Document:

EXHIBIT 10.6

                                       119

<PAGE>

                          AMENDMENT OF PROMISSORY NOTE

US $500,000                                                     August 25, 2000
New Maturity Date:  November 25, 2000                        Ramsey, New Jersey
                    -----------------
This is a 3 month  extension and amendment of Promissory Note dated May 25, 2000
from tech  Electro  Industries,  Inc.  ("Maker") to Caspic  International,  Ltd.
("Holder"),  with the promise to pay to the order of the Holder or its  assigns,
the principal sum of five hundred thousand United States dollars ("US$500,000"),
with interest thereon from May 25, 2000, at the rate of twelve percent (12%) per
annum until fully paid on August 25, 2000. Such Note including its principal and
interest is now extended and amended as follows:

Tech  Electro  Industries,   Inc.  Promises  to  pay  to  the  order  of  Caspic
--------------------------------------------------------------------------------
International  Ltd. At Ramsey,  New Jersey or at such place as may be designated
--------------------------------------------------------------------------------
in writing by Holder or its assigns,  the principal  sum of five hundred  United
--------------------------------------------------------------------------------
States dollars  (US$500,000),  with interest  thereon from the date, until fully
--------------------------------------------------------------------------------
paid, at the rate of twelve percent (12%) per annum. Such principal and interest
--------------------------------------------------------------------------------
shall be payable as follows:  The principal sum of US$5000,000  shall be due and
--------------------------------------------------------------------------------
payable on November 25, 2000.  Interest shall continue to be paid monthly,  each
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25th of the month until the principal is paid in full. If not so paid and at the
--------------------------------------------------------------------------------
option of the Holder, or its assigns,  all principal and interest,  shall become
--------------------------------------------------------------------------------
immediately due and payable.
---------------------------
This Note is secured by a pledge of the  shares of  capital  stock of  Alphablet
Hospitality  Systems Inc. As set forth in that certain  Pledge  Agreement of the
parties executed simultaneous herewith.

This Note may be prepaid  anytime from time to time, in whole or in part without
penalty, premium or permission.

In the event that the Maker  defaults  in any of its  obligations  hereunder  or
under the Pledge  Agreement,  Holder  shall be  entitled to recover its costs of
collection of all amounts due hereunder, including reasonable attorney fees.

TECH ELECTRO INDUSTRIES, INC.

By: /s/ Ian Edmonds                                     By: /s/ Mimi Tan
   ---------------------                           -------------------------
     Ian Edmonds                                     Mimi Tan
     Vice President                                  Secretary of Corporation

                                       120

<PAGE>

                                  Exhibit 23.1<PAGE>

                                                                    EXHIBIT 10.1

                          SALIX PHARMACEUTICALS, LTD.
                            1996 STOCK OPTION PLAN
                         (as amended, September 2000)

     1.   Purposes of the Plan.  The purposes of this 1996 Stock Option Plan are
          --------------------
to attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to the Employees and Consultants
of the Company and to promote the success of the Company's business.  Options
granted hereunder may be either Incentive Stock Options or Nonstatutory Stock
Options, at the discretion of the Board and as reflected in the terms of the
written option agreement.

     2.   Definitions.  As used herein, the following definitions shall apply:
          -----------

          (a) "Administrator" shall mean the Board or any of its Committees
               -------------
appointed pursuant to Section 4 of the Plan.

          (b) "Applicable Laws" means the requirements relating to the
               ---------------
administration of stock option plans under the corporate laws and securities
regulations of applicable Canadian provincial securities laws, U.S. state
corporate laws, U.S. federal and state securities laws, the Code, any stock
exchange or quotation system on which the Common Stock is listed or quoted and
the applicable laws of any foreign country or jurisdiction where Options are, or
will be, granted under the Plan.

          (c) "Associate" shall mean (i)  any company of which such person or
               ---------
company beneficially owns, directly or indirectly, voting securities carrying
more than 10 per cent of the voting rights attached to all voting securities of
the company for the time being outstanding, (ii) any partner of that person or
company, (iii) any trust or estate in which such person or company has a
substantial beneficial interest or as to which such person or company serves as
trustee or in a similar capacity, (iv) any relative of that person who resides
in the same home as that person, (v) any person of the opposite sex who resides
in the same home as that person and to whom that person is married or with whom
that person is living in a conjugal relationship outside marriage, or (vi) any
relative of a person mentioned in clause (v) who has the same home as that
person.

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

          (e) "Change in Control" shall mean a change in control of a nature
               -----------------
that would required to be reported in response to item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Exchange Act as such Schedule, Regulation
and Act were in effect on the date of adoption of this Plan by the Board,
assuming that such Schedule, Regulation and Act applied to the Company, provided
that such a change in control shall be deemed to have occurred at such time as:

              (i)    any "person" (as that term is used in Section 13(d) and
14(d)(2) of the Exchange Act) (other than the Company, a Subsidiary or an
Affiliate of the Company) becomes, directly or indirectly, the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act) of
<PAGE>

securities representing a 33-1/3% or more of the combined voting power for
election of members of the Board of the then outstanding voting securities of
the Company or any successor of the Company;

              (ii)   during any period of two consecutive years or less,
individuals who at the beginning of such period constituted the Board of the
Company cease, for any reason, to constitute at least a majority of the Board,
unless the election of nomination for election of each new member of the Board
was approved by a vote of at least two-thirds of the members of the Board then
still in office who were members of the Board at the beginning of the period;

              (iii)  the equityholders of the Company approve any merger or
consolidation to which the Company is a party as a result of which the persons
who were equityholders of the Company immediately prior to the effective date of
the merger or consolidation (and excluding, however, any shares held by any
party to such merger or consolidation and their affiliates) shall have
beneficial ownership of less than 50% of the combined voting power for election
of members of the Board (or equivalent) of the surviving entity following the
effective date of such merger or consolidation; or

              (iv)   the equityholders of the Company approve any merger or
consolidation as a result of which the equity interests in the Company shall be
changed, converted or exchanged (other than a merger with a wholly-owned
Subsidiary of the Company) or any liquidation of the Company or any sale or
other disposition of all or substantially all of the assets of the Company.

     However, in no event shall a Change in Control be deemed to have occurred
with respect to a Optionee, if the Optionee is part of a purchasing group which
consummates the Change in Control transaction.  The Optionee shall be deemed
"part of a purchasing group" for purposes of the preceding sentence if the
Optionee is either directly or indirectly an equity participant in the
purchasing group (except for (i) passive ownership of less than 3% of the stock
of the purchasing group, or (ii) ownership of equity participation in the
purchasing group which is otherwise not significant, as determined prior to the
Change in Control by the Committee).

          (f) "Code" shall mean the Internal Revenue Code of 1986, as amended,
               ----
or any successor thereto.

          (g) "Committee" shall mean any Committee appointed by the Board of
               ---------
Directors in accordance with Section 4(a) of the Plan, if one is appointed.

          (h) "Common Stock" shall mean the Common Stock of the Company.
               ------------

          (i) "Company" shall mean Salix Pharmaceuticals, Ltd., a British Virgin
               -------
Islands International Business Company.

          (j) "Consultant" shall mean any person, including an advisor, engaged
               ----------
by the Company or any Parent or Subsidiary to render services to such entity,
and any director of the Company whether compensated for such services or not.
<PAGE>

          (k) "Continuous Status as an Employee or Consultant" shall mean the
               ----------------------------------------------
absence of any interruption or termination of service as an Employee or
Consultant.  Continuous Status as an Employee or Consultant shall not be
considered interrupted in the case of sick leave, military leave, or any other
leave of absence approved by the Administrator; provided that such leave is for
                                                --------
a period of not more than 90 days or reemployment upon the expiration of such
leave is guaranteed by contract or statute.  For purposes of this Plan, a change
in status from Employee to Consultant or from Consultant to Employee will not
constitute a termination of employment.

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

          (m) "Employee" shall mean any person, including officers and Named
               --------
Executives (including officers and Named Executives who are also directors),
employed by the Company or any Parent or Subsidiary of the Company.  The payment
of a director's fee by the Company shall not be sufficient to constitute
"employment" by the Company.

          (n) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
               ------------
amended.

          (o) "Fair Market Value" means, as of any date, the value of Common
               -----------------
Stock determined as follows:

              (i)    Subject to clauses (ii) and (iii) hereof, if the Common
Stock is listed on The Toronto Stock Exchange, its Fair Market Value per Share
shall be not less than the closing price of the Common Stock on The Toronto
Stock Exchange on the last business day preceding the date of grant;

              (ii)   If the Common Stock is listed principally on any
established stock exchange or national market system in the United States,
including without limitation the National Market System of the National
Association of Securities Dealers, Inc. Automated Quotation ("NASDAQ") System,
its Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported, as quoted on such exchange or system for
the last market trading day prior to the time of determination) as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable;

              (iii)  If the Common Stock is quoted principally on the NASDAQ
System (but not on The National Market System thereof) or regularly quoted by a
recognized securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean between the high bid and low asked prices for the
Common Stock; or

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

     In the event the Fair Market Value is determined in accordance with clause
(i) above, such Fair Market Value shall be priced in United States dollars
converted at the then prevailing exchange rate between Canada and the United
States.
<PAGE>

          (p)  "Incentive Stock Option" shall mean an Option intended to qualify
                ----------------------
as an incentive stock option within the meaning of Section 422 of the Code.

          (q)  "Named Executive" shall mean any individual who, on the last day
                ---------------
of the Company's fiscal year, is the chief executive officer of the Company (or
is acting in such capacity) or among the four highest compensated officers of
the Company (other than the chief executive officer).  Such officer status shall
be determined pursuant to the executive compensation disclosure rules under the
Exchange Act.

          (r)  "Nonstatutory Stock Option" shall mean an Option not intended to
                -------------------------
qualify as an Incentive Stock Option.

          (s)  "Officer" shall mean a person who is an officer of the Company
                -------
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder, or any successor thereto and (a) every
director or senior officer of the Company, (b) every director or senior officer
of a company that is itself an insider or subsidiary of the Company, (c) any
person or company who beneficially owns, directly or indirectly, voting
securities of the Company or who exercises control or direction over voting
securities of the Company or a combination of both carrying more than 10% of the
voting rights attached to all voting securities of the Company for the time
being outstanding other than voting securities held by the person or company as
underwriter in the course of a distribution, and (d) the Company where it has
purchased, redeemed or otherwise acquired any of its securities, for so long as
it holds any of its securities;

          (t)  "Option" shall mean a stock option granted pursuant to the Plan.
                ------

          (u)  "Optioned Stock" shall mean the Common Stock subject to an
                --------------
Option.

          (v)  "Optionee" shall mean an Employee or Consultant who receives an
                --------
Option.

          (w)  "Outstanding Issue" shall mean the number of Shares that are
outstanding immediately prior to the share issuance in question, excluding
Shares issued pursuant to share compensation arrangements over the preceeding
one-year period.

          (x)  "Parent" shall mean a "parent corporation," whether now or
                ------
hereafter existing, as defined in Section 424(e) of the Code.

          (y)  "Plan" shall mean this 1996 Stock Option Plan, as amended.
                ----

          (z)  "Rule 16b-3" shall mean Rule 16b-3 promulgated under the Exchange
                ----------
Act as the same may be amended from time to time, or any successor provision.

          (aa) "Share" shall mean a share of the Common Stock, as adjusted in
                -----
accordance with Section 14 of the Plan.
<PAGE>

          (bb) "Subsidiary" shall mean a "subsidiary corporation," whether now
                ----------
or hereafter existing, as defined in Section 424(f) of the Code.

     3.   Stock Subject to the Plan.  Subject to the provisions of Section 14 of
          -------------------------
the Plan, the maximum aggregate number of shares that may be optioned and sold
under the Plan is 2,677,207 provided that in no event shall the number of shares
                            --------
that may be optioned and sold under the Plan exceed the sum of (i) 2,238,382
shares of Common Stock plus (ii) such number of shares as are subject to
outstanding and unexercised stock options under the Company's 1994 Stock Plan,
as of the date of adoption of this Plan by the stockholders, which options are
thereafter canceled or otherwise terminated without exercise.  The Shares may be
authorized, but unissued, or reacquired Common Stock.

     If an Option should expire or become unexercisable for any reason without
having been exercised in full, the unpurchased Shares that were subject thereto
shall, unless the Plan shall have been terminated, become available for future
grant under the Plan.  Notwithstanding any other provision of the Plan, shares
issued under the Plan and later repurchased by the Company shall not become
available for future grant or sale under the Plan.

     4.   Administration of the Plan.
          ---------------------------

          (a)  Procedure.
               ---------

               (i)    Multiple Administrative Bodies.  The Plan may be
                      ------------------------------

administered by different Committees with respect to different groups of
Employees and Consultants.

               (ii)   Section 162(m). To the extent that the Administrator
                      --------------
determines it to be desirable to qualify Options granted hereunder as
"performance-based compensation" within the meaning of Section 162(m) of the
Code, the Plan shall be administered by a Committee of two or more "outside
directors" within the meaning of Section 162(m) of the Code.

               (iii)  Rule 16b-3.  To the extent desirable to qualify
                      ----------
transactions hereunder as exempt under Rule 16b-3, the transactions contemplated
hereunder shall be structured to satisfy the requirements for exemption under
Rule 16b-3.

               (iv)   Other Administration.  Other than as provided above, the
                      --------------------
Plan shall be administered by (A) the Board or (B) a Committee, which committee
shall be constituted to satisfy Applicable Laws.

          (b)  Powers of the Administrator.   Subject to compliance with
               ---------------------------
Applicable Laws, and further subject to the provisions of the Plan and in the
case of a Committee, the specific duties delegated by the Board to such
Committee, the Administrator shall have the authority, in its discretion:

               (i)    to determine the Fair Market Value of the Common Stock, in
accordance with Section 2(n) of the Plan;
<PAGE>

               (ii)   to select the Employees and Consultants to whom Options
may from time to time be granted hereunder;

               (iii)  to determine whether and to what extent Options are
granted hereunder;

               (iv)   to determine the number of shares of Common Stock to be
covered by each such award granted hereunder;

               (v)    to approve forms of agreement for use under the Plan;

               (vi)   to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder (including, but not
limited to, the share price and any restriction or limitation, or any vesting
acceleration or waiver of forfeiture restrictions regarding any Option and/or
the shares of Common Stock relating thereto, based in each case on such factors
as the Administrator shall determine, in its sole discretion);

               (vii)  to determine whether, to what extent and under what
circumstances Common Stock and other amounts payable with respect to an award
under this Plan shall be deferred either automatically or at the election of the
participant (including providing for and determining the amount, if any, of any
deemed earnings on any deferred amount during any deferral period);

               (viii) to construe and interpret the terms of the Plan and
awards granted pursuant to the Plan; and

               (ix)   to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of the Common Stock covered
by such Option shall have declined since the date the Option was granted;

               (x)    to institute an option exchange program;

          (c)  Effect of Administrator's Decision.  All decisions,
               ----------------------------------
determinations and interpretations of the Administrator shall be final and
binding on all Optionees and any other holders of any Options.

     5.   Eligibility.
          -----------

          (a)  Nonstatutory Stock Options may be granted only to Employees and
Consultants.  Incentive Stock Options may be granted only to Employees.  An
Employee or Consultant who has been granted an Option may, if he or she is
otherwise eligible, be granted an additional Option or Options.

          (b)  Each Option shall be designated in the written option agreement
as either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such
<PAGE>

designations, to the extent that the aggregate Fair Market Value of Options that
are exercisable for the first time by an Optionee during any calendar year
(under all plans of the Company or any Parent or Subsidiary) exceeds $100,000,
such excess Options shall be treated as Nonstatutory Stock Options.

          (c) For purposes of Section 5(b), Incentive Stock Options shall be
taken into account in the order in which they were granted, and the Fair Market
Value of the Shares shall be determined as of the time the Option with respect
to such Shares is granted.

          (d) The Plan shall not confer upon any Optionee any right with respect
to continuation of employment or consulting relationship with the Company, nor
shall it interfere in any way with his or her right or the Company's right to
terminate his or her employment or consulting relationship at any time, with or
without cause.

          (e) The terms of any Option shall comply with Applicable Laws.

          (f)  Not more than 50% of the total number of shares reserved under
the Plan shall be allocated to any one participant under the Plan within any
twelve calendar month period.

          (g) The maximum number of shares that may be allocated to any one
participant upon the grant of stock Options may not exceed 5% of the issued and
outstanding Common Stock at the time of grant.

          (h) The following limitations shall apply to grants of Options:

              (i)    No Employee or Consultant shall be granted, in any fiscal
year of the Company, Options to purchase more than 250,000 Shares.

              (ii)   In connection with his or her initial service, an Employee
or Consultant may be granted Options to purchase up to an additional 500,000
Shares which shall not count against the limit set forth in subsection (i)
above.

              (iii)  The foregoing limitations shall be adjusted proportionately
in connection with any change in the Company's capitalization as described in
Section 13.

              (iv)   If an Option is canceled in the same fiscal year of the
Company in which it was granted (other than in connection with a transaction
described in Section 13), the canceled Option will be counted against the limits
set forth in subsections (i) and (ii) above. For this purpose, if the exercise
price of an Option is reduced, the transaction will be treated as a cancellation
of the Option and the grant of a new Option.

     6.   Term of Plan.  The Plan shall become effective upon the earlier to
          ------------
occur of its adoption by the Board of Directors or its approval by the
stockholders of the Company.  It shall continue in effect for a term of ten (10)
years, unless sooner terminated under Section 16 of the Plan.
<PAGE>

     7.   Term of Option.  The term of each Option shall be the term stated in
          --------------
the Option Agreement; provided, however, that in the case of an Incentive Stock
                      --------  -------
Option, the term shall be no more than ten (10) years from the date of grant
thereof or such shorter term as may be provided in the Option Agreement.
However, in the case of an Incentive Stock Option granted to an Optionee who, at
the time the Option is granted, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary, the term of the Option shall be five (5) years from the date of
grant thereof or such shorter term as may be provided in the Option Agreement.

     8.   Limitation on Grants to Officers. Subject to adjustment as provided in
          --------------------------------
this Plan and subject to the other limitations set forth herein:

          (a) The maximum number of Shares which may be reserved for issuance to
all Officers under the Plan may not exceed 10% of the Outstanding Issue.

          (b) The maximum number of Shares which may be issued to Officers under
the Plan in any 12 month period shall be 10% of the Outstanding Issue.

          (c) The maximum number of Shares which may be issued to any one
Officer and such Officer's Associates under the Plan in any 12 month period
shall be 5% of the Outstanding Issue.

     9.   Option Exercise Price and Consideration.
          ---------------------------------------

          (a) The per Share exercise price for the Shares to be issued pursuant
to exercise of an Option shall be such price as is determined by the
Administrator, but shall be subject to the following:

              (i)    In the case of an Incentive Stock Option

                     (A) granted to an Employee who, at the time of the grant of
such Incentive Stock Option, owns stock representing more than ten percent (10%)
of the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of grant;

                     (B) granted to any Employee, the per Share exercise price
shall be no less than 100% of the Fair Market Value per Share on the date of
grant.

              (ii)   In the case of a Nonstatutory Stock Option granted to a
person who, at the time of the grant of such Option, is a Named Executive of the
Company, the per share Exercise Price shall be no less than 100% of the Fair
Market Value on the date of grant;

          (b) The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant) and may consist entirely of (1) cash, (2)
check, (3) other Shares that (x) in the case of Shares acquired upon exercise of
an Option
<PAGE>

either have been owned by the Optionee for more than six months on the date of
surrender or were not acquired, directly or indirectly, from the Company, and
(y) have a Fair Market Value on the date of surrender equal to the aggregate
exercise price of the Shares as to which said Option shall be exercised, (4)
authorization from the Company to retain from the total number of Shares as to
which the Option is exercised that number of Shares having a Fair Market Value
on the date of exercise equal to the exercise price for the total number of
Shares as to which the Option is exercised, (5) delivery of a properly executed
exercise notice together with irrevocable instructions to a broker to deliver
promptly to the Company the amount of sale or loan proceeds required to pay the
exercise price, (6) any combination of the foregoing methods of payment, or (7)
such other consideration and method of payment for the issuance of Shares to the
extent permitted under Applicable Laws. No Optionee shall receive financial
assistance from the Company in connection with the exercise of any Option and
the purchase price of the Common Stock issuable pursuant to any Option shall be
paid in full prior to the issuance of such Common Stock. In making its
determination as to the type of consideration to accept, the Administrator shall
consider if acceptance of such consideration may be reasonably expected to
benefit the Company.

     10.  Exercise of Option.
          ------------------

          (a)  Procedure for Exercise; Rights as a Stockholder.  Any Option
               -----------------------------------------------
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Administrator, including performance criteria with respect
to the Company and/or the Optionee, and as shall be permissible under the terms
of the Plan.

               An Option may not be exercised for a fraction of a Share.

               An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Administrator, consist of any
consideration and method of payment allowable under Section 9(b) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a stockholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) such stock certificate promptly upon exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 14 of the Plan.

          Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.

          (b)  Termination of Status as an Employee or Consultant.  In the event
               ---------------------------------------------------
of termination of an Optionee's Continuous Status as an Employee or Consultant,
such Optionee may, but only within thirty (30) days (or such other period of
time, not exceeding three (3) months in the
<PAGE>

case of an Incentive Stock Option or six (6) months in the case of a
Nonstatutory Stock Option, as is determined by the Administrator, with such
determination in the case of an Incentive Stock Option being made at the time of
grant of the Option) after the date of such termination (but in no event later
than the date of expiration of the term of such Option as set forth in the
Option Agreement), exercise his or her Option to the extent that he or she was
entitled to exercise it at the date of such termination. To the extent that the
Optionee was not entitled to exercise the Option at the date of such
termination, or if the optionee does not exercise such Option (which he or she
was entitled to exercise) within the time specified herein, the Option shall
terminate.

          (c) Disability of Optionee.  Notwithstanding the provisions of Section
              ----------------------
10(b) above, in the event of termination of an Optionee's Continuous Status as
an Employee or Consultant as a result of his or her disability, he or she may,
but only within twelve (12) months (or such other period of time not exceeding
twelve (12) months as is determined by the Administrator, with such
determination in the case of an Incentive Stock Option being made at the time of
grant of the Option) from the date of such termination (but in no event later
than the date of expiration of the term of such Option as set forth in the
Option Agreement), exercise his or her Option to the extent he or she was
entitled to exercise it at the date of such termination.  To the extent that he
or she was not entitled to exercise the Option at the date of termination, or if
he does not exercise such Option (which he was entitled to exercise) within the
time specified herein, the Option shall terminate.

          (d) Death of Optionee.   In the event of the death of an Optionee:
              -----------------

              (i)    during the term of the Option who is at the time of his
death an Employee or Consultant of the Company and who shall have been in
Continuous Status as an Employee or Consultant since the date of grant of the
Option, the Option may be exercised, at any time within six (6) months (or such
other period of time, not exceeding six (6) months, as is determined by the
Administrator, with such determination in the case of an Incentive Stock Option
being made at the time of grant of the Option) following the date of death (but
in no event later than the date of expiration of the term of such Option as set
forth in the Option Agreement), by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance but only to
the extent of the right to exercise that would have accrued had the Optionee
continued living and remained in Continuous Status as an Employee or Consultant
three (3) months (or such other period of time as is determined by the
Administrator as provided above) after the date of death, subject to the
limitation set forth in Section 5(b); or

              (ii)   within thirty (30) days (or such other period of time not
exceeding three (3) months as is determined by the Administrator, with such
determination in the case of an Incentive Stock Option being made at the time of
grant of the Option) after the termination of Continuous Status as an Employee
or Consultant, the Option may be exercised, at any time within twelve (12)
months following the date of death (but in no event later than the date of
expiration of the term of such Option as set forth in the Option Agreement), by
the Optionee's estate or by a person who acquired the right to exercise the
Option by bequest or inheritance, but only to the extent of the right to
exercise that had accrued at the date of termination.
<PAGE>

     11.  Withholding Taxes.  As a condition to the exercise of Options granted
          -----------------
hereunder, the Optionee shall make such arrangements as the Administrator may
require for the satisfaction of any federal, state, local or foreign withholding
tax obligations that may arise in connection with the exercise, receipt or
vesting of such Option.  The Company shall not be required to issue any Shares
under the Plan until such obligations are satisfied.

     12.  Satisfaction of Withholding Tax Obligations.  At the discretion of the
          -------------------------------------------
Administrator, Optionees may satisfy withholding obligations as provided in this
paragraph.  When an Optionee incurs tax liability in connection with an Option
which tax liability is subject to tax withholding under applicable tax laws, and
the Optionee is obligated to pay the Company an amount required to be withheld
under applicable tax laws, the Optionee may satisfy the withholding tax
obligation by one or some combination of the following methods: (a) by cash
payment, or (b) out of Optionee's current compensation, (c) if permitted by the
Administrator, in its discretion, by surrendering to the Company Shares that (i)
in the case of Shares previously acquired from the Company, have been owned by
the Optionee for more than six months on the date of surrender, and (ii) have a
fair market value on the date of surrender equal to or less than Optionee's
marginal tax rate times the ordinary income recognized, or (d) by electing to
have the Company withhold from the Shares to be issued upon exercise of the
Option that number of Shares having a fair market value equal to the amount
required to be withheld.  For this purpose, the fair market value of the Shares
to be withheld shall be determined on the date that the amount of tax to be
withheld is to be determined (the "Tax Date").

          All elections by an Optionee to have Shares withheld to satisfy tax
withholding obligations shall be made in writing in a form acceptable to the
Administrator.

     13.  Non-Transferability of Options.   Unless determined otherwise by the
          ------------------------------
Administrator, an Option may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee.  If the Administrator makes an Option
transferable, such Option shall contain such additional terms and conditions as
the Administrator deems appropriate.

     14.  Adjustments Upon Changes in Capitalization or Merger.
          -----------------------------------------------------

          (a) Changes in Capitalization.  Subject to any required action by the
              -------------------------
stockholders of the Company, the number of shares of Common Stock covered by
each outstanding Option, the number of shares of Common Stock that have been
authorized for issuance under the Plan but as to which no Options have yet been
granted or which have been returned to the Plan upon cancellation or expiration
of an Option, the maximum number of shares of Common Stock for which Options may
be granted to any employee under Section 8 of the Plan, and the price per share
of Common Stock covered by each such outstanding Option, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock, or any other
increase or decrease in the number of issued shares of Common Stock effected
without receipt of consideration by the Company; provided, however, that
                                                 --------  -------
conversion of any convertible securities of the Company shall not be deemed to
have been "effected without receipt of consideration."  Such adjustment shall
<PAGE>

be made by the Administrator, whose determination in that respect shall be
final, binding and conclusive. 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 of Common Stock
subject to an Option.

          (b) Dissolution or Liquidation.  In the event of the proposed
              --------------------------
dissolution or liquidation of the Company, the Board shall notify the Optionee
as soon as practicable prior to the effective date of such proposed action.  To
the extent it has not been previously exercised, the Option will terminate
immediately prior to the consummation of such proposed action.

          (c) Acceleration upon Change in Control.  In the event of a Change in
              -----------------------------------
Control of the Company, all outstanding options granted under the Plan shall
become vested and immediately and fully exercisable, and may either (i) be
assumed or an equivalent option or right shall be substituted by such successor
corporation or a parent or subsidiary of such successor corporation or (ii)
terminate 10 days after the Administrator shall notify the Optionee of such
vesting and termination.  For the purposes of this paragraph, the Option shall
be considered assumed if, following the merger or sale of assets, the option
confers the right to purchase or receive, for each Share of Optioned Stock
subject to the Option immediately prior to the merger or sale of assets, the
consideration (whether stock, cash, or other securities or property) received in
the merger or sale of assets by holders of Common Stock for each Share held on
the effective date of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding Shares); provided, however, that if such consideration received
in the merger or sale of assets is not solely common stock of the successor
corporation or its Parent, the Administrator may, with the consent of the
successor corporation, provide for the consideration to be received upon the
exercise of the Option, for each Share of Optioned Stock subject to the Option,
to be solely common stock of the successor corporation or its Parent equal in
fair market value to the per share consideration received by holders of Common
Stock in the merger or sale of assets.

          (e) Certain Distributions.  In the event of any distribution to the
              ---------------------
Company's shareholders of securities of any other entity or other assets (other
than dividends payable in cash or stock of the Company) without receipt of
consideration by the Company, the Administrator may, in its discretion,
appropriately adjust the price per share of Common Stock covered by each
outstanding Option to reflect the effect of such distribution.

     15.  Time of Granting Options.  The date of grant of an Option shall, for
          ------------------------
all purposes, be the date on which the Administrator makes the determination
granting such Option or such other date as is determined by the Administrator.
Notice of the determination shall be given to each Employee or Consultant to
whom an Option is so granted within a reasonable time after the date of such
grant.

     16.  Amendment and Termination of the Plan.
          -------------------------------------

          (a) Amendment and Termination.  The Board may amend or terminate the
              -------------------------
Plan from time to time in such respects as the Board may deem advisable.
<PAGE>

          (b) Stockholder Approval.  The Company shall obtain stockholder
              ---------------------
approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.

          (c) Effect of Amendment or Termination.  Any such amendment or
              ----------------------------------
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and
the Board, which agreement must be in writing and signed by the Optionee and the
Company.

     17.  Conditions Upon Issuance of Shares.  Shares shall not be issued
          ----------------------------------
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with
Applicable Laws and shall be further subject to the approval of counsel for the
Company with respect to such compliance.

          As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.

     18.  Reservation of Shares.   The Company, during the term of this Plan,
          ---------------------
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.  The inability of the
Company to obtain authority from any regulatory body having jurisdiction, which
authority is deemed by the Company's counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.

     19.  Option Agreement.   Options shall be evidenced by written option
          ----------------
agreements in such form as the Board shall approve.

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