Document:

DIOMED INC.
                               1998 INCENTIVE PLAN

1.     DEFINED TERMS

       Exhibit A, which is incorporated by reference, defines the terms used in
the Plan and sets forth certain operational rules related to those terms.

2.     IN GENERAL

       The Plan has been established to advance the interests of the Company by
giving selected Employees, directors and other persons (including both
individuals and entities) who provide services to the Company or its Affiliates
Stock-based or other incentives based on performance measures relating to the
Company or its Affiliates.

3.     ADMINISTRATION

       The Administrator has discretionary authority, subject only to the
express provisions of the Plan, to interpret the Plan; determine eligibility for
and grant Awards; determine, modify or waive the terms and conditions of any
Award; prescribe forms, rules and procedures (which it may modify or Waive); and
otherwise do all things necessary to carry out the purposes of the Plan. Once an
Award has been communicated in writing to a Participant, the Administrator may
not, without the Participant's consent, alter the terms of the Award so as to
affect adversely the Participant's rights under the Award, unless the
Administrator expressly reserved the right to do so in writing at the time of
such communication.

4.     SHARES SUBJECT TO THE PLAN

       a.     Subject to adjustment as provided in Section 7.b.(1), a maximum of
750,000 shares of Stock (not including any shares of stock that have been
authorized for issuance under stock option plans of Diomed, Ltd.) may be
delivered in satisfaction of Awards under the Plan. For purposes of the
preceding sentence, the following shares shall not be considered to have been
delivered under the Plan: (i) shares remaining under an Award that terminates
without having been exercised in full; (ii) shares subject to an Award, where
cash is delivered to a Participant in lieu of such shares; (iii) shares of
Restricted Stock that have been forfeited in accordance with the terms of the
applicable Award: and (iv) shares held back, in satisfaction of the exercise
price or tax withholding requirements, from shares that would otherwise have
been delivered pursuant to an Award. The number of shares of Stock delivered
under an Award shall be determined net of any previously acquired Shares
tendered by the Participant in payment of the exercise price, if any, or of
withholding taxes.

                                      -1-
<PAGE>

       b.     Stock delivered by the Company under the Plan may be authorized
but unissued Stock or previously issued Stock acquired by the Company and held
in treasury. No fractional shares of Stock will be delivered under the Plan.

5.     ELIGIBILITY AND PARTICIPATION

       The Administrator will select Participants from among those key
Employees, directors and other individuals or entities providing services to the
Company or its Affiliates who, in the opinion of the Administrator, are in a
position to make a significant contribution to the success of the Company and
its Affiliates. Eligibility for ISOs is further limited to those individuals
whose employment status would qualify them for the tax treatment described in
Sections 421 and 422 of the Code.

6.     RULES APPLICABLE TO AWARDS

       a.     ALL AWARDS

              (1)    PERFORMANCE OBJECTIVES. Where rights under an Award depend
in whole or in part on attainment of performance objectives, actions by the
Company that have an effect, however material, on such performance objectives or
on the likelihood that they will be achieved will not be deemed an amendment or
alteration of the Award unless accomplished by a change in the express terms of
the Award or other action that is without substantial consequence except as it
affects the Award.

              (2)    ALTERNATIVE SETTLEMENT. The Company retains the right at
any time to extinguish rights under an Award in exchange for payment in cash,
Stock (subject to the limitations of Section 4) or other property on such terms
as the Administrator determines, provided the holder of the Award consents to
such exchange.

              (3)    TRANSFERABILITY OF AWARDS. Except as the Administrator
otherwise expressly provides, Awards, to the extent vested, (other than an Award
in the form of an outright transfer of cash or Unrestricted Stock) may only be
transferred to a Participant's Immediate Family members upon such Participant's
death. In the event of a Participant's incapacity, the person or persons legally
appointed to act on the Participant's behalf may exercise Awards on behalf of
such Participant.

              (4)    VESTING, ETC. Without limiting the generality of Section 3
and unless the Administrator provides otherwise: (i) Awards shall vest over a
two year time period, with 1/24th of the total Award vesting upon the end of
each month following the date of grant and (ii) an Award shall remain
exercisable for a period of ten years from the date of grant (the last

                                      -2-
<PAGE>

day of such period being the "Final Exercise Date"). The Administrator shall
determine the terms on which an Award requiring exercise will remain
exercisable. Except as otherwise determined by the Administrator, any period
during which a Participant who is an employee is on an unpaid leave of absence
(or other unpaid absence) from the Company shall toll the period of time over
which an option becomes exercisable.

       If a Participant dies, each Award held by the Participant immediately
prior to death may be exercised, to the extent it was exercisable immediately
prior to death, by the Participant's executor or administrator or by the person
or persons to whom the Award is transferred by will or the applicable laws of
descent and distribution, in accordance with the limitations set forth in
Section 6(a)(3), at any time within the one-year period (or such longer or
shorter period as the Administrator may determine) beginning with the date of
the Participant's death but in no event beyond the Final Exercise Date. All
Awards held by a Participant immediately prior to death that are not then
exercisable shall terminate on the date of death.

       If an Employee's employment with the Company and its subsidiaries
terminates for any reason other than by death, all Awards held by the Employee
that are not then exercisable shall terminate. Awards that are exercisable on
the date employment terminates shall continue to be exercisable for a period of
three months (or such longer period as the Administrator may determine, but in
no event beyond the Final Exercise Date) unless the Employee was discharged for
cause that in the opinion of the Administrator casts such discredit on the
Employee as to justify termination of the Employee's Awards. After completion
of the post-termination exercise period, such Awards shall terminate to the
extent not previously exercised, expired or terminated. For purposes of this
Section 3(a)(4), employment shall not be considered terminated (i) in the case
of sick leave or other bona fide leave of absence approved for purposes of the
Plan by the Administrator, so long as the Employee's right to reemployment is
guaranteed either by statute or by contract, or (ii) in the case of a transfer
of employment between the Company and & a subsidiary or between subsidiaries, or
to the employment of a corporation (or a parent or subsidiary corporation of
such corporation) issuing or assuming an option in a transaction to which
section 424(a) of the Code applies.

       In the case of a Participant who is not an Employee, provisions relating
to the exercisability of Awards following termination of service shall be
specified in the Award. If not so specified, all Awards held by such Participant
that are not then exercisable shall terminate upon termination of service.
Awards that are exercisable on the date the Participant's service as a director,
consultant or adviser terminates shall continue to be exercisable for a period
of three months (or such longer period as the Administrator may determine, but
in no event beyond the Final Exercise Date) unless the director, consultant or
adviser was terminated for cause that in the opinion of the Administrator casts
such discredit on him or her as to justify termination of his of her Awards.
After completion of the post-termination exercise period, such options shall
terminate to the extent not previously exercised, expired or terminated,

                                      -3-
<PAGE>

              (5)    TAXES. The Company will withhold from any cash payment
made pursuant to an Award an amount sufficient to satisfy all federal, state
and local withholding tax requirements (the "withholding requirements").

       In the case of an Award pursuant to which Stock may be delivered, the
Administrator will have the right to require that the Participant or other
appropriate person remit to the Company an amount sufficient to satisfy the
withholding requirements, or make other arrangements satisfactory to the
Administrator with regard to such requirements, prior to the delivery of any
Stock or removal of restrictions thereon. If and to the extent that such
withholding is required, the Administrator may permit the Participant or such
other person to elect at such time and in such manner as the Administrator
provides to have the Company hold back from the shares to be delivered, or to
deliver to the Company, Stock having a value calculated to satisfy the
withholding requirement. The Administrator may make such share withholding
mandatory with respect to any Award at the time such Award is made to a
Participant.

       If at the time an ISO is exercised the Administrator determines that the
Company could be liable for withholding requirements with respect to the
exercise or with respect to a disposition of the Stock received upon exercise,
the Administrator may require as a condition of exercise that the person
exercising the ISO agree (a) to provide for withholding under the preceding
paragraph of this Section 6.a.(5), if the Administrator determines that a
withholding responsibility may arise in connection with the exercise, (b) to
Inform the Company promptly of any disposition (within the meaning of section
424(c) of the Code) of Stock received upon exercise, and (c) to give such
security as the Administrator deems adequate to meet the potential liability of
the Company for other withholding requirements and to augment such security from
time to time in any amount reasonably deemed necessary by the Administrator to
preserve the adequacy of such security.

              (6)    DIVIDEND  EQUIVALENTS,  ETC. The  Administrator may provide
for the payment of amounts in lieu of cash dividends or other cash distributions
with respect to Stock subject to an Award

              (7)    RIGHTS  LIMITED.  Nothing in the Plan shall be construed as
giving any person the right to continued  employment or service with the Company
or its  Affiliates, or any rights as a shareholder  except as to shares of Stock
actually  issued  under the Plan.  The loss of existing or  potential  profit in
Awards will not  constitute an element of damages in the event of termination of
employment or service for any reason, even if the termination is in violation of
an obligation of the Company or Affiliate to the Participant.

              (8)    DOCUMENTATION  OF AWARDS.  Awards will be evidenced by such
written instruments, if any, as may be prescribed by the Administrator from time
to time. Such  instruments  may be in the form of  Agreements to be executed by
both the Participant and the

                                      -4-
<PAGE>

Company,  or  certificates,  letters or similar  instruments,  which need not be
executed by the Participant  but acceptance of which will evidence  agreement to
the terms thereof,

              (9)    NO RIGHTS AS A STOCKHOLDER. Except as specifically provided
by the Plan,  the  receipt of an Award will not give a  Participant  rights as a
stockholder; the Participant will obtain such rights, subject to any limitations
imposed  by the Plan or the  instrument  evidencing  the  Award,  only  upon the
issuance of Stock.

       b.     AWARDS REQUIRING EXERCISE

              (1)    TIME AND  MANNER  OF  EXERCISE.  Unless  the  Administrator
expressly provides otherwise, (a) an Award requiring exercise by the holder will
not be deemed to have been exercised until the Administrator  receives a written
notice of  exercise  (in form  acceptable  to the  Administrator)  signed by the
appropriate  person and accompanied by any payment  required under the Award and
any documents required by the  Administrator;  and (b) if the Award is exercised
by  any  person  other  than  the  Participant, the  Administrator  may  require
satisfactory  evidence that the person exercising  the Award has the right to do
so.

              (2)    PAYMENT OF EXERCISE PRICE, IF ANY. Where the exercise of an
Award is to be  accompanied  by payment,  the  Administrator  may  determine the
required or permitted forms of payment either at or after the time of the Award,
subject  to the  following:  (a)  unless the  Administrator  expressly  provides
otherwise,   all  payments  will  be   by  cash  or  check   acceptable  to  the
Administrator;  and (b) where  shares of stock issued under an Award are part of
an original issue of shares,  the Award shall require an exercise price equal to
at least the par value of such shares,

              (3)    RELOAD AWARDS.  The Administrator may provide that upon the
exercise of an Award,  either by payment of cash or (if permitted  under Section
6.b.(2)above)  through  the  tender of  previously  owned  shares of Stock,  the
Participant or other person  exercising the Award will  automatically  receive a
new Award of like kind  covering a number of shares of Stock equal to the number
of shares of Stock for which the first Award was exercised.

              (4)    ISOs. No ISO may be granted under the Plan after _________,
2008, but ISOs previously granted may extend beyond that date.

       c.     AWARDS NOT REQUIRING EXERCISE

       Awards of Restricted Stock and  Unrestricted  Stock may be made in return
for either (i) services determined by the Administrator to have a value not less
than the par  value  of  the  awarded  shares  of  Stock,  or (ii) cash or other
property  having a value not less  than the par  value of the awarded  shares of
Stock plus such additional amounts (if any) as the Administrator may

                                      -5-
<PAGE>

determine  payable in such  combination and type of cash, other property (of any
kind) or services as the Administrator may determine.

7.     EFFECT OF CERTAIN TRANSACTIONS

       a.     MERGERS, ETC.

       In the event of (i) a consolidation or merger in which the Company is not
the  surviving  corporation  or  which  results  in  the  acquisition  of all or
substantially  all of the Company's  then  outstanding  common stock by a single
person or entity or by a group of persons  and/or  entities  acting in  concert,
(ii) a sale or transfer of all or  substantially  all the Company's  assets.  or
(iii) a  dissolution  or  liquidation  of the Company (any of the  foregoing,  a
"Covered Transaction"),  all outstanding Awards (other than shares of Stock that
are  outstanding and fully vested) will be forfeited as of the effective time of
the Covered  Transaction  unless assumed by an acquiring or surviving  entity or
its affiliate as provided in the  following  sentence.  In  connection  with any
Covered  Transaction  in which there is an acquiring or  surviving  entity,  the
Administrator  may provide for  substitute  or  replacement  awards from, or the
assumption  of Awards by, the acquiring or surviving  entity or its  affiliates,
any such  substitution,  replacement  or  assumption  to be on such terms as the
Administrator  determines;  but if there is no acquiring or surviving entity, or
if the Administrator  does not so provide for the  substitution,  replacement or
assumption of Awards in connection with the covered transaction, all outstanding
Awards shall vest and if relevant become  exercisable  and all deferrals,  other
than deferrals of amounts that are neither  measured by reference to nor payable
in shares of  Stock,  shall be  accelerated,  immediately  prior to the  covered
transaction.

       b.     CHANGES IN AND DISTRIBUTIONS WITH RESPECT TO THE STOCK

              (1)    RUDE  ADJUSTMENT  PROVISIONS.  In  the  event  of  a  stock
dividend, stock split or combination of shares, recapitalization or other change
in the Company's  capital  structure,  the Administrator  will make  appropriate
adjustments to the maximum number of shares that may be delivered under the Plan
under Section 4.a. and will also make appropriate  adjustments to the number and
kind of shares of stock or  securities  subject to Awards  then  outstanding  or
subsequently  granted,  any  exercise  prices  relating  to Awards and any other
provision of Awards affected by such change.

              (2)    CERTAIN OTHER  ADJUSTMENTS. The Administrator may also make
adjustments  of the type  described in paragraph  (1) above to take into account
distributions to common  stockholders  other than stock dividends or normal cash
dividends,  mergers,  consolidations,   acquisitions,  dispositions  or  similar
corporate transactions, or any other event, if the Administrator determines that
adjustments are appropriate to avoid distortion in the operation of the Plan and
to

                                      -6-
<PAGE>

preserve  the  value  of the  Awards  made  hereunder;  PROVIDED,  that  no such
adjustment  shall be made to ISOs  except to the  extent  consistent  with their
continued qualification under Section 422 of the Code.

              (3)    CONTINUING  APPLICATION  OF PLAN TERMS.  References  in the
Plan to shares of Stock shall be  construed  to include any stock or  securities
resulting from an adjustment pursuant to Section 7.b.(1) or 7.b.(2) above.

8.     CONDITIONS ON DELIVERY OF STOCK

       The Company will not be obligated to deliver any shares of Stock pursuant
to the Plan or to  remove  any  restriction  from  shares  of  Stock  previously
delivered  under the Plan until:  the  Company's  counsel has approved all legal
matters in  connection  with the issuance  and  delivery of such shares;  if the
outstanding  Stock is at the time of  delivery  listed on any stock  exchange or
national  market  system,  the  shares  to be  delivered  have  been  listed  or
authorized  to be listed on such  exchange  or system  upon  official  notice of
issuance;  and all conditions of the Award have been satisfied or waived. If the
sale of Stock has not been  registered  under  the  Securities  Act of 1933,  as
amended,  the Company may require, as a condition to exercise of the Award, such
representations   or   agreements  as  counsel  for  the  Company  may  consider
appropriate  to avoid  violation  of such Act.  The  Company  may  require  that
certificates  evidencing Stock issued under the Plan bear an appropriate  legend
reflecting any restriction on transfer applicable to such Stock.

9.     AMENDMENT AND TERMINATION

       Subject to the last sentence of Section 3, the  Administrator  may at any
time or times amend the Plan or any outstanding  Award for any purpose which may
at the time be permitted by law, or may at any time terminate the Plan as to any
further  grants of  Awards;  PROVIDED,  that  (except  to the  extent  expressly
required or permitted by the Plan) no such amendment will,  without the approval
of the  stockholders of the Company,  effectuate a change for which  stockholder
approval is required in order for the Plan to continue to qualify  under Section
422 of the Code.

10.    NON-LIMITATION OF THE COMPANY'S RIGHTS

       The  existence of the Plan or the grant of any Award shall not in any way
affect the Company's  right to award a person bonuses or other  compensation  in
addition to Awards under the Plan.

11.    GOVERNING LAW

                                      -7-
<PAGE>

The Plan  shall  be  construed  in  accordance  with  the  laws of the  State of
Delaware.

                                      -8-
<PAGE>

                                    EXHIBIT A

                               DEFLATION OF TERMS

       The following  terms,  when used in the Plan, shall have the meanings and
be subject to the provisions set forth below:

       "ADMINISTRATOR": The Board or, if one has been appointed, the Committee.

       "AFFILIATE":   Any  corporation  or  other  entity  owning,  directly  or
indirectly,  50% or  more of the outstanding  Stock of the Company,  or in which
the  Company  or  any  such  corporation  or  other  entity  owns,  directly  or
indirectly, 50% of the outstanding capital stock (determined by aggregate voting
rights) or other voting interests.

       "AWARD": Any of the following:

              (i)   Options  ("Stock  Options")   entitling   the  recipient  to
       acquire  shares of Stock upon  payment of the exercise  price. Each Stock
       Option  will have an  exercise  price  determined  by the  Administrator,
       except that an ISO will have an  exercise  price equal to the fair market
       value of the Stock  subject to the option,  determined  as of the date of
       grant  unless  the ISO is  granted to an  Employee  described  in Section
       422(b)(6)  of the Code in which case the ISO will have an exercise  price
       equal to 110% of such fair market value. The Administrator will determine
       the medium in which the exercise price is to be paid, the duration of the
       option,  the time or times at which an option  will  become  exercisable,
       provisions  for   continuation   (if  any)  of  option  rights  following
       termination  of the  Participant's  employment  with the  Company and its
       Affiliates,  and all other  terms of the Stock  Option.  No Stock  Option
       awarded under the Plan will be an ISO unless the Administrator  expressly
       provides for ISO treatment.

              (ii)   Rights  ("SARs")  entitling  the holder  upon  exercise  to
       receive  cash or  Stock,  as the  Administrator  determines,  equal  to a
       function (determined by the  Administrator using such factors as it deems
       appropriate)  of the amount by which the Stock has  appreciated  in value
       since the date of the Award.

              (iii)  Stock subject to  restrictions  ("Restricted  Stock") under
       the Plan  requiring  that such  Stock be  redelivered  to the  Company if
       specified conditions are not satisfied. The conditions to be satisfied in
       connection  with any Award of Restricted  Stock,  the terms on which such
       Stock must be  redelivered  to the Company,  the  purchase  price of such
       Stock, and all other terms shall be determined by the Administrator.

              (iv)   Stock  not  subject  to any  restrictions  under  the  Plan
       ("Unrestricted Stock").

<PAGE>

              (v)    A  promise  to  deliver  Stock or other  securities  in the
       future on such terms and  conditions as the Administrator determines.

              (vi)   Securities  (other than Stock Options) that are convertible
       into or  exchangeable  for  Stock on such  terms  and  conditions  as the
       Administrator determines,

              (vii)  Cash bonuses tied to  performance  criteria as described at
       (viii) below ("Cash Performance Awards").

              (viii) Awards  described  in any of (i) through  (vii) above where
       the right to  exercisability,  vesting or full  enjoyment of the Award is
       conditioned  in  whole  or in  part  on  the  satisfaction  of  specified
       performance criteria ("Performance Awards").

              (ix)   Grants of cash,  or loans, made in  connection  with  other
       Awards  in order to help  defray  in whole or in part the  economic  cost
       (including  tax cost) of the Award to the  Participant.  The terms of any
       such grant or loan shall be determined by the Administrator.

Awards may be combined in the Administrator's discretion.

       "BOARD": The Board of Directors of the Company.

       "CODE":  The  U.S.  Internal  Revenue  Code of 1986 as from  time to time
amended and in effect, or any successor statute as from time to time in effect.

       "COMMITTEE":  A  committee  of the  Board.  The  Committee  may  delegate
ministerial tasks to such persons (including Employees) as it deems appropriate.

       "COMPANY": Diomed, Inc.

       "EMPLOYEE": Any person who is employed by the Company or an Affiliate.

       "IMMEDIATE FAMILY": A person's children or spouse.

       "ISO": A Stock Option  intended to be an "incentive  stock option" within
the meaning of Section 422 of the Code.

       "PARTICIPANT":  An Employee, director or other person or entity providing
services  to the  Company or its  Affiliates  who is granted an Award  under the
Plan.

       "PLAN": Diomed, Inc. 1998 Incentive Plan as from time to time amended and
in effect.

       "STOCK": Common Stock of the Company, par value $0.001 per share.DIOMED, INC.

                         2001 EMPLOYEE STOCK OPTION PLAN

       1.     PURPOSE.

       This Employee Stock Option Plan (the "Plan") is intended as a performance
incentive for officers, directors, employees and consultants of Diomed, Inc.
(the "Company") and its Subsidiaries (as hereinafter defined) to enable the
persons to whom options are granted (the "Optionees") to acquire or increase a
proprietary interest in the success of the Company. The Company intends that
this purpose will be affected by the granting of stock options. Options granted
under the Plan may be either "incentive stock options" ("Incentive Options") as
defined in Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), or options that do not qualify as Incentive Options ("Nonqualified
Options"). The term "Subsidiaries" includes any corporations in which stock
possessing greater than fifty percent of the total combined voting power of all
classes of stock is owned directly or indirectly by the Company, and for
purposes of Incentive Options granted under the Plan is limited to Subsidiaries
that are "subsidiary corporations" within the meaning of Section 424(d)(2) of
the Code.

       2.     OPTIONS TO BE GRANTED.

       Options granted under the Plan may be either Incentive Options or
Nonqualified Options, and shall be designated as such at the time of grant. To
the extent that any option intended to be an Incentive Option shall fail to
qualify as an "incentive stock option" under the Code, such option shall be
deemed to be a Nonqualified Option.

       3.     ADMINISTRATION.

              (a)    BOARD OR OPTION COMMITTEE. The Plan shall be administered
by the Board of Directors of the Company (the "Board of Directors") or by a
committee (the "Option Committee") of not less than two directors of the Company
appointed by the Board. All references in the Plan to the Option Committee shall
mean the Board if no Option Committee has been appointed; provided that the
Board at its discretion may exercise any power of the Option Committee under the
Plan regardless of whether an Option Committee has been appointed. It is the
intention of the Company that each member of the Option Committee shall be a
"non-employed director" as that term is defined and interpreted pursuant to Rule
16b-3(b)(3) or any successor rule thereto promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). To the extent that the
Board of Directors determines it to be desirable to qualify options granted
hereunder as "performance-based compensation" within the meaning of Section
162(m) of the Code ("Performance Based Compensation"), each member of the Option
Committee also shall be an "outside director" within the meaning of said Section
162(m), and the grant of such option shall be made by the Option Committee.
Action by the Option Committee shall require the affirmative vote of a majority
of all its members (or unanimous approval if there are only two members).

<PAGE>

              (b)    POWERS OF OPTION COMMITTEE. Subject to the terms and
conditions of the Plan, the Option Committee shall have full and final authority
to operate, manage and administer the Plan on behalf of the Company, including,
without limitation, the power:

                     (i)    To effect the grant of options under the Plan; to
       grant options conditionally or unconditionally; to determine from time to
       time the persons to whom options shall be granted, the form of option to
       be granted to such persons under the Plan (including whether such options
       shall be Incentive Options or Nonqualified Options), the number of shares
       subject to any such option, the exercise price for options (which price
       shall be subject to the applicable requirements of Section 6(d)), the
       time or times at which each option shall become exercisable, the
       conditions under which exercise may be accelerated, the duration of the
       exercise period (which shall not exceed the limitations specified in
       Section 6(a)) and any restrictions on shares issued upon exercise of such
       option; and to prescribe the form or forms of the instruments evidencing
       options granted under the Plan and the terms and provisions (which need
       not be identical) of each option granted under the Plan to such persons;

                     (ii)   To waive compliance by an Optionee with any
       obligation to be performed by such Optionee under an option and to waive
       any condition or provision of an option, both generally and in particular
       instances, except that the Option Committee may not, in the case of an
       Incentive Option, other than in accordance with Section 8 or 9, (A)
       increase the total number of shares covered by the option, (B) extend the
       term of the option to more than ten years (or five years in the case of
       an Incentive Option granted to shareholders subject to the limitations
       described in Section 5(b)) or (C) unless the Optionee consents, reduce
       the purchase price per share of Common Stock subject to such option (but
       in no event below the fair market value of the Common Stock at such time
       (determined by reference to the provisions of Section 6(b) hereof)) or
       waive compliance by the Optionee with any obligation, condition or
       provision required for such option to qualify as an Incentive Option;

                     (iii)  To construe and interpret the Plan and options
       granted thereunder and to establish, amend, and revoke rules and
       regulations for administration of the Plan, and in this connection, the
       Option Committee may correct any defect or supply any omission, or
       reconcile any inconsistency in the Plan, in any option agreement or in
       any related agreements, in the manner and to the extent it shall deem
       necessary or expedient to make the Plan fully effective, with all
       decisions and determinations by the Option Committee in the exercise of
       this power to be final and binding upon the Company and Optionees; and

                     (iv)   Generally, to exercise such powers and to perform
       such acts as are deemed necessary or expedient to administer the Plan or
       to promote the best interests of the Company with respect to the Plan.

                                       2
<PAGE>

              (c)    PERFORMANCE BASED COMPENSATION. The Option Committee, in
its discretion, may take such actions as may be necessary to ensure that options
granted under the Plan qualify as Performance Based Compensation.

       4.     STOCK.

              (a)    SHARES SUBJECT TO PLAN. The stock subject to options
granted under the Plan shall be authorized but unissued shares of Common Stock,
$.001 par value per share, of the Company (the "Common Stock"). The total number
of shares of Common Stock that may be issued pursuant to options granted under
the Plan shall not exceed an aggregate of one million (1,000,000) shares. Such
number of shares shall be subject to adjustment as provided in Section 8 hereof.
No employee of the Company or any Subsidiary maybe granted options to acquire,
in the aggregate, more than five hundred thousand (500,000) shares of Common
Stock (subject to adjustment as provided in Section 8 hereof) under the Plan
during any fiscal year of the Company

              (b)    RESTRICTIONS ON SHARES. Shares purchased upon the exercise
of options granted under the Plan may be subject to restrictions, such as
limitations on transfer, vesting and repurchase provisions, and the like, as set
forth in the relevant option agreement or in any other agreement to which the
Optionee is subject. Such restrictions shall be in such form as the Option
Committee shall from time to time deem appropriate. Stock restriction provisions
need not be identical. Unless otherwise provided by the Option Committee, upon
exercise of any option granted under the Plan, the Optionee shall, as a
condition of the issuance of the shares purchased pursuant to such exercise,
execute and become a party to the Stockholders Agreement between the Company and
certain of its stockholders dated as of March 14, 2001, as amended (or any
similar agreement between the Company and certain of its stockholders designated
by the Company's Board of Directors in lieu thereof) (the "Stockholders
Agreement"), confirming his or her agreement to the restrictions on transfer and
other terms applicable to the purchased shares set forth therein, and all shares
issued pursuant to such exercise shall be subject to the restrictions and other
terms set forth in the Stockholders Agreement even if Optionee shall fail to
execute such Stockholders Agreement.

              (c)    LAPSED OR UNEXERCISED OPTIONS. Whenever any outstanding
option under the Plan expires, is cancelled or is otherwise terminated (other
than by exercise), the shares of Common Stock allocable to the unexercised
portion of such option may again be the subject of options under the Plan. When
any withholding tax obligation of an Optionee with respect to the exercise of an
option granted under the Plan is satisfied by cancellation of options, as
permitted in Section  10(a), the total number of shares of Common Stock for
which further options may be granted under the Plan shall be irrevocably reduced
by the total number of shares for which such option is thus exercised and the
number of shares for which such option is canceled.

       5.     ELIGIBILITY.

              (a)    ELIGIBLE OPTIONEES. Incentive Options may be granted only
to officers or other employees of the Company or its Subsidiaries, including
members of the Board of

                                       3
<PAGE>

Directors who are also employees of the Company or its Subsidiaries.
Nonqualified Options may be granted to officers or other employees of the
Company or its Subsidiaries, to members of the Board of Directors of the Company
or any Subsidiary whether or not employees of the Company or such Subsidiary,
and to consultants who provide services to the Company or its Subsidiaries
(regardless of whether they are also employees).

              (b)    LIMITATION ON 10% SHAREHOLDERS. No person shall be eligible
to receive any Incentive Option under the Plan if, at the date of grant, such
person beneficially owns stock representing in excess of ten percent (10%) of
the voting power of all outstanding capital stock of the Company or its parent
or a Subsidiary, unless notwithstanding anything in this Plan to the contrary
(i) the purchase price for stock subject to such Incentive Option is at least
one hundred ten percent (110%) of the fair market value of such stock at the
time of the grant (determined by reference to the provisions of Section 6(d)
hereof) and (ii) such Incentive Option by its terms is not exercisable more than
five (5) years from the date of grant thereof.

              (c)    LIMITATION ON EXERCISABLE OPTIONS. Notwithstanding any
other provision of the Plan, the aggregate fair market value (determined as of
the time the option is granted) of the stock with respect to which Incentive
Options are exercisable for the first time by any individual during any calendar
year (under the Plan and all other plans of the Company and its parent and
Subsidiaries) shall not exceed $ $100,000.00. Any option granted under the Plan
in excess of the foregoing limitation shall be deemed a Nonqualified Option. The
provisions of this Section 5(c) shall be construed and applied in accordance
with Section 422(d) of the Code and the regulations, if any, promulgated
thereunder.

              (d)    OTHER AWARDS. Receipt of options under the Plan or of
awards under any other employee benefit plan of the Company or any of its
Subsidiaries shall not preclude an employee from receiving options or additional
options under the Plan. In granting options the Option Committee may include or
exclude previous participants in the Plan as the Option Committee may determine.

       6.     TERMS OF THE OPTION AGREEMENTS.

       Subject to the terms and conditions of the Plan, each option shall be
evidenced by an option agreement, which shall contain such provisions not
inconsistent with the Plan as the Option Committee shall from time to time deem
appropriate. In the event of any conflict between the terms of an option
agreement and the terms of the Plan, the terms of the Plan shall control.
Option agreements need not be identical, but each option agreement by
appropriate language shall include the substance of all of the following
provisions:

              (a)    EXPIRATION. Notwithstanding any other provision of the Plan
or of any option agreement, each option shall expire on the date specified in
the option agreement, which date in the case of any Incentive Option shall not
be later than the tenth anniversary of the date on which the option was granted
(or five years in the case of an Incentive Option granted to shareholders
subject to the limitations described in Section 5(b)).

                                       4
<PAGE>

              (b)    MINIMUM SHARES EXERCISABLE. Option agreements may in the
discretion of the Option Committee set forth a minimum number of shares with
respect to which an option may be exercised at any one time.

              (c)    EXERCISE. Options may be exercisable in full or in such
installments (which need not be equal) and at such time or times (including upon
the occurrence of such event or events) as may be designated by the Option
Committee. Except as otherwise provided in the applicable option agreement, no
option shall first be exercisable, either in whole or in part, until the twelve
month anniversary of the date of grant, and shall be exercisable with respect to
a number of shares equal to one-fourth (1/4) of the total number of shares
subject to such option on the twelve month anniversary of the date of grant and
with respect to a number of shares equal to one-forty-eighth (1/48) of the total
number of shares subject to such option on the same day of each month as the
date of grant for thirty-six (36) consecutive months commencing on the thirteen
month anniversary of the date of grant. To the extent installments of an option
become exercisable but are not exercised, such installments shall accumulate and
be exercisable, in whole or in part, at any time after becoming exercisable, but
not later than the date the option expires or terminates.

              (d)    PURCHASE PRICE. The purchase price per share of Common
Stock subject to each option shall be determined by the Option Committee at the
time the option is granted; provided, however, that the purchase price per share
subject to each Incentive Option shall be not less than the fair market value of
the Common Stock on the date such option is granted (subject to Section 5(b)).
For the purposes of the Plan, the fair market value of shares of Common Stock
subject to options granted hereunder shall be determined in good faith by the
Option Committee; provided, however, that (i) if shares of Common Stock are
admitted to quotation on the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") on the date the option is granted, the
fair market value shall not be less than the average of the highest bid and
lowest asked prices of the Common Stock on NASDAQ reported for such date, or
(ii) if shares of Common Stock are admitted to trading on a national securities
exchange or the NASDAQ National Market System on the date the option is granted,
the fair market value shall not be less than the closing price reported for the
Common Stock on such exchange or system for such date or, if no sales were
reported for such date, for the last date preceding such date for which a sale
was reported.

              (e)    TRANSFER. Options granted under the Plan and the rights and
privileges conferred thereby may not be transferred, assigned, pledged or
hypothecated in any manner (whether by operation of law or otherwise) other than
by will or by applicable laws of descent and distribution, and may be exercised
during the Optionee's lifetime only by the Optionee, or his or her guardian or
legal representative. No option granted under the Plan shall be subject to
execution, attachment or similar process. Upon any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of any option under the Plan or any
right or privilege conferred hereby contrary to the provisions of the Plan, or
upon the sale or levy or any attachment or similar process upon the rights and
privileges conferred hereby, such option shall thereupon terminate and become
null and void. Notwithstanding the above provisions of this Section 6(e),

                                       5
<PAGE>

any option granted under the Plan may be pledged or hypothecated to secure an
obligation to the Company.

              (f)    TERMINATION OF EMPLOYMENT OR DEATH OR DISABILITY OF
OPTIONEE. The Option Committee may in its discretion specify, at the time an
option is granted under the Plan and subject to the agreement of the applicable
Optionee thereafter, a period or periods within which such option may be
exercised following termination of the Optionee's employment with the Company or
its Subsidiaries, if any, for any reason, or upon the happening of any other
event. Except as otherwise provided in the applicable option agreement, options
granted hereunder shall terminate on the earliest to occur of:

                     (i)    the date of expiration thereof;

                     (ii)   if the Optionee is employed by the Company or a
       Subsidiary and such employment is terminated by the Company or such
       Subsidiary for cause (as hereinafter defined), on the date of such
       termination of employment;

                     (iii)  if the Optionee is employed by the Company or a
       Subsidiary and such employment is terminated for any reason other than
       death, permanent and total disability, or for cause, on the earlier of
       the date of expiration thereof or ninety (90) days following the date of
       such termination of employment (provided that no further shares shall
       first become exercisable during such ninety (90) day period and such
       option maybe exercised only with respect to that portion of the option
       that was exercisable immediately prior to such termination of
       employment); or

                     (iv)   if the Optionee dies or becomes permanently and
       totally disabled while employed by the Company, on the earlier of the
       date of expiration thereof or one (1) year following the date of such
       death or disability (provided that no further shares shall first become
       exercisable during such one (1) year period and such option may be
       exercised only with respect to that portion of the option that was
       exercisable immediately prior to such death or disability).

                     For purposes of the Plan, the date of termination of
employment for any Optionee shall mean the date the employee actually ceases to
be employed by the Company for any reason regardless of any period thereafter
during which the Company pays or is required to pay the employee salary
continuation benefits or salary in lieu of notice.

                     An employment relationship between the Company and the
Optionee shall be deemed to exist during any period during which the Optionee is
employed by the Company or any Subsidiary. For purposes of the Plan, employment
shall not be considered terminated in the case of the transfer of an Optionee
from the employ of the Company to a Subsidiary or VICE VERSA, or from one
Subsidiary to another, or to the employment of a corporation (or a parent or
subsidiary corporation of such corporation) assuming an option in the
circumstances described in and subject to Section 9. Whether authorized leave of
absence or absence on military service shall constitute termination of the
employment relationship between the Company and the

                                       6
<PAGE>

Optionee shall be determined by the Option Committee at the time thereof.
Nothing contained in the Plan or in any option agreement shall confer upon any
Optionee any right with respect to the continuation of his or her employment or
other relationship with the Company or any Subsidiary or interfere in any way
with the right of the Company or any Subsidiary at any time to terminate such
employment or relationship or to increase or decrease the compensation of the
Optionee.

                     For purposes of this Section 5(f), the term "cause" shall
have the same meaning given to such term (or other term of similar meaning) in
any written employment or other similar agreement between the Optionee and the
Company or a Subsidiary for purposes of termination of employment under such
agreement, and in the absence of any such agreement or if such agreement does
not include a definition of "cause" (or other term of similar meaning), the term
"cause" shall mean (i) any material breach by the Optionee of any agreement to
which the Optionee and the Company are both parties, (ii) any act or omission to
act by the Optionee which may have a material and adverse effect on the
Company's business or on the Optionee's ability to perform services for the
Company, including, without limitation, the commission of any crime (other than
minor traffic violations), or (iii) any material misconduct or material neglect
of duties by the Optionee in connection with the business or affairs of the
Company or a Subsidiary or affiliate of the Company.

                     After the death of the Optionee, his executor,
administrator or any person or persons to whom his option is transferred by will
or by the laws of descent and distribution, shall have the right, at any time
prior to such termination, to exercise the option in whole or in part. An
Optionee shall be deemed to be permanently and totally disabled if he is unable
to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
not less than twelve (12) months.

              (g)    RIGHTS OF OPTIONEES. No Optionee shall be deemed for any
purpose to be the owner of any shares of Common Stock subject to any option
unless and until (i) the option shall have been exercised with respect to such
shares pursuant to the terms thereof, (ii) all requirements under applicable law
and regulations with respect to such exercise shall have been complied with to
the satisfaction of the Company, and (iii) the Company shall have issued and
delivered such shares to the Optionee. Thereupon, the Optionee shall have full
voting, dividend and other ownership rights with respect to such shares of
Common Stock.

       7.     METHOD OF EXERCISE; PAYMENT OF PURCHASE PRICE.

              (a)    NOTICE OF EXERCISE. Any option granted under the Plan may
be exercised by the Optionee in whole or, subject to Section 6(b) hereof, in
part, to the extent then exercisable in accordance with the terms of the
applicable option agreement, by delivering to the Company on any business day a
written notice specifying the number of shares of Common Stock the Optionee then
desires to purchase (the "Notice"). The Notice shall be accompanied by payment
for such shares, any required payment of withholding taxes, and such documents
as may reasonably be required or requested by the Company. If an option is
exercised by the executor or administrator of a deceased Optionee, or by the
person or persons to whom the option has been

                                       7
<PAGE>

transferred by the Optionee's will or the applicable laws of descent and
distribution, the Company shall be under no obligation to honor the Notice until
the Company is satisfied as to the authority of the person or persons exercising
the option.

              (b)    MEANS OF PAYMENT AND DELIVERY. Payment for shares of Common
Stock purchased pursuant to the exercise of an option shall be made either: (i)
in cash, or by certified or bank check or other payment acceptable to the
Company, equal to the option exercise price for the number of shares specified
in the Notice (the "Total Option Price"); (ii) if authorized by the applicable
option agreement or by the Option Committee and if permitted by law, by the
Optionee delivering the Notice to the Company together with irrevocable
instructions to a broker to promptly deliver the Total Option Price to the
Company in cash or by other method of payment acceptable to the Company
(provided, however, that the Optionee and the broker shall comply with such
procedures and enter into such agreements of indemnity or other agreements as
the Company shall prescribe as a condition of payment under this clause (ii));
(iii) any other form of payment authorized by the applicable option agreement or
by the Option Committee and permitted by law or (iv) by any combination of the
above permissible forms of payment.

              (c)    CONDITIONS TO EXERCISE. The delivery of certificates
representing shares of Common Stock to be purchased pursuant to the exercise of
an option will be contingent upon the Company's receipt of the Total Option
Price in a manner provided above and of any written representations from the
Optionee required by the Option Committee, and the fulfillment of any other
requirements contained in the option agreement or applicable provisions of law.

       8.     ADJUSTMENT UPON CHANGES IN CAPITALIZATION.

              (a)    NO EFFECT OF OPTIONS UPON CERTAIN CORPORATE TRANSACTIONS.
The existence of outstanding options shall not affect in any way the right or
power of the Company or its shareholders to make or authorize any or all
adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business, or any merger or consolidation of
the Company, or any issue of shares of Common Stock, or any issue of bonds,
debentures, preferred or prior preference stock ahead of or affecting the Common
Stock or the rights thereof, or the dissolution or liquidation of the Company,
or any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character or otherwise.

              (b)    STOCK DIVIDENDS, RECAPITALIZATIONS, ETC. If the shares of
the Company's Common Stock as a whole are increased, decreased, changed into or
exchanged for a different number or kind of shares or securities of the Company
or, subject to Section 9, securities not of the Company's issue, whether through
merger, consolidation, reorganization, recapitalization, reclassification, stock
dividend, stock split, combination of shares, exchange of shares, change in
corporate structure or the like, an appropriate and proportionate adjustment
shall be made in the number and kind of shares subject to the Plan, and in the
number, kind, and per share exercise price of shares subject to unexercised
options or portions thereof granted prior to any such change. In the event of
any such adjustment in an outstanding option, the Optionee thereafter shall have
the right to purchase the number of shares under such option at the per share
price, as

                                       8
<PAGE>

so adjusted, which the Optionee could purchase at the total purchase price
applicable to the option immediately prior to such adjustment.

              (c)    DETERMINATION OF ADJUSTMENT. Adjustments under this Section
8 shall be determined by the Option Committee and such determinations shall be
final and conclusive. The Option Committee shall have the discretion and power
in any such event to determine and to make effective provision for acceleration
of the time or times at which any option or portion thereof shall become
exercisable.

              (d)    NO ADJUSTMENT IN CERTAIN CASES. Except as hereinbefore
expressly provided, the issue by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or property
or for labor or services, either upon direct sale or upon the exercise of rights
or warrants to subscribe therefor, or upon conversion of shares or obligations
of the Company convertible into such shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of shares of Common Stock then subject to outstanding options.

              (e)    MODIFICATION OF INCENTIVE OPTIONS. Any adjustments made
pursuant to this Section 8 with respect to Incentive Options shall be made only
after the Option Committee, after consulting with counsel for the Company,
determines whether such adjustments would constitute a "modification" of such
Incentive Options (as that term is defined in Section 424 of the Code) or would
cause any adverse tax consequences for the holders of such Incentive Options. If
the Option Committee determines that such adjustments made with respect to
Incentive Options would constitute a modification of such Incentive Options or
would cause adverse tax consequences to the holders of such Incentive Options,
it may refrain from making such adjustments.

       9.     EFFECT OF CERTAIN TRANSACTIONS.

                     In the case of (i) the dissolution, winding-up or
liquidation of the Company, (ii) a merger, consolidation or reorganization in
which the Company is acquired by another person or entity (other than a holding
company formed by the Company) and as a result of which outstanding shares of
Common Stock are changed into or exchanged for cash or property or securities
not of the Company's issue, or any combination thereof, or (iii) the sale of all
or substantially all of the assets of the Company to, or the acquisition of
shares (either alone or together with other previously held shares) representing
more than fifty percent (50%) of the voting power of the stock of the Company
then outstanding by, any person or entity or persons or entities acting in
concert or combination (any of the foregoing, a "Covered Transaction"), the Plan
and the options issued hereunder shall terminate upon the effectiveness of such
Covered Transaction, unless provision is made by the Option Committee in
connection with such a Covered Transaction in which there is an acquiring or
surviving entity for the assumption of options theretofore granted, or the
substitution for such options of new options of the acquiring or surviving
entity or affiliates thereof, with appropriate adjustment as to the number and
kind of shares and the per share exercise prices, as provided in Section 8, in
which event the Plan and options theretofore granted shall continue in the
manner and under the terms so provided. If there is no acquiring or

                                       9
<PAGE>

surviving entity, or if the Option Committee does not so provide for the
assumption or substitution in connection with the Covered Transaction of options
theretofore granted, all outstanding options shall vest immediately prior to
such Covered Transaction and each Optionee shall be permitted to exercise
immediately prior to such Covered Transaction, subject to delivery of notice of
exercise at such time prior to the consummation of the Covered Transaction as
the Company shall designate, the unexercised portions of options held by such
Optionee. The option agreement evidencing any option may also provide for such
acceleration of otherwise unexercisable portions of the option upon other
specified events or occurrences, such as involuntary terminations of the
Optionee's employment following certain changes in the control of the Company.

       10.    TAX WITHHOLDING.

              (a)    WITHHOLDING OBLIGATION. Each Optionee shall, no later than
the date as of which the value of any option or of any shares of Common Stock
issued upon the exercise of any option first becomes includible in the gross
income of the Optionee for income tax purposes (the "Tax Date"), pay to the
Company, or make arrangements satisfactory to the Company regarding payment of
any federal, state or local taxes of any kind required by law to be withheld
with respect to such income, and the Company may withhold such taxes from
payments of any kind otherwise due to the Optionee. Such arrangements may
include (a) payment by the Optionee in cash or by certified or bank check or
other payment acceptable to the Company of the amount of withholding taxes; (ii)
if authorized by the applicable option agreement or by the Option Committee and
if permitted by law, by the Optionee delivering to the Company irrevocable
instructions to a broker to promptly deliver the amount of withholding taxes to
the Company in cash or by other method of payment acceptable to the Company
(provided, however, that the Optionee and the broker shall comply with such
procedures and enter into such agreements of indemnity or other agreements as
the Company shall prescribe as a condition of payment under this clause (ii));
(iii) if authorized by the applicable option agreement or by the Option
Committee and if permitted by law, by the surrender for cancellation of options
that are then exercisable under the applicable option agreement and the Plan to
purchase such number of shares of Common Stock as is equal to (A) the amount of
withholding taxes, divided by (B) the fair market value on such date of one
share Common Stock (determined by reference to the provisions of Section 6(d)
hereof) minus the exercise price of one Common Stock under the option so
canceled; (iv) any other form of payment authorized by the applicable option
agreement or by the Option Committee and permitted by law; or (v) by any
combination of the above permissible forms of payment

              (b)    CONDITION OF EXERCISE. Without limiting the generality of
Section 10(a), (i) in the case of a Nonqualified Option, the Option Committee
may require as a condition of exercise of such Nonqualified Option that the
Optionee exercising the option pay to the Company, or make arrangements
satisfactory to the Company regarding payment of withholding taxes, and (ii) in
the case of an Incentive Option, if at the time the Incentive Option is
exercised the Option Committee determines that under applicable law and
regulations the Company could be liable for the withholding of any federal,
state or local tax with respect to a disposition of the shares of Common Stock
received upon exercise of such Incentive Option, the Option

                                       10
<PAGE>

Committee shall have the right to require as a condition of exercise of such
Incentive Option that the Optionee exercising the option agree to give such
security as the Option Committee deems adequate to meet the potential liability
of the Company for the withholding of tax, and to augment such security from
time to time in any amount reasonably deemed necessary by the Option Committee
to preserve the adequacy of such security.

              (c)    NOTICE OF DISQUALIFYING DISPOSITIONS. By accepting an
Incentive Option granted under the Plan, each Optionee agrees to notify the
Company in writing immediately after such Optionee makes a disqualifying
disposition (within the meaning of Sections 421 and 422 of the Code) of any
shares of Common Stock acquired upon exercise of an Incentive Option granted
under the Plan.

       11.    FINANCIAL ASSISTANCE.

       The Company is vested with authority under the Plan to assist any
Optionee to whom an option is granted hereunder in the payment of the purchase
price payable on exercise of that option, or the payment of any federal, state
or local income tax with respect to income recognized as the result of the
exercise of such option (or any withholding tax obligation relating thereto), by
making a loan to such Optionee on such terms and at such rates of interest and
upon such security (or unsecured) as shall have been authorized by or under
authority of the Board of Directors in the amount of such purchase price or the
amount of any federal, state and local income tax with respect to income
recognized as a result of the exercise of such option.

       12.    AMENDMENT OF THE PLAN.

       The Board of Directors may discontinue the Plan or amend the Plan at any
time, and from time to time, subject to any required regulatory approval and the
limitation that, except as provided in Sections 8 and 9 hereof, no amendment
shall be effective unless approved by the shareholders of the Company in
accordance with applicable law and regulations at an annual or special meeting
held within twelve (12) months before or after the date of adoption of such
amendment, where such amendment would:

              (a)    increase the number of shares of Common Stock as to which
options may be granted under the Plan;

              (b)    change in substance Section 5 hereof relating to
eligibility to participate in the Plan; or

              (c)    otherwise require the approval of shareholders of the
Company under applicable law or regulations.

Notwithstanding the foregoing, the Board shall have the right (but not the
obligation), without the consent of any Optionee who may be affected thereby, to
amend or modify the terms and provisions of the Plan, and the Option Committee
shall have the right (but not the obligation), without the consent of any
Optionee who may be affected thereby, to amend or modify the terms

                                       11
<PAGE>

and provisions of option agreements entered into in connection with any
outstanding options (i) to the extent necessary to ensure the compliance of the
Plan and such options under Rule 16b-3 of the Exchange Act, or any successor
rule thereto, and (ii) to the extent necessary to preserve the Company's
deduction for United States income tax purposes, if any, of compensation paid
to certain Optionees who are "covered employees," within the meaning of Treasury
Regulation Section 1.162-27(c)(2), as a result of the grant or exercise of
options under the Plan.

       Except as provided above or in Sections 8 and 9 hereof, rights and
obligations under any option granted before any amendment of the Plan effected
after the date of the adoption of the Plan shall not be altered or impaired by
such amendment, except with the consent of the Optionee.

       13.    NONEXCLUSIVITY OF THE PLAN; NON-UNIFORM DETERMINATIONS.

              (a)    NONEXCLUSIVITY. Neither the adoption of the Plan by the
Board of Directors nor the submission of the Plan to the shareholders of the
Company for approval shall be construed as creating any limitations on the
power of the Board of Directors to adopt such other incentive arrangements as it
may deem desirable, including, without limitation, the granting of stock options
otherwise than under the Plan, and such arrangements may be either applicable
generally or only in specific cases. Neither the Plan nor any grant of any
option hereunder shall be deemed to confer upon any Optionee or other employee
any right to continued employment with the Company or its Subsidiaries or
interfere in any way with any right of the Company or any of its Subsidiaries to
terminate the employment of an Optionee or other employee at any time.

              (b)    NON-UNIFORM DETERMINATIONS. The Option Committee shall be
entitled to make nonuniform and selective determinations, and to enter into
non-uniform and selective option agreements, as to, among other things, (i) the
persons to receive options under the Plan and (ii) the terms and provisions of
options.

       14.    GOVERNMENT AND OTHER REGULATIONS; GOVERNING LAW.

              (a)    The obligation of the Company to sell and deliver shares of
Common Stock with respect to options granted under the Plan shall be subject to
all applicable laws, rules and regulations. Each option shall be subject to the
requirement that if, at any time, counsel to the Company shall determine that
the listing, registration or qualification of the shares subject to such option
upon any securities exchange or automated quotation system or under any
applicable law, or the consent or approval of any governmental or regulatory
body, or that the disclosure of non-public information or the satisfaction of
any other condition, is necessary as a condition of, or in connection with the
issuance or purchase of shares thereunder, except to the extent expressly
permitted by the Board of Directors, such option may not be exercised, in whole
or in part, unless such listing, registration, qualification, consent or
approval or satisfaction of such condition shall have been effected or obtained
on conditions acceptable to the Board of Directors, The Company may, but shall
in no event be obligated to, register or qualify any shares covered

                                       12
<PAGE>

by options under any applicable United States federal and state securities laws;
provided that the Company shall not be obligated to take any action in order to
cause the exercise of an option or the issuance of shares pursuant thereto to
comply with any law or regulation of any governmental authority.

              (b)    The Plan shall be governed by Delaware law.

              (c)    Transactions under the Plan are intended to comply with
Rule 16b-3 or any successor rule thereto promulgated under the Exchange Act.

       15.    EFFECTIVE DATE OF PLAN; SHAREHOLDER APPROVAL.

The Plan shall become effective upon the date that it is approved by the Board
of Directors of the Company; provided, however, that the Plan shall be subject
to the approval of the Company's shareholders in accordance with applicable laws
and regulations at an annual or special meeting held within twelve (12) months
of such effective date. No options granted under the Plan prior to such
shareholder approval may be exercised until such approval has been obtained. No
options may be granted under the Plan after the tenth anniversary of the
effective date of the Plan. Unless sooner terminated by the Board of Directors,
the Plan shall terminate upon the close of business on the day next preceding
the tenth anniversary of the effective date of the Plan; provided, however, that
such termination will not affect any options granted prior to termination of the
Plan.

                                       13

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00033-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00033-of-00352.parquet"}]]