Document:

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                                                                   EXHIBIT 10.47

                         AGREEMENT RELATED TO SEVERANCE

This Agreement (this "Agreement"), dated as of November 22, 2002, is between
Paradigm Genetics, Inc., a Delaware corporation ("Paradigm") and John Hamer,
currently employed as Paradigm's Chief Science Officer ("Executive"). This
document supercedes the Employment Agreement dated May 1, 2002 with changes
incorporated at the request of the Paradigm Board of Directors.

1.    As an inducement for Executive to remain in his current position, Paradigm
      agrees that Executive will be entitled to the severance benefits described
      in Paragraph 3 if Executive's employment with Paradigm is terminated
      without "Cause". For purposes of this Agreement, Cause" for termination
      shall mean: (a) conviction of, or pleading guilty or nolo contendere to, a
      felony or other crime involving theft, fraud or moral turpitude; (b) drug
      or alcohol abuse; (c) Executive's material breach of this Agreement,
      including failure to cure unsatisfactory job performance after written
      notice and a 60 day period to cure; (d) Executive's refusal to abide by or
      comply with the directives of the Board; (e) Executive's dishonesty,
      fraud, or misconduct with respect to the business affairs of the Company,
      including, without limitation, fraud, misappropriation or embezzlement;
      (f) intentional damage of any property worth in excess of $1,000 of the
      Company; or (g) conduct by Executive which demonstrates gross unfitness to
      serve.

2.    In return for the severance benefits described in Paragraph 3, which
      Executive acknowledges exceed the benefits to which Executive otherwise is
      entitled, Executive agrees to execute a release in a form substantially
      similar to the release attached to this Agreement as Attachment A. The
      release will be dated as of Executive's final day of employment.

3.    If Executive is terminated by Paradigm without Cause, Executive shall be
      entitled to the following benefits:

      a)    Paradigm will continue to pay Executive his current salary and
            provide his current healthcare benefits (less applicable deductions
            and withholdings) for up to twelve (12) months following the
            Executive's final date of employment. Executive must use diligent
            documented efforts to obtain employment. Executive will continue to
            receive salary and benefits as set forth above during this twelve
            (12) month period as long as he is unable to secure comparable
            regular, full time employment or a consulting engagement lasting for
            more than six (6) months.

      b)    If the Company is acquired or a change of control of ownership with
            respect to the Company (as defined below) occurs at anytime during
            the twelve (12) month severance period, described above, all amounts
            of salary and the cash equivalent of the cost of COBRA expense for
            the remainder of the twelve (12) month period shall be due and
            payable to Executive in full.

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      c)    If the Company is acquired or a change of control of ownership with
            respect to the Company (as defined below) occurs, Paradigm will
            increase two-fold the amount of stock options otherwise vested up to
            100%. If redundancy occurs within twelve (12) months of a change of
            control, Executive is entitled to a full twelve (12) months of
            severance pay on a non-contingent basis.

            "Change of Control" means the occurrence of any of the following
            events: (a) Ownership. Any "Person" (as such term is used in
            Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
            amended) becomes the "Beneficial Owner" (as defined in Rule 13d-3
            under said Act), directly or indirectly, of securities of the
            Company representing 50% or more of the total voting power
            represented by the Company's then outstanding voting securities
            (excluding for this purpose the Company or its Affiliates or any
            employee benefit plan of the Company) pursuant to a transaction or a
            series of related transactions which the Board of Directors does not
            approve; (b) Merger/Sale of Assets. A merger or consolidation of the
            Company whether or not approved by the Board of Directors, other
            than a merger or consolidation which would result in the voting
            securities of the Company outstanding immediately prior thereto
            continuing to represent (either by remaining outstanding or by being
            converted into voting securities of the surviving entity or the
            parent of such corporation) at least 80% of the total voting power
            represented by the voting securities of the Company or such
            surviving entity or parent of such corporation outstanding
            immediately after such merger or consolidation, or the stockholders
            of the Company approve an agreement for the sale or disposition by
            the Company of all or substantially all of the Company's assets.

4.    Executive agrees that for the longer of twelve (12) months after the
      separation of his employment with the Company, or any period for which he
      is receiving severance under the terms of this Separation Agreement, he
      will not become engaged in any "Competitive Activity" (as defined below).

      "Competitive Activity" means: (A) Directly or indirectly, engaging,
      assisting or participating in, whether as a President, CEO, Vice
      President, director, officer, employee, agent, manager, consultant,
      partner, owner or independent contractor or other participant, any
      business, firm, corporation, partnership, enterprise or organization that
      competes with the business engaged or hereafter engaged in by the Company;
      (B) the sale, trade, service or production or attempted sale, trade,
      service or production of genomics. (C) the sale, trade, service or
      production or attempted sale, trade, service or production of products
      which are competitor products to the products produced, sold or designed
      by the Company facility in Research Triangle Park, North Carolina during
      his employment with the Company; and (D) employment, whether direct or as
      independent contractor, with Metabolon, Beyond Genomics, SurroMed,
      Phenomenome, Metabometrix, or Cantata, and any of their successor
      businesses or businesses which acquire these companies after the date of
      this Agreement.

5.    Executive for twelve (12) months immediately following the date of this
      Agreement, shall not recruit or encourage employees of Paradigm to leave

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      paradigm to be hired by any company or business with which he affiliated
      or allow any such company or business, to the extent it is in his control,
      to engage in any activity which, were it done by him, would violate any
      provision of this Section 8; provided, however, that the Company
      acknowledges and agrees that a company or business with which you are
      affiliated may employee or engage Paradigm employees that have left
      Paradigm, so long as the company or business did not recruit or encourage
      the Paradigm employee to leave (it being understood that discussions,
      whether occurring before or after the date of this Agreement, resulting
      from general employment advertisements or initiated by Paradigm employees,
      do not constitute recruitment or encouragement to leave.

6.    The parties agree that Paradigm has no prior legal obligations to provide
      the additional monetary payments and other benefits specified in Paragraph
      3, which are exchanged for Executive's promises and agreements herein.

7.    Executive agrees that the only consideration for signing this Agreement
      are the terms stated herein and that no other promises or assurances of
      any kind have been made to him by Paradigm, its attorneys, or any other
      person as inducement to sign this Agreement. Therefore, this Agreement
      constitutes the entire understanding of the parties, and no
      representation, promise or inducement not included herein shall be binding
      upon the parties.

8.    Executive agrees that he will not disclose matters relating to the
      contents of this Agreement, including the amount of monetary payments and
      other benefits, to anyone other than his spouse, attorneys, and
      accountants or financial advisors for professional counseling. Executive
      also agrees that he will take every precaution to ensure that his spouse,
      attorneys, accountants or financial advisors maintain the confidentiality
      provisions of this Agreement before any disclosure is made as permitted by
      this paragraph.

9.    Executive understands and agrees that Paradigm's obligation to perform
      under this Agreement is constituted upon Executive's performance of all
      agreements, releases, and covenants to Paradigm as set forth herein.

10.   Executive acknowledges that he possesses sufficient education and
      experience to fully understand the terms of this Agreement as it has been
      written, the legal and binding effect of this Agreement, and the exchange
      of monetary payments and other benefits for promises herein.

11.   This Agreement shall endure to and be binding upon the parties hereto, the
      respective heirs, legal representatives, successors, and assigns.

12.   This Agreement is made and entered into in the State of North Carolina and
      shall in all respects be construed, enforced, and governed in accordance
      with the laws of North Carolina, except as federal laws may apply.

13.   In the event that one or more of the provisions, or portions thereof, of
      this Agreement is determined to be illegal or unenforceable, the remainder
      of this

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      Agreement shall not be affected thereby, and each remaining provision or
      portion thereof shall continue to be valid and effective and shall be
      enforceable to the fullest extent permitted by law.

14.   Executive states that he has carefully read the foregoing Agreement, that
      the terms are fully understood, and that he voluntarily accepts these
      terms and signs the same as his own free act.

      IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first below written.

                                             PARADIGM GENETICS, INC.

                                             By: /s/ James D. Bucci
                                               ---------------------------------
                                                     For Paradigm Genetics, Inc.

                                             Date:    11/23/02

Accepted and agreed this 25th day of November, 2002.

      /s/ John Hamer
-----------------------------------------
          John Hamer

I acknowledge that I have been advised that I have up to forty-five (45) days to
consider this Agreement and I may revoke my agreement within seven (7) days of
signing.

      /s/ John Hamer                                Date  11/25/02
-----------------------------------------
          John Hamer

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ATTACHMENT A

FORM OF RELEASE

1.    Executive hereby fully and expressly, knowingly, voluntarily and
      unconditionally releases, acquits, and forever discharges Paradigm, its
      past and present owners, stockholders, agents, directors, officers,
      employees, divisions, subsidiaries and affiliates, predecessors,
      successors and assigns (collectively referred to as Releasers) from any
      and all charges, complaints, claims, liabilities, obligations, promises,
      agreements, controversies, damages, actions, causes of action, rights,
      demands, losses, debts, expenses, and attorney fees and cost of any nature
      whatsoever, known or unknown, with regard to any transaction or event
      occurring prior to the date of this Agreement.

2.    Executive agrees and understands that this release includes, but is not
      limited to, all claims under Title VII of the Civil Rights act of 1964, 42
      U.S.C. Section 2000e, et. seq., as amended, the Americans with
      Disabilities Act of 1990, 42 U.S.C.Section 12101 et. seq., the
      Rehabilitation act of 1973, 29 U.S.C. Section 701 et. seq., and all other
      federal or state laws and statutes or common law claims arising out of, or
      relating to his employment with Paradigm or with regard to any other
      transactions or events occurring prior to the date of this Agreement.
      Executive further agrees that he will not file, commence, prosecute or
      participate in any charge, claim, or lawsuit against Paradigm or any
      Releasers based on or arising from the matters released herein. Executive
      also agrees to indemnify and hold Paradigm harmless from any claims and
      expenses Paradigm may incur as a result of any failure by Executive to pay
      taxes, which may be due as a result of the payment by Paradigm herein.

3.    Executive further agrees and understands that this Agreement includes, but
      is not limited to, all claims under the Federal Age Discrimination and
      Employment Act of 1967, as amended, 29 U.S.C. Section 621, et. seq., and
      any other state or local laws concerning age discrimination, which may
      have arisen prior to the date of this Agreement. Executive acknowledges
      that he has been advised by Paradigm that he has up to forty-five (45)
      days to consider this Agreement and that he may revoke his acceptance of
      this Agreement within seven (7) days of signing. Further, Executive
      acknowledges that he is advised to consult with legal counsel of his own
      choice and at his own expense to seek clarification of any of the
      Agreement's terms prior to signing this Agreement.

4.    Executive agrees that he will not use for himself nor will he disclose to
      any other person, business, company or corporation any trade secret, data,
      knowledge or other proprietary information of or about Paradigm or its
      affiliates. Further, in accordance with normal ethical and professional
      standards, Executive will refrain from taking actions or making
      statements, written or oral, which disparage or defame the goodwill or
      reputation of Paradigm, its affiliates or their present/former directors,
      officers, executives, and employees, or make statements which could
      adversely affect the morale of other Paradigm employees. Furthermore,
      Paradigm agrees, when requested by a prospective employer for Executive
      that it will give a positive recommendation. Any reference requests

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      must be referred to the Vice President, Human Resources.

5.    Executive acknowledges and recognizes that his violation of this Agreement
      will cause Paradigm irreparable damage and Paradigm will have no adequate
      remedy at law for such violation. Accordingly, Executive agrees that
      Paradigm shall be entitled as a matter of right to an injunction out of
      any court of competent jurisdiction, restricting any further violation of
      the Agreement or covenants contained therein. Such right to injunctive
      relief shall be cumulative and in addition to any other remedies Paradigm
      may have at law, including the right to recover from Executive the entire
      amount paid to Executive under the Agreement Related to Severance between
      Executive and Paradigm, dated November 22, 2002. Nothing in this Agreement
      shall be construed to abridge or limit in any way Executive's ability to
      enjoy the benefits of this Agreement, nor shall any terms of this
      Agreement be construed to limit any resource, right or remedy at law or in
      equity, which Executive may have for breach thereof. Further, Executive
      hereby agrees to indemnify and hold Paradigm and each of the Releasers
      harmless from and against all loss, damage or expense, including without
      limitation, attorneys' fees and costs incurred by Paradigm, or any
      Releaser arising out of Executive's breach of this Agreement.

6.    This Agreement shall endure to and be binding upon the parties hereto, the
      respective heirs, legal representatives, successors, and assigns.

7.    This Agreement is made and entered into in the State of North Carolina and
      shall in all respects be construed, enforced, and governed in accordance
      with the laws of North Carolina, except as federal laws may apply.

8.    In the event that one or more of the provisions, or portions thereof, of
      this Agreement is determined to be illegal or unenforceable, the remainder
      of this Agreement shall not be affected thereby, and each remaining
      provision or portion thereof shall continue to be valid and effective and
      shall be enforceable to the fullest extent permitted by law.

9.    Executive further states that he has carefully read the foregoing
      Agreement, that the terms are fully understood, and that he voluntarily
      accepts these terms and signs the same as his own free act.

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      IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first below written.

                                             PARADIGM GENETICS, INC.

                                             By:
                                               ---------------------------------
                                                   For Paradigm Genetics, Inc.

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

Accepted and agreed this 25th day of November, 2002.

      /s/ John Hamer
-----------------------------------------
          John Hamer

I acknowledge that I have been advised that I have up to forty-five (45) days to
consider this Agreement and I may revoke my agreement within seven (7) days of
signing.

      /s/ John Hamer                                Date  11/25/02
-----------------------------------------
         John Hamer<PAGE>

                                                                   EXHIBIT 10.48

                             PARADIGM GENETICS, INC.

                2003 EMPLOYEE, DIRECTOR AND CONSULTANT STOCK PLAN

1.    DEFINITIONS.

      Unless otherwise specified or unless the context otherwise requires, the
      following terms, as used in this Paradigm Genetics, Inc. 2003 Employee,
      Director and Consultant Stock Plan, have the following meanings:

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

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

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

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

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

            Common Stock means shares of the Company's common stock, $0.01 par
            value per share.

            Company means Paradigm Genetics, Inc., a Delaware corporation.

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

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

            Fair  Market Value of a Share of Common Stock means:

            (1)   If the Common Stock is listed on a national securities
            exchange or traded in the over-the-counter market and sales prices
            are regularly reported for the Common Stock, the closing or last
            price of the Common Stock on the Composite

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            Tape or other comparable reporting system for the trading day
            immediately preceding the applicable date;

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

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

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

            Non-Qualified Option means an option which is not intended to
            qualify as an ISO.

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

            Option Agreement means an agreement between the Company and a
            Participant delivered pursuant to the Plan, in such form as the
            Administrator shall approve.

            Participant means an Employee, director or consultant of the Company
            or an Affiliate to whom one or more Stock Rights are granted under
            the Plan. As used herein, "Participant" shall include "Participant's
            Survivors" where the context requires.

            Plan means this Paradigm Genetics, Inc. 2003 Employee, Director and
            Consultant Stock Plan.

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

            Stock Grant means a grant by the Company of Shares under the Plan.

            Stock Grant Agreement means an agreement between the Company and a
            Participant delivered pursuant to the Plan, in such form as the
            Administrator shall approve.

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            Stock Right means a right to Shares of the Company granted pursuant
            to the Plan -- an ISO, a Non-Qualified Option or a Stock Grant.

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

2.    PURPOSES OF THE PLAN.

      The Plan is intended to encourage ownership of Shares by Employees and
directors of and certain consultants to the Company in order to attract such
people, to induce them to work for the benefit of the Company or of an Affiliate
and to provide additional incentive for them to promote the success of the
Company or of an Affiliate. The Plan provides for the granting of ISOs,
Non-Qualified Options and Stock Grants.

3.    SHARES SUBJECT TO THE PLAN.

      (a)   The number of Shares which may be issued from time to time pursuant
to this Plan shall be 500,000, or the equivalent of such number of Shares after
the Administrator, in its sole discretion, has interpreted the effect of any
stock split, stock dividend, combination, recapitalization or similar
transaction in accordance with Paragraph 23 of the Plan.

      (b)   If an Option ceases to be "outstanding", in whole or in part, or if
the Company shall reacquire any Shares issued pursuant to a Stock Grant, the
Shares which were subject to such Option and any Shares so reacquired by the
Company shall be available for the granting of other Stock Rights under the
Plan. Any Option shall be treated as "outstanding" until such Option is
exercised in full, or terminates or expires under the provisions of the Plan, or
by agreement of the parties to the pertinent Option Agreement.

4.    ADMINISTRATION OF THE PLAN.

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

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

      b.    Determine which Employees, directors and consultants shall be
            granted Stock Rights;

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

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

      e.    Adopt any sub-plans applicable to residents of any specified
            jurisdiction as it deems necessary or appropriate in order to comply
            with or take advantage of any tax laws applicable to the Company or
            to Plan Participants or to otherwise facilitate the administration
            of the Plan, which sub-plans may include additional restrictions or
            conditions applicable to Options or Shares acquired upon exercise of
            Options;

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

      If permissible under applicable law, the Board of Directors or the
Committee may allocate all or any portion of its responsibilities and powers to
any one or more of its members and may delegate all or any portion of its
responsibilities and powers to any other person selected by it. Any such
allocation or delegation may be revoked by the Board of Directors or the
Committee at any time.

5.    ELIGIBILITY FOR PARTICIPATION.

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

6.    TERMS AND CONDITIONS OF OPTIONS.

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

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

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

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

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

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

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

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

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

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

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

                  i.    10% or less of the total combined voting power of all
                        classes of stock of the Company or an Affiliate, the
                        Option price per share of the Shares covered by each ISO
                        shall not be less than 100% of the Fair Market Value per
                        share of the Shares on the date of the grant of the
                        Option; or

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

            c.    Term of Option: For Participants who own:

                  i.    10% or less of the total combined voting power of all
                        classes of stock of the Company or an Affiliate, each
                        ISO shall terminate not more than ten years from the
                        date of the grant or at such earlier time as the Option
                        Agreement may provide; or

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

            d.    Limitation on Yearly Exercise: The Option Agreements shall
                  restrict the amount of ISOs which may become exercisable in
                  any calendar year (under this or any other ISO plan of the
                  Company or an Affiliate) so that the aggregate Fair Market
                  Value (determined at the time each ISO is granted) of the
                  stock with respect to which ISOs are exercisable for the first
                  time by the Participant in any calendar year does not exceed
                  $100,000.

7.    TERMS AND CONDITIONS OF STOCK GRANTS.

      Each offer of a Stock Grant to a Participant shall state the date prior to
which the Stock Grant must be accepted by the Participant, and the principal
terms of each Stock Grant shall be set forth in a Stock Grant Agreement, duly
executed by the Company and, to the extent required by law or requested by the
Company, by the Participant. The Stock Grant Agreement shall be in

<PAGE>

a form approved by the Administrator and shall contain terms and conditions
which the Administrator determines to be appropriate and in the best interest of
the Company, subject to the following minimum standards:

      (a)   Each Stock Grant Agreement shall state the purchase price (per
            share), if any, of the Shares covered by each Stock Grant, which
            purchase price shall be determined by the Administrator but shall
            not be less than the minimum consideration required by the Delaware
            General Corporation Law on the date of the grant of the Stock Grant;

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

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

8.    EXERCISE OF OPTIONS AND ISSUE OF SHARES.

      An Option (or any part or installment thereof) shall be exercised by
giving written notice to the Company or its designee, together with provision
for payment of the full purchase price in accordance with this Paragraph for the
Shares as to which the Option is being exercised, and upon compliance with any
other condition(s) set forth in the Option Agreement. Such notice shall be
signed by the person exercising the Option, shall state the number of Shares
with respect to which the Option is being exercised and shall contain any
representation required by the Plan or the Option Agreement. Payment of the
purchase price for the Shares as to which such Option is being exercised shall
be made (a) in United States dollars in cash or by check, or (b) at the
discretion of the Administrator, through delivery of shares of Common Stock
having a Fair Market Value equal as of the date of the exercise to the cash
exercise price of the Option and held for at least six months, or (c) at the
discretion of the Administrator, by delivery of the grantee's personal note, for
full, partial or no recourse, bearing interest payable not less than annually at
market rate on the date of exercise and at no less than 100% of the applicable
Federal rate, as defined in Section 1274(d) of the Code, with or without the
pledge of such Shares as collateral, or (d) at the discretion of the
Administrator, in accordance with a cashless exercise program established with a
securities brokerage firm, and approved by the Administrator, or (e) at the
discretion of the Administrator, by any combination of (a), (b), (c) and (d)
above. Notwithstanding the foregoing, the Administrator shall accept only such
payment on exercise of an ISO as is permitted by Section 422 of the Code.

      The Company shall then reasonably promptly deliver the Shares as to which
such Option was exercised to the Participant (or to the Participant's Survivors,
as the case may be). In determining what constitutes "reasonably promptly," it
is expressly understood that the issuance and delivery of the Shares may be
delayed by the Company in order to comply with any law or regulation (including,
without limitation, state securities or "blue sky" laws) which requires the

<PAGE>

Company to take any action with respect to the Shares prior to their issuance.
The Shares shall, upon delivery, be fully paid, non-assessable Shares.

      The Administrator shall have the right to accelerate the date of exercise
of any installment of any Option; provided that the Administrator shall not
accelerate the exercise date of any installment of any Option granted to an
Employee as an ISO (and not previously converted into a Non-Qualified Option
pursuant to Paragraph 26) if such acceleration would violate the annual vesting
limitation contained in Section 422(d) of the Code, as described in Paragraph
6.B.d.

      The Administrator may, in its discretion, amend any term or condition of
an outstanding Option provided (i) such term or condition as amended is
permitted by the Plan, (ii) any such amendment shall be made only with the
consent of the Participant to whom the Option was granted, or in the event of
the death of the Participant, the Participant's Survivors, if the amendment is
adverse to the Participant, and (iii) any such amendment of any ISO shall be
made only after the Administrator determines whether such amendment would
constitute a "modification" of any Option which is an ISO (as that term is
defined in Section 424(h) of the Code) or would cause any adverse tax
consequences for the holder of such ISO.

9.    ACCEPTANCE OF STOCK GRANT AND ISSUE OF SHARES.

      A Stock Grant (or any part or installment thereof) shall be accepted by
executing the Stock Grant Agreement and delivering it to the Company or its
designee, together with provision for payment of the full purchase price, if
any, in accordance with this Paragraph for the Shares as to which such Stock
Grant is being accepted, and upon compliance with any other conditions set forth
in the Stock Grant Agreement. Payment of the purchase price for the Shares as to
which such Stock Grant is being accepted shall be made (a) in United States
dollars in cash or by check, or (b) at the discretion of the Administrator,
through delivery of shares of Common Stock held for at least six months and
having a Fair Market Value equal as of the date of acceptance of the Stock Grant
to the purchase price of the Stock Grant, or (c) at the discretion of the
Administrator, by delivery of the grantee's personal note, for full or partial
recourse as determined by the Administrator, bearing interest payable not less
than annually at no less than 100% of the applicable Federal rate, as defined in
Section 1274(d) of the Code, or (d) at the discretion of the Administrator, by
any combination of (a), (b) and (c) above.

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

      The Administrator may, in its discretion, amend any term or condition of
an outstanding Stock Grant or Stock Grant Agreement provided (i) such term or
condition as amended is

<PAGE>

permitted by the Plan, and (ii) any such amendment shall be made only with the
consent of the Participant to whom the Stock Grant was made, if the amendment is
adverse to the Participant.

10.   RIGHTS AS A SHAREHOLDER.

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

11.   ASSIGNABILITY AND TRANSFERABILITY OF STOCK RIGHTS.

      By its terms, a Stock Right granted to a Participant shall not be
transferable by the Participant other than (i) by will or by the laws of descent
and distribution, or (ii) as approved by the Administrator in its discretion and
set forth in the applicable Option Agreement or Stock Grant Agreement.
Notwithstanding the foregoing, an ISO transferred except in compliance with
clause (i) above shall no longer qualify as an ISO. The designation of a
beneficiary of a Stock Right by a Participant, with the prior approval of the
Administrator and in such form as the Administrator shall prescribe, shall not
be deemed a transfer prohibited by this Paragraph. Except as provided above, a
Stock Right shall only be exercisable or may only be accepted, during the
Participant's lifetime, only by such Participant (or by his or her legal
representative) and shall not be assigned, pledged or hypothecated in any way
(whether by operation of law or otherwise) and shall not be subject to
execution, attachment or similar process. Any attempted transfer, assignment,
pledge, hypothecation or other disposition of any Stock Right or of any rights
granted thereunder contrary to the provisions of this Plan, or the levy of any
attachment or similar process upon a Stock Right, shall be null and void.

12.   EFFECT ON OPTIONS OF TERMINATION OF SERVICE OTHER THAN "FOR CAUSE" OR
      DEATH OR DISABILITY.

      Except as otherwise provided in a Participant's Option Agreement, in the
event of a termination of service (whether as an employee, director or
consultant) with the Company or an Affiliate before the Participant has
exercised an Option, the following rules apply:

      a.    A Participant who ceases to be an employee, director or consultant
            of the Company or of an Affiliate (for any reason other than
            termination "for cause", Disability, or death for which events there
            are special rules in Paragraphs 13, 14, and 15, respectively), may
            exercise any Option granted to him or her to the extent that the
            Option is exercisable on the date of such termination of service,
            but only within such term as the Administrator has designated in a
            Participant's Option Agreement.

<PAGE>

      b.    Except as provided in Subparagraph (c) below, or Paragraph 14 or 15,
            in no event may an Option intended to be an ISO, be exercised later
            than three months after the Participant's termination of employment.

      c.    The provisions of this Paragraph, and not the provisions of
            Paragraph 14 or 15, shall apply to a Participant who subsequently
            becomes Disabled or dies after the termination of employment,
            director status or consultancy, provided, however, in the case of a
            Participant's Disability or death within three months after the
            termination of employment, director status or consultancy, the
            Participant or the Participant's Survivors may exercise the Option
            within one year after the date of the Participant's termination of
            service, but in no event after the date of expiration of the term of
            the Option.

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

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

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

13.   EFFECT ON OPTIONS OF TERMINATION OF SERVICE "FOR CAUSE".

      Except as otherwise provided in a Participant's Option Agreement, the
following rules apply if the Participant's service (whether as an employee,
director or consultant) with the Company or an Affiliate is terminated "for
cause" prior to the time that all his or her outstanding Options have been
exercised:

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

<PAGE>

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

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

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

14.   EFFECT ON OPTIONS OF TERMINATION OF SERVICE FOR DISABILITY.

      Except as otherwise provided in a Participant's Option Agreement, a
Participant who ceases to be an employee, director or consultant of the Company
or of an Affiliate by reason of Disability may exercise any Option granted to
such Participant:

      a.    To the extent that the Option has become exercisable but has not
            been exercised on the date of Disability; and

      b.    In the event rights to exercise the Option accrue periodically, to
            the extent of a pro rata portion through the date of Disability of
            any additional vesting rights that would have accrued on the next
            vesting date had the Participant not become Disabled. The proration
            shall be based upon the number of days accrued in the current
            vesting period prior to the date of Disability.

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

<PAGE>

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

15.   EFFECT ON OPTIONS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.

      Except as otherwise provided in a Participant's Option Agreement, in the
event of the death of a Participant while the Participant is an employee,
director or consultant of the Company or of an Affiliate, such Option may be
exercised by the Participant's Survivors:

      a.    To the extent that the Option has become exercisable but has not
            been exercised on the date of death; and

      b.    In the event rights to exercise the Option accrue periodically, to
            the extent of a pro rata portion through the date of death of any
            additional vesting rights that would have accrued on the next
            vesting date had the Participant not died. The proration shall be
            based upon the number of days accrued in the current vesting period
            prior to the Participant's date of death.

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

16.   EFFECT OF TERMINATION OF SERVICE ON STOCK GRANTS.

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

      For purposes of this Paragraph 16 and Paragraph 17 below, a Participant to
whom a Stock Grant has been offered and accepted under the Plan who is absent
from work with the Company or with an Affiliate because of temporary disability
(any disability other than a permanent and total Disability as defined in
Paragraph 1 hereof), or who is on leave of absence for any purpose, shall not,
during the period of any such absence, be deemed, by virtue of such absence
alone, to have terminated such Participant's employment, director status or
consultancy with the Company or with an Affiliate, except as the Administrator
may otherwise expressly provide.

<PAGE>

      In addition, for purposes of this Paragraph 16 and Paragraph 17 below, any
change of employment or other service within or among the Company and any
Affiliates shall not be treated as a termination of employment, director status
or consultancy so long as the Participant continues to be an employee, director
or consultant of the Company or any Affiliate.

17.   EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE OTHER THAN "FOR CAUSE" OR
      DEATH OR DISABILITY.

      Except as otherwise provided in a Participant's Stock Grant Agreement, in
the event of a termination of service (whether as an employee, director or
consultant), other than termination "for cause," Disability, or death for which
events there are special rules in Paragraphs 18, 19, and 20, respectively,
before all Company rights of repurchase shall have lapsed, then the Company
shall have the right to repurchase that number of Shares subject to a Stock
Grant as to which the Company's repurchase rights have not lapsed.

18.   EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE "FOR CAUSE".

      Except as otherwise provided in a Participant's Stock Grant Agreement, the
following rules apply if the Participant's service (whether as an employee,
director or consultant) with the Company or an Affiliate is terminated "for
cause":

      a.    All Shares subject to any Stock Grant shall be immediately subject
            to repurchase by the Company at the purchase price, if any, thereof.

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

      c.    "Cause" is not limited to events which have occurred prior to a
            Participant's termination of service, nor is it necessary that the
            Administrator's finding of "cause" occur prior to termination. If
            the Administrator determines, subsequent to a Participant's
            termination of service, that either prior or subsequent to the
            Participant's termination the Participant engaged in conduct which
            would constitute "cause," then the Company's right to repurchase all
            of such Participant's Shares shall apply.

      d.    Any definition in an agreement between the Participant and the
            Company or an Affiliate, which contains a conflicting definition of
            "cause" for termination and

<PAGE>

            which is in effect at the time of such termination, shall supersede
            the definition in this Plan with respect to that Participant.

19.   EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE FOR DISABILITY.

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

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

20.   EFFECT ON STOCK GRANTS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.

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

21.   PURCHASE FOR INVESTMENT.

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

      a.    The person(s) who exercise(s) or accept(s) such Stock Right shall
            warrant to the Company, prior to the receipt of such Shares, that
            such person(s) are acquiring

<PAGE>

            such Shares for their own respective accounts, for investment, and
            not with a view to, or for sale in connection with, the distribution
            of any such Shares, in which event the person(s) acquiring such
            Shares shall be bound by the provisions of the following legend
            which shall be endorsed upon the certificate(s) evidencing their
            Shares issued pursuant to such exercise or such grant:

                  "The shares represented by this certificate have been taken
                  for investment and they may not be sold or otherwise
                  transferred by any person, including a pledgee, unless (1)
                  either (a) a Registration Statement with respect to such
                  shares shall be effective under the Securities Act of 1933, as
                  amended, or (b) the Company shall have received an opinion of
                  counsel satisfactory to it that an exemption from registration
                  under such Act is then available, and (2) there shall have
                  been compliance with all applicable state securities laws."

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

22.   DISSOLUTION OR LIQUIDATION OF THE COMPANY.

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

23.   ADJUSTMENTS.

      Upon the occurrence of any of the following events, a Participant's rights
with respect to any Stock Right granted to him or her hereunder shall be
adjusted as hereinafter provided, unless otherwise specifically provided in a
Participant's Option Agreement or Stock Grant Agreement:

      A.    Stock Dividends and Stock Splits. If (i) the shares of Common Stock
shall be subdivided or combined into a greater or smaller number of shares or if
the Company shall issue any shares of Common Stock as a stock dividend on its
outstanding Common Stock, or (ii) additional shares or new or different shares
or other securities of the Company or other non-cash assets are distributed with
respect to such shares of Common Stock, the number of shares of Common Stock
deliverable upon the exercise or acceptance of such Stock Right may be
appropriately increased or decreased proportionately, and appropriate
adjustments may be made including, in the purchase price per share, to reflect
such events. The number of Shares subject

<PAGE>

to the limitation in Paragraph 4(c) shall also be proportionately adjusted upon
the occurrence of such events.

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

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

      C.    Recapitalization or Reorganization. In the event of a
recapitalization or reorganization of the Company other than a Corporate
Transaction pursuant to which securities of the Company or of another
corporation are issued with respect to the outstanding shares of Common Stock, a
Participant upon exercising or accepting a Stock Right after the
recapitalization or reorganization shall be entitled to receive for the purchase
price paid upon such exercise or acceptance the number of replacement securities
which would have been received if such Stock Right had been exercised or
accepted prior to such recapitalization or reorganization.

      D.    Modification of ISOs. Notwithstanding the foregoing, any adjustments
made pursuant to Subparagraph A, B or C above with respect to ISOs shall be made
only after the Administrator determines whether such adjustments would
constitute a "modification" of such

<PAGE>

ISOs (as that term is defined in Section 424(h) of the Code) or would cause any
adverse tax consequences for the holders of such ISOs. If the Administrator
determines that such adjustments made with respect to ISOs would constitute a
modification of such ISOs, it may refrain from making such adjustments, unless
the holder of an ISO specifically requests in writing that such adjustment be
made and such writing indicates that the holder has full knowledge of the
consequences of such "modification" on his or her income tax treatment with
respect to the ISO.

24.   ISSUANCES OF SECURITIES.

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

25.   FRACTIONAL SHARES.

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

26.   CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS; TERMINATION OF ISOs.

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

27.   WITHHOLDING.

<PAGE>

      In the event that any federal, state, or local income taxes, employment
taxes, Federal Insurance Contributions Act ("F.I.C.A.") withholdings or other
amounts are required by applicable law or governmental regulation to be withheld
from the Participant's salary, wages or other remuneration in connection with
the exercise or acceptance of a Stock Right or in connection with a
Disqualifying Disposition (as defined in Paragraph 28) or upon the lapsing of
any right of repurchase, the Company may withhold from the Participant's
compensation, if any, or may require that the Participant advance in cash to the
Company, or to any Affiliate of the Company which employs or employed the
Participant, the statutory minimum amount of such withholdings unless a
different withholding arrangement, including the use of shares of the Company's
Common Stock or a promissory note, is authorized by the Administrator (and
permitted by law). For purposes hereof, the fair market value of the shares
withheld for purposes of payroll withholding shall be determined in the manner
provided in Paragraph 1 above, as of the most recent practicable date prior to
the date of exercise. If the fair market value of the shares withheld is less
than the amount of payroll withholdings required, the Participant may be
required to advance the difference in cash to the Company or the Affiliate
employer. The Administrator in its discretion may condition the exercise of an
Option for less than the then Fair Market Value on the Participant's payment of
such additional withholding.

28.   NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION.

      Each Employee who receives an ISO must agree to notify the Company in
writing immediately after the Employee makes a Disqualifying Disposition of any
shares acquired pursuant to the exercise of an ISO. A Disqualifying Disposition
is defined in Section 424(c) of the Code and includes any disposition (including
any sale or gift) of such shares before the later of (a) two years after the
date the Employee was granted the ISO, or (b) one year after the date the
Employee acquired Shares by exercising the ISO, except as otherwise provided in
Section 424(c) of the Code. If the Employee has died before such stock is sold,
these holding period requirements do not apply and no Disqualifying Disposition
can occur thereafter.

29.   TERMINATION OF THE PLAN.

      The Plan will terminate on February 13, 2013, the date which is ten years
from the earlier of the date of its adoption by the Board of Directors and the
date of its approval by the shareholders. The Plan may be terminated at an
earlier date by vote of the shareholders or the Board of Directors of the
Company; provided, however, that any such earlier termination shall not affect
any Option Agreements or Stock Grant Agreements executed prior to the effective
date of such termination.

30.   AMENDMENT OF THE PLAN AND AGREEMENTS.

      The Plan may be amended by the shareholders of the Company. The Plan may
also be amended by the Administrator, including, without limitation, to the
extent necessary to qualify any or all outstanding Stock Rights granted under

<PAGE>

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

31.   EMPLOYMENT OR OTHER RELATIONSHIP.

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

32.   GOVERNING LAW.

      This Plan shall be construed and enforced in accordance with the law of
the State of North Carolina.

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