Document:

<PAGE>

                                                                    DRAFT 2/1/01

================================================================================

                          PECO ENERGY TRANSITION TRUST,

                                    Issuer

                                     and

                             THE BANK OF NEW YORK,

                                  Bond Trustee

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

                                SERIES SUPPLEMENT

                                Dated as of [___]

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

================================================================================

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                           Page
                                                                           ----

<S>         <C>                                                             <C>

SECTION 1.  Definitions......................................................3
SECTION 2.  Designation; Series Issuance Dates...............................4
SECTION 3.  Initial Principal Amount; Bond Rate; Special Payment Date;
            Expected Final Payment Date; Series Termination Date; Class
            Termination Dates................................................4
SECTION 4.  Payment Dates; Expected Amortization Schedule
            for Principal; Interest; Overcollateralization
            Amount; Monthly Allocated Balances...............................5
SECTION 5.  Authorized Initial Denominations.................................6
SECTION 6.  Redemption.......................................................6
SECTION 7.  Credit Enhancement...............................................7
SECTION 8.  Delivery and Payment for the Series [_____]
            Transition Bonds; Form of the Series [_____]
            Transition Bonds.................................................7
SECTION 9.  Confirmation of Indenture........................................7
SECTION 10. Counterparts.....................................................7
SECTION 11. Governing Law....................................................8
SECTION 12. Issuer Obligation................................................8

Schedule A          Expected Amortization Schedule
Schedule B          Monthly Allocated Balances

Exhibit A           Form of Transition Bond

</TABLE>

<PAGE>

                                    SERIES SUPPLEMENT dated as of [___] (this
                           "Supplement"), by and between PECO ENERGY TRANSITION
                           TRUST, a Delaware statutory business trust (the
                           "Issuer"), and THE BANK OF NEW YORK, a New York
                           banking corporation (the "Bond Trustee"), as Bond
                           Trustee under the Indenture dated as of March 1,
                           1999, between the Issuer and the Bond Trustee, as
                           amended and supplemented by the Series Supplement
                           thereto dated as of May 2, 2000, between the Issuer
                           and the Bond Trustee (the "Indenture").

                              PRELIMINARY STATEMENT

                  Section 9.01 of the Indenture provides, among other things,
that the Issuer and the Bond Trustee may at any time and from time to time enter
into one or more indentures supplemental to the Indenture for the purposes of
authorizing the issuance by the Issuer of a Series of Transition Bonds and
specifying the terms thereof and for modifying certain provisions of the
Indenture. The Issuer has duly authorized the execution and delivery of this
Supplement and the creation of a Series of Transition Bonds with an initial
aggregate principal amount of $[___] to be known as the Issuer's Transition
Bonds, Series [___] (the "Series [___] Transition Bonds"). All acts and all
things necessary to make the Series [___] Transition Bonds, when duly executed
by the Issuer and authenticated by the Bond Trustee as provided in the Indenture
and this Supplement and issued by the Issuer, the valid, binding and legal
obligations of the Issuer and to make this Supplement a valid and enforceable
supplement to the Indenture have been done, performed and fulfilled and the
execution and delivery hereof have been in all respects duly and lawfully
authorized. The Issuer and the Bond Trustee are executing and delivering this
Supplement in order to provide for the Series [___] Transition Bonds.

                  In order to secure the payment of principal of and interest on
the Series [___] Transition Bonds, and to further secure the payment of
principal of and interest on the Series 1999-A Bonds issued on March 25, 1999,
and the Series 2000-A Bonds issued on May 2, 2000, in each case issued and to be
issued under the Indenture and/or any Series Supplement, the Issuer hereby
Grants, and confirms its prior Grants on March 25, 1999 and May 2, 2000, in
connection with the issuance of the Series 1999-A Bonds and

<PAGE>

                                                                               2

the Series 2000-A Bonds, respectively, to the Bond Trustee as trustee for the
benefit of the Holders of the Transition Bonds from time to time issued and
outstanding, all of the Issuer's right, title and interest in and to (a) the
Intangible Transition Property transferred by the Seller to the Issuer from time
to time pursuant to the Sale Agreement and all proceeds thereof, (b) the Sale
Agreement except for Section 5.01 thereof solely to the extent such Section
provides for indemnification of the Issuer, (c) all Bills of Sale delivered by
the Seller pursuant to the Sale Agreement, (d) the Servicing Agreement except
for Section 5.02(b) thereof solely to the extent such Section provides for
indemnification of the Issuer, (e) the Collection Account and all amounts on
deposit therein from time to time, (f) all Swap Agreements with respect to the
Transition Bonds, (g) all other property of whatever kind owned from time to
time by the Issuer including all accounts, accounts receivable and chattel
paper, (h) all present and future claims, demands, causes and choses in action
in respect of any or all of the foregoing and (i) all payments on or under and
all proceeds of every kind and nature whatsoever in respect of any or all of the
foregoing, including all proceeds of the conversion, voluntary or involuntary,
into cash or other liquid property, all cash proceeds, accounts, accounts
receivable, general intangibles, notes, drafts, acceptances, chattel paper,
checks, deposit accounts, insurance proceeds, condemnation awards, rights to
payment of any and every kind, and other forms of obligations and receivables,
instruments and other property which at any time constitute all or part of or
are included in the proceeds of any of the foregoing (collectively, the
"Collateral").

                  To have and to hold in trust to secure the payment of
principal of and premium, if any, and interest on, and any other amounts
(including all fees, expenses, counsel fees and other amounts due and owing to
the Bond Trustee) owing in respect of, the Transition Bonds equally and ratably
without prejudice, preference, priority or distinction, except as expressly
provided in the Indenture or any Series Supplement and to secure performance by
the Issuer of all of the Issuer's obligations under the Indenture and all Series
Supplements with respect to the Transition Bonds, all as provided in the
Indenture.

                  The Bond Trustee, as trustee on behalf of the Holders of the
Transition Bonds, acknowledges such Grant, accepts the trusts hereunder in
accordance with the provisions hereof and agrees to perform its duties required
in the Indenture and this Supplement.

<PAGE>

                                                                               3

                  SECTION 1. Definitions. (a) Article One of the Indenture
provides that the meanings of certain defined terms used in the Indenture shall,
when applied to the Transition Bonds of a particular Series, be as defined in
Article One but with such additional provisions as are specified in the related
Series Supplement. With respect to the Series [___] Transition Bonds, the
following definitions shall apply:

                  "Adjustment Date" shall mean initially each [___], until
[___], and commencing on [___], such date and the [___] day of each month
thereafter until the Series Termination Date.

                  "Authorized Initial Denominations" shall mean $1,000 and
integral multiples thereof.

                  "Bond Rate" has the meaning set forth in Section 3 of this
Supplement.

                  "Calculation Date" means initially each [___], until [___],
and commencing on [___], such date and the [___] day of each month thereafter
until the Series Termination Date.

                  "Class Termination Date" means, with respect to any Class of
the Series [___] Transition Bonds, the termination date therefor, as specified
in Section 3 of this Supplement.

                  "Expected Amortization Schedule" means Schedule A to this
Supplement.

                  "Expected Final Payment Date" means, with respect to any Class
of the Series [___] Transition Bonds, the expected final payment date therefor,
as specified in Section 3 of this Supplement.

                  "Interest Accrual Period" means, with respect to any Payment
Date, the period from and including the preceding Payment Date (or, in the case
of the first Payment Date, from and including the Series Issuance Date) to and
excluding such Payment Date.

                  "Monthly Allocated Interest Balance" has the meaning set forth
in Section 4(e) of this Supplement.

                  "Monthly Allocated Principal Balance" has the meaning set
forth in Section 4(e) of this Supplement.

<PAGE>

                                                                               4

                  "Overcollateralization Amount" has the meaning set forth in
Section 4(d) of this Supplement.

                  "Payment Date" has the meaning set forth in Section 4(a) of
this Supplement.

                  "Record Date" shall mean, with respect to any Payment Date,
the close of business on the day prior to such Payment Date.

                  "Series Issuance Date" has the meaning set forth in Section
2(b) of this Supplement.

                  "Series Termination Date" has the meaning set forth in Section
3 of this Supplement.

                  "Servicing Fee Rate" shall mean 0.25% per annum so long as ITC
Charges are included in electric bills otherwise sent to Customers or, if ITC
Charges are not included in such bills, 1.50% per annum.

                  "Special Payment Date" means December 31, 2010.

                  (b) All terms used in this Supplement that are defined in the
Indenture, either directly or by reference therein, have the meanings assigned
to them therein, except to the extent such terms are defined or modified in this
Supplement or the context clearly requires otherwise.

                  SECTION 2. Designation; Series Issuance Dates. (a)
Designation. The Series [___] Transition Bonds shall be designated generally as
the Issuer's Transition Bonds, Series [___] and further denominated as Classes
A-1 and A-2.

                  (b) Series Issuance Date. The Series [___] Transition Bonds
that are authenticated and delivered by the Bond Trustee to or upon the order of
the Issuer on [___] (the "Series Issuance Date") shall have as their date of
authentication [___]. Each other Series [___] Transition Bond shall be dated the
date of its authentication.

                  SECTION 3. Initial Principal Amount; Bond Rate; Special
Payment Date; Expected Final Payment Date; Series Termination Date; Class
Termination Dates. The Transition Bonds of each Class of the Series [___]
Transition Bonds shall have the initial principal amounts, bear interest at the
rates per annum and shall have Special Payment Dates, Expected Final Payment
Dates and Class Termination Dates as set forth below:

           Initial
Class     Principal    Bond      Special     Expected Final          Class
            Amount     Rate   Payment Date    Payment Date     Termination Date
A-1         [___]     [___]%      [___]           [___]              [___]
A-2         [___]     [___]%      [___]           [___]              [___]

--------------------------------------------------------------------------------
                  The Bond Rate for each Class shall be computed on the basis of
a 360-day year of twelve 30-day months.

<PAGE>

                                                                               5

                  SECTION 4. Payment Dates; Expected Amortization Schedule for
Principal; Interest; Overcollateralization Amount; Monthly Allocated Balances.
(a) Payment Dates. The Payment Dates for each Class of the
Series [___] Transition Bonds are March 1 and September 1 of each year and the
Special Payment Date or, if any such date is not a Business Day, the next
succeeding Business Day, commencing on [___] and continuing until the earlier of
repayment of such Class in full and the applicable Class Termination Date.

                  (b) Expected Amortization Schedule for Principal. Unless an
Event of Default shall have occurred and be continuing and the unpaid principal
amount of all Series of Transition Bonds has been declared to be due and payable
together with accrued and unpaid interest thereon, on each Payment Date, the
Bond Trustee shall distribute to the Series [___] Transition Bondholders of
record as of the related Record Date amounts payable in respect of the Series
[___] Transition Bonds pursuant to Section 8.02(e) of the Indenture as
principal, in accordance with the Expected Amortization Schedule. Available
funds in the Series [___] Subaccount will be allocated in a sequential manner,
to the extent funds are available, as follows: (1) to the holders of the Series
[___] Transition Bonds, Class A-1, until this Class is retired in full and (2)
to the holders of the Series [___] Transition Bonds and Class A-2, until this
Class is retired in full. Other than in the event of an acceleration of payments
following an Event of Default or a redemption, in no event shall a principal
payment pursuant to this Section 4(b) on any Class on a Payment Date be greater
than the amount that reduces the Outstanding Amount of such Class of Series
[___] Transition Bonds to the amount specified in the Expected Amortization
Schedule which is attached as Schedule A hereto for such Class and Payment Date.
In the event of an acceleration of payments following an Event of Default on the
Series [___] Transition Bonds, principal payments on each Class of Series [___]
Transition Bonds will be made on a pro rata basis based on the

<PAGE>

                                                                              6

respective Outstanding Amount of each Class as of the prior Payment Date.

                  (c) Interest. Interest will be payable on each Class of the
Series [___] Transition Bonds on each Payment Date in an amount equal to
one-half of the product of (i) the applicable Bond Rate and (ii) the Outstanding
Amount of the related Class of Transition Bonds as of the close of business on
the preceding Payment Date after giving effect to all payments of principal made
to the holders of the related Class of Series [___] Transition Bonds on such
preceding Payment Date; and provided, further, that with respect to the initial
Payment Date or, if no payment has yet been made, interest on the outstanding
principal balance will accrue from and including the Series Issuance Date to,
but excluding, the following Payment Date.

                  (d) Overcollateralization Amount. The Overcollateralization
Amount for the Series [___] Transition Bonds shall be $[___].

                  (e) Monthly Allocated Balances. The Monthly Allocated Interest
Balance and Monthly Allocated Principal Balance for any Monthly Allocation Date
and the Series [___] Transition Bonds shall be as set forth in Schedule B
hereto.

                  Not later than each Schedule Revision Date, the Issuer shall
deliver to the Bond Trustee replacement Schedules A and B hereto, adjusted to
reflect the event giving rise to such Schedule Revision Date and setting forth
the Expected Amortization Schedule for each Payment Date and the Monthly
Allocated Interest Balance and Monthly Allocated Principal Balance for each
Monthly Allocation Date; provided, however, that no such replacement schedules
shall be required if the event giving rise to such Schedule Revision Date is a
redemption of the Series [___] Transition Bonds in whole.

                  SECTION 5. Authorized Initial Denominations. The Series [___]
Transition Bonds shall be issuable in the Authorized Initial Denominations.

                  SECTION 6. Redemption. (a) Mandatory Redemption. The Series
[___] Transition Bonds shall not be subject to mandatory redemption except as
provided in Section 10.02 of the Indenture in the event that the Issuer receives
Liquidated Damages. If the Issuer receives Liquidated Damages from the Seller as
a result of a breach of a representation and warranty under the Sale Agreement
which relates to one or more of the Qualified Rate Orders,

<PAGE>
                                                                              7

but not all of the Qualified Rate Orders, then (i) only the Affected Transition
Bonds will be redeemed and (ii) the Redemption Price shall be equal to the then
outstanding principal amount of the Affected Transition Bonds as of the
Liquidated Damages Redemption Date plus accrued interest to such Redemption
Date.

                  (b) Optional Redemption. The Series [___] Transition Bonds
shall not be subject to optional redemption by the Issuer except that the Series
[___] Transition Bonds may be redeemed in whole at a Redemption Price equal to
the principal amount thereof plus interest at the applicable Bond Rate accrued
to the Redemption Date on any Payment Date on which the Outstanding Amount
thereof (after giving effect to payments that would otherwise be made on such
Payment Date) has been reduced to less than or equal to 5% of the initial
principal balance thereof. Notwithstanding Section 10.01 of the Indenture, with
respect to an optional redemption pursuant to this Section 6(b), the Issuer
shall deposit with the Bond Trustee the Redemption Price of the Transition Bonds
to be redeemed plus accrued interest thereon to the Redemption Date on or prior
to the date that notice of such redemption is furnished.

                  SECTION 7. Credit Enhancement. No credit enhancement (other
than the Overcollateralization Amount) is provided for the Series [___]
Transition Bonds.

                  SECTION 8. Delivery and Payment for the Series [___]
Transition Bonds; Form of the Series [___] Transition Bonds. The Bond Trustee
shall deliver the Series [___] Transition Bonds to the Issuer when authenticated
in accordance with Section 2.02 of the Indenture. The Series [___] Transition
Bonds of each Class shall be in the form of Exhibit A.

                  SECTION 9. Confirmation of Indenture. As supplemented by this
Supplement, the Indenture is in all respects ratified and confirmed and the
Indenture, as so supplemented by this Supplement, shall be read, taken, and
construed as one and the same instrument.

                  SECTION 10. Counterparts. This Supplement may be executed in
any number of counterparts, each of which so executed shall be deemed to be an
original, but all of such counterparts shall together constitute but one and the
same instrument.

<PAGE>
                                                                              8

                  SECTION 11. Governing Law. This Supplement shall be construed
in accordance with the laws of the Commonwealth of Pennsylvania, without
reference to its conflict of law provisions, and the obligations, rights and
remedies of the parties hereunder shall be determined in accordance with such
laws.

                  SECTION 12. Issuer Obligation. No recourse may be taken,
directly or indirectly, with respect to the obligations of the Issuer or the
Bond Trustee on the Transition Bonds or under this Supplement or any certificate
or other writing delivered in connection herewith or therewith, against (i) any
owner of a beneficial interest in the Issuer or (ii) any partner, owner,
beneficiary, agent, officer, director or employee of the Bond Trustee, any
holder of a beneficial interest in the Issuer or the Bond Trustee or of any
successor or assign of the Bond Trustee, except as any such Person may have
expressly agreed (it being understood that none of the Bond Trustee's
obligations are in its individual capacity).

<PAGE>
                                                                              9

                  IN WITNESS WHEREOF, the Issuer and the Bond Trustee have
caused this Supplement to be duly executed by their respective officers
thereunto duly authorized as of the first day of the month and year first above
written.

                                              PECO ENERGY TRANSITION TRUST,

                                              by  First Union Trust Company,
                                                  National Association, not in
                                                  its individual capacity but
                                                  solely as Issuer Trustee,
                                                  Delaware Trustee and
                                                  Independent Trustee

                                              by
                                                  ---------------------------
                                                  Name:
                                                  Title:

                                                  THE BANK OF NEW YORK, not in
                                                  its individual capacity but
                                                  solely as Bond Trustee on
                                                  behalf of the Transition
                                                  Bondholders,

                                              by
                                                  ----------------------------
                                                  Name:
                                                  Title:

<PAGE>

                                   SCHEDULE A

                         Expected Amortization Schedule

                          Outstanding Principal Balance

----------------------   --------------     --------------   -----------------
Payment Date                Class A-1          Class A-2        Series 2000-A
----------------------   --------------     --------------   -----------------

Series Issuance Date..
September 1, 2001.....
March 1, 2002.........
September 1, 2002.....
March 1, 2003.........
September 1, 2003.....
March 1, 2004.........
September 1, 2004.....
March 1, 2005.........
September 1, 2005.....
March 1, 2006.........
September 1, 2006.....
March 1, 2007.........
September 1, 2007.....
March 1, 2008.........
September 1, 2008.....
March 1, 2009.........
September 1, 2009.....
March 1, 2010.........
September 1, 2010.....

<PAGE>

                                   SCHEDULE B

                           Monthly Allocated Balances

                                 Monthly Allocated           Monthly Allocated
Monthly Allocation Date          Interest Balance            Principal Balance
-----------------------          ----------------            -----------------

April 1, 2001...............
May 1, 2001.................
June 1, 2001................
July 1, 2001................
August 1, 2001..............
September 1, 2001...........
October 1, 2001.............
November 1, 2001............
December 1, 2001............
January 1, 2002.............
February 1, 2002............
March 1, 2002...............
April 1, 2002...............
May 1, 2002.................
June 1, 2002................
July 1, 2002................
August 1, 2002..............
September 1, 2002...........
October 1, 2002.............
November 1, 2002............
December 1, 2002............
January 1, 2003.............
February 1, 2003............
March 1, 2003...............
April 1, 2003...............
May 1, 2003.................
June 1, 2003................
July 1, 2003................
August 1, 2003..............
September 1, 2003...........
October 1, 2003.............
November 1, 2003............
December 1, 2003............
January 1, 2004.............
February 1, 2004............
March 1, 2004...............
April 1, 2004...............
May 1, 2004.................
June 1, 2004................
July 1, 2004................

<PAGE>

                                 Monthly Allocated           Monthly Allocated
Monthly Allocation Date          Interest Balance            Principal Balance
-----------------------          ----------------            -----------------

August 1, 2004..............
September 1, 2004...........
October 1, 2004.............
November 1, 2004............
December 1, 2004............
January 1, 2005.............
February 1, 2005............
March 1, 2005...............
April 1, 2005...............
May 1, 2005.................
June 1, 2005................
July 1, 2005................
August 1, 2005..............
September 1, 2005...........
October 1, 2005.............
November 1, 2005............
December 1, 2005............
January 1, 2006.............
February 1, 2006............
March 1, 2006...............
April 1, 2006...............
May 1, 2006.................
June 1, 2006................
July 1, 2006................
August 1, 2006..............
September 1, 2006...........
October 1, 2006.............
November 1, 2006............
December 1, 2006............
January 1, 2007.............
February 1, 2007............
March 1, 2007...............
April 1, 2007...............
May 1, 2007.................
June 1, 2007................
July 1, 2007................
August 1, 2007..............
September 1, 2007...........
October 1, 2007.............
November 1, 2007............
December 1, 2007............

<PAGE>

                                 Monthly Allocated           Monthly Allocated
Monthly Allocation Date          Interest Balance            Principal Balance
-----------------------          ----------------            -----------------

January 1, 2008.............
February 1, 2008............
March 1, 2008...............
April 1, 2008...............
May 1, 2008.................
June 1, 2008................
July 1, 2008................
August 1, 2008..............
September 1, 2008...........
October 1, 2008.............
November 1, 2008............
December 1, 2008............
January 1, 2009.............
February 1, 2009............
March 1, 2009...............
April 1, 2009...............
May 1, 2009.................
June 1, 2009................
July 1, 2009................
August 1, 2009..............
September 1, 2009...........
October 1, 2009.............
November 1, 2009............
December 1, 2009............
January 1, 2010.............
February 1,2010.............
March 1, 2010...............
April 1, 2010...............
May 1, 2010.................
June 1, 2010................
July 1, 2010................
August 1, 2010..............
September 1, 2010...........

<PAGE>
                                    EXHIBIT A

                             Form of Transition Bond<PAGE>   1

                                                                     EXHIBIT 4.3

                                INFOGRAMES, INC.

                           2000 STOCK INCENTIVE PLAN

                                                                       JUNE 2000
<PAGE>   2

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                      PAGE
                                                                      ----
<C>     <S>                                                           <C>
ARTICLE I -- GENERAL................................................     2
  1.1   Purpose.....................................................     2
  1.2   Administration..............................................     2
  1.3   Persons Eligible for Awards.................................     2
  1.4   Types of Awards Under Plan..................................     3
  1.5   Shares Available for Awards.................................     3
  1.6   Definitions of Certain Terms................................     3
ARTICLE II -- AWARDS UNDER THE PLAN.................................     4
  2.1   Agreements Evidencing Awards................................     4
  2.2   No Rights as a Shareholder..................................     4
  2.3   Grant of Stock Options, Stock Appreciation Rights and
        Dividend Equivalent Rights..................................     5
  2.4   Exercise of Options and Stock Appreciation Rights...........     6
  2.5   Termination of Employment...................................     7
  2.6   Grant of Restricted Stock...................................     7
  2.7   Grant of Restricted Stock Units.............................     8
  2.8   Other Stock-Based Awards....................................     8
  2.9   Grant of Dividend Equivalent Rights.........................     8
  2.10  Forfeiture and Repayment of Awards..........................     9
ARTICLE III -- MISCELLANEOUS........................................     9
  3.1   Amendment of the Plan; Modification of Awards...............     9
  3.2   Tax Withholding.............................................     9
  3.3   Restrictions................................................    10
  3.4   Nonassignability............................................    10
  3.5   Requirement of Notification of Election Under Code Section
        83(b).......................................................    10
  3.6   Requirement of Notification Upon Disqualifying Disposition
        Under Code Section 421(b)...................................    10
  3.7   Dissolution, Liquidation or Merger..........................    10
  3.8   Right of Discharge Reserved.................................    11
  3.9   Nature of Payments..........................................    11
  3.10  Non-Uniform Determinations..................................    11
  3.11  Other Payments or Awards....................................    11
  3.12  Section Headings............................................    11
  3.13  Effective Date and Term of Plan.............................    11
  3.14  Governing Law...............................................    12
</TABLE>

                                       1
<PAGE>   3

                                   ARTICLE I

                                    GENERAL

1.1  PURPOSE

     The purpose of the Infogrames, Inc. 2000 Stock Incentive Plan (the "Plan")
is to provide officers, other employees and directors of, and consultants to,
Infogrames, Inc. (the "Company") and any of its subsidiaries an incentive (a) to
enter into and remain in the service of the Company or its subsidiaries, (b) to
enhance the long-term performance of the Company or its subsidiaries, and (c) to
acquire a proprietary interest in the success of the Company or its
subsidiaries.

1.2  ADMINISTRATION

     1.2.1  Subject to Section 1.2.6, the Plan will be administered by the
Compensation Committee (the "Committee") of the board of directors of the
Company (the "Board"), which will consist of not less than two directors. The
members of the Committee will be appointed by, and serve at the pleasure of, the
Board. To the extent required for transactions under the Plan to qualify for the
exemptions available under Rule 16b-3 ("Rule 16b-3") promulgated under the
Securities Exchange Act of 1934 (the "1934 Act"), all actions relating to awards
to persons subject to Section 16 of the 1934 Act will be taken by the Board
unless each person who serves on the Committee is a "non-employee director"
within the meaning of Rule 16b-3 or such actions are taken by a sub-committee of
the Committee (or the Board) comprised solely of "non-employee directors". To
the extent required for compensation realized from awards under the Plan to be
deductible by the Company pursuant to Section 162(m) of the Internal Revenue
Code of 1986 (the "Code"), the members of the Committee will be "outside
directors" within the meaning of Code Section 162(m). In the absence of a
Committee, the Board will administer the Plan and all references to the
"Committee" will be deemed to refer to the "Board".

     1.2.2  The Committee will have the authority (a) to exercise all of the
powers granted to it under the Plan, (b) to construe, interpret and implement
the Plan and any Plan Agreements executed pursuant to Section 2.1, (c) to
prescribe, amend and rescind rules and regulations relating to the Plan,
including rules governing its own operations, (d) to make all determinations
necessary or advisable in administering the Plan, (e) to correct any defect,
supply any omission and reconcile any inconsistency in the Plan, and (f) to
amend the Plan to reflect changes in applicable law.

     1.2.3  Actions of the Committee will be taken by the vote of a majority of
its members. Any action may be taken by a written instrument signed by a
majority of the Committee members, and action so taken will be fully as
effective as if it had been taken by a vote at a meeting.

     1.2.4  The determination of the Committee on all matters relating to the
Plan or any Plan Agreement will be final, binding and conclusive.

     1.2.5  No member of the Committee will be liable for any action or
determination made in good faith with respect to the Plan or any award
thereunder.

     1.2.6  Notwithstanding anything to the contrary contained in the Plan: (a)
until the Board appoints the members of the Committee, the Plan will be
administered by the Board; and (b) the Board may, in its sole discretion, at any
time and from time to time, grant awards or resolve to administer the Plan. In
either of such foregoing events, the Board will have all of the authority and
responsibility granted to the Committee herein.

1.3  PERSONS ELIGIBLE FOR AWARDS

     Awards under the Plan may be made to such directors, officers and other
employees of the Company and its subsidiaries (including prospective employees
conditioned on their becoming employees), and to such consultants to the Company
and its subsidiaries (collectively, "key persons") as the Committee in its
discretion selects.

                                       2
<PAGE>   4

1.4  TYPES OF AWARDS UNDER PLAN

     Awards may be made under the Plan in the form of (a) incentive stock
options (within the meaning of Code Section 422), (b) nonqualified stock
options, (c) stock appreciation rights, (d) dividend equivalent rights, (e)
restricted stock, (f) restricted stock units, and (g) other stock-based awards,
all as described in Article II. The term "award" means any of the foregoing. No
incentive stock option (other than an incentive stock option that may be assumed
or issued by the Company in connection with a transaction to which Code Section
424(a) applies) may be granted to a person who is not an employee of the Company
or any of its subsidiaries on the date of grant.

1.5  SHARES AVAILABLE FOR AWARDS

     1.5.1  The total number of shares of common stock of the Company, par value
$.01 per share ("Common Stock"), which may be transferred pursuant to awards
granted under the Plan will be initially 15,000,000 shares (before the
one-for-five reverse stock split) and may be increased annually, commencing
January 1, 2001 at the discretion of the Board, by an amount up to 1% of the
shares of Common Stock then outstanding. Such shares may be authorized but
unissued Common Stock or authorized and issued Common Stock held in the
Company's treasury or acquired by the Company for the purposes of the Plan. The
Committee may direct that any stock certificate evidencing shares issued
pursuant to the Plan will bear a legend setting forth such restrictions on
transferability as may apply to such shares pursuant to the Plan.

     1.5.2  The total number of shares of Common Stock with respect to which
stock options and stock appreciation rights may be granted to any one employee
of the Company or any of its subsidiaries during any one-year period will not
exceed 1,500,000, prior to the reverse stock split.

     1.5.3  Subject to any required action by the shareholders of the Company,
the number of shares of Common Stock covered by each outstanding award, the
number of shares available for awards, the number of shares that may be subject
to awards to any one employee, and the price per share of Common Stock covered
by each such outstanding award automatically will be proportionately adjusted
for any increase or decrease in the number of issued shares of Common Stock
resulting from a stock split, reverse stock split, stock dividend, combination
or reclassification of the Common Stock, or any other increase or decrease in
the number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company will not be deemed to have been "effected
without receipt of consideration." 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, will affect, and no adjustment by
reason thereof will be made with respect to, the number or price of shares of
Common Stock subject to an award. After any adjustment made pursuant to this
Section 1.5.3, the number of shares subject to each outstanding award will be
rounded to the nearest whole number.

     1.5.4  Except as provided in this Section 1.5 and in Section 2.3.8, there
will not be any limit on the number or the value of the shares of Common Stock
that may be subject to awards to any individual under the Plan.

1.6  DEFINITIONS OF CERTAIN TERMS

     1.6.1  The "Fair Market Value" of a share of Common Stock on any day will
be determined as follows:

     (a) If the principal market for the Common Stock (the "Market") is a
national securities exchange or the NASDAQ Stock Exchange, the last sale price
or, if no reported sales take place on the applicable date, the average of the
high bid and low asked price of Common Stock as reported for such Market on such
date or, if no such quotation is made on such date, on the next preceding day on
which there were quotations, provided that such quotations will have been made
within the ten (10) business days preceding the applicable date;

     (b) If the Market is the NASDAQ National List, the NASDAQ Supplemental List
or another market, the average of the high bid and low asked price for Common
Stock on the applicable date, or, if no such

                                       3
<PAGE>   5

quotations will have been made on such date, on the next preceding day on which
there were quotations, provided that such quotations were made within the ten
(10) business days preceding the applicable date; or

     (c) If neither paragraph (a) nor (b) applies, the Fair Market Value of a
share of Common Stock on any day will be determined in good faith by the
Committee.

     1.6.2  The term "incentive stock option" means an option that is intended
to qualify for special federal income tax treatment pursuant to Code Sections
421 and 422, as now constituted or subsequently amended, or pursuant to a
successor provision of the Code, and which is so designated in the applicable
Plan Agreement. Any option that is not specifically designated as an incentive
stock option will under no circumstances be considered an incentive stock
option. Any option that is not an incentive stock option is referred to in the
Plan as a "nonqualified stock option."

     1.6.3  The term "employment" means, in the case of a grantee of an award
under the Plan who is not an employee of the Company or any of its subsidiaries,
the grantee's association with the Company or any of its subsidiaries as a
director, consultant or otherwise.

     1.6.4  A grantee will be deemed to have a "termination of employment" upon
ceasing employment with the Company and all of its subsidiaries or by a
corporation assuming awards in a transaction to which Code Section 424(a)
applies. The Committee may in its discretion determine (a) whether any leave of
absence constitutes a termination of employment for purposes of the Plan, (b)
the impact, if any, of any such leave of absence on awards made under the Plan,
and (c) when a change in a non-employee's association with the Company or any of
its subsidiaries constitutes a termination of employment for purposes of the
Plan. The Committee will have the right to determine whether the termination of
a grantee's employment is a dismissal for "cause" and the date of termination.
The Committee may retroactively deem such a date to be the date of the action
that is cause for dismissal. Such determinations of the Committee will be final,
binding and conclusive.

     1.6.5  The term "cause", when used in connection with termination of a
grantee's employment, will have the meaning set forth in any then-effective
employment agreement between the grantee and the Company or any of its
subsidiaries. In the absence of such an employment agreement provision, "cause"
means: (a) conviction or pleading guilty or no contest to any crime (whether or
not involving the Company or any of its subsidiaries) constituting a felony in
the jurisdiction involved; (b) engaging in any substantiated act involving moral
turpitude; (c) engaging in any act which, in each case, subjects, or if
generally known would subject, the Company or any of its subsidiaries to public
ridicule or embarrassment; (d) material violation of the Company's or any of its
subsidiaries' policies, including, without limitation, those relating to sexual
harassment or the disclosure or misuse of confidential information; (e) serious
neglect or misconduct in the performance of the grantee's duties for the Company
or any of its subsidiaries or willful or repeated failure or refusal to perform
such duties; in each case as determined by the Committee, which determination
will be final, binding and conclusive.

                                   ARTICLE II

                             AWARDS UNDER THE PLAN

2.1  AGREEMENTS EVIDENCING AWARDS

     Each award granted under the Plan (except an award of unrestricted stock)
will be evidenced by a written agreement ("Plan Agreement") which will contain
such provisions as the Committee in its discretion deems necessary or desirable.
By accepting an award pursuant to the Plan, a grantee thereby agrees that the
award will be subject to all of the terms and provisions of the Plan and the
applicable Plan Agreement.

2.2  NO RIGHTS AS A SHAREHOLDER

     No grantee of an option or stock appreciation right (or other person having
the right to exercise such award) will have any of the rights of a shareholder
of the Company with respect to shares subject to such

                                       4
<PAGE>   6

award until the issuance of a stock certificate to such person for such shares.
Except as otherwise provided in Section 1.5.3, no adjustment will be made for
dividends, distributions or other rights (whether ordinary or extraordinary, and
whether in cash, securities or other property) for which the record date is
prior to the date such stock certificate is issued.

2.3  GRANT OF STOCK OPTIONS, STOCK APPRECIATION RIGHTS AND DIVIDEND EQUIVALENT
RIGHTS

     2.3.1  The Committee may grant incentive stock options and nonqualified
stock options (collectively, "options") to purchase shares of Common Stock from
the Company, to such key persons, in such amounts and subject to such terms and
conditions, as the Committee determines in its discretion, subject to the
provisions of the Plan.

     2.3.2  The Committee may grant stock appreciation rights to such key
persons, in such amounts and subject to such terms and conditions, as the
Committee determines in its discretion, subject to the provisions of the Plan.
Stock appreciation rights may be granted in connection with all or any part of,
or independently of, any option granted under the Plan. A stock appreciation
right granted in connection with a nonqualified stock option may be granted at
or after the time of grant of such option. A stock appreciation right granted in
connection with an incentive stock option may be granted only at the time of
grant of such option.

     2.3.3  The grantee of a stock appreciation right will have the right,
subject to the terms of the Plan and the applicable Plan Agreement, to receive
from the Company an amount equal to (a) the excess of the Fair Market Value of a
share of Common Stock on the date of exercise of the stock appreciation right
over (b) the exercise price of such right as set forth in the Plan Agreement (or
over the option exercise price if the stock appreciation right is granted in
connection with an option), multiplied by (c) the number of shares with respect
to which the stock appreciation right is exercised. Payment upon exercise of a
stock appreciation right will be in cash or in shares of Common Stock (valued at
their Fair Market Value on the date of exercise of the stock appreciation right)
or both, all as the Committee determines in its discretion. Upon the exercise of
a stock appreciation right granted in connection with an option, the number of
shares subject to the option will be correspondingly reduced by the number of
shares with respect to which the stock appreciation right is exercised. Upon the
exercise of an option in connection with which a stock appreciation right has
been granted, the number of shares subject to the stock appreciation right will
be correspondingly reduced by the number of shares with respect to which the
option is exercised.

     2.3.4  Each Plan Agreement with respect to an option will set forth the
amount (the "option exercise price") payable by the grantee to the Company upon
exercise of the option evidenced thereby. The option exercise price per share
will be determined by the Committee in its discretion; provided, however, that
the option exercise price of an incentive stock option will be at least 100% of
the Fair Market Value of a share of Common Stock on the date the option is
granted (except as permitted in connection with the assumption or issuance of
options in a transaction to which Code Section 424(a) applies), and provided
further that in no event will the option exercise price be less than the par
value of a share of Common Stock.

     2.3.5  Each Plan Agreement with respect to an option or stock appreciation
right will set forth the periods during which such award is exercisable, whether
in whole or in part. Such periods will be determined by the Committee in its
discretion; provided, however, that no incentive stock option (or a stock
appreciation right granted in connection with an incentive stock option) will be
exercisable more than 10 years after the date of grant.

     2.3.6  The Committee may in its discretion include in any Plan Agreement
with respect to an option (the "original option") a provision that an additional
option (the "additional option") will be granted to any grantee who, pursuant to
Section 2.4.3(b), delivers shares of Common Stock in partial or full payment of
the exercise price of the original option. The additional option will be for a
number of shares of Common Stock equal to the number thus delivered, will have
an exercise price equal to the Fair Market Value of a share of Common Stock on
the date of exercise of the original option, and will have an expiration date no
later than the expiration date of the original option. If a Plan Agreement
provides for the grant of an additional option, such Agreement will also provide
that the exercise price of the original option be no less than the Fair Market

                                       5
<PAGE>   7

Value of a share of Common Stock on its date of grant, and that any shares that
are delivered pursuant to Section 2.4.3(b) in payment of such exercise price
will have been held for at least six months.

     2.3.7  To the extent that the aggregate Fair Market Value (determined as of
the time the option is granted) of the stock with respect to which incentive
stock options granted under this Plan and all other plans of the Company and any
of its subsidiaries are first exercisable by any employee during any calendar
year will exceed the maximum limit (currently, $100,000), if any, imposed from
time to time under Code Section 422, such options will be treated as
nonqualified stock options.

     2.3.8  Notwithstanding the provisions of Sections 2.3.4 and 2.3.5, to the
extent required under Code Section 422, an incentive stock option may not be
granted under the Plan to an individual who, at the time the option is granted,
owns stock possessing more than 10% of the total combined voting power of all
classes of stock of his employer corporation or of its parent or subsidiary
corporations (as such ownership may be determined under Code Section 422(b)(6))
unless (a) at the time such incentive stock option is granted the option
exercise price is at least 110% of the Fair Market Value of the shares subject
thereto and (b) the incentive stock option by its terms is not exercisable after
the expiration of five years from the date it is granted.

2.4  EXERCISE OF OPTIONS AND STOCK APPRECIATION RIGHTS

     Subject to the provisions of this Article II, each option or stock
appreciation right granted under the Plan will be exercisable as follows:

     2.4.1  Unless the applicable Plan Agreement otherwise provides, an option
or stock appreciation right will become exercisable in installments. The first
installment of 25% of the total shares will become exercisable on the first
anniversary of the date of grant. The remaining 75% of the total shares will be
exercisable in equal installments of 6.25% of the total shares on the last day
of each full calendar quarter beginning after the first anniversary of the grant
date until all shares are fully exercisable on the fourth anniversary of the
grant date. Each installment, once it becomes exercisable, will remain
exercisable until expiration, cancellation or termination of the award unless
the grantee is terminated for "cause". If the grantee is terminated for "cause",
all exercisable options will be forfeited immediately.

     2.4.2  Unless the applicable Plan Agreement provides otherwise, an option
or stock appreciation right may be exercised from time to time as to all or part
of the shares as to which such award is then exercisable (but, in any event,
only for whole shares). A stock appreciation right granted in connection with an
option may be exercised at any time when, and to the same extent that, the
related option may be exercised. An option or stock appreciation right must be
exercised by the filing of a written notice with the Company, on such form and
in such manner as the Committee prescribes.

     2.4.3  Any written notice of exercise of an option must be accompanied by
payment for the shares being purchased. Such payment will be made: (a) by
certified or official bank check (or the equivalent thereof acceptable to the
Company) for the full option exercise price; or (b) unless the applicable Plan
Agreement provides otherwise, by delivery of shares of Common Stock acquired at
least six months prior to the option exercise date and having a Fair Market
Value (determined as of the exercise date) equal to all or part of the option
exercise price and a certified or official bank check (or the equivalent thereof
acceptable to the Company) for any remaining portion of the full option exercise
price; or (c) at the discretion of the Committee and to the extent permitted by
law, by such other provision as the Committee may from time to time prescribe.
Notwithstanding the foregoing, payment methods (a) and (b) are only available
while the Common Stock is listed on a national securities exchange or the NASDAQ
Stock Exchange.

     2.4.4  Promptly after receiving payment of the full option exercise price,
or after receiving notice of the exercise of a stock appreciation right for
which payment will be made partly or entirely in shares, the Company will,
subject to the provisions of Section 3.3 (relating to certain restrictions),
deliver to the grantee or to such other person as may then have the right to
exercise the award, a certificate or certificates for the shares of Common Stock
for which the award has been exercised. If the method of payment employed upon

                                       6
<PAGE>   8

option exercise so requires, and if applicable law permits, an optionee may
direct the Company to deliver the certificate(s) to the optionee's stockbroker.

2.5  TERMINATION OF EMPLOYMENT

     2.5.1  All options and stock appreciation rights not previously exercised
will terminate in accordance with Sections 2.5.2 through 2.5.6 upon termination
of the grantee's employment, unless otherwise provided in the Plan Agreement.

     2.5.2  If the grantee's employment terminates because of a dismissal by the
Company or any of its subsidiaries for "cause", all outstanding exercisable and
nonexercisable options will be forfeited immediately.

     2.5.3  If the grantee's employment terminates because of a dismissal by the
Company or any of its subsidiaries not for "cause", the grantee may exercise all
outstanding exercisable options and stock appreciation rights for 90 days after
the termination, but in no event after the expiration of the award set forth in
the Plan Agreement.

     2.5.4  If the grantee's employment is terminated because of a "disability",
the grantee may exercise all outstanding exercisable options and stock
appreciation rights for 12 months after the termination, but in no event after
the expiration of the award set forth in the Plan Agreement. In the case of an
incentive stock option, the term "disability" for purposes of the preceding
sentence will have the meaning given to it by Code Section 22(e). In the case of
nonqualified options and stock appreciation rights, the term "disability" for
purposes of the first sentence will mean the definition thereof contained in the
then-existing employment agreement, if any, or, in the event that no definition
is so provided, the date the grantee becomes physically or mentally disabled,
whether totally or partially, either permanently or so that the grantee, in the
good faith judgment of the Committee, is unable to substantially and competently
perform his duties hereunder for a period of 90 consecutive days or for 90 days
during a six-month period.

     2.5.5  If the grantee's employment terminates by action of the grantee for
any reason, the grantee may exercise all outstanding exercisable options and
stock appreciation rights for 30 days after the date of termination, but in no
event after the expiration of the award set forth in the Plan Agreement.

     2.5.6  If the grantee dies while employed by the Company or any of its
subsidiaries, or during the period in which the grantee's awards are exercisable
pursuant to Section 2.5.3, 2.5.4 or 2.5.5, the grantee's estate may exercise all
outstanding exercisable options and stock appreciation rights for 90 days after
the grantee's death, but in no event after the expiration of the award set forth
in the Plan Agreement. Any such exercise of an award following a grantee's death
will be made only by the grantee's executor or administrator, unless the
grantee's will specifically disposes of such award, in which case such exercise
will be made only by the recipient of such specific disposition. If a grantee's
personal representative or the recipient of a specific disposition under the
grantee's will is entitled to exercise any award pursuant to the preceding
sentence, such representative or recipient will be bound by all the terms and
conditions of the Plan and the applicable Plan Agreement which would have
applied to the grantee including, without limitation, the provisions of Sections
3.3 and 3.7 of the Plan.

2.6  GRANT OF RESTRICTED STOCK

     2.6.1  The Committee may grant restricted shares of Common Stock to such
key persons, in such amounts, and subject to such terms and conditions as the
Committee determines in its discretion, subject to the provisions of the Plan.
Restricted stock awards may be made independently of or in connection with any
other award under the Plan. A grantee of a restricted stock award will have no
rights with respect to such award unless such grantee accepts the award within
such period as the Committee specifies by executing a Plan Agreement in such
form as the Committee determines and, if the Committee requires, makes payment
to the Company by certified or official bank check (or the equivalent thereof
acceptable to the Company) in such amount as the Committee may determine.

     2.6.2  Promptly after a grantee accepts a restricted stock award, the
Company will issue in the grantee's name a certificate or certificates for the
shares of Common Stock covered by the award. Upon the issuance of

                                       7
<PAGE>   9

such certificate(s), the grantee will have the rights of a shareholder with
respect to the restricted stock, subject to the nontransferability restrictions
and Company repurchase rights described in Sections 2.6.4 and 2.6.5 and to such
other restrictions and conditions as the Committee in its discretion may include
in the applicable Plan Agreement.

     2.6.3  Unless the Committee otherwise determines, any certificate issued
evidencing shares of restricted stock will remain in the possession of the
Company until such shares are free of any restrictions specified in the
applicable Plan Agreement.

     2.6.4  Shares of restricted stock may not be sold, assigned, transferred,
pledged or otherwise encumbered or disposed of except as specifically provided
in this Plan or the applicable Plan Agreement. The Committee at the time of
grant will specify the date or dates (which may depend upon or be related to the
attainment of performance goals and other conditions) on which the
nontransferability of the restricted stock will lapse. Unless the applicable
Plan Agreement provides otherwise, additional shares of Common Stock or other
property distributed to the grantee in respect of shares of restricted stock, as
dividends or otherwise, will be subject to the same restrictions applicable to
such restricted stock.

     2.6.5  During the 120 days following termination of the grantee's
employment for any reason, the Company will have the right to require the return
of any shares to which restrictions on transferability apply, in exchange for
which the Company will repay to the grantee (or the grantee's estate) any amount
paid by the grantee for such shares.

2.7  GRANT OF RESTRICTED STOCK UNITS

     2.7.1  The Committee may grant awards of restricted stock units to such key
persons, in such amounts, and subject to such terms and conditions as the
Committee determines in its discretion, subject to the provisions of the Plan.
Restricted stock units may be awarded independently of or in connection with any
other award under the Plan.

     2.7.2  At the time of grant, the Committee will specify the date or dates
on which the restricted stock units become fully vested and nonforfeitable, and
may specify such conditions to vesting as it deems appropriate. If the grantee's
employment by the Company and any of its subsidiaries terminates for any reason,
restricted stock units that have not become nonforfeitable will be forfeited and
canceled immediately. The Committee at any time may accelerate vesting dates and
otherwise waive or amend any conditions of an award of restricted stock units.

     2.7.3  At the time of grant, the Committee will specify the maturity date
applicable to each grant of restricted stock units, which may be determined at
the election of the grantee. Such date may be later than the vesting date or
dates of the award. On the maturity date, the Company will transfer to the
grantee one unrestricted, fully transferable share of Common Stock for each
restricted stock unit scheduled to be paid out on such date and not previously
forfeited. The Committee will specify the purchase price, if any, to be paid by
the grantee to the Company for such shares of Common Stock.

2.8  OTHER STOCK-BASED AWARDS

     The Board may authorize other types of stock-based awards (including the
grant of unrestricted shares), which the Committee may grant to such key
persons, and in such amounts and subject to such terms and conditions, as the
Committee in its discretion determines, subject to the provisions of the Plan.
Such awards may entail the transfer of actual shares of Common Stock to Plan
participants, or payment in cash or otherwise of amounts based on the value of
shares of Common Stock.

2.9  GRANT OF DIVIDEND EQUIVALENT RIGHTS

     The Committee may in its discretion include in the Plan Agreement with
respect to any award a dividend equivalent right entitling the grantee to
receive amounts equal to the ordinary dividends that would be paid, during the
time such award is outstanding and unexercised, on the shares of Common Stock
covered by such award if such shares were then outstanding. In the event such a
provision is included in a Plan Agreement, the

                                       8
<PAGE>   10

Committee will determine whether such payments will be made in cash, in shares
of Common Stock or in another form, whether they will be conditioned upon the
exercise of the award to which they relate, the time or times at which they will
be made, and such other terms and conditions as the Committee will deem
appropriate.

2.10  FORFEITURE AND REPAYMENT OF AWARDS

     Notwithstanding any other provision of this Plan to the contrary, the
Committee may provide in any Plan Agreement that any award will be forfeited and
any amounts received in connection with any award must be repaid to the Company
or any of its subsidiaries upon the occurrence of certain events (including, but
not limited to, the grantee's breach of such grantee's employment or service
agreement with the Company or any of its subsidiaries or the optionee's
violation of covenants relating to employment or service with the Company or any
of its subsidiaries).

                                  ARTICLE III

                                 MISCELLANEOUS

3.1  AMENDMENT OF THE PLAN; MODIFICATION OF AWARDS

     3.1.1  The Board may from time to time suspend, discontinue, revise or
amend the Plan in any respect whatsoever including the substitution of classes
of stock or other securities, in their discretion, except that no such action
will materially impair any rights or materially increase any obligations under
any award theretofore made under the Plan without the consent of the grantee
(or, after the grantee's death, the person having the right to exercise the
award). For purposes of this Section 3.1, any action of the Board or the
Committee that alters or affects the tax treatment of any award will not be
considered to materially impair any rights of any grantee.

     3.1.2  Shareholder approval of any amendment will be obtained to the extent
necessary to comply with Code Section 422 (relating to incentive stock options)
or other applicable law or regulation.

     3.1.3  The Committee may amend any outstanding Plan Agreement, including,
without limitation, by amendment which would accelerate the time or times at
which the award becomes unrestricted or may be exercised, or waive or amend any
goals, restrictions or conditions set forth in the Agreement. However, any such
amendment (other than an amendment pursuant to Section 3.7) that materially
impairs the rights or materially increases the obligations of a grantee under an
outstanding award will be made only with the consent of the grantee (or, upon
the grantee's death, the person having the right to exercise the award).

3.2  TAX WITHHOLDING

     3.2.1  As a condition to the receipt of any shares of Common Stock pursuant
to any award or the lifting of restrictions on any award, or in connection with
any other event that gives rise to a federal or other governmental tax
withholding obligation on the part of the Company relating to an award
(including, without limitation, FICA tax), the Company will be entitled to
require that the grantee remit to the Company an amount sufficient in the
opinion of the Company to satisfy such withholding obligation.

     3.2.2  If the event giving rise to the withholding obligation is a transfer
of shares of Common Stock, then, unless otherwise specified in the applicable
Plan Agreement, the grantee may satisfy the withholding obligation imposed under
Section 3.2.1 by electing to have the Company withhold shares of Common Stock
having a Fair Market Value equal to the amount of tax to be withheld. For this
purpose, Fair Market Value will be determined as of the date on which the amount
of tax to be withheld is determined (and any fractional share amount will be
settled in cash).

                                       9
<PAGE>   11

3.3  RESTRICTIONS

     3.3.1  If the Committee at any time determines that any consent (as defined
in Section 3.2.2) is necessary or desirable as a condition of, or in connection
with, the granting of any award under the Plan, the issuance or purchase of
shares or other rights thereunder, or the taking of any other action thereunder
(each such action being hereinafter referred to as a "plan action"), then such
plan action will not be taken, in whole or in part, unless and until such
consent will have been effected or obtained to the full satisfaction of the
Committee.

     3.3.2  The term "consent" as used herein with respect to any plan action
means (a) any and all listings, registrations or qualifications in respect
thereof upon any securities exchange or under any federal, state or local law,
rule or regulation, (b) any and all written agreements and representations by
the grantee with respect to the disposition of shares, or with respect to any
other matter, which the Committee deems necessary or desirable to comply with
the terms of any such listing, registration or qualification or to obtain an
exemption from the requirement that any such listing, qualification or
registration be made and (c) any and all consents, clearances and approvals in
respect of a plan action by any governmental or other regulatory bodies.

3.4  NONASSIGNABILITY

     Except to the extent otherwise provided in the applicable Plan Agreement,
no award or right granted to any person under the Plan will be assignable or
transferable other than by will or by the laws of descent and distribution, and
all such awards and rights will be exercisable during the life of the grantee
only by the grantee or the grantee's legal representative.

3.5  REQUIREMENT OF NOTIFICATION OF ELECTION UNDER CODE SECTION 83(b)

     If any grantee, in connection with the acquisition of shares of Common
Stock under the Plan, makes an election permitted under Code Section 83(b) (that
is, an election to include in gross income in the year of transfer the amounts
specified in Section 83(b)), such grantee must notify the Company of such
election within 10 days of filing notice of the election with the Internal
Revenue Service, in addition to any filing and notification required pursuant to
regulations issued under the authority of Code Section 83(b).

3.6  REQUIREMENT OF NOTIFICATION UPON DISQUALIFYING DISPOSITION UNDER CODE
SECTION 421(b)

     If any grantee makes any disposition of shares of Common Stock issued
pursuant to the exercise of an incentive stock option under the circumstances
described in Code Section 421(b) (relating to certain disqualifying
dispositions), such grantee must notify the Company of such disposition within
10 days thereof.

3.7  DISSOLUTION, LIQUIDATION OR MERGER

     3.7.1  In the event of the proposed dissolution or liquidation of the
Company, all outstanding awards will terminate immediately prior to the
consummation of such proposed action, unless otherwise provided by the
Committee. The Committee may, in the exercise of its sole discretion in such
instances, accelerate the date on which any award becomes exercisable or fully
vested and/or declare that any award will terminate as of a specified date.

     3.7.2  In the event of a merger or consolidation ("Merger") of the Company
with or into any other corporation or entity ("Successor Corporation"),
outstanding awards may be assumed or an equivalent option or right may be
substituted by such Successor Corporation or a parent or subsidiary of such
Successor Corporation, unless the Committee determines, in the exercise of its
sole discretion, to accelerate the date on which an award becomes exercisable or
fully vested. In the absence of an assumption or substitution of awards, awards
will, to the extent not exercised, terminate as of the date of the closing of
the Merger. For the purposes of this Section 3.7.2, an award will be considered
assumed if, for every share of Common Stock subject thereto immediately prior to
the Merger, the grantee has the right, following the Merger, to acquire an
amount equivalent to the consideration received in the Merger transaction by
holders of shares of Common Stock (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority

                                       10
<PAGE>   12

of the outstanding shares); provided, however, that if such consideration
received in the Merger was not solely common stock of the Successor Corporation
or its parent, the Committee may, with the consent of the Successor Corporation
and the grantee, provide for the consideration to be acquired pursuant to the
award, for each share of Common Stock subject thereto, to be solely common stock
of the Successor Corporation or its parent equal in fair market value to the per
share consideration received by holders of Common Stock in the Merger. For
purposes hereof, the term "Merger" will include any transaction in which another
corporation acquires all of the issued and outstanding Common Stock of the
Company.

     3.7.3  If the Common Stock is no longer listed on the NASDAQ stock exchange
or any other national securities exchange, the Committee will be authorized to
make such amendments to the Plan as are deemed necessary and appropriate in such
circumstances, including determining the Fair Market Value of the Common Stock
of the Company for purposes of the Plan in accordance with Section 1.6.1(c).

3.8  RIGHT OF DISCHARGE RESERVED

     Nothing in the Plan or in any Plan Agreement will confer upon any grantee
the right to continue in the employ of the Company or any of its subsidiaries or
affect any right which the Company or any of its subsidiaries may have to
terminate such employment.

3.9  NATURE OF PAYMENTS

     3.9.1  Any and all grants of awards and issuances of shares of Common Stock
under the Plan will be in consideration of services performed by the grantee for
the Company or any of its subsidiaries.

     3.9.2  All such grants and issuances will constitute a special incentive
payment to the grantee and will not be taken into account in computing the
amount of salary or compensation of the grantee for the purpose of determining
any benefits under any pension, retirement, profit-sharing, bonus, life
insurance or other benefit plan of the Company or any of its subsidiaries or
under any agreement between the Company or any of its subsidiaries and the
grantee, unless such plan or agreement specifically provides otherwise.

3.10  NON-UNIFORM DETERMINATIONS

     The Committee's determinations under the Plan need not be uniform and may
differ among persons who receive, or are eligible to receive, awards under the
Plan (whether or not such persons are similarly situated). Without limiting the
generality of the foregoing, the Committee will be entitled, among other things,
to make non-uniform and different determinations, and to enter into non-uniform
and different Plan agreements, as to (a) the persons to receive awards under the
Plan, (b) the terms and provisions of awards under the Plan, and (c) the
treatment of leaves of absence pursuant to Section 1.6.4.

3.11  OTHER PAYMENTS OR AWARDS

     Nothing contained in the Plan will be deemed in any way to limit or
restrict the Company or any of its subsidiaries from making any award or payment
to any person under any other plan, arrangement or understanding, whether now
existing or hereafter in effect.

3.12  SECTION HEADINGS

     The section headings contained in this Plan are for the purpose of
convenience only and are not intended to define or limit the contents of the
sections.

3.13  EFFECTIVE DATE AND TERM OF PLAN

     3.13.1  The Plan was adopted by the Board on June 27, 2000, subject to
approval by the Company's shareholders. All awards under the Plan prior to such
shareholder approval are subject in their entirety to such approval. If such
approval is not obtained prior to the first anniversary of the date of adoption
of the Plan, the Plan and all awards thereunder will terminate on that date.

                                       11
<PAGE>   13

     3.13.2  Unless sooner terminated by the Board, the provisions of the Plan
relating to the grant of incentive stock options will terminate on the day
before the tenth anniversary of the adoption of the Plan by the Board, and no
incentive stock option awards will thereafter be made under the Plan. All awards
made under the Plan prior to its termination will remain in effect until such
awards have been satisfied or terminated in accordance with the terms and
provisions of the Plan and the applicable Plan Agreements.

3.14  GOVERNING LAW

     All rights and obligations under the Plan will be construed and interpreted
in accordance with the laws of the State of New York, without giving effect to
principles of conflict of laws.

                                       12

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00019-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00019-of-00352.parquet"}]]