Document:

2003 Omnibus Stock Option and Incentive Plan Arete Industries, Inc.

                             ARETE INDUSTRIES, INC.
                  2003 OMNIBUS STOCK OPTION AND INCENTIVE PLAN

1. PURPOSE.

The Plan is intended to provide incentive to key employees and directors of, and
key consultants,  vendors, customers, and others expected to provide significant
services  to  the  Corporation,   to  encourage   proprietary  interest  in  the
Corporation,  to  encourage  such key  employees  to remain in the employ of the
Corporation  and its  Subsidiaries,  to attract new employees  with  outstanding
qualifications,  and to afford  additional  incentive to  consultants,  vendors,
customers,  and  others to  increase  their  efforts  in  providing  significant
beneficial services to the Corporation.

2. DEFINITIONS.

2.1 "Award"  shall mean an Option which may be  designated  an  Incentive  Stock
Option or a Non-statutory  Stock Option, a Purchase Right, a Stock  Appreciation
Right or a Stock Payment, in each case as granted pursuant to the Plan.

2.2 "Award  Agreement"  shall mean a Stock Option  Agreement,  Restricted  Stock
Agreement or a Purchase Right Agreement.

2.3 "Beneficiary"  shall mean the person,  persons,  trust or trusts entitled by
will or the laws of descent and  distribution to receive the benefits  specified
under the Plan in the event of a Participant's death.

2.4 "Board" shall mean the Board of Directors of the Corporation.

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

2.6  "Committee"  shall mean the  committee,  if any,  appointed by the Board in
accordance with Section 4 of the Plan.

2.7 "Common Stock" shall mean the Common Stock of the Corporation.

2.8 "Corporation" shall mean Arete Industries, Inc. and its Subsidiaries.

2.9 "Disability"  shall mean the condition of a Participant who is unable to (i)
perform his or her substantial and material job duties due to injury or sickness
or such other  condition  as the Board or  Committee  may  determine in its sole
discretion;  and/or (ii) 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,  or such other  meaning
ascribed in Section  22(e)(3) or any  successor  provision  of the Code.  If the
recipient has a disability  insurance policy,  the term "Disability" shall be as
defined  therein;  provided that said  definition is not  inconsistent  with the
meaning ascribed in Section 22(e)(3) of the Code.

2.10  "Discount"  shall mean,  with  respect to the  Purchase  Price of Purchase
Rights,  the  discount  from the Fair  Market  Value of a Share as set  forth in
Section 8.3.

2.11 "Dividend Equivalent" shall mean a right to receive a number of Shares or a
cash  amount,  determined  as  provided  in Article 12  hereof.

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2.12 "Eligible  Employee"  shall mean an individual who is employed  (within the
meaning of Code Section 3401 and the regulations thereunder) by the Corporation.

2.13 "Event" shall mean any of the following:

(a) Any  person or entity  (or group of  affiliated  persons  or  entities)  who
acquired in one or more transactions, whether before or after the Effective Date
of the Plan,  ownership  of more than  fifty  percent  (50%) of the  outstanding
Shares  of  stock  entitled  to  vote  in  the  election  of  directors  of  the
Corporation; or

(b) The  dissolution  or liquidation  of the  Corporation  or a  reorganization,
merger or  consolidation  of the  Corporation  with one or more  entities,  as a
result of which the Corporation is not the surviving entity, or a sale of all or
substantially  all of the assets of the  Corporation  as an  entirety to another
entity.

For purposes of this definition,  ownership does not include ownership: (i) by a
person  owning such Shares  merely of record  (such as a member of a  securities
exchange, a nominee or a securities  depository system), (ii) by a person who is
a bona fide pledgee of Shares prior to a default and  determination  to exercise
powers as an owner of the Shares,  (iii) by a person who is not required to file
a statement on Schedule  13D by virtue of Rule  13d-1(b) of the  Securities  and
Exchange  Commission  under the  Exchange  Act,  or (iv) by a person who owns or
holds  Shares as an  underwriter  acquired in  connection  with an  underwritten
offering pending and for purposes of resale.

2.14 "Exchange  Act" shall mean the Securities  Exchange Act of 1934, as amended
from time to time.

2.15 "Exercise Price" shall mean the price per Share of Common Stock, determined
by the Board or the Committee, at which an Award may be exercised.

2.16 "Fair Market  Value" shall mean the value of one (1) Share of Common Stock,
determined as follows:

(i) if the Shares are traded on a national  securities exchange or on the Nasdaq
National  Market  System,  the  price at which  Shares  traded  at the  close of
business  on the  date of  valuation,  or if the  quotation  for the  last  sale
reported  is not  available,  the  closing  price of the Shares as  reported  by
Nasdaq; or

(ii) if the Shares are traded over-the-counter on the NASDAQ System, the closing
bid price if one is  available,  or the mean between the bid and asked prices on
said system at the close of business on the date of valuation; or

(iii) if neither (i) nor (ii) above applies, the Fair Market Value as determined
by the  Board  or the  Committee  in good  faith.  Such  determination  shall be
conclusive and binding on all persons.

(iv) Fair Market Value shall be  determined  without  regard to any  restriction
other than a restriction  which, by its terms,  will never lapse. In the case of
Bonuses and/or Options granted with the corresponding shares of common stock not
covered  by an  effective  registration  statement,  Fair  Market  Value  may be
determined by the Committee at a reasonable  discount to reflect the  restricted
nature of the shares to be issued and the  inability  of the  Recipient  to sell
those  shares  promptly.

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2.17 "Incentive  Stock Option" shall mean an option described in Section 422A(b)
of the Code.

2.18  "Nonstatutory  Stock Option" shall mean an option not described in Section
422(b), 422A(b), 423(b) or 424(b) of the Code.

2.19  "Option"  shall mean either an Incentive  Stock  Option or a  Nonstatutory
Stock Option granted pursuant to the Plan.

2.20  "Participant"  shall mean an Eligible Employee or any other person who has
been granted an Award under the Plan.

2.21  "Performance  Award"  shall  mean a  cash  bonus,  stock  bonus  or  other
performance or incentive  award that is paid in cash,  stock or a combination of
both.

2.22 "Plan" shall mean this 2003 Omnibus Stock Option and Incentive  Plan, as it
may be amended from time to time.

2.23  "Purchase  Price" shall mean the Exercise Price times the number of Shares
with respect to which an Award is exercised.

2.24  "Purchase  Right"  shall  mean the  grant to an  Employee  of the right to
purchase Shares under the Plan.

2.25 "Restricted  Stock" shall mean those Shares issued pursuant to a Restricted
Stock  Award  that are not free of the  restrictions  set  forth in the  related
Restricted Stock Agreement.

2.26  "Restricted  Stock  Award" shall mean an award of a fixed number of shares
subject  to  payment  of  such  consideration,   if  any,  and  such  forfeiture
provisions, as are set forth in the related Restricted Stock Agreement.

2.27  "Retirement"  shall mean the  voluntary  termination  of  employment by an
Employee upon the  attainment of age  sixty-five  (65) and the completion of not
less than twenty (20) years of service with the Corporation or a Subsidiary.

2.28 "Share"  shall mean one (1) share of Common  Stock,  adjusted in accordance
with Section 15.3 of the Plan (if applicable).

2.29  "Securities  Act" shall mean the  Securities  Act of 1933, as amended from
time to time.

2.30  "Stock  Appreciation  Right"  shall  mean the right to receive a number of
Shares or a cash amount,  or a  combination  of Shares and cash,  based upon the
Fair Market Value,  book value or other  measure  determined by the Board or the
Committee, as the case may be, pursuant to Section 9 of the Plan.

2.31 "Stock  Payment" shall mean a payment in the form of Shares,  or a Purchase
Right, as part of a deferred compensation arrangement made in lieu of all or any
portion of the compensation, including without limitation the salary, bonuses or
commissions, that would otherwise become payable in cash to an Eligible Employee
or Participant.

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2.32  "Subsidiary"  shall mean any  corporation at least thirty percent (30%) of
the  total  combined  voting  power of which is owned by the  Corporation  or by
another  subsidiary.  Subsidiary  shall also  include any  partnership,  limited
liability company or other independent  business entity in which the Corporation
has a controlling or majority interest.

2.33     "Tax Date" shall have the meaning set forth in Section 15.3 hereof.

3. TERM AND EFFECTIVE DATE.

The Plan was  proposed  by the  Board of  Directors  on August  21,  2003 and is
proposed  to be adopted by the  Corporation's  shareholders  at the next  annual
meeting of shareholders. The Effective Date of the Plan shall be August 21, 2003
(the "Effective Date").

Options  and  Bonuses  may be  granted  under  this Plan from time to time until
August 21,  2006,  which is three  years  from the date the Plan was  originally
adopted by the Board.

4. ADMINISTRATION.

4.1 The Plan shall be administered by the Board in compliance with Rule 16b-3 of
the Exchange Act ("Rule  16b-3") if applicable to the  Corporation at such time,
or by a Committee  appointed by the Board,  which Committee shall be constituted
to permit the Plan to comply with Rule 16b-3,  applicable provisions of the Code
and which  shall  consist of not less than three (3)  members.  The Board  shall
appoint one (1) of the members of the Committee, if there be one, as Chairman of
the Committee,  who may, but is not required to be a "Disinterested Director" as
defined  in the Code or Rule  16b-3.  If a  Committee  has been  appointed,  the
Committee shall hold meetings at such times and places as it may determine. Acts
of a majority of the Committee at which a quorum is present,  or acts reduced to
or approved in writing by a majority  of the members of the  Committee  shall be
valid acts of the Committee. The Board, or the Committee, if there be one, shall
from time to time at its discretion select the Eligible  Employees,  consultants
and other  Participants  who are to be granted  Awards,  determine the number of
Shares or cash, or the combination  thereof, to be applicable to such Award, and
designate any Options as Incentive Stock Options or Nonstatutory  Stock Options,
except that no Incentive Stock Option may be granted to a non-employee  director
or a non-employee consultant. A member of the Board or Committee member shall in
no event  participate in any  determination  relating to Awards held by or to be
granted to such Board or Committee member;  however,  a member of the Board or a
Committee   member  shall  be  entitled  to  receive  Awards   approved  by  the
shareholders in accordance with the provisions of Rule 16b-3. The interpretation
and  construction  by the Board,  or by the  Committee,  if there be one, of any
provision  of the Plan or of any Award  granted  thereunder  shall be final.  No
member  of the  Board  or the  Committee  shall  be  liable  for any  action  or
determination  made in good faith with respect to the Plan or any Award  granted
thereunder. In addition to any right of indemnification provided by the Articles
of Incorporation or Bylaws of the Corporation,  such person shall be indemnified
and held harmless by the Corporation from any loss,  cost,  liability or expense
that may be imposed upon or reasonably  incurred by him in  connection  with any
claim,  suit,  action or  proceeding to which he may be a party by reason of any
action or omission under the Plan.

4.2 Options, Bonuses or other Award granted under the Plan shall be evidenced by
duly adopted resolutions of the Committee included in the minutes of the meeting
at which they are adopted or in a unanimous written consent.

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4.3 By resolution,  the Committee may delegate to one or more executive officers
the  power to grant  options  or stock  bonuses  to  employees,  consultants  or
advisors of the  Corporation;  provided,  however,  that grants to  directors or
executive officers of the Corporation, or any other person subject to Section 16
of the Exchange Act may not be made pursuant to such delegated  authority.  With
respect to persons subject to Section 16 of the Exchange Act, transactions under
this Plan are intended to comply with all applicable conditions of Rule 16b-3 or
any successor  regulation under the Exchange Act. To the extent any provision of
this Plan or action by the Committee fails to so comply, it shall be deemed null
and void, to the extent  permitted by law and deemed advisable by the Committee.
Any  Option,  Bonus or other Award  granted  hereunder  which  would  subject or
subjects the Participant to liability under Section 16(b) of the Exchange Act is
void AB INITIO as if it had never been granted.

4.4 No member of the Committee or the Board, nor any agent,  shall be liable for
any action taken or determination made in good faith with respect to the Plan or
any Option or Bonus granted hereunder.

4.5 The  Committee  may delegate to one or more of its members or to one or more
agents such administrative duties as it may deem advisable, and the Committee or
any person to whom it has  delegated  duties as aforesaid may employ one or more
persons to render  advice with respect to any  responsibility  the  Committee or
such person may have under the Plan.

5.   PARTICIPATION.

5.1  Eligibility.  Subject to the terms and conditions of Section 5.2 below, the
Participants  shall be such  persons as the  shareholders  may approve or as the
Board or Committee may select from among the following  classes of persons:  (i)
Employees of the Corporation or of a Subsidiary (who may be officers, whether or
not they are directors) and directors of the Corporation or of a Subsidiary; and
(ii) Consultants, vendors, customers, and others expected to provide significant
services to the Corporation or a Subsidiary.  In determining the persons to whom
Awards  shall be  granted  and the  number of shares to be  covered by each such
Award,  the Board or the  Committee  as the case may be, shall take into account
the duties of the respective persons, their present and potential  contributions
to the  success of the  Corporation  and such other  factors as the Board or the
Committee, as the case may be, shall deem relevant to accomplish the purposes of
the Plan.

For purposes of this Plan, an Eligible  Employee,  or other Participant who is a
director or an  officer,  consultant,  vendor,  customer,  or other  provider of
significant services to the Corporation or a Subsidiary shall be deemed to be an
Eligible  Employee  or  Participant,   and  service  as  an  officer,  director,
consultant,  vendor,  customer, or other provider of significant services to the
Corporation  or a Subsidiary  shall be deemed to be  employment,  except that no
Incentive Stock Option may be granted to a non-employee director or non-employee
consultant,  vendor,  customer, or other provider of significant services to the
Corporation or a Subsidiary, and except that no Nonstatutory Stock Option may be
granted to a non-employee director or non-employee consultant, vendor, customer,
or other  provider of  significant  services to the  Corporation or a Subsidiary
other than upon a vote of a majority of disinterested directors and/or Committee
members,  if there shall be a Committee,  finding that the value of the services
rendered  or  to  be  rendered  to  the  Corporation  or a  Subsidiary  by  such
non-employee  director or non-employee  consultant,  vendor,  customer, or other
provider of services is at least equal to the value of the Awards granted.

5.2 Ten-Percent Shareholders.  An Eligible Employee or Participant who owns more
than ten  percent  (10%) of the total  combined  voting  power of all classes of
outstanding  stock of the  Corporation,  its  parent or any of its  Subsidiaries
shall not be eligible to receive an Award for an Incentive  Stock Option  unless
(i) the  Exercise  Price of the  Shares  subject  to such  Award is at least one
hundred ten percent  (110%) of the Fair Market  Value of such Shares on the date
of  grant:  and

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(ii) such Award by its terms is not exercisable after the expiration of five (5)
years from the date of grant.

5.3 Stock  Ownership.  For purposes of Section 5.2 above,  in determining  stock
ownership, an Eligible Employee or Participant shall be considered as owning the
stock  owned,  directly or  indirectly,  by or for a  corporation,  partnership,
estate or trust shall be considered as being owned proportionately by or for its
shareholders,  partners  or  beneficiaries.  Stock  with  respect  to which such
Eligible Employee or Participant holds an Award shall not be counted.

5.4 Outstanding  Stock. For purposes of Section 5.2 above,  "Outstanding  stock"
shall include all stock actually  issued and outstanding  immediately  after the
grant of the Award to the  Participant.  "Outstanding  stock"  shall not include
shares authorized for issue under outstanding Options or Purchase Rights held by
the Participant or by any other person.

6. STOCK SUBJECT TO THE PLAN.

The stock  subject  to  Awards  granted  under  the Plan  shall be Shares of the
Corporation's  authorized but unissued or reacquired Common Stock. The aggregate
number of Shares that may be issued as Awards or upon  exercise of Awards  under
the Plan shall not exceed Forty Million  (40,000,000)  common shares. The number
of Shares subject to unexercised Options,  Stock Appreciation Rights or Purchase
Rights (plus the number of Shares previously issued under the Plan) shall not at
any time exceed the number of Shares  available for issuance  under the Plan. In
the event that any  unexercised  Option,  Stock  Appreciation  Right or Purchase
Right, or any portion  thereof,  for any reason expires or is terminated,  or if
any Shares subject to a Restricted Stock Award do not vest or are not delivered,
the unexercised or unvested Shares allocable to such Option,  Stock Appreciation
Right, Purchase Right or Restricted Stock Award may again be made subject to any
Award. Any Shares withheld by the Corporation pursuant to Section 15.3 shall not
be deemed to be issued. The number of withheld Shares shall be deducted from the
applicable  Award and shall not entitle the  Participant  to receive  additional
Shares.  The  limitations  established  by this  Article 6 shall be  subject  to
adjustment in the manner  provided in Section 14.5 hereof upon the occurrence of
an event specified therein.

7. OPTIONS.

7.1 Stock Option Agreements.  Options shall be evidenced by written stock option
agreements  in such form as the Board or the  Committee,  if there shall be one,
shall from time to time  determine.  Such  agreements  shall  comply with and be
subject to the terms and conditions set forth below. In the event that a written
common  stock option  shall not have been  delivered to an eligible  Participant
prior to their notice of intent to exercise, the terms of the stock option shall
be deemed the same as the form of stock option  agreement  attached hereto as an
exhibit  and  incorporated  herein  by  reference  with the  specific  terms and
provisions as set forth in the board minutes granting such option or award.

7.2 Number of Shares.  Each Option  shall state the number of Shares to which it
pertains and shall provide for the  adjustment  thereof in  accordance  with the
provisions of Section 14.5 hereof.

7.3 Exercise  Price.  Each Option shall state the Exercise  Price  thereof.  The
Exercise Price in the case of any Incentive  Stock Option shall not be less than
the  Fair  Market  Value on the date of  grant  and,  in the case of any  Option
granted to an Optionee  described in Section 5.2 hereof,  shall not be less than
one hundred ten  percent  (110%) of the Fair Market  Value on the date of grant.
The  Exercise  Price in the case of any  Nonstatutory  Stock Option shall not be
less than  eighty-five  percent  (85%) of the Fair  Market  Value on the date of
grant.  The  Exercise  Price for any Option  shall be subject to  adjustment  in
accordance with the provisions of Section 14.5 hereof.

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7.4 Medium and Time of Payment.  The Purchase  Price shall be payable in full in
United States dollars upon the exercise of the Option;  provided,  however, that
if the applicable  Stock Option Agreement so provides the Purchase Price may the
paid (i) by the  surrender  of Shares in good  form for  transfer,  owned by the
Participant  and having a Fair Market Value on the date of exercise equal to the
Purchase Price, or in any combination of cash and Shares,  as long as the sum of
the cash so paid and the Fair Market Value of the Shares so  surrendered  equals
the Purchase Price, (ii) by cancellation of indebtedness owed by the Corporation
to the Participant,  (iii) with a full recourse  promissory note executed by the
Participant,  or (iv) any  combination of the  foregoing.  The interest rate and
other terms and  conditions of such note shall be  determined by the  Committee.
The Committee may require that the  Participant  pledge his or her Shares to the
Corporation  for the purpose of securing  the payment of such note.  In no event
shall the stock  certificate(s)  representing  such  Shares be  released  to the
Participant until such note shall be paid in full.

7.5 Term and Non-Transferability of Options.

7.5.1    The date on which the Board or Committee adopts a resolution expressly
         granting an Option shall be considered the day on which such Option is
         granted,  unless  a  future  date is  specified  in  such  resolution;
         provided  however that no Participant  shall have any rights under the
         Grant until he/she have executed an Option  Agreement  with respect to
         such  Option.  Each option  shall state the time or times which all or
         part thereof becomes exercisable. No Option shall be exercisable after
         the expiration of ten (10) years from the date it was granted,  and no
         Option granted to a Participant  described in Section 5.2 hereof shall
         be exercisable after the expiration of five (5) years from the date it
         was granted. During the lifetime of the Participant,  the Option shall
         be exercisable  only by the Participant and shall not be assignable or
         transferable.  In the event of the  Participant's  death,  the  Option
         shall not be transferable by the Participant other than by will or the
         laws of descent and distribution.

7.5.2    Nothing in the Plan or in any Option  granted  hereunder  shall  confer
         upon a  Participant  any  right  to  continue  in the  employ  of or to
         continue any other  relationship  with the Corporation nor interfere in
         any way with the right of the  Corporation to terminate such employment
         or other relationship between a Participant and the Corporation.

7.5.3    Transferability Restriction

7.5.3.1  Options granted under the Plan shall not be transferable  other than by
         will or by the  laws of  descent  and  distribution  or  pursuant  to a
         qualified domestic relations order as defined by the Code or Title I of
         the  Employee  Retirement  Income  Security  Act of 1974,  or the rules
         thereunder.  Options  may  be  exercised  during  the  lifetime  of the
         Participant only by the  Participant,  and thereafter only by his legal
         representative or permitted assignee.

7.5.3.2  Any attempted sale, pledge, assignment, hypothecation or other transfer
         of an Option  contrary  to the  provisions  hereof  and the levy of any
         execution,  attachment or similar  process upon an Option shall be null
         and void and without  force or effect and shall result in a termination
         of the Option.

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7.6 Modification, Extension and Renewal of Option. Within the limitations of the
Plan, the Committee may modify,  extend or renew  outstanding  Options or accept
the cancellation of outstanding Options (to the extent not previously exercised)
for  the  granting  of new  Options  in  substitution  therefore,  in  its  sole
discretion  as it deems  appropriate.  No  exercise  period may be  extended  to
increase the term of the Option beyond ten years from the date of the grant,  or
five years in the case of Incentive Stock Options granted to persons owning more
than ten percent of the total  combined  voting power of the Common Stock of the
Corporation. The foregoing notwithstanding, no modifications of an Option shall,
without  the  consent  of  the  Participant,  alter  or  impair  any  rights  or
obligations under any Option previously granted.

7.7  Limitation on Grant of Incentive  Stock  Options.  In the case of Incentive
Stock Options granted hereunder,  the aggregate Fair Market Value (determined as
of the date of the grant thereof) of the Shares with respect to which  Incentive
Stock Options become  exercisable by any  Participant  for the first time during
any  calendar  year  (under  this Plan and all  other  plans  maintained  by the
Corporation,  its  parent or it  Subsidiaries)  shall  not  exceed  One  Hundred
Thousand  Dollars  ($100,000).  The Board or Committee  may,  however,  with the
Participant's  consent  authorize an amendment to the  incentive  Stock  Option,
which renders it a Nonstatutory Stock Option.

7.8 Other Provisions.  The Stock Option Agreements authorized under the Plan may
contain  such  other  provisions  not  inconsistent  with the  terms of the Plan
(including, without limitation, restrictions upon the exercise of the Option) as
the Committee shall deem advisable.

7.9 Specific Awards Approved by the Shareholders. Subject to the approval by the
vote  of  the  shareholders  at  the  next  Annual  or  Special  Meeting  of the
Shareholders,  the individuals whose names are set forth in Schedule "A", a copy
of which is attached hereto and incorporated herein by this reference,  shall be
deemed granted Awards in the amounts and denominations specified thereon, in the
amounts and for the amount  indicated  opposite their  respective  names, and in
accordance  with the vesting  schedule set forth herein,  all in accordance with
the provisions set forth in this Article 7 of the Plan, effective as of the date
granted or the  Effective  Date,  whichever is specified in  resolutions  of the
Board of Directors  granting such awards. The provisions of this Section 7.9 and
following  Section  7.10,  shall not be  amended  more  than once  every six (6)
months,  other than to comport with changes in the Internal  Revenue  Code,  the
Employee  Retirement  Income  Security  Act,  or the  rules  thereunder,  and/or
intended  to be  construed  in  accordance  with the  provisions  pertaining  to
"formula awards" under Paragraph (c) (2) (ii) of Rule 16b-3.
..
7.10 Awards from the 2002 Plan. In addition to the formula  grants  described in
the  preceding  paragraph,  the stock options  listed in "Schedule B",  attached
hereto  consisting of unexercised stock options remaining from the Corporation's
2002 Omnibus  Incentive Stock Option and Incentive Plan shall be deemed included
and made subject to this Plan also subject to shareholder approval.

8.  RESTRICTED/REGISTERED STOCK PURCHASE RIGHTS

8.1 Stock  Purchase  Agreements.  Purchase  Rights shall be evidenced by written
Stock Purchase  Agreements in such form as the Committee shall from time to time
determine.  Such  agreements  shall  comply with and be subject to the terms and
conditions set forth below.

8.2 Number of Shares.  Each  Purchase  Right shall state the number of Shares to
which it pertains and shall  provide for the  adjustment  thereof in  accordance
with the provisions of Section 14.5 hereof.

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8.3 Purchase Price. Each Stock Purchase Agreement shall state the Purchase Price
per Share at which the Purchase Right may be exercised  which,  unless the Board
or Committee otherwise determines,  shall not be less than the Fair Market Value
of a Share  as of the date on  which  the  Purchase  Right  is  granted,  less a
discount (the "Discount") equal to not more than  seventy-five  percent (75%) of
such  value.  In the event that  shares  subject  to a Purchase  right are to be
registered pursuant to a registration  statement under the '33 Act, the Purchase
Price per share shall not be less than the Fair  Market  Value of a Shares as of
the date on which the Purchase Right is granted.

8.4 Exercisability and Non -Transferability of Purchase Rights.  Purchase Rights
granted to a  Participant  pursuant to the Plan must be  exercised  within sixty
(60) days  after the  later to occur of (i) Board  approval  of the grant of the
Purchase Right or (ii) delivery of notice of such grant. Purchase Rights may not
be sold,  pledged,  assigned,  hypothecated,  transferred  or disposed of in any
manner and shall expire  immediately  upon the death of the  Participant  or the
termination of such Participant's employment with the Corporation.

8.5 Medium and Time of Payment.  The Purchase  Price shall be payable in full in
United States dollars upon exercise of the Purchase Right; provided however that
if the applicable Stock Purchase Agreement so provides the Purchase Price may be
paid (i) by the  surrender  of  Shares in good  form for  transfer  owned by the
person  exercising the Purchase Right and having a Fair Market Value on the date
of exercise equal to the Purchase Price or in any combination of cash and Shares
as long as the sum of the cash so paid and the Fair  Market  Value of the Shares
so surrendered equal the Purchase Price or (iii) with a full recourse promissory
note  executed  by the  Participant.  The  interest  rate and  other  terms  and
conditions of such note shall be determined by the Committee.  The Committee may
require that the Participant pledge his or her Shares to the Corporation for the
purpose  of  securing  the  payment of such  note.  In no event  shall the stock
certificate(s)  representing  such Shares be released to Participant  until such
note shall be paid in full. In the event the  Corporation  determines that it is
required to withhold  state or federal income tax as a result of the exercise of
a Purchase Right, as a condition to the exercise  thereof,  a Participant may be
required to make arrangements  satisfactory to the Corporation for it to satisfy
such  withholding  requirements.  In addition,  the  Participant  shall agree to
immediately  notify the  Corporation if he or she files an election  pursuant to
Section 83(b) of the Code with respect to receipt of the Shares.

8.6 Consent of Spouse.  Each  Participant  who is married  must cause his or her
spouse to sign and deliver the Stock Purchase  Agreement to the Corporation,  in
the place provided for such signature on the Stock Purchase Agreement.

8.7  Modification,   Extension  and  Renewal  of  Purchase  Rights.  Within  the
limitations of the Plan, the Board or the Committee may modify,  extend or renew
outstanding  Purchase Rights or accept the cancellation of outstanding  Purchase
Rights (to the extent not previously exercised) for the granting of new Purchase
Rights in substitution therefor. The foregoing notwithstanding,  no modification
of a Purchase Right shall, without the consent of the Employee,  alter or impair
any rights or obligations under any Purchase Right previously granted.

8.8 Repurchase Option as to Unvested Shares.

8.8.1    Termination of Employment. In the event of the voluntary or involuntary
         termination   or  cessation  of  employment  or   association   of  the
         Participant  with the  Corporation  or any  Subsidiary  for any  reason
         whatsoever, with or without cause (including death or disability),  the
         Corporation  shall,  upon  the  date  of  such  termination,   have  an
         irrevocable,  exclusive option to repurchase (the "Repurchase  Option")
         all or any portion of the Shares held by the Employee  that are subject
         to the  Repurchase  Option  as of such  date at the  original  Purchase
         Price.
                                        9
<PAGE>

8.8.2    Vesting.  Initially,  all  of  the  Shares  shall  be  subject  to  the
         Repurchase  Option.  Thereafter,  the Repurchase Option shall lapse and
         expire, or "vest", as to a specified number of the Shares in accordance
         with a schedule to be determined by the Board or the Committee,  as the
         case may be, which shall be attached to the Stock Purchase Agreement to
         be entered into between the Participant and the Corporation as provided
         in Section 8.1 above.  All Shares  which  continue to be subject to the
         Repurchase  Option are sometimes  hereinafter  referred to as "Unvested
         Shares."

8.8.3    Notice. Within ninety (90) days following the date of the Participant's
         termination of employment by the  Corporation,  the  Corporation  shall
         notify the Employee as to whether it wishes to repurchase  the Unvested
         Shares  pursuant  to the  exercise  of the  Repurchase  Option.  If the
         Corporation  elects to repurchase said Unvested Shares,  it shall set a
         date for the closing of the transaction at the Executive Offices of the
         Corporation,  not  later  than  thirty  (30) days from the date of such
         notice.

8.8.4    Transfers.  Except  for  transfers  to  Participant's  descendants  and
         spouses,  the  Participant  shall  not  transfer  by sale,  assignment,
         hypothecation,  donation or otherwise any of the Shares or any interest
         therein prior to the release of such Shares from the Repurchase Option.

8.8.5    Assignment.  The  Corporation's  Repurchase  Option may be  assigned in
         whole or in part to any  stockholder or stockholders of the Corporation
         or other persons or organizations.

8.9 Corporation's  Right of First Refusal to Purchase Vested Shares.  Each Stock
Purchase  Agreement entered into as provided herein shall provide for a right of
first refusal and option on the part of the  Corporation  to purchase all or any
part of any Shares which are no longer  subject to the  Repurchase  Option which
the Participant  purposes to sell,  transfer or otherwise dispose of (except for
transfers to  Participant's  descendants and spouses) on the following terms and
conditions.

8.9.1    The Participant  must notify the Corporation in writing of any proposed
         sale,  transfer or other  disposition of any of the Shares,  specifying
         the  proposed   transferee,   the  number  of  Shares  proposed  to  be
         transferred,  and the  price  at  which  such  Shares  are to be  sold,
         transferred or otherwise disposed.

8.9.2    The  Corporation  shall have a period of thirty (30) days from receipt
         of such notice to notify the  Participant  in writing as to whether or
         not the Corporation  elects to purchase all or a specified  portion of
         such  Shares  at the  lower  of:  i) price  per share set forth in the
         notice  given by the  Participant,  or ii) the Fair Market Value for a
         share of the Corporation's Common Stock, without restrictions,  on the
         date on which the notice is given by  Participant  to the  Corporation
         (determined as provided in Section 2.13 above), less in either case an
         amount  equal  to the  Discount.  If  the  Corporation  elects  not to
         purchase all of the Shares  specified in the notice,  the  Participant
         may sell,  transfer or otherwise  dispose of the  remaining  Shares in
         strict accordance with the terms specified in the notice within ninety
         (90) days  following  the date of the  notice.  It is  understood  and
         agreed  that any  transferee  of any of such  Shares  (other  than the
         Corporation)  will take and acquire all of such Shares  subject to the
         continuing  right  of  first  refusal  and  option  on the part of the
         Corporation  to  purchase  all or any  portion of such Shares from the
         transferee on all of the same terms and conditions as are set forth in

                                       10
<PAGE>

         the Stock Purchase  Agreement,  unless the Participant shall have paid
         to the  Corporation,  out of the proceeds from the sale of such Shares
         or otherwise,  an amount equal to the lesser of (i) the  Discount,  or
         (ii) the  amount  by which  the Fair  Market  Value for a share of the
         Corporation's Common Stock, without restrictions, on the date on which
         the notice is given by Participant to the  Corporation  (determined as
         provided in Section  2.13  above)  exceeds the price per Share paid by
         the Participant for such Shares.

8.9 Other Provisions.  The Stock Purchase Agreements authorized may contain such
other provisions not inconsistent with the terms of the Plan as the Board or the
Committee shall deem advisable.  8.10 Special Incentive Stock Purchase Plan. The
Board has  reserved  10,000,000  Shares  under  this Plan as a special  award of
Special  Incentive  Stock  Purchase  Rights  to  present  and  future  officers,
directors employees and consultants  individually or as a group,  providing that
individuals who are or may become officers, directors,  employees or consultants
of the Corporation  during the term of the Plan may purchase a designated number
of Shares at the market price for the Shares as of the date of the Plan,  August
21, 2003, or $0.01 per share.  The Board or Committee,  as the case may be, have
been authorized to establish  standards and requirements for eligibility,  terms
and  conditions  for  exercise  of  Special   Incentive  Stock  Purchase  Rights
including,  without  limitation,  vesting  rights,  exercise  periods,  and  any
restrictions  on resale of Shares  purchased  pursuant to such Awards,  in their
sole and complete discretion. The Board or Committee as the case may be may make
individual  or  blanket  Awards  to all or any  class or  sub-classification  of
Participant, subject to the following general provisions:

8.11.1   Participants  must be employed  for a minimum of 45 days before  Awards
         are  granted or become  exercisable.  Awards  granted  before such time
         expire  if  employment  terminates  before  expiration  of  such 45 day
         period. Accordingly, no exercise may be accepted until such time.

8.11.2   Awards must be exercised on or before 10 days after  termination of the
         Participant's  qualified  employment,  unless  terminated for cause, in
         which case they will expire on such termination for cause.

8.11.3   Shares issued pursuant to exercise of Special  Incentive Stock Purchase
         Rights,  are to be  issued  in  unrestricted  and  free  trading  form,
         provided  that (a)  sufficient  shares under an effective  Registration
         Statement are reserved for their issuance; and (b) no other restriction
         is otherwise applicable under Rule 144 under the Act;

8.11.4   Awards of Special  Incentive Stock Purchase Rights are not effective in
         any event  unless  represented  by a written  Special  Incentive  Stock
         Purchase  Right  Agreement,   setting  forth  the  material  terms  and
         conditions  of the  specific  Award,  signed  by the  Chairman  and one
         committee member;

8.11.5   Any  provision  of this Plan,  not  specifically  modified or expressly
         excluded from the  provisions  of this Section 8.11,  may be applied to
         specific Special  Incentive Stock Purchase Awards, in the discretion of
         the Board or Committee,  as the case may be. This subsection is subject
         to the general terms,  definitions and provisions including Sections 14
         and 15 hereof.

                                       11
<PAGE>

9. STOCK APPRECIATION RIGHTS.

9.1 Grant.  Stock  Appreciation  Rights related or unrelated to Options or other
Awards may be granted  to  Participants:  (i) at any time,  if  unrelated  to an
Award, or if related to an Award other than an Incentive  Stock Option;  or (ii)
only at the time of grant of an Option if related thereto.  A Stock Appreciation
Right may extend to all or a portion of the Shares covered by a related Award.

9.2 Exercise of Stock Appreciation Rights. A Stock Appreciation Right granted in
connection with an Award shall be exercisable only at such time or times, and to
the extent  that a related  Award is  exercisable.  A Stock  Appreciation  Right
granted  in  connection  with an Option  may be  exercisable  only when the Fair
Market Value of the stock  subject to the Option  exceeds the Exercise  Price of
the Incentive Stock Option.

9.3  Payment.

(a)  Upon  the  exercise  of a Stock  Appreciation  Right,  and,  if such  Stock
Appreciation Right is related to an Award,  surrender of an exercisable  portion
of a related Award,  the Participant  shall be entitled to receive payment of an
amount determined by multiplying: (i) the difference obtained by subtracting the
purchase price of a share of Common Stock  specified in the related Award, or if
such Stock  Appreciation  Right is unrelated  to an Award,  from the Fair Market
Value,  book  value or  other  measure  specified  in the  Award  of such  Stock
Appreciation  Right of a share of Common  Stock on the date of  exercise of such
Stock  Appreciation  Right,  by (ii) the number of Shares as to which such Stock
Appreciation Right has been exercised.

(b) The Board or the Committee, as the case may be, in its sole discretion,  may
require  settlement of the amount determined under paragraph (a) above solely in
cash,  solely in Shares of Common  Stock  (valued  at Fair  Market  Value on the
business  day next  preceding  the date of exercise  of such Stock  Appreciation
Right), or partly in such Shares and partly in cash.

9.4 Maximum Stock Appreciation Right Term. Each Stock Appreciation Right and all
rights  and  obligations  thereunder  shall  expire  on such  date as  shall  be
determined by the Board or the Committed but not later than ten (10) years after
the date of the Award  thereof,  and shall be subject to earlier  termination as
provided in the related Award Agreement and Sections 14.6,  14.7, 14.8, 14.9 and
15.1.

10. PERFORMANCE AWARDS.

One or more Performance Awards may be granted to any eligible  Participant.  The
value of such  Awards  may be linked to the  market  value,  book value or other
measure of the value of the Common Stock or other specific  performance criteria
determined  appropriate  by the  Board  or the  Committee,  in  each  case  on a
specified date or over any period  determined by the Board or the Committee,  or
may be based  upon the  appreciation  in the market  value,  book value or other
measure  of the value of a  specified  number of Shares of Common  Stock  over a
fixed  period  determined  by  the  Board  or  the  Committee.  In  making  such
determinations,  the Board or the  Committee  may  consider  (among  such  other
factors  as it deems  relevant  in  light of the  specific  type of  award)  the
contributions, responsibilities and other compensation of the Participant.

                                       12
<PAGE>

11. DIVIDEND EQUIVALENTS.

A Participant may also be granted "Dividend  Equivalents" based on the dividends
declared on the Common  Stock,  to be credited  as of  dividend  payment  dates,
during the period  between the Award Date and the date such Award is  exercised,
vests or expires as  determined  by the Board or the  Committee.  Such  Dividend
Equivalents  shall be converted to cash or additional  Shares of Common Stock by
such  formula  and at  such  time  and  subject  to such  limitations  as may be
determined by the Board or the Committee.

12. STOCK PAYMENTS.

The Board or the Committee may approve Stock  Payments to Eligible  Employees or
other  Participants who elect to receive such payments in the manner  determined
from time to time by the Board or the  Committee.  The number of Shares shall be
determined  by the Board or the  Committee and may be based upon the Fair Market
Value, book value or other measure of the value of such Shares on the Award Date
or on any date thereafter.

13. LOANS.

The Corporation may, with the Board's or the Committee's approval, extend one or
more  loans to  Participants  in  connection  with the  exercise  or  receipt of
outstanding  Awards  granted  under the Plan;  provided  any such loan  shall be
subject to the following terms and conditions;

(i) The principal of the loan shall not exceed the amount required to be paid to
the  Corporation  upon the  exercise or receipt of one or more Awards  under the
Plan less the aggregate Par Value of any Common Stock deliverable on such event,
and the loan proceeds shall be paid directly to the Corporation in consideration
of such exercise or receipt.

(ii) The  initial  term of the  loan  shall be  determined  by the  Board or the
Committee;  provided that the term of the loan, including extensions,  shall not
exceed a period of ten (10) years.

(iii)  The  loan  shall  be with  full  recourse  to the  Participant,  shall be
evidenced by the Participant's promissory note and shall bear interest at a rate
determined  by the Board or the  Committee  but not less than the  Corporation's
average  cost of funds as of a date within  thirty-one  (31) days of the date of
such loan, as determined by the Board or Committee.

(iv) in the event a Participant  terminates his or her employment at the request
of the Corporation,  the unpaid  principal  balance of the note shall become due
and payable on the tenth (10th) business day after such  termination;  provided,
however,  that if a sale of such Shares  would cause such  Participant  to incur
liability  under  Section  16(b) of the Exchange  Act, the unpaid  balance shall
become due and payable on the tenth  (10th)  business day after the first day on
which a sale of  such  Shares  could  have  been  made  without  incurring  such
liability  assuming for these purposes that there are no other  transactions  by
the  Participant  subsequent  to such  termination.  In the event a  Participant
terminates  employment other than at the request of the Corporation,  the unpaid
principal  balance of the note shall become due and payable six (6) months after
the date of such termination.

14. RIGHTS OF ELIGIBLE EMPLOYEES, PARTICIPANTS AND BENEFICIARIES.

14.1 Employee Status.  Status as an Eligible Employee or other Participant shall
not be construed  as a commitment  that any Award will be made under the Plan to
an Eligible Employee, Participant or to Eligible Employees or other Participants
generally.

                                       13
<PAGE>

14.2 No  Employment  Contract.  Nothing  contained  in the Plan (or in the Award
Agreements  or in any other  documents  related to the Plan or to Awards)  shall
confer upon any Eligible  Employee or  Participant  any right to continue in the
employ of the Corporation or constitute any contract or agreement of employment,
or  interfere  in any way  with the  right of the  Corporation  to  reduce  such
person's  compensation or to terminate the employment of such Eligible  Employee
or Participant,  with or without cause, but nothing contained in the Plan or any
document  related  thereto  shall  affect  any  other  contractual  right of any
Eligible employee or Participant. Nothing contained in the Plan (or in the Award
Agreements  or in any other  documents  related to the Plan or the Awards) shall
confer upon any director of the  Corporation any right to continue as a director
of the Corporation.

14.3 No Transferability. Awards may be exercised only by, and amounts payable or
Shares issued  pursuant to an Award shall be paid only to or registered  only in
the name of, the Participant or, in the event of the Participant's death, to the
Participant's  Beneficiary or, in the event of the Participant's  Disability, to
the  participant's  Personal  Representative  or,  if  there  is  none,  to  the
Participant.  Other than by will or the laws of  descent  and  distribution,  no
right or benefit under the Plan or any Award, including, without limitation, any
Option or share of Restricted Stock that has not vested, shall be subject in any
manner  to  anticipation,   alienation,  sale,  transfer,   assignment,  pledge,
encumbrance  or charge and any such  attempted  action shall be void and no such
right or benefit  shall be, in any manner,  liable  for,  or subject to,  debts,
contract,   liabilities,   engagements,  or  torts  of  any  Eligible  Employee,
Participant  or  Beneficiary,  in any case except as may  otherwise by expressly
required by  applicable  law. The Board or the  Committee  shall  disregard  any
attempt at transfer;  assignment or other alienation prohibited by the preceding
sentence  and shall  pay or  deliver  such  cash or  Shares  of Common  Stock in
accordance with the provisions of the Plan.  Notwithstanding the foregoing,  the
Board or the Committee  may authorize  exercise by or transfers or payments to a
third  party in a  specific  case or more  generally;  provided,  however,  with
respect to any option or similar right (including any Stock Appreciation  Right)
such discretion may only be exercised to the extent that applicable  rules under
Section 16 of the Exchange Act would so permit  without  disqualifying  the Plan
from certain benefits thereunder.

14.4 Plan Not Funded. No Participant, Beneficiary or other person shall have any
right,  title or interest in any fund or in any specific asset (including Shares
of Common Stock) of the  Corporation  by reason of any Award granted  hereunder.
There shall be no funding of any benefits  which may become  payable  hereunder.
Neither the provision of the Plan (or of any documents  related hereto,  nor the
creation  or  adoption  of the  Plan,  nor  any  action  taken  pursuant  to the
provisions of the Plan shall create,  or be construed to create,  a trust of any
kind or a fiduciary  relationship between the Corporation and any Participant or
Beneficiary.  To the extent that a  Participant,  a Beneficiary  or other person
acquires a right to receive an Award  hereunder,  such right shall be no greater
than the right of any  unsecured  general  creditor of the  Corporation.  Awards
payable  under the Plan  shall be paid in  Shares  of  Common  Stock or from the
general  assets of the  Corporation,  and no special or separate fund or deposit
shall be  established  and no  segregation  of assets or Shares shall be made to
assure payment of such Awards.

14.5 Adjustment Upon  Recapitalization and Corporate Changes. If the outstanding
Shares of Common  Stock are changed  into or  exchanged  for cash or a different
number or kind of Shares or securities of the Corporation, or if the outstanding
Shares of the Common Stock are increased, decreased, exchanged for, or otherwise
changed,  or if additional  Shares or new or different  shares or securities are
distributed with respect to the outstanding Shares of the Common Stock,  through
a  reorganization  or merger in which the Corporation is the surviving entity or
through a combination, consolidation, recapitalization,  reclassification, stock
split, stock dividend, reverse stock split, stock consolidation or other capital
change or adjustment,  an appropriate adjustment shall be made in the number and
kind of shares or other  consideration  that is subject to or may be distributed
under the Plan and pursuant to outstanding Awards. A corresponding adjustment to

                                       14
<PAGE>

the  consideration  payable  with  respect to Awards  granted  prior to any such
change and to the price, if any, to be paid in connection with Restricted  Stock
Awards shall also be made as  appropriate.  Corresponding  adjustments  shall be
made with respect to Stock Appreciation  Rights related to Options to which they
are related.  In addition,  the Board or the Committee may grant such additional
rights in the foregoing  circumstances as the Board or the Committee deems to be
in the best interest of any Participant and the Corporation in order to preserve
for the Participant the benefits of an Award.

14.6 Termination of Employment Except by Death,  Disability or Retirement.  If a
Participant ceases to be an Employee for any reason other than his or her death,
disability or retirement,  such Participant shall have the right, subject to the
restrictions  of Section  14.3 above,  to exercise  any Award at any time within
three (3) months after  termination of employment,  but only to the extent that,
at the date of termination of employment,  the  Participant's  right to exercise
such Award had accrued pursuant to the terms of the applicable agreement and had
not previously been exercised;  provided,  however,  that if the Participant was
terminated  for cause (as  defined in the  applicable  agreement)  any Award not
exercised in full prior to such termination shall be canceled. For this purpose,
the  employment  relationship  shall be treated as  continuing  intact while the
Participant is on military leave, sick leave or other bona fide leave of absence
(to be determined in the sole  discretion  of the Board or the  Committee).  The
foregoing notwithstanding,  in the case of an Incentive Stock Option, employment
shall  not be deemed to  continue  beyond  the  ninetieth  (90th)  day after the
Participant's re-employment rights are guaranteed by statute or by contract.

14.7 Death of  Participant.  If a Participant  dies while an Employee,  or after
ceasing to be an  Employee  but  during  the  period  while he or she could have
exercised  the Award under this Section  14.7,  and has not fully  exercised the
Award,  then the Award may be exercised  in full at any time within  twelve (12)
months after the  Participant's  death but no later than the date of termination
(fixed in the applicable  agreement),  by the executors or administrators of his
or her estate or by any person or persons who have  acquired the Award  directly
from the Participant by bequest or inheritance,  but only to the extent that, at
the date of death,  the  Participant's  right to exercise such Award had accrued
and had not been forfeited pursuant to the terms of the applicable agreement and
had not previously been exercised.

14.8  Disability of  Participant.  If a Participant  ceases to be an Employee by
reason of  Disability,  such  Participant  shall have the right to exercise  the
Award at any time within twelve (12) months after termination of employment (but
not later than the termination date fixed in the applicable agreements) but only
to the extent that at the date of termination of employment,  the  Participant's
right to exercise such Award had accrued pursuant to the terms of the applicable
agreement and had not previously been exercised.

14.9  Retirement of  Participant.  If a Participant  ceases to be an Employee by
reason of  Retirement,  such  Participant  shall have the right to exercise  the
Award at any time within three (3) months after  termination of employment  (but
not later than the termination date fixed in the applicable agreements) but only
to the extent that, at the date of termination of employment,  the Participant's
right to exercise such Award had accrued pursuant to the terms of the applicable
agreement and had not previously been exercised.

14.10 Rights as a Stockholder. A Participant,  or a transferee of a Participant,
shall have no rights as a stockholder  with respect to any Shares covered by his
or her Award  until the date of the  issuance  of a stock  certificate  for such
Shares.  No adjustment shall be made for dividends  (ordinary or  extraordinary,
whether in cash,  securities or other  property),  distributions or other rights
for which the record date is prior to the date such stock certificate is issued,
except as provided in Section 14.5 hereof.

                                       15
<PAGE>

14.11 Deferral of Payments.  The Board or the Committee may approve the deferral
of any  payments  that may become due under the Plan.  Such  deferrals  shall be
subject to any  conditions,  restrictions  or  requirements  as the Board or the
Committee may determine.

14.12  Acceleration of Awards.  Immediately prior to the occurrence of an Event,
(i) each  Option  and  Stock  Appreciation  Right  under the Plan  shall  become
exercisable  in full;  (ii)  Restricted  Stock  delivered  under the Plan  shall
immediately  vest free of  restriction;  and (iii) each other Award  outstanding
under the Plan shall be fully vested or  exercisable  unless prior to the Event,
the Board or the  Committee  otherwise  determines  that there  shall be no such
acceleration or vesting of an Award or otherwise  determines  those Awards which
shall  be  accelerated  or  vested  and to the  extent  to which  they  shall be
accelerated or vested, or that an Award shall terminate, or unless in connection
with  such  Event the  Board  provides  (a) for the  assumption  of such  Awards
theretofore  granted;  or (b) for the substitution for such Awards of new awards
covering  securities or obligations (or any combination  thereof) of a successor
corporation,  or a parent or subsidiary thereof, with appropriate adjustments as
to number  and kind of shares  and  prices;  or (c) for the  payment of the Fair
Market  Value of the then  outstanding  Awards.  In  addition,  the Board or the
Committee may grant such additional rights in the foregoing circumstances as the
Board or the Committee  deems to be in the best interest of the  Participant and
the  Corporation  in order to preserve  for the  Participant  the benefits of an
Award.  For purposes of this Section  14.12 only,  Board shall mean the Board of
Directors of the Corporation as constituted  immediately  prior to the Event. In
addition,  the Board may in its sole discretion accelerate the exercisability or
vesting of any or all Awards  outstanding under the Plan in circumstances  under
which the Board or the Committee determines such acceleration appropriate.

14.13  Conditions  to Transfer of Shares.  (A) As a condition to the transfer of
any shares of Common Stock issued upon  exercise of an Award  granted under this
Plan, the  Corporation  may require an opinion of counsel,  satisfactory  to the
Corporation,  to the effect that such  transfer  will not be in violation of the
Securities Act or any other applicable securities laws or that such transfer has
been registered under federal,  state and all other applicable  securities laws.
(B) Further,  the Corporation  shall be authorized to refrain from delivering or
transferring  shares of Common Stock issued under this Plan until the  Committee
determines that such delivery or transfer will not violate applicable securities
laws and the Participant  has tendered to the Corporation any federal,  state or
local tax owed by the  Participant  as a result of exercising an Option or other
Award  or  disposing  of any  Common  Stock  when  the  Corporation  has a legal
liability  to  satisfy  such tax.  (C) The  Corporation  shall not be liable for
damages due to delay in the  delivery or issuance of any stock  certificate  for
any reason whatsoever,  including, but not limited to, a delay caused by listing
requirements  of  any  securities  exchange  or  the  National   Association  of
Securities Dealers,  or any registration  requirements under the Securities Act,
the Exchange Act, or under any other state or federal law,  rule or  regulation.
(D) The  Corporation  is under no  obligation  to take any  action  or incur any
expense in order to register  or qualify  the  delivery or transfer of shares of
Common Stock under  applicable  securities laws or to perfect any exemption from
such registration or qualification. (E) Furthermore, the Corporation will not be
liable to any  Participant  for failure to deliver or transfer  shares of Common
Stock if such failure is based upon the provisions of this paragraph.

                                       16
<PAGE>

15. MISCELLANEOUS

15.1 Termination,  Suspension and Amendment.  The Board or the Committee may, at
any time suspend,  amend, modify of terminate the Plan (or any part thereof) and
may, with the consent of a  Participant,  authorize  such  modifications  of the
terms and  conditions of such  Participant's  Award as it shall deem  advisable;
provided that,  except as permitted  under the provision of Section 14.5 hereof,
no amendment or modification  of the Plan may be adopted  without  approval by a
majority of the Shares of the Common Stock  (represented  in person or by proxy)
at a meeting of  stockholders  at which a quorum is present and entitled to vote
thereat, if such amendment or modification would:

i)  materially  increase the benefits  accruing to  Participants  under the Plan
within  the  meaning  of Rule  16b-3  under the  Exchange  Act or any  successor
provision;

ii)  materially  increase the aggregate  number of Shares which may be delivered
pursuant to Awards granted under the Plan; or

iii)  materially  modify the  requirements of eligibility for either adoption of
the Plan.

Neither adoption of the Plan nor the provisions hereof shall limit the authority
of the Board to adopt other Plans or to authorize  other payment of compensation
and benefits  under  applicable  law. No Awards under the Plan may be granted or
amended  during  any  suspension  of the  Plan or  after  its  termination.  The
amendment,  suspension or termination of the Plan shall not, without the consent
of the Participant,  alter or impair any rights or obligations pertaining to any
Awards  granted  under  the  Plan  prior  to  such   amendment,   suspension  or
termination.

15.2 No Fractional Shares. No Award or installment  thereof shall be exercisable
except in  respect to whole  Shares,  and  fractional  share  interest  shall be
disregarded.

15.3 Tax  Withholding  and Tax Bonuses.  As required by law,  federal,  state or
local taxes that are subject to the  withholding  of tax at the source  shall be
withheld by the  Corporation  as  necessary  to satisfy  such  requirement.  The
Corporation is entitled to require deduction from other compensation  payable to
such  Participant  or, in the  alternative;  i) the  Corporation may require the
Participant to advance such sums: or ii) if Participant  elects, the Corporation
may  withhold  (or  require the return of) Shares  having the Fair Market  Value
equal to the sums required to be withheld.  If the Participant elects to advance
such sums directly,  written notice of that election shall be delivered prior to
such  exercise  and,  whether  pursuant  to  such  election  or  pursuant  to  a
requirement imposed by the Corporation, payment in cash or by check of such sums
for taxes shall be delivered  within ten (10) days after the Exercise  Date.  If
the Participant  elects to have the Corporation  withhold Shares (or be entitled
to the return of Shares)  having a Fair Market Value equal to the sums  required
to be  withheld,  the value of the Shares to be withheld (or  returned)  will be
equal to the Fair Market  Value on the day the amount of tax to be withheld  (or
subject to return) is to be determined (the "Tax Date").

15.4 Restriction on Elections Made by Participants. Elections by Participants to
have Shares  withheld (or subject to return) for this purpose will be subject to
the following restrictions:  i) the election must be made prior to the Tax Date;
ii) the election must be  irrevocable;  iii) the election will be subject to the
Board's  disapproval;  and (iv) if the  Participant  is an "officer"  within the
meaning of Section 16 of the Exchange Act, the election shall be subject to such
additional restrictions as the Board or the Committee may impose in an effort to
secure the benefits of any regulations thereunder.

                                       17
<PAGE>

15.5 Limitations on the Corporation's Obligations.  The Corporation shall not be
obligated to issue Shares and/or  distribute  cash to the  Participant  upon any
Award  exercise  until  such  payment  has been  received  or  Shares  have been
withheld,  (unless withholding for offset against a cash payment) as of or prior
to the Exercise Date,  sufficient to cover all such sums due or which may be due
with respect to such exercise. In addition, the Board or the Committee may grant
to a Participant a cash bonus in any amount required by federal, state, or local
tax law to be withheld with respect to an Award.

15.6  Compliance with Laws. The Plan, the granting of Awards under the Plan, the
Stock  Option  Agreements  and Stock  Purchase  Agreements  and the  delivery of
Options,  Shares  and  Awards  (and/or  the  payment  of money or Common  Stock)
pursuant  thereto and the  extension of any loans  hereunder are subject to such
additional  requirements  as the Board or the  Committee may impose to assure or
facilitate  compliance  with all  applicable  federal and state laws,  rules and
regulations   (including,   without  limitation,   securities  laws  and  margin
requirements)  and to such  approvals by any regulatory or  governmental  agency
which may be necessary or advisable in connection therewith.  In connection with
the  administration  of the Plan or the  grant of any  Award,  the  Board or the
Committee  may impose such further  limitations  or conditions as in its opinion
may be required or advisable to satisfy,  or secure the benefits of,  applicable
regulatory  requirements  (including those rules promulgated under Section 16 of
the Exchange Act or those rules that  facilitate  exemption  from or  compliance
with the  Securities Act or the Exchange  Act),  the  requirements  of any stock
exchange upon which such Shares or shares of the same class are then listed, and
any Blue Sky or other securities laws applicable to such Shares.

15.7  Governing  Laws.  The Plan and all Awards  granted  under the Plan and the
documents  evidencing  Awards shall be governed by, and  construed in accordance
with, the laws of the State of Colorado.

15.8 Securities Law Requirements.

a) Legality of  issuance.  The  issuance of any Shares upon the  exercise of any
Option  or other  Award  and the grant of any  Option  or other  Award  shall be
contingent upon the following:

i) the Corporation and the Participant  shall have taken all actions required to
register the Shares under the Securities  Act, and to qualify the Option and the
Shares  under any and all  applicable  state  securities  or "Blue  Sky" laws or
regulations,  or to perfect an exemption  from the respective  registration  and
qualification requirements thereof;

ii) any applicable listing requirement of any stock exchange on which the Common
Stock is listed shall have been satisfied; and

iii) any other applicable provision of federal law shall have been satisfied.

b) Restrictions on Transfer. In addition to the express provisions of this Plan,
and  regardless  of whether the  offering  and sale of Shares under the Plan has
been  registered  under the Securities  Act or has been  registered or qualified
under the securities laws of any state, the Corporation may impose  restrictions
on the sale, pledge or other transfer of such Shares (including the placement of
appropriate   legends  on  stock  certificates)  if,  in  the  judgment  of  the
Corporation  and its counsel,  such  restrictions  are necessary or desirable in
order to achieve  compliance  with the  provision  of the  Securities  Act,  the
securities  laws of any state or any other  law.  In the event  that the sale of

                                       18
<PAGE>

Shares  under  the  Plan  is not  registered  under  the  Securities  Act but an
exemption is available  which  required an  investment  representation  or other
representation, each Participant shall be required to represent that such Shares
are  being  acquired  for  investment,  and  not  with a view  to  the  sale  or
distribution  thereof,  and to make such  other  representations  as are  deemed
necessary or appropriate by the Corporation and its counsel.  Any  determination
by the  Corporation  and its  counsel in  connection  with any of the matter set
forth in this Section  15.8(b) shall be  conclusive  and binding on all persons.
Stock  certificates  evidencing  Shares  acquired  under the Plan pursuant to an
unregistered  transaction shall bear the following  restrictive  legend and such
other  restrictive  legends  as are  required  or  deemed  advisable  under  the
provisions of any applicable law:

THE SALE OF THE SECURITIES  REPRESENTED HEREBY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE  "SECURITIES  ACT"). ANY TRANSFER OF SUCH SECURITIES
WILL BE INVALID UNLESS A REGISTRATION  STATEMENT  UNDER THE SECURITIES ACT IS IN
EFFECT AS TO SUCH  TRANSFER  OR IN THE  OPINION OF COUNSEL  FOR THE ISSUER  SUCH
REGISTRATION  IS  UNNECESSARY  IN ORDER FOR SUCH  TRANSFER  TO  COMPLY  WITH THE
SECURITIES ACT.

c) Registration or Qualification  of Securities.  The Corporation may, but shall
not be obligated  to register or qualify the issuance of Awards  and/or the sale
of Shares under the Securities Act or any other  applicable law. The Corporation
shall  not be  obligated  to take any  affirmative  action in order to cause the
issuance of Awards or the sale of Shares under the Plan to comply with any law.

d)  Exchange of  Certificates.  If, in the  opinion of the  Corporation  and its
counsel,  any legend  placed on a certificate  representing  Shares issued under
that  Plan is no  longer  required,  the  holder  of such  certificate  shall be
entitled to exchange such  certificate for a certificate  representing  the same
number of Shares but lacking such legend.

15.9 Shareholder  Approval.  If this Plan is not approved by the shareholders of
the Company  within 12 months  following  the date the Plan was  approved by the
Board as required by Section  422(b)(1) of the Code, this Plan and the Awards of
Options granted hereunder shall be and remain effective for all Recipients,  but
the reference to Incentive Stock Options herein shall be deleted and all options
granted  hereunder shall be  Non-qualified  Stock Options  pursuant to Section 7
hereof.

15.10 Execution.  To record the adoption of the Plan in the form set forth above
by the Board  effective as of August 21, 2003, the  Corporation  has caused this
Plan to be executed in the name and on behalf of the Corporation  where provided
below by an officer of the Corporation thereunto duly authorized.

ARETE INDUSTRIES, INC.

By: /s/ /s/ THOMAS P.  RAABE
    ------------------------
    Chief Executive Officer

Attest:
    /s/ William W. Stewart
    ------------------------
    Secretary

                                       19
<PAGE>

<TABLE>
                                   SCHEDULE A
                            Section 7.9 of 2003 Plan
                            ------------------------
<CAPTION>

Name                                  Number of Shares                           Description
------------------------------------- ----------------- ---------------------------------------------------------------
New Designated Grants under 2003 Plan
------------------------------------- ----------------- ---------------------------------------------------------------
<S>                                   <C>               <C>
Thomas P. Raabe                       5,000,000         Granted August 21, 2003 exercisable through 8/21/2005 at
                                                        $0.01 per share.
------------------------------------- ----------------- ---------------------------------------------------------------
William W. Stewart                    2,000,000         Granted August 21, 2003 exercisable through 8/21/2005 at
                                                        $0.01 per share
------------------------------------- ----------------- ---------------------------------------------------------------
Employees and Management              10,000,000         Stock Purchase Rights Granted August 21, 2003 priced at
                                                        $0.01, exercisable by qualified and eligible employees,
                                                        officers and directors, and advisors and consultants, as
                                                        determined by the compensation committee pursuant to the 2003
                                                        Plan.
------------------------------------- ----------------- ---------------------------------------------------------------
</TABLE>

<TABLE>
                                   SCHEDULE B
                            Section 7.10 of 2003 Plan
                            -------------------------
<CAPTION>

Name                                  Number of Shares                           Description
------------------------------------- ----------------- ---------------------------------------------------------------
Outstanding Grants/New Issue/2002
remainders
------------------------------------- ----------------- ---------------------------------------------------------------
<S>                                   <C>               <C>
Thomas P. Raabe                       1,000,000         Granted in November 19, 2001, exercisable at $0.02 per
                                                        share.through 11/19/2003
------------------------------------- ----------------- ---------------------------------------------------------------
Thomas P. Raabe                       1,000,000         Granted Jan. 29, 2003 exercisable through 3/31/2005 at
                                                        $0.0165 per share.
------------------------------------- ----------------- ---------------------------------------------------------------
Thomas P. Raabe                       1,000,000         Granted 4/1/2003 exercisable through 4/1/2005 at $0.0155 per
                                                        share.
------------------------------------- ----------------- ---------------------------------------------------------------
Brian McGowan                         1,000,000         Granted 8/9/2002 exercisable through 8/0/2004 at $0.02 per
                                                        share
------------------------------------- ----------------- ---------------------------------------------------------------
William W. Stewart                    1,000,000         Granted 4/1/2003 exercisable through 12/31/2003 at $0.0155
                                                        per share.
------------------------------------- ----------------- ---------------------------------------------------------------
</TABLE>

                                       20EMPLOYMENT AGREEMENT

This  AGREEMENT  is effective  as of the second day of  September  2003,  by and
between William A. Hightower (the "Employee") and ParkerVision,  Inc., a Florida
corporation (the "Corporation").

In consideration of the mutual covenants herein contained,  and in consideration
of the employment of Employee by the Corporation, the parties agree as follows:

1.   Duties and Scope of Employment

     (a)  POSITION.  The  Corporation  agrees  to  employ  the  Employee  in the
          position of President.  Employee shall report directly to the Chairman
          of the Board and Chief Executive  Officer of the Corporation  ("CEO").
          All of Employee's  powers and  authority in any capacity  shall at all
          times be  subject  to the  direction  and  control  of the CEO and the
          Corporation's Board of Directors.

     (b)  OBLIGATIONS.  During his employment under this Agreement, the Employee
          shall devote his full  business  efforts and time to the  Corporation.
          The foregoing,  however, shall not preclude the Employee from engaging
          in  appropriate  civic,  charitable  or religious  activities  or from
          devoting a reasonable  amount of time to private  investments  or from
          serving on the boards of directors of other entities,  as long as such
          activities   and  service  do  not  interfere  or  conflict  with  his
          responsibilities to the Corporation.

2.   BASE  COMPENSATION.   During  his  employment  under  this  Agreement,  the
     Corporation  agrees to pay the Employee as compensation  for his services a
     base salary at the annual rate of  $250,000,  or at such higher rate as the
     Corporation's  Board of Directors  may determine  from time to time,  along
     with  such  performance  incentive  amounts,  if any,  as the  Board  shall
     authorize,  in its  discretion,  from time to time.  Such  salary  shall be
     payable  in  approximately  equal  bi-weekly   installments.   (The  annual
     compensation  specified in this Section 2,  together  with any increases in
     such  compensation that the Board of Directors may grant from time to time,
     is referred to in this Agreement as "Base Compensation".)

3.   EMPLOYEE BENEFITS.

     (a)  GENERAL.  During his  employment  under this  Agreement,  the Employee
          shall be eligible to  participate  in any employee  benefit  plans and
          executive  compensation  programs  which  may  be  maintained  by  the
          Corporation,  including (without limitation) pension plans, savings or
          profit-sharing  plans,   deferred  compensation  plans,   supplemental
          retirement or excess-benefit  plans, stock option,  incentive or other
          bonus plans, life,  disability,  health,  accident and other insurance
          programs,

                                       1
<PAGE>

          paid vacations, and similar plans or programs, subject in each case to
          the generally  applicable  terms and conditions of the plan or program
          in question and to the  determination  of any committee  administering
          such plan or program.

     (b)  STOCK OPTIONS.  The Corporation shall grant to the Employee options to
          purchase  500,000 shares of the Common Stock of the Corporation at the
          closing  price on the date hereof.  The terms of the options  shall be
          governed  by  the  Corporation's   Stock  Option  Agreement   executed
          simultaneously herewith.

4.   BUSINESS  EXPENSE AND TRAVEL.  During his employment  under this Agreement,
     the Employee shall be authorized to incur necessary and reasonable  travel,
     entertainment  and other  business  expenses in connection  with his duties
     hereunder.  The Corporation  shall reimburse the Employee for such expenses
     upon  presentation  of  an  itemized  account  and  appropriate  supporting
     documentation,   all  in  accordance  with  the   Corporation's   generally
     applicable policies.

5.   TERM OF EMPLOYMENT

     (a)  TERM.  The term of Employee's  employment  hereunder  shall be through
          September 2, 2008, subject to earlier termination as provided herein.

     (b)  TERMINATION  BY  THE   CORPORATION.   The  Corporation  may  terminate
          Employee's  employment  at any time,  for any  reason  whatsoever,  by
          giving the Employee  thirty (30) day's advance notice in writing.  The
          Corporation  has the option of providing pay in lieu of such notice at
          the rate of Employee's Base Compensation.

          (i)   TERMINATION   WITHOUT  CAUSE.  If  the  Corporation   terminates
                Employee's  employment  without cause, the provisions of Section
                6(a) shall apply.

          (ii)  TERMINATION UPON DISABILITY.  If the Corporation  terminates the
                Employee's employment for Disability,  the provisions of Section
                6(a)  shall  apply.  For  all  purposes  under  this  Agreement,
                "Disability" shall mean that the Employee, at the time notice is
                given, has been unable to perform the essential functions of his
                position  under this Agreement for a period of not less than six
                (6)  consecutive  months  as a result of his  incapacity  due to
                physical  or  mental  illness.  In the event  that the  Employee
                resumes  the  performance  of  substantially  all of his  duties
                hereunder  before the  termination of his employment  under this
                subsection(ii)  becomes  effective,  the  notice of  termination
                shall automatically be deemed to have been revoked.

          (iii) TERMINATION WITHIN TWELVE (12) MONTHS OF A CHANGE OF CONTROL. If
                the Corporation  terminates  Employee's employment within twelve
                (12) months after a Change in Control,  whether such termination
                is  with  or  without  Cause,  is due  to  Employee's  death  or
                Disability or constitutes a

                                       2
<PAGE>

                Constructive Termination (as defined in Section 5(c) below), the
                provisions of Sections 6(a) shall apply.  For all purposes under
                this Agreement, "Change in Control" shall mean the occurrence of
                any of the following events:

                1)   Any  "person"  (as such term is used in Sections  13(d) and
                     14(d) of the Securities  Exchange Act of 1934, as amended),
                     is or becomes  the  "beneficial  owner" (as defined in Rule
                     13d-3  under  said  Act),   directly  or   indirectly,   of
                     securities of the  Corporation  representing  fifty percent
                     (50%) or more of the total voting power  represented by the
                     Corporation's  then outstanding  voting  securities  except
                     that  separately or in the aggregate the total voting power
                     of Jeffrey L.  Parker,  Stacie P. Wilf,  and Todd D. Parker
                     being fifty percent (50%) or more of the total voting power
                     of the then  outstanding  voting  securities  shall  not be
                     considered  a Change of  Control,  or except  pursuant to a
                     negotiated  agreement with the  Corporation and pursuant to
                     which such  securities are purchased from the  Corporation;
                     or

                2)   The  shareholders  of the  Corporation  approve a merger or
                     consolidation   of   the   Corporation   with   any   other
                     corporation,  other  than a merger or  consolidation  which
                     would result in the voting  securities  of the  Corporation
                     outstanding   immediately   prior  thereto   continuing  to
                     represent  (either  by  remaining  outstanding  or by being
                     converted into voting  securities of the surviving  entity)
                     at least  fifty  percent  (50%) of the total  voting  power
                     represented by the voting  securities of the Corporation or
                     such surviving entity  outstanding  immediately  after such
                     merger or consolidation.

                Any other  provision of this Section  notwithstanding,  the term
                "Change in Control"  shall not include  either of the  following
                events undertaken at the election of the Corporation:

                     (1)  Any  transaction,  the  sole  purpose  of  which is to
                          change the state of the Corporation's incorporation;

                     (2)  A  transaction,  the result of which is to sell all or
                          substantially  all of the assets of the Corporation to
                          another  corporation  (the  "surviving  corporation");
                          provided  that  the  surviving  corporation  is  owned
                          directly  or  indirectly  by the  shareholders  of the
                          Corporation  immediately following such transaction in
                          substantially  the same proportions as their ownership
                          of  the   Corporation's   common   stock   immediately
                          preceding  such  transaction;  and provided,  further,
                          that the surviving  corporation expressly assumes this
                          Agreement.

                                       3
<PAGE>

          (iv)  DEATH.  Upon  the  event  of the  Employee's  death,  Employee's
                employment   with   the   Corporation    shall   be   considered
                automatically  terminated  and the  provisions  of Section  6(a)
                shall apply.

          (v)   TERMINATION FOR CAUSE. Except as set forth in Section 5(b)(iii),
                if the Corporation  terminates  Employee's employment for Cause,
                the  provisions  of Section 6(b) shall  apply.  For all purposes
                under this  Agreement,  "Cause"  shall mean (i) a failure by the
                Employee to  substantially  perform his duties  hereunder (other
                than a failure resulting from the Employee's complete or partial
                incapacity  due to  physical  or mental  illness or  impairment)
                after there has been  delivered to Employee a written demand for
                performance  from the Corporation  which describes the basis for
                the  Corporation's  belief that  Employee has not  substantially
                performed his duties and sets forth specific  performance  goals
                to cure such defaults;  provided that upon any  determination by
                the Corporation  that Employee has failed to perform his duties,
                Employee  shall  have 30 days in which to cure such  failure  to
                perform his duties,  (ii) a willful  act by the  Employee  which
                constitutes misconduct connected with work within the meaning of
                Florida's  unemployment  compensation law, (iii) a breach by the
                Employee of a material  provision of this  Agreement,  or (iv) a
                violation of a federal,  state or local law or regulation  other
                than a minor traffic offense.

     (c)  VOLUNTARY TERMINATION BY THE EMPLOYEE.  The Employee may terminate his
          employment by giving the Corporation  thirty (30) days' advance notice
          in  writing.  If the  Employee  terminates  his  employment  under the
          preceding   sentence   other  than  as  a  result  of  a  Constructive
          Termination,  the  provisions  of  Section  6(c) shall  apply.  If the
          Employee  terminates his employment pursuant to this Section 5(c) as a
          result of a Constructive  Termination,  the provisions of Section 6(a)
          shall apply.  For all  purposes  under this  Agreement,  "Constructive
          Termination":  shall mean a material  reduction in salary or benefits,
          or a requirement to relocate the Employee's primary residence,  except
          for office  relocations that would not increase the Employee's one-way
          commute distance by more than 25 miles.

     (d)  WAIVER OF NOTICE.  Any  waiver of notice  shall be valid only if it is
          made  in  writing  and  expressly  refers  to  the  applicable  notice
          requirement in this Section 5.

6.   PAYMENTS UPON TERMINATION OF EMPLOYMENT.

     (a)  PAYMENTS  UPON  TERMINATION   PURSUANT  TO  SECTION  5(B)(I)-(IV)  AND
          CONSTRUCTIVE  TERMINATION.  If during the term of this Agreement,  the
          Employee's employment is terminated pursuant to any of the reasons set
          forth in Section  5(b)(i) - (iv), or voluntarily by the Employee under
          Section 5(c) as a result of a Constructive  Termination,  the Employee
          shall be entitled to receive a severance  payment from the Corporation
          (the "Severance Payment") in

                                       4
<PAGE>

          (i)   an amount equal to one hundred  percent (100%) of the Employee's
                annual  Base  Compensation  in effect on the date of  employment
                termination; plus

          (ii)  the greater of an amount equal to one hundred  percent (100%) of
                the  aggregate  incentive  or  bonus,  if  any,  payable  to the
                employee  for the  immediately  preceding  12 month period or an
                amount  equal to one  hundred  percent  (100%) of the  aggregate
                incentive  or  bonus,  if  any,  paid  to the  employee  for the
                immediately preceding fiscal year.

                The Employee  agrees to allow the  Corporation at its option and
                at the  Corporation's  expense to secure Life  Insurance  and/or
                Disability  Insurance covering the event of the Employee's death
                or disability  during the term of his employment.  To the extent
                insurance  is paid to the  employee or his heirs in the event of
                disability  or  death  the   Severance   Payment  due  from  the
                Corporation will be reduced by the amount of insurance paid. The
                Severance Payment shall be made in a lump sum within thirty (30)
                days following the date of the employment  termination or in the
                situation of Life or Disability  Insurance payment shall be made
                within the timeframe  representing  the normal  practices of the
                insurance carrier. The Severance Payment shall be in lieu of any
                further payments to the Employee under Section 2 and any further
                accrual  of  benefits  under  Section 3 with  respect to periods
                subsequent  to the  date  of  the  employment  termination.  The
                Severance  Payment  shall not reduce or offset any  benefits the
                Employee  may be  entitled  to under the  specific  terms of the
                benefit plans of the Corporation.

                The Employee shall not be required to mitigate the amount of any
                payment  contemplated  by this Section 6(a)  (whether by seeking
                new  employment  or in any  other  manner),  nor  shall any such
                payment be reduced by any earnings that the Employee may receive
                from any other source.

     (b)  TERMINATION FOR CAUSE. If the Employee's  employment is terminated for
          Cause pursuant to Sections 5(b) (v),  except as otherwise set forth in
          Section  5(b)(iii),  no  compensation  or  payments  will  be  paid or
          provided to the Employee for the periods  following the date when such
          a  termination  of  employment  is  effective.   Notwithstanding   the
          preceding  sentence,  nothing herein shall be interpreted to reduce or
          offset any benefits the Employee may be entitled to under the terms of
          the benefit plans of the Corporation.

     (c)  PAYMENTS UPON  VOLUNTARY  TERMINATION.  In the event that,  during the
          term  of this  Agreement,  the  Employee's  employment  is  terminated
          pursuant  to Section  5(c)  other  than as a result of a  Constructive
          Termination,  no  compensation or payments will be paid or provided to
          the  Employee  for  the  periods   following  the  date  when  such  a
          termination of employment is effective. Notwithstanding

                                       5
<PAGE>

          the preceding sentence,  nothing herein shall be interpreted to reduce
          or offset any benefits the Employee may be entitled to under the terms
          of the benefit plans of the Corporation.

     (d)  LIMITATION ON PAYMENTS.

          (i)   In the event that the severance and other benefits  provided for
                in this  Agreement  or  otherwise  payable to the  Employee  (i)
                constitute  "parachute  payments"  within the meaning of Section
                280G of the  Internal  Revenue  Code of 1986,  as  amended  (the
                "Code")  and (ii) but for this  Section  would be subject to the
                excise  tax  imposed  by  Section  4999 of the  Code,  then  the
                Employee's  severance  benefits under Section 6 shall be payable
                either (i) in full, or (ii) as to such lesser amount which would
                result in no portion of such severance benefits being subject to
                excise  tax under  Section  4999 of the Code,  whichever  of the
                foregoing amounts,  taking into account the applicable  federal,
                state and local  income  taxes and the  excise  tax  imposed  by
                Section  4999,  results  in the  receipt by the  Employee  on an
                after-tax  basis, of the greatest  amount of severance  benefits
                under this Agreement,  notwithstanding  that all or some portion
                of such severance  benefits may be taxable under Section 4999 of
                the Code.

          (ii)  If a reduction in the payments and benefits that would otherwise
                be paid or  provided  to the  Employee  under  the terms of this
                Agreement is necessary to comply with the  provisions of Section
                6(e)(i), the Employee shall be entitled to select which payments
                or  benefits  will be  reduced  and the manner and method of any
                such  reduction of such payments or benefits  (including but not
                limited to the number of options  that would vest under  Section
                6(b) subject to reasonable  limitations  (including for example,
                express  provisions  under the  Corporation's  benefit plans) so
                long as the  requirements  of Section  6(e)(i) are met).  Within
                thirty (30) days after the amount of any  required  reduction in
                payments and benefits is finally  determined in accordance  with
                the provisions of Section  6(e)(iii),  the Employee shall notify
                the Corporation in writing  regarding which payments or benefits
                are to be reduced.  If the Employee gives no  notification,  the
                Corporation  will  determine  which amounts to reduce.  If, as a
                result of any  reduction  required by Section  6(e)(i),  amounts
                previously  paid to the Employee  exceed the amount to which the
                Employee is entitled,  the  Employee  will  promptly  return the
                excess amount to the Corporation.

          (iii) Unless  the  Corporation  and the  Employee  otherwise  agree in
                writing, any determination  required under this Section shall be
                made  in  writing  by  the  Corporation's   independent   public
                accountants (the  "Accountants"),  whose  determination shall be
                conclusive and binding upon the Employee and the Corporation for
                all purposes.  For purposes of making the calculations  required
                by this Section, the Accountants may make reasonable assumptions
                and approximations  concerning  applicable taxes and may rely on
                reasonable,

                                       6
<PAGE>

                good  faith   interpretations   concerning  the  application  of
                Sections  280G and 4999 of the  Code.  The  Corporation  and the
                Employee shall furnish to the Accountants  such  information and
                documents as the Accountants may reasonably  request in order to
                make a determination  under this Section.  The Corporation shall
                bear  all  costs  the  Accountants   may  reasonably   incur  in
                connection with any calculations contemplated by this Section.

7.   EMPLOYEE'S  SUCCESSORS.  This  Agreement  and all  rights  of the  Employee
     hereunder shall continue to benefit,  and be enforceable by, the Employee's
     personal or legal representatives,  executors, administrators,  successors,
     heirs, distributes, devises and legatees.

8.   NOTICE. Notices and all other communications contemplated by this Agreement
     shall be in  writing  and shall be deemed  to have  been  duly  given  when
     personally  delivered or when mailed by U. S. registered or certified mail,
     return receipt requested and postage prepaid.  In the case of the Employee,
     mailed  notices shall be addressed to him at the home address which he most
     recently  communicated to the Corporation in writing or his office address.
     In the case of the  Corporation,  mailed  notices shall be addressed to its
     corporate headquarters,  and all notices shall be directed to the attention
     of its Secretary.

9.   MISCELLANEOUS PROVISIONS.

     (a)  WAIVER.  No provision of this Agreement  shall be modified,  waived or
          discharged unless the  modification,  waiver or discharge is agreed to
          in writing and signed by the Employee and by an authorized  officer of
          the Corporation  (other than the Employee).  No waiver by either party
          of any breach of, or of compliance with, any condition or provision of
          this  Agreement by the other party shall be considered a waiver of any
          other  condition or provision or of the same condition or provision at
          another time.

     (b)  WHOLE  AGREEMENT.  No agreements,  representations  or  understandings
          (whether oral or written and whether express or implied) which are not
          expressly set forth in this  Agreement  have been made or entered into
          by either  party  with  respect  to  employment  matters,  except  for
          contractual   limitations  on  the  Employee  set  forth  in  separate
          agreements  containing  restrictive  covenants  which  (i)  limit  the
          Employee's  ability to compete with the  Corporation  and (ii) protect
          the Corporation's  confidential proprietary information,  as set forth
          in such separate agreements.

     (c)  CHOICE  OF LAW.  The laws of the State of  Florida  shall  govern  the
          validity,   interpretation,   construction  and  performance  of  this
          Agreement.

                                       7
<PAGE>

     (d)  SEVERABILITY.  The invalidity or  unenforceability of any provision or
          provisions  of  this  Agreement  shall  not  affect  the  validity  or
          enforceability  of any other provision  hereof,  which shall remain in
          full force and effect.

     (e)  ARBITRATION. Any dispute or controversy arising under or in connection
          with this  Agreement  shall be settled  exclusively  by arbitration in
          Jacksonville,  Florida in  accordance  with the rules of the  American
          Arbitration Association then in effect. Judgment may be entered on the
          arbitrator's award in any court having jurisdiction.  Punitive damages
          shall not be  awarded.  Nothing in this  section  shall be  construed,
          however,  to limit the Corporation's  rights,  remedies and ability to
          enforce in a court of  competent  jurisdiction  its  rights  under the
          aforementioned restrictive covenants.

     (f)  NO  ASSIGNMENT  OF  BENEFITS.  The rights of any person to payments or
          benefits under this  Agreement  shall not be made subject to option or
          assignment,  either  by  voluntary  or  involuntary  assignment  or by
          operation  of  law,   including   (without   limitation)   bankruptcy,
          garnishment, attachment or other creditor'' process, and any action in
          violation of this subsection (f) shall be void.

     (g)  EMPLOYMENT AT WILL:  Limitation of Remedies.  The  Corporation and the
          Employee  acknowledge  that the  Employee's  employment is at will, as
          defined under applicable law. If the Employee's  employment terminates
          for any reason,  the Employee  shall not be entitled to any  payments,
          benefits,  damages,  awards or compensation  other than as provided by
          this Agreement.

     (h)  EMPLOYMENT TAXES. All payments made pursuant to this Agreement will be
          subject to withholding of applicable taxes.

     (i)  ASSIGNMENT OF AGREEMENT BY CORPORATION. The Corporation may assign its
          rights under this  Agreement  to an  affiliate,  and an affiliate  may
          assign its rights  under this  Agreement  to another  affiliate of the
          Corporation or to the Corporation. In the case of any such assignment,
          the term  "Corporation" when used in a section of this Agreement shall
          mean the corporation that actually employs the Employee.

     (j)  COUNTERPARTS.  This Agreement may be executed in counterparts, each of
          which  shall be deemed an  original,  but all of which  together  will
          constitute one and the same instrument.

                                       8
<PAGE>

IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case
of the Corporation by its duly authorized  officer, as of the day and year first
above written.

PARKERVISION, INC.

By: _________________________________________

TITLE: ______________________________________

_____________________________________________
William A. Hightower

                                       9
<PAGE>

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