Document:

<PAGE>
                                                                   Exhibit 10.56
[LOGO] Guy Carpenter

                        Guy Carpenter & Company, Inc.

                        44 Whippany Road
                        P.O. Box 1966
                        973-401-5000                     Telephone 973-401-5000
                        Morristown, NJ  07962-1966       Facsimile 973-401-8260

Placement Slip
--------------------------------------------------------------------------------
                                         File #:           8493-0009-01/2/3/4
                                         Effective Date:   January 1, 2002

COMPANY:
-------

     SCPIE HOLDINGS, INC.,
     AND/OR SCPIE INDEMNITY COMPANY,
     AND/OR AMERICAN HEALTHCARE INDEMNITY COMPANY,
     AND/OR AMERICAN HEALTHCARE SPECIALTY COMPANY,
     AND/OR SCPIE INSURANCE SERVICES, INC.,
     AND/OR SCPIE MANAGEMENT SERVICES, INC.,
     LOS ANGELES, CALIFORNIA

TYPE:
----

     FIRST - FOURTH  EXCESS OF LOSS REINSURANCE

BUSINESS COVERED:
----------------

     1.   Physicians & Surgeons Comprehensive Professional and Business
          Liability, including Clinics and Clinical Laboratories.

     2.   Professional and Business Liability Policies for Hospitals and
          Healthcare Facilities, including:

          a.   Modified Claims Made Coverage Hospitals and Medical Centers
               (Primary & Excess);

          b.   Claims Made Coverage Hospitals and Medical Centers (Primary &
               Excess);

          c.   Excess Automobile Liability and Excess Employers Liability
               associated with the policy forms outlined above.

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                                         Page:             2 of 8
                                         File #:           8493-0009-01/2/3/4
                                         Effective Date:   January 1, 2002

BUSINESS COVERED (continued)
----------------------------

     3.   Errors and Omissions Liability Policies for Managed Care
          Organizations, and Directors and Officers Liability Policies.

     4.   Physicians and Surgeons Comprehensive Professional Liability and
          Personal Umbrella Business underwritten by Brown & Brown, Inc., Tampa,
          Florida.

TERM:
----

     January 1, 2002 to December 31, 2002 as respects claims made during the
     calendar year 2002.

     The term "claims made" as used herein shall mean (A) In respect of Claims
     Made Policies, claims first notified to the Company during the term of this
     Agreement on any inforce policy or reporting endorsement arising out of
     incidents subsequent to the retroactive date of said policy as the result
     of the rendering of or failure to render a professional service or the
     reporting of losses which arise from the insured premises and operations
     incidental to the practice of a physician, hospital or managed care
     organization and/or (B) In respect of Occurrence, or Modified Claims Made
     Policies, claims or losses first notified to the Company during the term of
     this Agreement.

     Retroactive date January 1, 1976, except for Extra Contractual Obligations
     which is January 1, 1979.

     In the event of cancellation, and at the option of the Reinsured,
     Reinsurers agree to run-off policies in force until natural expiration not
     to exceed 12 months from the expiration date hereon, subject to a Premium
     equal to 50% of the Actual Earned Reinsurance Premium applicable to each
     layer.

TERRITORY:
---------

     As per the Company's original policies, contracts, or binders

EXCLUSIONS:
----------

     1.   Insolvency Funds.

     2.   Nuclear Incident - Liability - Reinsurance.

     3.   Assumed Reinsurance other than for Licensing, Financial Rating
          Purposes or Acquisition Purposes.

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                                         Page:             3 of 8
                                         File #:           8493-0009-01/2/3/4
                                         Effective Date:   January 1, 2002

LIMIT AND RETENTION:
-------------------

     First Layer:
     -----------

     A.)  $3,750,000 each and every loss in excess of $1,250,000 as respects
          Physicians and Surgeons Comprehensive Professional and Business
          Liability Policies, including clinics and clinical laboratories,
          Professional and Business Liability polices for Healthcare Facilities,
          and Errors and Omissions liability policies for Managed Care
          Organizations and Directors and Officers Liability Policies.

     B.)  $3,000,000 each and every loss in excess of $2,000,000 each and every
          loss with respect to Professional and Business Liability Policies for
          Hospitals.

     C.)  It is understood and agreed that this agreement would respond to
          individual losses under Physicians and Surgeons Comprehensive
          Professional and Business Liability Policies, including clinics and
          clinical laboratories, Professional and Business Liability policies
          for Healthcare Facilities, Errors and Omissions Liability Policies for
          Managed Care Organizations, and Directors and Officers Liability
          Policies and/or any combination thereof, in excess of $1,250,000
          arising from any one incident. However, in the event any such combined
          loss were to include Professional and Business Liability Policies for
          Hospitals, then this agreement would attach in excess of $2,000,000
          arising from any one incident.

     D.)  Reinsurers maximum aggregate liability, during the term of this
          Agreement shall be $15,000,000.

     Not withstanding the foregoing it is a condition hereto that an Annual
     Aggregate Deductible of $2,750,000 and otherwise recoverable, shall first
     be deducted before any liability attaches hereon.

     Second Layer:
     ------------

     A.)  $5,000,000 each and every loss in excess of $5,000,000 each and every
          loss.

     B.)  Reinstatements -      First -  Computed Pro-Rata as to amount, 50%
                                         as to Premium.

                                Second - Computed Pro-Rata as to amount, 100%
                                         as to Premium.

     Third Layer:
     -----------

     A.)  $10,000,000 each and every loss in excess of $10,000,000 each and
          every loss.

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                                         Page:             4 of 8
                                         File #:           8493-0009-01/2/3/4
                                         Effective Date:   January 1, 2002

LIMIT AND RETENTION (continued)
------------------------------

     B.)  Reinstatements -      First -  Computed Pro-Rata as to amount, 100%
                                         as to Premium.

                                Second - Computed Pro-Rata as to amount, 100%
                                         as to Premium.

     Fourth Layer:
     ------------

     A.)  $30,000,000 each and every loss in excess of $20,000,000 each and
          every loss

     B.)  Reinstatement -       One in all computed Pro Rata as to amount, 100%
                                as to Premium.

WARRANTY:
--------

     1.)  In respect of Physicians and Surgeons Comprehensive Professional and
          Business Liability Policies, including Clinics and Clinical
          Laboratories, the Maximum Policy Limit is $10,000,000 subject to
          inuring protection of $8,000,000 in excess of $2,000,000 with a
          maximum aggregate of $8,000,000 during each 12 month period, or so
          deemed.

     2.)  Coverage for Professional and Business Liability Policies for
          Hospitals is restricted to policies incepting prior to January 1,
          2002, the Maximum Policy Limit is $50,000,000, or so deemed.

     3.)  In respect of Professional and Business Liability Policies for
          Healthcare Facilities, the Maximum Policy Limit is $10,000,000 for
          policies incepting prior to January 1, 2002, and $5,000,000 for
          policies incepting on or after January 1, 2002, or so deemed.

     4.)  In respect of Errors and Omissions Liability Policies for Managed Care
          Organizations, Directors and Officers Liability Policies, and
          Employment Practices Liability Insurance, the Maximum Policy Limit is
          $5,000,000 for policies incepting prior to January 1, 2002, and
          $1,000,000 for policies incepting on or after January 1, 2002, or so
          deemed.

     5.)  In respect of Professional and Business Liability Policies for
          Dentists, excluding coverages for Oral and Maxillofacial Surgeons, the
          Maximum Policy Limit is $10,000,000, for policies incepting prior to
          January 1, 2002, and $2,000,000 for policies incepting on or after
          January 1, 2002, or so deemed.

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                                         Page:             5 of 8
                                         File #:           8493-0009-01/2/3/4
                                         Effective Date:   January 1, 2002

PREMIUM:
-------

     First Layer:
     -----------
     4.50% of G.N.E.P.I.
     Deposit - $7,232,000 payable $1,808,000 quarterly.
     Minimum - $5,785,600

     Second Layer:
     ------------
     1.87% of G.N.E.P.I.
     Deposit - $3,000,000 payable $750,000 quarterly.
     Minimum - $2,400,000

     Third Layer:
     -----------
     1.17% of G.N.E.P.I.
     Deposit - $1,880,000 payable $470,000 quarterly
     Minimum - $1,504,000

     Fourth Layer:
     ------------
     0.82% G.N.E.P.I.
     Deposit - $1,300,000 payable $325,000 quarterly. Minimum - $1,040,000.

ATTACHMENT OF LIABILITY:
-----------------------

     (A)  For purposes of determining the attachment of the Reinsurers liability
          hereunder as respects any one loss, all losses (including Discovery
          Period Losses) involving one or more Original Insureds, arising from
          the same incident, and in which First Notice of Claim or Circumstance
          is notified to the Company during the term of this Agreement shall be
          covered hereunder.

     (B)  The date of a loss hereunder shall be the earliest date, within the
          term of this Agreement, that the Company has received First Notice of
          Claim or Circumstance.

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                                         Page:             6 of 8
                                         File #:           8493-0009-01/2/3/4
                                         Effective Date:   January 1, 2002

ACCOUNTING:
----------

     Premiums - Payments within 60 days of respective due date. Losses -
     Payments within 60 days of receipt of proof of loss.
     Outstanding losses reported individually as they occur.

GENERAL CONDITIONS:
------------------

     Loss Adjustment Expenses to be included with the Ultimate Net Loss.
     Excess of Original Policy Limits Clause.
     80% Extra Contractual Obligations Clause.
     Ultimate Net Loss Clause including Declaratory Judgement Expenses
        incurred in connection with coverage questions and legal actions
        related to a specific claim.
     Net Retained Lines Clause.
     Notice of Loss Clause.
     Loss Funding Clause - Including IBNR (See Attached).
     Special Funding Clause.
     Confidentiality Clause.
     Commutation Clause by Mutual Agreement.
     Federal Excise Tax Clause.
     Errors and Omissions Clause.
     Insolvency Clause.
     Offset Clause - BRMA 36A
     Service of Suit Clause.
     Arbitration Clause.
     Access to Records Clause.
     Guy Carpenter & Company, Inc. Intermediary Clause.

INFORMATION:
-----------

     2002 Premium Estimates by Line:
     ------------------------------

     Physicians SCPIE                      $ 83,500,000
     Physicians Cal. Standard AHI          $ 14,500,000
     Physicians Other than Cal. Std. AHI   $  2,500,000
     Physicians - Non Standard AHI         $  2,000,000
     Physicians - Non Standard AHSIC       $  1,000,000
                                           ------------
                            Subtotal:      $103,500,000

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

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                                         Page:             7 of 8
                                         File #:           8493-0009-01/2/3/4
                                         Effective Date:   January 1, 2002

INFORMATION (continued)
----------------------

     Hospitals                             $  2,750,000
     Healthcare Facilities                 $  6,500,000
     Heathcare Providers                   $  1,750,000
     Umbrella                              $    600,000
     Managed Care E&O                      $  1,000,000
     Directors & Officers                  $  1,600,000
                                           ------------
                            Subtotal:      $ 14,200,000

     Brown & Brown
     Physicians                            $ 36,000,000
     Phys. - Dentists & Oral Surgeons      $  7,000,000
                                           ------------
                            Subtotal:      $ 43,000,000

     Grand Total:                          $160,700,000

REGULATION 98:
-------------

     Premium and loss payments made to Guy Carpenter & Company, Inc. shall be
     deposited in a Premium and Loss Account in accordance with Section
     32.3(a)(1) of Regulation 98 of the New York Insurance Department. The
     parties hereto consent to withdrawals from said account in accordance with
     Section 32.3(a)(3) of the Regulation, including interest and Federal Excise
     Tax.

BROKERAGE:
---------

     10%

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                                         Page:             8 of 8
                                         File #:           8493-0009-01/2/3/4
                                         Effective Date:   January 1, 2002

ACCEPTED:
---------

     First Layer:
                       ---------------------------------------------------------

     Second Layer:
                       ---------------------------------------------------------

     Third Layer:
                       ---------------------------------------------------------

     Fourth Layer:
                       ---------------------------------------------------------

     Fifth Layer:
                       ---------------------------------------------------------

Reinsurer:
                       ---------------------------------------------------------

Reference #:
                       ---------------------------------------------------------

FEIN # & NAIC #:
                       ---------------------------------------------------------

Authorized Signature:
                       ---------------------------------------------------------

Date:
                       ---------------------------------------------------------

--------------------------------------------------------------------------------<PAGE>

                                                                   Exhibit 10.57

             THE 2001 amended and restated EQUITY PARTICIPATION PLAN

                                       OF

                               SCPIE Holdings Inc.
                               -------------------

          SCPIE Holdings Inc., a Delaware corporation, has adopted The 2001
Amended and Restated Equity Participation Plan of SCPIE Holdings Inc (the
"Plan"), effective October 17, 2001, for the benefit of its eligible employees,
consultants and directors. The Plan consists of two plans, one for the benefit
of key Employees (as such term is defined below) and Consultants and one for the
benefit of Independent Directors (as such term is defined below) and constitutes
an amendment and restatement of the 1997 Equity Participation Plan of SCPIE
Holdings Inc.

          The purposes of this Plan are as follows:

          (1)     To provide an additional incentive for directors, key
Employees and Consultants to further the growth, development and financial
success of the Company by personally benefiting through the ownership of Company
stock and/or rights which recognize such growth, development and financial
success.

          (2)     To enable the Company to obtain and retain the services of
directors, key Employees and Consultants considered essential to the long range
success of the Company by offering them an opportunity to own stock in the
Company and/or rights which will reflect the growth, development and financial
success of the Company.

                                       1.

                                   DEFINITIONS

          1.1.    General. Wherever the following terms are used in this Plan
                  -------
they shall have the meanings specified below, unless the context clearly
indicates otherwise.

          1.2.    Award Limit. "Award Limit" shall mean 250,000 shares of Common
                  -----------
Stock, as adjusted pursuant to Section 10.3.

          1.3.    Board. "Board" shall mean the Board of Directors of the
                  -----
Company.

          1.4.    Change in Control. "Change in Control" shall mean a change in
                  -----------------
ownership or control of the Company effected through the occurrence of any of
the following:

                  1.4.1    any Person (as defined in Sections 13(d) and 14(d) of
the Exchange Act is or becomes the Beneficial Owner (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the Company's then
outstanding securities ("Outstanding Company Voting Securities"); provided,
                                                                  --------
however, that, for purposes of this subsection 1.4.1, the following shall not
-------
constitute a Change in Control: (i) any acquisition by the Company or any

<PAGE>

corporation controlled by the Company, (ii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company, or (iii) any acquisition by a Person of
20% of the Outstanding Company Voting Securities as a result of an acquisition
of Common Stock by the Company which, by reducing the number of shares of Common
Stock of the Company outstanding, increases the proportionate number of shares
beneficially owned by such Person to 20% or more of the Outstanding Company
Voting Securities; provided, further, that if a Person shall become the
                   --------  -------
beneficial owner of 20% or more of the Outstanding Company Voting Securities by
reason of a share acquisition by the Company as described above and shall, after
such share acquisition by the Company, become the beneficial owner of any
additional shares of Common Stock, then such acquisition shall constitute a
Change in Control;

                  1.4.2.   during any period of two consecutive years
individuals who at the beginning of such period constitute the Board, and any
new Board member (other than a Board member designated by a person who has
entered into an agreement with the Company to effect a transaction described in
Sections 1.4.1, 1.10.1, 1.10.2 or 1.10.3 hereof) whose election by the Board or
nomination for election by the Company's stockholders was approved by a vote of
at least two-thirds (K) of the Board members then still in office who either
were Board members at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute at least a majority of the Board;

          1.5.    Code. "Code" shall mean the Internal Revenue Code of 1986,
                  ----
as amended.

          1.6.    Committee.  "Committee" shall mean the Compensation Committee
                  ---------
of the Board, or another committee or subcommittee of the Board, appointed as
provided in Section 9.1.

          1.7.    Common Stock. "Common Stock" shall mean the common stock of
                  ------------
the Company, par value $.0001 per share, and any equity security of the Company
issued or authorized to be issued in the future, but excluding any preferred
stock and any warrants, options or other rights to purchase Common Stock. Debt
securities of the Company convertible into Common Stock shall be deemed equity
securities of the Company.

          1.8.    Company.  "Company" shall mean SCPIE Holdings Inc., a Delaware
                  -------
corporation.

          1.9.    Consultant.  "Consultant" shall mean any consultant or adviser
                  ----------
if:

                  1.9.1.   the consultant or adviser renders bona fide services
to the Company;

                  1.9.2.   the services rendered by the consultant or adviser
are not in connection with the offer or sale of securities in a capital-raising
transaction and do not directly or indirectly promote or maintain a market for
the Company's securities; and

                  1.9.3.   the consultant or adviser is a natural person who has
contracted directly with the Company to render such services.

                                       2

<PAGE>

          1.10.   Corporate Transaction. "Corporate Transaction" shall mean any
                  ---------------------
of the following stockholder-approved transactions to which the Company is a
party: "Corporate Transaction" shall mean any of the following
stockholder-approved transactions to which the Company is a party, other than
any such transaction which constitutes a Change in Control:

                  1.10.1.  a merger or consolidation in which the Company is not
the surviving entity, except for a transaction the principal purpose of which is
to change the State in which the Company is incorporated, form a holding company
or effect a similar reorganization as to form whereupon this Plan and all
Options are assumed by the successor entity;

                  1.10.2.  the sale, transfer, exchange or other disposition of
all or substantially all of the assets of the Company, in complete liquidation
or dissolution of the Company in a transaction not covered by the exceptions to
subsection 1.10.1, above; or

                  1.10.3.  any reverse merger in which the Company is the
surviving entity but in which securities possessing more than 50% of the total
combined voting power of the Company's outstanding securities are transferred or
issued to a person or persons different from those who held such securities
immediately prior to such merger.

          1.11.   Deferred Stock. "Deferred Stock" shall mean Common Stock
                  --------------
awarded under Article VII of this Plan.

          1.12.   Director. "Director" shall mean a member of (i) the Board or
                  --------
(ii) the Board of Directors of any corporation which is a Subsidiary.

          1.13.   Dividend Equivalent. "Dividend Equivalent" shall mean a right
                  -------------------
to receive the equivalent value (in cash or Common Stock) of dividends paid on
Common Stock, awarded under Article VII of this Plan.

          1.14.   Employee. "Employee" shall mean any officer or other employee
                  --------
(as defined in accordance with Section 3401(c) of the Code) of the Company, or
of any corporation which is a Subsidiary.

          1.15.   Exchange Act. "Exchange Act" shall mean the Securities
                  ------------
Exchange Act of 1934, as amended.

          1.16.   Fair Market Value. "Fair Market Value" of a share of Common
                  -----------------
Stock as of a given date shall be (i) the closing price of a share of Common
Stock on the principal exchange on which shares of Common Stock are then
trading, if any (or as reported on any composite index which includes such
principal exchange), on the trading day previous to such date, or if shares were
not traded on the trading day previous to such date, then on the next preceding
date on which a trade occurred; or (ii) if Common Stock is not traded on an
exchange but is quoted on Nasdaq or a successor quotation system, the mean
between the closing representative bid and asked prices for the Common Stock on
the trading day previous to such date as reported by Nasdaq or such successor
quotation system; or (iii) if Common Stock is not publicly traded on an exchange
and not quoted on Nasdaq or a successor quotation system, the Fair Market Value
of a share of Common Stock as established by the Committee (or the Board, in the
case of Options granted to Independent Directors) acting in good faith.

                                       3

<PAGE>

          1.17.   Grantee. "Grantee" shall mean an Employee or Consultant
                  -------
granted a Performance Award, Dividend Equivalent, Stock Payment or Stock
Appreciation Right, or an award of Deferred Stock, under this Plan.

          1.18.   Incentive Stock Option. "Incentive Stock Option" shall mean an
                  ----------------------
option which conforms to the applicable provisions of Section 422 of the Code
and which is designated as an Incentive Stock Option by the Committee.

          1.19.   Independent Director. "Independent Director" shall mean a
                  --------------------
Director who is not an Employee of the Company or of any corporation which is a
Subsidiary.

          1.20.   Non-Qualified Stock Option. "Non-Qualified Stock Option" shall
                  --------------------------
mean an Option which is not designated as an Incentive Stock Option by the
Committee.

          1.21.   Option. "Option" shall mean a stock option granted under
                  ------
Article III of this Plan. An Option granted under this Plan shall, as determined
by the Committee, be either a Non-Qualified Stock Option or an Incentive Stock
Option; provided, however, that Options granted to Independent Directors and
Consultants shall be Non-Qualified Stock Options.

          1.22.   Optionee. "Optionee" shall mean an Employee, Consultant or
                  --------
Independent Director granted an Option under this Plan.

          1.23.   Performance Award. "Performance Award" shall mean a cash
                  -----------------
bonus, stock bonus or other performance or incentive award that is paid in cash,
Common Stock or a combination of both, awarded under Article VII of this Plan.

          1.24.   Plan. "Plan" shall mean The 2001 Amended and Restated Equity
                  ----
Participation Plan of SCPIE Holdings Inc.

          1.25.   QDRO. "QDRO" shall mean a qualified domestic relations order
                  ----
as defined by the Code or Title I of the Employee Retirement Income Security Act
of 1974, as amended, or the rules thereunder.

          1.26.   Restricted Stock. "Restricted Stock" shall mean Common Stock
                  ----------------
awarded under Article VI of this Plan.

          1.27.   Restricted Stockholder. "Restricted Stockholder" shall mean an
                  ----------------------
Employee or Consultant granted an award of Restricted Stock under Article VI of
this Plan.

          1.28.   Rule 16b-3. "Rule 16b-3" shall mean that certain Rule 16b-3
                  ----------
under the Exchange Act, as such Rule may be amended from time to time.

          1.29.   Section 162(m) Participant. "Section 162(m) Participant" shall
                  --------------------------
mean any key Employee designated by the Committee as a key Employee whose
compensation for the fiscal year in which the key Employee is so designated or a
future fiscal year may be subject to the limit on deductible compensation
imposed by Section 162(m) of the Code.

                                        4

<PAGE>

          1.30.   Stock Appreciation Right. "Stock Appreciation Right" shall
                  ------------------------
mean a stock appreciation right granted under Article VIII of this Plan.

          1.31.   Stock Payment. "Stock Payment" shall mean a payment in the
                  -------------
form of (i) shares of Common Stock, or (ii) an option or other right to purchase
shares of Common Stock, as part of a deferred compensation arrangement, made in
lieu of all or any portion of the compensation, including without limitation,
salary, bonuses and commissions, that would otherwise become payable to a key
Employee or Consultant in cash, awarded under Article VII of this Plan.

          1.32.   Subsidiary. "Subsidiary" shall mean any corporation in an
                  ----------
unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain then owns
stock possessing 50% or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain.

          1.33.   Termination of Consultancy. "Termination of Consultancy" shall
                  --------------------------
mean the time when the engagement of an Optionee, Grantee or Restricted
Stockholder as a Consultant to the Company or a Subsidiary is terminated for any
reason, with or without cause, including, but not by way of limitation, by
resignation, discharge, death or retirement; but excluding terminations where
there is a simultaneous commencement of employment with the Company or any
Subsidiary. The Committee, in its absolute discretion, shall determine the
effect of all matters and questions relating to Termination of Consultancy,
including, but not by way of limitation, the question of whether a Termination
of Consultancy resulted from a discharge for good cause, and all questions of
whether a particular leave of absence constitutes a Termination of Consultancy.
Notwithstanding any other provision of this Plan, the Company or any Subsidiary
has an absolute and unrestricted right to terminate a Consultant's service at
any time for any reason whatsoever, with or without cause, except to the extent
expressly provided otherwise in writing.

          1.34.   Termination of Directorship. "Termination of Directorship"
                  ---------------------------
shall mean the time when an Optionee who is an Independent Director ceases to be
a Director for any reason, including, but not by way of limitation, a
termination by resignation, failure to be elected, death or retirement. The
Board, in its sole and absolute discretion, shall determine the effect of all
matters and questions relating to Termination of Directorship with respect to
Independent Directors.

          1.35.   Termination of Employment. "Termination of Employment" shall
                  -------------------------
mean the time when the employee-employer relationship between an Optionee,
Grantee or Restricted Stockholder and the Company or any Subsidiary is
terminated for any reason, with or without cause, including, but not by way of
limitation, a termination by resignation, discharge, death, disability or
retirement; but excluding (i) terminations where there is a simultaneous
reemployment or continuing employment of an Optionee, Grantee or Restricted
Stockholder by the Company or any Subsidiary, (ii) at the discretion of the
Committee, terminations which result in a temporary severance of the
employee-employer relationship, and (iii) at the discretion of the Committee,
terminations which are followed by the simultaneous establishment of a
consulting relationship by the Company or a Subsidiary with the former employee.
The Committee, in its absolute discretion, shall determine the effect of all
matters and questions relating to Termination of Employment, including, but not
by way of limitation, the question of whether a Termination of Employment
resulted from a discharge for good cause, and all questions of whether a
particular leave of absence constitutes a Terminations of Employment; provided,
                                                                      --------
however, that, with respect to Incentive Stock
-------

                                       5

<PAGE>

Options unless otherwise determined by the Committee in its discretion, a leave
of absence, change in status from an employee to an independent contractor or
other change in the employee-employer relationship shall constitute a
Termination of Employment if, and to the extent that, such leave of absence,
change in status or other change interrupts employment for the purposes of
Section 422(a)(2) of the Code and the then applicable regulations and revenue
rulings under said Section. Notwithstanding any other provision of this Plan,
the Company or any Subsidiary has an absolute and unrestricted right to
terminate an Employee's employment at any time for any reason whatsoever, with
or without cause, except to the extent expressly provided otherwise in writing.

                                       2.

                             SHARES SUBJECT TO PLAN

          2.1.    Shares Subject to Plan.
                  ----------------------

                  2.1.1.   The shares of stock subject to Options, awards of
Restricted Stock, Performance Awards, Dividend Equivalents, awards of Deferred
Stock, Stock Payments or Stock Appreciation Rights shall be Common Stock,
initially shares of the Company's Common Stock, par value $.0001 per share. The
aggregate number of such shares which may be issued upon exercise of such
Options or rights or upon any such awards under the Plan shall not exceed
1,250,000. The shares of Common Stock issuable upon exercise of such Options or
rights or upon any such awards may be either previously authorized but unissued
shares or treasury shares.

                  2.1.2.   The maximum number of shares which may be subject to
Options, awards of Restricted Stock, Performance Awards, Dividend Equivalents,
awards of Deferred Stock, Stock Payments or Stock Appreciation Rights granted
under the Plan to any individual in any calendar year shall not exceed the Award
Limit. To the extent required by Section 162(m) of the Code, shares subject to
Options which are canceled continue to be counted against the Award Limit.

          2.2.    Add-back of Options and Other Rights. If any Option, or other
                  ------------------------------------
right to acquire shares of Common Stock under any other award under this Plan,
expires or is canceled without having been fully exercised, or is exercised in
whole or in part for cash as permitted by this Plan, the number of shares
subject to such Option or other right but as to which such Option or other right
was not exercised prior to its expiration, cancellation or exercise may again be
optioned, granted or awarded hereunder, subject to the limitations of Section
2.1. Furthermore, any shares subject to Options or other awards which are
adjusted pursuant to Section 10.3 and become exercisable with respect to shares
of stock of another corporation shall be considered canceled and may again be
optioned, granted or awarded hereunder, subject to the limitations of Section
2.1. Shares of Common Stock which are delivered by the Optionee or Grantee or
withheld by the Company upon the exercise of any Option or other award under
this Plan, in payment of the exercise price thereof, may again be optioned,
granted or awarded hereunder, subject to the limitations of Section 2.1. If any
share of Restricted Stock is forfeited by the Grantee or repurchased by the
Company pursuant to Section 6.7 hereof, such share may again be optioned,
granted or awarded hereunder, subject to the limitations of Section 2.1.
Notwithstanding the provisions of this Section 2.2, no shares of Common Stock
may again be optioned, granted or awarded if such action would cause an
Incentive Stock Option to fail to qualify as an incentive stock option under
Section 422 of the Code.

                                       6

<PAGE>

                                       3.

                               GRANTING OF OPTIONS

          3.1.    Eligibility. Any Employee or Consultant selected by the
                  -----------
Committee pursuant to Section 3.4.1.1 shall be eligible to be granted an Option.
Each Independent Director of the Company shall be eligible to be granted Options
at the times and in the manner set forth in Section 3.4.4.

          3.2.    Disqualification for Stock Ownership. No person may be granted
                  ------------------------------------
an Incentive Stock Option under this Plan if such person, at the time the
Incentive Stock Option is granted, owns stock possessing more than ten percent
of the total combined voting power of all classes of stock of the Company or any
then existing Subsidiary or parent corporation (within the meaning of Section
422 of the Code) unless such Incentive Stock Option conforms to the applicable
provisions of Section 422 of the Code.

          3.3.    Qualification of Incentive Stock Options. No Incentive Stock
                  ----------------------------------------
Option shall be granted to any person who is not an Employee.

          3.4.    Granting of Options
                  -------------------

                  3.4.1.   The Committee shall from time to time, in its
absolute discretion, and subject to applicable limitations of this Plan:

                           3.4.1.1.    Determine which Employees are key
Employees and select from among the key Employees or Consultants (including
Employees or Consultants who have previously received Options or other awards
under this Plan) such of them as in its opinion should be granted Options;

                           3.4.1.2.    Subject to the Award Limit, determine the
number of shares to be subject to such Options granted to the selected key
Employees or Consultants;

                           3.4.1.3.    Subject to Section 3.3, determine whether
such Options are to be Incentive Stock Options or Non-Qualified Stock Options
and whether such Options are to qualify as performance-based compensation as
described in Section 162(m)(4)(C) of the Code; and

                           3.4.1.4.    Determine the terms and conditions of
such Options, consistent with this Plan; provided, however, that the terms and
                                         --------  -------
conditions of Options intended to qualify as performance-based compensation as
described in Section 162(m)(4)(C) of the Code shall include, but not be limited
to, such terms and conditions as may be necessary to meet the applicable
provisions of Section 162(m) of the Code.

          3.4.2.  Upon the selection of a key Employee or Consultant to be
granted an Option, the Committee shall instruct the Secretary of the Company to
issue the Option and may impose such conditions on the grant of the Option as it
deems appropriate.

                                       7

<PAGE>

                  3.4.3.   Any Incentive Stock Option granted under this Plan
may be modified by the Committee to disqualify such Option from treatment as an
"incentive stock option" under Section 422 of the Code.

                  3.4.4.   The Company shall grant Options under the Plan to
Independent Directors as follows:

                           3.4.4.1.    Except as provided in Section 3.4.4.3 and
subject to being a Director on the date of each grant, (i) each person who is an
Independent Director of the Company as of the effective date of the Plan
automatically shall be granted an Option to purchase 5,000 shares of Common
Stock (subject to adjustment as provided in Section 10.3) on the date of each
annual meeting of stockholders after the effective date of the Plan; and (ii)
each person who as of the effective date of the Plan is an Independent Director
of a Subsidiary may, in the Board's absolute discretion and in connection with
each annual meeting of stockholders, be designated by the Board to be granted an
Option to purchase 5,000 shares of Common Stock (subject to adjustment as
provided in Section 10.3) on the dates of such annual meetings of stockholders
after the effective date of the Plan.

                           3.4.4.2.    Subject to being a Director on the date
of each grant, during the term of the Plan, (i) a person who is initially
elected a Director after the effective date of the Plan and who is an
Independent Director of the Company at the time of such initial election
automatically shall be granted (a) an Option to purchase 5,000 shares of Common
Stock (subject to adjustment as provided in Section 10.3) on the date of such
initial election and (b) an Option to purchase 5,000 shares of Common Stock
(subject to adjustment as provided in Section 10.3) on the date of each
subsequent annual meeting of stockholders; and (ii) a person who is initially
elected a Director after the effective date of the Plan and who at the time of
such initial election is an Independent Director of a Subsidiary may, in the
Board's absolute discretion and in connection with such initial election or in
connection with each subsequent annual meeting of stockholders (as the case may
be), be designated by the Board to be granted (a) an Option to purchase 5,000
shares of Common Stock (subject to adjustment as provided in Section 10.3) on
the date of such initial election or (b) an Option to purchase 5,000 shares of
Common Stock (subject to adjustment as provided in Section 10.3) on the date of
such subsequent annual meeting of stockholders.

                           3.4.4.3.    In lieu of the Options to be granted to
the Independent Directors under Section 3.4.4.1 at the annual meeting of
stockholders to be held in 2002, 2003, and 2004, the Company, on the effective
date of the Plan, shall grant to the Independent Directors of the Company on
such date an Option to purchase 15,000 shares of Common Stock (subject to
adjustment as provided in Section 10.3), and may grant to the Independent
Directors of Subsidiaries on such date such Options as the Board in its absolute
discretion shall determine.

                           3.4.4.4.    From time to time following the annual
meeting of stockholders to be held in 2004, the Board may, in its absolute
discretion, and subject to the applicable limitations of this Plan, grant to the
Independent Directors Options to purchase shares of Common Stock (subject to
adjustment as provided in Section 10.3) in lieu of annual Option grants for
future years.

                                       8

<PAGE>

                           3.4.4.5.    Directors who are employees of the
Company or a Subsidiary who subsequently retire from the Company or such
Subsidiary and remain a Director will not receive an initial Option grant
pursuant to clause (i)(a) or (ii)(a) of Section 3.4.4.2, but to the extent that
they are otherwise eligible, will receive, after retirement from employment with
the Company or a Subsidiary, Options as described in clause (i)(b) or (ii)(b) of
Section 3.4.4.2 and in Sections 3.4.4.3 and 3.4.4.4.

                                       4.

                                TERMS OF OPTIONS

                  4.1.     Option Agreement. Each Option shall be evidenced by a
                           ----------------
written Stock Option Agreement, which shall be executed by the Optionee and an
authorized officer of the Company and which shall contain such terms and
conditions as the Committee (or the Board, in the case of Options granted to
Independent Directors) shall determine, consistent with this Plan. Stock Option
Agreements evidencing Options intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code shall contain such
terms and conditions as may be necessary to meet the applicable provisions of
Section 162(m) of the Code. Stock Option Agreements evidencing Incentive Stock
Options shall contain such terms and conditions as may be necessary to meet the
applicable provisions of Section 422 of the Code.

                  4.2.     Option Price. The price per share of the shares
                           ------------
subject to each Option shall be set by the Committee; provided, however, that
                                                      --------  -------
such price shall be no less than the par value of a share of Common Stock,
unless otherwise permitted by applicable state law, and (i) in the case of
Options intended to qualify as performance-based compensation as described in
Section 162(m)(4)(C) of the Code, such price shall not be less than 100% of the
Fair Market Value of a share of Common Stock on the date the Option is granted;
(ii) in the case of Incentive Stock Options such price shall not be less than
100% of the Fair Market Value of a share of Common Stock on the date the Option
is granted (or the date the Option is modified, extended or renewed for purposes
of Section 424(h) of the Code); (iii) in the case of Incentive Stock Options
granted to an individual then owning (within the meaning of Section 424(d) of
the Code) more than ten percent of the total combined voting power of all
classes of stock of the Company or any Subsidiary or parent corporation thereof
(within the meaning of Section 422 of the Code), such price shall not be less
than 110% of the Fair Market Value of a share of Common Stock on the date the
Option is granted (or the date the Option is modified, extended or renewed for
purposes of Section 424(h) of the Code); and (iv) in the case of Options granted
to Independent Directors, such price shall equal 100% of the Fair Market Value
of a share of Common Stock on the date the Option is granted.

                  4.3.     Option Term. The term of an Option shall be set by
                           -----------
the Committee in its discretion; provided, however, that, (i) in the case of
                                 --------  -------
Options granted to Independent Directors, the term shall be ten years from the
date the Option is granted, without variation or acceleration hereunder, but
subject to Section 5.6, and (ii) in the case of Incentive Stock Options, the
term shall not be more than ten years from the date the Incentive Stock Option
is granted, or five years from such date if the Incentive Stock Option is
granted to an individual then owning (within the meaning of Section 424(d) of
the Code) more than 10% of the total combined voting power of all classes of

                                       9

<PAGE>

stock of the Company or any Subsidiary or parent corporation thereof (within the
meaning of Section 422 of the Code). Except as limited by requirements of
Section 422 of the Code and regulations and rulings thereunder applicable to
Incentive Stock Options, the Committee may extend the term of any outstanding
Option in connection with any Termination of Employment or Termination of
Consultancy of the Optionee, or amend any other term or condition of such Option
relating to such a termination.

          4.4.    Option Vesting
                  --------------

                  4.4.1.   The period during which the right to exercise an
Option in whole or in part vests in the Optionee shall be set by the Committee
and the Committee may determine that an Option may not be exercised in whole or
in part for a specified period after it is granted; provided, however, that,
                                                    --------  -------
unless the Committee otherwise provides in the terms of the Option or otherwise,
no Option shall be exercisable by any Optionee who is then subject to Section 16
of the Exchange Act within the period ending six months and one day after the
date the Option is granted; and provided, further, that Options granted to
                                --------  -------
Independent Directors shall become exercisable (except as provided by Section
4.4.1.1) in cumulative annual installments of 33?% on each of the first, second
and third anniversaries of the date of Option grant, without variation or
acceleration hereunder except as provided in Sections 4.4.2 and 10.3. At any
time after grant of an Option, the Committee may, in its sole and absolute
discretion and subject to whatever terms and conditions it selects, accelerate
the period during which an Option (except an Option granted to an Independent
Director) vests.

                           4.4.1.1.    Options granted to Independent Directors
pursuant to Section 3.4.4.3 shall become exercisable with respect to the
following number of shares on each of the following anniversaries of the date of
grant: (i) first anniversary, 1,666 shares, (ii) second anniversary, 3,333
shares, (iii) third anniversary, 5,001 shares, (iv) fourth anniversary, 3,333
shares and (v) fifth anniversary, 1,667, except as provided in Sections 4.4.2
and 10.3.

                  4.4.2.   No portion of an Option which is unexercisable at
Termination of Employment, Termination of Directorship or Termination of
Consultancy, as applicable, shall thereafter become exercisable, except (i) as
may be otherwise provided by the Committee in the case of Options granted to
Employees or Consultants either in the Stock Option Agreement or by action of
the Committee following the grant of the Option, or (ii) in the case of
Termination of Directorship by reason of death, permanent and total disability
(within the meaning of Section 22(e)(3) of the Code) or retirement required by
age limits imposed on directorships, each Option granted to an Independent
Director shall become fully vested and exercisable as to all shares covered
thereby upon such Termination of Directorship.

                  4.4.3.   To the extent that the aggregate Fair Market Value of
stock with respect to which "incentive stock options" (within the meaning of
Section 422 of the Code, but without regard to Section 422(d) of the Code) are
exercisable for the first time by an Optionee during any calendar year (under
the Plan and all other incentive stock option plans of the Company and any
parent or subsidiary corporation (within the meaning of Section 422 of the Code)
of the Company) exceeds $100,000, such Options shall be treated as Non-Qualified
Options to the extent required by Section 422 of the Code. The rule set forth in
the preceding sentence shall be applied by taking Options into account in the
order in which they were granted.

                                       10

<PAGE>

For purposes of this Section 4.4.3, the Fair Market Value of stock shall
be determined as of the time the Option with respect to such stock is granted.

          4.5. Consideration. In consideration of the granting of an Option, the
               -------------
Optionee shall agree, in the written Stock Option Agreement, to remain in the
employ of (or to consult for or to serve as an Independent Director of, as
applicable) the Company or any Subsidiary for a period of at least one year (or
such shorter period as may be fixed in the Stock Option Agreement or by action
of the Committee, or Board in the case of Independent Directors, following grant
of the Option) after the Option is granted. Nothing in this Plan or in any Stock
Option Agreement hereunder shall confer upon any Optionee any right to continue
in the employ of, or as a consultant for, the Company or any Subsidiary, or as a
director of the Company, or shall interfere with or restrict in any way the
rights of the Company and any Subsidiary, which are hereby expressly reserved,
to discharge any Optionee at any time for any reason whatsoever, with or without
good cause.

                                       5.

                              EXERCISE OF OPTIONS

          5.1. Partial Exercise. An exercisable Option may be exercised in whole
               ----------------
or in part. However, an Option shall not be exercisable with respect to
fractional shares and the Committee (or the Board, in the case of Options
granted to Independent Directors) may require that, by the terms of the Option,
a partial exercise be with respect to a minimum number of shares.

          5.2. Manner of Exercise. All or a portion of an exercisable Option
               ------------------
shall be deemed exercised upon delivery of all of the following to the Secretary
of the Company or his office:

               5.2.1. A written notice complying with the applicable rules
established by the Committee (or the Board, in the case of Options granted to
Independent Directors) stating that the Option, or a portion thereof, is
exercised. The notice shall be signed by the Optionee or other person then
entitled to exercise the Option or such portion of the Option;

               5.2.2. Such representations and documents as the Committee (or
the Board, in the case of Options granted to Independent Directors), in its
absolute discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act of 1933, as amended, and any other
federal or state securities laws or regulations. The Committee or Board may, in
its absolute discretion, also take whatever additional actions it deems
appropriate to effect such compliance including, without limitation, placing
legends on share certificates and issuing stop-transfer notices to agents and
registrars;

               5.2.3. In the event that the Option shall be exercised pursuant
to Section 10.1 by any person or persons other than the Optionee, appropriate
proof of the right of such person or persons to exercise the Option; and

               5.2.4. Full cash payment to the Secretary of the Company for the
shares with respect to which the Option, or portion thereof, is exercised.
However, the Committee (or the Board, in the case of Options granted to
Independent Directors), may in its discretion (i) allow a delay in payment up to
30 days from the date the Option, or portion thereof, is exercised; (ii) allow

                                       11

<PAGE>

payment, in whole or in part, through the delivery of shares of Common Stock
owned by the Optionee, duly endorsed for transfer to the Company with a Fair
Market Value on the date of delivery equal to the aggregate exercise price of
the Option or exercised portion thereof; (iii) allow payment, in whole or in
part, through the surrender of shares of Common Stock then issuable upon
exercise of the Option having a Fair Market Value on the date of Option exercise
equal to the aggregate exercise price of the Option or exercised portion
thereof; (iv) allow payment, in whole or in part, through the delivery of
property of any kind which constitutes good and valuable consideration; (v)
allow payment, in whole or in part, through the delivery of a full recourse
promissory note bearing interest (at no less than such rate as shall then
preclude the imputation of interest under the Code) and payable upon such terms
as may be prescribed by the Committee or the Board; (vi) allow payment, in whole
or in part, through the delivery of a notice that the Optionee has placed a
market sell order with a broker with respect to shares of Common Stock then
issuable upon exercise of the Option, and that the broker has been directed to
pay a sufficient portion of the net proceeds of the sale to the Company in
satisfaction of the Option exercise price; or (vii) allow payment through any
combination of the consideration provided in the foregoing subparagraphs (ii),
(iii), (iv), (v) and (vi). In the case of a promissory note, the Committee (or
the Board, in the case of Options granted to Independent Directors) may also
prescribe the form of such note and the security to be given for such note. The
Option may not be exercised, however, by delivery of a promissory note or by a
loan from the Company when or where such loan or other extension of credit is
prohibited by law.

          5.3. Conditions to Issuance of Stock Certificates. The Company shall
               --------------------------------------------
not be required to issue or deliver any certificate or certificates for shares
of stock purchased upon the exercise of any Option or portion thereof prior to
fulfillment of all of the following conditions:

               5.3.1. The admission of such shares to listing on all stock
exchanges on which such class of stock is then listed;

               5.3.2. The completion of any registration or other qualification
of such shares under any state or federal law, or under the rulings or
regulations of the Securities and Exchange Commission or any other governmental
regulatory body which the Committee or Board shall, in its absolute discretion,
deem necessary or advisable;

               5.3.3. The obtaining of any approval or other clearance from any
state or federal governmental agency which the Committee (or Board, in the case
of Options granted to Independent Directors) shall, in its absolute discretion,
determine to be necessary or advisable;

               5.3.4. The lapse of such reasonable period of time following the
exercise of the Option as the Committee (or Board, in the case of Options
granted to Independent Directors) may establish from time to time for reasons of
administrative convenience; and

               5.3.5. The receipt by the Company of full payment for such
shares, including payment of any applicable withholding tax.

          5.4. Rights as Stockholders. The holders of Options shall not be, nor
               ----------------------
have any of the rights or privileges of, stockholders of the Company in respect
of any shares purchasable upon

                                       12

<PAGE>

the exercise of any part of an Option unless and until certificates representing
such shares have been issued by the Company to such holders.

          5.5. Ownership and Transfer Restrictions. The Committee (or Board, in
               -----------------------------------
the case of Options granted to Independent Directors), in its absolute
discretion, may impose such restrictions on the ownership and transferability of
the shares purchasable upon the exercise of an Option as it deems appropriate.
Any such restriction shall be set forth in the respective Stock Option Agreement
and may be referred to on the certificates evidencing such shares. The Committee
may require the Employee to give the Company prompt notice of any disposition of
shares of Common Stock acquired by exercise of an Incentive Stock Option within
(i) two years from the date of granting (including the date the Option is
modified, extended or renewed for purposes of Section 424(h) of the Code) such
Option to such Employee or (ii) one year after the transfer of such shares to
such Employee. The Committee may direct that the certificates evidencing shares
acquired by exercise of an Option refer to such requirement to give prompt
notice of disposition.

          5.6. Limitations on Exercise of Options Granted to Independent
               ---------------------------------------------------------
Directors. No Option granted to an Independent Director may be exercised to any
---------
extent by anyone after the first to occur of the following events:

               5.6.1. The expiration of 12 months from the date of the
Optionee's death;

               5.6.2. The expiration of 12 months from the date of the
Optionee's Termination of Directorship by reason of such Optionee's permanent
and total disability (within the meaning of Section 22(e)(3) of the Code);

               5.6.3. The expiration of 12 months from the date of the
Optionee's retirement;

               5.6.4. The expiration of three months from the date of the
Optionee's Termination of Directorship for any reason other than such Optionee's
death, permanent and total disability, or retirement unless the Optionee dies
within said three-month period; or

               5.6.5. The expiration of ten years from the date the Option was
granted.

                                       6.

                            AWARD OF RESTRICTED STOCK

          6.1. Eligibility. Subject to the Award Limit, Restricted Stock may be
               -----------
awarded to any Employee who the Committee determines is a key Employee or any
Consultant whom the Committee determines should receive such an award.

          6.2. Award of Restricted Stock
               -------------------------

               6.2.1. The Committee may from time to time, in its absolute
discretion:

                                       13

<PAGE>

               6.2.2. Determine which Employees are key Employees and select
from among the key Employees or Consultants (including Employees or Consultants
who have previously received other awards under this Plan) such of them as in
its opinion should be awarded Restricted Stock; and

               6.2.3. Determine the purchase price, if any, and other terms and
conditions applicable to such Restricted Stock, consistent with this Plan.

               6.2.4. The Committee shall establish the purchase price, if any,
and form of payment for Restricted Stock; provided, however, that such purchase
                                          --------  -------
price shall be no less than the par value of the Common Stock to be purchased,
unless otherwise permitted by applicable state law. In all cases, legal
consideration shall be required for each issuance of Restricted Stock.

               6.2.5. Upon the selection of a key Employee or Consultant to be
awarded Restricted Stock, the Committee shall instruct the Secretary of the
Company to issue such Restricted Stock and may impose such conditions on the
issuance of such Restricted Stock as it deems appropriate.

          6.3. Restricted Stock Agreement. Restricted Stock shall be issued only
               --------------------------
pursuant to a written Restricted Stock Agreement, which shall be executed by the
selected key Employee or Consultant and an authorized officer of the Company and
which shall contain such terms and conditions as the Committee shall determine,
consistent with this Plan.

          6.4. Consideration. As consideration for the issuance of Restricted
               -------------
Stock, in addition to payment of any purchase price, the Restricted Stockholder
shall agree, in the written Restricted Stock Agreement, to remain in the employ
of, or to consult for, the Company or any Subsidiary for a period of at least
one year after the Restricted Stock is issued (or such shorter period as may be
fixed in the Restricted Stock Agreement or by action of the Committee following
grant of the Restricted Stock). Nothing in this Plan or in any Restricted Stock
Agreement hereunder shall confer on any Restricted Stockholder any right to
continue in the employ of, or as a consultant for, the Company or any Subsidiary
or shall interfere with or restrict in any way the rights of the Company and any
Subsidiary, which are hereby expressly reserved, to discharge any Restricted
Stockholder at any time for any reason whatsoever, with or without good cause.

          6.5. Rights as Stockholders. Subject to Section 6.6, upon delivery of
               ----------------------
the shares of Restricted Stock to the escrow holder pursuant to Section 6.8, the
Restricted Stockholder shall have, unless otherwise provided by the Committee,
all the rights of a stockholder with respect to said shares, subject to the
restrictions in his Restricted Stock Agreement, including the right to receive
all dividends and other distributions paid or made with respect to the shares;
provided, however, that in the discretion of the Committee, any extraordinary
--------  -------
distributions with respect to the Common Stock shall be subject to the
restrictions set forth in Section 6.6.

          6.6. Restriction. All shares of Restricted Stock issued under this
               -----------
Plan (including any shares received by holders thereof with respect to shares of
Restricted Stock as a result of stock dividends, stock splits or any other form
of recapitalization) shall, in the terms of each individual Restricted Stock
Agreement, be subject to such restrictions as the Committee shall provide, which

                                       14

<PAGE>

restrictions may include, without limitation, restrictions concerning voting
rights and transferability and restrictions based on duration of employment with
the Company, Company performance and individual performance; provided, however,
                                                             --------  -------
that, unless the Committee otherwise provides in the terms of the Restricted
Stock Agreement or otherwise, no share of Restricted Stock granted to a person
subject to Section 16 of the Exchange Act shall be sold, assigned or otherwise
transferred until at least six months and one day have elapsed from the date on
which the Restricted Stock was issued; provided, further, that, except with
                                       --------  -------
respect to shares of Restricted Stock granted pursuant to Section 6.10, by
action taken after the Restricted Stock is issued, the Committee may, on such
terms and conditions as it may determine to be appropriate, remove any or all of
the restrictions imposed by the terms of the Restricted Stock Agreement.
Restricted Stock may not be sold or encumbered until all restrictions are
terminated or expire. If no consideration was paid by the Restricted Stockholder
upon issuance, a Restricted Stockholder's rights in unvested Restricted Stock
shall lapse upon Termination of Employment or, if applicable, upon Termination
of Consultancy with the Company; provided, however, that the Committee in its
                                 --------  -------
sole and absolute discretion may provide that such rights shall not lapse in the
event of a Termination of Employment following a "change of ownership control"
(within the meaning of Treasury Regulation Section 1.162-27(e)(2)(v) or any
successor regulation thereto) of the Company or because of the Restricted
Stockholder's death or disability; provided, further, except with respect to
                                   --------  -------
shares of Restricted Stock granted pursuant to Section 6.10, the Committee in
its sole and absolute discretion may provide that no such right of repurchase
shall exist in the event of a Termination of Employment, or a Termination of
Consultancy, without cause or following any change in control or ownership of
the Company or because of the Restricted Stockholder's retirement, or otherwise.

          6.7. Repurchase of Restricted Stock. The Committee shall provide in
               ------------------------------
the terms of each individual Restricted Stock Agreement that the Company shall
have the right to repurchase from the Restricted Stockholder the Restricted
Stock then subject to restrictions under the Restricted Stock Agreement
immediately upon a Termination of Employment or, if applicable, upon a
Termination of Consultancy between the Restricted Stockholder and the Company,
at a cash price per share equal to the price paid by the Restricted Stockholder
for such Restricted Stock; provided, however, that the Committee in its sole and
                           --------  -------
absolute discretion may provide that no such right of repurchase shall exist in
the event of a Termination of Employment following a "change of ownership or
control" (within the meaning of Treasury Regulation Section 1.162-27(e)(2)(v) or
any successor regulation thereto) of the Company or because of the Restricted
Stockholder's death or disability; provided, further, that, except with respect
                                   --------  -------
to shares of Restricted Stock granted pursuant to Section 6.10, the Committee in
its sole and absolute discretion may provide that no such right of repurchase
shall exist in the event of a Termination of Employment or a Termination of
Consultancy without cause or following any change in control or ownership of the
Company or because of the Restricted Stockholder's retirement, or otherwise.

          6.8. Escrow. The Secretary of the Company or such other escrow holder
               ------
as the Committee may appoint shall retain physical custody of each certificate
representing Restricted Stock until all of the restrictions imposed under the
Restricted Stock Agreement with respect to the shares evidenced by such
certificate expire or shall have been removed.

          6.9. Legend. In order to enforce the restrictions imposed upon shares
               ------
of Restricted Stock hereunder, the Committee shall cause a legend or legends to
be placed on certificates representing all shares of Restricted Stock that are
still subject to restrictions under

                                       15

<PAGE>

Restricted Stock Agreements, which legend or legends shall make appropriate
reference to the conditions imposed thereby.

          6.10. Provisions Applicable to Section 162(m) Participants.
                ----------------------------------------------------

                6.10.1. Notwithstanding anything in the Plan to the contrary,
the Committee may grant Restricted Stock to a Section 162(m) Participant, the
restrictions with respect to which lapse upon the attainment of performance
goals for the Company which are related to one or more of the following business
criteria: (i) net income either before or after taxes, (ii) market share, (iii)
customer satisfaction, (iv) profits, (v) share price, (vi) earnings per share,
(vii) total stockholder return, (viii) return on assets, (ix) return on equity,
(x) operating income, (xi) return on capital or investments, or (xii) economic
value added (including, but not limited to, any or all of such measures in
comparison to the Company's competitors, the industry, or some other comparator
group).

                6.10.2. To the extent necessary to comply with the
performance-based compensation requirements of Section 162(m)(4)(C) of the Code,
with respect to Restricted Stock which may be granted to one or more Section
162(m) Participants, no later than 90 days following the commencement of any
fiscal year in question or any other designated fiscal period or period of
service (or such other time as may be required or permitted by Section 162(m) of
the Code), the Committee shall, in writing, (i) designate one or more Section
162(m) Participants, (ii) select the performance goal or goals applicable to the
fiscal year or other designated fiscal period or period of service, (iii)
establish the various targets and amounts of Restricted Stock which may be
earned for such fiscal year or other designated fiscal period or period of
service and (iv) specify the relationship between performance goals and targets
and the amounts of Restricted Stock to be earned by each Section 162(m)
Participant for such fiscal year or other designated fiscal period or period of
service. Following the completion of each fiscal year or other designated fiscal
period or period of service, the Committee shall certify in writing whether the
applicable performance targets have been achieved for such fiscal year or other
designated fiscal period or period of service. In determining the amount earned
by a Section 162(m) Participant, the Committee shall have the right to reduce
(but not to increase) the amount payable at a given level of performance to take
into account additional factors that the Committee may deem relevant to the
assessment of individual or corporate performance for the fiscal year or other
designated fiscal period or period of service.

                                       7.

                    PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS,
                         DEFERRED STOCK, STOCK PAYMENTS

                7.1. Eligibility. Subject to the Award Limit, one or more
                     -----------
Performance Awards, Dividend Equivalents, awards of Deferred Stock, and/or Stock
Payments may be granted to any Employee whom the Committee determines is a key
Employee or any Consultant whom the Committee determines should receive such an
award.

                7.2. Performance Awards. Any key Employee or Consultant selected
                     ------------------
by the Committee may be granted one or more Performance Awards. The value of
such Performance

                                       16

<PAGE>

Awards may be linked to the market value, book value, net profits or other
measure of the value of Common Stock or other specific performance criteria
determined appropriate by the Committee, in each case on a specified date or
dates or over any period or periods determined by the Committee, or may be based
upon the appreciation in the market value, book value, net profits or other
measure of the value of a specified number of shares of Common Stock over a
fixed period or periods determined by the Committee. In making such
determinations, the Committee shall consider (among such other factors as it
deems relevant in light of the specific type of award) the contributions,
responsibilities and other compensation of the particular key Employee or
Consultant.

                7.3. Dividend Equivalents. Any key Employee or Consultant
                     --------------------
selected by the Committee may be granted Dividend Equivalents based on the
dividends declared on Common Stock, to be credited as of dividend payment dates,
during the period between the date an Option, Stock Appreciation Right, Deferred
Stock or Performance Award is granted, and the date such Option, Stock
Appreciation Right, Deferred Stock or Performance Award is exercised, vests or
expires, as determined by the Committee. Such Dividend Equivalents shall be
converted to cash or additional shares of Common Stock by such formula and at
such time and subject to such limitations as may be determined by the Committee.
With respect to Dividend Equivalents granted with respect to Options intended to
be qualified performance-based compensation for purposes of Section 162(m) of
the Code, such Dividend Equivalents shall be payable regardless of whether such
Option is exercised.

                7.4. Stock Payments. Any key Employee or Consultant selected by
                     --------------
the Committee may receive Stock Payments in the manner determined from time to
time by the Committee. The number of shares shall be determined by the Committee
and may be based upon the Fair Market Value, book value, net profits or other
measure of the value of Common Stock or other specific performance criteria
determined appropriate by the Committee, determined on the date such Stock
Payment is made or on any date thereafter.

                7.5. Deferred Stock. Any key Employee or Consultant selected by
                     --------------
the Committee may be granted an award of Deferred Stock in the manner determined
from time to time by the Committee. The number of shares of Deferred Stock shall
be determined by the Committee and may be linked to the market value, book
value, net profits or other measure of the value of Common Stock or other
specific performance criteria determined to be appropriate by the Committee, in
each case on a specified date or dates or over any period or periods determined
by the Committee. Common Stock underlying a Deferred Stock award will not be
issued until the Deferred Stock award has vested, pursuant to a vesting schedule
or performance criteria set by the Committee. Unless otherwise provided by the
Committee, a Grantee of Deferred Stock shall have no rights as a Company
stockholder with respect to such Deferred Stock until such time as the award has
vested and the Common Stock underlying the award has been issued.

                7.6. Performance Award Agreement, Dividend Equivalent Agreement,
                     -----------------------------------------------------------
Deferred Stock Agreement, Stock Payment Agreement. Each Performance Award,
-------------------------------------------------
Dividend Equivalent, award of Deferred Stock and/or Stock Payment shall be
evidenced by a written agreement, which shall be executed by the Grantee and an
authorized officer of the Company and which shall contain such terms and
conditions as the Committee shall determine, consistent with this Plan.

                                       17

<PAGE>

                7.7.  Term. The term of a Performance Award, Dividend
                      ----
Equivalent, award of Deferred Stock and/or Stock Payment shall be set by the
Committee in its discretion.

                7.8.  Exercise or Purchase Price. The Committee may establish
                      --------------------------
the exercise or purchase price of a Performance Award, shares of Deferred Stock,
or shares received as a Stock Payment; provided, however, that such price shall
                                       --------  -------
not be less than the par value for a share of Common Stock, unless otherwise
permitted by applicable state law.

                7.9.  Exercise Upon Termination of Employment. A Performance
                      ---------------------------------------
Award, Dividend Equivalent, award of Deferred Stock and/or Stock Payment is
exercisable or payable only while the Grantee is an Employee or Consultant;
provided, however, that the Committee in its sole and absolute discretion may
--------  -------
provide that the Performance Award, Dividend Equivalent, award of Deferred Stock
and/or Stock Payment may be exercised or paid subsequent to a Termination of
Employment following a "change of control or ownership" (within the meaning of
Section 1.162-27(e)(2)(v) or any successor regulation thereto) of the Company;
provided, further, that except with respect to Performance Awards granted
--------  -------
pursuant to Section 7.12, the Committee in its sole and absolute discretion may
provide that the Performance Awards may be exercised or paid following a
Termination of Employment or a Termination of Consultancy without cause, or
following a change in control of the Company, or because of the Grantee's
retirement, death or disability, or otherwise.

                7.10. Payment on Exercise. Payment of the amount determined
                      -------------------
under Section 7.2 or 7.3 above shall be in cash, in Common Stock or a
combination of both, as determined by the Committee. To the extent any payment
under this Article VII is effected in Common Stock, it shall be made subject to
satisfaction of all provisions of Section 5.3.

                7.11. Consideration. In consideration of the granting of a
                      -------------
Performance Award, Dividend Equivalent, award of Deferred Stock and/or Stock
Payment, the Grantee shall agree, in a written agreement, to remain in the
employ of, or to consult for, the Company or any Subsidiary for a period of at
least one year after such Performance Award, Dividend Equivalent, award of
Deferred Stock and/or Stock Payment is granted (or such shorter period as may be
fixed in such agreement or by action of the Committee following such grant).
Nothing in this Plan or in any agreement hereunder shall confer on any Grantee
any right to continue in the employ of, or as a consultant for, the Company or
any Subsidiary or shall interfere with or restrict in any way the rights of the
Company and any Subsidiary, which are hereby expressly reserved, to discharge
any Grantee at any time for any reason whatsoever, with or without good cause.

                7.12. Provisions Applicable to Section 162(m) Participants.
                      ----------------------------------------------------

                      7.12.1. Notwithstanding anything in the Plan to the
contrary, the Committee may grant any performance or incentive awards described
in Article VII to a Section 162(m) Participant that vest or become exercisable
or payable upon the attainment of performance goals for the Company which are
related to one or more of the following business criteria: (i) net income either
before or after taxes, (ii) market share, (iii) customer satisfaction, (iv)
profits, (v) share price, (vi) earnings per share, (vii) total stockholder
return, (viii) return on assets, (ix) return on equity, (x) operating income,
(xi) return on capital or investments, or (xii) economic value added (including,
but not limited to, any or all of such measures in comparison to the Company's
competitors, the industry, or some other comparator group).

                                       18

<PAGE>

                      7.12.2. To the extent necessary to comply with the
performance-based compensation requirements of Section 162(m)(4)(C) of the Code,
with respect to performance or incentive awards described in Article VII which
may be granted to one or more Section 162(m) Participants, no later than 90 days
following the commencement of any fiscal year in question or any other
designated fiscal period or period of service (or such other time as may be
required or permitted by Section 162(m) of the Code), the Committee shall, in
writing, (i) designate one or more Section 162(m) Participants, (ii) select the
performance goal or goals applicable to the fiscal year or other designated
fiscal period or period of service, (iii) establish the various targets and
bonus amounts which may be earned for such fiscal year or other designated
fiscal period or period of service and (iv) specify the relationship between
performance goals and targets and the amounts to be earned by each Section
162(m) Participant for such fiscal year or other designated fiscal period or
period of service. Following the completion of each fiscal year or other
designated fiscal period or period of service, the Committee shall certify in
writing whether the applicable performance targets have been achieved for such
fiscal year or other designated fiscal period or period of service. In
determining the amount earned by a Section 162(m) Participant, the Committee
shall have the right to reduce (but not to increase) the amount payable at a
given level of performance to take into account additional factors that the
Committee may deem relevant to the assessment of individual or corporate
performance for the fiscal year or other designated fiscal period or period of
service.

                                       8.

                            STOCK APPRECIATION RIGHTS

                8.1.  Grant of Stock Appreciation Rights. A Stock Appreciation
                      ----------------------------------
Right may be granted to any key Employee or Consultant selected by the
Committee. A Stock Appreciation Right may be granted (i) in connection and
simultaneously with the grant of an Option, (ii) with respect to a previously
granted Option, or (iii) independent of an Option. A Stock Appreciation Right
shall be subject to such terms and conditions not inconsistent with this Plan as
the Committee shall impose and shall be evidenced by a written Stock
Appreciation Right Agreement, which shall be executed by the Grantee and an
authorized officer of the Company. The Committee, in its discretion, may
determine whether a Stock Appreciation Right is to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code and Stock
Appreciation Right Agreements evidencing Stock Appreciation Rights intended to
so qualify shall contain such terms and conditions as may be necessary to meet
the applicable provisions of Section 162(m) of the Code.

                8.2.  Coupled Stock Appreciation Rights
                      ---------------------------------

                      8.2.1. A Coupled Stock Appreciation Right ("CSAR") shall
be related to a particular Option and shall be exercisable only when and to the
extent the related Option is exercisable.

                      8.2.2. A CSAR may be granted to the Grantee for no
more than the number of shares subject to the simultaneously or previously
granted Option to which it is coupled.

                                       19

<PAGE>

                      8.2.3. A CSAR shall entitle the Grantee (or other person
entitled to exercise the Option pursuant to this Plan) to surrender to the
Company unexercised a portion of the Option to which the CSAR relates (to the
extent then exercisable pursuant to its terms) and to receive from the Company
in exchange therefor an amount determined by multiplying the difference obtained
by subtracting the Option exercise price from the Fair Market Value of a share
of Common Stock on the date of exercise of the CSAR by the number of shares of
Common Stock with respect to which the CSAR shall have been exercised, subject
to any limitations the Committee may impose.

                8.3.  Independent Stock Appreciation Rights
                      -------------------------------------

                      8.3.1. An Independent Stock Appreciation Right ("ISAR")
shall be unrelated to any Option and shall have a term set by the Committee. An
ISAR shall be exercisable in such installments as the Committee may determine.
An ISAR shall cover such number of shares of Common Stock as the Committee may
determine; provided, however, that unless the Committee otherwise provides in
           --------  -------
the terms of the ISAR or otherwise, no ISAR granted to a person subject to
Section 16 of the Exchange Act shall be exercisable until at least six months
have elapsed from (but excluding) the date on which the Option was granted. The
exercise price per share of Common Stock subject to each ISAR shall be set by
the Committee. An ISAR is exercisable only while the Grantee is an Employee or
Consultant; provided that the Committee may determine that the ISAR may be
exercised subsequent to Termination of Employment or Termination of Consultancy
without cause, or following a change in control of the Company, or because of
the Grantee's retirement, death or disability, or otherwise.

                      8.3.2. An ISAR shall entitle the Grantee (or other person
entitled to exercise the ISAR pursuant to this Plan) to exercise all or a
specified portion of the ISAR (to the extent then exercisable pursuant to its
terms) and to receive from the Company an amount determined by multiplying the
difference obtained by subtracting the exercise price per share of the ISAR from
the Fair Market Value of a share of Common Stock on the date of exercise of the
ISAR by the number of shares of Common Stock with respect to which the ISAR
shall have been exercised, subject to any limitations the Committee may impose.

                8.4.  Payment and Limitations on Exercise
                      -----------------------------------

                      8.4.1. Payment of the amount determined under Sections
8.2.3 and 8.3.2 above shall be in cash, in Common Stock (based on its Fair
Market Value as of the date the Stock Appreciation Right is exercised) or a
combination of both, as determined by the Committee. To the extent such payment
is effected in Common Stock it shall be made subject to satisfaction of all
provisions of Section 5.3 above pertaining to Options.

                      8.4.2. Grantees of Stock Appreciation Rights may be
required to comply with any timing or other restrictions with respect to the
settlement or exercise of a Stock Appreciation Right, including a window-period
limitation, as may be imposed in the discretion of the Board or Committee.

                8.5.  Consideration. In consideration of the granting of a Stock
                      -------------
Appreciation Right, the Grantee shall agree, in the written Stock Appreciation
Right Agreement, to remain in the

                                       20

<PAGE>

employ of, or to consult for, the Company or any Subsidiary for a period of at
least one year after the Stock Appreciation Right is granted (or such shorter
period as may be fixed in the Stock Appreciation Right Agreement or by action of
the Committee following grant of the Restricted Stock). Nothing in this Plan or
in any Stock Appreciation Right Agreement hereunder shall confer on any Grantee
any right to continue in the employ of, or as a consultant for, the Company or
any Subsidiary or shall interfere with or restrict in any way the rights of the
Company and any Subsidiary, which are hereby expressly reserved, to discharge
any Grantee at any time for any reason whatsoever, with or without good cause.

                                       9.

                                 ADMINISTRATION

       9.1.   Compensation Committee. The Compensation Committee (or another
              ----------------------
committee or a subcommittee of the Board assuming the functions of the Committee
under this Plan) shall consist solely of two or more Independent Directors of
the Company appointed by and holding office at the pleasure of the Board, each
of whom is a "non-employee director" as defined by Rule 16b-3. Appointment of
Committee members shall be effective upon acceptance of appointment. Committee
members may resign at any time by delivering written notice to the Board.
Vacancies in the Committee may be filled by the Board.

       9.2.   Duties and Powers of Committee. It shall be the duty of the
              ------------------------------
Committee to conduct the general administration of this Plan in accordance with
its provisions. The Committee shall have the power to interpret this Plan and
the agreements pursuant to which Options, awards of Restricted Stock or Deferred
Stock, Performance Awards, Stock Appreciation Rights, Dividend Equivalents or
Stock Payments are granted or awarded, and to adopt such rules for the
administration, interpretation, and application of this Plan as are consistent
therewith and to interpret, amend or revoke any such rules. Notwithstanding the
foregoing, the full Board, acting by a majority of its members in office, shall
conduct the general administration of the Plan with respect to Options granted
to Independent Directors. Any such grant or award under this Plan need not be
the same with respect to each Optionee, Grantee or Restricted Stockholder. Any
such interpretations and rules with respect to Incentive Stock Options shall be
consistent with the provisions of Section 422 of the Code. In its absolute
discretion, the Board may at any time and from time to time exercise any and all
rights and duties of the Committee under this Plan except with respect to
matters which under Rule 16b-3 or Section 162(m) of the Code, or any regulations
or rules issued thereunder, are required to be determined in the sole discretion
of the Committee.

       9.3.   Majority Rule; Unanimous Written Consent. The Committee shall act
              ----------------------------------------
by a majority of its members in attendance at a meeting at which a quorum is
present or by a memorandum or other written instrument signed by all members of
the Committee.

       9.4.   Compensation; Professional Assistance; Good Faith Actions. Members
              ---------------------------------------------------------
of the Committee shall receive such compensation for their services as members
as may be determined by the Board. All expenses and liabilities which members of
the Committee incur in connection with the administration of this Plan shall be
borne by the Company. The Committee may, with the approval of the Board, employ
attorneys, consultants, accountants, appraisers, brokers, or other persons. The
Committee, the Company and the Company's officers and Directors shall be
entitled

                                       21

<PAGE>

to rely upon the advice, opinions or valuations of any such persons. All actions
taken and all interpretations and determinations made by the Committee or the
Board in good faith shall be final and binding upon all Optionees, Grantees,
Restricted Stockholders, the Company and all other interested persons. No
members of the Committee or Board shall be personally liable for any action,
determination or interpretation made in good faith with respect to this Plan,
Options, awards of Restricted Stock or Deferred Stock, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments, and all members of
the Committee and the Board shall be fully protected by the Company in respect
of any such action, determination or interpretation.

                                      10.

                            MISCELLANEOUS PROVISIONS

       10.1.  Not Transferable. Options, Restricted Stock awards, Deferred Stock
              ----------------
awards, Performance Awards, Stock Appreciation Rights, Dividend Equivalents or
Stock Payments under this Plan may not be sold, pledged, assigned, or
transferred in any manner other than by will or the laws of descent and
distribution or pursuant to a QDRO, unless and until such rights or awards have
been exercised, or the shares underlying such rights or awards have been issued,
and all restrictions applicable to such shares have lapsed. No Option,
Restricted Stock award, Deferred Stock award, Performance Award, Stock
Appreciation Right, Dividend Equivalent or Stock Payment or interest or right
therein shall be liable for the debts, contracts or engagements of the Optionee,
Grantee or Restricted Stockholder or his successors in interest or shall be
subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be voluntary
or involuntary or by operation of law by judgment, levy, attachment, garnishment
or any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect, except to
the extent that such disposition is permitted by the preceding sentence.

              During the lifetime of the Optionee or Grantee, only he may
exercise an Option or other right or award (or any portion thereof) granted to
him under the Plan, unless it has been disposed of pursuant to a QDRO. After the
death of the Optionee or Grantee, any exercisable portion of an Option or other
right or award may, prior to the time when such portion becomes unexercisable
under the Plan or the applicable Stock Option Agreement or other agreement, be
exercised by his personal representative or by any person empowered to do so
under the deceased Optionee's or Grantee's will or under the then applicable
laws of descent and distribution.

       10.2   Amendment, Suspension or Termination of this Plan. Except as
              -------------------------------------------------
otherwise provided in this Section 10.2, this Plan may be wholly or partially
amended or otherwise modified, suspended or terminated at any time or from time
to time by the Board or the Committee. However, without approval of the
Company's stockholders given within 12 months before or after the action by the
Board or the Committee, no action of the Board or the Committee may, except as
provided in Section 10.3, increase the limits imposed in Section 2.1 on the
maximum number of shares which may be issued under this Plan or increase the
Award Limit, and no action of the Board or the Committee may be taken that would
otherwise require stockholder approval as a matter of applicable law, regulation
or rule. No amendment, suspension or termination of this Plan shall, without the
consent of the holder of Options, Restricted Stock awards, Deferred Stock
awards, Performance Awards, Stock Appreciation Rights, Dividend Equivalents or
Stock Payments, alter or

                                       22

<PAGE>

impair any rights or obligations under any Options, Restricted Stock awards,
Deferred Stock awards, Performance Awards, Stock Appreciation Rights, Dividend
Equivalents or Stock Payments theretofore granted or awarded, unless the award
itself otherwise expressly so provides. No Options, Restricted Stock, Deferred
Stock, Performance Awards, Stock Appreciation Rights, Dividend Equivalents or
Stock Payments may be granted or awarded during any period of suspension or
after termination of this Plan, and in no event may any Incentive Stock Option
be granted under this Plan after the first to occur of the following events:

              10.2.1.  The expiration of ten years from the date the Plan is
adopted by the Board; or

              10.2.2.  The  expiration  of ten years from the later of the date
the Plan was initially approved or is subsequently reapproved by the Company's
stockholders under Section 10.4

       10.3.  Changes in Common Stock or Assets of the Company, Acquisition or
              ----------------------------------------------------------------
Liquidation of the Company and Other Corporate Events.
-----------------------------------------------------

              10.3.1.  Subject to Section 10.3.4, in the event that the
Committee (or the Board, in the case of Options granted to Independent
Directors) determines that any dividend or other distribution (whether in the
form of cash, Common Stock, other securities, or other property),
recapitalization, reclassification, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, liquidation, dissolution, or sale, transfer, exchange or other
disposition of all or substantially all of the assets of the Company (including,
but not limited to, a Corporate Transaction), or exchange of Common Stock or
other securities of the Company, issuance of warrants or other rights to
purchase Common Stock or other securities of the Company, or other similar
corporate transaction or event, in the Committee's sole discretion (or in the
case of Options granted to Independent Directors, the Board's sole discretion),
affects the Common Stock such that an adjustment is determined by the Committee
to be appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan or with respect
to an Option, Restricted Stock award, Performance Award, Stock Appreciation
Right, Dividend Equivalent, Deferred Stock award or Stock Payment, then the
Committee (or the Board, in the case of Options granted to Independent
Directors) shall, in such manner as it may deem equitable, adjust any or all of

                       10.3.1.1.   the number and kind of shares of Common Stock
(or other securities or property) with respect to which Options, Performance
Awards, Stock Appreciation Rights, Dividend Equivalents or Stock Payments may be
granted under the Plan, or which may be granted as Restricted Stock or Deferred
Stock (including, but not limited to, adjustments of the limitations in Section
2.1 on the maximum number and kind of shares which may be issued and adjustments
of the Award Limit),

                       10.3.1.2.   the number and kind of shares of Common Stock
(or other securities or property) subject to outstanding Options, Performance
Awards, Stock Appreciation Rights, Dividend Equivalents, or Stock Payments, and
in the number and kind of shares of outstanding Restricted Stock or Deferred
Stock, and

                                       23

<PAGE>

                       10.3.1.3.   the grant or exercise price with respect to
any Option, Performance Award, Stock Appreciation Right, Dividend Equivalent or
Stock Payment.

              10.3.2.  Subject to Sections 10.3.2.7, 10.3.2.8 and 10.3.4, in the
event of any Corporate Transaction or other transaction or event described in
Section 10.3.1 or any unusual or nonrecurring transactions or events affecting
the Company, any affiliate of the Company, or the financial statements of the
Company or any affiliate, or of changes in applicable laws, regulations, or
accounting principles, the Committee (or the Board, in the case of Options
granted to Independent Directors) in its discretion is hereby authorized to take
any one or more of the following actions whenever the Committee (or the Board,
in the case of Options granted to Independent Directors) determines that such
action is appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the Plan or
with respect to any option, right or other award under this Plan, to facilitate
such transactions or events or to give effect to such changes in laws,
regulations or principles:

                       10.3.2.1.   In its sole and absolute discretion, and on
such terms and conditions as it deems appropriate, the Committee (or the Board,
in the case of Options granted to Independent Directors) may provide, either by
the terms of the agreement or by action taken prior to the occurrence of such
transaction or event and either automatically or upon the optionee's request,
for either the purchase of any such Option, Performance Award, Stock
Appreciation Right, Dividend Equivalent, or Stock Payment, or any Restricted
Stock or Deferred Stock for an amount of cash equal to the amount that could
have been attained upon the exercise of such option, right or award or
realization of the optionee's rights had such option, right or award been
currently exercisable or payable or fully vested or the replacement of such
option, right or award with other rights or property selected by the Committee
(or the Board, in the case of Options granted to Independent Directors) in its
sole discretion;

                       10.3.2.2.   In its sole and absolute discretion, the
Committee (or the Board, in the case of Options granted to Independent
Directors) may provide, either by the terms of such Option, Performance Award,
Stock Appreciation Right, Dividend Equivalent, or Stock Payment, or Restricted
Stock or Deferred Stock or by action taken prior to the occurrence of such
transaction or event that it cannot vest, be exercised or become payable after
such event;

                       10.3.2.3.   In its sole and absolute discretion, and on
such terms and conditions as it deems appropriate, the Committee (or the Board,
in the case of Options granted to Independent Directors) may provide, either by
the terms of such Option, Performance Award, Stock Appreciation Right, Dividend
Equivalent, or Stock Payment, or Restricted Stock or Deferred Stock or by action
taken prior to the occurrence of such transaction or event, that for a specified
period of time prior to such transaction or event, such option, right or award
shall be exercisable as to all shares covered thereby, notwithstanding anything
to the contrary in (i) Section 4.4 or (ii) the provisions of such Option,
Performance Award, Stock Appreciation Right, Dividend Equivalent, or Stock
Payment, or Restricted Stock or Deferred Stock;

                                       24

<PAGE>

                         10.3.2.4.  In its sole and absolute discretion, and on
such terms and conditions as it deems appropriate, the Committee (or the Board,
in the case of Options granted to Independent Directors) may provide, either by
the terms of such Option, Performance Award, Stock Appreciation Right, Dividend
Equivalent, or Stock Payment, or Restricted Stock or Deferred Stock or by action
taken prior to the occurrence of such transaction or event, that upon such
event, such option, right or award be assumed by the successor or survivor
corporation, or a parent or subsidiary thereof, or shall be substituted for by
similar options, rights or awards covering the stock of the successor or
survivor corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kind of shares and prices;

                         10.3.2.5.  In its sole and absolute discretion, and on
such terms and conditions as it deems appropriate, the Committee (or the Board,
in the case of Options granted to Independent Directors) may make adjustments in
the number and type of shares of Common Stock (or other securities or property)
subject to outstanding Options, Performance Awards, Stock Appreciation Rights,
Dividend Equivalents, or Stock Payments, and in the number and kind of
outstanding Restricted Stock or Deferred Stock and/or in the terms and
conditions of (including the grant or exercise price), and the criteria included
in, outstanding options, rights and awards and options, rights and awards which
may be granted in the future;

                         10.3.2.6.  In its sole and absolute discretion, and on
such terms and conditions as it deems appropriate, the Committee may provide
either by the terms of a Restricted Stock award or Deferred Stock award or by
action taken prior to the occurrence of such event that, for a specified period
of time prior to such event, the restrictions imposed under a Restricted Stock
Agreement or a Deferred Stock Agreement upon some or all shares of Restricted
Stock or Deferred Stock may be terminated, and, in the case of Restricted Stock,
some or all shares of such Restricted Stock may cease to be subject to
repurchase under Section 6.7 or forfeiture under Section 6.6 after such event;

                         10.3.2.7.  In the event of a Change in Control, each
Option granted to a key Employee, Consultant or Independent Director shall
become fully vested and exercisable as to all shares covered thereby upon such
Change in Control, notwithstanding anything to the contrary in Section 4.4 or
the vesting schedule of such Options; and

                         10.3.2.8.  In the event of any Corporate Transaction,
each outstanding Option, Performance Award, Stock Appreciation Right, Dividend
Equivalent, Stock Payment, Restricted Stock, or Deferred Stock award shall,
immediately prior to the effective date of the Corporate Transaction,
automatically become fully exercisable for all of the shares of Common Stock at
the time subject to such rights or fully vested, as applicable, and may be
exercised for any or all of those shares as fully-vested shares of Common Stock.
However, an outstanding right shall not so accelerate if and to the extent: (i)
such right is, in connection with the Corporate Transaction, either to be
assumed by the successor or survivor corporation (or parent thereof) or to be
replaced with a comparable right with respect to shares of the capital stock of
the successor or survivor corporation (or parent thereof) or (ii) the
acceleration of exercisability of such right is subject to other limitations
imposed by the Committee (or Board in the case of Independent Directors) at the
time of grant. The determination of comparability of rights under clause (i)
above shall be made by the Committee (or Board in the case of Independent
Directors), and its determination shall be final, binding and conclusive.

                                       25

<PAGE>

              10.3.3.    Subject to Section 10.3.4 and 10.8, the Committee (or
the Board, in the case of Options granted to Independent Directors) may, in its
discretion, include such further provisions and limitations in any Option,
Performance Award, Stock Appreciation Right, Dividend Equivalent, or Stock
Payment, or Restricted Stock or Deferred Stock agreement or certificate, as it
may deem equitable and in the best interests of the Company.

              10.3.4.    With respect to Options, Stock Appreciation Rights and
performance or incentive awards described in Article VII which are granted to
Section 162(m) Participants and are intended to qualify as performance based
compensation under Section 162(m)(4)(C), no adjustment or action described in
this Section 10.3 or in any other provision of the Plan shall be authorized to
the extent that such adjustment or action would cause the Plan to violate
Section 422(b)(1) of the Code or would cause such option or stock appreciation
right to fail to so qualify under Section 162(m)(4)(C), as the case may be, or
any successor provisions thereto. Furthermore, no such adjustment or action
shall be authorized to the extent such adjustment or action would result in
short-swing profits liability under Section 16 or violate the exemptive
conditions of Rule 16b-3 unless the Committee (or the Board, in the case of
Options granted to Independent Directors) determines that the option or other
award is not to comply with such exemptive conditions. The number of shares of
Common Stock subject to any option, right or award shall always be rounded to
the next whole number.

        10.4. Approval of Plan by Stockholders. This Plan, as originally adopted
              --------------------------------
has been submitted for the approval of the Company's stockholders and such
approval was received within 12 months after the date of the Board's initial
adoption of this Plan. If the Board determines that Restricted Stock, Deferred
Stock, Performance Awards, Dividend Equivalents or Stock Payments which may be
granted to Section 162(m) Participants should continue to be eligible to qualify
as performance based compensation under Section 162(m)(4)(C) of the Code, the
performance criteria must be disclosed to and approved by the Company's
stockholders no later than the first stockholder meeting that occurs in the
fifth year following the year in which the Company's stockholders previously
approved the performance criteria.

        10.5. Tax Withholding. The Company shall be entitled to require payment
              ---------------
in cash or deduction from other compensation payable to each Optionee, Grantee
or Restricted Stockholder of any sums required by federal, state or local tax
law to be withheld with respect to the issuance, vesting, exercise or payment of
any Option, Restricted Stock, Deferred Stock, Performance Award, Stock
Appreciation Right, Dividend Equivalent or Stock Payment. The Committee (or the
Board, in the case of Options granted to Independent Directors) may in its
discretion and in satisfaction of the foregoing requirement allow such Optionee,
Grantee or Restricted Stockholder to elect to have the Company withhold shares
of Common Stock otherwise issuable under such Option or other award (or allow
the return of shares of Common Stock) having a Fair Market Value equal to the
sums required to be withheld. Notwithstanding any other provision of the Plan,
the number of shares of Common Stock which may be withheld with respect to the
issuance, vesting, exercise or payment of any Option, Restricted Stock, Deferred
Stock, Performance Award, Stock Appreciation Right, Dividend Equivalent or Stock
Payment (or which may be repurchased from the Optionee, Grantee or Restricted
Stockholder within six months after such shares of Common Stock were acquired
from the Company by the Optionee, Grantee or Restricted Stockholder) in order to
satisfy the Optionee, Grantee or Restricted Stockholder's federal and state
income and payroll tax liabilities with respect to the issuance, vesting,
exercise or payment of the Option, Restricted Stock, Deferred

                                       26

<PAGE>

Stock, Performance Award, Stock Appreciation Right, Dividend Equivalent or
Stock Payment shall be limited to the number of shares which have a Fair Market
Value on the date of withholding or repurchase equal to the aggregate amount of
such liabilities based on the minimum statutory withholding rates for federal
and state tax income and payroll tax purposes that are applicable to such
supplemental taxable income.

        10.6. Loans. The Committee may, in its discretion, extend one or more
              -----
loans to key Employees in connection with the exercise or receipt of an Option,
Performance Award, Stock Appreciation Right, Dividend Equivalent or Stock
Payment granted under this Plan, or the issuance of Restricted Stock or Deferred
Stock awarded under this Plan. The terms and conditions of any such loan shall
be set by the Committee.

        10.7. Forfeiture Provisions. Pursuant to its general authority to
              ---------------------
determine the terms and conditions applicable to awards under the Plan, the
Committee (or the Board, in the case of Options granted to Independent
Directors) shall have the right (to the extent consistent with the applicable
exemptive conditions of Rule 16b-3) to provide, in the terms of Options or other
awards made under the Plan, or to require the recipient to agree by separate
written instrument, that (i) any proceeds, gains or other economic benefit
actually or constructively received by the recipient upon any receipt or
exercise of the award, or upon the receipt or resale of any Common Stock
underlying such award, must be paid to the Company, and (ii) the award shall
terminate and any unexercised portion of such award (whether or not vested)
shall be forfeited, if (a) a Termination of Employment, Termination of
Consultancy or Termination of Directorship occurs prior to a specified date, or
within a specified time period following receipt or exercise of the award, or
(b) the recipient at any time, or during a specified time period, engages in any
activity in competition with the Company, or which is inimical, contrary or
harmful to the interests of the Company, as further defined by the Committee (or
the Board, as applicable).

        10.8. Limitations Applicable to Section 16 Persons and Performance-Based
              ------------------------------------------------------------------
Compensation. Notwithstanding any other provision of this Plan, and any Option,
------------
Performance Award, Stock Appreciation Right, Dividend Equivalent or Stock
Payment granted, or Restricted Stock or Deferred Stock awarded, to any
individual who is then subject to Section 16 of the Exchange Act, shall be
subject to any additional limitations set forth in any applicable exemptive rule
under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of
the Exchange Act) that are requirements for the application of such exemptive
rule. To the extent permitted by applicable law, the Plan, Options, Performance
Awards, Stock Appreciation Rights, Dividend Equivalents, Stock Payments,
Restricted Stock and Deferred Stock granted or awarded hereunder shall be deemed
amended to the extent necessary to conform to such applicable exemptive rule.
Furthermore, notwithstanding any other provision of this Plan, any Option, Stock
Appreciation Right or performance or incentive award described in Article VII
which is granted to a Section 162(m) Participant and is intended to qualify as
performance-based compensation as described in Section 162(m)(4)(C) of the Code
shall be subject to any additional limitations set forth in Section 162(m) of
the Code (including any amendment to Section 162(m) of the Code) or any
regulations or rulings issued thereunder that are requirements for qualification
as performance-based compensation as described in Section 162(m)(4)(C) of the
Code, and this Plan shall be deemed amended to the extent necessary to conform
to such requirements.

                                       27

<PAGE>

        10.9.  Effect of Plan Upon Options and Compensation Plans. The adoption
               --------------------------------------------------
of this Plan shall not affect any other compensation or incentive plans in
effect for the Company or any Subsidiary. Nothing in this Plan shall be
construed to limit the right of the Company (i) to establish any other forms of
incentives or compensation for Employees, Directors or Consultants of the
Company or any Subsidiary or (ii) to grant or assume options or other rights or
awards otherwise than under this Plan in connection with any proper corporate
purpose including but not by way of limitation, the grant or assumption of
options in connection with the acquisition by purchase, lease, merger,
consolidation or otherwise, of the business, stock or assets of any corporation,
partnership, limited liability company, firm or association.

        10.10. Compliance with Laws. This Plan, the granting and vesting of
               --------------------
Options, Restricted Stock awards, Deferred Stock awards, Performance Awards,
Stock Appreciation Rights, Dividend Equivalents or Stock Payments under this
Plan and the issuance and delivery of shares of Common Stock and the payment of
money under this Plan or under Options, Performance Awards, Stock Appreciation
Rights, Dividend Equivalents or Stock Payments granted or Restricted Stock or
Deferred Stock awarded hereunder are subject to compliance with all applicable
federal and state laws, rules and regulations (including but not limited to
state and federal securities law and federal margin requirements) and to such
approvals by any listing, regulatory or governmental authority as may, in the
opinion of counsel for the Company, be necessary or advisable in connection
therewith. Any securities delivered under this Plan shall be subject to such
restrictions, and the person acquiring such securities shall, if requested by
the Company, provide such assurances and representations to the Company as the
Company may deem necessary or desirable to assure compliance with all applicable
legal requirements. To the extent permitted by applicable law, the Plan,
Options, Restricted Stock awards, Deferred Stock awards, Performance Awards,
Stock Appreciation Rights, Dividend Equivalents or Stock Payments granted or
awarded hereunder shall be deemed amended to the extent necessary to conform to
such laws, rules and regulations.

        10.11. Titles.  Titles are provided herein for convenience only and are
               ------
not to serve as a basis for interpretation or construction of this Plan.

        10.12. Governing Law. This Plan and any agreements hereunder shall be
               -------------
administered, interpreted and enforced under the internal laws of the State of
Delaware without regard to conflicts of laws thereof.

                                       28

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