Document:

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                                                                    Exhibit 10.4

                              EMPLOYMENT AGREEMENT

                     This EMPLOYMENT AGREEMENT ("Agreement") is entered into as
of this 14th day of August, 2000, by and between S1 Corporation, a Delaware
corporation (the "Company"), and Daniel H. Drechsel, an individual who currently
resides at the address set out below (the "Executive").

                     WHEREAS, the Executive is currently employed as the
President and Chief Operating Officer of S1, Inc., a subsidiary of the Company;

                     WHEREAS, the Company has publicly announced its intention
to transfer substantially all of the European, Middle Eastern and African
operations of the Company and its Subsidiaries (as defined below) to a
subsidiary of the Company ("EMEA") or to one or more subsidiaries of EMEA;

                     WHEREAS, the Company has also announced its intention to
reduce its ownership of EMEA to 90% or less by the sale or issuance of stock in
EMEA to third parties (the "EMEA Separation");

                     WHEREAS, the Company has asked the Executive to become the
Chief Executive Officer of EMEA, and the Executive desires to accept such
position, on the terms and conditions set forth herein, from and after August
14, 2000 (the "Effective Date"); and

                     WHEREAS, the board of directors of the Company (the
"Board") has approved and authorized the Company's execution, delivery and
performance of this Agreement.

                     NOW, THEREFORE, in consideration of the mutual covenants
and agreements set forth herein and other good and valuable consideration, the
receipt and sufficiency of which hereby are acknowledged, the parties hereto
agree as follows:

                     1.        Employment Agreement.  On the terms and
conditions set forth in this Agreement, the Company agrees to cause EMEA to
employ the Executive and the Executive agrees to be employed by EMEA for the
Employment Period set forth in Section 2 hereof and in the position and with the
duties set forth in Section 3 hereof. Terms used herein with initial
capitalization not otherwise defined are defined in Section 20 below.

                     2.        Term.  The initial term of employment under this
Agreement shall be for a two-year period commencing on the Effective Date (the
"Initial Term"). The term of employment shall be renewed for an additional
consecutive 12-month period (the "Extended Term") as of August 14, 2002 (the
second anniversary of the Effective Date), unless either party provides written
notice to the

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other party in accordance with Section 10 hereof at least 30 days before such
date that such party is terminating the term of employment under this Agreement
("Non-Renewal"), which termination shall be effective as of the end of such
Initial Term, or until such term of employment is otherwise sooner terminated as
hereinafter set forth. The Initial Term and Extended Term are collectively
referred to herein as the "Employment Period." A notice of Non-Renewal given by
either party to this Agreement shall not be deemed a termination of the
Executive's employment for purposes of Section 9 of this Agreement. The
Company's obligations under Section 9 hereof shall survive the expiration or
termination of the Employment Period.

                     3.        Position and Duties.  The Executive shall serve
as the Chief Executive Officer of EMEA during the Employment Period, from and
after the formation and capitalization of EMEA. Pending such formation and
capitalization, the Executive shall be employed by the Company as the Chief
Executive Officer of EMEA Operations. As the Chief Executive Officer of EMEA,
the Executive shall render executive, policy and other management services to
EMEA of the type customarily performed by persons serving in a similar officer
capacity. The Executive shall report to the Chief Executive or Chief Operating
Officer of the Company and the Board before such formation and capitalization
and thereafter to the Board of Directors of EMEA. The Executive shall also
perform such other duties with EMEA or the Company and with any Subsidiary as
the Board may from time to time reasonably determine and assign to the Executive
(except that, after the EMEA Separation, such determination shall be made by the
Board of Directors of EMEA). The Executive shall devote the Executive's
reasonable best efforts and substantially full business time to the performance
of the Executive's duties and the advancement of the business and affairs of
EMEA or the Company.

                     4.        Place of Performance.  In connection with the
Executive's employment by EMEA, the Executive shall be based at the principal
offices of EMEA in the United Kingdom, except as otherwise agreed by the
Executive and EMEA and except for reasonable travel on business for EMEA.

                     5.        Compensation and Benefits; Stock Option.

                               (a)        Base Salary.  During the Employment
Period, EMEA or the Company shall pay to the Executive an annual base salary
(the "Base Salary") at the rate of U.S. $265,000 per year, increased by not more
than 25% to reflect cost of living differences between London, England and
Atlanta, Georgia U.S.A., as computed by an independent third party designated by
the Company and reasonably acceptable to the Executive. The Base Salary shall be
reviewed no less frequently than annually and may be increased at the discretion
of EMEA or the Company. The Base Salary shall be payable semi-monthly or in such
other installments as shall be consistent with the payroll procedures of EMEA or
the Company, as applicable.

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                               (b)        Annual Bonus Opportunity.  The
Executive will have the opportunity to earn an annual bonus, payable no later
than the end of the first fiscal quarter following the end of each fiscal year
of EMEA during the Employment Period (pro-rated for any period that is less than
12 months) of up to 50% of the Executive's Base Salary (without regard to any
adjustment pursuant to Section 5(a) to reflect cost of living differences) for
such year, based on the attainment of specific EMEA performance targets as may
be agreed annually upon by the Executive and (i) before the EMEA Separation, the
Chief Executive Officer of the Company or (ii) after the EMEA Separation, the
Compensation Committee of the Board of Directors of EMEA.

                               (c)        Benefits.  During the Employment
Period, the Executive will be entitled to participate in any retirement,
deferred compensation, fringe benefit or welfare benefit plan of the Company
prior to the EMEA Separation and thereafter of EMEA, including any plan
providing for employee stock purchases, pension or retirement income, retirement
savings, employee stock ownership, deferred compensation or medical,
prescription, dental, disability, employee life, group life, accidental death or
travel accident insurance benefits that the Company or EMEA, as applicable, may
adopt for the benefit of executive employees, in accordance with the terms of
such plan. In addition, during the Employment Period, EMEA or the Company shall
provide the Executive and his family with supplemental health insurance to
enable them to make use of private health care services while they are living in
the UK. Nothing in this Agreement shall restrict the right of the Company and
EMEA to change insurance carriers and to adopt, amend, terminate or modify
employee benefit plans and arrangements at any time and without the consent of
the Executive.

                               (d)        Stock Option.  Upon completion of the
formation and capitalization of EMEA during the Employment Period, the Company
shall cause EMEA (or any successor corporation or holding company thereof) to
grant options to the Executive pursuant to a written option agreement with the
Executive that will afford to the Executive the right to purchase shares of the
stock of EMEA (or such successor corporation or holding company) representing 2%
of the outstanding shares, on a fully diluted basis, of such stock and on
substantially the terms and conditions that are set out in the Option Term Sheet
that is attached as Exhibit 1 to this Agreement. EMEA or the Company may grant
additional options to the Executive in accordance with the terms of their
respective stock option plans.

                               (e)        Automobile.  During the Employment
Period, EMEA or the Company shall provide to the Executive or reimburse the
Executive for the cost of a leased automobile at a monthly cost to EMEA or the
Company not in excess of U.S. $1,500.

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                               (f)        Housing Allowance.  During the
Employment Period, EMEA or the Company shall pay to the Executive a monthly
housing allowance not in excess of U.S. $4,000.

                               (g)        Education Expenses.  During the
Employment Period, EMEA or the Company shall pay or reimburse the Executive for
education expenses incurred by him in obtaining private schooling for his son at
an annual cost to EMEA or the Company of not in excess of U.S. $15,000.

                               (h)        Relocation and Living Expenses.  EMEA
or the Company shall pay or reimburse the Executive for the reasonable and
customary: (1) expenses of obtaining a visa permitting employment in the UK
pursuant to this Agreement; (2) temporary living expenses paid or incurred by
the Executive and his wife and family in the London, England metropolitan area
during a period of up to three months following the Effective Date while the
Executive is also maintaining his current residence in Atlanta, Georgia U.S.A.;
(3) expenses that the Executive pays or incurs in relocating himself and his
family to the London, England metropolitan area from Atlanta, Georgia U.S.A.,
including reasonable and customary personal transportation, shipment of
household goods and other moving expenses; (4) costs during the Employment
Period of storage in the U.S. and insurance for household goods that are not
shipped to the UK and (5) costs paid or incurred by the Executive in connection
with the sale of his personal residence in Atlanta, Georgia U.S.A., including
reasonable and customary sales commissions and closing costs. In addition, EMEA
or the Company shall pay to the Executive an appliance allowance of U.S. $5,000
and a relocation allowance of U.S. $5,000.

                               (i)        Vacation; Home Leave; Holidays.  The
Executive shall be entitled to all public holidays observed by EMEA and to four
weeks annual vacation, in accordance with the applicable vacation policies for
senior executives of EMEA, which shall be taken at a reasonable time or times.
During the Employment Period, EMEA or the Company shall pay or reimburse the
Executive for the reasonable and customary costs and expenses he pays or incurs
in connection with up to two family home leave trips per year, including round
trip coach class air transportation from the UK to the United States.

                               (j)        Tax Equalization Payment.  During the
Employment Period, EMEA or the Company shall pay to the Executive an additional
amount so that, on an after-tax basis, the compensation and benefits received by
the Executive under this Agreement will not be less than the corresponding
after-tax amount that the Executive would have received if such payments had not
been subject to taxes other than United States federal, state and local taxes.
The Executive will use commercially reasonable efforts to minimize the amount of
U.S. and non-U.S. taxes that are imposed on such amounts. The amount of the tax
equalization payment shall be determined by an independent third party
designated by EMEA or the Company and reasonably acceptable to the Executive.
The Executive will provide

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such third party with sufficient information, including information concerning
his income, deductions, tax payments and tax returns, from which it can
calculate the amount of the payments that are due under this subsection. Any
foreign tax credits (resulting from non-U.S. taxes that were paid or reimbursed
by EMEA or the Company) that offset the Executive's U.S. taxes will be for the
benefit of, and remitted to, EMEA or the Company, as applicable, as soon as
practicable after the Executive receives a refund or other tax benefit from such
credit.

                               (k)        Vesting of Company Stock Options if
EMEA Separation not Completed by August 14, 2002. Without regard to whether the
term of employment under this Agreement is renewed as of August 14, 2002
pursuant to Section 2 above, if the EMEA Separation does not occur before August
14, 2002 and the Executive continues to be employed by EMEA or the Company on
that date, all options held by the Executive to purchase stock of the Company
shall be fully vested and exercisable as of that date.

                               (l)        Withholding Taxes and Other
Deductions. To the extent required by law, EMEA or the Company shall withhold
from any payments due Executive under this Agreement any applicable UK, federal,
state or local taxes and such other deductions as are prescribed by law or EMEA
or Company policy or are otherwise authorized by the Executive.

                     6.        Expenses.  The Executive is expected and is
authorized to incur reasonable expenses in the performance of his duties
hereunder. EMEA or the Company shall reimburse the Executive for all such
expenses promptly upon periodic presentation by the Executive of an itemized
account, including reasonable substantiation, of such expenses.

                     7.        Confidentiality, Non-Disclosure and
Non-Competition Agreement.

                               Concurrently with the execution of this
Agreement, the parties are entering into a Confidentiality, Non-Disclosure and
Non-Competition Agreement (the "Related Agreement").

                     8.        Termination of Employment.

                               (a)        Permitted Terminations.  The
Executive's employment hereunder may be terminated during the Employment Period
under the following circumstances:

                                          (i)       Death.  The Executive's
employment hereunder shall terminate upon the Executive's death;

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                                          (ii)      By the Company or EMEA.
The Company or EMEA may terminate the Executive's employment:

                                                    (A)       If the Executive
shall have been substantially unable to perform the Executive's material duties
hereunder by reason of illness, physical or mental disability or other similar
incapacity, which inability shall continue for six consecutive months or until
such time as the Executive is entitled to receive benefits under a long term
disability insurance policy or plan applicable to him, if any, whichever is
earlier (provided, that until such termination, the Executive shall continue to
receive his compensation and benefits hereunder, reduced by any benefits payable
to him under any short term disability insurance policy or plan applicable to
him); or

                                                    (B)       For Cause;

                                          (iii)     By the Executive.  The
Executive may terminate his employment for any reason or for no reason upon 30
days' written notice to the Company and EMEA.

                               (b)        Termination.  Any termination of the
Executive's employment by EMEA or the Executive (other than because of the
Executive's death) shall be communicated by written Notice of Termination to the
other party hereto in accordance with Section 10 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon, if any, and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated. Termination of the Executive's employment shall take
effect on the Date of Termination.

                     9.        Compensation Upon Termination.

                               (a)        Death.  If the Executive's employment
is terminated during the Employment Period as a result of the Executive's death,
EMEA or the Company, as applicable, shall pay to the Executive's estate, or as
may be directed by the legal representatives of such estate, the Executive's
full Base Salary through the Date of Termination and all other unpaid amounts,
if any, to which the Executive is entitled as of the Date of Termination, at the
time such payments are due and EMEA and the Company shall have no further
obligation to the Executive under this Agreement.

                               (b)        Disability.  If EMEA or the Company
terminates the Executive's employment during the Employment Period because of
the Executive's disability pursuant to Section 8(a)(ii)(A) hereof, EMEA or the
Company, as applicable, shall pay the Executive the Executive's full Base Salary
through the Date of Termination, and all other unpaid amounts, if any, to which
the Executive

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is entitled as of the Date of Termination, at the time such payments are due and
EMEA and the Company shall have no further obligations to the Executive under
this Agreement; provided, that payments so made to the Executive with respect to
any period that the Executive is substantially unable to perform the Executive's
material duties hereunder by reason of illness, physical or mental illness or
other similar incapacity shall be reduced by the sum of the amounts, if any,
payable to the Executive by reason of such disability, at or prior to the time
of any such payment, under any disability insurance policy or benefit plan and
which amounts have not previously been applied to reduce any such payment.

                               (c)        By EMEA or the Company for Cause or
by the Executive without Good Reason. If, during the Employment Period, EMEA
or the Company terminates the Executive's employment for Cause pursuant to
Section 8(a)(ii)(B) hereof or the Executive terminates his employment without
Good Reason, EMEA or the Company, as applicable, shall pay the Executive the
Executive's full Base Salary through the Date of Termination, and all other
unpaid amounts, if any, to which the Executive is entitled as of the Date of
Termination, at the time such payments are due and EMEA and the Company shall
have no further obligations to the Executive under this Agreement.

                               (d)        By EMEA or the Company without Cause
or by the Executive with Good Reason. If EMEA or the Company terminates the
Executive's employment during the Employment Period other than for Cause,
disability or death pursuant to Section 8(a)(i) or (ii) hereof or the Executive
terminates employment hereunder with Good Reason, EMEA or the Company, as
applicable, shall (i) pay the Executive the Executive's full Base Salary through
the Date of Termination and all other unpaid amounts, if any, to which the
Executive is entitled as of the Date of Termination, at the time such payments
are due, (ii) pay, during the 12-month period commencing on the Date of
Termination (the "Severance Period"), to the Executive an aggregate amount equal
to Executive's Base Salary, payable in equal installments on the regular salary
payment dates of EMEA or the Company, as applicable, (iii) pay, during the
Severance Period an annual bonus equal to the average annual bonus paid by EMEA
or the Company to the Executive during the last 24-months of the Executive's
employment preceding the Date of Termination (or, if less, the entire period of
the Executive's employment by EMEA), which bonus shall be paid at the time that
such bonus would have become payable if the Executive had continued to be
employed by EMEA during the Severance Period, (iv) continue in effect during the
Severance Period the life insurance and employee benefits provided to the
Executive under Sections 5(c) and (d) hereof immediately before the Date of
Termination (except to that, to the extent such benefits are provided pursuant
to a qualified plan under Section 401(a) of the Internal Revenue Code of 1986,
as amended, EMEA or the Company shall provide a substantially equivalent
nonqualified benefit), (v) pay or reimburse the Executive for the reasonable and
customary expenses that the Executive pays or incurs in relocating himself and
his family from the United Kingdom to the United States,

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including reasonable and customary personal transportation and moving expenses
and costs paid or incurred by the Executive in connection with the sale of his
personal residence in the United Kingdom, including reasonable and customary
sales commissions and closing costs and (vi) fully vest all options granted to
the Executive to purchase stock of the Company; provided, that no notice of
Non-Renewal shall be deemed to be a termination of the Executive's employment
for such purposes.

                               (e)        Liquidated Damages.  The parties
acknowledge and agree that damages which will result to the Executive for
termination by EMEA or the Company without Cause or other breach of this
Agreement by EMEA or the Company shall be extremely difficult or impossible to
establish or prove, and agree that the amounts payable to the Executive under
Section 9(d) hereof (the "Severance Payments") shall constitute liquidated
damages for any breach of this Agreement by EMEA or the Company through the Date
of Termination. The Executive agrees that, except for such other payments and
benefits to which the Executive may be entitled as expressly provided by the
terms of this Agreement or any applicable benefit plan, such liquidated damages
shall be in lieu of all other claims that the Executive may make by reason of
termination of his employment or any such breach of this Agreement and that, as
a condition to receiving the Severance Payments, the Executive will execute a
release of claims in a form reasonably satisfactory to EMEA and the Company.

                     10.       Notices.  All notices, demands, requests, or
other communications which may be or are required to be given, served, or sent
by any party to any other party pursuant to this Agreement shall be in writing
and shall be hand delivered, sent by overnight courier or mailed by first-class,
registered or certified mail, return receipt requested, postage prepaid, or
transmitted by telegram, telecopy or telex, addressed as follows:

                     (i)       If to EMEA or the Company:

                               S1 Europe N.V., a Belgian corporation
                               8th Floor, Peninsular House
                               36, Monument Street
                               London EC3R 8LJ, UK
                               Fax:  44 (0) 20 74270260
                               Attn:  Chairman of the Board of Directors

                               and

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                               S1 Corporation
                               3390 Peachtree Road
                               Suite 1700
                               Atlanta, GA  30326
                               Fax:  404/812-6727
                               Attn:  Chief Executive Officer

                     with copies (which shall not constitute notice) to:

                     Stuart G. Stein              and  S1 Corporation
                     Hogan & Hartson, L.L.P.           3390 Peachtree Road
                     555 13th Street, N.W.             Suite 1700
                     Washington, D.C.  20004-1190      Atlanta, GA  30326
                     Fax:  202/637-5910                Fax:  404/812-6727
                                                       Attn: Chief Legal Officer

                     (ii)      If to the Executive:

                               Daniel H. Drechsel
                               1151 Oxford Road
                               Atlanta, GA  30306

                     with a copy (which shall not constitute notice) to:

                               James F. Tenney
                               Merritt & Tenney LLP
                               Suite 500
                               200 Galleria Parkway, N.W.
                               Atlanta, GA  30389
                               Fax:  770/952-0028

                     Each party may designate by notice in writing a new
address to which any notice, demand, request or communication may thereafter be
so given, served or sent. Each notice, demand, request, or communication which
shall be hand delivered, sent, mailed, telecopied or telexed in the manner
described above, or which shall be delivered to a telegraph company, shall be
deemed sufficiently given, served, sent, received or delivered for all purposes
at such time as it is delivered to the addressee (with the return receipt, the
delivery receipt, or (with respect to a telecopy or telex) the answerback being
deemed conclusive, but not exclusive, evidence of such delivery) or at such
time as delivery is refused by the addressee upon presentation.

                     11.       Severability.  The invalidity or
unenforceability of any one or more provisions of this Agreement shall not
affect the validity or enforceability of the other provisions of this
Agreement, which shall remain in full force and effect.

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                     12.       Survival.  It is the express intention and
agreement of the parties hereto that the provisions of Sections 9, 10, 11, 13,
17 and 20 hereof and this Section 12 shall survive the termination of employment
of the Executive. In addition, all obligations of EMEA and the Company to make
payments hereunder shall survive any termination of this Agreement on the terms
and conditions set forth herein.

                     13.       Assignment.  The rights and obligations of the
parties to this Agreement shall not be assignable or delegable, except that (i)
in the event of the Executive's death, the personal representative or legatees
or distributees of the Executive's estate, as the case may be, shall have the
right to receive any amount owing and unpaid to the Executive hereunder, (ii)
the rights and obligations of the Company shall be assignable to EMEA or to any
parent corporation, holding company or successor of EMEA and (iii) the rights
and obligations of the Company and EMEA hereunder shall be assignable and
delegable in connection with any subsequent merger, consolidation, sale of all
or substantially all of the assets or stock of the Company or EMEA, the creation
of a parent corporation or holding company with respect to EMEA, the EMEA
Separation or any similar transaction involving the Company, EMEA or a successor
corporation of either of them.

                     14.       Binding Effect.  Subject to any provisions
hereof restricting assignment, this Agreement shall be binding upon the parties
hereto and shall inure to the benefit of the parties and their respective
heirs, devisees, executors, administrators, legal representatives, successors
and assigns.

                     15.       Amendment; Waiver.  This Agreement shall not be
amended, altered or modified except by an instrument in writing duly executed by
the parties hereto. Neither the waiver by either of the parties hereto of a
breach of or a default under any of the provisions of this Agreement, nor the
failure of either of the parties, on one or more occasions, to enforce any of
the provisions of this Agreement or to exercise any right or privilege
hereunder, shall thereafter be construed as a waiver of any subsequent breach or
default of a similar nature, or as a waiver of any such provisions, rights or
privileges hereunder.

                     16.       Headings.  Section and subsection headings
contained in this Agreement are inserted for convenience of reference only,
shall not be deemed to be a part of this Agreement for any purpose, and shall
not in any way define or affect the meaning, construction or scope of any of the
provisions hereof.

                     17.       Governing Law.  This Agreement, the rights and
obligations of the parties hereto, and any claims or disputes relating thereto,
shall be governed by and construed in accordance with the laws of the State of
Delaware (but not including any choice of law rule thereof that would cause the
laws of another jurisdiction to apply).

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                     18.       Entire Agreement. This Agreement constitutes the
entire agreement between the parties respecting the employment of the Executive,
there being no representations, warranties or commitments except as set forth
herein.

                     19.       Counterparts.  This Agreement may be executed in
two counterparts, each of which shall be an original and all of which shall be
deemed to constitute one and the same instrument.

                     20.       Definitions.

                               "Agreement" means this Employment Agreement.

                               "Base Salary" is defined in Section 5(a) above.

                               "Board" means the board of directors of the
Company.

                               "Cause" means (i) the conviction of a felony or
a crime involving moral turpitude or the commission of any other act or
omission involving dishonesty or fraud with respect to, and adversely affecting
the business affairs of, EMEA, the Company or any of its Subsidiaries or any of
their customers or suppliers, (ii) conduct tending to bring EMEA, the Company
or any of its Subsidiaries into substantial public disgrace or disrepute, (iii)
substantial and repeated failure to perform duties of the office held by the
Executive as reasonably directed by the Chief Executive Officer of the Company
or the Board of Directors of EMEA or the Company, and such failure is not cured
within 30 days after the Executive receives written notice thereof from EMEA or
the Company that specifically identifies the manner in which EMEA or the
Company believes the Executive has not substantially performed his duties, (iv)
gross negligence or willful misconduct with respect to EMEA or the Company or
any of its Subsidiaries that is materially injurious to EMEA or the Company,
monetarily or otherwise or (v) any breach of the Related Agreement. For
purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of EMEA or the
Company, as applicable. Any act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Board of Directors of EMEA or the
Company or based upon written advice of counsel for EMEA or the Company shall
be conclusively presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interests of EMEA and the Company.

                               "Company" means S1 Corporation and its successors
and assigns.

                               "Date of Termination" means (i) if the
Executive's employment is terminated by the Executive's death, the date of the
Executive's death; (ii) if the Executive's employment is terminated because of
the Executive's disability

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pursuant to Section 8(a)(ii)(A) hereof, 30 days after Notice of Termination,
provided that the Executive shall not have returned to the performance of the
Executive's duties on a full-time basis during such 30-day period; (iii) if the
Executive's employment is terminated by EMEA or the Company for Cause pursuant
to Section 8(a)(ii)(B) hereof or by the Executive pursuant to Section 8(a)(iii)
hereof, the date specified in the Notice of Termination; or (iv) if the
Executive's employment is terminated during the Employment Period other than
pursuant to Section 8(a), the date on which Notice of Termination is given.

                               "Effective Date" means August 14, 2000.

                               "EMEA" is defined in the preamble to this
Agreement.

                               "EMEA Separation" is defined in the preamble to
this Agreement.

                               "Employment Period" is defined in Section 2
above.

                               "Executive" means Daniel H. Drechsel.

                               "Good Reason" means (i) the failure of EMEA or
the Company to perform or observe any of the material terms or provisions of
this Agreement, and the continued failure of EMEA or the Company, as applicable,
to cure such default within 30 days after written demand for performance has
been given to EMEA or the Company, as applicable, by the Executive, which demand
shall describe specifically the nature of such alleged failure to perform or
observe such material terms or provisions; (ii) a material reduction in the
scope of the Executive's title or duties without his written consent; (iii) any
requirement by EMEA or the Company without the written consent of the Executive
that the Executive relocate to a place outside the United Kingdom to perform his
duties hereunder or (iv) failure to complete the EMEA Separation before the
second anniversary of the Effective Date.

                               "Initial Term" is defined in Section 2 above.

                               "Non-Renewal" is defined in Section 2 above.

                               "Notice of Termination" is defined in Section
8(b) above.

                               "Related Agreement" is defined in Section 7
above.

                               "Severance Payments" is defined in Section
9(e) above.

                               "Severance Period" is defined in Section 9(d)
above.

                               "Subsidiary" means any corporation of which EMEA
or the Company, as applicable, owns securities having a majority of the ordinary
voting power in electing the board of directors directly or through one or more
subsidiaries

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and any partnership, limited liability company or other entity in which EMEA or
the Company, as applicable, or any subsidiary owns a controlling interest.

                     IN WITNESS WHEREOF, the undersigned have duly executed and
delivered this Agreement, or have caused this
Agreement to be duly executed and delivered on their behalf, as of the Effective
Date.

                                           S1 CORPORATION

                                           By: /s/ Robert F. Stockwell
                                               -------------------------------
                                                 Robert F. Stockwell
                                                 -----------------------------
                                                 CFO
                                                 -----------------------------

                                           THE EXECUTIVE:

                                           /s/ DH Drechsel
                                           -----------------------------------

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<PAGE>   14

                                                                       EXHIBIT 1

                                OPTION TERM SHEET

-          2% of the issued and outstanding stock of EMEA, on a fully diluted
           basis, (or a successor or parent corporation of EMEA) after the EMEA
           Separation (the "Stock"), with an exercise price equal to 25% of the
           per share valuation of EMEA in negotiation.

-          Vested and exercisable to the extent of 25% of such shares on each of
           August 14, 2001, 2002, 2003 and 2004 (except that, if such vesting
           would otherwise occur before the option is granted, the option will
           be immediately exercisable and vested as of the grant date to the
           extent that it would have become vested before that event under the
           foregoing schedule), provided that the Executive continues to be
           employed by EMEA as of each such vesting date

-          Accelerated vesting if (i) the Executive's employment is terminated
           by EMEA without Cause or by the Executive for Good Reason or death or
           (ii) the EMEA Separation does not occur before August 14, 2002 and
           the Executive continues to be employed by EMEA or the Company as of
           that date

-          Term 10 years, unless earlier terminated because of termination of
           the Executive's employment, or an acquisition or merger of EMEA
           without assumption or replacement of the option

-          Option terminates 12 months after termination of the Executive's
           employment

-          To the extent permissible under Section 422 of the Internal Revenue
           Code, the option will constitute an incentive stock option, and
           otherwise the option will be nonqualified for federal income tax
           purposes

-          Nontransferable (except as otherwise may be provided pursuant to the
           terms of the applicable option plan) and exercisable only by the
           Executive, except in the event of the Executive's death<PAGE>   1

                                                                    EXHIBIT 10.1

                               DIGENE CORPORATION
                   AMENDED AND RESTATED 1997 STOCK OPTION PLAN

                                    ARTICLE I
                      PURPOSE; EFFECTIVE DATE; DEFINITIONS

       1.1    PURPOSE. This Digene Corporation 1997 Stock Option Plan (the
"Plan") is intended to secure for Digene Corporation (the "Company") and its
stockholders the benefits of the incentive inherent in common stock ownership by
consultants providing services to the Company and to afford such persons the
opportunity to obtain or increase their proprietary interest in the Company on a
favorable basis and thereby have an opportunity to share in its success.

       1.2    EFFECTIVE DATE. This Plan shall be effective on and after
September 9, 1997.

       1.3    DEFINITIONS. Throughout this Plan, the following terms shall have
the meanings indicated:

              (a)    "BOARD" shall mean the Board of Directors of the Company.

              (b)    "CHANGE OF CONTROL" shall mean (a) the reorganization,
consolidation or merger of the Company or any of its subsidiaries holding or
controlling a majority of the assets relating to the business of the Company,
with or into any third party (other than a subsidiary); (b) the assignment,
sale, transfer, lease or other disposition of all or substantially all of the
assets of the Company and its subsidiaries taken as a whole; or (c) the
acquisition by any third party or group of third parties acting in concert, of
beneficial ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission ("SEC") under the Securities Exchange Act of 1934, as
amended) of shares of voting stock of the Company, the result of which in the
case of any transaction described in clauses (a), (b) and (c) above is that
immediately after the transaction the stockholders of the Company immediately
before the transaction, other than the acquiror, own less than fifty percent
(50%) of the combined voting power of the outstanding voting securities entitled
to vote generally in the election of directors of the surviving or resulting
corporation in a transaction specified in clause (a) above, the acquiror in a
transaction specified in clause (b) above, or the Company or the acquiror in a
transaction specified in clause (c) above.

              (c)    "CODE" shall mean the Internal Revenue Code of 1986, as
amended, any successor revenue laws of the United States, and the rules and
regulations promulgated thereunder.

<PAGE>   2

              (d)    "COMMITTEE" shall mean any committee of the Board
designated by the Board to administer this Plan.

              (e)    "COMMON STOCK" shall mean the common stock, par value $.01
per share, of the Company.

              (f)    "COMPANY" shall mean Digene Corporation, a Delaware
corporation.

              (g)    "CONSULTANT" shall mean a person that has entered into an
agreement or arrangement (written or otherwise) to provide, or is currently
engaged in providing, bona fide services (other than services in connection with
the offer or sale of securities in a capital-raising transaction) to or for the
benefit of the Company and is not an employee, officer or director of the
Company or any of its subsidiaries on the date of grant of the Option; provided,
that the Committee shall have sole discretion in the determination of whether a
person is a Consultant to the Company for the purposes of this Plan.

              (h)    "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended.

              (i)    "FAIR MARKET VALUE" shall mean with respect to the Common
Stock on any day, (i) the closing sales price of a share of Common Stock as
reported on the principal securities exchange on which shares of Common Stock
are then listed or admitted to trading, or (ii) if not so reported, the closing
sales price of a share of Common Stock as published in the NASDAQ National
Market Issues report in the Eastern Edition of The Wall Street Journal, or (iii)
if not so reported, the average of the closing bid and asked prices of a share
of Common Stock as reported on the NASDAQ National Market System, or (iv) if not
so reported, as furnished by any member of the National Association of
Securities Dealers, Inc. selected by the Committee. In the event that the price
of a share of Common Stock shall not be so reported or furnished, the Fair
Market Value of a share of Common Stock shall be determined by the Committee in
good faith. The market value of an Option granted under the Plan on any day
shall be the market value of the underlying Common Stock, determined as
aforesaid, less the exercise price of the Option. A "business day" is any day on
which the relevant market is open for trading.

              (j)    "OPTION" shall mean an option to purchase shares of Common
Stock granted by the Committee under this Plan.

              (k)    "OPTION AGREEMENT" shall mean the certificate evidencing an
Option grant.

              (l)    "OPTION SHARES" shall mean the shares of Common Stock
issuable upon exercise of an Option.

                                       2
<PAGE>   3

              (m)    "PLAN" shall mean this Digene Corporation 1997 Stock Option
Plan, as the same may be amended from time to time.

              (n)    "TERMINATION OF ENGAGEMENT" shall mean the termination of a
Consultant's consulting engagement with the Company such that from and after
such date the Consultant is no longer expected, in the sole discretion of the
Committee, to be engaged in providing bona fide services to or for the benefit
of the Company; provided, however, that a Termination of Engagement shall not be
deemed to have occurred if the Consultant has become an employee, officer or
director of the Company in which event a Termination of Engagement shall occur
only upon the termination (whether voluntary or involuntary) of all positions
with the Company.

                                   ARTICLE II
                                 ADMINISTRATION

       2.1    COMMITTEE ADMINISTRATION. This Plan and the Options granted
hereunder shall be interpreted, construed and administered by the Committee in
its sole discretion. A person who has been granted Options under the Plan may
appeal to the Committee in writing any decision or action of the Committee with
respect to the Plan that adversely affects such person. Upon review of such
appeal and in any other case where the Committee has acted with respect to the
Plan, the interpretation and construction by the Committee of any provisions of
this Plan or of any Option shall be conclusive and binding on all parties.

       2.2    COMMITTEE COMPOSITION. The Committee shall consist of not less
than two persons who shall be members of the Board and shall be subject to such
terms and conditions as the Board may prescribe. Each Committee member shall be
a "Non-Employee Director" within the meaning of Rule 16b-3 promulgated under the
Exchange Act. Once designated, the Committee shall continue to serve until
otherwise directed by the Board. From time to time, the Board may increase the
size of the Committee and appoint additional members thereof, remove members
(with or without cause) and appoint new members in substitution therefor, fill
vacancies however caused and remove all members of the Committee.

       A majority of the entire Committee shall constitute a quorum, and the
action of a majority of the members present at any meeting at which a quorum is
present shall be deemed the action of the Committee. In addition, any decision
or determination reduced to writing and signed by all of the members of the
Committee shall be fully as effective as if it had been made by a majority vote
at a meeting duly called and held. Subject to the provisions of this Plan and
the Company's bylaws, and to any terms and conditions prescribed by the Board,
the Committee may make such additional rules and regulations for the conduct of
its business as it shall deem advisable. The Committee shall hold meetings at
such times and places as it may determine.

       2.3    COMMITTEE POWERS. The Committee shall have authority to grant
Options pursuant to an Option Agreement providing for such terms (not
inconsistent with the

                                       3
<PAGE>   4

provisions of this Plan) as the Committee may consider appropriate. Such terms
shall include, without limitation, as applicable, the number of shares, the
Option price, the medium and time of payment, the term of each grant and any
vesting requirements and may include conditions (in addition to those contained
in this Plan) on the exercisability of all or any part of an Option.
Notwithstanding any such conditions, the Committee may, in its discretion, at
any time on or after the date of grant, accelerate the time at which any Option
may be exercised. In addition, the Committee shall have complete discretionary
authority to prescribe the form of Option Agreements; to adopt, amend and
rescind rules and regulations pertaining to the administration of the Plan; and
to make all other determinations necessary or advisable for the administration
of this Plan. The express grant in the Plan of any specific power to the
Committee shall not be construed as limiting any power or authority of the
Committee. All expenses of administering this Plan shall be borne by the
Company.

       2.4    LIMITATION ON RECEIPT OF OPTIONS BY COMMITTEE MEMBERS. No person
while a member of the Committee shall be eligible to be granted Options under
this Plan, but a member of the Committee may be granted and may exercise options
to purchase stock granted under other plans of the Company, and a member of the
Committee may exercise Options granted under this Plan prior to his or her
becoming a member of the Committee.

       2.5    GOOD FAITH DETERMINATIONS. No member of the Committee or other
member of the Board shall be liable for any action or determination made in good
faith with respect to this Plan or any Option granted hereunder.

                                   ARTICLE III
                       ELIGIBILITY; SHARES SUBJECT TO PLAN

       3.1    ELIGIBILITY. The Committee shall from time to time determine and
designate Consultants to receive Options under this Plan, the number of Options
to be granted to each such Consultant, the formula or other basis on which such
Options shall be granted to Consultants and any condition or conditions to the
exercise of such Options consistent with the terms of this Plan. In making any
such grant, the Committee may take into account the nature of services rendered
by a Consultant, commissions, fees or other compensation paid by the Company to
the Consultant, the capacity of the Consultant to contribute to the success of
the Company and other factors that the Committee may consider relevant.

       3.2    SHARES SUBJECT TO THIS PLAN. Subject to the provisions of Section
4.1(e) (relating to adjustment for changes in Common Stock), the maximum number
of shares that may be issued under this Plan shall not exceed in the aggregate
500,000 shares of Common Stock. Such shares may be authorized and unissued
shares or authorized and issued shares that have been reacquired by the Company.
If any Options granted under this Plan shall for any reason terminate or expire
or be surrendered without having been exercised in full, then the shares not
purchased under such Options shall be available again for grant hereunder.

                                       4
<PAGE>   5

                                   ARTICLE IV
                                  STOCK OPTIONS

       4.1    GRANT; TERMS AND CONDITIONS. The Committee, in its discretion, may
from time to time grant Options to any Consultant eligible to receive Options
under this Plan. Each Consultant who is granted an Option shall receive an
Option Agreement from the Company in a form specified by the Committee and
containing such provisions, consistent with this Plan, as the Committee, in its
sole discretion, shall determine at the time the Option is granted.

              (a)    NUMBER OF SHARES. Each Option Agreement shall state the
number of shares of Common Stock to which it pertains.

              (b)    OPTION PRICE. Each Option Agreement shall state the Option
exercise price, which shall be the price determined by the Committee, in its
absolute discretion, to be suitable to attain the purposes of this Plan;
provided that the exercise price of an Option shall not be lower than the Fair
Market Value of the Common Stock as of the date of the grant.

              (c)    MEDIUM AND TIME OF PAYMENT. Upon the exercise of an Option,
the Option exercise price shall be payable in United States dollars, in cash
(including by check) or (unless the Committee otherwise prescribes) in shares of
Common Stock owned by the optionee, in Options granted to the optionee under the
Plan which are then exercisable, or in a combination of cash, Common Stock and
Options. If all or any portion of the Option exercise price is paid in Common
Stock owned by the optionee, then that Common Stock shall be valued at its Fair
Market Value as of the date the Option is exercised. If all or any portion of
the Option exercise price is paid in Options granted to the optionee under the
Plan, then such Options shall be valued at their Fair Market Value as of the
date the Option is exercised. For the purpose of assisting an optionee to
exercise an Option, the Company may, in the discretion of the Board, make loans
to the optionee or guarantee loans made by third parties to the optionee, in
either case on such terms and conditions as the Board may authorize.

              (d)    TERM AND EXERCISE OF OPTIONS. The term of each Option shall
be determined by the Committee at the time the Option is granted; provided that
the term of an Option shall in no event be more than ten years from the date of
grant. Not less than one hundred shares may be purchased at any one time unless
the number purchased is the total number at the time purchasable under the
Option. During the lifetime of an optionee, the Option shall be exercisable only
by him or her and shall not be assignable or transferable by him or her and no
person shall acquire any rights therein. Following an optionee's death, the
Option may be exercised (to the extent permitted under the Plan) by the person
designated by the optionee as a beneficiary in a written notification delivered
to the Committee prior to the optionee's death, or if there is no such written
designation, by the executor or administrator of the optionee's estate or by the
person or persons to whom such rights pass by will or by the laws of descent or
distribution.

              (e)    RECAPITALIZATION; REORGANIZATION. Subject to any required
action by the stockholders of the Company, the maximum number of shares of
Common Stock that may

                                       5
<PAGE>   6

be issued under this Plan, the number of shares of Common Stock covered by each
outstanding Option, the kind of shares subject to outstanding Options and the
per share exercise price under each outstanding Option shall be adjusted, in
each case, to the extent and in the manner the Committee deems appropriate for
any increase or decrease in the number of issued shares of Common Stock
resulting from a reorganization, recapitalization, stock split, stock dividend,
combination of shares, merger, consolidation, rights offering, subdivision or
consolidation of shares or the payment of a stock dividend (but only on the
Common Stock) or any other change in the corporate structure or state of the
Company.

              Subject to any action that may be required on the part of the
stockholders of the Company, if the Company is the surviving corporation in any
merger, consolidation, sale, transfer, acquisition, tender offer or exchange
offer which does not result in a Change of Control, then each outstanding Option
shall pertain to and apply to the securities or other consideration that a
holder of the number of shares of Common Stock subject to the Option would have
been entitled to receive in such transaction.

              If the Company is the surviving corporation in any merger,
consolidation, sale transfer, acquisition, tender offer or exchange offer which
results in a Change of Control, each optionee shall, in such event, have the
right immediately prior to such transaction to exercise his or her Option in
whole or in part without regard to any installment provision contained in his or
her Agreement; provided, however, that the exercisability of any Option shall
not be accelerated if, in the opinion of the Board, such acceleration would
prevent pooling of interests accounting treatment for the Change of Control
transaction and such accounting treatment is desired by the parties to such
transaction. Any Option not exercised immediately prior to such transaction
shall pertain to and apply to the securities or other consideration that a
holder of the number of shares of Common Stock subject to the Option would have
been entitled to receive in the transaction.

              A merger, consolidation, sale, transfer, acquisition, tender offer
or exchange offer in which the Company is not the surviving corporation, other
than such a transaction effected for the purpose of changing the Company's
domicile, shall cause each holder of an outstanding Option to have the right
immediately prior to such transaction to exercise his or her Option in whole or
in part without regard to any installment provision contained in his or her
Agreement. Any Option not exercised immediately prior to such transaction shall
pertain to and apply to the securities or other consideration that a holder of
the number of shares of Common Stock subject to the Option would have been
entitled to receive in the transaction.

              A dissolution or liquidation of the Company shall cause each
outstanding Option to terminate, provided that each holder shall, in such event,
have the right immediately prior to such dissolution or liquidation to exercise
his or her Option in whole or in part without regard to any installment
provision contained in his or her Agreement.

              Notwithstanding the foregoing, in no event shall any Option be
exercisable after the date of termination of the exercise period of such Option.

                                       6
<PAGE>   7

              In the case of a merger, consolidation, sale, transfer,
acquisition, tender offer or exchange offer effected for the purpose of changing
the Company's domicile, each outstanding Option shall continue in effect in
accordance with its terms and shall apply or relate to the same number of shares
of common stock of such surviving corporation as the number of shares of Common
Stock to which it applied or related immediately prior to such transaction,
adjusted for any increase or decrease in the number of outstanding shares of
common stock of the surviving corporation effected without receipt of
consideration.

              In the event of a change in the Common Stock as presently
constituted, which change is limited to a change of all of the authorized shares
with par value into the same number of shares with a different par value or
without par value, the shares resulting from any such change shall be deemed to
be the Common Stock within the meaning of this Plan.

              The foregoing adjustments shall be made by the Committee, whose
determination shall be final, binding and conclusive.

              Except as expressly provided in this subsection, the holder of an
Option shall have no rights by reason of (i) any subdivision or consolidation of
shares of any class, (ii) any stock dividend, (iii) any other increase or
decrease in the number of shares of stock of any class, (iv) any dissolution,
liquidation, merger or consolidation or spin-off, split-off or split-up of
assets of the Company or stock of another corporation or (v) any issuance by the
Company of shares of stock of any class or securities convertible into shares of
stock of any class. Moreover, except as expressly provided in this subsection,
the occurrence of one or more of such events shall not affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
of Common Stock subject to the Option.

              The grant of an Option pursuant to this Plan shall not affect in
any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge or to consolidate or to dissolve, liquidate, sell or
otherwise transfer all or any part of its business or assets.

              (f)    RIGHTS AS A STOCKHOLDER. Subject to Section 5.9 of this
Plan regarding uncertificated shares, an optionee or a transferee of an Option
shall have no rights as a stockholder with respect to any shares covered by his
or her Option until the date of the issuance of a stock certificate to him or
her for those shares upon payment of the exercise price. No adjustments shall be
made for dividends (ordinary or extraordinary, whether in cash, securities or
other property) or distributions or other rights for which the record date is
prior to the date such stock certificate is issued, except as provided in
subsection 4.1(e).

              (g)    MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. Subject to
the terms and conditions and within the limitations of this Plan, the Committee
may, on or after the date of grant, modify, extend or renew outstanding Options
granted under this Plan or accept the surrender of outstanding Options (to the
extent not theretofore exercised) and authorize the granting of new Options in
substitution therefor (to the extent not theretofore

                                       7
<PAGE>   8

exercised). No modification of an Option shall, without the consent of the
holder thereof, alter or impair any rights or obligations under any Option
theretofore granted under this Plan.

              (h)    EXERCISABILITY AND TERM OF OPTIONS. Unless earlier
terminated, Options granted pursuant to this Plan shall be exercisable at any
time on or after the dates of exercisability and before the expiration date set
forth in the Option Agreement. Notwithstanding the foregoing, unless otherwise
determined by the Committee on or after the date of grant, an Option shall
terminate and may not be exercised after the date of a Termination of
Engagement, except that: (1) unless the Committee shall determine that the
Consultant's engagement was terminated for conduct that in the judgment of the
Committee involves dishonesty or action by the Consultant that is detrimental to
the best interest of the Company, the Consultant may at any time within three
months after Termination of Engagement exercise his or her Option but only to
the extent the Option was exercisable on the date of Termination of Engagement;
(2) if such Consultant's engagement terminates on account of total and permanent
disability, then the Consultant may at any time within one year after
Termination of Engagement exercise the Option but only to the extent that the
Option was exercisable on the date of Termination of Engagement; and (3) if such
Consultant dies while engaged as a consultant to the Company, or within the
three or twelve month period following Termination of Engagement as described in
clause (1) or (2) above, then his or her Option may be exercised at any time
within twelve months following his or her death by the person specified in
Section 4.1(d), but only to the extent that such Option was exercisable by him
or her on the date of Termination of Engagement. The Committee may, in its
discretion, provide in any Option Agreement or determine at any time after the
date of grant that the exercisability of an Option will be accelerated, in whole
or in part, in the event of a Consultant's death or disability. The Committee
may, in its discretion, extend the post-termination exercise periods set forth
in this subsection, but not beyond the expiration date of the Option.
Notwithstanding anything to the contrary in this subsection, an Option may not
be exercised by anyone after the expiration of its term.

       4.2    OTHER TERMS AND CONDITIONS. Through the Option Agreements
authorized under this Plan, the Committee may impose such other terms and
conditions, not inconsistent with the terms hereof, on the grant or exercise of
Options, as it deems advisable.

       4.3    INCLUSION OF PRIOR GRANTS. From and after the Effective Date of
this Plan, the grants of rights to purchase shares of Common Stock listed below
shall, for the purposes of this Plan, be deemed to be Options granted under the
terms of, and in accordance with, this Plan, such Options shall be governed by
the terms of this Plan, and the terms of such Options shall include the terms
and provisions of this Plan, the terms and conditions theretofore adopted by the
Committee in connection with the grant of such Options and the terms and
conditions set forth in the Option Agreements relating to such Options:

                                       8
<PAGE>   9

<TABLE>
<CAPTION>
                                                    Number of Shares
Name of Consultant           Date of Grant         Subject to Options
------------------           -------------         ------------------
<S>                          <C>                   <C>
Robert McG. Lilley              4/18/97                 125,000
Gerson Dores                    7/18/97                  25,000
Mark Van Asten                  7/18/97                  25,000
Greg Brown                      7/18/97                  25,000
</TABLE>

                                    ARTICLE V
                                  MISCELLANEOUS

       5.1    WITHHOLDING TAXES. A Consultant granted Options under this Plan
shall be conclusively deemed to have authorized the Company to withhold from the
commissions, fees or other compensation of such Consultant funds in amounts or
property (including Common Stock or Options) in value equal to any federal,
state and local income, employment or other withholding taxes applicable to the
income recognized by such Consultant and attributable to the Options or Option
Shares as, when and to the extent, if any, required by law; provided, however,
that, in lieu of the withholding of federal, state and local taxes as herein
provided, the Company may require that the Consultant (or other person
exercising such Option) pay the Company an amount equal to the federal, state
and local withholding taxes on such income at the time such withholding is
required or such other time as shall be satisfactory to the Company.

       5.2    AMENDMENT, SUSPENSION, DISCONTINUANCE OR TERMINATION OF PLAN. The
Board or the Committee may from time to time amend, suspend or discontinue this
Plan or revise it in any respect whatsoever for the purpose of maintaining or
improving the effectiveness of this Plan as an incentive device, for the purpose
of conforming this Plan to applicable governmental regulations or to any change
in applicable law or regulations or for any other purpose permitted by law;
provided, however, that no such action by the Committee shall adversely affect
any Option theretofore granted under this Plan without the consent of the holder
so affected. Unless sooner terminated by the Committee, this Plan will terminate
on September 9, 2007.

       5.3    GOVERNING LAW. This Plan shall be governed by, and construed in
accordance with, the laws of the State of Maryland (without giving effect to
principles of conflict of laws).

       5.4    DESIGNATION. This Plan may be referred to in other documents and
instruments as the "Digene Corporation 1997 Stock Option Plan."

       5.5    INDEMNIFICATION OF COMMITTEE. In addition to such other rights of
indemnification as they may have as directors or as members of the Committee,
the members of the Committee shall be indemnified by the Company against the
reasonable expenses, including attorneys' fees, actually and necessarily
incurred in connection with the defense of

                                       9
<PAGE>   10

any investigation, action, suit or proceeding, or in connection with any appeal
therefrom, to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with this Plan or any Option, and
against all amounts paid by them in settlement thereof (provided such settlement
is approved by independent legal counsel selected by the Company) or paid by
them in satisfaction of a judgment in or dismissal or other discontinuance of
any such investigation, action, suit or proceeding, except in relation to
matters as to which it shall be adjudged in such investigation, action, suit or
proceeding that such Committee member is liable for negligence or misconduct in
the performance of his or her duties; provided that, within 60 days after
institution of any such investigation, action, suit or proceeding, a Committee
member shall in writing offer the Company the opportunity, at its own expense,
to handle and defend the same.

       5.6    RESERVATION OF SHARES. The Company shall at all times during the
term of this Plan, and so long as any Option shall be outstanding, reserve and
keep available (and will seek or obtain from any regulatory body having
jurisdiction any requisite authority in order to issue) such number of shares of
its Common Stock as shall be sufficient to satisfy the requirements of this
Plan. Inability of the Company to obtain from any regulatory body of appropriate
jurisdiction authority considered by the Company to be necessary or desirable to
the lawful issuance of any shares of its Common Stock hereunder shall relieve
the Company of any liability in respect of the nonissuance or sale of such
Common Stock as to which such requisite authority shall not have been obtained.

       5.7    APPLICATION OF FUNDS. The proceeds received by the Company from
the sale of Common Stock pursuant to the exercise of Options will be used for
general corporate purposes.

       5.8    NO OBLIGATION TO EXERCISE. The granting of an Option shall impose
no obligation upon the holder to exercise or otherwise realize the value of that
Option.

       5.9    UNCERTIFICATED SHARES. A Consultant who exercises an Option to
acquire Common Stock may, but need not, be issued a stock certificate in respect
of the Common Stock so acquired. A "book entry" (i.e., a computerized or manual
entry) shall be made in the records of the Company to evidence the issuance of
shares of Common Stock to a Consultant where no certificate is issued in the
name of the Consultant. Such Company records, absent manifest error, shall be
binding on Consultants. In all instances where the date of issuance of shares
may be deemed significant but no certificate is issued in accordance with this
Section 5.9, the date of the book entry shall be the relevant date for such
purposes.

       5.10   FORFEITURE FOR COMPETITION. If a participant in this Plan provides
services to a competitor of the Company or any of its subsidiaries, whether as
an employee, officer, director, independent contractor, consultant, agent or
otherwise, such services being of a nature that can reasonably be expected to
involve the skills and experience used or developed by the participant while a
Consultant, then that participant's rights to any Options hereunder shall
automatically be forfeited, subject to a determination to the contrary by the
Committee.

                                       10
<PAGE>   11

       5.11   SUCCESSORS. This Plan shall be binding upon any and all successors
of the Company.

       5.12   ENGAGEMENT RIGHTS. Nothing in this Plan or in any Option Agreement
shall confer on any Consultant any right to continue as a Consultant of the
Company or any of its subsidiaries or shall interfere in any way with the right
of the Company or any of its subsidiaries to terminate such person's engagement
at any time.

       5.13   OTHER ACTIONS. Nothing contained in the Plan shall be construed to
limit the authority of the Company to exercise its corporate rights and powers,
including, but not by way of limitation, the right of the Company to grant
options for proper corporate purposes other than under the Plan with respect to
any employee or other person, firm, corporation or association.

       5.14   TAX TREATMENT AND CHARACTERIZATION. The Options granted hereunder
shall not be considered incentive stock options that qualify under Code Section
422.

       5.15   LEGEND. The Committee may require each person exercising an Option
to represent to and agree with the Company in writing that he or she is
acquiring the Option Shares without a view to distribution thereof. In addition
to any legend required by this Plan, the stock certificates representing such
Option Shares may include any legend which the Committee deems appropriate to
reflect any restrictions on transfer.

              All certificates for Option Shares shall be subject to such stock
transfer orders and other restrictions as the Committee may deem advisable under
the rules, regulations and other requirements of the Securities and Exchange
Commission, any stock exchange upon which the Common Stock is then listed, any
applicable federal or state securities law, and any applicable corporate law,
and the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.

       5.16   UNFUNDED STATUS OF PLAN. The Plan is intended to constitute an
"unfunded plan for incentive compensation. With respect to any payment not yet
made to a participant in this Plan by the Company, nothing contained herein
shall give any such participant any rights that are greater than those of a
general creditor of the Company.

       5.17   LISTING AND OTHER CONDITIONS.

              (a)    If the Common Stock is listed on a national securities
exchange, the issuance of any shares of Common Stock upon exercise of an Option
shall be conditioned upon such shares being listed on such exchange. The Company
shall have no obligation to issue such shares unless and until such shares are
so listed, and the right to exercise any Option shall be suspended until such
listing has been effected.

              (b)    If at any time counsel to the Company shall be of the
opinion that any sale or delivery of shares of Common Stock upon exercise of an
Option is or may in the

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<PAGE>   12

circumstances be unlawful or result in the imposition of excise taxes under the
statutes, rules or regulations of any applicable jurisdiction, the Company shall
have no obligation to make such sale or delivery, or to make any application or
to effect or to maintain any qualification or registration under the Securities
Act of 1933, as amended, or otherwise with respect to shares of Common Stock,
and the right to exercise any Option shall be suspended until, in the opinion of
such counsel, such sale or delivery shall be lawful or shall not result in the
imposition of excise taxes.

              (c)    Upon termination of any period of suspension under this
Section 5.17, any Option affected by such suspension which shall not then have
expired or terminated shall be reinstated as to all shares available before such
suspension and as to shares which would otherwise have become available during
the period of such suspension, but no such suspension shall extend the term of
any Option.

       5.18   CONSTRUCTION. Wherever any words are used in the Plan in the
masculine gender they shall be construed as though they were also used in the
feminine gender in all cases where they would so apply, and wherever any words
are used herein in the singular form they shall be construed as though they were
also used in the plural form in all cases where they would so apply.

       5.19   SEVERABILITY. If any part of the Plan shall be determined to be
invalid or void in any respect, such determination shall not affect, impair,
invalidate or nullify the remaining provisions of the Plan which shall continue
in full force and effect.

       5.20   HEADINGS. Article and section headings contained in the Plan are
included for convenience only and are not to be used in construing or
interpreting the Plan.

AS REVISED BY THE BOARD AT ITS MEETING HELD SEPTEMBER 10, 1998 - THE LAST
SENTENCE OF SECTION 4.1(d) AMENDED REGARDING DESIGNATION OF A BENEFICIARY AND
SUBSECTION (3) OF THE SECOND SENTENCE OF SECTION 4.1(h) AMENDED REGARDING
EXERCISE BY DESIGNATED BENEFICIARY.

AS AMENDED AND RESTATED BY THE BOARD AT ITS MEETING HELD OCTOBER 26, 2000 -
ADDING AND CLARIFYING THE DEFINITION "CHANGE OF CONTROL" TO SECTION 1.3(b) AND
REPLACING SECTION 4.1(e) TO PROVIDE AMENDED PROVISIONS REGARDING THE TREATMENT
OF OPTIONS IN THE EVENT OF A CHANGE OF CONTROL TRANSACTION.

                                       12

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