Document:

EXHIBIT 4.1

                   COMMON STOCK AND WARRANT PURCHASE AGREEMENT

      COMMON STOCK AND WARRANT PURCHASE AGREEMENT (this "Agreement") made as of
the 16th day of February, 2001 by and among EP MEDSYSTEMS, INC. (the "Company")
and the entities listed on Schedule I hereto (each, a "Purchaser" and
collectively, the "Purchasers").

                                    RECITALS

      WHEREAS, the Company desires to issue and sell to the Purchasers (i) an
aggregate of 1,625,000 shares of its authorized but unissued Common Stock (as
defined in Section 1.1) and (ii) warrants to purchase an aggregate of 812,500
shares of Common Stock; and

      WHEREAS, each Purchaser desires to purchase that number of shares of
Common Stock and warrants shown next to its name on Schedule I hereto, all upon
the terms and conditions set forth herein.

      NOW, THEREFORE, in consideration of the mutual promises herein made, and
in consideration of the representations, warranties and covenants herein
contained, the parties hereto agree as follows:

      SECTION 1. SALE AND PURCHASE OF COMMON STOCK AND WARRANTS; CLOSING

            1.1 Subscription, Sale and Purchase.

                  (a) Upon the terms and subject to the conditions of this
Agreement, on the Closing Date (as hereinafter defined) the Company agrees to
issue, sell and deliver to the Purchasers, and the Purchasers agree to purchase
from the Company, an aggregate of (i) 1,625,000 shares of the Company's Common
Stock, $.001 stated value per share (the "Common Stock") and (ii) warrants to
purchase an aggregate of 812,500 shares of Common Stock (the "Warrants" and
together with the Common Shares, the "Securities"). Hereinafter, "Common Shares"
means the shares of Common Stock purchased by the Purchasers hereunder.

                  (b) The quantity and purchase price for the Securities to be
purchased by each Purchaser is as set forth on Schedule I hereto (the "Purchase
Price").

            1.2 Closing.

                  (a) The closing of the issuance and sale of the Securities to
the Purchasers hereunder shall occur in such location and manner (i.e., by
telecopy exchange of signature pages with originals to follow by overnight
delivery) as the parties may mutually agree. As used herein "Closing" shall mean
the closing of the issuance and sale of the Securities to the Purchasers
hereunder and the "Closing Date" shall mean the date on which such Closing takes
place. The Closing Date shall be the fifth (5th) business day following approval
by the Company's shareholders of the issuance and sale of the Securities to the
Purchasers pursuant to this Agreement; provided, however, in no event shall the
Closing Date be after April 30, 2001.

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                  (b) At the Closing (or within three (3) business days after
the Closing Date), against satisfaction or waiver of each of the conditions set
forth in Sections 4 and 5, the Company shall deliver to each Purchaser (i) stock
certificates representing the Common Stock to be purchased by each such
Purchaser, duly executed by the Company, registered in each such Purchaser's
name (or the name of its nominee), free of all restrictive and other legends
(other than the legend specified in Section 8.2 and otherwise in form for good
delivery) and (ii) a Warrant for Warrant Shares (as defined in the Warrant), all
in the quantities set forth in Schedule I. At the Closing, against such delivery
of said stock certificates and Warrants (or evidence satisfactory to the
Purchasers that the stock certificates and Warrants will be delivered to the
Purchasers within three (3) business days after the Closing Date) and subject to
the satisfaction or waiver of each of the conditions set forth in Sections 4 and
5, the Purchasers will deliver to the Company, by wire transfer to a bank in the
United States specified by the Company for the account of the Company, funds in
an amount equal to the Purchase Price for the Securities being purchased
hereunder. The Purchase Price shall be allocated based on $1.99 per Common Share
and $.02 per Warrant Share.

            1.3 Nature of Obligations. The Company shall not be obligated to
issue and sell less than those Securities specified on Schedule I to each
Purchaser opposite its name. In committing to purchase the Securities under this
Section 1, each Purchaser is contracting severally (and not jointly) to purchase
only the number of Securities specified on Schedule I opposite its name. No
Purchaser shall be obligated to purchase any Securities unless all of the
Securities to be purchased by it as shown on Schedule I are tendered for
purchase. The Company shall pay all costs and expenses (i) incurred by it in
connection with this Agreement and contemplated transaction and (ii) provided
the Purchase Price for the Securities being purchased by Cardiac Capital, LLC is
received on or before the close of business April 30, 2001, the costs and
expenses of Cardiac Capital, LLC and its legal counsel in connection with this
Agreement and the contemplated transactions incurred through the date hereof, up
to an aggregate of $10,000.

      SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY

      The Company represents and warrants to each Purchaser as follows:

            2.1 Organization and Good Standing. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of New Jersey and has all requisite power and authority, and all necessary
licenses and permits, to own and lease its properties and assets and to conduct
its business as now conducted. Each subsidiary as referred to in the Company
Reports (as hereinafter defined) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite power and authority, and all necessary
licenses and permits, to own and lease its properties and assets and to conduct
its business as now conducted. The Company and its subsidiaries are each
qualified to do business as a foreign corporation and are in good standing in
all states where the conduct of their respective businesses or their ownership
or leasing of property requires such qualification, except where the failure to
so qualify would not have a material adverse effect on the Company's and the
subsidiaries' business, properties, assets, operations or condition (financial
or otherwise), taken as a whole.

            2.2 Authorization. The Company has all requisite power and authority
to execute and deliver this Agreement and each other agreement required to be
executed and delivered by it pursuant to this Agreement (collectively, the
"Company Agreements") and to carry out the transactions contemplated hereby and
thereby. The execution, delivery and performance by the Company of this
Agreement, and each other Company Agreement have been duly authorized by all
requisite corporate

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action, and this Agreement has been duly executed and delivered by the Company
and constitutes (and, when executed and delivered against payment therefor as
contemplated herein, each other Company Agreement will constitute) the valid and
binding obligation of the Company, enforceable against the Company in accordance
with their respective terms.

            2.3 No Conflict with Law or Documents. The execution, delivery and
performance of this Agreement or any Company Agreement by the Company, the
issuance of the Common Shares sold hereunder, the issuance of the Warrant Shares
upon exercise of the Warrants and the consummation by the Company of the
transactions contemplated hereby and thereby do not and will not violate any
provision of law, any rule or regulation of any governmental authority, or any
judgment, decree or order of any court binding on the Company and, do not and
will not conflict with or result in any material breach of any of the terms,
conditions or provisions of, or constitute a default under, or result in the
creation of any lien, security interest, charge or encumbrance upon any of the
properties, assets or outstanding stock of the Company under its Amended and
Restated Certificate of Incorporation or By-Laws, or any material indenture,
mortgage, lease, agreement or other instrument to which the Company is a party
or by which it or any of its properties is bound (except for such conflicts,
defaults, terminations, amendments, accelerations, cancellations and violations
under any such indenture, mortgage, lease, agreement or other instrument as
would not, individually or in the aggregate, have a material adverse effect on
the Company and its subsidiaries' business, properties, assets, operations or
condition (financial or otherwise) taken as a whole).

            2.4 Capital Stock of Company.

                  (a) The authorized capital stock of the Company consists of:
(i) 5,000,000 shares of preferred stock of the Company, no par value per share,
of which no shares are issued and outstanding; and (ii) 25,000,000 shares of
Common Stock, no par value, $.00l stated value per share, of which 12,023,167
shares are issued and outstanding as of the date hereof (excluding the offering
contemplated hereunder) and all such outstanding shares (including the offering
contemplated hereunder) are validly issued, fully paid and nonassessable, (iii)
1,000,000 shares of Common Stock reserved for issuance pursuant to the Company's
1995 Long Term Incentive Plan , (iv) 360,000 shares of Common Stock reserved for
issuance pursuant to the Company's 1995 Director Option Plan, and (v) 1,167,000
shares of Common Stock reserved for issuance pursuant to existing non-plan stock
options; of which with respect to the 1995 Long Term Incentive Plan, the 1995
Director Option Plan and other non-plan stock options, an aggregate of 1,162,560
options have been granted and are outstanding as of December 31, 2000. A further
362,250 shares of Common Stock are reserved for issuance pursuant to outstanding
warrants issued pursuant to that certain Common Stock and Warrant Purchase
Agreement dated as of August 31, 1999, as subsequently amended.

                  (b) There are no preemptive or similar rights to purchase or
otherwise acquire shares of capital stock of the Company pursuant to any
provision of law or the Amended and Restated Certificate of Incorporation or
By-Laws of the Company or by agreement or otherwise. Except as set forth in this
Section 2.4, there are no outstanding subscriptions, warrants, options or other
rights or commitments of any character to subscribe for or purchase from the
Company, or obligating the Company to issue, any shares of capital stock of the
Company or any securities convertible into or exchangeable for such shares.

            2.5 Valid Issuance of the Securities. The Securities when issued,
sold and delivered to each Purchaser in accordance with this Agreement will be
duly and validly issued, fully paid and non-

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assessable. There are no New Jersey state or city taxes, fees or other charges
payable in connection with the execution or delivery of the Company Agreements
or the Securities.

            2.6 Consents and Approvals. Except for filings under Federal and
applicable state securities laws, no permit, consent, approval or authorization
of, or declaration to or filing with, any federal, state, local or foreign
governmental or regulatory authority or other person, not made or obtained,
other than the filing with, and approval of, the NASDAQ National Market System
("NASDAQ") with respect to the listing of the Securities which will be made
prior to Closing and the filing of any registration statement which may be filed
pursuant to the Registration Rights Agreement, is required in connection with
the execution or delivery of this Agreement or any Company Agreement by the
Company, the offer, issuance, sale or delivery of the Securities, or the
carrying out by the Company of the other transactions contemplated hereby. The
issuance and sale by the Company of the Securities as contemplated hereby will
not require compliance with the notification or other requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules
and regulations promulgated thereunder, nor require any action by or approval of
the Company's shareholders as such or of any other individual or entity which
has not already been obtained.

            2.7 Private Offering. Assuming the accuracy of the Purchasers'
representations and warranties contained in Section 3 herein, the offer,
issuance and delivery to the Purchasers' pursuant to the terms of this Agreement
of the Securities and, assuming compliance by the Purchasers with the terms of
this Agreement and applicable law, the Securities, are exempt from registration
under the Securities Act.

            2.8 Certificate of Incorporation and By-Laws. The copies of the
Company's Amended and Restated Certificate of Incorporation and By-Laws, as
amended, in the form made available to the Purchasers are true and correct
copies of such documents and are in full force and effect.

            2.9 SEC Filings. The Company has delivered to the Purchasers, or has
made available, prior to the date hereof true and correct copies of (i) its
Annual Report on Form 10-KSB for its year ended December 31, 1999 and Quarterly
Reports on Form 10-QSB for the quarters ended March 31, 2000, June 30, 2000 and
September 30, 2000; (ii) all other reports and documents filed with the
Securities and Exchange Commission (the "SEC") since January 1, 2000; and (iii)
certain other internal Company financial books and records . All documents
described in this Section 2.9 are hereinafter referred to as the "Company
Reports." The Company has made all filings required to be made by it under the
Securities Act, the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the securities laws of any state, and any rules and regulations
promulgated thereunder. The Company's reports and other documents filed with the
SEC pursuant to the Exchange Act conformed in all material respects to the
requirements of the Exchange Act and the rules and regulations of the SEC
thereunder, and none of such documents contained any untrue statement of
material fact or omitted to state a material fact necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. The Company is currently eligible to utilize a
registration statement on Form S-3 with respect to the registration of the
Registrable Securities (as defined in the Registration Rights Agreement)
required by Section 1.2 of the Registration Rights Agreement contemplated by
Section 4.8 hereof.

            2.10 Litigation. Except as set forth in the Company Reports, there
is no pending or, to the knowledge of the Company, threatened suit, action or
litigation, or administrative, arbitration or other proceeding or governmental
inquiry or investigation questioning the validity of this Agreement or the

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transactions contemplated hereby, or affecting in any material adverse respect
the Company and its subsidiaries, taken as a whole.

            2.11 Compliance with Laws. The Company and each subsidiary is in
compliance with all laws, ordinances, rules and regulations of governmental
authorities applicable to or affecting it, its properties or its business,
except where non-compliance would not have a material adverse effect on the
business, properties, assets, operations or condition (financial or otherwise)
of the Company and its subsidiaries taken as a whole, and neither the Company
nor any subsidiary has received written notice of any claimed default with
respect to such laws, ordinances, rules and regulations.

            2.12 Financial Statements.

                  (a) (i) The audited consolidated balance sheets and
shareholders' equity of the Company and its subsidiaries as of December 31, 1999
and 1998, and (ii) the audited consolidated statements of income and cash flow
of the Company and its subsidiaries, for the two years ended December 31, 1999
and 1998, together with the notes thereto, copies of all of which have
heretofore been furnished to the Purchasers, or have been made available, in
each case, present fairly in all material respects the consolidated financial
position of the Company and its subsidiaries at such dates and the consolidated
results of their operations and their consolidated cash flows for the periods
then ended, in conformity with generally accepted accounting principles,
consistently applied ("GAAP"). The audited consolidated balance sheet dated
December 31, 1999 is referred to herein as the "Balance Sheet".

                  (b) Except as set forth on Schedule 2.12(b) attached hereto,
since December 31, 1999 (the "Balance Sheet Date"), there has been no material
adverse change in the business, properties, assets, operations or condition
(financial or otherwise) of the Company and its subsidiaries, taken as a whole.

            2.13 Assets. The Company and each subsidiary has good and marketable
title to all of the real and personal properties and assets reflected on the
Balance Sheet as being owned by the Company or such subsidiary at the Balance
Sheet Date, except for properties and assets sold or otherwise disposed of in
the ordinary course of business since the Balance Sheet Date or that are not
material to its business.

            2.14 Tax Matters. The Company and each subsidiary has filed all U.S.
Federal, state, local, foreign and other tax returns which were required to be
filed on or before the date hereof and has paid all taxes which have become due
and payable. All such reports and returns (copies of which have been made
available to the Purchasers) were materially accurate and complete when filed
and reflect all taxes required to be paid by the Company and its subsidiaries
for the periods reported therein. No tax returns or reports of the Company or
any subsidiary are or ever have been under audit except as set forth on Schedule
2.14 attached hereto.

            2.15 Patents, Trademarks, Proprietary Rights.

                  (a) To the Company's knowledge, each of the Company and its
subsidiaries owns or has the right to use all of the Intellectual Property
Rights (as defined below), except where such failure would not have a material
adverse effect on the business, properties or assets of the Company and its
subsidiaries, taken as a whole. For purposes of this Agreement, "Intellectual
Property Rights" means all patents, copyrights, trademarks, service marks, trade
names, permits, trade secrets, computer

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programs, software designs and related materials and other intellectual property
that are used by the Company or a subsidiary and are material to the conduct of
the Company's or a subsidiary's business.

                  (b) To the Company's knowledge, the Company's and each
subsidiary's use and enjoyment of the Intellectual Property Rights do not
violate any license or conflict with or infringe the intellectual property
rights of others in a manner which would materially and adversely affect the
business, assets, properties, operations or condition (financial or otherwise)
of the Company and its subsidiaries, taken as a whole.

            2.16 Insurance. All the insurable properties of the Company and the
subsidiaries are insured for the benefit of the Company and the subsidiaries
against all risks usually insured against by persons operating similar
properties in the locality where such properties are located under valid and
enforceable policies issued by insurance companies of recognized responsibility
in reasonably sufficient amounts.

            2.17 Use of Proceeds. The proceeds from the sale of the Securities
will be used by the Company for working capital purposes including research and
development expenses.

            2.18 Environmental Compliance.

                  (a) Neither the Company nor any subsidiary has generated,
stored, treated, discharged or disposed of any hazardous substances or hazardous
waste in violation of any applicable law or regulation, nor is the Company or
any subsidiary aware of any allegations that any such violations have occurred.
Neither the Company nor any subsidiary is aware of any claims, investigations,
litigation or administrative proceedings, whether actual or threatened, against
the Company or any subsidiary relating to any environmental contamination of any
property owned, used or leased by any of them or arising out of any alleged
violation of any environmental law or regulation.

                  (b) To the Company's knowledge, none of the real property
owned and/or occupied by the Company or any subsidiary has ever been used by
previous owners and/or operators to generate, manufacture, refine, transport,
treat, store, handle or dispose of "Hazardous Substances" or "Hazardous wastes,"
as such terms are defined in the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. 9601, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. 6901, et seq., or applicable state and
local laws, or any regulations issued under any such laws.

            2.19 Minute Books. The minute books of the Company and its
subsidiaries heretofore made available for inspection by the Purchasers contain
summaries of all meetings of directors and shareholders since the incorporation
of the Company or such subsidiary, as applicable, and reflect accurately in all
material respects all transactions referred to in such minutes or records.

            2.20 Labor Agreements and Actions. Neither the Company nor any
subsidiary thereof is bound by or subject to, any written or oral, express or
implied, contract, commitment or arrangement with any labor union, and no labor
union has requested or, to the knowledge of the Company, has sought to represent
any of the employees, representatives or agents of the Company or any such
subsidiary thereof. There is no strike or other labor dispute involving the
Company or any subsidiary thereof pending, or to the knowledge of the Company
threatened, which could have a material adverse effect on the business, assets,
properties, operations or condition (financial or otherwise) of the Company and
its subsidiaries, taken as a whole, nor is the Company aware of any labor
organization activity involving any of the employees of the Company or any
subsidiary thereof.

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            2.21 Company Status. The Company has registered its Common Stock
pursuant to Section 12(g) of the Exchange Act, is in full compliance with all
reporting requirements of the Exchange Act, and the Company has maintained all
requirements for the continued listing of its Common Stock on NASDAQ, and such
Common Stock is currently listed and traded on NASDAQ subject to NASDAQ
acknowledgment and acceptance of the listing application and its receipt of the
listing fee for the Securities being issued hereunder.

            2.22 No Directed Selling Efforts or General Solicitation in Regard
to this Transaction. The Company has not conducted any general solicitation (as
that term is used in Regulation D) with respect to any of the Securities, nor
has it made any offers or sales of any Securities or solicited any offers to buy
any Securities, under circumstances that would require registration of the
Securities under the Securities Act.

            2.23 Third Party Consents; Business Not in Violation. The Company
has obtained from third parties all consents necessary to consummate the
transactions contemplated hereby and by the other Company Agreements. The
business of the Company and its subsidiaries is not being conducted in violation
of any law, ordinance or regulations of any governmental entity, except for
violations or potential violations which either individually or in the aggregate
do not and will not have a material adverse effect on the Company and the
subsidiaries business, properties, assets, operations or condition (financial or
otherwise) taken as a whole.

            2.24 No Integration. Neither the Company nor any of its subsidiaries
nor any person acting on the Company's behalf has, directly or indirectly, at
any time within the past six (6) months made any offer or sale of any security
or solicitation of any offer to buy any security under circumstances that would
(i) eliminate the availability of the exemption from registration under
Regulation D under the Securities Act in connection with the offer and sale of
the Securities as contemplated hereby or (ii) cause the offering of the
Securities pursuant to this Agreement to be integrated with prior offerings by
the Company for purposes of the Securities Act or any applicable stockholder
approval provisions, including, without limitation, under the rules and
regulations of the National Association of Securities Dealers ("NASD"), as
applicable.

            2.25 Investment Company. The Company is not, and is not controlled
by or under common control with an affiliate of, an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.

            2.26 Permits. Each of the Company and its subsidiaries possesses all
franchises, certificates, licenses, authorizations and permits or similar
authority necessary to conduct its business as described in the SEC Reports
except where the failure to possess such permits would not, individually or in
the aggregate, have a material adverse effect on the Company or its
subsidiaries, or their businesses, properties, assets, operations or condition
(financial or otherwise) taken as a whole ("Material Permits"), and neither the
Company nor any such subsidiary has received any notice of proceedings relating
to the revocation or modification of any Material Permit.

            2.27 Company Board of Director Action. The Board of Directors of the
Company at a meeting duly called and held has by the requisite vote of all
directors present (i) determined that the issuance and sale of Securities to the
Purchasers pursuant to this Agreement is advisable and in the best interests of
the Company and its shareholders and (ii) resolved to recommend the approval of
the issuance and sale of Securities to the Purchasers pursuant to this Agreement
by the shareholders of the

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Company and directed that such issuance and sale be submitted for consideration
by the shareholders of the Company at the Special Meeting (defined below).

            2.28 Full Disclosure. The representations and warranties of the
Company set forth in this Agreement do not contain any untrue statement of a
material fact or omit any material fact necessary to make the statements
contained herein, in the light of the circumstances under which they were made,
not misleading.

      SECTION 3. PURCHASERS' REPRESENTATIONS AND WARRANTIES

      The Purchasers understand that the sale to them of the Securities will not
be registered under the Securities Act, on the grounds that the sales provided
for in this Agreement are exempt pursuant to Section 4(2) of the Securities Act
and/or Regulation D promulgated under Section 4(2) of the Securities Act, and
that the reliance of the Company on such exemptions is predicated in part on the
Purchasers' representations, warranties, covenants and acknowledgments set forth
in this Section 3.

            3.1 Principal Place of Business. Each Purchaser represents and
warrants to the Company that the address of its principal place of business or
residence is as set forth on Schedule I hereto.

            3.2 Purchase Without View to Distribute. Each Purchaser represents
and warrants to the Company that the Securities to be purchased by it are being
acquired by such Purchaser for its own account, not as a nominee or agent, and
not with a view to resale or distribution within the meaning of the Securities
Act, and the rules and regulations thereunder, and such Purchaser will not,
directly or indirectly, offer, sell, pledge, transfer or otherwise dispose any
of the Securities in violation of the Securities Act or any applicable state
securities laws.

            3.3 Restrictions on Transfer. Each Purchaser (i) acknowledges that
the Securities are "Restricted Securities" under the Federal securities laws and
are not registered under the Securities Act, (ii) acknowledges that the
Securities to be acquired by it must be held indefinitely by it unless they are
subsequently registered under the Securities Act or an exemption from
registration is available, (iii) is aware that any routine sales under Rule 144
of the SEC under the Securities Act of Securities may be made only in limited
amounts and in accordance with the terms and conditions of that Rule and that in
such cases where the Rule is not applicable, compliance with some other
registration exemption will be required, (iv) is aware that Rule 144 is not
presently available for use by the Purchaser for resale of any such Securities
and (v) is aware that, except as provided in Section 4.8 herein, the Company is
not obligated to register under the Securities Act any sale, transfer or other
disposition of the Securities.

            3.4 Access to Information. Each Purchaser confirms that the Company
has made available to it the opportunity to ask questions of and receive answers
from the Company's officers and directors concerning the terms and conditions of
the offering and the business and financial condition of the Company and its
subsidiaries, and to acquire, and such Purchaser has received to its
satisfaction, such additional information, in addition to that set forth herein,
about the business and financial condition of the Company and its subsidiaries
and the terms and conditions of the offering as it has requested.

            3.5 Additional Representations of the Purchaser. Each Purchaser
represents and warrants that (i) it is an "accredited investor" as such term is
defined in Rule 501 promulgated under the Securities Act, (ii) its financial
situation is such that it can afford to bear the economic risk of holding the
Securities for an indefinite period of time and suffer complete loss of its
investment in the Securities, (iii)

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its knowledge and experience in financial and business matters are such that it
is capable of evaluating the merits and risks of its purchase of the Securities
as contemplated by this Agreement, (iv) it has all requisite power and authority
to execute, deliver and perform this Agreement, (v) and the purchase of the
Securities by it has been duly and properly authorized and this Agreement has
been duly executed and delivered by it or on its behalf and constitutes the
valid and binding obligation of such Purchaser, and is enforceable against such
Purchaser in accordance with its terms, and (vi) it has no contract, arrangement
or understanding with any broker, finder of similar agent with respect to the
transactions contemplated by this Agreement.

            3.6 Legends. Each Purchaser understands that the certificates
evidencing the Common Shares shall bear the legend set forth in Section 8.2
herein.

      SECTION 4. CONDITIONS PRECEDENT TO PURCHASERS' OBLIGATIONS

      Each Purchaser's obligation to purchase and make payment for the
Securities subscribed for hereunder by it on the Closing Date is subject, at its
option, to the satisfaction of each of the following conditions:

            4.1 Representations and Warranties. On the Closing Date, the
representations and warranties contained in Section 2 hereof shall be true and
correct in all material respects with the same effect as though made on and as
of the Closing Date, and the Company shall have so certified to the Purchasers
in writing.

            4.2 Performance. All the covenants, agreements and conditions
contained in this Agreement to be performed or complied with by the Company on
or prior to the Closing Date shall have been performed or complied with in all
material respects, and the Company shall have so certified to the Purchasers in
writing.

            4.3 Opinion of Counsel to the Company. On the Closing Date, the
Purchasers shall have received an opinion from counsel for the Company, dated
the Closing Date, which shall be in a form reasonably acceptable to the parties.

            4.4 Proceedings; Certified Copies. All proceedings to be taken in
connection with the transactions contemplated by this Agreement to be
consummated on or prior to the Closing Date, and all documents incident thereto,
shall be satisfactory in form and substance to the Purchasers. The Purchasers
shall have received such certified copies or other copies of such documents as
they may reasonably request.

            4.5 No Proceeding or Litigation. No suit, action, or other
proceeding seeking to restrain, prevent or change the transactions contemplated
hereby or otherwise questioning the validity or legality of such transactions
shall have been instituted and be pending.

            4.6 No Material Adverse Change. There shall have been no material
adverse change since the Balance Sheet Date, except as set forth on Schedule
2.12(b) attached hereto, in the business, properties, assets, operations, or
condition (financial or otherwise) of the Company and its subsidiaries, taken as
a whole.

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            4.7 Blue Sky Compliance. The Company shall have complied with all
applicable requirements of federal and state securities or "blue sky" laws with
respect to the issuance of the Securities sold at the Closing.

            4.8 Registration Rights Agreement. The Company shall have executed
and delivered a Registration Rights Agreement in the form attached hereto as
Exhibit A.

            4.9 Warrant. The Company shall have executed and delivered a Warrant
in the form attached hereto as Exhibit B.

            4.10 NASDAQ Listing. The Securities shall have been approved for
listing on NASDAQ subject to NASDAQ's official notice of issuance of the
Securities.

            4.11 Company Stockholder Approval. The affirmative vote of the
holders of a majority of the outstanding shares of stock of the Company present
or represented at a meeting at which a quorum is present in favor of this
Agreement and the issuance of the Securities to the Purchasers in connection
with this Agreement shall have been obtained.

            4.12 Fairness Opinion. The Board of Directors of the Company shall
have received from Tucker Anthony Incorporated a written opinion (the "Fairness
Opinion"), dated as of or immediately prior to the date of submission of the
preliminary Proxy Statement to the SEC, to such Board satisfactory in form and
substance to such Board, to the effect that the price to be paid by the
Purchasers for the Securities is fair to the Public Shareholders from a
financial point of view.

            4.13 Cardiac Capital Participation. It is a condition precedent to
the obligation of the Purchaser other than Cardiac Capital, LLC to purchase the
Securities that Cardiac Capital, LLC shall have complied with its obligations
hereunder. Cardiac Capital, LLC's obligations hereunder are not subject to the
precondition that the Purchaser other than Cardiac Capital shall have complied
with its obligations hereunder.

      SECTION 5. CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS

      The Company's obligation to sell the Securities subscribed for by the
Purchasers on the Closing Date is subject, at the Company's option, to the
satisfaction of each of the following conditions:

            5.1 Representations and Warranties. On the Closing Date, the
representations and warranties contained in Section 3 hereof shall be true and
correct in all material respects with the same effect as though made on and as
of the Closing Date and the Purchasers shall have so certified to the Company in
writing.

            5.2 Performance. All the covenants, agreements and conditions
contained in this Agreement to be performed or complied with by the Purchasers
on or prior to the Closing Date shall have been performed or complied with in
all material respects, and the Purchasers shall have so certified to the Company
in writing.

            5.3 No Proceeding or Litigation. No suit, action, or other
proceeding seeking to restrain, prevent or change the transactions contemplated
hereby or otherwise questioning the validity or legality of such transactions
shall have been instituted and be pending.

                                       10
<PAGE>

            5.4 Company Stockholder Approval. The affirmative vote of the
holders of a majority of the outstanding shares of stock of the Company present
or represented at a meeting at which a quorum is present in favor of this
Agreement and the issuance of the Securities to the Purchasers in connection
with this Agreement shall have been obtained.

            5.5 Fairness Opinion. The Board of Directors of the Company shall
have received from Tucker Anthony Incorporated the Fairness Opinion, dated as of
or immediately prior to the date of submission of the preliminary Proxy
Statement to the SEC.

            5.6 Cardiac Capital Participation. It is a condition precedent to
the obligation of the Company to sell the Securities to the Purchasers that
Cardiac Capital, LLC shall have complied with its obligations hereunder.

      SECTION 6. COVENANTS OF THE COMPANY PRIOR TO CLOSING

            6.1 Operation of Business in Ordinary Course. Prior to the Closing,
the Company and each subsidiary will operate its business only in the usual and
normal course.

            6.2 Conditions Precedent. The Company and the Purchasers shall use
their best efforts to cause the conditions specified in Sections 4 and 5 to be
satisfied by the Closing Date.

            6.3 Special Company Meeting. The Company shall take all action
necessary, in accordance with applicable law and its certificate of
incorporation and bylaws, to convene a special meeting of the shareholders of
Company ("Special Meeting") as promptly as practicable for the purpose of
considering and taking action upon this Agreement and approving the issuance and
sale of Securities to the Purchasers pursuant to this Agreement. Subject to the
receipt by the Board of Directors of the Company of the Fairness Opinion as
contemplated by Paragraphs 4.12 and 5.5 herein, the Board of Directors of the
Company will recommend that the shareholders of the Company vote in favor of
this Agreement and such issuance and sale at the Special Meeting and any related
proposals.

            6.4 Proxy Statement. As soon as practicable after the date hereof,
the Company shall prepare a proxy statement relating to the actions to be voted
on at the Special Meeting (the "Proxy Statement"), file it with the SEC, use its
best efforts to respond to all comments of the staff of the SEC and clear the
Proxy Statement with the staff of the SEC. Promptly after such clearance, the
Company shall mail the Proxy Statement to all holders of record of Company stock
who are holders on the record date for the Special Meeting.

      SECTION 7. COVENANTS OF THE PARTIES AFTER CLOSING

            7.1 Rule 144. The Company covenants that (i) the Company will use
its best efforts to comply with the current public information requirements of
Rule 144 (c) (1) under the Securities Act; and (ii) at all such times as Rule
144 is available for use by the holders of the Securities, the Company will
furnish each such holder upon request with all information within the possession
of the Company required for the preparation and filing of Form 144.

            7.2 Inspection. From the Closing Date and for as long as each
Purchaser owns 5% or more of the outstanding Common Stock, upon reasonable
advance written notice, the Company and each subsidiary shall permit such
Purchaser, at its expense, to visit and inspect the properties of the Company
and each of its subsidiaries during normal business hours, and to discuss its
affairs, finances, and

                                       11
<PAGE>

accounts with its executive officers in each case for any purpose reasonably
related to such Purchaser's investment in the Company, provided that such
Purchaser shall agree not to disclose any confidential information received as a
result thereof. Any such Purchaser is authorized to disclose to any one or more
of the other Purchasers any information it discovers as a result of such
inspections, provided such other Purchaser agrees not to disclose any
confidential information received. The rights set forth in this Section 7.2
shall be in addition to and not in lieu of the rights of inspection that any
holder of Securities may have under applicable law.

            7.3 Waivers' Consents, Etc. Compliance with any of the covenants in
this Section 7 may be waived, either generally or in the particular instance,
and any consent required thereunder may be given, by holders of Common Shares
sufficient to consent to an amendment to this Agreement under Section 10.8.

            7.4 Filing of Current Report on Form 8-K. On or before the second
business day following the Closing Date, the Company shall file a Current Report
on Form 8-K with the SEC describing the terms of the transaction consummated at
the Closing.

            7.5 Form D. The Company agrees to file a Form D with respect to the
Securities as required under Regulation D and to provide a copy thereof toeach
Purchaser promptly after such filing.

            7.6 Right to designate member to Board of Directors. Subject to
compliance with the New Jersey Business Corporation Act, the Company's
Certificate of Incorporation, the Company's Bylaws and applicable law, from the
Closing Date and for as long as Cardiac Capital, LLC owns 400,000 or more of the
outstanding Common Stock, or securities convertible into 400,000 shares of
Common Stock, or a combination thereof, upon reasonable advance written notice,
the Company shall, at the request of Cardiac Capital, LLC, promptly use its best
efforts to take all actions necessary to cause the Company's Board of Directors
to include one representative nominated by Cardiac Capital, LLC, including,
without limitation, by accepting the resignation of an incumbent director or
increasing the number of members of the Board of Directors in accordance with
the Company's Bylaws to enable Cardiac Capital, LLC's designee to be elected or
appointed to serve on the Company's Board of Directors. The parties hereto agree
that Cardiac Capital may assign this right to Rollins Investment Fund, without
the consent of the Company.

      SECTION 8. COMPLIANCE WITH SECURITIES ACT; RESTRICTIONS ON TRANSFERABILITY
                 OF COMMON SHARES.

            8.1 Compliance with Securities Act. The Common Shares shall not be
transferable, except upon the conditions specified in this Section 8, which
conditions are intended to insure compliance with the provisions of the
Securities Act and applicable state securities laws in respect of any such
transfer.

            8.2 Restrictive Legend. Each certificate representing the Common
Shares and any shares of Common Stock or other securities issued upon any stock
split, stock dividend, recapitalization, merger, consolidation, similar event,
shall (unless otherwise permitted by the provisions of Section 8.4 below) be
stamped or otherwise imprinted with the following legend:

      "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE
      SECURITIES LAW AND THE TRANSFERABILITY HEREOF

                                       12
<PAGE>

      IS SUBJECT TO THE PROVISIONS OF A COMMON STOCK AND WARRANT PURCHASE
      AGREEMENT BY AND AMONG EP MEDSYSTEMS, INC. AND THE PURCHASERS LISTED ON
      SCHEDULE I THERETO."

            8.3 Restrictions on Transferability. Until the Common Shares are
registered under the Securities Act, the Company shall not be required to
register the transfer of the Common Shares on the books of the Company unless
the Company shall have been provided with an opinion of counsel reasonably
satisfactory to it prior to such transfer to the effect that registration under
the Securities Act or any applicable state securities law is not required in
connection with the transaction resulting in such transfer. Each certificate for
Common Shares issued upon any transfer as above provided shall bear the
restrictive legend set forth in Section 8.2 above, except that such restrictive
legend shall not be required if the opinion of counsel reasonably satisfactory
to the Company referred to above is to the further effect that such legend is
not required in order to establish compliance with the provisions of the
Securities Act and any applicable state securities law.

            8.4 Termination of Restrictions on Transferability. The conditions
precedent imposed by this Section 8 upon the transferability of the Common
Shares shall cease and terminate as to any of the Common Shares when (i) such
securities shall have been registered under the Securities Act and sold or
otherwise disposed of in accordance with the intended method of disposition by
the seller or sellers thereof set forth in the registration statement covering
such securities, or (ii) at such time as an opinion of counsel satisfactory to
the Company shall have been rendered as required pursuant to the second sentence
of Section 8.3 to the effect that the restrictive legend on such securities is
no longer required, or (iii) when such securities are transferable in accordance
with the provisions of Rule 144 (k) promulgated under the Securities Act and
Section 8.3 above. Whenever the conditions imposed by this Section 8 shall
terminate as hereinabove provided with respect to any of the Common Shares, the
holder of any such securities bearing the legend set forth in this Section 8 as
to which such conditions shall have terminated shall be entitled to receive from
the Company, without expense (except for the payment of any applicable transfer
tax) new stock certificates not bearing such legend.

      SECTION 9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES

      All representations and warranties made herein and in the certificates
delivered pursuant hereto are made as of the date hereof and shall survive the
execution and delivery of this Agreement and the issuance and sale of the
Securities hereunder for a period of one year.

      SECTION 10. MISCELLANEOUS.

            10.1 Owner of Common Shares. The Company may deem and treat the
person in whose name the Securities are registered as the absolute owner thereof
for all purposes whatsoever, and the Company shall not be affected by any notice
to the contrary.

            10.2 Successors and Assigns. This Agreement shall be binding upon,
shall inure to the benefit of the respective successors, executors, personal
representatives, heirs, and permitted assigns of each of the parties hereto.

            10.3 Broker or Finder. Each party to this Agreement represents and
warrants that, to the best of its knowledge, no broker or finder has acted for
such party in connection with this Agreement or the transactions contemplated by
this Agreement and that no broker or finder is entitled to any broker's or
finder's fee or other commission in respect thereof based in any way on
agreements, arrangements or

                                       13
<PAGE>

understandings made by such party. The Company shall indemnify each Purchaser
against, and hold it harmless from, any liability, cost, or expense (including
reasonable attorneys' fees and expenses) resulting from any agreement,
arrangement, or understanding made by the Company, and each Purchaser shall
indemnity the Company against, and hold the Company harmless from, any
liability, cost, or expense (including reasonable attorneys fees and expenses)
resulting from any agreement, arrangement, or understanding made by such
Purchaser with any third party, for brokerage or finder's fees or other
commissions in connection with this Agreement or any of the transactions
contemplated hereby.

            10.4 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New Jersey,
without regard to conflicts of law principles.

            10.5 Notice. Any notice or other communications required or
permitted hereunder shall be deemed given when delivered personally, or upon
receipt by the party entitled to receive the notice when sent by registered or
certified mail, postage prepaid, or by a recognized national overnight courier
service addressed as follows or to such other address or addresses as may
hereafter be furnished in writing by notice similarly given by one party to the
other:

                    To the Company:      EP MedSystems, Inc.
                                         100 Stierli Court, Suite 107
                                         Mount Arlington, NJ 07856
                                         Attention: David Jenkins, President

                    To any Purchaser:    At its address set forth on Schedule I
                                         hereto and, if to Cardiac Capital, LLC
                                         with a required copy of such notice to:
                                         Rollins Investment Fund
                                         2170 Piedmont Road, N.E.
                                         Atlanta, GA  30324
                                         Attention: Joe M. Young

Notice to any holder of Securities other than a Purchaser shall be given in a
like manner to such holder at the address reflected in the Company's records.

            10.6 Full Agreement. This Agreement, together with the Securities
and the Exhibits and Schedules attached hereto or delivered herewith, and any
other documents delivered herewith, sets forth the entire understanding of the
parties with respect to the transactions contemplated hereby.

            10.7 Headings. The headings of the sections of this Agreement are
inserted for convenience of reference only and shall not be considered a part
hereof.

            10.8 Amendment. This Agreement may be modified, amended or changed
only with the written consent of the Company and the holders of at least 75.0%
of the Common Shares then outstanding.

            10.9 Schedules and Exhibits. Disclosure of any fact or item in any
Schedule or Exhibit hereto referenced by a particular paragraph or section in
this Agreement shall be deemed to be disclosed with respect to any other
paragraph or section (whether or not an explicit cross-reference

                                       14
<PAGE>

appears) should the existence of such fact or item or its contents be relevant
to that other paragraph or section.

            10.10 Counterparts. This Agreement may be executed concurrently in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument upon delivery, by
telefax or otherwise, of all counterparts to all parties hereto.

                            [signature page follows]

                                       15
<PAGE>

      IN WITNESS WHEREOF, each of the parties hereto has fully executed this
Agreement on the date first set forth above.

                                  EP MEDSYSTEMS, INC.

                                  By: /s/ Joseph M. Turner
                                  ---------------------------------
                                  Name:  Joseph M. Turner
                                  Title: Chief Financial Officer

                                  PURCHASERS:

                                  CARDIAC CAPITAL, LLC.

                                  By: Rollins Investment Fund, Manager

                                  By: /s/ R. Randall Rollins
                                  -----------------------------------
                                  Name: R. Randall Rollins
                                  Title: General Partner

                                  TEXADA TRUST

                                  By: /s/ Jerome J. Klawitter
                                  ----------------------------------
                                  Name: Jerome J. Klawitter
                                  Title: Trustee

                                       16
<PAGE>

                                   SCHEDULE I

<TABLE>
<CAPTION>
=====================================================================================
PURCHASER                                  NUMBER OF     NUMBER OF    PURCHASE PRICE
                                            COMMON        WARRANT
                                            SHARES        SHARES
=====================================================================================
<S>                                        <C>            <C>          <C>
Cardiac Capital, LLC                       1,500,000      750,000      $3,000,000
Attention:  Manager
c/o David A. Jenkins
100 Stierli Court, Suite 107
Mt. Arlington, N.J. 07856
-------------------------------------------------------------------------------------

Texada Trust
3 Humboldt Lane                              125,000       62,500        $250,000
Austin, Texas 78746
Attention: Jerome J. Klawitter, Trustee
-------------------------------------------------------------------------------------

TOTAL                                      1,625,000      812,500      $3,250,000
-------------------------------------------------------------------------------------
</TABLE>EXHIBIT 4.1

                             SIGA TECHNOLOGIES, INC.
           AMENDED 1996 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN

            1. Purpose. The purposes of this 1996 Incentive and Non-Qualified
Stock Option Plan are to attract and retain the best available personnel, to
provide additional incentive to the Employees, Consultants and Outside Directors
of SIGA Technologies, Inc., a Delaware corporation (the "Company"), and to
promote the success of the Company's business.

            Options granted hereunder may, consistent with the terms of this
Plan, be either Incentive Stock Options or Nonstatutory Stock Options, at the
discretion of the Committee and as reflected in the terms of the written option
agreement.

            2. Definitions. As used in this Plan, the following definitions
shall apply:

            (a) "Board" means the Board of Directors of the Company.

            (b) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, and the rules and regulations promulgated thereunder.

            (c) "Commission" means the United States Securities and Exchange
Commission.

            (d) "Committee" means the Committee appointed by the Board or
otherwise determined in accordance with Section 4(a) of this Plan.

            (e) "Common Stock" means the common stock of the Company, par value
$0.0001 per share.

            (f) "Consultant" means any person who is engaged by the Company or
any Parent or Subsidiary to render consulting services and is compensated for
such consulting services; provided that the term Consultant shall not include
directors who are not compensated for their services or are paid only a
director's fee by the Company.

            (g) "Continuous Status as an Employee. Consultant or Outside
Director" means the absence of any interruption or termination of service as an
Employee, Consultant or Outside Director, as applicable. Continuous Status as an
Employee, Consultant or Outside Director shall not be considered interrupted in
the case of sick leave or military leave, any other leave provided pursuant to a
written policy of the Company in effect at the time of determination, or any
other leave of absence approved by the Board or the Committee; provided that
such leave is for a period of not more than the greatest of (i) 90 days, (ii)

<PAGE>

the date of the resumption of such service upon the expiration of such leave
which is guaranteed by contract or statute or is provided in a written policy of
the Company which was in effect upon the commencement of such leave, or (iii)
such period of leave as may be determined by the Board or the Committee in its
sole discretion.

            (h) "Disinterested Person" shall have the meaning set forth in Rule
l6b-3(d)(3), or any successor definition adopted by the Commission, provided the
person is also an "outside director" under Section 162(m) of the Code.

            (i) "Employee" means any person employed by the Company or any
Parent or Subsidiary of the Company, including employees who are also officers
or directors or both of 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.

            (j) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and the rules and regulations promulgated thereunder.

            (k) "Incentive Stock Option" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code, and the
rules and regulations promulgated thereunder.

            (l) "Nonstatutory Stock Option" means an Option not intended to
qualify as an Incentive Stock Option.

            (m) "Option" means a stock option granted pursuant to this Plan.

            (n) "Optioned Stock" means the Common Stock subject to an Option.

            (o) "Optionee " means an Employee, Consultant or Outside Director
who receives an Option.

            (p) "Outside Director" means any member of the Board of Directors of
the Company who is not an Employee or Consultant.

            (q) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.

            (r) "Plan" means this SIGA Corporation 1996 Stock Option Plan, as
amended from time to time.

                                       -2-
<PAGE>

            (s) "Rule 16(b)-3" means Rule 16b-3, as promulgated by the
Commission under Section 16 b of the Exchange Act as such rule is amended from
time to time and as interpreted by the Commission.

            (t) "Securities Act" means the Securities Act of 1 933, as amended
from time to time, and the rules and regulations promulgated thereunder.

            (u) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 10 of this Plan.

            (v) "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.

            3. Scope of Plan. Subject to the provisions of Section 10 of this
Plan, and unless otherwise amended by the Board and approved by the stockholders
of the Company as required by law, the maximum aggregate number of Shares
issuable under this Plan is 2,500,000, and such Shares are hereby made available
and shall be reserved for issuance under this Plan. The Shares may be authorized
but unissued, or reacquired, Common Stock.

            If an Option shall expire or become unexercisable for any reason
without having been exercised in full, the unpurchased Shares subject thereto
shall (unless this Plan shall have terminated) become available for grants of
other Options under this Plan.

            4. Administration of Plan.

            (a) Procedure. This Plan shall be administered by the Committee
appointed pursuant to this Section 4(a). The Committee shall consist of two or
more Outside Directors appointed by the Board, but all Committee members must be
Disinterested Persons. If the Board fails to appoint such persons, the Committee
shall consist of all Outside Directors who are Disinterested Persons.

            (b) Powers of Committee. Subject to Section 5(b) below and otherwise
subject to the provisions of this Plan, the Committee shall have full and final
authority in its discretion to: (i) grant Incentive Stock Options and
Nonstatutory Stock Options, (ii) determine, upon review of relevant information
and in accordance with Section 7 below, the Fair Market Value of the Common
Stock; (iii) determine the exercise price per share of Options to be granted, in
accordance with this Plan, (iv) determine the Employees and Consultants to whom,
and the time or times at which, Options shall be granted, and the number of
shares to be represented by each Option; (v) cancel, with the consent of the
Optionee, outstanding Options and grant new Options in substitution therefor;
(vi) interpret this Plan; (vii) accelerate or defer (with the consent of
Optionee) the exercise date of any Option; (viii) prescribe, amend and rescind
rules

                                       -3-
<PAGE>

and regulations relating to this Plan; (ix) determine the terns and provisions
of each Option Granted (which need not be identical) by which Options shall be
evidenced and, with the consent of the holder thereof, modify or amend any
provisions (including without limitation provisions relating to the exercise
price and the obligation of any Optionee to sell purchased Shares to the Company
upon specified terms and conditions) of any Option; (x) require withholding from
or payment by an Optionee of any federal, state or local taxes; (xi) appoint and
compensate agents, counsel, auditors or other specialists as the Committee deems
necessary or advisable; (xii) correct any defect or supply any omission or
reconcile any inconsistency in this Plan and any agreement relating to any
Option, in such manner and to such extent the Committee determines to carry out
the purposes of this Plan, and; (xiii) construe and interpret this Plan, any
agreement relating to any Option, and make all other determinations deemed by
the Committee to be necessary or advisable for the administration of this Plan.

            A majority of the Committee shall constitute a quorum at any
meeting, and the acts of a majority of the members present, or acts unanimously
approved in writing by the entire Committee without a meeting, shall be the acts
of the Committee. A member of the Committee shall not participate in any
decisions with respect to himself under this Plan.

            (c) Effect of Committee's Decision. All decisions, determinations
and interpretations of the Committee shall be final and binding on all Optionees
and any other holders of any Options Granted under this Plan.

            5. Eligibility.

            (a) Options may be granted to any Employee, Consultant or Outside
Director as the Committee may from time to time designate, provided that (1)
Incentive Stock Options may be granted only to Employees, and (ii) Options may
be granted to Outside Directors only in accordance with the provisions of
Section 5(b) below. In selecting the individuals to whom Options shall be
granted, as well as in determining the number of Options Granted, the Committee
shall take into consideration such factors as it deems relevant in connection
with accomplishing the purpose of this Plan. Subject to the provisions of
Section 3 above, an Optionee may, if he or she is otherwise eligible, be granted
an additional Option or Options if the Committee shall so determine.

            (b) All grants of Options to Outside Directors under this Plan shall
be automatic and non-discretionary and shall be made strictly in accordance with
the following provisions:

            (i) No person shall have any discretion to select which Outside
Directors shall be granted options or to determine the number of Shares to be
covered by options granted to Outside Directors;

                                       -4-
<PAGE>

provided, that nothing in this Plan shall be construed to prevent an Outside
Director from declining to receive an Option under this Plan.

            (ii) The terns of each Option granted pursuant to this Section 5(b)
shall be as follows:

                        (A) the term of the option shall be ten (10) years;

                        (B) the Option shall become exercisable cumulatively
                        with respect to one-third of the Shares on each of the
                        first, second and third anniversaries of the date of
                        grant; provided, however, that in no event shall any
                        option be exercisable prior to obtaining stockholder
                        approval of this Plan; and

                        (C) the exercise price per share of Common Stock shall
                        be 100 % of the "Fair Market Value" (as defined in
                        Section 7(b) below) on the date of grant of the Option.

            (c) Each Option granted pursuant to Section 5(b) above shall be a
Nonstatutory Stock Option. Each other Option shall be designated in the written
option agreement as either an Incentive Stock Option or a Nonstatutory Stock
Option. Notwithstanding such designations, if and to the extent that the
aggregate Fair Market Value of the Shares with respect to which Options
designated as Incentive Stock Options are exercisable for the first time by any
Optionee during any calendar year (under all plans of the Company) exceeds
$100,000, such options shall be treated as Nonstatutory Stock Options. For
purposes of this Section 5(c), options shall be taken into account in the order
in which they are 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) This Plan shall not confer upon any Optionee any right with
respect to continuation of employment by or the rendition of services to the
Company or any Parent or Subsidiary, nor shall it interfere in any way with his
or her right or the right of the Company or any Parent or Subsidiary to
terminate his or her employment or services at any time, with or without cause.
The terms of this Plan or any Options granted hereunder shall not be construed
to give any Optionee the right to any benefits not specifically provided by this
Plan or in any manner modify the Company's right to modify, amend or terminate
any of its pension or retirement plans.

            6. Term of Plan. This Plan shall become effective upon its adoption
by the Board of Directors of the Company subject to the approval thereof by vote
of the holders of a majority of the outstanding shares of the Company present,
or represented, and entitled to vote at a meeting to be duly held in accordance
with the applicable laws of the State of Delaware. Such meeting shall be held
within twelve months of the adoption of the plan by the Board of Directors. The
plan shall terminate

                                       -5-
<PAGE>

no later than January 1, 2006. No grants shall be made under this Plan after the
date of termination of this Plan. Any termination, either partially or wholly,
shall not affect any Options then outstanding under this Plan.

            7. Exercise Price and Consideration.

            (a) Exercise Price. The per Share exercise price for the Shares to
be issued pursuant to exercise of an Option shall be determined by the Committee
as follows:

            (i) In the case of an Incentive Stock Option 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, but if 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.

            (ii) With respect to (i) above, the per Share exercise price is
subject to adjustment as provided in Section 10 below. For purposes of this
Section 7(a), if an Option is amended to reduce the exercise price, the date of
grant of such option shall thereafter be considered to be the date of such
amendment.

            (b) Fair Market Value. The "Fair Market Value" of the Common Stock
shall be determined by the Committee in its discretion; provided, that if the
Common Stock is listed on a stock exchange, the Fair Market Value per Share
shall be the closing price on such exchange on the date of grant of the Option
as reported in the Wall Street Journal (or, (i) if not so reported, as otherwise
reported by the exchange, and (ii) if not reported on the date of grant, then on
the last prior date on which a sale of the Common Stock was reported); or if not
listed on an exchange but traded on the National Association of Securities
Dealers Automated Quotation National Market System ("NASDAQ"), the Fair Market
Value per Share shall be the closing price per share of the Common Stock for the
date of grant, as reported in the Wall Street Journal (or, (i) if not so
reported, as otherwise reported by NASDAQ, and (ii) if not reported on the date
of grant, then on the last prior date on which a sale of the Common Stock was
reported); or, if the Common Stock is otherwise publicly traded, the mean of the
closing bid price and asked price for the last known sale.

            (c) Consideration. 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 Committee (and in the case of an Incentive Stock Option, shall
be determined at the time of grant) and may consist entirely of (i) cash; (ii)
check; (iii) the Optionee's personal interest bearing full recourse promissory
note with such terns and provisions as the Committee may authorize (provided
that no person who is not an Employee

                                       -6-
<PAGE>

of the Company may purchase Shares with a promissory note); (iv) other Shares of
Common Stock which (X) either have been owned by the Optionee for more than six
(6) 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
(determined without regard to any limitations on transferability imposed by
securities laws) equal to the aggregate exercise price of the Shares as to which
said Option shall be exercised; (v) any combination of such methods of payment;
or (vi) such other consideration and method of payment for the issuance of
Shares to the extent permitted under applicable laws.

            (d) Withholding. No later than the date as of which an amount first
becomes includable in the gross income of the Optionee for federal income tax
purposes with respect to an option, the Optionee shall pay to the Company (or
other entity identified by the Committee), or make arrangements satisfactory to
the Company or other entity identified by the Committee regarding the payment
of, any federal, state, local or foreign taxes of any kind required by law to be
withheld with respect to such amount required in order for the Company to obtain
a current deduction. Unless otherwise determined by the Committee, withholding
obligations may be settled with Common Stock, including Common Stock underlying
the subject option, provided that any applicable requirements under Section 16
of the Exchange Act are satisfied so as to avoid liability thereunder. The
obligations of the Company under this Plan shall be conditional upon such
payment or arrangements, and the Company shall, to the extent permitted by law,
have the right to deduct any such taxes from any payment otherwise due to the
Optionee.

            8. Options.

            (a) Term of Option. The term of each Option granted (other than an
Option granted under Section 5(b) above) shall be for a period of 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 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 time as may be provided in
the option Agreement.

            (b) Exercise of Options.

            (i) Procedure for Exercise; Rights as a Stockholder. Any option
granted under this Plan (other than an option granted pursuant to Section 5(b)
above) shall be exercisable at such times and under such conditions as
determined by the Committee, including performance criteria with respect to the
Company and/or the Optionee, and as shall otherwise be permissible under the
terms of this Plan.

                                       -7-
<PAGE>

            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 Committee, consist of any
consideration and method of payment allowable under Section 7 of this 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. If the
exercise of an Option is treated in part as the exercise of an Incentive Stock
Option and in part as the exercise of a Nonstatutory Stock Option pursuant to
Section 5(b) above, the Company shall issue a separate stock certificate
evidencing the Shares treated as acquired upon exercise of an Incentive Stock
Option and a separate stock certificate evidencing the Shares treated as
acquired upon exercise of a Nonstatutory Stock Option and shall identify each
such certificate accordingly in its stock transfer records. 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 10 of this
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
this Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.

            (ii) Method of Exercise. An Optionee may exercise an Option, in
whole or in part, at any time during the option period by the Optionee's giving
written notice of exercise on a form provided by the Committee (if available) to
the Company specifying the number of shares of Common Stock subject to the
Option to be purchased. Such notice shall be accompanied by payment in full of
the purchase price by cash or check or such other form of payment as the Company
may accept. If approved by the Committee, payment in full or in part may also be
made (A) by delivering Common Stock already owned by the Optionee having a total
Fair Market Value on the date of such delivery equal to the exercise price of
the subject Option; (B) by the execution and delivery of a note or other
evidence of indebtedness (and any security agreement thereunder) satisfactory to
the Committee; (C) by authorizing the Company to retain shares of Common Stock
which would otherwise be issuable upon exercise of the Option having a total
Fair Market Value on the date of delivery equal to the exercise price of the
subject Option; (D) by the delivery of cash by a broker-dealer to whom the
Optionee has submitted an irrevocable notice of exercise (in accordance with
Part 220, Chapter II, Title 12 of the Code of Federal Regulations, s0-called
"cashless" exercise); or (E) by any combination of the foregoing. In the case of
an Incentive Stock Option, the right to make a payment in the form of

                                       -8-
<PAGE>

already owned shares of Common Stock of the same class as the Common Stock
subject to the Option may be authorized only at the time the Option is granted.
No shares of Common Stock shall be issued until full payment therefor has been
made. An Optionee shall have all of the rights of a stockholder of the Company
holding the class of Common Stock that is subject to such Option (including, if
applicable, the right to vote the shares and the right to receive dividends),
when the Optionee has given written notice of exercise, has paid in full for
such shares and such shares have been recorded on the Company's official
stockholder records as having been issued or transferred.

            (iii) Termination of Status as an Employee, Consultant or Outside
Director. If an Optionee's Continuous Status as an Employee, Consultant or
Outside Director (as the case may be) is terminated for any reason whatever,
such Optionee may, but only within such period of time as provided in the Option
agreement, 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 and determined by the Committee), exercise the Option to the extent
that such Employee, Consultant or Outside Director was entitled to exercise it
at the date of such termination pursuant to the terms of the Option agreement.
To the extent that such Employee, Consultant or Outside Director was not
entitled to exercise the Option at the date of such termination, or if such
Employee, Consultant or Outside Director does not exercise such Option (which
such Employee, Consultant or Outside Director was entitled to exercise) within
the time specified in the Option agreement, the Option shall terminate.

            (iv) Company Loan or Guarantee. Upon the exercise of any Option and
subject to the pertinent Option agreement and the discretion of the Committee,
the Company may at the request of the Optionee; (A) lend to the Optionee, with
recourse, an amount equal to such portion of the option exercise price as the
Committee may determine; or (B) guarantee a loan obtained by the Optionee from a
third-party for the purpose of tendering the option exercise price.

            9. Non-transferability of Options. An Option granted hereunder shall
by its terms not be sold, pledged, assigned, hypothecated, transferred, or
disposed of in any manner other than by will or the laws of descent and
distribution. An Option may be exercised during the Optionee's lifetime only by
the Optionee.

            10. Adjustments Upon Changes in Capitalization or Merger.

            (a) Capitalization. Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock which have
been authorized for issuance under this Plan but as to which no Options have yet
been granted or which have been returned to this Plan upon cancellation or
expiration of an Option, and the number of shares of Common Stock subject to
each outstanding Option, as well as the price per share of Common Stock covered
by

                                       -9-
<PAGE>

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 of the Company or the payment of a stock
dividend with respect to the Common Stock. 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, each Option will terminate
immediately prior to the consummation of such proposed action, unless otherwise
provided by the Committee. The Committee may, in the exercise of its sole
discretion in such instances, declare that any Option shall terminate as of a
date fixed by the Committee and give each Optionee the right to exercise his or
her Option as to all or any part of the Optioned Stock, including Shares as to
which the Option would not otherwise be exercisable.

            (c) Sale or Merger. "Sale" means; (i) sale (other than a sale by the
Company) of securities entitled to more than 75 % of the voting power of the
Company in a single transaction or a related series of transactions; or (ii)
sale of substantially all of the assets of the Company; or (iii) approval by the
stockholders of the Company of a reorganization, merger or consolidation of the
Company, as a result of which the persons who were the stockholders of the
Company immediately prior to such reorganization, merger or consolidation do not
own securities immediately after the reorganization, merger or consolidation
entitled to more than 50 % of the voting power of the reorganized, merged or
consolidated company. Immediately prior to a Sale, each Optionee may exercise
his or her option as to all Shares then subject to the Option, regardless of any
vesting conditions otherwise expressed in the Option. Voting power, as used in
this Section 10(c), shall refer to those securities entitled to vote generally
in the election of directors, and securities of the Company not entitled to vote
but which are convertible into, or exercisable for, securities of the Company
entitled to vote generally in the election of directors shall be counted as if
converted or exercised, and each unit of voting securities shall be counted in
proportion to the number of votes such unit is entitled to cast.

            (d) Purchased Shares. No adjustment under this Section 10 shall
apply to any purchased Shares already deemed issued at the time any adjustment
would occur.

            (e) Notice of Adjustments. Whenever the purchase price or the number
or kind of securities issuable upon the exercise of the option shall be adjusted
pursuant to Section 10, the Company shall give each Optionee written notice
setting forth, in reasonable detail, the event requiring the adjustment, the
amount of the adjustment, and the method by which such adjustment was
calculated.

                                      - 10-
<PAGE>

            (f) Certain Cash Payments. If an Optionee would not be permitted to
exercise an Option or any portion thereof (for purposes of this subsection (f)
only, each such Option being referred to as a "Subject Option") or dispose of
the Shares received upon the exercise thereof without loss or liability (other
than a loss or liability for the exercise price, applicable withholding or any
associated transactional cost), or if the Board determines that the Optionee may
not be permitted to exercise the same rights or receive the sane consideration
with respect to the Sale of the Company as a stockholder of the Company with
respect to any Subject Options or portion thereof or the Shares received upon
the exercise thereof, then notwithstanding any other provision of this Plan and
unless the Committee shall provide otherwise in an agreement with such Optionee
with respect to any Subject Options, such Optionee shall have the right, whether
or not the Subject Option is fully exercisable or may be otherwise realized by
the Optionee, by giving notice during the 60-day period from and after a Sale to
the Company, to elect to surrender all or part of any Subject Options to the
Company and to receive cash, within 30 days of such notice, in an amount equal
to the amount by which the "Sale Price" (as defined herein) per share of Common
Stock on the date of such election shall exceed the amount which the Optionee
must pay to exercise the Subject Options per share of Common Stock under such
Subject Options (the "Spread") multiplied by the number of shares of Common
Stock granted under the Subject Options as to which the right granted hereunder
shall be applicable and shall have been exercised; provided, however, that if
the end of such 60-day period from and after a Sale is within six months of the
date of grant of a Subject Option held by an Optionee (except an Optionee who
has deceased during such six month period) who is an officer or director of the
Company (within the meaning of Section 16(b) of the Exchange Act), such Subject
Option shall be canceled in exchange for a payment to the Optionee, effective on
the day which is six months and one day after the date of grant of such Subject
Option, equal to the Spread multiplied by the number of shares of Common Stock
granted under the Subject Option. With respect to any Optionee who is an officer
or director of the Company (within the meaning of Section 16(b) of the Exchange
Act), the 6o-day period shall be extended, if necessary, to include the "window
period" of Rule 16(b)-3 which first commences on or after the date of the Sale,
and the Committee shall have sole discretion, if necessary, to approve the
Optionee's exercise hereunder and the date on which the Spread is calculated may
be adjusted, if necessary, to a later date if necessary to avoid liability to
such Optionee under Section 16(b) , For purposes of the Plan, "Sale Price" means
the higher of (a) the highest reported sales price of a share of Common Stock in
any transaction reported on the principal exchange on which such shares are
listed or on NASDAQ during the 6o-day period prior to and including the date of
a Sale or (b) if the Sale is the result of a tender or exchange offer or a
corporate transaction, the highest price per share of Common Stock paid in such
tender or exchange offer or a corporate transaction, except that, in the case of
Incentive Stock Options, such price shall be based only on the Fair Market Value
of the Common Stock on the date such Incentive Stock Option is exercised. To the
extent that the consideration paid in any such transaction described above
consists all or in part of securities or other non-cash consideration, the value
of such

                                      -11-
<PAGE>

securities or other non-cash consideration shall be determined in the sole
discretion of the Committee.

            (g) Mitigation of Excise Tax. If any payment or right accruing to an
Optionee under this Plan (without the application of this Section, either alone
or together with other payments or rights accruing to the Optionee from the
Company or an affiliate ("Total Payments") would constitute a "parachute
payment" (as defined in Section 280G of the Code and regulations thereunder),
the Committee may in each particular instance determine to (i) reduce such
payment or right to the largest amount or greatest right that will result in no
portion of the amount payable or right accruing under the Plan being subject to
an excise tax under Section 4999 of the Code or being disallowed as a deduction
under Section 28OG of the Code, or (ii) take such other actions, or make such
other arrangements or payments with respect to any such payment or right as the
Committee may determine in the circumstances. Any such determination shall be
made by the Committee in the exercise of its sole discretion, and such
determination shall be conclusive and binding on the Optionee. The Optionee
shall cooperate as may be requested by the Committee in connection with the
Committee's determination, including providing the Committee with such
information concerning such Optionee as the Committee may deem relevant to its
determination.

            11. Time of Granting Options. The date of grant of an Option shall,
for all purposes, be the date on which the Committee makes the determination
granting such Option. Notice of the determination shall be given to each
Employee, Consultant or Outside Director to whom an Option is so granted within
a reasonable time after the date of such grant. If the Committee cancels, with
the consent of Optionee, any Option granted under this Plan, and a new Option is
substituted therefor, the date that the canceled Option was originally granted
shall be the date used to determine the earliest date for exercising the new
substituted Option under Section 7 so that the Optionee may exercise the
substituted Option at the same time as if the Optionee had held the substituted
Option since the date the canceled Option was granted.

            12. Amendment and Termination of Plan.

            (a) Amendment and Termination. The Board or the Committee may amend,
waive or terminate this Plan from time to time in such respects as it shall deem
advisable; provided that, to the extent necessary to comply with Rule 16b-3 or
with Section 422 of the Code (or any other successor or applicable law or
regulation), the Company shall obtain stockholder approval of any Plan amendment
in such a manner and to such a degree as is required by the applicable law, rule
or regulation. Notwithstanding the foregoing, neither the provisions of Section
5(b) of this Plan, nor any other provisions pertaining to the automatic option
grants to Outside Directors, shall be amended more than once every six months,
other than to comport with changes in the Code or other applicable laws or any
rules or regulations promulgated thereunder.

                                      -12-
<PAGE>

            (b) Effect of Amendment or Termination. Any such amendment or
termination of this 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 Committee, which agreement must be in writing and signed by the Optionee and
the Company.

            13. 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 all
relevant provisions of law, including, without limitation, the Securities Act,
the Exchange Act, and the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the Shares may then be listed, 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.

            14. Restrictions on Shares. Shares of Common Stock issued upon
exercise of an Option shall be subject to the terms and conditions specified
herein and to such other terms, conditions and restrictions as the Committee in
its discretion may determine or provide in the grant. The Company shall not be
required to issue or deliver any certificates for shares of Common Stock, cash
or other property prior to (a) the listing of such shares on any stock exchange
(or other public market) on which the Common Stock may then be listed (or
regularly traded), (b) the completion of any registration or qualification of
such shares under federal or state law, or any ruling or regulation of any
government body which the Committee determines to be necessary or advisable, and
(c) the satisfaction of any applicable withholding obligation in order for the
Company or an affiliate to obtain a deduction with respect to the exercise of an
Option. The Company may cause any certificate for any share of Common Stock to
be delivered to be properly marked with a legend or other notation reflecting
the limitations on transfer of such Common Stock as provided in this Plan or as
the Committee may otherwise require. The Committee may require any person
exercising an Option to make such representations and furnish such information
as it may consider appropriate in connection with the issuance or delivery of
the shares of Common Stock in compliance with applicable law or otherwise.
Fractional shares shall not be delivered, but shall be rounded to the next lower
whole number of shares.

            15. Stockholder Rights. No person shall have any rights of a
stockholder as to shares of Common Stock subject to an Option until, after
proper exercise of the Option or other action required, such shares shall have
been recorded on the Company's official stockholder records as having been

                                      -13-
<PAGE>

issued or transferred. Subject to the preceding Section and upon exercise of the
Option or any portion thereof, the Company will have thirty (30) days in which
to issue the shares, and the Optionee will not be treated as a stockholder for
any purpose whatsoever prior to such issuance. No adjustment shall be made for
cash dividends or other rights for which the record date is prior to the date
such shares are recorded as issued or transferred in the Company's official
stockholder records, except as provided herein or in an agreement.

            16. Best Efforts To Register. If there has been a public offering,
the Company may register under the Securities Act the Common Stock delivered or
deliverable pursuant to Options on Commission Form S-8 if available to the
Company for this purpose (or any successor or alternate form that is
substantially similar to that form to the extent available to effect such
registration), in accordance with the rules and regulations governing such
forms, as soon as such forms are available for registration to the Company for
this purpose. The Company will, if it so determines, use its good faith efforts
to cause the registration statement to become effective as soon as possible and
will file such supplements and amendments to the registration statement as may
be necessary to keep the registration statement in effect until the earliest of
(a) one year following the expiration of the option period of the last Option
outstanding, (b) the date the Company is no longer a reporting company under the
Exchange Act and (c) the date all Optionees have disposed of all shares
delivered pursuant to any Option. The Company may delay the foregoing actions at
any time and from time to time if the Committee determines in its discretion
that any such registration would materially and adversely affect the Company's
interests or if there is no material benefit to Optionees.

            17. 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 permit the exercise of all Options outstanding under this
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 for any
reason.

            18. Option Agreements. Options shall be evidenced by written Option
agreements in such form as the Committee shall approve.

            19. Information to Optionees. To the extent required by applicable
law, the Company shall provide to each Optionee, during the period for which
such Optionee has one or more Options outstanding, copies of all annual reports
and other information which are provided to all stockholders of the Company.
Except as otherwise noted in the foregoing sentence, the Company shall have no
obligation or duty to affirmatively disclose to any Optionee, and no Optionee
shall have any right to be advised of, any material information regarding the
Company or any Parent or Subsidiary at any time

                                      -14-
<PAGE>

prior to, upon or otherwise in connection with, the exercise of an Option.

            20. Funding . Benefits payable under this Plan to any person shall
be paid directly by the Company. The Company shall not be required to fund or
otherwise segregate assets to be used for payment of benefits under this Plan.

            21. Indemnification. In addition to such other rights of
indemnification as they may have as directors or as members of the Committee,
the members of the Committee shall be indemnified by the Company against the
reasonable expenses, including attorneys' fees, actually and necessarily
incurred in connection with the defense of any action, suit or proceeding, or in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with this
Plan or any option granted hereunder, and against all amounts paid by them in
settlement thereof (provided such settlement is approved by independent legal
counsel selected by the Company) or paid by them in satisfaction of a judgment
in any such action, suit or proceeding; provided that within 60 days after
institution of any such action, suit or proceeding a Committee member shall in
writing offer the Company the opportunity, at its own expense, to handle and
defend the same. The foregoing right of indemnification shall not be exclusive
and shall be independent of any other rights of indemnification to which such
persons may be entitled under the Company's Certificate of Incorporation or
bylaws, by contract, as a matter of law, or otherwise.

            22. Controlling Law. This Plan shall be governed by the laws of the
State of Delaware applicable to contracts made and performed wholly in Delaware
between Delaware residents.

                                      -15-

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