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                                                                    Exhibit 10.2

THE OPTION GRANTED  PURSUANT TO THIS AGREEMENT AND THE SHARES  ISSUABLE UPON THE
EXERCISE  THEREOF HAVE NOT BEEN REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS
AMENDED,  AND MAY NOT BE SOLD,  PLEDGED,  OR  OTHERWISE  TRANSFERRED  WITHOUT AN
EFFECTIVE  REGISTRATION  THEREOF  UNDER  SUCH  ACT  OR AN  OPINION  OF  COUNSEL,
SATISFACTORY  TO THE  COMPANY AND ITS  COUNSEL,  THAT SUCH  REGISTRATION  IS NOT
REQUIRED.

              PINE PHOTONICS COMMUNICATIONS, INC. 2000 STOCK PLAN:
                             STOCK OPTION AGREEMENT

SECTION 1. GRANT OF OPTION.

      (a) OPTION.  On the terms and  conditions set forth in the Notice of Stock
Option Grant and this Agreement,  the Company grants to the Optionee on the Date
of Grant the option to purchase at the  Exercise  Price the number of Shares set
forth in the Notice of Stock Option Grant. The Exercise Price is agreed to be at
least 100% of the Fair Market Value per Share on the Date of Grant (110% of Fair
Market Value if Section 3(b) of the Plan applies). This option is intended to be
an ISO or a  Nonstatutory  Option,  as  provided  in the Notice of Stock  Option
Grant.

      (b) STOCK PLAN AND DEFINED TERMS.  This option is granted  pursuant to the
Plan, a copy of which the Optionee acknowledges having received.  The provisions
of the Plan are incorporated into this Agreement by this reference.  Capitalized
terms are defined in Section 14 of this Agreement.

SECTION 2. RIGHT TO EXERCISE.

      (a) EXERCISABILITY. Subject to Subsections (b) and (c) below and the other
conditions  set  forth  in this  Agreement,  all or part of this  option  may be
exercised  prior to its  expiration at the time or times set forth in the Notice
of Stock Option Grant. Shares purchased by exercising this option may be subject
to the Right of Repurchase under Section 7.

      (b) $100,000  LIMITATION.  If this option is  designated  as an ISO in the
Notice of Stock Option Grant,  then the Optionee's right to exercise this option
shall be  deferred  to the  extent  (and only to the  extent)  that this  option
otherwise  would  not be  treated  as an ISO by reason  of the  $100,000  annual
limitation under Section 422(d) of the Code, except that:

            (i) The Optionee's  right to exercise this option shall in any event
      become  exercisable at least as rapidly as 20% per year over the five-year
      period commencing on the Date of Grant,  unless the Optionee is an officer
      of the Company, an Outside Director or a Consultant; and

            (ii) The Optionee's right to exercise this option shall no longer be
      deferred if (A) the  Company is subject to a Change in Control  before the
      Optionee's   Service   terminates,   (B)  this   option  does  not  remain
      outstanding,  (C) this option is not assumed by the surviving  corporation
      or its parent and (D) the  surviving  corporation  or its parent  does not
      substitute an option with substantially the same terms for this option.

      (c)   STOCKHOLDER   APPROVAL.   Any  other  provision  of  this  Agreement
notwithstanding,  no portion of this  option  shall be  exercisable  at any time
prior to the approval of the Plan by the Company's stockholders.

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SECTION 3. NO TRANSFER OR ASSIGNMENT OF OPTION.

      Except as otherwise provided in this Agreement, this option and the rights
and  privileges  conferred  hereby  shall  not be  sold,  pledged  or  otherwise
transferred  (whether by operation of law or otherwise) and shall not be subject
to sale under execution, attachment, levy or similar process.

SECTION 4. EXERCISE PROCEDURES.

      (a) NOTICE OF EXERCISE. The Optionee or the Optionee's  representative may
exercise this option by giving written notice to the Company pursuant to Section
13(c). The notice shall specify the election to exercise this option, the number
of Shares for which it is being  exercised  and the form of payment.  The person
exercising  this option shall sign the notice.  In the event that this option is
being  exercised  by the  representative  of the  Optionee,  the notice shall be
accompanied by proof (satisfactory to the Company) of the representative's right
to exercise this option.  The Optionee or the  Optionee's  representative  shall
deliver  to the  Company,  at the time of giving the  notice,  payment in a form
permissible under Section 5 for the full amount of the Purchase Price.

      (b) ISSUANCE OF SHARES.  After receiving a proper notice of exercise,  the
Company shall cause to be issued a certificate or certificates for the Shares as
to which this option has been  exercised,  registered  in the name of the person
exercising  this option (or in the names of such person and his or her spouse as
community property or as joint tenants with right of survivorship).  The Company
shall  cause such  certificate  or  certificates  to be  deposited  in escrow or
delivered to or upon the order of the person exercising this option.

      (c) WITHHOLDING TAXES. In the event that the Company determines that it is
required to withhold  any tax as a result of the  exercise of this  option,  the
Optionee, as a condition to the exercise of this option, shall make arrangements
satisfactory   to  the  Company  to  enable  it  to  satisfy   all   withholding
requirements.  The Optionee  shall also make  arrangements  satisfactory  to the
Company to enable it to satisfy any withholding  requirements  that may arise in
connection  with the vesting or  disposition  of Shares  purchased by exercising
this option.

SECTION 5. PAYMENT FOR STOCK.

      (a) CASH.  All or part of the  Purchase  Price may be paid in cash or cash
equivalents.

      (b) SURRENDER OF STOCK.  All or any part of the Purchase Price may be paid
by surrendering, or attesting to the ownership of, Shares that are already owned
by the Optionee.  Such Shares shall be  surrendered  to the Company in good form
for  transfer  and shall be valued at their Fair  Market  Value on the date when
this option is exercised.  The Optionee  shall not  surrender,  or attest to the
ownership of, Shares in payment of the Purchase Price if such action would cause
the  Company to  recognize  compensation  expense  (or  additional  compensation
expense) with respect to this option for financial reporting purposes.

      (c)  EXERCISE/SALE.  If  Stock  is  publicly  traded,  all or  part of the
Purchase Price and any withholding  taxes may be paid by the delivery (on a form
prescribed by the Company) of an  irrevocable  direction to a securities  broker
approved  by the  Company to sell Shares and to deliver all or part of the sales
proceeds to the Company.

      (d)  EXERCISE/PLEDGE.  If Stock  is  publicly  traded,  all or part of the
Purchase Price and any withholding  taxes may be paid by the delivery (on a form
prescribed  by the Company) of an

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irrevocable direction to pledge Shares to a securities broker or lender approved
by the Company,  as security for a loan,  and to deliver all or part of the loan
proceeds to the Company.

      (e) PROMISSORY  NOTE. All or part of the Purchase Price may be paid with a
full-recourse  promissory note.  However,  the par value of the Shares, if newly
issued,  shall be paid in cash or cash equivalents.  The Shares shall be pledged
as  security  for payment of the  principal  amount of the  promissory  note and
interest  thereon.  The interest rate payable under the terms of the  promissory
note  shall not be less than the  minimum  rate (if any)  required  to avoid the
imputation of additional interest under the Code. Subject to the foregoing,  the
Board of Directors (at its sole  discretion)  shall  specify the term,  interest
rate, amortization requirements (if any) and other provisions of such note.

SECTION 6. TERM AND EXPIRATION.

      (a) BASIC TERM.  This option shall in any event  expire on the  expiration
date set forth in the Notice of Stock Option Grant, which date is 10 years after
the Date of Grant  (five  years  after  the  Date of  Grant  if this  option  is
designated as an ISO in the Notice of Stock Option Grant and Section 3(b) of the
Plan applies).

      (b)  TERMINATION OF SERVICE (EXCEPT BY DEATH).  If the Optionee's  Service
terminates for any reason other than death, then this option shall expire on the
earliest of the following occasions:

            (i) The expiration date determined pursuant to Subsection (a) above;

            (ii) The date three months after the  termination  of the Optionee's
      Service for any reason other than Disability; or

            (iii) The date six months after the  termination  of the  Optionee's
      Service by reason of Disability.

The  Optionee  may  exercise  all or part of this  option at any time before its
expiration under the preceding sentence, but only to the extent that this option
had  become   exercisable  for  vested  shares  before  the  Optionee's  Service
terminated.  When the Optionee's  Service  terminates,  this option shall expire
immediately  with  respect to the number of Shares for which this  option is not
yet exercisable and with respect to any Restricted Shares. In the event that the
Optionee  dies after  termination  of Service but before the  expiration of this
option, all or part of this option may be exercised (prior to expiration) by the
executors or  administrators  of the Optionee's  estate or by any person who has
acquired  this option  directly  from the Optionee by  beneficiary  designation,
bequest  or  inheritance,  but only to the  extent  that this  option had become
exercisable before the Optionee's Service terminated.

      (c) DEATH OF THE  OPTIONEE.  If the Optionee  dies while in Service,  then
this option shall expire on the earlier of the following dates:

            (i) The expiration date determined pursuant to Subsection (a) above;
      or

            (ii) The date 12 months after the Optionee's death.

All or part of this option may be  exercised  at any time before its  expiration
under  the  preceding  sentence  by  the  executors  or  administrators  of  the
Optionee's  estate or by any person who has acquired  this option  directly from
the Optionee by beneficiary designation, bequest or inheritance, but only to the
extent that

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this  option  had  become  exercisable  before the  Optionee's  death.  When the
Optionee dies, this option shall expire  immediately  with respect to the number
of Shares for which this option is not yet  exercisable  and with respect to any
Restricted Shares.

      (d) LEAVES OF ABSENCE. For any purpose under this Agreement, Service shall
be deemed to continue while the Optionee is on a bona fide leave of absence,  if
such leave was approved by the Company in writing and if continued  crediting of
Service for such purpose is expressly  required by the terms of such leave or by
applicable law (as determined by the Company).

      (e) NOTICE  CONCERNING ISO  TREATMENT.  If this option is designated as an
ISO in the Notice of Stock Option Grant,  it ceases to qualify for favorable tax
treatment  as an ISO to the extent it is  exercised  (i) more than three  months
after the date the  Optionee  ceases to be an Employee for any reason other than
death or permanent and total  disability (as defined in Section  22(e)(3) of the
Code),  (ii)  more than 12 months  after the date the  Optionee  ceases to be an
Employee by reason of such  permanent  and total  disability  or (iii) after the
Optionee  has  been on a leave of  absence  for more  than 90 days,  unless  the
Optionee's reemployment rights are guaranteed by statute or by contract.

SECTION 7. RIGHT OF REPURCHASE.

      (a)  SCOPE  OF  REPURCHASE  RIGHT.  Unless  they  have  become  vested  in
accordance  with the Notice of Stock Option Grant and Subsection (c) below,  the
Shares acquired under this Agreement  initially  shall be Restricted  Shares and
shall  be  subject  to a right  (but not an  obligation)  of  repurchase  by the
Company. The Optionee shall not transfer,  assign, encumber or otherwise dispose
of any  Restricted  Shares,  except as provided in the following  sentence.  The
Optionee may transfer Restricted Shares (i) by beneficiary designation,  will or
intestate succession or (ii) to the Optionee's spouse, children or grandchildren
or to a trust established by the Optionee for the benefit of the Optionee or the
Optionee's spouse,  children or grandchildren,  provided in either case that the
Transferee  agrees in writing on a form prescribed by the Company to be bound by
all  provisions of this  Agreement.  If the Optionee  transfers  any  Restricted
Shares,  then this Section 7 shall apply to the Transferee to the same extent as
to the Optionee.

      (b)  CONDITION  PRECEDENT TO EXERCISE.  The Right of  Repurchase  shall be
exercisable with respect to any Restricted  Shares only during the 60-day period
next following the later of:

            (i) The date when the Optionee's  Service terminates for any reason,
      with or without cause, including (without limitation) death or disability;
      or

            (ii) The date when such  Restricted  Shares  were  purchased  by the
      Optionee,  the executors or administrators of the Optionee's estate or any
      person who has acquired this option directly from the Optionee by bequest,
      inheritance or beneficiary designation.

      (c) LAPSE OF REPURCHASE  RIGHT.  The Right of Repurchase  shall lapse with
respect to the Shares  subject to this  option in  accordance  with the  vesting
schedule  set forth in the  Notice  of Stock  Option  Grant.  In  addition,  the
following  rules  shall  apply if the  Company is subject to a Change in Control
before the Optionee's Service terminates:

            (i) If the Right of  Repurchase  is not  assigned to the entity that
      employs  the  Optionee  immediately  after the Change in Control or to its
      parent or subsidiary,  then the Right of Repurchase shall lapse and all of
      the remaining Restricted Shares shall become vested.

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            (ii) If the Right of  Repurchase  is  assigned  to the  entity  that
      employs  the  Optionee  immediately  after the Change in Control or to its
      parent or  subsidiary,  and if the  Optionee is subject to an  Involuntary
      Termination  within 12 months after the Change in Control,  then the Right
      of  Repurchase  shall lapse with respect to 25% of the  Restricted  Shares
      remaining at the time of the Involuntary Termination.

      (d) REPURCHASE COST. If the Company exercises the Right of Repurchase,  it
shall pay the  Optionee an amount  equal to the  Exercise  Price for each of the
Restricted Shares being repurchased.

      (e)  EXERCISE  OF  REPURCHASE  RIGHT.  The  Right of  Repurchase  shall be
exercisable  only by  written  notice  delivered  to the  Optionee  prior to the
expiration of the 60-day period  specified in Subsection  (b) above.  The notice
shall set forth the date on which the  repurchase  is to be effected.  Such date
shall not be more than 30 days after the date of the notice.  The certificate(s)
representing the Restricted Shares to be repurchased  shall,  prior to the close
of  business on the date  specified  for the  repurchase,  be  delivered  to the
Company properly endorsed for transfer. The Company shall, concurrently with the
receipt  of  such  certificate(s),  pay  to  the  Optionee  the  purchase  price
determined  according to Subsection (d) above.  Payment shall be made in cash or
cash  equivalents or by canceling  indebtedness  to the Company  incurred by the
Optionee in the purchase of the Restricted Shares. The Right of Repurchase shall
terminate with respect to any Restricted Shares for which it has not been timely
exercised pursuant to this Subsection (e).

      (f)  ADDITIONAL  SHARES  OR  SUBSTITUTED  SECURITIES.  In the event of the
declaration of a stock dividend,  the declaration of an  extraordinary  dividend
payable in a form other than stock, a spin-off,  a stock split, an adjustment in
conversion  ratio, a  recapitalization  or a similar  transaction  affecting the
Company's  outstanding  securities  without receipt of  consideration,  any new,
substituted  or additional  securities or other property  (including  money paid
other than as an ordinary cash dividend) which are by reason of such transaction
distributed with respect to any Restricted  Shares or into which such Restricted
Shares thereby become  convertible  shall immediately be subject to the Right of
Repurchase.   Appropriate  adjustments  to  reflect  the  distribution  of  such
securities  or  property  shall  be  made  to the  number  and/or  class  of the
Restricted  Shares.   Appropriate   adjustments  shall  also,  after  each  such
transaction,  be made to the price per share to be paid upon the exercise of the
Right of Repurchase in order to reflect any change in the Company's  outstanding
securities  effected  without  receipt  of  consideration  therefor;   provided,
however,  that the aggregate  purchase price payable for the  Restricted  Shares
shall remain the same.

      (g) TERMINATION OF RIGHTS AS STOCKHOLDER.  If the Company makes available,
at the time and place and in the amount and form provided in this Agreement, the
consideration  for the Restricted  Shares to be  repurchased in accordance  with
this Section 7, then after such time the person from whom such Restricted Shares
are to be  repurchased  shall no  longer  have any  rights  as a holder  of such
Restricted Shares (other than the right to receive payment of such consideration
in accordance with this  Agreement).  Such Restricted  Shares shall be deemed to
have been  repurchased  in accordance  with the  applicable  provisions  hereof,
whether or not the  certificate(s)  therefor have been  delivered as required by
this Agreement.

      (h) ESCROW. Upon issuance, the certificates for Restricted Shares shall be
deposited  in  escrow  with  the  Company  to be held  in  accordance  with  the
provisions of this Agreement.  Any new, substituted or additional  securities or
other property  described in Subsection (f) above shall immediately be delivered
to the  Company to be held in  escrow,  but only to the extent the Shares are at
the time Restricted  Shares. All regular cash dividends on Restricted Shares (or
other  securities  at the time held in  escrow)  shall be paid  directly  to the
Optionee and shall not be held in escrow.  Restricted Shares,  together with any
other assets or securities held in escrow hereunder, shall be (i) surrendered to
the Company for

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repurchase  and  cancellation  upon  the  Company's  exercise  of its  Right  of
Repurchase  or Right of First  Refusal or (ii) released to the Optionee upon the
Optionee's request to the extent the Shares are no longer Restricted Shares (but
not more frequently than once every six months).  In any event, all Shares which
have vested (and any other vested assets and  securities  attributable  thereto)
shall be  released  within  60 days  after  the  earlier  of (i) the  Optionee's
cessation of Service or (ii) the lapse of the Right of First Refusal.

SECTION 8. RIGHT OF FIRST REFUSAL.

      (a) RIGHT OF FIRST  REFUSAL.  In the event that the  Optionee  proposes to
sell,  pledge or otherwise  transfer to a third party any Shares  acquired under
this Agreement, or any interest in such Shares, the Company shall have the Right
of First Refusal with respect to all (and not less than all) of such Shares.  If
the Optionee  desires to transfer  Shares  acquired  under this  Agreement,  the
Optionee shall give a written  Transfer Notice to the Company  describing  fully
the  proposed   transfer,   including  the  number  of  Shares  proposed  to  be
transferred,  the proposed  transfer price, the name and address of the proposed
Transferee  and proof  satisfactory  to the Company  that the  proposed  sale or
transfer will not violate any applicable  federal or state  securities laws. The
Transfer  Notice  shall  be  signed  both by the  Optionee  and by the  proposed
Transferee  and must  constitute  a binding  commitment  of both  parties to the
transfer of the Shares.  The Company  shall have the right to purchase  all, and
not less than all, of the Shares on the terms of the  proposal  described in the
Transfer Notice (subject,  however,  to any change in such terms permitted under
Subsection  (b) below) by delivery of a notice of exercise of the Right of First
Refusal  within 30 days after the date when the Transfer  Notice was received by
the Company.  The  Company's  rights under this  Subsection  (a) shall be freely
assignable, in whole or in part.

      (b)  TRANSFER  OF SHARES.  If the Company  fails to exercise  its Right of
First  Refusal  within  30 days  after the date when it  received  the  Transfer
Notice,  the  Optionee  may,  not later  than 90 days  following  receipt of the
Transfer Notice by the Company, conclude a transfer of the Shares subject to the
Transfer  Notice on the terms and conditions  described in the Transfer  Notice,
provided that any such sale is made in compliance  with  applicable  federal and
state securities laws and not in violation of any other contractual restrictions
to which the Optionee is bound.  Any proposed  transfer on terms and  conditions
different from those described in the Transfer Notice, as well as any subsequent
proposed transfer by the Optionee,  shall again be subject to the Right of First
Refusal and shall require compliance with the procedure  described in Subsection
(a) above.  If the Company  exercises  its Right of First  Refusal,  the parties
shall  consummate  the sale of the Shares on the terms set forth in the Transfer
Notice  within 60 days after the date when the  Company  received  the  Transfer
Notice (or within such longer period as may have been  specified in the Transfer
Notice); provided,  however, that in the event the Transfer Notice provided that
payment  for  the  Shares  was to be  made  in a form  other  than  cash or cash
equivalents  paid at the time of transfer,  the Company shall have the option of
paying for the Shares with cash or cash  equivalents  equal to the present value
of the consideration described in the Transfer Notice.

      (c)  ADDITIONAL  SHARES  OR  SUBSTITUTED  SECURITIES.  In the event of the
declaration of a stock dividend,  the declaration of an  extraordinary  dividend
payable in a form other than stock, a spin-off,  a stock split, an adjustment in
conversion  ratio, a  recapitalization  or a similar  transaction  affecting the
Company's  outstanding  securities  without receipt of  consideration,  any new,
substituted  or additional  securities or other property  (including  money paid
other than as an ordinary cash dividend) which are by reason of such transaction
distributed  with respect to any Shares  subject to this Section 8 or into which
such Shares  thereby  become  convertible  shall  immediately be subject to this
Section  8.  Appropriate   adjustments  to  reflect  the  distribution  of  such
securities  or property  shall be made to the number  and/or class of the Shares
subject to this Section 8.

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      (d)  TERMINATION  OF RIGHT OF FIRST REFUSAL.  Any other  provision of this
Section 8 notwithstanding, in the event that the Stock is readily tradable on an
established  securities market when the Optionee desires to transfer Shares, the
Company  shall have no Right of First  Refusal,  and the Optionee  shall have no
obligation to comply with the procedures  prescribed by Subsections  (a) and (b)
above.

      (e) PERMITTED TRANSFERS.  This Section 8 shall not apply to (i) a transfer
by beneficiary  designation,  will or intestate succession or (ii) a transfer to
the Optionee's  spouse,  children or grandchildren or to a trust  established by
the Optionee for the benefit of the Optionee or the Optionee's spouse,  children
or grandchildren,  provided in either case that the Transferee agrees in writing
on a form  prescribed  by the  Company  to be  bound by all  provisions  of this
Agreement.  If the Optionee  transfers any Shares acquired under this Agreement,
either under this Subsection (e) or after the Company has failed to exercise the
Right of First Refusal, then this Section 8 shall apply to the Transferee to the
same extent as to the Optionee.

      (f) TERMINATION OF RIGHTS AS STOCKHOLDER.  If the Company makes available,
at the time and place and in the amount and form provided in this Agreement, the
consideration  for the Shares to be purchased in accordance with this Section 8,
then after such time the person from whom such Shares are to be purchased  shall
no longer  have any rights as a holder of such  Shares  (other than the right to
receive payment of such  consideration in accordance with this Agreement).  Such
Shares shall be deemed to have been purchased in accordance  with the applicable
provisions  hereof,  whether  or  not  the  certificate(s)  therefor  have  been
delivered as required by this Agreement.

SECTION 9. LEGALITY OF INITIAL ISSUANCE.

      No Shares  shall be issued upon the  exercise  of this  option  unless and
until the Company has determined that:

      (a) It and the  Optionee  have taken any actions  required to register the
Shares under the Securities Act or to perfect an exemption from the registration
requirements thereof;

      (b) Any  applicable  listing  requirement  of any stock  exchange or other
securities market on which Stock is listed has been satisfied; and

      (c) Any  other  applicable  provision  of  state or  federal  law has been
satisfied.

SECTION 10. NO REGISTRATION RIGHTS.

      The Company may, but shall not be  obligated  to,  register or qualify the
sale of Shares under the Securities Act or any other applicable law. The Company
shall not be obligated to take any affirmative action in order to cause the sale
of Shares under this Agreement to comply with any law.

SECTION 11. RESTRICTIONS ON TRANSFER.

      (a)  SECURITIES LAW  RESTRICTIONS.  Regardless of whether the offering and
sale of Shares under the Plan have been  registered  under the Securities Act or
have been registered or qualified  under the securities  laws of any state,  the
Company at its discretion may impose restrictions upon the sale, pledge or other
transfer of such Shares (including the placement of appropriate legends on stock
certificates  or  the  imposition  of  stop-transfer  instructions)  if,  in the
judgment of the Company,  such  restrictions are necessary or desirable in order
to achieve  compliance with the Securities Act, the securities laws of any state
or any other law.

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      (b) MARKET STAND-OFF.  In connection with any underwritten public offering
by the Company of its equity  securities  pursuant to an effective  registration
statement filed under the Securities Act, including the Company's initial public
offering,  the Optionee  shall not directly or indirectly  sell,  make any short
sale of, loan,  hypothecate,  pledge,  offer,  grant or sell any option or other
contract for the purchase of, purchase any option or other contract for the sale
of,  or  otherwise  dispose  of or  transfer,  or agree to  engage in any of the
foregoing transactions with respect to, any Shares acquired under this Agreement
without  the prior  written  consent of the  Company or its  underwriters.  Such
restriction (the "Market  Stand-Off") shall be in effect for such period of time
following the date of the final  prospectus for the offering as may be requested
by the Company or such  underwriters.  In no event,  however,  shall such period
exceed 180 days.  The Market  Stand-Off  shall in any event  terminate two years
after the date of the Company's  initial  public  offering.  In the event of the
declaration of a stock  dividend,  a spin-off,  a stock split,  an adjustment in
conversion  ratio, a  recapitalization  or a similar  transaction  affecting the
Company's  outstanding  securities  without receipt of  consideration,  any new,
substituted  or additional  securities  which are by reason of such  transaction
distributed with respect to any Shares subject to the Market Stand-Off,  or into
which such Shares thereby become  convertible,  shall  immediately be subject to
the Market Stand-Off. In order to enforce the Market Stand-Off,  the Company may
impose stop-transfer instructions with respect to the Shares acquired under this
Agreement  until  the end of the  applicable  stand-off  period.  The  Company's
underwriters  shall  be  beneficiaries  of  the  agreement  set  forth  in  this
Subsection (b). This Subsection (b) shall not apply to Shares  registered in the
public  offering under the Securities  Act, and the Optionee shall be subject to
this  Subsection  (b) only if the  directors  and  officers  of the  Company are
subject to similar arrangements.

      (c) INVESTMENT  INTENT AT GRANT.  The Optionee  represents and agrees that
the Shares to be acquired  upon  exercising  this  option  will be acquired  for
investment, and not with a view to the sale or distribution thereof.

      (d)  INVESTMENT  INTENT AT EXERCISE.  In the event that the sale of Shares
under the Plan is not  registered  under the  Securities Act but an exemption is
available which requires an investment  representation or other  representation,
the Optionee  shall  represent and agree at the time of exercise that the Shares
being acquired upon  exercising  this option are being acquired for  investment,
and not with a view to the sale or  distribution  thereof,  and shall  make such
other  representations as are deemed necessary or appropriate by the Company and
its counsel.

      (e) LEGENDS.  All  certificates  evidencing  Shares  purchased  under this
Agreement shall bear the following legend:

         "THE SHARES REPRESENTED HEREBY MAY NOT BE SOLD, ASSIGNED,  TRANSFERRED,
         ENCUMBERED OR IN ANY MANNER  DISPOSED OF, EXCEPT IN COMPLIANCE WITH THE
         TERMS OF A WRITTEN  AGREEMENT  BETWEEN THE  COMPANY AND THE  REGISTERED
         HOLDER OF THE SHARES (OR THE  PREDECESSOR  IN INTEREST TO THE  SHARES).
         SUCH  AGREEMENT  GRANTS TO THE COMPANY  CERTAIN RIGHTS OF FIRST REFUSAL
         UPON AN ATTEMPTED  TRANSFER OF THE SHARES AND CERTAIN REPURCHASE RIGHTS
         UPON  TERMINATION  OF SERVICE  WITH THE COMPANY.  THE  SECRETARY OF THE
         COMPANY WILL UPON WRITTEN  REQUEST  FURNISH A COPY OF SUCH AGREEMENT TO
         THE HOLDER HEREOF WITHOUT CHARGE."

All  certificates  evidencing  Shares  purchased  under  this  Agreement  in  an
unregistered  transaction  shall  bear the  following  legend  (and  such  other
restrictive  legends as are required or deemed advisable under the provisions of
any applicable law):

                                       8

<PAGE>

         "THE  SHARES  REPRESENTED  HEREBY  HAVE NOT BEEN  REGISTERED  UNDER THE
         SECURITIES ACT OF 1933, AS AMENDED,  AND MAY NOT BE SOLD,  PLEDGED,  OR
         OTHERWISE  TRANSFERRED WITHOUT AN EFFECTIVE  REGISTRATION THEREOF UNDER
         SUCH ACT OR AN OPINION OF COUNSEL,  SATISFACTORY TO THE COMPANY AND ITS
         COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED."

      (f) REMOVAL OF LEGENDS. If, in the opinion of the Company and its counsel,
any legend  placed on a stock  certificate  representing  Shares sold under this
Agreement  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 without such legend.

      (g)  ADMINISTRATION.  Any  determination by the Company and its counsel in
connection  with  any of the  matters  set  forth  in this  Section  11 shall be
conclusive and binding on the Optionee and all other persons.

SECTION 12. ADJUSTMENT OF SHARES.

      In the event of any transaction described in Section 8(a) of the Plan, the
terms of this  option  (including,  without  limitation,  the number and kind of
Shares  subject to this option and the Exercise  Price) shall be adjusted as set
forth in Section 8(a) of the Plan. In the event that the Company is a party to a
merger or consolidation, this option shall be subject to the agreement of merger
or consolidation, as provided in Section 8(b) of the Plan.

SECTION 13. MISCELLANEOUS PROVISIONS.

      (a) RIGHTS AS A  STOCKHOLDER.  Neither  the  Optionee  nor the  Optionee's
representative shall have any rights as a stockholder with respect to any Shares
subject to this  option  until the  Optionee  or the  Optionee's  representative
becomes  entitled  to receive  such  Shares by filing a notice of  exercise  and
paying the Purchase Price pursuant to Sections 4 and 5.

      (b) NO  RETENTION  RIGHTS.  Nothing  in this  option or in the Plan  shall
confer  upon the  Optionee  any right to  continue  in Service for any period of
specific duration or interfere with or otherwise  restrict in any way the rights
of the Company (or any Parent or Subsidiary employing or retaining the Optionee)
or of the  Optionee,  which  rights are hereby  expressly  reserved by each,  to
terminate  his or her  Service at any time and for any  reason,  with or without
cause.

      (c) NOTICE.  Any notice  required by the terms of this Agreement  shall be
given in writing and shall be deemed  effective  upon personal  delivery or upon
deposit with the United States Postal Service,  by registered or certified mail,
with postage and fees  prepaid.  Notice shall be addressed to the Company at its
principal  executive  office and to the  Optionee at the address  that he or she
most recently provided to the Company.

      (d) ENTIRE AGREEMENT. The Notice of Stock Option Grant, this Agreement and
the Plan constitute the entire  contract  between the parties hereto with regard
to  the  subject   matter   hereof.   They   supersede  any  other   agreements,
representations  or understandings  (whether oral or written and whether express
or implied) which relate to the subject matter hereof.

      (e) CHOICE OF LAW. This  Agreement  shall be governed by, and construed in
accordance  with, the laws of the State of California,  as such laws are applied
to contracts entered into and performed in such State.

                                       9

<PAGE>

SECTION 14. DEFINITIONS.

      (a) "AGREEMENT" shall mean this Stock Option Agreement.

      (b) "BOARD OF DIRECTORS" shall mean the Board of Directors of the Company,
as  constituted  from time to time or, if a Committee has been  appointed,  such
Committee.

      (c)  "CAUSE"  shall mean (i) the  unauthorized  use or  disclosure  of the
confidential  information  or  trade  secrets  of  the  Company,  which  use  or
disclosure causes material harm to the Company, (ii) conviction of, or a plea of
"guilty" or "no contest" to, a felony under the laws of the United States or any
state  thereof,  (iii) gross  negligence  or (iv)  continued  failure to perform
assigned  duties  after  receiving  written   notification  from  the  Board  of
Directors. The foregoing,  however, shall not be deemed an exclusive list of all
acts or omissions that the Company (or a Parent or  Subsidiary)  may consider as
grounds for the discharge of the Optionee without Cause.

      (d) "CHANGE IN CONTROL" shall mean:

            (i) The  consummation  of a merger or  consolidation  of the Company
      with or into  another  entity or any other  corporate  reorganization,  if
      persons who were not stockholders of the Company immediately prior to such
      merger,  consolidation or other  reorganization own immediately after such
      merger,  consolidation or other  reorganization  50% or more of the voting
      power  of the  outstanding  securities  of each of (A) the  continuing  or
      surviving entity and (B) any direct or indirect parent corporation of such
      continuing or surviving entity; or

            (ii) The sale, transfer or other disposition of all or substantially
      all of the Company's assets.

A transaction shall not constitute a Change in Control if its sole purpose is to
change the state of the Company's  incorporation  or to create a holding company
that will be owned in substantially the same proportions by the persons who held
the Company's securities immediately before such transaction.

      (e) "CODE" shall mean the Internal Revenue Code of 1986, as amended.

      (f)  "COMMITTEE"  shall mean a  committee  of the Board of  Directors,  as
described in Section 2 of the Plan.

      (g) "COMPANY" shall mean Pine Photonics  Communications,  Inc., a Delaware
corporation.

      (h)  "CONSULTANT"  shall mean a person who performs bona fide services for
the Company,  a Parent or a Subsidiary  as a  consultant  or advisor,  excluding
Employees and Outside Directors.

      (i) "DATE OF GRANT"  shall mean the date  specified in the Notice of Stock
Option  Grant,  which date shall be the later of (i) the date on which the Board
of  Directors  resolved  to  grant  this  option  or (ii) the  first  day of the
Optionee's Service.

      (j)  "DISABILITY"  shall mean that the Optionee is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment.

                                       10

<PAGE>

      (k) "EMPLOYEE"  shall mean any individual who is a common-law  employee of
the Company, a Parent or a Subsidiary.

      (l)  "EXERCISE  PRICE"  shall  mean the  amount for which one Share may be
purchased  upon  exercise of this  option,  as  specified in the Notice of Stock
Option Grant.

      (m) "FAIR MARKET  VALUE"  shall mean the fair market value of a Share,  as
determined by the Board of Directors in good faith. Such determination  shall be
conclusive and binding on all persons.

      (n) "INVOLUNTARY TERMINATION" shall mean the termination of the Optionee's
Service by reason of:

            (i) The involuntary discharge of the Optionee by the Company (or the
      Parent or  Subsidiary  employing him or her) for reasons other than Cause;
      or

            (ii) The  voluntary  resignation  of the  Optionee  following  (A) a
      change  in his or  her  position  with  the  Company  (or  the  Parent  or
      Subsidiary  employing him or her) that materially reduces his or her level
      of authority or responsibility, (B) a reduction in his or her compensation
      (including  base salary,  fringe  benefits and  participation  in bonus or
      incentive  programs  based on  corporate  performance)  or (C)  receipt of
      notice that his or her principal  workplace will be relocated more than 30
      miles.

      (o) "ISO" shall mean an  employee  incentive  stock  option  described  in
Section 422(b) of the Code.

      (p)  "NONSTATUTORY  OPTION"  shall mean a stock  option not  described  in
Sections 422(b) or 423(b) of the Code.

      (q) "NOTICE OF STOCK OPTION  GRANT" shall mean the document so entitled to
which this Agreement is attached.

      (r)  "OPTIONEE"  shall mean the person named in the Notice of Stock Option
Grant.

      (s) "OUTSIDE  DIRECTOR"  shall mean a member of the Board of Directors who
is not an Employee.

      (t)  "PARENT"  shall mean any  corporation  (other than the Company) in an
unbroken  chain  of  corporations  ending  with  the  Company,  if  each  of the
corporations  other than the Company  owns stock  possessing  50% or more of the
total  combined  voting  power  of all  classes  of  stock  in one of the  other
corporations in such chain.

      (u) "PLAN" shall mean the Pine Photonics  Communications,  Inc. 2000 Stock
Plan, as in effect on the Date of Grant.

      (v)  "PURCHASE  PRICE" shall mean the  Exercise  Price  multiplied  by the
number of Shares with respect to which this option is being exercised.

      (w) "RESTRICTED  SHARE" shall mean a Share that is subject to the Right of
Repurchase.

                                       11

<PAGE>

      (x)  "RIGHT OF FIRST  REFUSAL"  shall  mean the  Company's  right of first
refusal described in Section 8.

      (y) "RIGHT OF  REPURCHASE"  shall mean the  Company's  right of repurchase
described in Section 7.

      (z) "SECURITIES ACT" shall mean the Securities Act of 1933, as amended.

      (aa)  "SERVICE"  shall mean  service as an Employee,  Outside  Director or
Consultant.

      (bb) "SHARE" shall mean one share of Stock, as adjusted in accordance with
Section 8 of the Plan (if applicable).

      (cc) "STOCK" shall mean the Common Stock of the Company,  with a par value
of $0.0001 per Share.

      (dd) "SUBSIDIARY"  shall mean any corporation  (other than the Company) in
an unbroken chain of  corporations  beginning  with the Company,  if each of the
corporations  other than the last  corporation  in the unbroken chain owns stock
possessing  50% or more of the total  combined  voting  power of all  classes of
stock in one of the other corporations in such chain.

      (ee) "TRANSFEREE"  shall mean any person to whom the Optionee has directly
or indirectly transferred any Share acquired under this Agreement.

      (ff)  "TRANSFER  NOTICE"  shall mean the notice of a proposed  transfer of
Shares described in Section 8.

                                       12<PAGE>

                                                                    Exhibit 10.3

                                  OpNext, Inc.

                       2001 Long-Term Stock Incentive Plan

                  SECTION 1. Purpose. The purposes of this OpNext, Inc. 2001
Long-Term Stock Incentive Plan are to (i) attract and retain exceptional
officers and other key employees, consultants and directors; (ii) motivate such
individuals by means of performance-related incentives to achieve long range
performance goals and (iii) enable such individuals to participate in the
long-term growth and financial success of the Company.

                  SECTION 2. Definitions. As used in the Plan, the following
terms shall have the meanings set forth below:

                           "Affiliate" shall mean (i) any entity that, directly
         or indirectly, is controlled by, or controls or is under common control
         with, the Company and (ii) any entity in which the Company has a
         significant equity interest, in either case as determined by the
         Committee.

                           "Award" shall mean any Option, Stock Appreciation
         Right, Restricted Stock Award, Restricted Stock Unit Award, Performance
         Award, or Other Stock-Based Award.

                           "Award Agreement" shall mean any written agreement,
         contract, or other instrument or document evidencing any Award.

                           "Board" shall mean the Board of Directors of the
         Company.

                           "Code" shall mean the Internal Revenue Code of 1986,
         as amended from time to time.

                           "Committee" shall mean either (i) the Board or (ii) a
         committee of the Board designated by the Board to administer the Plan.

                           "Company" shall mean OpNext, Inc., together with any
         successor thereto.

                           "Exchange Act" shall mean the Securities Exchange Act
         of 1934, as amended.

                           "Fair Market Value" shall mean, as of any date, (i)
         the mean between the high and low sales prices of the Shares as
         reported on the composite tape for securities traded on the New York
         Stock Exchange for such date (or if not then trading on the New York
         Stock Exchange, the mean between the high and low sales price of the
         Shares on the stock exchange or over-the-counter market on which the
         Shares are principally trading on such date), or if there were no sales
         on such date, on the closest preceding date on which there were sales
         of Shares, or (ii) in the event there shall be no public market for the
         Shares on such date, the fair market value of the Shares as determined
         in good faith by the Committee.

<PAGE>

                                                                               2

                           "Incentive Stock Option" shall mean a right to
         purchase Shares from the Company that is granted under Section 6 of the
         Plan and that is intended to meet the requirements of Section 422 of
         the Code or any successor provision thereto.

                           "Non-Qualified Stock Option" shall mean a right to
         purchase Shares from the Company that is granted under Section 6 of the
         Plan and that is not intended to be an Incentive Stock Option.

                           "Option" shall mean an Incentive Stock Option or a
         Non-Qualified Stock Option.

                           "Other Stock-Based Award" shall mean any right

         granted under Section 9 of the Plan.

                           "Participant" shall mean any officer or other key
         employee, consultant or director of the Company or its Subsidiaries or
         other Person eligible for an Award under Section 5 and selected by the
         Committee to receive an Award under the Plan.

                           "Person" shall mean any individual, corporation,
         partnership, limited liability company, association, joint-stock
         company, trust, unincorporated organization, government or political
         subdivision thereof or other entity.

                           "Plan" shall mean this OpNext, Inc. 2001 Long-Term
         Stock Incentive Plan, as amended from time to time.

                           "Restricted Stock" shall mean any Share granted under
         Section 8 of the Plan.

                           "Restricted Stock Unit" shall mean any unit granted
         under Section 8 of the Plan.

                           "Shares" shall mean the Class B common shares of the
         Company, $.01 par value, or such other securities of the Company (i)
         into which such Class B common shares shall be changed by reason of a
         recapitalization, merger, consolidation, split-up, combination,
         exchange of shares or other similar transaction or (ii) as may be
         determined by the Committee pursuant to Section 4(b).

                           "Stock Appreciation Right" shall mean any right
         granted under Section 7 of the Plan.

                           "Subsidiary" shall mean (i) any entity that, directly
         or indirectly, is controlled by the Company and (ii) any entity in
         which the Company has a significant equity interest, in either case as
         determined by the Committee.

                           "Substitute Awards" shall have the meaning specified
         in Section 4(c).

<PAGE>

                                                                               3

                  SECTION 3. Administration.

                  (a) The Plan shall be administered by the Committee. Subject
to the terms of the Plan and applicable law, and in addition to other express
powers and authorizations conferred on the Committee by the Plan, the Committee
shall have full power and authority to: (i) designate Participants; (ii)
determine the type or types of Awards to be granted to a Participant; (iii)
determine the number of Shares to be covered by, or with respect to which
payments, rights, or other matters are to be calculated in connection with,
Awards; (iv) determine the terms and conditions of any Award; (v) determine
whether, to what extent, and under what circumstances Awards may be settled or
exercised in cash, Shares, other securities, other Awards or other property, or
canceled, forfeited, or suspended and the method or methods by which Awards may
be settled, exercised, canceled, forfeited, or suspended; (vi) determine
whether, to what extent, and under what circumstances cash, Shares, other
securities, other Awards, other property, and other amounts payable with respect
to an Award shall be deferred either automatically or at the election of the
holder thereof or of the Committee; (vii) interpret, administer or reconcile any
inconsistency, correct any default and/or supply any omission in the Plan and
any instrument or agreement relating to, or Award made under, the Plan; (viii)
establish, amend, suspend, or waive such rules and regulations and appoint such
agents as it shall deem appropriate for the proper administration of the Plan;
and (ix) make any other determination and take any other action that the
Committee deems necessary or desirable for the administration of the Plan.

                  (b) Unless otherwise expressly provided in the Plan, all
designations, determinations, interpretations, and other decisions under or with
respect to the Plan or any Award shall be within the sole discretion of the
Committee, may be made at any time and shall be final, conclusive, and binding
upon all Persons, including the Company, any Affiliate, any Participant, any
holder or beneficiary of any Award, and any shareholder.

                  (c) No member of the Committee shall be liable for any action
or determination made in good faith with respect to the Plan or any Award
hereunder.

                  SECTION 4. Shares Available for Awards.

                  (a) Shares Available. Subject to adjustment as provided in
Section 4(b), the aggregate number of Shares with respect to which Awards may be
granted under the Plan shall be 22,500,000; and the aggregate number of Shares
with respect to which Options may be granted under the Plan shall be 22,500,000.
If, after the effective date of the Plan, any Shares covered by an Award granted
under the Plan, or to which such an Award relates, are forfeited, or if an Award
has expired, terminated or been canceled for any reason whatsoever (other than
by reason of exercise or vesting), then the Shares covered by such Award shall
again be, or shall become, Shares with respect to which Awards may be granted
hereunder.

                  (b) Adjustments. Notwithstanding any provisions of the Plan to
the contrary, in the event that the Committee determines that any dividend or
other distribution (whether in the form of cash, Shares, other securities, or
other property), recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, or exchange of Shares or other securities of the Company, issuance
of warrants or other rights to

<PAGE>

                                                                               4

purchase Shares or other securities of the Company, or other similar corporate
transaction or event affects the Shares such that an adjustment is determined by
the Committee in its discretion to be appropriate in order to prevent dilution
or enlargement of the benefits or potential benefits intended to be made
available under the Plan, then the Committee shall, in such manner as it may
deem equitable, adjust any or all of (i) the number of Shares or other
securities of the Company (or number and kind of other securities or property)
with respect to which Awards may be granted, (ii) the number of Shares or other
securities of the Company (or number and kind of other securities or property)
subject to outstanding Awards, and (iii) the grant or exercise price with
respect to any Award or, if deemed appropriate, make provision for a cash
payment to the holder of an outstanding Award in consideration for the
cancellation of such Award, which, in the case of Options and Stock Appreciation
Rights shall equal the excess, if any, of the Fair Market Value of the Shares
subject to such Options or Stock Appreciation Rights over the aggregate exercise
price or grant price of such Options or Stock Appreciation Rights.

                  (c) Substitute Awards. Awards may, in the discretion of the
Committee, be made under the Plan in assumption of, or in substitution for,
outstanding awards previously granted by the Company or its Affiliates or a
company acquired by the Company or with which the Company combines ("Substitute
Awards"). The number of Shares underlying any Substitute Awards shall be counted
against the aggregate number of Shares available for Awards under the Plan.

                  (d) Sources of Shares Deliverable Under Awards. Any Shares
delivered pursuant to an Award may consist, in whole or in part, of authorized
and unissued Shares or of treasury Shares.

                  SECTION 5. Eligibility. Any officer or other key employee,
consultant or director of the Company or any of its Subsidiaries (including any
prospective officer, key employee, consultant or director) or other Person
designated by the Committee shall be eligible to be designated a Participant.

                  SECTION 6. Stock Options.

                  (a) Grant. Subject to the provisions of the Plan, the
Committee shall have sole and complete authority to determine the Participants
to whom Options shall be granted, the number of Shares to be covered by each
Option, the exercise price therefor and the conditions and limitations
applicable to the exercise of the Option, which terms shall be set forth in the
applicable Award Agreement. The Committee shall have the authority to grant
Incentive Stock Options, or to grant Non-Qualified Stock Options, or to grant
both types of Options. In the case of Incentive Stock Options, the terms and
conditions of such grants shall be subject to and comply with such rules as may
be prescribed by Section 422 of the Code, as from time to time amended, and any
regulations implementing such statute. All Options when granted under the Plan
are intended to be Non-Qualified Stock Options, unless the applicable Award
Agreement expressly states that the Option is intended to be an Incentive Stock
Option. If an Option is intended to be an Incentive Stock Option, and if for any
reason such Option (or any portion thereof) shall not qualify as an Incentive
Stock Option, then, to the extent of such nonqualification, such Option (or
portion thereof) shall be regarded as a Non-Qualified Stock

<PAGE>

                                                                               5

Option appropriately granted under the Plan; provided that such Option (or
portion thereof) otherwise complies with the Plan's requirements relating to
Non-Qualified Stock Options.

                  (b) Exercise Price. The Committee shall establish the exercise
price at the time each Option is granted, which exercise price shall be set
forth in the applicable Award Agreement.

                  (c) Exercise. Each Option shall be exercisable at such times
and subject to such terms and conditions as the Committee may, in its sole
discretion, specify in the applicable Award Agreement or thereafter. The
Committee may impose such conditions with respect to the exercise of Options,
including without limitation, any relating to the application of federal or
state securities laws, as it may deem necessary or advisable.

                  (d) Payment.

                           (i) No Shares shall be delivered pursuant to any
exercise of an Option until payment in full of the aggregate exercise price
therefor and any related tax is received by the Company. Such payment may be
made in cash, or its equivalent, or (x) by exchanging Shares owned by the
optionee (which are not the subject of any pledge or other security interest and
which have been owned by such optionee for at least 6 months) or (y) at any time
that the Shares are publicly traded on a nationally recognized stock exchange,
through delivery of irrevocable instructions to a broker (as selected or
approved by the Committee) to sell the Shares otherwise deliverable upon the
exercise of the Option and to deliver promptly to the Company an amount equal to
the aggregate exercise price, or by a combination of the foregoing, provided
that the combined value of all cash and cash equivalents and the Fair Market
Value of any such Shares so tendered to the Company as of the date of such
tender is at least equal to such aggregate exercise price.

                           (ii) Wherever in this Plan or any Award Agreement a
Participant is permitted to pay the exercise price of an Option or taxes
relating to the exercise of an Option by delivering Shares, the Participant may,
subject to procedures satisfactory to the Committee, satisfy such delivery
requirement by presenting proof of beneficial ownership of such Shares, in which
case the Company shall treat the Option as exercised without further payment and
shall withhold such number of Shares from the Shares acquired by the exercise of
the Option.

                  SECTION 7. Stock Appreciation Rights.

                  (a) Grant. Subject to the provisions of the Plan, the
Committee shall have sole and complete authority to determine the Participants
to whom Stock Appreciation Rights shall be granted, the number of Shares to be
covered by each Stock Appreciation Right Award, the grant price thereof and the
conditions and limitations applicable to the exercise thereof, which terms shall
be set forth in the applicable Award Agreement. Stock Appreciation Rights may be
granted in tandem with another Award, in addition to another Award, or
freestanding and unrelated to another Award. Stock Appreciation Rights granted
in tandem with or in addition to an Award may be granted either at the same time
as the Award or at a later time.

                  (b) Exercise and Payment. A Stock Appreciation Right shall
entitle the Participant to receive an amount equal to the excess of the Fair
Market Value of a Share on the

<PAGE>

                                                                               6

date of exercise of the Stock Appreciation Right over the grant price thereof.
The Committee shall determine whether a Stock Appreciation Right shall be
settled in cash, Shares or a combination of cash and Shares.

                  (c) Other Terms and Conditions. Subject to the terms of the
Plan and any applicable Award Agreement, the Committee shall determine, at or
after the grant of a Stock Appreciation Right, the term, methods of exercise,
methods and form of settlement, and any other terms and conditions of any Stock
Appreciation Right. Any such determination by the Committee may be changed by
the Committee from time to time and may govern the exercise of Stock
Appreciation Rights granted or exercised prior to such determination as well as
Stock Appreciation Rights granted or exercised thereafter. The Committee may
impose such conditions or restrictions on the exercise of any Stock Appreciation
Right as it shall deem appropriate.

                  SECTION 8. Restricted Stock and Restricted Stock Units.

                  (a) Grant. Subject to the provisions of the Plan, the
Committee shall have sole and complete authority to determine the Participants
to whom Shares of Restricted Stock and Restricted Stock Units shall be granted,
the number of Shares of Restricted Stock and/or the number of Restricted Stock
Units to be granted to each Participant, the duration of the period during
which, and the conditions, if any, under which, the Restricted Stock and
Restricted Stock Units may be forfeited to the Company, and the other terms and
conditions of such Awards, which terms shall be set forth in the applicable
Award Agreement.

                  (b) Transfer Restrictions. Shares of Restricted Stock and
Restricted Stock Units may not be sold, assigned, transferred, pledged or
otherwise encumbered, except, in the case of Restricted Stock, as provided in
the Plan or the applicable Award Agreements. Certificates issued in respect of
Shares of Restricted Stock shall be registered in the name of the Participant
and deposited by such Participant, together with a stock power endorsed in
blank, with the Company. Upon the lapse of the restrictions applicable to such
Shares of Restricted Stock, the Company shall deliver such certificates to the
Participant or the Participant's legal representative.

                  (c) Payment. Each Restricted Stock Unit shall have a value
equal to the Fair Market Value of a Share. Restricted Stock Units shall be paid
to the Participant in cash, Shares, other securities or other property, as
determined in the sole discretion of the Committee, upon the lapse of the
restrictions applicable thereto, or otherwise in accordance with the applicable
Award Agreement. Dividends paid on any Shares of Restricted Stock may be paid
directly to the Participant, withheld by the Company subject to vesting of the
Shares of Restricted Stock pursuant to the terms of the applicable Award
Agreement, or may be reinvested in additional Shares of Restricted Stock or in
additional Restricted Stock Units, as determined by the Committee in its sole
discretion.

                  SECTION 9. Other Stock-Based Awards.

                  (a) General. The Committee shall have authority to grant to
Participants an "Other Stock-Based Award", which shall consist of any right
which is (i) not an Award

<PAGE>

                                                                               7

described in Sections 6 through 8 above and (ii) an Award of Shares or an Award
denominated or payable in, valued in whole or in part by reference to, or
otherwise based on or related to, Shares (including, without limitation,
securities convertible into Shares), as deemed by the Committee to be consistent
with the purposes of the Plan. Subject to the terms of the Plan and any
applicable Award Agreement, the Committee shall determine the terms and
conditions of any such Other Stock-Based Award, including the price, if any, at
which securities may be purchased pursuant to any Other Stock-Based Award
granted under this Plan.

                  (b) Dividend Equivalents. In the sole and complete discretion
of the Committee, an Award, whether made as an Other Stock-Based Award under
this Section 9 or as an Award granted pursuant to Sections 6 through 8 hereof,
may provide the Participant with dividends or dividend equivalents, payable in
cash, Shares, other securities or other property on a current or deferred basis.

                  SECTION 10. Amendment and Termination.

                  (a) Amendments to the Plan. The Board may amend, alter,
suspend, discontinue, or terminate the Plan or any portion thereof at any time;
provided that any such amendment, alteration, suspension, discontinuance or
termination that would impair the rights of any Participant or any holder or
beneficiary of any Award theretofore granted shall not to that extent be
effective without the consent of the affected Participant, holder or
beneficiary.

                  (b) Amendments to Awards. The Committee may waive any
conditions or rights under, amend any terms of, or alter, suspend, discontinue,
cancel or terminate, any Award theretofore granted, prospectively or
retroactively; provided that any such waiver, amendment, alteration, suspension,
discontinuance, cancellation or termination that would impair the rights of any
Participant or any holder or beneficiary of any Award theretofore granted shall
not to that extent be effective without the consent of the affected Participant,
holder or beneficiary.

                  SECTION 11. General Provisions.

                  (a) Nontransferability.

                           (i) Each Award, and each right under any Award, shall
be exercisable only by the Participant, except that upon death or disability of
a Participant, if permissible under applicable law, it shall be exercisable by
the Participant's legal guardian or representative.

                           (ii) Unless otherwise specified in an Award
Agreement, no Award may be transferred or assigned by a Participant otherwise
than by will or by the laws of descent and distribution, and any such purported
transfer or assignment shall be void and unenforceable against the Company or
any Affiliate; provided that the designation of a beneficiary shall not
constitute a transfer or assignment.

                  (b) No Rights to Awards. No Participant or other Person shall
have any claim to be granted any Award, and there is no obligation for
uniformity of treatment of Participants, or holders or beneficiaries of Awards.
The terms and conditions of Awards and the Committee's determinations and
interpretations with respect thereto need not be the same with respect to each
Participant (whether or not such Participants are similarly situated).

<PAGE>

                                                                               8

                  (c) Share Certificates. All certificates for Shares or other
securities of the Company or any Affiliate delivered under the Plan pursuant to
any Award or the exercise thereof shall be subject to such stop transfer orders
and other restrictions as the Committee may deem advisable under the Plan or the
rules, regulations, and other requirements of the Securities and Exchange
Commission, any stock exchange upon which such Shares or other securities are
then listed, and any applicable Federal or state laws, and the Committee may
cause a legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.

                  (d) Withholding.

                           (i) A Participant may be required to pay to the
Company or any Affiliate and the Company or any Affiliate shall have the right
and is hereby authorized to withhold from any Award, from any payment due or
transfer made under any Award or under the Plan or from any compensation or
other amount owing to a Participant the amount (in cash, Shares, other
securities, other Awards or other property) of any applicable withholding taxes
in respect of an Award, its exercise, or any payment or transfer under an Award
or under the Plan and to take such other action as may be necessary in the
opinion of the Company to satisfy all obligations for the payment of such taxes.
The Committee may provide for additional cash payments to holders of Awards to
defray or offset any tax arising from the grant, vesting, exercise or payments
of any Award.

                           (ii) Without limiting the generality of clause (i)
above, a Participant may satisfy, in whole or in part, the foregoing withholding
liability by delivery of Shares owned by the Participant (which are not subject
to any pledge or other security interest and which have been owned by the
Participant for at least 6 months) with a Fair Market Value equal to such
withholding liability or by having the Company withhold from the number of
Shares otherwise issuable pursuant to the exercise of the Award a number of
Shares with a Fair Market Value equal to such withholding liability.

                           (iii) Notwithstanding any provision of this Plan to
the contrary, in connection with the transfer of an Award pursuant to Section
11(a) of the Plan, the transferee shall remain liable for any withholding taxes
required to be withheld upon the exercise of such Award by such transferee.

                  (e) Award Agreements. Each Award hereunder shall be evidenced
by an Award Agreement which shall be delivered to the Participant and shall
specify the terms and conditions of the Award and any rules applicable thereto,
including but not limited to the effect on such Award of the death, disability
or termination of employment or service of a Participant and the effect, if any,
of such other events as may be determined by the Committee.

                  (f) No Limit on Other Compensation Arrangements. Nothing
contained in the Plan shall prevent the Company or any Affiliate from adopting
or continuing in effect other compensation arrangements, which may, but need
not, provide for the grant of options, restricted stock, Shares and other types
of Awards provided for hereunder (subject to shareholder approval if such
approval is required), and such arrangements may be either generally applicable
or applicable only in specific cases.

<PAGE>
                                                                               9

                  (g) No Right to Employment. The grant of an Award shall not be
construed as giving a Participant the right to be retained in the employ of, or
in any consulting relationship to, the Company or any Affiliate. Further, the
Company or an Affiliate may at any time dismiss a Participant from employment or
discontinue any consulting relationship, free from any liability or any claim
under the Plan, unless otherwise expressly provided in the Plan or in any Award
Agreement.

                  (h) No Rights as Stockholder. Subject to the provisions of the
applicable Award, no Participant or holder or beneficiary of any Award shall
have any rights as a stockholder with respect to any Shares to be distributed
under the Plan until he or she has become the holder of such Shares.
Notwithstanding the foregoing, in connection with each grant of Restricted Stock
hereunder, the applicable Award shall specify if and to what extent the
Participant shall not be entitled to the rights of a stockholder in respect of
such Restricted Stock.

                  (i) Governing Law. The validity, construction, and effect of
the Plan and any rules and regulations relating to the Plan and any Award
Agreement shall be determined in accordance with the laws of the State of New
York, without regard to principles of conflicts of laws.

                  (j) Severability. If any provision of the Plan or any Award is
or becomes or is deemed to be invalid, illegal, or unenforceable in any
jurisdiction or as to any Person or Award, or would disqualify the Plan or any
Award under any law deemed applicable by the Committee, such provision shall be
construed or deemed amended to conform to the applicable laws, or if it cannot
be construed or deemed amended without, in the determination of the Committee,
materially altering the intent of the Plan or the Award, such provision shall be
stricken as to such jurisdiction, Person or Award and the remainder of the Plan
and any such Award shall remain in full force and effect.

                  (k) Other Laws. The Committee may refuse to issue or transfer
any Shares or other consideration under an Award if, acting in its sole
discretion, it determines that the issuance or transfer of such Shares or such
other consideration might violate any applicable law or regulation or entitle
the Company to recover the same under Section 16(b) of the Exchange Act, and any
payment tendered to the Company by a Participant, other holder or beneficiary in
connection with the exercise of such Award shall be promptly refunded to the
relevant Participant, holder or beneficiary. Without limiting the generality of
the foregoing, no Award granted hereunder shall be construed as an offer to sell
securities of the Company, and no such offer shall be outstanding, unless and
until the Committee in its sole discretion has determined that any such offer,
if made, would be in compliance with all applicable requirements of the U.S.
federal securities laws.

                  (l) No Trust or Fund Created. Neither the Plan nor any Award
shall create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Affiliate and a Participant or
any other Person. To the extent that any Person acquires a right to receive
payments from the Company or any Affiliate pursuant to an Award, such right
shall be no greater than the right of any unsecured general creditor of the
Company or any Affiliate.

<PAGE>

                                                                              10

                  (m) No Fractional Shares. No fractional Shares shall be issued
or delivered pursuant to the Plan or any Award, and the Committee shall
determine whether cash, other securities, or other property shall be paid or
transferred in lieu of any fractional Shares or whether such fractional Shares
or any rights thereto shall be canceled, terminated, or otherwise eliminated.

                  (n) Headings. Headings are given to the Sections and
subsections of the Plan solely as a convenience to facilitate reference. Such
headings shall not be deemed in any way material or relevant to the construction
or interpretation of the Plan or any provision thereof.

                  SECTION 12. Term of the Plan.

                  (a) Effective Date. The Plan shall be effective as of July 31,
2001.

                  (b) Expiration Date. No Award shall be granted under the Plan
after December 31, 2011. Unless otherwise expressly provided in the Plan or in
an applicable Award Agreement, any Award granted hereunder may continue after
December 31, 2011.

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