Document:

EXHIBIT 10(e)

                   BRINKER INTERNATIONAL, INC.
              1999 STOCK OPTION AND INCENTIVE PLAN
           FOR NON-EMPLOYEE DIRECTORS AND CONSULTANTS

                           SECTION 1

                            GENERAL

     1.1   Purpose.  The Brinker International, Inc.  1999  Stock
Option   and  Incentive  Plan  For  Non-Employee  Directors   and
Consultants  (the  "Plan")  has  been  established   by   Brinker
International,  Inc. (the "Company") to provide a  means  through
which  the Company may attract able persons to serve on its Board
and  to  act  as  consultants or advisors  and  to  provide  such
individuals  with  an interest in the Company's  welfare  and  to
furnish  them  an  incentive to continue their services  for  the
Company.

     1.2  Participation.  Subject to the terms and conditions  of
the  Plan, the directors of the Company who are not employees  of
the  Company  or  its subsidiaries, and certain consultants,  are
eligible  to become "Participants" in the Plan. In the discretion
of  the  Committee,  a  Participant  may  be  granted  any  Award
permitted  under the provisions of the Plan, and  more  than  one
Award  may be granted to a Participant. Awards may be granted  as
alternatives  to or replacement of awards outstanding  under  the
Plan,  or  any  other plan or arrangement of  the  Company  or  a
Related Company (including a plan or arrangement of a business or
entity, all or a portion of which is acquired by the Company or a
Related Company).

     1.3    Operation,   Administration  and  Definitions.    The
operation  and administration of the Plan, including  the  Awards
made  under  the  Plan,  shall be subject to  the  provisions  of
Section 4 (relating to operation and administration). Capitalized
terms  in  the  Plan shall be defined as set forth  in  the  Plan
(including the definition provisions of Section 8 of the Plan).

                           SECTION 2

                        OPTIONS AND SARS

     2.1  Definitions.

          (a)  The  grant of an "Option" entitles the Participant
               to  purchase shares of Stock at an Exercise  Price
               established  by  the  Committee.  Options  granted
               under  this Section 2 will be Non-Qualified  Stock
               Options.  A  "Non-Qualified Stock  Option"  is  an
               Option  that  is not intended to be an  "incentive
               stock option" as that term is described in section
               422(b) of the Code.

          (b)  A stock appreciation right (an "SAR") entitles the
               Participant  to  receive, in  cash  or  Stock  (as
               determined  in  accordance with  subsection  2.5),
               value equal to all or a portion of the excess  of:
               (a) the Fair Market Value of a specified number of
               shares of Stock at the time of exercise; over  (b)
               an Exercise Price established by the Committee.

     2.2   Exercise Price.  The "Exercise Price" of  each  Option
and  SAR granted under this Section 2 shall be established by the
Committee or shall be determined by a method established  by  the
Committee  at the time the Option or SAR is granted, except  that
the Exercise Price shall not be less than 100% of the Fair Market
Value of a share of Stock as of the Pricing Date. For purposes of
the  preceding sentence, the "Pricing Date" shall be the date  on
which the Option or SAR is granted, except that the Committee may
provide that if an Option or SAR is granted in tandem with, or in
substitution for, an outstanding Award, the Pricing Date  is  the
date of grant of such outstanding Award.

     2.3  Exercise.  An Option and an SAR shall be exercisable in
accordance with such terms and conditions and during such periods
as may be established by the Committee.

     2.4   Payment of Option Exercise Price.  The payment of  the
Exercise Price of an Option granted under this Section 2 shall be
subject to the following:

          (a)  Subject  to  the  following  provisions  of   this
               subsection 2.4, the full Exercise Price for shares
               of Stock purchased upon the exercise of any Option
               shall be paid at the time of such exercise (except
               that,  in  the  case  of  an exercise  arrangement
               approved   by  the  Committee  and  described   in
               paragraph 2.4(c), payment may be made as  soon  as
               practicable after the exercise).

          (b)  The Exercise Price shall be payable in cash or  by
               tendering  shares  of  Stock  (by  either   actual
               delivery  of shares or by attestation,  with  such
               shares  valued at Fair Market Value as of the  day
               of  exercise), or in any combination  thereof,  as
               determined by the Committee.

          (c)  The Committee may permit a Participant to elect to
               pay  the  Exercise Price upon the exercise  of  an
               Option by authorizing a third party to sell shares
               of  Stock (or a sufficient portion of the  shares)
               acquired upon exercise of the Option and remit  to
               the  Company  a  sufficient portion  of  the  sale
               proceeds to pay the entire Exercise Price and  any
               tax withholding resulting from such exercise.

     2.5   Settlement of Award.  Distribution following  exercise
of  an Option or SAR, and shares of Stock distributed pursuant to
such  exercise, shall be subject to such conditions, restrictions
and  contingencies as the Committee may establish. Settlement  of
SARs  may be made in shares of Stock (valued at their Fair Market
Value  at  the  time of exercise), in cash, or in  a  combination
thereof,  as  determined in the discretion of the Committee.  The
Committee,   in  its  discretion,  may  impose  such  conditions,
restrictions  and contingencies with respect to shares  of  Stock
acquired pursuant to the exercise of an Option or an SAR  as  the
Committee determines to be desirable.

                           SECTION 3

                       OTHER STOCK AWARDS

     3.1   Definition.   A Stock Award is a grant  of  shares  of
Stock  or  of a right to receive shares of Stock (or  their  cash
equivalent or a combination of both) in the future.

     3.2   Restrictions on Stock Awards.  Each Stock Award  shall
be  subject to such conditions, restrictions and contingencies as
the Committee shall determine. If the right to become vested in a
Stock  Award granted under this Section 3 is conditioned  on  the
completion of a specified period of service with the Company  and
the  Related  Companies, then the required period of service  for
vesting  shall be not less than one year (subject to acceleration
of  vesting,  to  the extent permitted by the Committee,  in  the
event  of  the  Participant's death,  disability,  or  change  in
control).

                           SECTION 4

                  OPERATION AND ADMINISTRATION

     4.1   Effective  Date.   Subject  to  the  approval  of  the
shareholders of the Company at the Company's 1999 annual  meeting
of  its shareholders, the Plan shall be effective as of September
2,  1999  (the "Effective Date"). The Plan shall be unlimited  in
duration  and, in the event of Plan termination, shall remain  in
effect as long as any Awards under it are outstanding.

     4.2  Shares Subject to Plan.

          (a)       (i)   Subject to the following provisions  of
                    this   subsection  4.2,  the  maximum  number
                    shares  of  Stock  that may be  delivered  to
                    Participants  and  their beneficiaries  under
                    the Plan shall be 300,000.

               (ii) Any  shares of Stock granted under  the  Plan
                    that are forfeited because of the failure  to
                    meet  an Award contingency or condition shall
                    again  be available for delivery pursuant  to
                    new  Awards  granted under the Plan.  To  the
                    extent  any  shares of Stock  covered  by  an
                    Award  are not delivered to a Participant  or
                    beneficiary because the Award is forfeited or
                    canceled,  or  the shares of  Stock  are  not
                    delivered  because the Award  is  settled  in
                    cash, such shares shall not be deemed to have
                    been  delivered  for purposes of  determining
                    the   maximum  number  of  shares  of   Stock
                    available for delivery under the Plan.

               (iii)      If  the  Exercise Price  of  any  stock
                    option  granted under the Plan or  any  Prior
                    Plan  is  satisfied  by tendering  shares  of
                    Stock   to  the  Company  (by  either  actual
                    delivery or by attestation), only the  number
                    of  shares of Stock issued net of the  shares
                    of  Stock  tendered shall be deemed delivered
                    for   purposes  of  determining  the  maximum
                    number  of  shares  of  Stock  available  for
                    delivery under the Plan.

               (iv) Shares  of Stock delivered under the Plan  in
                    settlement,  assumption  or  substitution  of
                    outstanding awards (or obligations  to  grant
                    future    awards)   under   the   plans    or
                    arrangements  of  another  entity  shall  not
                    reduce the maximum number of shares of  Stock
                    available for delivery under the Plan, to the
                    extent  that  such settlement, assumption  or
                    substitution is a result of the Company or  a
                    Related Company acquiring another entity  (or
                    an interest in another entity).

           (b) Subject to the provisions of Section 6 hereof,  in
               the event of a corporate transaction involving the
               Company (including, without limitation, any  stock
               dividend,   stock   split,   extraordinary    cash
               dividend,     recapitalization,    reorganization,
               merger,    consolidation,   split-up,    spin-off,
               combination or exchange of shares), the  Committee
               may  adjust  Awards to preserve  the  benefits  or
               potential  benefits of the Awards. Action  by  the
               Committee  may  include  adjustment  of:  (i)  the
               number  and kind of shares which may be  delivered
               under the Plan; (ii) the number and kind of shares
               subject  to  outstanding  Awards;  and  (iii)  the
               Exercise Price of outstanding Options and SARs  as
               well  as  any other adjustments that the Committee
               determines to be equitable.

     4.3  Limit on Distribution.  Distribution of shares of Stock
or  other  amounts  under  the  Plan  shall  be  subject  to  the
following:

          (a)  Notwithstanding any other provision of  the  Plan,
               the Company shall have no liability to deliver any
               shares  of Stock under the Plan or make any  other
               distribution  of  benefits under the  Plan  unless
               such  delivery or distribution would  comply  with
               all    applicable    laws   (including,    without
               limitation, the requirements of the Securities Act
               of  1933), and the applicable requirements of  any
               securities exchange or similar entity.

          (b)  To  the extent that the Plan provides for issuance
               of  stock certificates to reflect the issuance  of
               shares of Stock, the issuance may be effected on a
               noncertificated   basis,   to   the   extent   not
               prohibited  by  applicable law or  the  applicable
               rules of any stock exchange.

     4.4   Tax Withholding.  Whenever the Company proposes or  is
required  to  distribute Stock under the Plan,  the  Company  may
require  the  recipient  to  remit  to  the  Company  an   amount
sufficient   to  satisfy  any  Federal,  state  and   local   tax
withholding requirements prior to the delivery of any certificate
for  such  shares  or, in the discretion of  the  Committee,  the
Company  may  withhold  from the shares to  be  delivered  shares
sufficient  to  satisfy all or a portion of such tax  withholding
requirements. Whenever under the Plan payments are to be made  in
cash, such payments may be net of an amount sufficient to satisfy
any Federal, state and local tax withholding requirements.

     4.5   Payment Shares.  Subject to the overall limitation  on
the  number  of shares of Stock that may be delivered  under  the
Plan, the Committee may use available shares of Stock as the form
of payment for compensation, grants or rights earned or due under
any other compensation plans or arrangements of the Company or  a
Related  Company,  including the plans and  arrangements  of  the
Company  or  a  Related Company acquiring another entity  (or  an
interest in another entity).

     4.6   Dividends  and  Dividend Equivalents.   An  Award  may
provide  the  Participant with the right to receive dividends  or
dividend equivalent payments with respect to Stock which  may  be
either  paid  currently  or  credited  to  an  account  for   the
Participant, and may be settled in cash or Stock as determined by
the  Committee. Any such settlements, and any such  crediting  of
dividends  or dividend equivalents or reinvestment in  shares  of
Stock,  may  be  subject  to  such conditions,  restrictions  and
contingencies  as  the Committee shall establish,  including  the
reinvestment of such credited amounts in Stock equivalents.

     4.7  Payments.  Awards may be settled through cash payments,
the  delivery  of  shares of Stock, the granting  of  replacement
Awards,  or combination thereof as the Committee shall determine.
Any Award settlement, including payment deferrals, may be subject
to   such  conditions,  restrictions  and  contingencies  as  the
Committee  shall determine. The Committee may permit  or  require
the  deferral  of any Award payment, subject to  such  rules  and
procedures as it may establish, which may include provisions  for
the  payment  or crediting of interest, or dividend  equivalents,
including   converting   such   credits   into   deferred   Stock
equivalents.

     4.8   Transferability.  Except as otherwise provided by  the
Committee, Awards under the Plan are not transferable  except  as
designated  by the Participant by will or by the laws of  descent
and distribution.

     4.9  Form and Time of Elections.  Unless otherwise specified
herein,  each election required or permitted to be  made  by  any
Participant or other person entitled to benefits under the  Plan,
and  any permitted modification, or revocation thereof, shall  be
in  writing filed with the Committee at such times, in such form,
and   subject   to   such  restrictions  and   limitations,   not
inconsistent  with the terms of the Plan, as the Committee  shall
require.

     4.10  Agreement With Company. At the time of an Award  to  a
Participant  under  the  Plan,  the  Committee  may   require   a
Participant  to  enter into an agreement with  the  Company  (the
"Agreement")  in a form specified by the Committee,  agreeing  to
the terms and conditions of the Plan and to such additional terms
and  conditions, not inconsistent with the Plan, as the Committee
may, in its sole discretion, prescribe.

     4.11 Limitation of Implied Rights.

          (a)  Neither a Participant nor any other person  shall,
               by  reason  of the Plan, acquire any right  in  or
               title  to  any  assets, funds or property  of  the
               Company   or   any  Related  Company   whatsoever,
               including, without limitation, any specific funds,
               assets, or other property which the Company or any
               Related Company, in their sole discretion, may set
               aside  in  anticipation of a liability  under  the
               Plan.  A Participant shall have only a contractual
               right  to  the  stock or amounts, if any,  payable
               under  the  Plan, unsecured by any assets  of  the
               Company  or any Related Company. Nothing contained
               in  the Plan shall constitute a guarantee that the
               assets  of  such companies shall be sufficient  to
               pay any benefits to any person.

          (b)  The  Plan does not give any Participant any  right
               or  claim  to  any benefit under the Plan,  unless
               such right or claim has specifically accrued under
               the   terms  of  the  Plan.  Except  as  otherwise
               provided  in  the Plan, no Award  under  the  Plan
               shall confer upon the holder thereof any right  as
               a  shareholder of the Company prior to the date on
               which  the individual fulfills all conditions  for
               receipt of such rights.

     4.12  Evidence.  Evidence required of anyone under the  Plan
may  be  by certificate, affidavit, document or other information
which  the  person acting on it considers pertinent and reliable,
and signed, made or presented by the proper party or parties.

     4.13  Action  by  Company or Related  Company.   Any  action
required  or permitted to be taken by the Company or any  Related
Company shall be by resolution of its board of directors,  or  by
action of one or more members of the board (including a committee
of  the  board) who are duly authorized to act for the board,  or
(except  to the extent prohibited by applicable law or applicable
rules of any stock exchange) by a duly authorized officer of  the
company.

     4.14 Gender and Number.  Where the context admits, words  in
any  gender shall include any other gender, words in the singular
shall  include  the  plural  and the  plural  shall  include  the
singular.

                           SECTION 5

                           COMMITTEE

     5.1   Administration.  The authority to control  and  manage
the  operation and administration of the Plan shall be vested  in
the  Nominating  Committee (the "Committee") in  accordance  with
this Section 5.  The Committee shall be selected by the Board and
shall consist of two or more members of the Board.

     5.2   Powers  of  Committee.  The authority  to  manage  and
control  the  operation and administration of the Plan  shall  be
vested in the Committee, subject to the following:

          (a)  Subject  to  the  provisions  of  the  Plan,   the
               Committee  will have the authority and  discretion
               to  select those persons who shall receive Awards,
               to  determine  the time or times  of  receipt,  to
               determine  the types of Awards and the  number  of
               shares  covered  by the Awards, to  establish  the
               terms,     conditions,    performance    criteria,
               restrictions, and other provisions of such Awards,
               and  (subject  to  the  restrictions  imposed   by
               Section 6) to cancel or suspend Awards. In  making
               such  Award determinations, the Committee may take
               into  account the nature of services  rendered  by
               the   individual,  the  individual's  present  and
               potential  contribution to the  Company's  success
               and  such  other  factors as the  Committee  deems
               relevant.

           (b) Subject  to  the  provisions  of  the  Plan,   the
               Committee  will have the authority and  discretion
               to establish terms and conditions of awards as the
               Committee   determines   to   be   necessary    or
               appropriate  to conform to applicable requirements
               or  practices  of  jurisdictions  outside  of  the
               United States.

          (c)  The   Committee   will  have  the  authority   and
               discretion  to  interpret the Plan, to  establish,
               amend,  and  rescind  any  rules  and  regulations
               relating  to the Plan, to determine the terms  and
               provisions of any agreements made pursuant to  the
               Plan,  and  to make all other determinations  that
               may    be   necessary   or   advisable   for   the
               administration of the Plan.

          (d)  Any  interpretation of the Plan by  the  Committee
               and  any  decision made by it under  the  Plan  is
               final and binding.

          (e)  Except  as  otherwise expressly  provided  in  the
               Plan, where the Committee is authorized to make  a
               determination  with  respect to  any  Award,  such
               determination shall be made at the time the  Award
               is made, except that the Committee may reserve the
               authority to have such determination made  by  the
               Committee  in  the  future  (but  only   if   such
               reservation  is  made at the  time  the  Award  is
               granted  and is expressly stated in the  Agreement
               reflecting the Award).

          (f)  In  controlling  and managing  the  operation  and
               administration  of the Plan, the  Committee  shall
               act  by a majority of its then members, by meeting
               or   by  writing  filed  without  a  meeting.  The
               Committee shall maintain and keep adequate records
               concerning the Plan and concerning its proceedings
               and  acts in such form and detail as the Committee
               may decide.

     5.3    Delegation  by  Committee.   Except  to  the   extent
prohibited by applicable law or the applicable rules of  a  stock
exchange  and  subject to the prior approval of  the  Board,  the
Committee may allocate all or any portion of its responsibilities
and powers to any one or more of its members and may delegate all
or  any part of its responsibilities and powers to any person  or
persons selected by it. Any such allocation or delegation may  be
revoked by the Committee at any time.

     5.4   Information to be Furnished to Committee.  The Company
and  Related Companies shall furnish the Committee with such data
and  information  as  may be required for  it  to  discharge  its
duties. Participants and other persons entitled to benefits under
the  Plan  must  furnish  the Committee such  evidence,  data  or
information as the Committee considers desirable to carry out the
terms of the Plan.

                           SECTION 6

                 ACCELERATION OF EXERCISABILITY
            AND VESTING UNDER CERTAIN CIRCUMSTANCES

     Notwithstanding any provision in this Plan to the  contrary,
with regard to any Award of Options, SARs and Stock Awards to any
Participant,  unless  the  particular  grant  agreement  provides
otherwise,  all  Awards will become immediately  exercisable  and
vested  in  full  upon the occurrence, before the  expiration  or
termination  of such Option, SARs and Stock Awards or  forfeiture
of such Awards, of any of the events listed below:

          (a)  a  sale,  transfer or other conveyance of  all  or
               substantially all of the assets of the Company  on
               a consolidated basis; or

          (b)  the  acquisition of beneficial ownership (as  such
               term  is  defined in Rule 13d-3 promulgated  under
               the Exchange Act) by any "person" (as such term is
               used  in  Sections 13(d) and 14(d) of the Exchange
               Act),   other   than  the  Company,  directly   or
               indirectly, of securities representing 50% or more
               of  the total number of votes that may be cast for
               the election of directors of the Company; or

          (c)  the commencement (within the meaning of Rule 14d-2
               promulgated under the Exchange Act) of  a  "tender
               offer" for stock of the Company subject to Section
               14(d)(2) of the Exchange Act; or

          (d)  the  failure at any annual or special  meeting  of
               the  Company's stockholders following an "election
               contest" subject to Rule 14a-11 promulgated  under
               the  Exchange Act, of any of the persons nominated
               by  the  Company in the proxy material  mailed  to
               stockholders by the management of the  Company  to
               win election to seats on the Board, excluding only
               those who die, retire voluntarily, are disabled or
               are  otherwise disqualified in the interim between
               their nomination and the date of the meeting.

                           SECTION 7

                   AMENDMENT AND TERMINATION

     The Committee may, at any time, amend or terminate the Plan,
provided  that,  subject to subsection 4.2 (relating  to  certain
adjustments  to  shares)  and  Section  6  hereof  (relating   to
immediate   vesting  upon  certain  events),  no   amendment   or
termination may, in the absence of written consent to the  change
by  the affected Participant (or, if the Participant is not  then
living, the affected beneficiary), adversely affect the rights of
any  Participant or beneficiary under any Award granted under the
Plan prior to the date such amendment is adopted by the Board.

                           SECTION 8

                         DEFINED TERMS

     For  purposes of the Plan, the terms listed below  shall  be
defined as follows:

          (a)  Award.   The term "Award" shall mean any award  or
               benefit granted to any Participant under the Plan,
               including,  without  limitation,  the   grant   of
               Options, SARs, and Stock Awards.

          (b)  Board.   The term "Board" shall mean the Board  of
               Directors of the Company.

          (c)  Code.   The term "Code" means the Internal Revenue
               Code  of  1986,  as  amended. A reference  to  any
               provision  of the Code shall include reference  to
               any successor provision of the Code.

           (d) Fair  Market  Value.  For purposes of  determining
               the  "Fair Market Value" of a share of Stock,  the
               following rules shall apply:

               (i)  If  the  Stock  is  at  the  time  listed  or
                    admitted  to  trading on any stock  exchange,
                    then  the  "Fair Market Value" shall  be  the
                    mean  between the lowest and highest reported
                    sale  prices  of  the Stock on  the  date  in
                    question  on the principal exchange on  which
                    the  Stock  is  then listed  or  admitted  to
                    trading.  If no reported sale of Stock  takes
                    place   on  the  date  in  question  on   the
                    principal exchange, then the reported closing
                    asked price of the Stock on such date on  the
                    principal exchange shall be determinative  of
                    "Fair Market Value."

               (ii) If  the  Stock is not at the time  listed  or
                    admitted to trading on a stock exchange,  the
                    "Fair Market Value" shall be the mean between
                    the  lowest  reported bid price  and  highest
                    reported asked price of the Stock on the date
                    in  question in the over-the-counter  market,
                    as  such prices are reported in a publication
                    of   general  circulation  selected  by   the
                    Committee and regularly reporting the  market
                    price of Stock in such market.

               (iii)      If  the Stock is not listed or admitted
                    to trading on any stock exchange or traded in
                    the over-the-counter market, the "Fair Market
                    Value"  shall be as determined in good  faith
                    by the Committee.

          (f)  Exchange  Act.  The term "Exchange Act" means  the
               Securities Exchange Act of 1934, as amended.

          (g)  Related  Companies.   The term  "Related  Company"
               means any company during any period in which it is
               a  "parent  company" (as that term is  defined  in
               Code  section 424(e)) with respect to the Company,
               or  a  "subsidiary corporation" (as that  term  is
               defined  in  Code section 424(f)) with respect  to
               the Company.

          (h)  Stock.   The  term "Stock" shall  mean  shares  of
               Common Stock of the Company.Exhibit 10.3

                              AMERICA ONLINE, INC.

                                 1999 STOCK PLAN

1.       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 or its  Affiliates in
order to attract  and  retain  such  people,  to  motivate  them to work for the
benefit of the Company or an Affiliate,  and to provide an additional  incentive
for them to promote  the  success of the  Company or of an  Affiliate.  The Plan
provides for the granting of ISOs and Non-Qualified  Options and awards of Stock
Purchase Rights.

2.       DEFINITIONS.
         -----------

         Unless otherwise  specified or unless the context  otherwise  requires,
         the following  terms, as used in this America  Online,  Inc. 1999 Stock
         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,  with respect to ISOs,  means a corporation  which,
                  for  purposes  of  Section  424 of the  Code,  is a parent  or
                  subsidiary  of the  Company,  direct or  indirect,  and,  with
                  respect  to  Non-Qualified  Options,  means  any  corporation,
                  company  or  other   entity   whose   financial   results  are
                  consolidated with those of the Company in accordance with U.S.
                  generally accepted accounting principles, all as determined by
                  the Administrator.

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

                  Change in Control  means either a Corporate  Change in Control
                  or a Transactional Change in Control.

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

                  Committee means the  Compensation  and Management  Development
                  Committee of the Board of Directors, or its successor, or such
                  other  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,  $.01
                  par value per share.

                  Company means America Online, Inc., a Delaware corporation.

                  Corporate  Change in Control means the happening of any of the
                  following events:

                  (1) the  acquisition  by any  individual,  entity or group (an
                  "Entity"),  including  any  "person"  within  the  meaning  of
                  Section   13(d)(3)  or  14(d)(2)  of  the  Exchange   Act,  of
                  beneficial   ownership  (within  the  meaning  of  Rule  13d-3
                  promulgated  under the Exchange  Act) of 30% or more of either
                  (i) the then outstanding shares of common stock of the Company
                  (the "Outstanding  Company Common Stock") or (ii) the combined
                  voting power of the then outstanding securities of the Company
                  entitled to vote  generally in the election of directors  (the
                  "Outstanding Company Voting Securities");  excluding, however,
                  the following:  (A) any acquisition  directly from the Company
                  (excluding  any  acquisition  by virtue of the  exercise of an
                  exercise, conversion or exchange privilege unless the security
                  being so exercised, converted or exchanged was itself acquired
                  directly  from  the  Company),  (B)  any  acquisition  by  the
                  Company,  or (C) any  acquisition by an employee  benefit plan
                  (or related  trust)  sponsored or maintained by the Company or
                  by any corporation controlled by the Company; or

                  (2) a change in the composition of the Board since October 28,
                  1999,  such  that  the  individuals  who,  as  of  such  date,
                  constituted  the Board of Directors  (the  "Incumbent  Board")
                  cease for any reason to constitute at least a majority of such
                  Board;  provided that any individual who becomes a director of
                  the Company subsequent to October 28, 1999 whose election,  or
                  nomination  for election by the  Company's  stockholders,  was
                  approved by the vote of at least a majority  of the  directors
                  then  comprising the Incumbent  Board shall be deemed a member
                  of  the  Incumbent  Board;  and  provided  further,  that  any
                  individual  who was  initially  elected as a  director  of the
                  Company  as a  result  of an  actual  or  threatened  election
                  contest,  as such terms are used in Rule 14a-11 of  Regulation
                  14A promulgated under the Exchange Act, or any other actual or
                  threatened solicitation of proxies or consents by or on behalf
                  of any  person or  Entity  other  than the Board  shall not be
                  deemed a member of the Incumbent Board.

                  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 applicable
                  date,  or if the  applicable  date is not a trading  day,  the
                  trading day immediately preceding the applicable date;

                  (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 on the
                  applicable  date, or if the  applicable  date is not a trading
                  day, on the trading day  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.

                  Involuntary  Employment  Action  shall  mean any change in the
                  terms and conditions of the Participant's  employment with the
                  Company or any successor,  without cause (as defined  herein),
                  to such extent that:

                  (1) the  Participant  shall  fail  to be  vested  with  power,
                  authority and resources  analogous to the Participant's  title
                  and/or office prior to the Change in Control, or

                  (2) the  Participant  shall  lose any  significant  duties  or
                  responsibilities attending such office, or

                  (3) there shall occur a reduction  in the  Participant's  base
                  compensation, or

                  (4) the  Participant's  employment  with the  Company,  or its
                  successor, is terminated without cause (as defined herein).

                  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 Options or Stock Purchase  Rights under
                  the  Plan;  provided  however,  that Key  Employee  shall  not
                  include  any  person  who:  (i) is not on the  payroll  of the
                  Company or an Affiliate  as a full-time or part-time  employee
                  or  (ii)  directly  or  indirectly  provides  services  to the
                  Company or an  Affiliate  pursuant to a  contractual  or other
                  arrangement,  written or  otherwise  between the Company or an
                  Affiliate and either that person or a third party,  which does
                  not  designate  such  person  as an  employee  (regardless  of
                  whether   a   government   agency,   court  or  other   entity
                  subsequently determines that such person is an employee of the
                  Company or an Affiliate  for purposes of  employment  taxes or
                  for any other purpose).  Anything in the prior sentence to the
                  contrary  notwithstanding,  a person who is providing services
                  pursuant to a contractual or other arrangement may be eligible
                  for   participation  in  the  Plan  as  a  consultant  who  is
                  designated by the Administrator in accordance with Paragraph 5
                  of 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  between the Company and a
                  Participant  delivered  pursuant to the Plan,  in such form as
                  the Administrator shall approve.

                  Participant  means a Key  Employee,  director or consultant of
                  the Company or of an Affiliate 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 America Online, Inc. 1999 Stock Plan.

                  Restricted   Stock  means  shares  of  Common  Stock  acquired
                  pursuant to a grant of Stock Purchase  Rights under  Paragraph
                  14 below.

                  Restricted Stock Purchase  Agreement means a written agreement
                  between the Company and a Participant evidencing the terms and
                  restrictions   applying  to  stock  purchased  under  a  Stock
                  Purchase  Right,  in  such  form  as the  Administrator  shall
                  approve.

                  Shares means shares of the Common Stock as to which Options or
                  Stock  Purchase  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 upon exercise of
                  Options or Stock Purchase Rights granted under the Plan may be
                  authorized  and unissued  shares or shares held by the Company
                  in its treasury, or both.

                  Stock Purchase Right means the right to purchase  Common Stock
                  pursuant  to  Paragraph  14 of the  Plan,  as  evidenced  by a
                  Restricted Stock Purchase Agreement.

                  Survivors means a deceased Participant's legal representatives
                  and/or any person or persons who  acquired  the  Participant's
                  rights to an Option or Stock  Purchase Right by will or by the
                  laws of descent and distribution.

                  Transactional   Change  in  Control  shall  mean  any  of  the
                  following transactions to which the Company is a party:

                  (1)   a    reorganization,    recapitalization,    merger   or
                  consolidation  (a  "Corporate  Transaction")  of the  Company,
                  unless  securities  representing  60% or  more of  either  the
                  outstanding  shares of  common  stock or the  combined  voting
                  power of the then outstanding  voting  securities  entitled to
                  vote  generally in the election of directors of the Company or
                  the corporation  resulting from such Corporate Transaction (or
                  the parent of such  corporation)  are held  subsequent to such
                  transaction  by the person or persons who were the  beneficial
                  holders  of  the   Outstanding   Company   Common   Stock  and
                  Outstanding  Company Voting  Securities  immediately  prior to
                  such  Corporate   Transaction,   in  substantially   the  same
                  proportions  as  their  ownership  immediately  prior  to such
                  Corporate Transaction; or

                  (2)  the  sale,  transfer  or  other  disposition  of  all  or
                  substantially all of the assets of the Company.

                  To Vest means that you have  obtained  a  contingent  right to
                  exercise or purchase a defined  number of your stock  options,
                  as defined  by and  subject  to the terms and  conditions  set
                  forth in the pertinent Option Agreement and this Plan.  Unless
                  and until your stock options Vest pursuant to the terms of the
                  pertinent  Option  Agreement  and  this  Plan,  as well as the
                  vesting  schedule  included in your notice of grant,  you have
                  not  obtained  any such right to exercise  or purchase  any of
                  your  unvested  stock  options  (except as may be  provided in
                  Paragraphs 12 and 13 of this Plan and in the pertinent  Option
                  Agreement in the event of  Participant's  Disability or death,
                  respectively).

3.       SHARES SUBJECT TO THE PLAN.
         --------------------------

         The number of Shares which may be issued from time to time  pursuant to
this Plan shall be 50,000,000  or the  equivalent of such number of Shares after
the effect of any stock split, stock dividend, combination,  recapitalization or
similar transaction in accordance with Paragraph 17 of the Plan. No more than 5%
of such  number of  Shares  may be issued  in  connection  with  grants of Stock
Purchase Rights.

         If an  Option  ceases  to be  "outstanding",  in whole or in part,  the
Shares which were subject to such Option shall be available  for the granting of
other Options under the Plan. Any Option shall be treated as "outstanding" until
such Option is exercised in full, or terminates or expires under the  provisions
of the Plan, or by agreement of the parties to the pertinent  Option  Agreement.
Shares that have  actually  been issued under the Plan upon  exercise of a Stock
Purchase Right shall not be returned to the Plan and shall not become  available
for the granting of other Options or Stock Purchase Rights under the Plan.

4.       ADMINISTRATION OF THE PLAN.
         --------------------------

         Subject to the provisions of the Plan, the  Administrator is authorized
to:

         a.       Interpret the provisions of the Plan or of any Option,  Option
                  Agreement,  Stock Purchase Right, or Restricted Stock Purchase
                  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 Options
                  or Stock Purchase Rights;

         c.       Determine the number of Shares for which an Option, Options or
                  Stock  Purchase  Rights shall be granted,  provided,  however,
                  that in no event  shall  Options or Stock  Purchase  Rights to
                  purchase  more  than  2,000,000   Shares  be  granted  to  any
                  Participant in any fiscal year;

         d.       Specify the terms and conditions upon which an Option, Options
                  or Stock Purchase Rights may be granted; and

         e.       Award Options or Stock Purchase Rights to Participants who are
                  foreign  nationals  or employed or located  outside the United
                  States,  or both,  on such  terms  and  conditions,  including
                  imposing  conditions  on the exercise or Vesting of Options or
                  Stock  Purchase  Rights,  different  from those  applicable to
                  Options  or Stock  Purchase  Rights  granted  to  Participants
                  employed  or  located  in the  United  States  as may,  in the
                  judgment of the  Administrator,  be  necessary or desirable in
                  order to  recognize  differences  in local law,  tax policy or
                  customs;

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 Option or Stock Purchase
Right granted under it shall be final, unless otherwise  determined by the Board
of  Directors,  if the  Administrator  is  the  Committee.  The  Administrator's
determinations  under  the  Plan  need  not be  uniform  and  may be  made by it
selectively  among persons who receive,  or are eligible to receive,  Options or
Stock Purchase  Rights under the Plan (whether or not such persons are similarly
situated).  Without limiting the generality of the foregoing,  the Administrator
shall be  entitled,  among  other  things,  to make  non-uniform  and  selective
determinations, and to enter into non-uniform and selective Option Agreements or
Restricted Stock Purchase Agreements as to (a) the persons to receive Options or
Stock Purchase Rights under the Plan, (b) the terms and provisions of Options or
Stock  Purchase  Rights under the Plan, and (c) whether a termination of service
with the Company and any Affiliate has occurred.

         No member  of the  Board of  Directors  or the  Administrator  shall be
liable for any action or  determination  made in good faith with  respect to the
Plan or any Option.

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 an Option
or Stock Purchase Right is granted.  Members of the Company's Board of Directors
who are not employees of the Company or of an Affiliate  may receive  Options or
Stock  Purchase  Rights  pursuant to Paragraph 6,  Subparagraph  A (f), but only
pursuant  thereto.   Notwithstanding  any  of  the  foregoing  provisions,   the
Administrator  may authorize the grant of an Option or Stock Purchase Right to a
person not then a Key  Employee,  director or consultant of the Company or of an
Affiliate.  The actual grant of such Option or Stock  Purchase  Right,  however,
shall be conditioned upon such person becoming  eligible to become a Participant
at or prior to the time of the  execution of the Option  Agreement or Restricted
Stock Purchase  Agreement  evidencing  such Option or Stock Purchase  Right,  as
applicable. ISOs may be granted only to Key Employees. Non-Qualified Options may
be granted to any Key  Employee,  director  or  consultant  of the Company or an
Affiliate.  Stock Purchase  Rights shall be granted only in connection  with the
hiring or  retention  of a Key  Employee.  The  granting  of any Option or Stock
Purchase Right to any individual  shall neither  entitle that individual to, nor
disqualify him or her from, participation in any other grant of Options or Stock
Purchase 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  as the  Administrator  may deem
appropriate   including,   without   limitation,   subsequent  approval  by  the
stockholders of the Company of this Plan or any amendments  thereto.  The Option
Agreements shall be subject to at least the following terms and conditions:

         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:  The option  price (per  share) of the
                           Shares  covered by each Option shall be determined by
                           the  Administrator  but  shall  not be less  than one
                           hundred  percent (100%) of the Fair Market Value (per
                           share)  of the  Shares  on the  date of  grant of the
                           Option.

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

                  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 Vest 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 stock purchase agreement
                           in form satisfactory to the  Administrator  providing
                           for certain protections for the Company and its other
                           stockholders, 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.       Limitation  on Grant  of  Non-Qualified  Options:  No
                           Non-Qualified  Option shall be granted after the date
                           provided in Paragraph 23 of this Plan.

                  f.       Directors' Options:  Each director of the Company who
                           is not an employee  of the Company or any  Affiliate,
                           upon first being elected or appointed to the Board of
                           Directors, shall be granted a Non-Qualified Option to
                           purchase 20,000 Shares;  provided,  however, that the
                           Administrator  shall be  entitled  to grant an Option
                           for  such   higher   number   of  Shares  as  may  be
                           appropriate (as determined by the  Administrator) for
                           recruitment  purposes.  On  the  date  following  the
                           annual  meeting of  stockholders  of the Company each
                           year,  giving  effect to the election of any director
                           or directors at such annual meeting of  stockholders,
                           each  director  who is not an employee of the Company
                           or any  Affiliate  and who has  served  at least  six
                           months as a director shall be granted a Non-Qualified
                           Option to purchase 20,000 Shares. In addition, on the
                           date following the annual meeting of  stockholders of
                           the Company each year,  giving effect to the election
                           of any director or  directors at such annual  meeting
                           of stockholders, each director who is not an employee
                           of the Company or any Affiliate and who serves on the
                           Compensation and Management  Development Committee or
                           the Audit  Committee  of the Board of  Directors  (or
                           other committee  designated by the Board of Directors
                           to  be  entitled  to  receive   options   under  this
                           sentence) shall be granted a Non-Qualified  Option to
                           purchase 10,000 Shares;  provided,  further,  that on
                           such date, each such director who serves as the Chair
                           of such  committee  shall be  granted  an  additional
                           Option to  purchase  10,000  Shares.  The  grants for
                           service as a  committee  member or Chair  shall cover
                           service on all eligible  committees  and shall not be
                           cumulative  for  service on more than one  committee.
                           Each Option granted  pursuant to this Section 6(A)(f)
                           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) be immediately  exercisable (subject
                           to Section 16 of the Securities Exchange Act of 1934,
                           as amended (the "1934 Act")).  The Board of Directors
                           may amend this Section  6(A)(f) to increase,  reduce,
                           eliminate,  or  institute  option  grants  for Board,
                           Committee,  or other individual or collective service
                           under this Plan.

         B.       ISOs:  Each  Option  intended  to be an ISO shall so state and
                  shall be issued  only to a Key  Employee  and be subject to at
                  least 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 6(A) above, except clauses (a)
                           and (f) 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
                                    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  percent  (100%) of the Fair  Market
                                    Value per share of the Shares on the date of
                                    the grant of the Option.

                           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  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
                                    stock of the Company or an  Affiliate,  each
                                    Option shall  terminate  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  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.

                  e.       Limitation on Grant of ISOs: No ISOs shall be granted
                           after the date provided in Paragraph 23 of this Plan.

                  f.       To the extent that an Option  which is intended to be
                           an ISO fails to so qualify,  it shall be treated as a
                           Non-Qualified Option.

7.       EXERCISE OF OPTIONS AND ISSUANCE OF SHARES.
         ------------------------------------------

         An Option (or any part or  installment  thereof)  shall be exercised in
accordance with  procedures  established by the Company 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 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 (d) 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 (e) at the  discretion  of the  Administrator,  through  such other method of
payment  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 20) 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) if any  amendment  is  materially  adverse  to the
Participant,  any such  amendment  shall be made  only with the  consent  of the
Participant to whom the Option was granted,  or in the event of the death of the
Participant,  the Participant's  Survivors,  and (iii) any such amendment of any
ISO shall be made only after the  Administrator,  after  consulting with 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.

8.       RIGHTS AS A STOCKHOLDER.
         -----------------------

        No Participant to whom an Option has been granted shall have rights as a
stockholder with respect to any Shares covered by such Option,  except after due
exercise  of the  Option and  tender of the full  purchase  price for the Shares
being  purchased  pursuant  to such  exercise  (and  satisfaction  of such other
conditions for the transfer of Shares as may be required pursuant to the Option)
and  registration  of the Shares in the Company's  share register in the name of
the Participant.  No Participant to whom a Stock Purchase Right has been granted
shall have rights as a  stockholder  with respect to any Shares  covered by such
Stock  Purchase  Right,  except after tender of the full purchase  price for the
Shares  being  purchased  (and  satisfaction  of such other  conditions  for the
transfer of Shares as may be required  pursuant to the Stock Purchase Right) and
registration  of the Shares in the Company's  share  register in the name of the
purchaser.  Once the Stock Purchase Right is exercised, the purchaser shall have
the rights equivalent to those of a stockholder, and shall be a stockholder when
his or her purchase is entered upon the records of the duly authorized  transfer
agent of the Company.  No adjustment  will be made for a dividend or other right
for  which the  record  date is prior to the date the  Stock  Purchase  Right is
exercised, except as provided in Section 17 of the Plan.

9.       ASSIGNABILITY AND TRANSFERABILITY OF OPTIONS AND STOCK PURCHASE RIGHTS.
         ----------------------------------------------------------------------

         By  its  terms,  an  Option  or  Stock  Purchase  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 Restricted
Stock  Purchase  Agreement.  The  designation of a beneficiary of an Option by a
Participant shall not be deemed a transfer prohibited by this Paragraph.  Except
as provided  above,  an Option or Stock  Purchase  Right  shall be  exercisable,
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 Option or Stock Purchase Right
or of any rights granted thereunder  contrary to the provisions of this Plan, or
the levy of any  attachment or similar  process upon an Option or Stock Purchase
Right, shall be null and void.

10.      EFFECT 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 11, 12, and
                  13,  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.  An Option that is not  exercisable  on the date of
                  termination of service is canceled on such date and may not be
                  exercised.  An  Option  that  is  exercisable  on the  date of
                  termination of service,  but not exercised  within the term as
                  the  Administrator  has  designated  in the  pertinent  Option
                  Agreement is canceled and may not be exercised thereafter.

         b.       Except as provided in Paragraph  12, in no event may an Option
                  Agreement  provide,  if the 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  12  or  13,  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" (as defined in Paragraph  11 below),  then
                  such  Participant  shall  forthwith cease to have any right to
                  exercise any Option, whether or not such Option was previously
                  exercisable.

         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  2 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 to the extent
                  that the  Administrator  so determines as Company policy or to
                  the extent that the Option  Agreement 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 a  Key  Employee,  director  or
                  consultant of the Company or any Affiliate.

11.      EFFECT 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, except as otherwise provided in the
                  pertinent   Option  Agreement  or  Restricted  Stock  Purchase
                  Agreement,  "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.

         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.

12.      EFFECT OF TERMINATION OF SERVICE FOR DISABILITY.
         -----------------------------------------------

         Except as  otherwise  provided in the  pertinent  Option  Agreement,  a
Participant  who terminates his or her  employment,  directorship or consultancy
with the Company or 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
                  such cessation; and

         b.       In the event rights to exercise the Option Vest  periodically,
                  to the extent of a pro rata portion of any  additional  rights
                  as would have Vested had the Participant not terminated his or
                  her employement, directorship or consultancy by reason of such
                  Disability,  prior to the end of the Vesting period which next
                  ends  following  the date of such  termination.  The proration
                  shall be based upon the number of days of such Vesting  period
                  prior to the date of such termination.

         Except as  otherwise  provided in the  pertinent  Option  Agreement,  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 Company 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 Company,  the cost of which examination shall be paid for by the
Company.

13.      EFFECT 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

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

         Except as otherwise provided in the pertinent Option Agreement,  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
Participant's  termination of employment,  directorship or  consultancy,  as the
case may be,  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.

14.      STOCK PURCHASE RIGHTS.
         ---------------------

        a. Rights to Purchase. Stock Purchase Rights may be issued either alone,
in addition to, or in tandem with other awards granted under the Plan. After the
Administrator  determines  that it will offer Stock  Purchase  Rights  under the
Plan, it shall advise the offeree in writing,  by means of an Agreement,  of the
terms, conditions and restrictions related to the offer, including the number of
Shares that the offeree  shall be  entitled  to  purchase,  the price to be paid
(which shall not be less than the par value of the Shares),  and the time within
which the offeree must accept such offer, which shall in no event exceed six (6)
months  from the date upon which the  Administrator  made the  determination  to
grant the Stock  Purchase  Right.  The offer shall be accepted by execution of a
Restricted Stock Purchase Agreement in the form determined by the Administrator.

        b. Repurchase Option. Unless the Administrator determines otherwise, the
Restricted Stock Purchase  Agreement shall grant the Company a repurchase option
exercisable  upon the voluntary or involuntary  termination  of the  purchaser's
employment with the Company for any reason (including death or Disability).  The
purchase price for Shares repurchased  pursuant to the Restricted Stock Purchase
Agreement  shall be the original  price paid by the purchaser and may be paid by
cancellation of any indebtedness of the purchaser to the Company. The repurchase
option shall lapse at a rate determined by the Administrator.

        c. Other  Provisions.  The  Restricted  Stock Purchase  Agreement  shall
contain such other terms,  provisions and conditions not  inconsistent  with the
Plan as may be  determined  by the  Administrator  in its  sole  discretion.  In
addition, the provisions of Restricted Stock Purchase Agreements need not be the
same with respect to each purchaser.

15.      PURCHASE FOR INVESTMENT.
         -----------------------

         Unless  the  offering  and sale of the  Shares  to be  issued  upon the
particular  exercise  of an  Option  or Stock  Purchase  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 Stock  Purchase
                  Right shall  warrant to the  Company,  prior to the receipt of
                  such Shares, 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 of
                  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.

         The Company may delay  issuance of the Shares until  completion  of any
action or obtaining of any consent which the Company deems  necessary  under any
applicable law (including,  without  limitation,  state securities or "blue sky"
laws.)

16.      DISSOLUTION OR LIQUIDATION OF THE COMPANY.
         -----------------------------------------

         Upon the  dissolution  or  liquidation  of the Company,  all Options or
Stock  Purchase  Rights  granted under this Plan which as of such date shall not
have been exercised 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,  (i) the  Participant  or the  Participant's
Survivors  will  have  the  right  immediately  prior  to  such  dissolution  or
liquidation  to exercise any Option or Stock  Purchase  Right to the extent that
the Option or Stock Purchase  Right is  exercisable  as of the date  immediately
prior to such dissolution or liquidation;  and (ii) if a Change in Control shall
have  occurred  within the twelve months  immediately  prior to the date of such
dissolution or liquidation,  such  Participant or such  Participant's  Survivors
will have the right  immediately  prior to such  dissolution  or  liquidation to
exercise any Option or Stock Purchase Right then outstanding whether or not such
Option or Stock Purchase Right is exercisable as of such date.

17.      ADJUSTMENTS.
         -----------

         Upon the occurrence of any of the following events,  the adjustments as
hereinafter provided shall be made, unless otherwise  specifically provided in a
pertinent Option Agreement or Restricted Stock Purchase 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 Company or 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 an  Option  or Stock  Purchase  Right may be
appropriately   increased  or   decreased   proportionately,   and   appropriate
adjustments  may be made  in the  purchase  price  per  share  to  reflect  such
subdivision,  combination  or stock  dividend.  The number of Shares  subject to
options to be granted (i) pursuant to  Paragraph 3 or to  directors  pursuant to
Paragraph 6(A)(f) shall also be proportionately  adjusted upon the occurrence of
such events,  except as the Administrator  shall otherwise determine in its sole
discretion  or (ii)  pursuant to  Paragraph  4(c) shall also be  proportionately
adjusted upon the occurrence of such events.

         B. Corporate Changes in Control.  In the event of a Corporate Change in
Control,

         (i) Each Option or Stock Purchase Right outstanding as of the date such
Corporate  Change in Control is  determined to have  occurred,  and which is not
then  exercisable  by  reason  of  Vesting  requirements,   shall  automatically
accelerate  the Vesting so that the Option or Stock  Purchase Right shall become
fully exercisable and Vested on the first to occur of (x) the date the Option or
Stock  Purchase Right becomes  Vested and  exercisable  under its original terms
(with respect only to such Options or Stock Purchase  Rights as otherwise  would
Vest during such one-year period under their terms),  (y) the first  anniversary
of the date such Corporate Change in Control is determined to have occurred, and
(z) the occurrence of an Involuntary Employment Action; and

         (ii) The Options or Stock Purchase  Rights so accelerated  shall remain
so exercisable  until the earlier of the original  expiration date of the Option
or Stock  Purchase  Right and the  earlier  termination  of the  Option or Stock
Purchase Right in accordance with the Plan and the Agreement.

         C.  Transactional  Changes in Control.  In the event of a Transactional
Change in Control,

         (i) Each Option or Stock Purchase Right outstanding as of the date such
Transactional  Change in Control is determined to have occurred shall be either:
(a) assumed by the  successor  corporation  (or its  parent) or replaced  with a
comparable  option or stock  purchase  right to  purchase  shares of the capital
stock of the successor  corporation (or its parent) on an equitable  basis,  (b)
terminated upon written notice to the  Participants  stating that all Options or
Stock Purchase  Rights (for purposes of this  Subparagraph  all Options or Stock
Purchase  Rights then  outstanding  shall be deemed to be  exercisable)  must be
exercised  within a specified  number of days  (which  shall not be less than 15
days) from the date such notice is given, at the end of which period the Options
or Stock Purchase  Rights shall  terminate,  or (c) terminated in exchange for a
cash payment equal to the excess of the Fair Market Value of the shares  subject
to such Options or Stock Purchase Rights (for purposes of this  Subparagraph all
Options then  outstanding  shall be deemed to be exercisable)  over the exercise
price thereof;  provided,  however,  that if any of the treatments of Options or
Stock Purchase Rights pursuant to this Plan set forth in clauses (a), (b) or (c)
above would make a Transactional  Change in Control  transaction  ineligible for
pooling-of-interest  accounting under APB No. 16 such that but for the nature of
such treatment such transaction  would otherwise be eligible for such accounting
treatment,  the  Committee  (or  the  Administrator  if no  Committee  has  been
appointed)  shall  have  the  ability  to  substitute  for  any  cash  or  other
consideration  payable under such  treatment  shares of Common Stock with a Fair
Market  Value  or  other  consideration  with  value  equal to the cash or other
consideration  that would otherwise be payable  pursuant to such treatment.  The
determination  of which of the  treatments set forth in clauses (a), (b) and (c)
above to provide and of  comparability  under  clause (a) above shall be made by
the Administrator and its determinations shall be final, binding and conclusive.

         (ii) Each Option or Stock Purchase Right that is assumed or replaced in
connection with a Transactional Change in Control shall automatically accelerate
so that the Option or Stock  Purchase Right shall become fully  exercisable  and
Vested  on the  first to occur of (x) the date the  Option  becomes  Vested  and
exercisable under its original terms (with respect only to such Options or Stock
Purchase  Rights as otherwise would Vest during such one-year period under their
terms),  (y) the  first  anniversary  of the date such  Transactional  Change in
Control is determined to have occurred, and (z) the occurrence of an Involuntary
Employment  Action.  The Options or Stock Purchase  Rights so accelerated  shall
remain so exercisable  until the earlier of the original  expiration date of the
Option and the earlier termination of the Option in accordance with the Plan and
the Agreement.

         D. Corporate Transaction.  In the event of a Corporate Transaction that
does not  constitute  a  Transactional  Change in  Control  or in the event of a
similar  event,  pursuant  to which  securities  of the  Company  or of  another
corporation  or entity are issued  with  respect  to the  outstanding  shares of
Common Stock,  a Participant  upon  exercising an Option or Stock Purchase Right
shall be entitled to receive for the purchase  price paid upon such exercise the
securities which would have been received if such Option or Stock Purchase Right
had been exercised prior to such Corporate Transaction.

         E. Modification of ISOs. Notwithstanding the foregoing, any adjustments
made pursuant to  Subparagraph  A, B, C, or D 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.

18.      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 Options or Stock  Purchase
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.

19.      FRACTIONAL SHARES.
         -----------------

         No  fractional  shares  shall be issued  under the Plan and the  person
exercising  such  right  shall  receive  from the  Company  cash in lieu of such
fractional shares equal to the Fair Market Value thereof.

20.      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.

21.      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  regulation  to be withheld from the
Participant's  salary,  wages  or  other  remuneration  in  connection  with the
exercise of an Option or a  Disqualifying  Disposition  (as defined in Paragraph
22) or the Vesting of Shares  issued  pursuant  to Stock  Purchase  Rights,  the
Company may deduct from any amounts due to the Participant, such as compensation
or  reimbursements,  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),
provided,  however,  that with  respect to persons  subject to Section 16 of the
1934 Act,  any such  withholding  arrangement  shall be in  compliance  with any
applicable  provisions  of Rule 16b-3  promulgated  under Section 16 of the 1934
Act.  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 2 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 for less
than the then Fair Market Value on the Participant's  payment of such additional
withholding.

22.      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.

23.      TERMINATION OF THE PLAN.
         -----------------------

         Unless  sooner  terminated  by the Board of  Directors,  the Plan shall
terminate on October 28,  2009,  and no Options or Stock  Purchase  Rights shall
thereafter  be granted  under the Plan.  All  Options or Stock  Purchase  Rights
granted  under the Plan  prior to that date  shall  remain in effect  until such
Options or Stock  Purchase  Rights shall have been  exercised or  terminated  in
accordance  with the terms and provisions of the Plan and the applicable  Option
Agreements or Restricted Stock Purchase  Agreements.  The Board of Directors may
terminate the Plan at any time;  provided,  however,  that any such  termination
will not  materially  impair any rights under any Option or Stock Purchase Right
theretofore made under the Plan without the consent of the Participant.

24.      AMENDMENT OF THE PLAN AND AGREEMENTS.
         ------------------------------------

         The Plan may be amended by the  stockholders  of the Company.  The Plan
may also be amended by the Board of Directors or the  Administrator,  including,
without  limitation,  to the extent  necessary to qualify any or all outstanding
Options  granted  under the Plan or  Options  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,  for as long as the  Company has a class of stock  registered  pursuant to
Section 12 of the 1934 Act and to the  extent  necessary  to qualify  the shares
issuable  upon exercise of any  outstanding  Options  granted,  or Options 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  stockholder  approval  shall be subject to obtaining such
stockholder  approval.  Any  modification  or  amendment  of the Plan shall not,
without the consent of a  Participant,  materially  adversely  affect his or her
rights under an Option or Stock Purchase Right previously granted to him or her.
With the  consent  of the  Participant  affected,  the  Administrator  may amend
outstanding  Option  Agreements or  Restricted  Stock  Purchase  Agreements in a
manner  which may be  materially  adverse  to the  Participant  but which is not
inconsistent with the Plan. In the discretion of the Administrator,  outstanding
Option Agreements or Restricted Stock Purchase  Agreements may be amended by the
Administrator in a manner which is not materially adverse to the Participant.

25.      EMPLOYMENT OR OTHER RELATIONSHIP.
         --------------------------------

         Nothing  in this  Plan or any  Option  Agreement  or  Restricted  Stock
Purchase  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.

         All  Options  and Stock  Purchase  Rights  shall  constitute  a special
incentive  payment to the  Participant  and shall not be taken  into  account in
computing  the  amount of  salary or  compensation  of the  Participant  for the
purpose  of   determining   any   benefits   under  any   pension,   retirement,
profit-sharing,  bonus,  life  insurance or other benefit plan of the Company or
under any agreement between the Company and the Participant, unless such plan or
agreement specifically provides otherwise.

26.      GOVERNING LAW.
         -------------

         This Plan shall be governed by and  construed  in  accordance  with the
laws of the State of Delaware,  the Company's state of incorporation.  Except as
otherwise  provided  in the  pertinent  Option  Agreement  or  Restricted  Stock
Purchase Agreement, the United States District Court for the Eastern District of
Virginia shall have exclusive  jurisdiction  over any and all disputes between a
Participant  and the Company  related to or arising out of Options or Restricted
Stock Purchase Rights granted under this Plan.

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