Document:

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                                  EXHIBIT 10.20
                                -----------------

                                 NOGATECH, INC.
                   SERIES A PREFERRED STOCK PURCHASE AGREEMENT

         THIS SERIES A PREFERRED STOCK PURCHASE AGREEMENT is entered into as of
December 27, 1995, by and among NOGATECH, INC., a California corporation
(hereinafter the "Corporation"), and Andrew Schonzeit (hereinafter referred to
as the "Investor").

                                    RECITALS

         A.       The Corporation desires to raise money by the sale of Series A
Preferred Stock to the Investor.

         B.       The Investor desires to purchase shares of Series A Preferred
Stock from the Corporation, and the Corporation desires to sell shares of Series
A Preferred Stock to the Investor, on the terms and conditions hereinafter set
forth.

                                    AGREEMENT

         NOW, THEREFORE, in consideration of the mutual agreements, covenants,
representations and warranties contained in this Agreement, the parties agree as
follows:

         1.       AUTHORIZATION AND SALE OF PREFERRED STOCK.

                  a.       AUTHORIZATION. The Corporation will authorize on, or
before, the Closing the sale and issuance of up to four million four hundred
forty-four thousand four hundred forty-four (4,444,444) shares of its Series A
Convertible Preferred Stock (hereinafter the "Series A Preferred Stock") to the
Investor, having the rights, privileges and preferences as set forth in the
Amended and Restated Articles of Incorporation (hereinafter the "Articles") in
the form attached to this Agreement as Exhibit A.

                  b.       SALE OF SERIES A PREFERRED STOCK. Subject to the
terms and conditions hereof, the Corporation will issue and sell to the
Investor, one hundred forty-eight thousand one hundred forty-eight (148,148)
shares of Series A Preferred Stock (the "Shares") at a per share purchase price
of 3,375/10,000 U.S. Dollars ($0.3375), for an aggregate purchase price of Fifty
Thousand U.S. Dollars (U.S. $50,000).

         2.       ISSUANCE AND PAYMENT.

                  a.       CLOSING. Subject to the terms and conditions hereof,
the closing of the purchase and sale of the Shares (here-

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inafter the "Closing") shall be held (via facsimile transmittal and wire
transfers or cashier's check) at the Corporation's counsel's offices located at
1999 Harrison Street, Suite 1300, Oakland, California, on, or about, December
27, 1995, at 5:00 p.m., local time, or at such other time and place upon which
the Corporation and the Investor shall agree (the date of the Closing is
hereinafter referred to as the "Closing Date"). If Investor chooses to wire the
purchase price, the wire transfer shall be sent to Pezzola & Reinke's Attorney
Trust Account at: SUMMIT BANK, 2969 Broadway, Oakland, CA 94611; for deposit
into ACCOUNT NO. 01-20019741 (Summit Bank's telephone number is (510) 839-8800
and its ABA Number is 121138958). The wire instructions shall include a message
identifying the name of the Investor as the originator of the wire. If Investor
chooses to send a cashier's check, it shall be made payable to "Pezzola & Reinke
Trust Account for the benefit of Nogatech, Inc." and shall identify Investor as
the originator.

                  b.       CLOSING. At the Closing or as soon as practical
thereafter, the Corporation will deliver to the Investor a certificate,
registered in its name, representing the Shares to be purchased by the Investor,
against payment of the purchase price therefor, by cashier's check payable to
the Corporation, or by wire transfer through the Corporation's counsel, Pezzola
& Reinke, or as otherwise instructed by the Corporation.

         3.       CORPORATION'S WARRANTIES. The Corporation hereby represents
and warrants effective as of the Closing as follows:

                  a.       CORPORATE ORGANIZATION AND STANDING. The Corporation
is a corporation duly organized, existing and in good standing under the laws of
the State of California. The Corporation has the requisite corporate power to
carry on its business as presently conducted, and as proposed or contemplated to
be conducted in the future, and to enter into and carry out the provisions of
this Agreement and the transactions contemplated hereby. The Corporation is not
presently qualified to do business as a foreign corporation in any jurisdiction
where the failure to be so qualified would materially and adversely affect the
Corporation's business.

                  b.       SUBSIDIARIES. The Corporation has no subsidiaries or
affiliated companies and does not otherwise own or control, directly or
indirectly, any equity interest in any corporation, association or business
entity, except for its Israeli subsidiary, Nogatech, Ltd.

                  c.       CORPORATE CAPITALIZATION.

                           i.       Immediately prior to, or simultaneously
with, the Closing, the Corporation's authorized capital stock shall include only
two authorized classes of capital stock consisting of (i) sixteen million
(16,000,000) shares of Preferred Stock, fifteen million (15,000,000) shares of
which shall be designated as Series

                                      -2-

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A Convertible Preferred Stock, and (ii) forty million (40,000,000) shares of a
sole class of Common Stock. The Corporation intends to issue in late November,
1995 through early December, 1995 an aggregate of four million four hundred
forty-four thousand four hundred forty-four (4,444,444) shares of series A
Preferred Stock, including the issuance of the shares hereunder (the "Intended
Series A Shares"). Immediately prior to, or simultaneous with, the Closing
(without taking into consideration the Closing), the Corporation will have a
total of five hundred seventy-three thousand two hundred fifty (573,250) shares
of Common Stock outstanding; and up to one million four hundred eighty thousand
three hundred twenty-five (1,480,325) shares of Common Stock subject to issuance
pursuant to outstanding options (the "Options") granted to employees under stock
plans or to certain investors under option agreements. All issued and
outstanding shares of capital stock will have been duly authorized and validly
issued and will be fully paid and nonassessable. The Corporation has reserved
four million four hundred forty-four thousand four hundred forty-four
(4,444,444) shares of Series A Preferred Stock for issuance of the Intended
Series A Shares and four million four hundred forty-four thousand four hundred
forty-four (4,444,444) shares of Common Stock for issuance upon conversion. The
Corporation has also reserved (a) four million four hundred forty-four thousand
four hundred forty-four (4,444,444) shares of its Common Stock for issuance upon
conversion of the Series A Convertible Preferred Stock issued and outstanding
prior to the issuance hereunder; (b) one million four hundred eighty thousand
three hundred twenty-five (1,480,325) shares of its Common Stock for issuance
upon exercise of the Options.

                           ii.      Except as contemplated or set forth in this
Agreement, there are no outstanding preemptive or other rights, options,
warrants, conversion rights or agreements for the purchase or acquisition from
the Corporation of any shares of its capital stock.

                           iii.     As of the date hereof, the Corporation does
not have any declared and unpaid dividends (whether payable in cash, securities
or other consideration).

                  d.       AUTHORIZATION. All corporate action on the part of
the Corporation, its directors and shareholders necessary for the authorization,
execution, delivery and performance of this Agreement by the Corporation, the
authorization, sale, issuance and delivery of the Series A Preferred Stock (and
the Common Stock issuable upon conversion of the Series A Preferred Stock) and
the performance of all of the Corporation's obligations hereunder has been taken
or will be taken prior to the Closing. This Agreement, when executed and
delivered by the Corporation, shall constitute a valid and binding obligation of
the Corporation, enforceable in accordance with its terms, except as may be
limited by principles of public policy, and subject to laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
rules of law governing specific performance, injunctive relief or

                                      -3-

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other equitable remedies. The Shares, when issued in compliance with the
provisions of this Agreement, will be validly issued, will be fully paid and
nonassessable, and will have the rights, preferences and privileges described in
the Articles; the Common Stock issuable upon conversion of the Shares has been
duly and validly reserved and, when issued in compliance with the provisions of
this Agreement and the Articles, will be validly issued, fully paid and
nonassessable; and the Shares and such Common Stock will be free of any liens or
encumbrances, assuming the Investor takes the Shares with no notice thereof,
other than any liens or encumbrances created by or imposed upon the Shares
hereunder; provided, however, that the Shares (and the Common Stock issuable
upon conversion thereof) may be subject to restrictions on transfer under state
and/or federal securities laws.

                  e.       FINANCIAL STATEMENTS. The Corporation has made
available to the Investor the consolidated audited Balance Sheet and Statement
of Operations of the Corporation, together with its subsidiaries, for the period
ended August 31, 1995 (collectively the "Financial Statements"). The Financial
Statements are complete and correct in all material respects. To the
Corporation's knowledge, the Financial Statements accurately set out and
describe the Corporation's financial condition and operating results and that of
its subsidiary as of the dates, and during the periods, indicated therein. To
the Corporation's knowledge, since August 31, 1995 there has not been any
material change in the assets, liabilities, financial condition or operations of
the Corporation or its subsidiary, from that reflected in the Financial
Statements, except changes in the ordinary course of business which have not
been, either in any case or in the aggregate, materially adverse.

                  f.       MATERIAL LIABILITIES. Neither the Corporation nor its
subsidiary has any material liabilities or obligations, absolute or contingent
(individually or in the aggregate), except (i) the liabilities and obligations
set forth in the Financial Statements; (ii) liabilities and obligations which
have been incurred subsequent to August 31, 1995 in the ordinary course of
business which have not been, either in any case or in the aggregate, materially
adverse; and (iii) liabilities and obligations under a lease for its principal
offices and leases for equipment and liabilities and obligations under sales,
procurement and other contracts and arrangements entered into in the normal
course of business.

                  g.       LITIGATION. There are no actions, proceedings or, to
the Corporation's best knowledge, investigations pending, or any threat thereof,
against or affecting the Corporation which, either individually or in the
aggregate, might result in any material adverse change in the business,
prospects, condition, affairs or operations of the Corporation or in any of its
properties or assets, or in any material impairment of the right or ability of
the Corporation to carry on its business as proposed to be

                                      -4-

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conducted, and none which questions the validity of this Agreement or any action
taken or to be taken in connection herewith.

                  h.       GOVERNMENTAL CONSENTS. To the Corporation's
knowledge, no consent, approval, order, authorization or registration,
qualifications, designation, license, declarations or filings with any Federal
or state governmental authority is required on the part of the Corporation in
connection with the consummation of the transactions contemplated herein, except
for applicable security law filings and the IITSSA filing set forth in Section
4(h) below.

                  i.       REGISTRATION RIGHTS. The Corporation has granted
registration rights to the current holders of the shares of Series A Convertible
Preferred Stock, as successors in interest to the prior holders of such shares,
pursuant to the terms and conditions set forth in a Stock Purchase Agreement
dated as of January 1, 1993 (the "1993 Agreement"), among the Corporation, DSP
Group, Inc. and Scitex Corporation, Ltd. Except as provided hereunder and in the
1993 Agreement, the Corporation is not a party to any "registration rights
agreement" or any similar agreement pursuant to which any person would have the
right to cause, under any circumstances, the registration of securities under
the Securities Act of 1933, as amended (the "Securities Act").

                  j.       DISCLOSURE. No representation or warranty by the
Corporation in this Agreement or in any statement or certificate furnished or to
be furnished to the Investor pursuant hereto or in connection with the
transactions contemplated hereby contains or will contain any untrue statement
of a material fact or omits or will omit to state a material fact necessary to
make the statements made therein, in the light of the circumstances under which
they were made, not misleading.

                  k.       SURVIVAL OF REPRESENTATIONS. All representations made
by the Corporation in or under this Agreement shall be true and accurate as of
the Closing.

         4.       INVESTOR REPRESENTATIONS AND WARRANTIES. The Investor
represents and warrants to the Corporation that:

                  a.       INVESTMENT. The Investor is acquiring the Shares and
any shares of Common Stock issuable pursuant to conversion of the Shares
(hereinafter collectively the "Securities") for investment for their own
account, and not with a present intention to resell in connection with, any
distribution thereof, and they have no present intention of selling or
distributing any such Securities. It understands that the Securities have not
been registered under the Securities Act by reason of a specific exemption from
the registration provisions of the Securities Act which depends upon, among
other things, the bona fide nature of the investment as expressed herein.

                                      -5-

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                  b.       RULE 144. The Investor acknowledges that because the
Securities have not been registered under the Securities Act, the Securities
must be held indefinitely unless subsequently registered under the Securities
Act or an exemption from such registration is available. The Investor is aware
of the provisions of Rule 144 promulgated under the Securities Act which permits
limited resale of shares purchased in a private placement under certain
circumstances.

                  c.       NO PUBLIC MARKET. The Investor understands that no
public market now exists for any securities issued by the Corporation and that
it is uncertain whether a public market will ever exist for any such securities.

                  d.       ACCESS TO DATA. The Investor has had an opportunity
to discuss the Corporation's business, management and financial affairs with its
management and to obtain any additional information given to it necessary or
appropriate for deciding whether or not to purchase the Securities. The Investor
acknowledges that no representations or warranties have been made by the
Corporation or any agent thereof except as set forth in this Agreement.

                  e.       INVESTMENT EXPERIENCE. The Investor is an "accredited
investor" as that term is defined in Regulation D promulgated by the Securities
and Exchange Commission.

                  f.       PREVIOUS INVESTMENTS. The Investor is an investor in
securities of companies in the development stage and acknowledges that it is
able to fend for itself, can bear the economic risk of its investment and has
such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment contemplated
herein.

                  g.       RISKS. The Investor understands that an investment in
the Corporation involves a high degree of risk and is suitable only for an
investor who can afford a loss of their entire investment and who have no need
for liquidity from their investment.

                  h.       IITSSA COMPLIANCE. The Investor shall provide to the
Corporation all such information as is necessary to complete the forms required
to be filed by the Corporation with the U.S. Department of Commerce, Bureau of
Economic Analysis, under the International Investment and Trade in Services
Survey Act, as amended, and regulations issued thereunder.

                  i.       GOVERNMENTAL CONSENTS. To the Investor's knowledge,
no consent, approval, order, authorization or registration, qualifications,
designation, license, declarations or filings with any Israeli governmental
authority is required on the part of the Investor in connection with the
consummation of the transactions contemplated herein.

                                      -6-

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         5.       RESTRICTIVE LEGENDS. Each certificate or other written
documentation representing any of the Securities which the Investor is
purchasing or may purchase hereunder and any other securities issued upon any
stock split, stock dividend, recapitalization, merger, consolidation or similar
event (unless no longer required in the opinion of the counsel for the
Corporation) shall be stamped or otherwise imprinted with a legend substantially
in the following form:

         "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
         REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED
         UNDER ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED,
         ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION
         STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, OR THE HOLDER
         RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THE SECURITIES
         SATISFACTORY TO THE CORPORATION, STATING THAT SUCH SALE, TRANSFER,
         ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND
         PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND THE QUALIFICATION
         REQUIREMENTS UNDER STATE LAW."

         The Corporation shall be entitled to enter stop transfer notices on its
stock books with respect to the Securities.

         6.       AFFIRMATIVE COVENANTS OF THE CORPORATION. So long as the
Investor owns of record and beneficially at least fifty percent (50%) of the
Series A Preferred Stock shares purchased by it hereunder, until the Corporation
effects a registered underwritten public offering of its common stock, the
Corporation shall deliver to such Investor internally prepared quarterly and
annual financial statements.

         7.       REGISTRATION RIGHTS. At any time after three (3) years from
the Closing Date, or eighteen (18) months after the Corporation's initial public
offering, whichever is earlier, Persons holding at least twenty percent (20%) of
the Common Stock issuable upon conversion of all the Series A Preferred Stock
may request registration by the Corporation of their shares, if the anticipated
aggregate gross cash proceeds would exceed Ten Million Dollars ($10,000,000). In
such event, the Corporation will use its best efforts to cause such shares to be
registered. The Corporation shall only be obligated to effect two (2)
registrations under these demand registration rights provisions. Persons holding
Series A Preferred Stock or Common Stock issuable upon conversion of the Series
A Preferred Stock, shall be entitled to S-3 registration rights no more often
than once per every eighteen (18) month period on form S-3, if available for use
by the Corporation, for an aggregate offering price of at least One Million
Dollars ($1,000,000) per offering. Persons holding Series A Preferred Stock or
Common Stock issuable upon conversion of the Series A Preferred Stock shall be
entitled to unlimited "piggyback" registrations on a registration of the
Corporation's equity, subject to a prorata cutback with all those holding
"piggyback" registration rights in the underwriters' discretion and reasonable

                                      -7-

<PAGE>

lock-ups as requested by underwriters. The registration expenses (exclusive of
underwriting discounts and commissions) shall be borne by the Corporation for
all permitted registrations.

         8.       NEGATIVE COVENANTS. The Corporation shall not, without the
vote or written consent of the holders of a majority of the shares of Series A
Stock, voting as a separate class:

                           i.       create any new class or series of shares
having preference over the Series A Stock;

                           ii.      merge, consolidate, or reorganize, where
such merger, consolidation, or reorganization results in the change of a
majority of the members of the Board of Directors;

                           iii.     sell all or substantially all of its assets
or sell more than 50% of the Corporation's Common Stock in one transaction or
series of related transactions.

                           iv.      enter into a transaction with a related
party on terms and conditions which are not done in the ordinary course of
business or which are not done on terms and conditions which represent a fair
value to the Corporation.

         9.       MISCELLANEOUS.

                  a.       SURVIVAL. The covenants and agreements made herein
shall survive the Closing of the transactions contemplated hereby and shall end
when fewer than fifty percent (50%) of the Shares are outstanding or upon the
consummation of an initial public offering of any of the Corporations' shares.

                  b.       SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors and administrators of
the parties hereto.

                  c.       ENTIRE AGREEMENT. This Agreement and the exhibits
attached hereto and the other documents delivered pursuant hereto constitute the
full and entire understanding and agreement between and among the parties with
regard to the subjects hereof and thereof.

                  d.       NOTICE. Any notice, payment, report or other
communication required or permitted to be given by one party to any other party
by this Agreement shall be in writing and either (i) served personally on the
other party or parties; (ii) sent by express, registered or certified first
class mail, postage prepaid, addressed to the other party or parties at its or
their address or addresses as indicated next to their signatures below, or to
such other address as any addressee shall have theretofore furnished to

                                      -8-

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the other parties by like notice; (iii) delivered by commercial courier to the
other party or parties; or (iv) sent by facsimile. Such notice shall be deemed
received on the second day after transmittal if sent by one day courier together
with a transmission of such notice by facsimile if the recipient has the
capability to receive a facsimile at its address and if sent by other methods
shall be deemed received upon receipt.

                  e.       FINDER'S AND BROKER'S FEES. The Corporation and
Investor each represents and warrants that it has retained no finder or broker
in connection with the transactions contemplated by this Agreement. Each party
hereby agrees to indemnify and to hold the other harmless from any liability for
any finder's or broker's fee to any broker or other person or firm (and the
costs and expenses of defending against such liability or asserted liability)
for which such indemnifying person, or any of its employees or representatives,
are responsible.

                  f.       TITLES AND SUBTITLES. The titles of the Sections and
subsections of this Agreement are for the convenience of reference only and are
not to be considered in construing this Agreement.

                  g.       COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.

                  h.       APPLICABLE LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of California applicable
to contracts between California residents entered into and to be performed
entirely within the State of California.

                  i.       USE OF PROCEEDS. The Corporation may use the proceeds
of this financing for (i) working capital purposes; or (ii) capital investment.

                  j.       ARBITRATION. Any dispute between the parties arising
out of this Agreement shall be submitted to final and binding arbitration in the
City of Cupertino, County of Santa Clara, State of California, under the
Commercial Arbitration Rules of the American Arbitration Association then in
effect, upon written notification and demand of either party therefor. In the
event either party demands such arbitration, the American Arbitration
Association shall be requested to submit a list of prospective arbitrators
consisting of persons experienced in matters involving securities offerings. The
provisions of California Code of Civil Procedure Section 1283.05 and the laws of
the State of California are incorporated herein and shall be applicable to the
arbitration. In making the award, the arbitrator shall award recovery of costs
and expenses of the arbitration and reasonable attorneys' fees to the prevailing
party. Any award may be entered as a judgment in any court of competent
jurisdiction.

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                  (REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.)

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         Should judicial proceedings be commenced to enforce or carry out this
provision or any arbitration award, the prevailing party in such proceedings
shall be entitled to reasonable attorneys' fees and costs in addition to other
relief. Either party shall have the right, prior to receiving an arbitration
award, to obtain preliminary relief from a court of competent jurisdiction to
avoid injury or prejudice to that party.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year hereinabove first written.

CORPORATION:

NOGATECH, INC.
a California corporation
20300 Stevens Creek Boulevard, 4th Fl.
Cupertino, California 95014

By: /s/ Arie Heiman
   ------------------------------
           (Signature)

---------------------------------
      (Print Name and Title)

<TABLE>
<CAPTION>

INVESTOR:                                                 NUMBER OF SHARES:
--------                                                  ----------------
<S>                                                       <C>
                                                               148,148
</TABLE>

/s/ Andrew Schonzeit
------------------------------------
         (Signature)

Andrew U. Schonzeit
------------------------------------
         (Print Name)

255 W. 88th St.  #2c
------------------------------------
         (Print Address)
NY, NY 10024
------------------------------------

                                      -11-<PAGE>
                                                                       Page 1

                                                                 Exhibit 10.1

                       CARE MANAGEMENT SCIENCE CORPORATION
               AMENDED AND RESTATED 1995 EQUITY COMPENSATION PLAN

         The purpose of the Care Management Science Corporation Amended and
Restated 1995 Equity Compensation Plan (the "Plan") is to provide designated key
employees (including employees who are also officers and directors), and
directors who are not employees ("Non-Employee Directors") of Care Management
Science Corporation and its subsidiaries and affiliates (hereinafter
collectively referred to as the "Company") and selected consultants to the
Company with the opportunity to receive grants of incentive stock options,
nonqualified stock options, stock appreciation rights and restricted stock. The
Company believes that the Plan will cause the participants to contribute
materially to the growth of the Company, thereby benefitting the Company's
stockholders and will align the economic interests of the participants with
those of the stockholders.

1.       ADMINISTRATION

         The Plan shall be administered and interpreted by the Compensation
Committee of the Board of Directors (the "Committee") consisting of not less
than two persons appointed by the Board of Directors of the Company (the
"Board"). On and after the Effective Date set forth in Section 21(b), the
Committee shall consist of not less than two persons appointed by the Board, all
of whom shall be "non-employee directors" as defined under Rule 16b-3 under the
Securities Exchange Act of 1934 (the "Exchange Act") and "outside directors" as
defined under Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code") and related Treasury regulations. Notwithstanding the foregoing,
the Board may ratify or approve any grants it deems appropriate.

         The Committee shall have the sole authority to (i) determine the
individuals to whom grants shall be made under the Plan, (ii) determine the
type, size and terms of the grants to be made to each such individual, (iii)
determine the time when the grants will be made and the duration of any
applicable exercise or restriction period, including the criteria for vesting
and the acceleration of vesting, (iv) select the "Valuation Expert," as defined
below and (v) deal with any other matters arising under the Plan.

         The Committee shall have full power and authority to administer and
interpret the Plan, to make factual determinations and to adopt or amend such
rules, regulations, agreements and instruments for implementing the Plan and for
conduct of its business as it deems necessary or advisable, in its sole
discretion. The Committee's interpretations of the Plan and all determinations
made by the Committee pursuant to the powers vested in it hereunder shall be
conclusive and binding on all persons having any interests in the Plan or in any
awards granted hereunder. All powers of the Committee shall be executed in its
sole discretion, in the best interest of the Company and in keeping with the
objectives of the Plan and need not be uniform as to similarly situated
individuals.

<PAGE>
                                                                       Page 2

         Notwithstanding anything herein to the contrary, prior to the Effective
Date specified in Section 21(b), the Committee may delegate to the Company's
Chief Executive Officer (the "CEO") the authority to make grants and to
designate individuals to receive grants under Section 4 and, in any such case,
the provisions of Sections 5, 6, and 7 shall apply to the CEO instead of the
Committee, where applicable. In addition, notwithstanding anything herein to the
contrary, prior to the Effective Date specified under Section 21(b), the Board
may exercise any power or authority of the Committee under the Plan and, in such
case, any reference to the Committee hereunder shall be deemed to include the
Board as a whole.

2.       GRANTS

         Incentives under the Plan shall consist of incentive stock options,
nonqualified stock options, stock appreciation rights and restricted stock
(hereinafter collectively referred to as "Grants"). All Grants shall be subject
to the terms and conditions set forth herein and to those other terms and
conditions consistent with this Plan as the Committee deems appropriate and as
are specified in writing by the Committee to the individual (the "Grant
Letter"). The Committee shall approve the form and provisions of each Grant
Letter to an individual. Grants under a particular Section of the Plan need not
be uniform as among the grantees.

3.       SHARES SUBJECT TO THE PLAN

         (a) Subject to the adjustment specified below, the aggregate number of
shares of common stock of the Company, (the "Company Stock") that has been or
may be issued or transferred under the Plan is 2,165,038 shares, in the
aggregate. Notwithstanding anything in the Plan to the contrary, on and after
the Effective Date as set forth in Section 21(b), the maximum aggregate number
of shares of Company Stock that shall be subject to Grants made under the Plan
to any single employee during a calendar year shall be 500,000 shares, subject
to adjustment as described below. The shares may be authorized but unissued
shares of Company Stock or reacquired shares of Company Stock, including shares
purchased by the Company on the open market for purposes of the Plan. If and to
the extent options granted under the Plan terminate, expire, or are cancelled,
forfeited, exchanged or surrendered without having been exercised or if any
shares of restricted stock are forfeited, the shares subject to such Grants
shall again be available for purposes of the Plan.

         (b) If there is any change in the number or kind of shares of Company
Stock issuable under the Plan through the declaration of stock dividends or if
the value of outstanding shares of Company Stock is substantially reduced due to
the Company's payment of an extraordinary dividend or distribution, or through a
recapitalization, stock splits, or combinations or exchanges of such shares, or
merger, reorganization or consolidation of the Company, reclassification or
change in par value or by reason of any other extraordinary or unusual events
affecting the outstanding Company Stock as a class without the Company's receipt
of consideration, the maximum number of shares of Company Stock available for
Grants, the maximum number of shares of Company Stock for which any one
individual participating in the Plan may be granted, the number of shares
covered by outstanding Grants, and the price per share or the applicable

<PAGE>

                                                                       Page 3

market value of such Grants, and the other terms and conditions of the Grants,
as the Committee may deem necessary or desirable, shall be proportionately
adjusted by the Committee to reflect any increase or decrease in the number or
kind of issued shares of Company Stock to preclude the enlargement or dilution
of rights and benefits under such Grants; provided, however, that any fractional
shares resulting from such adjustment shall be eliminated. The adjustments
determined by the Committee shall be final, binding and conclusive.
Notwithstanding the foregoing, no adjustment shall be authorized or made
pursuant to this Section to the extent that such authority or adjustment would
cause any Incentive Stock Option to fail to comply with Section 422 of the Code.

4.       ELIGIBILITY FOR PARTICIPATION

         All individuals employed by the Company or a subsidiary ("Employees")
(including Employees who are officers or members of the Board) who hold
positions of responsibility and whose performance, in the judgment of the
Committee, can have a significant effect on the long-term success of the
Company, all Non-Employee Directors and consultants whose services, in the
judgment of the Committee, can have a significant effect on the long-term
success of the Company shall be eligible to participate in the Plan. The
Committee shall select the Employees, Non-Employee Directors and consultants to
receive Grants (the "Grantees") and determine the number of shares of Company
Stock subject to a particular Grant in such manner as the Committee determines.

         Nothing contained in this Plan shall be construed to limit the right of
the Company to make Grants otherwise in connection with the acquisition, by
purchase, lease, merger, consolidation or otherwise, of the business or assets
of any corporation, firm or association, including options granted to employees
thereof who become Employees of the Company, or for other proper corporate
purpose.

5.       GRANTING OF OPTIONS

         (a) NUMBER OF SHARES. The Committee, in its sole discretion, shall
determine the number of shares of Company Stock that will be subject to each
Grant of stock options.

         (b) TYPE OF OPTION AND PRICE. The Committee may grant options intended
to qualify as incentive stock options ("Incentive Stock Options") within the
meaning of Section 422 of the Code or options which are not intended to so
qualify ("Nonqualified Stock Options") (hereinafter collectively the "Stock
Options") or any combination of Incentive Stock Options and Nonqualified Stock
Options, all in accordance with the terms and conditions set forth herein;
provided, however, that neither Non-Employee Directors nor consultants shall be
eligible to receive Grants of Incentive Stock Options.

         The purchase price of Company Stock subject to a Stock Option shall be
determined by the Committee and may be equal to, greater than, or less than the
fair market value of a share of such Stock on the date such Stock Option is
granted; provided, however, that the purchase price of Company Stock subject to
an Incentive Stock Option shall be equal to, or greater than, the fair

<PAGE>

                                                                       Page 4

market value of a share of such Stock on the date such Stock Option is granted
and in no event, based upon the facts known at the time of the grant, may a
purchase price be established hereunder that would result in the disallowance of
the Company's expense deduction pursuant to Section 162(m) of the Code;
provided, further, that in the case of Stock Options referred to in Section
5(d)(2) below, the purchase price for such Stock Options shall not be less than
$2.60885 per share of Company Stock.

         During such time that the Company Stock is not listed on an established
stock exchange or traded in the over-the-counter-market, the "fair market value"
of Company Stock shall be determined by an independent firm, I.E., a firm not
otherwise engaged in consulting work for the Company, unless determined
otherwise by the Committee, with expertise in the valuation of business entities
and the securities thereof, selected by the Committee (the Valuation Expert") or
as otherwise determined by the Committee in good faith based on the best
available facts and circumstances. Such determination of "fair market value"
shall be made on a periodic basis, but no less than once a calendar year. If the
Company Stock is listed upon an established stock exchange or other market
source, as determined by the Committee, "fair market value" on any date of
reference shall be the closing price of a share of Company Stock (on a
consolidated basis) on the principal exchange or other recognized market source,
as determined by the Committee on such date, or if there is no sale on such
date, then the closing price of a share of Company Stock on the last previous
day on which a sale is reported.

         (c) EXERCISE PERIOD. The Committee shall determine the option exercise
period of each Stock Option. The exercise period shall not exceed ten years from
the date of grant.

         (d) EXERCISABILITY OF OPTIONS.

                  (1) With respect to Stock Options granted on or before
December 23, 1998, such Stock Options shall become exercisable with respect to
one-half of the shares subject to such Stock Options on each anniversary of the
date of the Grant ratably for the first four such anniversary dates and the
remaining one-half on the fourth anniversary of the date of Grant or as
otherwise determined by the Committee, in its sole discretion, and specified in
the Grant Letter. Notwithstanding any determination by the Committee, all
outstanding Stock Options shall become immediately exercisable upon a Change in
Control of the Company (as defined herein).

                  (2) With respect to Stock Options granted after December
23, 1998, such Stock Options shall become exercisable in the manner as
determined by the Committee, and specified in the Grant Letter.
Notwithstanding any determination by the Committee, all outstanding Stock
Options shall become immediately exercisable upon a Change in Control of the
Company (as defined herein).

<PAGE>

                                                                        Page 5

         (e) MANNER OF EXERCISE. A Grantee may exercise a Stock Option which has
become exercisable by delivering a notice of exercise to the Committee with
accompanying payment of the option price in accordance with (g) below. Should a
Stock Option become exercisable on or after the Effective Date specified in
Section 21(b), such notice may instruct the Company to deliver shares of Company
Stock due upon the exercise of the Stock Option to any registered broker or
dealer designated by the Committee ("Designated Broker") in lieu of delivery to
the Optionee. Such instructions must designate the account into which the shares
are to be deposited. The Grantee may tender this notice of exercise, which has
been properly executed by the Grantee, and the aforementioned delivery
instructions to any Designated Broker.

         (f) TERMINATION OF EMPLOYMENT, DISABILITY OR DEATH.

                  (1) EMPLOYEES. The following provisions shall apply solely to
a termination of employment of a Grantee who is an Employee at the time of
termination of employment:

                           (A) In the event that a Grantee's employment with the
Company is terminated for any reason other than a "disability" (as defined
herein), retirement approved by the Company, death or "termination for cause"
(as defined herein), any Stock Option which is otherwise exercisable by the
Grantee shall terminate unless exercised within 60 days of the date on which the
Grantee ceases to be an employee (or within such other period of time as may be
specified in the Grant Letter), but in any event no later than the date of
expiration of the option exercise period (except as the Committee may otherwise
provide in the Grant Letter). Any of the Grantee's Stock Options which are not
otherwise exercisable as of the date on which the Grantee ceases to be an
employee shall terminate as of such date (except as the Committee may otherwise
provide).

                           (B) Notwithstanding the foregoing, in the event the
Grantee during the Grantee's lifetime ceases to be an employee of the Company
simultaneously with or after a Change in Control for any reason other than
death, "disability," retirement approved by the Company, or a "termination for
cause," prior to the Change in Control, by the Company, with respect to all of
the Grantee's outstanding Stock Options (whether exercisable before such Change
in Control or as a result thereof), unless the Grantee elects otherwise, the
Company shall be required to pay to the Grantee, in cash, an amount equal to the
excess over the purchase price of the then fair market value of the shares of
Company Stock subject to the Grantee's outstanding Stock Options, if such
payment would not affect the accounting treatment of the transaction underlying
the Change in Control; provided, however, that if any right granted pursuant to
this Subsection would make the Change in Control ineligible for pooling of
interests accounting treatment under APB No. 16 that but for this provision
would otherwise be eligible for such accounting treatment, or would otherwise
affect the tax treatment of such Change in Control, the Grantee shall not be
able to receive a cash payment in lieu of the exercise of his or her Stock
Options.

                           (C) In the event the Grantee ceases to be an employee
of the Company on account of becoming "disabled," or retirement approved by the
Company, any Stock Option which is otherwise exercisable by the Grantee shall
terminate unless exercised within six months of the date on which the Grantee
ceases to be an employee (or within such other period of time as

<PAGE>

                                                                       Page 6

may be specified in the Grant Letter), but in any event no later than the date
of expiration of the option exercise period (except as the Committee may
otherwise provide in the Grant Letter). Any of the Grantee's Stock Options which
are not otherwise exercisable as of the date on which the Grantee ceases to be
an employee shall terminate as of such date (except as the Committee may
otherwise provide).

                           (D) In the event of the death of the Grantee while he
is an employee of the Company or within not more than 60 days of the date on
which he ceases to be an employee on account of a termination of employment
specified in Section 5(f)(1)(A) of the Plan (or within such other period of time
as may be specified in the Grant Letter), any Stock Option which is otherwise
exercisable by the Grantee shall terminate unless exercised within one year of
the date on which the Grantee ceases to be an employee (or within such other
period of time as may be specified in the Grant Letter), but in any event no
later than the date of expiration of the option exercise period (except as the
Committee may otherwise provide in the Grant Letter). Any of the Grantee's Stock
Options which are not otherwise exercisable as of the date on which the Grantee
ceases to be an employee shall terminate as of such date (except as the
Committee may otherwise provide).

                           (E) For purposes of this Section 5(f)(1), the
following terms shall be defined as follows: (A) "termination for cause" shall
mean a Grantee's termination of employment from the Company as determined in
accordance with the personnel policies of the Company in effect before any
Change in Control of the Company; and (B) "disability" shall mean a Grantee's
becoming disabled within the meaning of section 22(e)(3) of the Code.

                  (2) NON-EMPLOYEE DIRECTORS AND CONSULTANTS. The following
provisions shall apply solely to Grantees who are Non-Employee Directors or
consultants at the time they cease to serve the Company in such capacity:

                           (A) In the event a Non-Employee Director or
consultant ceases to serve the Company in such capacity for any reason other
than on account of becoming an employee of the Company, or "termination for
cause", as defined below, any Stock Option which is otherwise exercisable by the
Non-Employee or consultant shall not terminate until the date of expiration of
the option exercise period (except as the Committee may otherwise provide in the
Grant Letter). Any of the Non-Employee Director's or consultant's Stock Options
which are not otherwise exercisable as of the date on which the individual
ceases to serve the Company shall terminate as of such date (except as the
Committee may otherwise provide).

                           (B) In the event the Optionee ceases to be a
Non-Employee Director or consultant to the Company on account of a "termination
for cause" by the Company, as determined in accordance with the policies of the
Company in effect before any Change in Control of the Company, any Stock Option
held by the Grantee shall terminate as of the date the Grantee ceases to serve
in such capacity (except as the Committee may otherwise provide).

         (g) SATISFACTION OF OPTION PRICE. The Grantee shall pay the option
price specified in

<PAGE>

                                                                       Page 7

the Grant Letter in (i) cash, (ii) with the approval of the Committee, by
delivering shares of Company Stock owned by the Grantee including Company Stock
acquired in connection with the exercise of a particular Stock Option and having
a fair market value on the date of exercise equal to the option price (iii) if,
as directed by the Committee, shares of Company Stock may not be sold
immediately following the exercise of a Stock Option, with the proceeds of a
promissory note payable by the Grantee to the Company, but only in accordance
with the provisions of a Loan Program established by the Company, or any
successor program as in effect from time to time, (A) in a principal amount of
up to 100% of the payment due upon the exercise of the Stock Option, or such
applicable lower percentage as may be specified by the Committee pursuant to the
Loan Program, and (B) bearing interest at a rate not less than the applicable
Federal rate prescribed by Section 1274 of the Code, or such higher rate as may
be specified by the Committee pursuant to the Loan Program or (iv) through any
combination of (i), (ii) or (iii). The Grantee shall pay the option price and
the amount of withholding tax due, if any, at the time of exercise. Shares of
Company Stock shall not be issued or transferred upon exercise of a Stock Option
until the option price is fully paid and any required withholding tax is paid.

         (i) LIMITS ON INCENTIVE STOCK OPTIONS. Each Incentive Stock Option
shall provide that to the extent that the aggregate fair market value of the
Company Stock on the date of the grant with respect to which Incentive Stock
Options are exercisable for the first time by a Grantee during any calendar year
under the Plan or any other stock option plan of the Company exceeds $100,000,
then such option as to the excess shall be treated as a Nonqualified Stock
Option. An Incentive Stock Option shall not be granted to any Employee who, at
the time of grant, owns stock possessing more than 10 percent of the total
combined voting power of all classes of stock of the Company or parent of the
Company, unless the option price per share is not less than 110% of the fair
market value of Company Stock on the date of grant and the option exercise
period is not more than five years from the date of grant.

         (j) OPTIONAL PURCHASE BY THE COMPANY. In the sole discretion of the
Committee, in lieu of the exercise of a Stock Option, the Grantee may be
permitted to transfer the Stock Option to the Company in exchange for a cash
payment equal to the excess over the purchase price of the then fair market
value of the shares of Company Stock subject to the Grantee's outstanding Stock
Options. Notwithstanding the foregoing, if any right granted pursuant to this
Subsection would make any corporate transaction ineligible for pooling of
interests accounting treatment under APB No. 16 that but for this provision
would otherwise be eligible for such accounting treatment, or would otherwise
affect the tax treatment of any such transaction, the Grantee shall not be able
to receive a cash payment in lieu of the exercise of his or her Stock Options.

6.       RESTRICTED STOCK GRANTS

         The Committee may issue or transfer shares of Company Stock to an
Employee under a Grant (a "Restricted Stock Grant") pursuant to an incentive or
long range compensation plan or program approved by the Committee and adopted by
the Board. Neither consultants nor Non-Employee Directors shall be eligible to
receive Restricted Stock Grants. The following provisions are applicable to
Restricted Stock Grants:

<PAGE>

                                                                       Page 8

         (a) GENERAL REQUIREMENTS. Shares of Company Stock issued pursuant to
Restricted Stock Grants shall be issued for no consideration, at the sole
discretion of the Committee. Subject to any other restrictions by the Committee
as provided pursuant to this Section, restrictions on the transfer of shares of
Company Stock set forth in Section 6(d) shall lapse as to up to one-half of the
shares covered by a Restricted Stock Grant on each anniversary of the date of
the Grant ratably for the first four such anniversary dates and one-half at the
end of year four, or such other date as the Committee may approve until the
restrictions have lapsed on 100% of the shares; provided, however, that upon a
Change in Control of the Company (as defined herein), all restrictions on the
transfer of the shares which have not, prior to such date, been forfeited shall
immediately lapse. The period of years during which the Restricted Stock Grant
will remain subject to restrictions will be designated in the Grant Letter as
the "Restriction Period."

         (b) NUMBER OF SHARES. The Committee shall grant to each Grantee a
number of shares of Company Stock pursuant to a Restricted Stock Grant in such
manner as the Committee determines.

         (c) REQUIREMENT OF EMPLOYMENT. If the Grantee's employment terminates
during a period designated in the Grant Letter as the Restriction Period, the
Committee shall have the right to require the Grantee to surrender immediately
to the Company for cancellation, all shares covered by the Grant as to which
restrictions on transfer have not lapsed, and the Grantee shall cease to have
any rights with respect to the surrendered shares. The Committee may provide for
complete or partial exceptions to this requirement as it deems equitable.

          (d) RESTRICTIONS ON TRANSFER AND LEGEND ON STOCK CERTIFICATE. During
the Restriction Period, a Grantee may not sell, assign, transfer, pledge, or
otherwise dispose of the shares of Company Stock to which such Restriction
Period applies except to a Successor Grantee under Section 8. Each certificate
for a share issued or transferred under a Restricted Stock Grant shall contain a
legend giving appropriate notice of the restrictions in the Grant. The Grantee
shall be entitled to have the legend removed from the stock certificate or
certificates covering any of the shares subject to restrictions when all
restrictions on such shares have lapsed.

         (e) RIGHT TO VOTE AND TO CASH DIVIDENDS. During the Restriction Period,
the Grantee shall have the right to vote shares subject to the Restricted Stock
Grant and to receive any regular cash dividends paid on such shares.

         (f) LAPSE OF RESTRICTIONS. All restrictions imposed under the
Restricted Stock Grant shall lapse upon the expiration of the applicable
Restriction Period; provided, however, that upon a Change in Control of the
Company (as defined herein), all restrictions on the transfer of the shares
which have not, prior to such date, been forfeited shall immediately lapse. In
addition, the Committee may determine as to any or all Restricted Stock Grants,
that all the restrictions shall lapse, without regard to any Restriction Period,
under such circumstances as it deems equitable.

7.       STOCK APPRECIATION RIGHTS

<PAGE>

                                                                       Page 9

         (a) The Committee may grant stock appreciation rights ("SARs") to any
Grantee in tandem with any Stock Option, for all or a portion of the applicable
Stock Option, either at the time the Stock Option is granted or at any time
thereafter while the Stock Option remains outstanding; provided, however, that
in the case of an Incentive Stock Option, such rights may be granted only at the
time of the Grant of such Stock Option. The exercise price of each SAR shall be
equal to (i) the exercise price or option price of the related Stock Option or
(ii) the fair market value of a share of Company Stock as of the date of grant
of such SAR, but only in such circumstances where the SAR is granted subsequent
to the date of grant of the related Stock Option and an exercise price
established in accordance with clause (i) above would result in the disallowance
of the Company's expense deduction pursuant to Section 162(m) of the Code and
related Treasury regulations.

         (b) The number of SARs granted to a Grantee which shall be exercisable
during any given period of time shall not exceed the number of shares of Company
Stock which the Grantee may purchase upon the exercise of the related Stock
Option or Stock Options during such period of time. Upon the exercise of a Stock
Option, the SARs relating to the Company Stock covered by such Stock Option
shall terminate. Upon the exercise of SARs, the related Stock Option shall
terminate to the extent of an equal number of shares of Company Stock.

         (c) Upon a Grantee's exercise of some or all of his SARs, the Grantee
shall receive in settlement of such SARs an amount equal to the value of the
stock appreciation for the number of SARs exercised, payable in cash, Company
Stock or a combination thereof. Subject to adjustments required pursuant to
Subsection (a)(ii), the stock appreciation for an SAR is the difference between
the option price specified for the related Stock Option and the fair market
value of the underlying Company Stock on the date of exercise of such SAR.

         (d) At the time of such exercise, the Grantee shall have the right to
elect the portion of the amount to be received that shall consist of cash and
the portion that shall consist of Common Stock, which for purposes of
calculating the number of shares of Company Stock to be received, shall be
valued at their fair market value on the date of exercise of such SARs. The
Committee shall have the right to disapprove a Grantee's election to receive
cash in full or partial settlement of the SARs exercised, and to require that
shares of Company Stock be delivered in lieu of cash. If shares of Company Stock
are to be received upon exercise of an SAR, cash shall be delivered in lieu of
any fractional share.

8.       TRANSFERABILITY OF GRANTS

         Only the Grantee or his or her authorized legal representative may
exercise rights under a Grant. Such persons may not transfer those rights except
by will or by the laws of descent and distribution or, if permitted under Rule
16b-3 of the Exchange Act and if permitted in any specific case by the Committee
in its sole discretion, pursuant to a qualified domestic relations order as
defined under the Code or Title I of ERISA or the regulations thereunder. When a
Grantee dies, the personal representative or other person entitled to succeed to
the rights of the Grantee ("Successor Grantee") may exercise such rights. A
Successor Grantee must furnish satisfactory to the Company of his or her right
to receive the Grant under Grantee's will

<PAGE>

                                                                       Page 10

or under the applicable laws of descent and distribution.

         Notwithstanding the foregoing, the Committee may permit an Employee to
transfer rights under a Nonqualified Stock Option to the Employee's spouse,
lineal descendant or to one or more trusts for the benefit of such family group
members or to partnerships in which such family members are the only partners (a
"Family Group Transfer") provided that the Employee receives no consideration
for a Family Group Transfer and the Grant Letter relating to the Stock Options
transferred in a Family Group Transfer continues to apply the same terms and
conditions that were applicable to such Stock Options immediately prior to the
Family Group Transfer. At the discretion of the Committee and upon the advise of
counsel with respect to applicable tax and securities law consequences, a
"Family Group Transfer" may be deemed to include a domestic partner with whom
the Employee shares a residence.

9.       RIGHT OF FIRST REFUSAL

         Prior to the Effective Date specified in Section 21(b), if at any time
an individual desires to sell, encumber, or otherwise dispose of shares of
Company Stock distributed to him by the Committee under this Plan, he shall
first offer the same to the Company by giving the Company written notice
disclosing: (a) the name(s) of the proposed transferee of the Company Stock; (b)
the certificate number and number of shares of Company Stock proposed to be
transferred or encumbered; (c) the proposed price; and (d) all other terms of
the proposed transfer. Within fourteen (14) days after receipt of such notice,
the Company shall have the option to purchase all or part of such Company Stock.
If the Company decides to exercise this option, the purchase price of the
Company Stock shall be the proposed price and may be payable, at the discretion
of the Committee, in substantially equal installments over one year from the
date of purchase.

         In the event the Company does not exercise the option to purchase
Company Stock, as provided above, the individual shall have the right to sell,
encumber, or otherwise dispose of his shares of Company Stock on the terms of
the transfer set forth in the written notice to the Company, provided such
transfer is effected within fifteen (15) days after the expiration of the option
period. If the transfer is not effected within such period, the Company must
again be given an option to purchase, as provided above.

         Notwithstanding the foregoing, the Board, in its sole discretion, may
waive the Company's right of first refusal pursuant to this Section to the
extent that exercise of such right would cause any Company Stock issued by the
Company to fail to meet the requirements of "qualified small business stock"
within the meaning of Section 1202 of the Code. To the extent that the Company's
right of first refusal is so waived, the Board may, in its sole discretion,
pass-through such right to the remaining stockholders of the Company on a
pro-rata basis. To the extent that a stockholder has been given such right and
does not purchase his pro-rata allotment, the other stockholders shall have the
right to purchase such allotment on a pro-rata basis.

         On and after the Effective Date specified in Section 21(b), the Company
shall have no further right to purchase shares of Company Stock under this
Section and its limitations shall be

<PAGE>

                                                                       Page 11

null and void.

10.      RIGHT OF REPURCHASE UPON DEATH OR TERMINATION OF EMPLOYMENT. Prior to
the Effective Date specified in Section 21(b) of the Plan, the Company shall
have the right to repurchase shares of Company Stock issued under the Plan upon
the death or termination of employment of the Grantee for any reason at a price
paid in cash equal to the fair market value of the shares as determined by the
Committee immediately preceding the date the shares are to be sold. At the
discretion of the Committee, payment for the repurchase of such shares of
Company Stock may be made in substantially equal installments over one year from
the date of purchase.

         Notwithstanding the foregoing, the Board, in its sole discretion, may
waive the Company's right of repurchase pursuant to this Section to the extent
that the repurchase would cause any Company Stock issued by the Company to fail
to meet the requirements of "qualified small business stock" within the meaning
of Section 1202 of the Code. To the extent that the Company's repurchase right
is so waived, the Board may, in its sole discretion, pass-through such right to
the remaining stockholders of the Company on a pro-rata basis. To the extent
that a stockholder has been given such right and does not purchase his pro-rata
allotment, the other stockholders shall have the right to purchase such
allotment on a pro-rata basis.

         On and after the Effective Date specified in Section 21(b), the Company
shall have no further right to purchase shares of Company Stock under this
Section and its limitations shall be null and void.

11.      CHANGE IN CONTROL OF THE COMPANY

         As used herein, a "Change in Control" shall be deemed to have occurred
if:

                  (a) As a result of any transaction, any one stockholder, other
than David J. Brailer, M.D., Ph.D., becomes a beneficial owner (as defined in
Rule 13-d under the Exchange Act), directly or indirectly, of securities of the
Company representing more than 50% of the Common Stock of the Company or the
combined voting power of the Company's then outstanding securities; or

                  (b) The sale of all or substantially all of the Company's
assets occurs.

12.      CONSEQUENCES OF A CHANGE IN CONTROL

         (a) NOTICE.

                  (i) If a Change in Control as described in Section 11(a) or
(b) of the Plan will occur, then, at least 10 days after the approval by the
stockholders of the Company (or approval by the Board, if stockholder action is
not required) of such Change in Control, the Company shall

<PAGE>

                                                                      Page 12

give each optionee with any outstanding Stock Options written notice of such
proposed Change in Control.

                  (ii) If a Change in Control as described in Section 11(a) may
occur without approval by stockholders (or approval by the Board) and does so
occur, then, at least 10 days after such Change in Control, the Company shall
give each optionee with any outstanding Stock Options written notice of the
Change of Control.

         (b) ELECTION PERIOD. In connection with the Change in Control and
effective only upon such Change in Control, each such optionee shall thereupon
have the right, within 20 days after such written notice is sent by the Company
(the "Election Period"), to make an election as described in Subsection (c) with
respect to all of his or her outstanding Stock Options (whether the right to
exercise such Stock Options has then accrued or the right to exercise such Stock
Options will occur or has occurred upon the Change in Control pursuant to
Section 5(d) of the Plan).

         (c) ELECTION RIGHT. During the Election Period, each such optionee
shall have the right to elect:

                  (i) To exercise in full any installments of such Stock Options
not previously exercised or,

                  (ii) To surrender all or part of such outstanding Stock
Options, in exchange for a cash payment by the Company in an amount equal to the
excess over the purchase price of the then Change of Control Price (as defined
below) of the shares of Common Stock subject to the optionee's outstanding Stock
Options.

         (d) TERMINATION OF STOCK OPTIONS. If an optionee does not make a timely
election in accordance with Subsection (c) in connection with a Change in
Control described in Section 11(a) where the Company is not the surviving
corporation (or survives only as a subsidiary of another corporation), such
Stock Options shall terminate as of the Change of Control. Notwithstanding the
foregoing, an option will not terminate if assumed by the surviving or acquiring
corporation, or its parent, upon a merger or consolidation and, with respect to
an Incentive Stock Option, the assumption of the option occurs under
circumstances which are not deemed a modification of the option within the
meaning of Sections 424(a) and 424(h)(3)(A) of the Code.

         (e) ACCOUNTING AND TAX LIMITATIONS.

                  (i) Notwithstanding the foregoing, if the right described in
Subsection (c)(ii) would make the applicable Change in Control ineligible for
pooling of interest accounting treatment under APB No. 16 or make such Change of
Control ineligible for desired tax treatment with respect to such Change of
Control, that but for those provisions would otherwise be eligible for such
treatment the optionee shall receive shares of Common Stock with a fair market
value (as defined in Section 5(b)) equal to the cash that would otherwise be
payable hereunder in

<PAGE>

                                                                       Page 13

substitution for the cash.

                  (ii) Notwithstanding the foregoing, if the termination of the
Stock Options described in Subsection (d) would make the applicable Change in
Control ineligible for pooling of interest accounting treatment under APB No.
16, that but for such provision would otherwise be eligible for such treatment,
each affected optionee shall receive a replacement or substitute stock option
issued by the surviving or acquiring corporation.

         (f) CHANGE IN CONTROL PRICE. For purposes of this Section, Change in
Control Price shall mean the higher of:

                  (i) the highest reported sales price of a share of Common
Stock in any transaction reported on an exchange or NASDAQ, or paid in any
private transaction during the 60-day period prior to and including the date of
the approval of the stockholders of the Company of such Change of Control and

                  (ii) if the Change in Control is the result of a tender or
exchange offer, the highest price per share of Common Stock paid in such tender
or exchange offer.

13.      AMENDMENT AND TERMINATION OF THE PLAN

         (a) AMENDMENT. The Board, by written resolution, may amend or terminate
the Plan at any time; provided, however, that any amendment that increases the
aggregate number (or individual limit for any single Grantee) of shares of
Company Stock that may be issued or transferred under the Plan (other than by
operation of Section 3(b)), or modifies the requirements as to eligibility for
participation in the Plan, shall be subject to approval by the stockholders of
the Company, and provided, further, that the Board shall not amend the Plan
without stockholder approval if such approval is required by Section 162(m) of
the Code.

         (b) TERMINATION OF PLAN. The Plan shall terminate on the tenth
anniversary of its effective date unless terminated earlier by the Board or
unless extended by the Board with the approval of the stockholders.

         (c) TERMINATION AND AMENDMENT OF OUTSTANDING GRANTS. A termination or
amendment of the Plan that occurs after a Grant is made shall not materially
impair the rights of a Grantee unless the Grantee consents or unless the
Committee acts under Section 22(b) hereof. The termination of the Plan shall not
impair the power and authority of the Committee with respect to an outstanding
Grant. Whether or not the Plan has terminated, an outstanding Grant may be
terminated or amended under Section 22(b) hereof or may be amended by agreement
of the Company and the Grantee consistent with the Plan.

         (d) GOVERNING DOCUMENT. The Plan shall be the controlling document. No
other statements, representations, explanatory materials, or examples, oral or
written, may amend the Plan in any manner. The Plan shall be binding upon and
enforceable against the Company, its successors and assigns.

<PAGE>

                                                                       Page 14

14.      COVENANT NOT TO COMPETE; CONFIDENTIALITY AGREEMENT. All Grantees shall
be required, as a condition of the Grantee's acceptance of the Grant, to be
bound by a covenant not to compete and/or a confidentiality agreement with the
Company containing such terms as the Committee and the Board shall deem
advisable, unless the Committee shall determine otherwise.

15.      FUNDING OF THE PLAN

         This Plan shall be unfunded. The Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the payment of any Grants under this Plan. In no event shall
interest be paid or accrued on any Grant, including unpaid installments of
Grants.

16.      RIGHTS OF PARTICIPANTS

         Nothing in this Plan shall entitle any Employee, Non-Employee Director,
consultant or other person to any claim or right to be granted a Grant under
this Plan. Neither this Plan nor any action taken hereunder shall be construed
as giving any individual any rights to be retained by or in the employ of the
Company or any other employment rights.

17.      NO FRACTIONAL SHARES

         No fractional shares of Company Stock shall be issued or delivered
pursuant to the Plan or any Grant. The Committee shall determine whether cash,
other awards or other property shall be issued or paid in lieu of such
fractional shares or whether such fractional shares or any rights thereto shall
be forfeited or otherwise eliminated.

18.      WITHHOLDING OF TAXES

         The Company shall have the right to deduct from all Grants paid in
cash, or from other wages paid to the employee of the Company, any federal,
state or local taxes required by law to be withheld with respect to such cash
awards and, in the case of Grants paid in Company Stock, the Grantee or other
person receiving such shares shall be required to pay to the Company the amount
of any such taxes which the Company is required to withhold with respect to such
Grants or the Company shall have the right to deduct from other wages paid to
the employee by the Company the amount of any withholding due with respect to
such Grants.

19.      REQUIREMENTS FOR ISSUANCE OF SHARES

         No Company Stock shall be issued or transferred in connection with any
Grant hereunder unless and until all legal requirements applicable to the
issuance or transfer of such Company Stock have been complied with to the
satisfaction of the Committee. The Committee shall have the right to condition
any Grant made to any Grantee hereunder on such Grantee's undertaking in writing
to comply with such restrictions on his subsequent disposition of such shares of
Company Stock as the Committee shall deem necessary or advisable as a result of
any applicable

<PAGE>

                                                                       Page 15

law, regulation or official interpretation thereof, and certificates
representing such shares may be legended to reflect any such restrictions.
Certificates representing shares of Company Stock issued under the Plan will be
subject to such stop-transfer orders and other restrictions as may be applicable
under such laws, regulations and other obligations of the Company, including any
requirement that a legend or legends be placed thereon.

20.      HEADINGS

         Section headings are for reference only. In the event of a conflict
between a title and the content of a Section, the content of the Section shall
control.

21.      EFFECTIVE DATE

         (a) EFFECTIVE DATE OF THE PLAN. Subject to the approval of the
Company's stockholders, this Plan as amended and restated shall be effective as
of December 24, 1998.

         (b) EFFECTIVENESS OF SECTION 16 AND SECTION 162(M) PROVISIONS. The
provisions of the Plan that refer to, or are applicable to persons subject to,
Section 16 of the Exchange Act or Section 162(m) of the Code shall be effective,
if at all, upon registration of the Company Stock under Section 12(g) of the
Exchange Act, and shall remain effective thereafter for so long as such stock is
so registered.

22.      MISCELLANEOUS

         (a) SUBSTITUTE GRANTS. The Committee may make a Grant to an employee of
another corporation who becomes an Employee by reason of a corporate merger,
consolidation, acquisition of stock or property, reorganization or liquidation
involving the Company or any of its subsidiaries in substitution for a stock
option or restricted stock grant made by such corporation ("Substituted Stock
Incentives"). The terms and conditions of the substitute grant may vary from the
terms and conditions required by the Plan and from those of the Substituted
Stock Incentives. The Committee shall prescribe the provisions of the substitute
grants.

         (b) COMPLIANCE WITH LAW. The Plan, the exercise of Stock Options and
the and the obligations of the Company to issue or transfer shares of Company
Stock under Grants shall be subject to all applicable laws and to approvals by
an governmental or regulatory agency as may be required. With respect to persons
subject to Section 16 of the Exchange Act, it is the intent of the Company that
the Plan and all transactions under the Plan comply with all applicable
provisions of Rule 16b-3 or its successors under the Exchange Act. The Committee
may revoke any Grant if it is contrary to law or modify a Grant to bring it into
compliance with any valid and mandatory government regulation. The Committee may
also adopt rules regarding the withholding of taxes on payments to Grantees. The
Committee may, in its sole discretion, agree to limit its authority under this
Section.

         (c) OWNERSHIP OF STOCK. A Grantee or Successor Grantee shall have no
rights as a stockholder with respect to any shares of Company Stock covered by a
Grant until the shares are

<PAGE>

                                                                       Page 16

issued or transferred to the Grantee or Successor Grantee on the stock transfer
records of the Company.

         (d) GOVERNING LAW. The validity, construction, interpretation and
effect of the Plan and Grant Letters issued under the Plan shall exclusively be
governed by and determined in accordance with the law of the Commonwealth of
Pennsylvania.

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