shares being purchased pursuant to such exercise or acceptance, expiration
of any applicable deferral period and registration of the Shares in the
Company`s share register in the name of the Participant

         12. ASSIGNABILITY AND TRANSFERABILITY OF STOCK RIGHTS. By its terms, a
Stock Right granted to a Participant shall not be transferable by the
Participant other than (i) by will or by the laws of descent and distribution,
or (ii) as otherwise determined by the Administrator and set forth in the
applicable Option Agreement or Stock Grant Agreement. The designation of a
beneficiary of a Stock Right by a Participant shall not be deemed a transfer
prohibited by this Paragraph. Except as provided above, a Stock Right shall only
be exercisable or may only be accepted, during the Participant`s lifetime, only
by such Participant (or by his or her legal representative) and shall not be
assigned, pledged or hypothecated in any way (whether by operation of law or
otherwise) and shall not be subject to execution, attachment or similar process.
Any attempted transfer, assignment, pledge, hypothecation or other disposition
of any Stock Right or of any rights granted thereunder contrary to the
provisions of this Plan, or the levy of any attachment or similar process upon a
Stock Right, shall be null and void.

         13. EFFECT ON OPTIONS OF TERMINATION OF SERVICE OTHER THAN "FOR CAUSE"
OR DEATH OR DISABILITY. Except as otherwise provided in the pertinent Option
Agreement, in the event of a termination of service (whether as an employee,
director or consultant) with the Company or an Affiliate before the Participant
has exercised all Options, the following rules apply:

                  a. A Participant who ceases to be an employee, director or
         consultant of the Company or of an Affiliate (for any reason other than
         termination "for cause", Disability, or death for which events there
         are special rules in Paragraphs 14, 15, and 16, respectively), may
         exercise any Option granted to him or her to the extent that the Option
         is exercisable on the date of such termination of service, but only
         within such term as the Administrator has designated in the pertinent
         Option Agreement.

                  b. Except as provided in Subparagraph (c) below, or in
         Paragraph 15 or 16, in no event may an Option Agreement provide, if the

                                       10
<PAGE>

         Option is intended to be an ISO, that the time for exercise be later
         than three (3) months after the Participant`s termination of
         employment.

                  c. The provisions of this Paragraph, and not the provisions of
         Paragraph 15 or 16, shall apply to a Participant who subsequently
         becomes Disabled or dies after the termination of employment, director
         status or consultancy, provided, however, in the case of a
         Participant`s Disability or death within three (3) months after the
         termination of employment, director status or consultancy, the
         Participant or the Participant`s Survivors may exercise the Option
         within one (1) year after the date of the Participant`s termination of
         employment, but in no event after the date of expiration of the term of
         the Option.

                  d. Notwithstanding anything herein to the contrary, if
         subsequent to a Participant`s termination of employment, termination of
         director status or termination of consultancy, but prior to the
         exercise of an Option, the Board of Directors determines that, either
         prior or subsequent to the Participant`s termination, the Participant
         engaged in conduct which would constitute "cause", then such
         Participant shall forthwith cease to have any right to exercise any
         Option.

                  e. A Participant to whom an Option has been granted under the
         Plan who is absent from work with the Company or with an Affiliate
         because of temporary disability (any disability other than a permanent
         and total Disability as defined in Paragraph 1 hereof), or who is on
         leave of absence for any purpose, shall not, during the period of any
         such absence, be deemed, by virtue of such absence alone, to have
         terminated such Participant`s employment, director status or
         consultancy with the Company or with an Affiliate, except as the
         Administrator may otherwise expressly provide.

                  f. Except as required by law or as set forth in the pertinent
         Option Agreement, Options granted under the Plan shall not be affected
         by any change of a Participant`s status within or among the Company and
         any Affiliates, so long as the Participant continues to be an employee,
         director or consultant of the Company or any Affiliate.

         14. EFFECT ON OPTIONS OF TERMINATION OF SERVICE "FOR CAUSE". Except as
otherwise provided in the pertinent Option Agreement, the following rules apply
if the Participant`s service (whether as an employee, director or consultant)
with the Company or an Affiliate is terminated "for cause" prior to the time
that all his or her outstanding Options have been exercised:

                  a. All outstanding and unexercised Options as of the time the
         Participant is notified his or her service is terminated "for cause"
         will immediately be forfeited.

                  b. For purposes of this Plan, "cause" shall include (and is
         not limited to) dishonesty with respect to the Company or any
         Affiliate, insubordination, substantial malfeasance or non-feasance of
         duty, unauthorized disclosure of confidential information, and conduct
         substantially prejudicial to the business of the Company or any
         Affiliate. The determination of the Administrator as to the existence
         of "cause" will be conclusive on the Participant and the Company.

                                       11
<PAGE>

                  c. "Cause" is not limited to events which have occurred prior
         to a Participant`s termination of service, nor is it necessary that the
         Administrator`s finding of "cause" occur prior to termination. If the
         Administrator determines, subsequent to a Participant`s termination of
         service but prior to the exercise of an Option, that either prior or
         subsequent to the Participant`s termination the Participant engaged in
         conduct which would constitute "cause," then the right to exercise any
         Option is forfeited.

                  d. Any definition in an agreement between the Participant and
         the Company or an Affiliate, which contains a conflicting definition of
         "cause" for termination and which is in effect at the time of such
         termination, shall supersede the definition in this Plan with respect
         to such Participant.

         15. EFFECT ON OPTIONS OF TERMINATION OF SERVICE FOR DISABILITY. Except
as otherwise provided in the pertinent Option Agreement, a Participant who
ceases to be an employee, director or consultant of the Company or of an
Affiliate by reason of Disability may exercise any Option granted to such
Participant:

                  a. To the extent exercisable but not exercised on the date of
         Disability; and

                  b. In the event rights to exercise the Option accrue
         periodically, to the extent of a pro rata portion of any additional
         rights as would have accrued had the Participant not become Disabled
         prior to the end of the accrual period which next ends following the
         date of Disability. The proration shall be based upon the number of
         days of such accrual period prior to the date of Disability.

         A Disabled Participant may exercise such rights only within the period
ending one (1) year after the date of the Participant`s termination of
employment, directorship or consultancy, as the case may be, notwithstanding
that the Participant might have been able to exercise the Option as to some or
all of the Shares on a later date if the Participant had not become disabled and
had continued to be an employee, director or consultant or, if earlier, within
the originally prescribed term of the Option.

         The Administrator shall make the determination both of whether
Disability has occurred and the date of its occurrence (unless a procedure for
such determination is set forth in another agreement between the Company and
such Participant, in which case such procedure shall be used for such
determination). If requested, the Participant shall be examined by a physician
selected or approved by the Administrator, the cost of which examination shall
be paid for by the Company.

         16. EFFECT ON OPTIONS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR
CONSULTANT. Except as otherwise provided in the pertinent Option Agreement, in
the event of the death of a Participant while the Participant is an employee,
director or consultant of the Company or of an Affiliate, such Option may be
exercised by the Participant`s Survivors:

                  a. To the extent exercisable but not exercised on the date of
death; and

                                       12
<PAGE>

                  b. In the event rights to exercise the Option accrue
         periodically, to the extent of a pro rata portion of any additional
         rights which would have accrued had the Participant not died prior to
         the end of the accrual period which next ends following the date of
         death. The proration shall be based upon the number of days of such
         accrual period prior to the Participant`s death.

         If the Participant`s Survivors wish to exercise the Option, they must
take all necessary steps to exercise the Option within one (1) year after the
date of death of such Participant, notwithstanding that the decedent might have
been able to exercise the Option as to some or all of the Shares on a later date
if he or she had not died and had continued to be an employee, director or
consultant or, if earlier, within the originally prescribed term of the Option.

         17. EFFECT OF TERMINATION OF SERVICE ON STOCK GRANTS. In the event of a
termination of service (whether as an employee, director or consultant) with the
Company or an Affiliate for any reason before the Participant has accepted a
Stock Grant, such offer shall terminate.

         For purposes of this Paragraph 17 and Paragraph 18 below, a Participant
to whom a Stock Grant has been offered and accepted under the Plan who is absent
from work with the Company or with an Affiliate because of temporary disability
(any disability other than a permanent and total Disability as defined in
Paragraph 1 hereof), or who is on leave of absence for any purpose, shall not,
during the period of any such absence, be deemed, by virtue of such absence
alone, to have terminated such Participant`s employment, director status or
consultancy with the Company or with an Affiliate, except as the Administrator
may otherwise expressly provide.

         In addition, for purposes of this Paragraph 17 and Paragraph 18 below,
any change of employment or other service within or among the Company and any
Affiliates shall not be treated as a termination of employment, director status
or consultancy so long as the Participant continues to be an employee, director
or consultant of the Company or any Affiliate.

         18. EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE OTHER THAN "FOR
CAUSE" OR DEATH OR DISABILITY. Except as otherwise provided in a Participant`s
Stock Grant Agreement, in the event of a termination of service (whether as an
employee, director or consultant), other than termination "for cause,"
Disability, or death for which events there are special rules in Paragraphs 19,
20, and 21, respectively, before all Company rights of repurchase, if any, shall
have lapsed, then the Company shall have the right to repurchase that number of
Shares subject to a Stock Grant as to which the Company`s repurchase rights have
not lapsed.

         19. EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE "FOR CAUSE".
Except as otherwise provided in a Participant`s Stock Grant Agreement, if the
Participant`s service (whether as an employee, director or consultant) with the
Company or an Affiliate is terminated "for cause", all Shares subject to any
Stock Grant shall be immediately subject to repurchase by the Company at the
purchase price thereof.

                                       13
<PAGE>

         20. EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE FOR DISABILITY.
Except as otherwise provided in a Participant`s Stock Grant Agreement, the
following rules apply if a Participant ceases to be an employee, director or
consultant of the Company or of an Affiliate by reason of Disability: to the
extent the Company`s rights of repurchase have not lapsed on the date of
Disability, they shall be exercisable; provided, however, that if such rights of
repurchase lapse periodically, such rights shall lapse to the extent of a pro
rata portion of the Shares subject to such Stock Grant through the date of
Disability as would have lapsed had the Participant not become Disabled. The
proration shall be based upon the number of days accrued prior to the date of
Disability.

         The Administrator shall make the determination both of whether
Disability has occurred and the date of its occurrence (unless a procedure for
such determination is set forth in another agreement between the Company and
such Participant, in which case such procedure shall be used for such
determination). If requested, the Participant shall be examined by a physician
selected or approved by the Administrator, the cost of which examination shall
be paid for by the Company.

         21. EFFECT ON STOCK GRANTS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR
CONSULTANT. Except as otherwise provided in a Participant`s Stock Grant
Agreement, the following rules apply in the event of the death of a Participant
while the Participant is an employee, director or consultant of the Company or
of an Affiliate: to the extent the Company`s rights of repurchase have not
lapsed on the date of death, they shall be exercisable; provided, however, that
in the event such rights of repurchase lapse periodically, such rights shall
lapse to the extent of a pro rata portion of the Shares subject to such Stock
Grant through the date of death as would have lapsed had the Participant not
died. The proration shall be based upon the number of days accrued prior to the
Participant`s death.

         22. EFFECT ON DEFERRED SHARES OF TERMINATION OF SERVICE OTHER THAN "FOR
CAUSE". Except as otherwise provided in a Participant`s Deferral Agreement, all
Deferred Shares credited to a Participant`s Deferred Shares Account, if any,
shall be distributed in the form of Shares, and dividends relating thereto shall
be paid in a lump sum in cash, to the Participant on the date when the
Participant`s employment terminates for any reason other than "for cause"
including, without limitation, Death, retirement, resignation, discharge without
cause, or Disability.

         23. EFFECT ON DEFERRED SHARES OF TERMINATION OF SERVICE "FOR CAUSE".
Except as otherwise provided in a Participant`s Deferral Agreement, all Deferred
Shares credited to a Participant`s Deferred Shares Account, if any, and all
dividends relating thereto, if any, shall be forfeited and the purchase price,
if any, paid in cash or cash equivalents by such Participant for such Deferred
Shares shall paid in a lump sum in cash, without interest, to the Participant on
or prior to the 90th day after the date on which the Participant`s employment
terminates "for cause."

         24. PURCHASE FOR INVESTMENT. Unless the offering and sale of the Shares
to be issued upon the particular exercise of an Option or acceptance of a Stock

                                       14
<PAGE>

Right shall have been effectively registered under the Securities Act of 1933,
as now in force or hereafter amended (the "1933 Act"), the Company shall be
under no obligation to issue the Shares covered by such exercise unless and
until the following conditions have been fulfilled:

                  a. The person(s) who exercise(s) such Option or accept such
         Stock Grant, as applicable, shall warrant to the Company, prior to the
         receipt of the Shares relating thereto, that such person(s) are
         acquiring such Shares for their own respective accounts, for
         investment, and not with a view to, or for sale in connection with, the
         distribution of any such Shares, in which event the person(s) acquiring
         such Shares shall be bound by the provisions of the following legend
         which shall be endorsed upon the certificate(s) evidencing their Shares
         issued pursuant to such exercise or such grant:

                  "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN TAKEN
                  FOR INVESTMENT AND THEY MAY NOT BE SOLD OR OTHERWISE
                  TRANSFERRED BY ANY PERSON, INCLUDING A PLEDGEE, UNLESS (1)
                  EITHER (A) A REGISTRATION STATEMENT WITH RESPECT TO SUCH
                  SHARES SHALL BE EFFECTIVE UNDER THE SECURITIES ACT OF 1933, AS
                  AMENDED, OR (B) THE COMPANY SHALL HAVE RECEIVED AN OPINION OF
                  COUNSEL SATISFACTORY TO IT THAT AN EXEMPTION FROM REGISTRATION
                  UNDER SUCH ACT IS THEN AVAILABLE, AND (2) THERE SHALL HAVE
                  BEEN COMPLIANCE WITH ALL APPLICABLE STATE SECURITIES LAWS."

                  b. At the discretion of the Administrator, the Company shall
         have received an opinion of its counsel that the Shares may be issued
         upon such particular exercise in compliance with the 1933 Act without
         registration thereunder.

         25. DISSOLUTION OR LIQUIDATION OF THE COMPANY. Upon the dissolution or
liquidation of the Company, all Options granted under this Plan which as of such
date shall not have been exercised and all Stock Grants which have not been
accepted will terminate and become null and void; provided, however, that if the
rights of a Participant or a Participant`s Survivors have not otherwise
terminated and expired, the Participant or the Participant`s Survivors will have
the right immediately prior to such dissolution or liquidation to exercise or
accept any Stock Right to the extent that the Stock Right is exercisable or
subject to acceptance as of the date immediately prior to such dissolution or
liquidation.

         26. ADJUSTMENTS. Upon the occurrence of any of the following events, a
Participant`s rights with respect to any Stock Grant granted to him or her
hereunder which has not previously been exercised or accepted in full shall be
adjusted as hereinafter provided, unless otherwise specifically provided in the
pertinent Option Agreement or Stock Grant Agreement:

                  A. STOCK DIVIDENDS AND STOCK SPLITS. If (i) the shares of
         Common Stock shall be subdivided or combined into a greater or smaller
         number of shares or if the Company shall issue any shares of Common
         Stock as a stock dividend on its outstanding Common Stock, or (ii)
         additional shares or new or different shares or other securities of the

                                       15
<PAGE>

         Company or any other non cash assets are distributed with respect to
         such shares of Common Stock, the number of shares of Common Stock
         deliverable upon the exercise of such Option or acceptance of such
         Stock Grant may be appropriately increased or decreased
         proportionately, and appropriate adjustments may be made in the
         purchase price per share to reflect such events. The number of Shares
         subject to Options to be granted to directors pursuant to Paragraph
         6.A.e and the number of Shares subject to the limitation in Paragraph
         4.c shall also be proportionately adjusted upon the occurrence of such
         events.

                  B. CONSOLIDATIONS OR MERGERS. If the Company is to be
         consolidated with or acquired by another entity in a merger, sale of
         all or substantially all of the Company`s assets or otherwise (an
         "Acquisition"), the Administrator or the board of directors of any
         entity assuming the obligations of the Company hereunder (the
         "Successor Board"), shall, as to outstanding Options, either (i) make
         appropriate provision for the continuation of such Options by
         substituting on an equitable basis for the Shares then subject to such
         Options either the consideration payable with respect to the
         outstanding shares of Common Stock in connection with the Acquisition
         or securities of any successor or acquiring entity; or (ii) upon
         written notice to the Participants, provide that all Options must be
         exercised (either to the extent then exercisable or, at the discretion
         of the Administrator, all Options being made fully exercisable for
         purposes of this Subparagraph), within a specified number of days of
         the date of such notice, at the end of which period the Options shall
         terminate; or (iii) terminate all Options in exchange for a cash
         payment equal to the excess of the Fair Market Value of the shares
         subject to such Options (either to the extent then exercisable or, at
         the discretion of the Administrator, all Options being made fully
         exercisable for purposes of this Subparagraph) over the exercise price
         thereof.

                  With respect to outstanding Stock Grants, the Administrator or
         the Successor Board, shall either (i) make appropriate provisions for
         the continuation of such Stock Grants by substituting on an equitable
         basis for the Shares then subject to such Stock Grants either the
         consideration payable with respect to the outstanding Shares of Common
         Stock in connection with the Acquisition or securities of any
         successor or acquiring entity; or (ii) upon written notice to the
         Participants, provide that all Stock Grants must be accepted (to the
         extent then subject to acceptance) within a specified number of days of
         the date of such notice, at the end of which period the offer of the
         Stock Grants shall terminate; or (iii) terminate all Stock Grants in
         exchange for a cash payment equal to the excess of the Fair Market
         Value of the Shares subject to such Stock Grants over the purchase
         price thereof, if any. In addition, in the event of an Acquisition,
         the Administrator may waive any or all Company repurchase
         rights with respect to outstanding Stock Grants.

                  C. RECAPITALIZATION OR REORGANIZATION. In the event of a
         recapitalization or reorganization of the Company (other than a
         transaction described in Subparagraph B above) pursuant to which
         securities of the Company or of another corporation are issued with
         respect to the outstanding shares of Common Stock, a Participant upon
         exercising an Option or accepting a Stock Grant shall be entitled to

                                       16
<PAGE>

         receive for the purchase price paid upon such exercise the securities
         which would have been received if such Stock Right had been exercised
         or accepted prior to such recapitalization or reorganization.

                  D. MODIFICATION OF ISOS. Notwithstanding the foregoing, any
         adjustments made pursuant to Subparagraph A, B or C with respect to
         ISOs shall be made only after the Administrator, after consulting with
         counsel for the Company, determines whether such adjustments would
         constitute a "modification" of such ISOs (as that term is defined in
         Section 424(h) of the Code) or would cause any adverse tax consequences
         for the holders of such ISOs. If the Administrator determines that such
         adjustments made with respect to ISOs would constitute a modification
         of such ISOs, it may refrain from making such adjustments, unless the
         holder of an ISO specifically requests in writing that such adjustment
         be made and such writing indicates that the holder has full knowledge
         of the consequences of such "modification" on his or her income tax
         treatment with respect to the ISO.

         27. ISSUANCES OF SECURITIES. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
subject to Stock Rights. Except as expressly provided herein, no adjustments
shall be made for dividends paid in cash or in property (including without
limitation, securities) of the Company.

         28. FRACTIONAL SHARES. No fractional Shares shall be issued under the
Plan and the person exercising a Stock Right shall receive from the Company cash
in lieu of such fractional Shares equal to the Fair Market Value thereof.

         29. CONVERSION OF ISOS INTO NON-QUALIFIED OPTIONS; TERMINATION OF ISOS.
The Administrator, at the written request of any Participant, may in its
discretion take such actions as may be necessary to convert such Participant`s
ISOs (or any portions thereof) that have not been exercised on the date of
conversion into Non-Qualified Options at any time prior to the expiration of
such ISOs, regardless of whether the Participant is an employee of the Company
or an Affiliate at the time of such conversion. Such actions may include, but
not be limited to, extending the exercise period or reducing the exercise price
of the appropriate installments of such Options. At the time of such conversion,
the Administrator (with the consent of the Participant) may impose such
conditions on the exercise of the resulting Non-Qualified Options as the
Administrator in its discretion may determine, provided that such conditions
shall not be inconsistent with this Plan. Nothing in the Plan shall be deemed to
give any Participant the right to have such Participant`s ISOs converted into
Non-Qualified Options, and no such conversion shall occur until and unless the
Administrator takes appropriate action. The Administrator, with the consent of
the Participant, may also terminate any portion of any ISO that has not been
exercised at the time of such conversion.

         30. WITHHOLDING. In the event that any federal, state, or local income
taxes, employment taxes, Federal Insurance Contributions Act ("F.I.C.A.")
withholdings or other amounts are required by applicable law or governmental

                                       17
<PAGE>

regulation to be withheld from the Participant`s salary, wages or other
remuneration in connection with the exercise of an Option or acceptance of a
Stock Grant or a Disqualifying Disposition (as defined in Paragraph 31), the
Company may withhold from the Participant`s compensation, if any, or may require
that the Participant advance in cash to the Company, or to any Affiliate of the
Company which employs or employed the Participant, the amount of such
withholdings unless a different withholding arrangement, including the use of
shares of the Company`s Common Stock or a promissory note, is authorized by the
Administrator (and permitted by law). For purposes hereof, the fair market value
of the shares withheld for purposes of payroll withholding shall be determined
in the manner provided in Paragraph 1 above, as of the most recent practicable
date prior to the date of exercise. If the fair market value of the shares
withheld is less than the amount of payroll withholdings required, the
Participant may be required to advance the difference in cash to the Company or
the Affiliate employer. The Administrator in its discretion may condition the
exercise of an Option or acceptance of a Stock Grant for less than the then Fair
Market Value on the Participant`s payment of such additional withholding.

         31. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION. Each Key Employee
who receives an ISO must agree to notify the Company in writing immediately
after the Key Employee makes a Disqualifying Disposition of any shares acquired
pursuant to the exercise of an ISO. A Disqualifying Disposition is any
disposition (including any sale) of such shares before the later of (a) two
years after the date the Key Employee was granted the ISO, or (b) one year after
the date the Key Employee acquired Shares by exercising the ISO. If the Key
Employee has died before such stock is sold, these holding period requirements
do not apply and no Disqualifying Disposition can occur thereafter.

         32. TERMINATION OF THE PLAN. The Plan will terminate on June 30, 2007.
The Plan may be terminated at an earlier date by vote of the shareholders of the
Company, provided, however, that any such earlier termination shall not affect
any Option Agreements, Stock Grant Agreements or Deferral Agreements executed
prior to the effective date of such termination.

         33. AMENDMENT OF THE PLAN AND AGREEMENTS. The Plan may be amended by
the shareholders of the Company. The Plan may also be amended by the
Administrator, including, without limitation, to the extent necessary to qualify
any or all outstanding Stock Rights granted under the Plan or Stock Rights to be
granted under the Plan for favorable federal income tax treatment (including
deferral of taxation upon exercise) as may be afforded incentive stock options
under Section 422 of the Code, and to the extent necessary to qualify the shares
issuable upon exercise of any outstanding Stock Rights granted, or Stock Rights
to be granted, under the Plan for listing on any national securities exchange or
quotation in any national automated quotation system of securities dealers. Any
amendment approved by the Administrator which the Administrator determines is of
a scope that requires shareholder approval shall be subject to obtaining such
shareholder approval. Any modification or amendment of the Plan shall not,
without the consent of a Participant, adversely affect his or her rights under a
Stock Right previously granted to him or her. With the consent of the
Participant affected, the Administrator may amend outstanding Option Agreements,
Stock Grant Agreements and Deferral Agreements in a manner which may be adverse
to the Participant but which is not inconsistent with the Plan. In the
discretion of the Administrator, outstanding Option Agreements, Stock Grant

                                       18
<PAGE>

Agreements and Deferral Agreements may be amended by the Administrator in a
manner which is not adverse to the Participant.

         34. EMPLOYMENT OR OTHER RELATIONSHIP. Nothing in this Plan or any
Option Agreement, Stock Grant Agreement or Deferral Agreement shall be deemed to
prevent the Company or an Affiliate from terminating the employment, consultancy
or director status of a Participant, nor to prevent a Participant from
terminating his or her own employment, consultancy or director status or to give
any Participant a right to be retained in employment or other service by the
Company or any Affiliate for any period of time.

         35. GOVERNING LAW. This Plan shall be construed and enforced in
accordance with the law of the State of Delaware.

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<PAGE>

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