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                                                                   EXHIBIT 10.42

                             MACROVISION CORPORATION
                  EXECUTIVE SEVERANCE AND ARBITRATION AGREEMENT

      THIS EXECUTIVE SEVERANCE AND ARBITRATION AGREEMENT is made and entered
into as of June 24, 2002, by and between Macrovision Corporation, a Delaware
corporation (the "Company") and Ian R. Halifax ("Executive").

      WHEREAS, the Board of Directors (the "Board") of the Company has
determined that, in the event of a possible, threatened or pending sale or other
change in control of the Company, it is imperative that the Company and the
Board be able to rely upon Executive to continue in Executive's position, and
that the Company be able to receive and rely upon Executive's advice, if
requested, as to the best interests of the Company and its shareholders without
concern that Executive might be distracted by the personal uncertainties and
risks created by any such possible transactions; and
      WHEREAS, in connection with such a change in control, Executive may, in
addition to Executive's regular duties, be called upon to assist in the
assessment of any such possible transactions, advise management and the Board as
to whether such proposals would be in the best interests of the Company and its
shareholders, and to take such other actions as the Board might determine to be
appropriate; and
      WHEREAS, the Company's Compensation Committee has determined that
Executive should be provided severance benefits in the event his employment is
terminated without cause in the absence of a change in control, so that
Executive will not be distracted by personal uncertainties and risks concerning
his employment with the Company; and
      WHEREAS, the Board and the Compensation Committee have authorized the
Company to enter into an agreement with Executive providing severance benefits
as set forth herein;
      NOW, THEREFORE, to assure the Company that it will have the continued
dedication of Executive and the availability of Executive's advice and counsel
through the occurrence of any Change in Control of the Company, and to induce
Executive to remain in the employ of the Company, and for other good and
valuable consideration, the Company and Executive agree as follows:

      1.                DEFINITIONS.

                  (a)   "CAUSE" means the occurrence of any one or more of the
      following: (i) conviction of any felony or any act of fraud,
      misappropriation or embezzlement which has an immediate and materially
      adverse effect on the Company or a Subsidiary, (ii) engaging in a
      fraudulent act to the material damage or prejudice of the Company or a
      Subsidiary or in conduct or activities materially damaging to the
      property, business or reputation of the Company or a Subsidiary, (iii)
      willful and repeated failure to comply in any material respect with the
      terms of any applicable employment agreement or any lawful written
      policies or directives of the Board or the Company's chief executive
      officer which have an immediate and materially adverse effect on the
      Company or a Subsidiary and which have not been corrected within 30 days
      after written notice from the Company of such failure, (iv) any material
      act or omission involving gross negligence or willful misconduct in the
      performance of employment duties which has an immediate and materially
      adverse effect on the Company or a Subsidiary and which has not been
      corrected within 30 days after written notice from the Company, or (v)
      material breach of any other agreement with the Company, which has an
      immediate and materially adverse effect on the Company or a Subsidiary and
      which has not been cured within 30 days after written notice from the
      Company of such breach.

                  (b)   "CHANGE IN CONTROL" means any of the following events
      (i) any "person" or "group" (as defined in or pursuant to Sections 13(d)
      or 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
      Act")) other than the Company, is or becomes the "beneficial owner" (as
      defined in Rule 13d-3 promulgated under the Exchange Act), directly or
      indirectly

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      (including by holding securities which are exercisable for or convertible
      into shares of capital stock of the Company), of securities of the Company
      representing 50% or more of the voting power of the outstanding shares of
      capital stock of the Company entitled to vote generally in the election of
      directors; or, (ii) the Company sells or exchanges, through merger,
      assignment or otherwise, in one or more transactions, other than in the
      ordinary course of business, assets which provided at least seventy
      percent (70%) of the revenues or pre-tax net income of the Company and its
      Subsidiaries on a consolidated basis during the most recently-completed
      fiscal year, or, (iii) Continuing Directors cease to constitute at least a
      majority of the Board. Notwithstanding the foregoing, the following events
      shall not constitute a Change in Control: any acquisition of beneficial
      ownership pursuant to (i) a reclassification, however effected, of the
      Company's authorized common stock, or (ii) a corporate reorganization
      involving the Company or a Subsidiary which does not result in a material
      change in the ultimate ownership by the shareholders of the Company
      (through their ownership of the Company or its successor resulting from
      the reorganization) of the assets of the Company and its Subsidiaries, but
      only if such reclassification or reorganization has been approved by the
      Board.

                  (c)   "CONTINUING DIRECTOR" means (i) each Director in office
      on January 1, 2002, and (ii) any successor to any such Director whose
      nomination or selection was approved by a majority of the Directors in
      office at the time of the Director's nomination or selection.

                  (d)   "GOOD REASON" means the occurrence of any of the
      following without the employee's consent: (i) a substantial diminution in
      the employee's status, position or responsibilities, or the assignment to
      the employee of any duties or responsibilities that are inconsistent with
      the employee's status, position or responsibilities; (ii) a reduction in
      the employee's base salary; or (iii) a relocation of the employee's
      principal place of employment to a new work site requiring an increase in
      one-way commute from employee's residence of more than thirty-five (35)
      miles.

                  (e)   "SUBSIDIARY" means (i) any corporation, foreign or
      domestic, in which the Company directly or indirectly owns 50% or more of
      the issued and outstanding voting stock on an "as converted basis" and
      (ii) any partnership, foreign or domestic, in which the Company owns a
      direct or indirect interest equal to 50% or more of the outstanding equity
      interests.

                  (f)   "WELFARE BENEFITS" means and includes all life, dental,
      health, accident and disability benefit plans, other similar welfare
      plans, and any equivalent successor policy, plan, program or arrangement
      that may now exist or be adopted hereafter by the Company or a Subsidiary.

      2.    SEVERANCE BENEFITS.

                  (a)   In the event that a Change in Control occurs and, within
      the period beginning ninety (90) days before the date of the Change in
      Control and ending twelve (12) months thereafter, (i) Executive's
      employment is terminated by the Company or a Subsidiary without Cause or
      (ii) Executive voluntarily terminates his employment with Company and its
      Subsidiaries with Good Reason, then the Company shall pay to Executive
      severance pay under this Agreement. Such severance pay shall be in the
      form of salary continuation of Executive's regular base pay in effect
      ninety (90) days before the time of the Change in Control or at the time
      of the termination of his employment, whichever is greater.

                  (b)   In the event that Executive's employment is terminated
      by the Company or a Subsidiary without Cause and not within the period
      specified in Section 2(a) above, then the Company shall pay to Executive
      severance pay under this Agreement. Such severance pay shall be in the
      form of salary continuation of Executive's regular base pay in effect at
      the time of the termination of his employment.

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                  (c)   The Company shall pay the salary continuation specified
      in either Section 2(a) or Section 2(b) above during the twelve (12) month
      period immediately following the date on which Executive's employment with
      the Company terminates.

                  (d)   Transfer of Executive's employment from the Company to a
      Subsidiary (or to an entity of which the Company is a Subsidiary) or from
      a Subsidiary to the Company or to another Subsidiary (or to an entity of
      which the Company is a Subsidiary) shall not be considered a termination
      of Executive's employment.

            3.    WELFARE BENEFITS.

                  (a)   During the period that Company is obligated to pay
      Executive salary continuation as a result of a Change in Control pursuant
      to Section 2(a) above, or, if sooner, until Executive is entitled to
      Welfare Benefits (as defined below) under any plan maintained by any
      entity employing Executive after Executive's employment with the Company
      terminates, Company shall provide to Executive (and his spouse and other
      qualified dependents) all Welfare Benefits that Company provided to
      Executive (and his spouse and qualified dependents) immediately prior to
      the Change in Control. Notwithstanding the foregoing, with respect to any
      Welfare Benefits provided through an insurance policy, the Company's
      obligation to provide such Welfare Benefits following a Change in Control
      shall be limited by the terms of such policy; provided, however, that (i)
      the Company shall make reasonable efforts to amend such policy to provide
      the continued coverage described in this Section 3(a), and (ii) if such
      policy is not amended to provide the continued benefits described in this
      Section 3(a), the Company shall pay Executive's cost of comparable
      replacement coverage.

                  (b)   If prior to the Change in Control Executive was required
      to contribute towards the cost of a Welfare Benefit as a condition of
      receiving such Welfare Benefit, the Executive may be required to continue
      contributing towards the cost of such Welfare Benefit under the same terms
      and conditions as applied to the Executive immediately prior to the Change
      in Control in order to receive such Welfare Benefit.

            4.    STOCK OPTIONS.

                  (a)   The Company has granted Executive options to purchase
      Company common stock that are currently outstanding, but not yet
      exercisable in whole or in part, and the Company may grant Executive
      additional stock options in the future. The currently outstanding stock
      options and any future stock options Company grants to Executive are
      hereinafter referred to as the "Stock Options."

                  (b)   Notwithstanding the provisions of any agreement(s)
      pursuant to which the Stock Options are granted, in the event that a
      Change in Control occurs and, within the period beginning ninety (90) days
      before the date of the Change in Control and ending twelve (12) months
      thereafter, (a) Executive's employment is terminated by the Company or a
      Subsidiary without Cause or (b) Executive voluntarily terminates his
      employment with Company and its Subsidiaries with Good Reason, then on the
      last day of Executive's employment with the Company and its Subsidiaries,
      all of the Stock Options held by Executive shall become fully vested and
      exercisable.

                  (c)   Notwithstanding the provisions of any agreement(s)
      pursuant to which the Stock Options are granted, in the event that
      Executive's employment is terminated by the Company or a Subsidiary
      without Cause and not within the period specified in Section 4(b) above,
      then on the last day of Executive's employment with the Company and its
      Subsidiaries, all of the Stock Options held by Executive that are
      scheduled to become fully vested and exercisable

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      within twelve (12) months following such last day of employment shall
      become fully vested and exercisable.

      5.    OTHER EMPLOYEE BENEFITS. The benefits provided to Executive
hereunder shall not be affected by or reduced because of any other benefits
(including, but not limited to, salary, bonus, pension, stock option or stock
purchase plan) to which Executive may be entitled by reason of his employment
with the Company or any Subsidiary thereof or the termination of his employment
with the Company, and no other such benefit by reason of such employment shall
be so affected or reduced because of the benefits bestowed by this Agreement.
Notwithstanding the foregoing, if Executive qualifies for severance pay under
Section 2 of this Agreement, such severance pay will be in lieu of, and not in
addition to, any severance or other termination payments to which Executive may
be entitled under any employment agreement with, or other plan or arrangement
of, the Company.

      6.    WITHHOLDING. All amounts payable by the Company hereunder shall be
subject to all federal, state, local and other withholdings and employment taxes
as required by applicable law.

      7.    ARBITRATION OF CLAIMS. The following arbitration provisions shall
apply to any claim brought by Executive or the Company after the date of this
Agreement even if the facts upon which the claim is based arose prior to the
execution of this Agreement:

                  (a)   CLAIMS COVERED BY THIS AGREEMENT. To the maximum extent
      permitted by law, the Company and Executive mutually consent to the
      resolution by arbitration of all claims or causes of action that the
      Company may have against Executive or that Executive may have against the
      Company or against its officers, directors, employees, or agents in the
      capacity as such or otherwise (collectively "claims"). The claims covered
      by this Agreement include, but are not limited to, claims for breach of
      any contract or covenant (express or implied); tort claims; claims for
      discrimination (including, but not limited to, race, sex, sexual
      harassment, or any type of unlawful harassment, religion, national origin,
      age, marital status, medical condition, disability or sexual orientation);
      claims for wrongful termination in violation of public policy; and claims
      for violation of any federal, state, or other governmental law, statute,
      regulation or ordinance, including, but not limited to, all claims arising
      under Title VII of the Civil Rights Act of 1969, as amended, the Age
      Discrimination in Employment Act of 1967, the Americans with Disabilities
      Act, the California Fair Employment & Housing Act, the California Labor
      Code, the Consolidated Omnibus Budget Reconciliation Act of 1985, the Fair
      Labor Standards Act or Employee Retirement Income Security Act.

                  (b)   CLAIMS NOT COVERED BY THE AGREEMENT. Claims Executive
      may have for workers' compensation, unemployment compensation benefits or
      wage and hour claims within the jurisdiction of the California Labor
      Commissioner are not covered by this Agreement. Notwithstanding the fact
      that Executive is not required to arbitrate such claims, he may, if he so
      chooses, submit wage and hour claims to binding arbitration pursuant to
      this Agreement. Also not covered are claims by either party for injunctive
      and/or other equitable relief, as to which the parties understand and
      agree that either party may seek and obtain relief from a court of
      competent jurisdiction.

                  (c)   REQUIRED NOTICE OF ALL CLAIMS. The Company and Executive
      agree that the aggrieved party must give written notice of any claim to
      the other party. Written notice to the Company, or its officers, employees
      or agents, shall be sent to the Company's Chief Executive Officer.
      Executive will be given notice at the last address recorded in his
      personnel file or such other address as Executive may provide to the
      Company from time to time following the date of this Agreement by a
      writing specifying that it is the address for notice under this Agreement.
      The written notice shall identify and describe the nature of all claims
      asserted and detail the facts upon which such claims are based. The notice
      shall be sent to the other party by certified or registered mail, return
      receipt requested.

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                  (d)   ARBITRATION PROCEDURES. The Company and Executive agree
      that, except as provided in this Agreement, any arbitration shall be in
      accordance with and under the auspices and rules of the American
      Arbitration Association (hereinafter the "Arbitration Service"). The
      arbitration shall take place in Santa Clara County, California, unless the
      parties mutually agree to conduct the arbitration in a different location.
      The arbitrator shall be selected by the mutual agreement of the parties.
      If the parties cannot agree on a neutral arbitrator, Executive first, and
      then the Company, will alternately strike names from a list provided by
      the Arbitration Service until only one name remains. The arbitrator shall
      have exclusive authority to resolve any dispute relating to the
      interpretation, applicability, enforceability or formation of this
      Agreement, including but not limited to any claim that all or any part of
      this Agreement is void or voidable. The arbitrator shall apply the
      applicable statute of limitations to any claim, taking into account
      compliance with Section 7(c) of this Agreement. The arbitrator shall issue
      a written opinion and award, which shall be signed and dated. The
      arbitrator shall be permitted to award those remedies that are available
      under applicable law. The arbitrator's decision regarding the claims shall
      be final and binding upon the parties. The arbitrator's award shall be
      enforceable in any court having jurisdiction thereof.

                  (e)   ACKNOWLEDGMENT OF JURY TRIAL WAIVER. Executive
      understands that, by this Agreement, he is waiving his right to have a
      claim adjudicated by a court or jury. Any party may be represented by an
      attorney or other representative selected by the party.

                  (f)   ARBITRATION FEES AND COSTS; ATTORNEYS' FEES. Executive
      will be required to pay an arbitration fee to initiate the arbitration
      equal to what he would be charged as a first appearance fee in court. The
      Company shall advance the remaining fees and costs of the arbitrator.
      However, to the extent permissible under the law, and following the
      arbitrator's ruling on the matter, the arbitrator may rule that the
      arbitrator's fees and costs be distributed in an alternative manner. The
      arbitrator's award in any arbitration brought pursuant to the provisions
      of this Agreement shall provide for the prevailing party to recover from
      the other party the prevailing party's reasonable attorneys' fees relating
      to such action.

                  (g)   REQUIREMENTS FOR MODIFICATION OR REVOCATION. This
      agreement to arbitrate shall survive the termination of Executive's
      employment with the Company. It can only be revoked or modified by a
      writing signed by the parties that specifically states an intent to revoke
      or modify this Agreement.

                  (h)   CONSIDERATION. Executive understands that the provisions
      for severance pay as set forth herein and his continued employment with
      the Company are consideration for his acceptance of these arbitration
      provisions. In addition, the promises by the Company and by Executive to
      arbitrate claims, rather than litigate them before courts or other bodies,
      provide consideration for each other.

                  (i)   VIOLATION OF THIS AGREEMENT. Should any party to this
      Agreement hereafter institute any legal action or administrative
      proceeding against the other with respect to any claim required to be
      arbitrated under this Agreement or pursue any arbitrable dispute by any
      method other than arbitration, the responding party shall recover from the
      initiating party all damages, costs, expenses and attorneys' fees incurred
      as a result of such action.

8.    ENTIRE AGREEMENT; EFFECT OF PRIOR AGREEMENTS. This is the complete
agreement of the parties on the subjects set forth herein, including severance
pay and arbitration of disputes. This Agreement supersedes any prior or
contemporaneous oral or written understanding on such subjects. No party is
relying on any representations, oral or written, on the subject of the effect,
enforceability, or meaning of this Agreement, except as specifically set forth
in this Agreement. In the event of a conflict between any of the terms of this
Agreement and any of the terms of (i) any of the Option Agreements, or (ii) that
certain accepted offer of employment between Executive and the Company

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dated October 8, 1999, the terms of this Agreement shall prevail. Without
limiting the generality of the foregoing, the arbitration provisions of the
October 8, 1999 offer of employment shall be superseded by the arbitration
provisions set forth in this Agreement.

9.    AMENDMENT. This Agreement may not be amended without the prior written
consent of both Executive and the Company.

10.   NO RIGHT TO CONTINUED EMPLOYMENT. This Agreement does not constitute a
contract of employment, does not change the status of the Executive's employment
and does not change the Company's policies regarding termination of employment.
Nothing in this Agreement shall be deemed to give Executive the right to be
retained in the service of the Company or to deny the Company any right it may
have to discharge or demote him at any time; provided, however, that any
termination of employment of Executive, or any removal of Executive as an
executive officer of the Company primarily in contemplation of a Change in
Control shall not be effective to deny Executive the benefits of this Agreement,
including without limitation Sections 2, 3 and 4 hereof. No provision of this
Agreement shall in any way limit, restrict or prohibit Executive's right to
terminate employment with the Company or leave his position as senior executive.

11.   SEVERABILITY. If a court or other body of competent jurisdiction
determines that any provision of this Agreement is invalid or unenforceable,
that provision will be adjusted rather than voided, if possible, so that it is
enforceable to the maximum extent possible, or, if it is not possible to so
adjust such provision, this Agreement shall be construed in all respects as if
such invalid or unenforceable provision were omitted. The invalidity and
unenforceability of any particular provision of this Agreement shall not affect
any other provision hereof, and all other provisions of the Agreement shall be
valid and enforceable to the fullest extent possible.

12.   SUCCESSORS.

            (a)   The Company will require any successor, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place.

            (b)   This Agreement shall inure to the benefit of, and be
enforceable by, Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.

13.   GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California without regard or reference
to the rules of conflicts of law that would require the application of the laws
of any other jurisdiction.

      IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement,
effective as of the date set forth in the first paragraph hereof.

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MACROVISION CORPORATION                     EXECUTIVE

By /s/ William A. Krepick                   /s/ Ian Halifax
  ---------------------------------------   -----------------------------------
         William A. Krepick                 IAN HALIFAX
         Chief Executive Officer

                                            -----------------------------------
                                                     (Address)

                                            -----------------------------------

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                                                                    EXHIBIT 99.1

                            CERTIFICATION PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
                      (18 U.S.C. SECTION 1350, AS ADOPTED)

      In connection with the Quarterly Report of Macrovision Corporation (the
"Company") on Form 10-Q for the period ending June 30, 2002 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), William A.
Krepick and Ian R. Halifax certify in their capacities as Chief Executive
Officer and Chief Financial Officer, respectively, of the Company, pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350, as
adopted), that:

(a) The Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934, as amended, and

(b) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operation of the Company.

      IN WITNESS WHEREOF, the undersigned have hereunto signed this
Certification as of August 14, 2002.

                                              /s/ William A. Krepick
                                              ----------------------------------
                                              William A. Krepick
                                              Chief Executive Officer

                                              /s/ Ian R. Halifax
                                              ----------------------------------
                                              Ian R. Halifax
                                              Chief Financial Officer

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                                                                    EXHIBIT 10.1

                            THE ARISTOTLE CORPORATION

                2002 EMPLOYEE, DIRECTOR AND CONSULTANT STOCK PLAN

1.   DEFINITIONS.

     Unless otherwise specified or unless the context otherwise requires, the
     following terms, as used in this The Aristotle Corporation 2002 Employee,
     Director and Consultant Stock Plan, have the following meanings:

          ADMINISTRATOR means the Board of Directors, unless it has delegated
          power to act on its behalf to the Committee, in which case the
          Administrator means the Committee.

          AFFILIATE means a corporation which, for purposes of Section 424 of
          the Code, is a parent or subsidiary of the Company, direct or
          indirect.

          BOARD OF DIRECTORS means the Board of Directors of the Company.

          CODE means the United States Internal Revenue Code of 1986, as
          amended.

          COMMITTEE means the committee of the Board of Directors to which the
          Board of Directors has delegated power to act under or pursuant to the
          provisions of the Plan.

          COMMON STOCK means shares of the Company's common stock, $.01 par
          value per share.

          COMPANY means The Aristotle Corporation, a Delaware corporation.

          DISABILITY or DISABLED means permanent and total disability as defined
          in Section 22(e)(3) of the Code.

          EMPLOYEE means any employee of the Company or of an Affiliate
          (including, without limitation, an employee who is also serving as an
          officer or director of the Company or of an Affiliate), designated by
          the Administrator to be eligible to be granted one or more Stock
          Rights under the Plan.

          FAIR MARKET VALUE of a Share of Common Stock means:

          (1)    If the Common Stock is listed on a national securities exchange
          or traded in the over-the-counter market and sales prices are
          regularly reported for the Common Stock, the closing or last price of
          the Common Stock on the Composite

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          Tape or other comparable reporting system for the trading day
          immediately preceding the applicable date;

          (2)    If the Common Stock is not traded on a national securities
          exchange but is traded on the over-the-counter market, if sales prices
          are not regularly reported for the Common Stock for the trading day
          referred to in clause (1), and if bid and asked prices for the Common
          Stock are regularly reported, the mean between the bid and the asked
          price for the Common Stock at the close of trading in the
          over-the-counter market for the trading day on which Common Stock was
          traded immediately preceding the applicable date; and

          (3)    If the Common Stock is neither listed on a national securities
          exchange nor traded in the over-the-counter market, such value as the
          Administrator, in good faith, shall determine.

          ISO means an option meant to qualify as an incentive stock option
          under Section 422 of the Code.

          NON-QUALIFIED OPTION means an option which is not intended to qualify
          as an ISO.

          OPTION means an ISO or Non-Qualified Option granted under the Plan.

          OPTION AGREEMENT means an agreement between the Company and a
          Participant delivered pursuant to the Plan, in such form as the
          Administrator shall approve.

          PARTICIPANT means an Employee, director or consultant of the Company
          or an Affiliate to whom one or more Stock Rights are granted under the
          Plan. As used herein, "Participant" shall include "Participant's
          Survivors" where the context requires.

          PLAN means this The Aristotle Corporation 2002 Employee, Director and
          Consultant Stock Plan.

          SHARES means shares of the Common Stock as to which Stock Rights have
          been or may be granted under the Plan or any shares of capital stock
          into which the Shares are changed or for which they are exchanged
          within the provisions of Paragraph 3 of the Plan. The Shares issued
          under the Plan may be authorized and unissued shares or shares held by
          the Company in its treasury, or both.

          STOCK GRANT means a grant by the Company of Shares under the Plan.

          STOCK GRANT AGREEMENT means an agreement between the Company and a
          Participant delivered pursuant to the Plan, in such form as the
          Administrator shall approve.

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          STOCK RIGHT means a right to Shares of the Company granted pursuant to
          the Plan -- an ISO, a Non-Qualified Option or a Stock Grant.

          SURVIVOR means a deceased Participant's legal representatives and/or
          any person or persons who acquired the Participant's rights to a Stock
          Right by will or by the laws of descent and distribution.

2.   PURPOSES OF THE PLAN.

     The Plan is intended to encourage ownership of Shares by Employees and
directors of and certain consultants to the Company in order to attract such
people, to induce them to work for the benefit of the Company or of an Affiliate
and to provide additional incentive for them to promote the success of the
Company or of an Affiliate. The Plan provides for the granting of ISOs,
Non-Qualified Options and Stock Grants.

3.   SHARES SUBJECT TO THE PLAN.

     The number of Shares which may be issued from time to time pursuant to this
Plan shall be 1,500,000, or the equivalent of such number of Shares after the
Administrator, in its sole discretion, has interpreted the effect of any stock
split, stock dividend, combination, recapitalization or similar transaction in
accordance with Paragraph 23 of the Plan.

     If an Option ceases to be "outstanding", in whole or in part, or if the
Company shall reacquire any Shares issued pursuant to a Stock Grant, the Shares
which were subject to such Option and any Shares so reacquired by the Company
shall be available for the granting of other Stock Rights under the Plan. Any
Option shall be treated as "outstanding" until such Option is exercised in full,
or terminates or expires under the provisions of the Plan, or by agreement of
the parties to the pertinent Option Agreement.

4.   ADMINISTRATION OF THE PLAN.

     The Administrator of the Plan will be the Board of Directors, except to the
extent the Board of Directors delegates its authority to the Committee, in which
case the Committee shall be the Administrator. Subject to the provisions of the
Plan, the Administrator is authorized to:

     a.   Interpret the provisions of the Plan or of any Option or Stock Grant
          and to make all rules and determinations which it deems necessary or
          advisable for the administration of the Plan;

     b.   Determine which employees of the Company or of an Affiliate shall be
          designated as Employees and which of the Employees, directors and
          consultants shall be granted Stock Rights;

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     c.   Determine the number of Shares for which a Stock Right or Stock Rights
          shall be granted;

     d.   Specify the terms and conditions upon which a Stock Right or Stock
          Rights may be granted; and

     e.   Adopt any sub-plans applicable to residents of any specified
          jurisdiction as it deems necessary or appropriate in order to comply
          with or take advantage of any tax laws applicable to the Company or to
          Plan Participants or to otherwise facilitate the administration of the
          Plan, which sub-plans may include additional restrictions or
          conditions applicable to Options or Shares acquired upon exercise of
          Options.

provided, however, that all such interpretations, rules, determinations, terms
and conditions shall be made and prescribed in the context of preserving the tax
status under Section 422 of the Code of those Options which are designated as
ISOs. Subject to the foregoing, the interpretation and construction by the
Administrator of any provisions of the Plan or of any Stock Right granted under
it shall be final, unless otherwise determined by the Board of Directors, if the
Administrator is the Committee.

5.   ELIGIBILITY FOR PARTICIPATION.

     The Administrator will, in its sole discretion, name the Participants in
the Plan, provided, however, that each Participant must be an Employee, director
or consultant of the Company or of an Affiliate at the time a Stock Right is
granted. Notwithstanding the foregoing, the Administrator may authorize the
grant of a Stock Right to a person not then an employee, director or consultant
of the Company or of an Affiliate; provided, however, that the actual grant of
such Stock Right shall be conditioned upon such person becoming eligible to
become a Participant at or prior to the time of the execution of the Agreement
evidencing such Stock Right. ISOs may be granted only to Employees.
Non-Qualified Options and Stock Grants may be granted to any Employee, director
or consultant of the Company or an Affiliate. The granting of any Stock Right to
any individual shall neither entitle that individual to, nor disqualify him or
her from, participation in any other grant of Stock Rights.

6.   TERMS AND CONDITIONS OF OPTIONS.

     Each Option shall be set forth in writing in an Option Agreement, duly
executed by the Company and, to the extent required by law or requested by the
Company, by the Participant. The Administrator may provide that Options be
granted subject to such terms and conditions, consistent with the terms and
conditions specifically required under this Plan, as the Administrator may deem
appropriate including, without limitation, subsequent approval by the
shareholders of the Company of this Plan or any amendments thereto. The Option
Agreements shall be subject to at least the following terms and conditions:

                                       4
<PAGE>

     A.   NON-QUALIFIED OPTIONS: Each Option intended to be a Non-Qualified
          Option shall be subject to the terms and conditions which the
          Administrator determines to be appropriate and in the best interest of
          the Company, subject to the following minimum standards for any such
          Non-Qualified Option:

          a.   Option Price: Each Option Agreement shall state the option price
               (per share) of the Shares covered by each Option, which option
               price shall be determined by the Administrator but shall not be
               less than the par value per share of Common Stock.

          b.   Each Option Agreement shall state the number of Shares to which
               it pertains.

          c.   Each Option shall terminate not more than five years from the
               date of the grant or at such earlier time as the Option Agreement
               may provide.

          d.   Each Option Agreement shall state the date or dates on which it
               first is exercisable, and the date after which it may no longer
               be exercised, and may provide that the Option rights accrue or
               become exercisable in installments over a period of months or
               years, or upon the occurrence of certain conditions or the
               attainment of stated goals or events.

          e.   Exercise of any Option may be conditioned upon the Participant's
               execution of a Share purchase agreement in form satisfactory to
               the Administrator providing for certain protections for the
               Company and its other shareholders, including requirements that:

               i.   The Participant's or the Participant's Survivors' right to
                    sell or transfer the Shares may be restricted; and

               ii.  The Participant or the Participant's Survivors may be
                    required to execute letters of investment intent and must
                    also acknowledge that the Shares will bear legends noting
                    any applicable restrictions.

          f.   Directors' Options:

               i.   Each director of the Company who is not an employee of or
                    consultant to the Company or any Affiliate, upon first being
                    elected to the Board of Directors, shall be granted a
                    Non-Qualified Option to purchase 2,500 Shares. Each such
                    Option shall (i) have an exercise price equal to the Fair
                    Market Value (per share) of the Shares on the date of grant
                    of the Option, and (ii) be exercisable in full upon
                    completion of one full year of service on the Board of
                    Directors after the date of grant.

                                       5
<PAGE>

               ii.  On the date of each reelection to the Board of Directors,
                    provided that on such dates the director has been in the
                    continued and uninterrupted service as a director of the
                    Company or any Affiliate since his or her initial election
                    or appointment and is not an employee or consultant to the
                    Company or any Affiliate, each director shall be granted a
                    Non-Qualified Option to purchase 500 Shares. Each such
                    Option shall (i) have an exercise price equal to the Fair
                    Market Value (per share) of the Shares on the date of grant
                    of the Option, and (ii) be exercisable upon completion of
                    one full year of service on the Board of Directors after the
                    date of grant.

               iii. Any director entitled to receive an Option under this
                    subparagraph may elect to decline the Option.

     B.   ISOS: Each Option intended to be an ISO shall be issued only to an
          Employee and be subject to the following terms and conditions, with
          such additional restrictions or changes as the Administrator
          determines are appropriate but not in conflict with Section 422 of the
          Code and relevant regulations and rulings of the Internal Revenue
          Service:

          a.   Minimum standards: The ISO shall meet the minimum standards
               required of Non-Qualified Options, as described in Paragraph 6(A)
               above, except clause (a) thereunder.

          b.   Option Price: Immediately before the ISO is granted, if the
               Participant owns, directly or by reason of the applicable
               attribution rules in Section 424(d) of the Code:

               i.   10% OR LESS of the total combined voting power of all
                    classes of stock of the Company or an Affiliate, the Option
                    price per share of the Shares covered by each ISO shall not
                    be less than 100% of the Fair Market Value per share of the
                    Shares on the date of the grant of the Option; or

               ii.  More than 10% of the total combined voting power of all
                    classes of stock of the Company or an Affiliate, the Option
                    price per share of the Shares covered by each ISO shall not
                    be less than 110% of the said Fair Market Value on the date
                    of grant.

          c.   Each ISO shall terminate not more than five years from the date
               of the grant or at such earlier time as the Option Agreement may
               provide.

          d.   Limitation on Yearly Exercise: The Option Agreements shall
               restrict the amount of ISOs which may become exercisable in any
               calendar year (under this or any other ISO plan of the Company or
               an Affiliate) so that the aggregate Fair Market Value (determined
               at the time each ISO is

                                       6
<PAGE>

               granted) of the stock with respect to which ISOs are exercisable
               for the first time by the Participant in any calendar year does
               not exceed $100,000.

7.   TERMS AND CONDITIONS OF STOCK GRANTS.

     Each offer of a Stock Grant to a Participant shall state the date prior to
which the Stock Grant must be accepted by the Participant, and the principal
terms of each Stock Grant shall be set forth in a Stock Grant Agreement, duly
executed by the Company and, to the extent required by law or requested by the
Company, by the Participant. The Stock Grant Agreement shall be in a form
approved by the Administrator and shall contain terms and conditions which the
Administrator determines to be appropriate and in the best interest of the
Company, subject to the following minimum standards:

     (a)  Each Stock Grant Agreement shall state the purchase price (per share),
          if any, of the Shares covered by each Stock Grant, which purchase
          price shall be determined by the Administrator but shall not be less
          than the minimum consideration required by the Delaware General
          Corporation Law on the date of the grant of the Stock Grant;

     (b)  Each Stock Grant Agreement shall state the number of Shares to which
          the Stock Grant pertains; and

     (c)  Each Stock Grant Agreement shall include the terms of any right of the
          Company to restrict or reacquire the Shares subject to the Stock
          Grant, including the time and events upon which such reacquisition
          rights shall accrue and the purchase price therefor, if any.

8.   EXERCISE OF OPTIONS AND ISSUE OF SHARES.

     An Option (or any part or installment thereof) shall be exercised by giving
written notice to the Company or its designee, together with provision for
payment of the full purchase price in accordance with this Paragraph for the
Shares as to which the Option is being exercised, and upon compliance with any
other condition(s) set forth in the Option Agreement. Such notice shall be
signed by the person exercising the Option, shall state the number of Shares
with respect to which the Option is being exercised and shall contain any
representation required by the Plan or the Option Agreement. Payment of the
purchase price for the Shares as to which such Option is being exercised shall
be made (a) in United States dollars in cash or by check, or (b) at the
discretion of the Administrator, through delivery of shares of Common Stock
having a Fair Market Value equal as of the date of the exercise to the cash
exercise price of the Option and held for at least six months, or (c) at the
discretion of the Administrator, by delivery of the grantee's personal note, for
full, partial or no recourse, bearing interest payable not less than annually at
no less than 100% of the applicable Federal rate, as defined in Section 1274(d)
of the Code, with or without the pledge of such Shares as collateral, or (d) at
the discretion of the Administrator, in accordance with a cashless exercise
program established with a securities

                                       7
<PAGE>

brokerage firm, and approved by the Administrator, or (e) at the discretion of
the Administrator, by having the Company retain from the shares otherwise
issuable upon the exercise of the Option, a number of shares having the Fair
Market Value equal, as of the date of exercise, to the exercise price of the
Option, or (f) at the discretion of the Administrator, by any combination of
(a), (b), (c), (d) and (e) above. Notwithstanding the foregoing, the
Administrator shall accept only such payment on exercise of an ISO as is
permitted by Section 422 of the Code.

     The Company shall then reasonably promptly deliver the Shares as to which
such Option was exercised to the Participant (or to the Participant's Survivors,
as the case may be). In determining what constitutes "reasonably promptly," it
is expressly understood that the issuance and delivery of the Shares may be
delayed by the Company in order to comply with any law or regulation (including,
without limitation, state securities or "blue sky" laws) which requires the
Company to take any action with respect to the Shares prior to their issuance.
The Shares shall, upon delivery, be fully paid, non-assessable Shares.

     The Administrator shall have the right to accelerate the date of exercise
of any installment of any Option; provided that the Administrator shall not
accelerate the exercise date of any installment of any Option granted to an
Employee as an ISO (and not previously converted into a Non-Qualified Option
pursuant to Paragraph 26) if such acceleration would violate the annual vesting
limitation contained in Section 422(d) of the Code, as described in Paragraph
6.B.d.

     The Administrator may, in its discretion, amend any term or condition of an
outstanding Option provided (i) such term or condition as amended is permitted
by the Plan, (ii) any such amendment shall be made only with the consent of the
Participant to whom the Option was granted, or in the event of the death of the
Participant, the Participant's Survivors, if the amendment is adverse to the
Participant, and (iii) any such amendment of any ISO shall be made only after
the Administrator determines whether such amendment would constitute a
"modification" of any Option which is an ISO (as that term is defined in Section
424(h) of the Code) or would cause any adverse tax consequences for the holder
of such ISO.

9.   ACCEPTANCE OF STOCK GRANT AND ISSUE OF SHARES.

     A Stock Grant (or any part or installment thereof) shall be accepted by
executing the Stock Grant Agreement and delivering it to the Company or its
designee, together with provision for payment of the full purchase price, if
any, in accordance with this Paragraph for the Shares as to which such Stock
Grant is being accepted, and upon compliance with any other conditions set forth
in the Stock Grant Agreement. Payment of the purchase price for the Shares as to
which such Stock Grant is being accepted shall be made (a) in United States
dollars in cash or by check, or (b) at the discretion of the Administrator,
through delivery of shares of Common Stock held for at least six months and
having a fair market value equal as of the date of acceptance of the Stock Grant
to the purchase price of the Stock Grant determined in good faith by the
Administrator, or (c) at the discretion of the Administrator, by delivery of the
grantee's personal note, for full or partial recourse as determined by the
Administrator, bearing interest payable not less than annually at no less than
100% of the applicable Federal rate, as defined in Section

                                       8
<PAGE>

1274(d) of the Code, or (d) at the discretion of the Administrator, by any
combination of (a), (b) and (c) above.

     The Company shall then reasonably promptly deliver the Shares as to which
such Stock Grant was accepted to the Participant (or to the Participant's
Survivors, as the case may be), subject to any escrow provision set forth in the
Stock Grant Agreement. In determining what constitutes "reasonably promptly," it
is expressly understood that the issuance and delivery of the Shares may be
delayed by the Company in order to comply with any law or regulation (including,
without limitation, state securities or "blue sky" laws) which requires the
Company to take any action with respect to the Shares prior to their issuance.

     The Administrator may, in its discretion, amend any term or condition of an
outstanding Stock Grant or Stock Grant Agreement provided (i) such term or
condition as amended is permitted by the Plan, and (ii) any such amendment shall
be made only with the consent of the Participant to whom the Stock Grant was
made, if the amendment is adverse to the Participant.

10.  RIGHTS AS A SHAREHOLDER.

     No Participant to whom a Stock Right has been granted shall have rights as
a shareholder with respect to any Shares covered by such Stock Right, except
after due exercise of the Option or acceptance of the Stock Grant and tender of
the full purchase price, if any, for the Shares being purchased pursuant to such
exercise or acceptance and registration of the Shares in the Company's share
register in the name of the Participant.

11.  ASSIGNABILITY AND TRANSFERABILITY OF STOCK RIGHTS.

     By its terms, a Stock Right granted to a Participant shall not be
transferable by the Participant other than (i) by will or by the laws of descent
and distribution, or (ii) as approved by the Administrator in its discretion and
set forth in the applicable Option Agreement or Stock Grant Agreement.
Notwithstanding the foregoing, an ISO transferred except in compliance with
clause (i) above shall no longer qualify as an ISO. The designation of a
beneficiary of a Stock Right by a Participant, with the prior approval of the
Administrator and in such form as the Administrator shall prescribe, shall not
be deemed a transfer prohibited by this Paragraph. Except as provided above, a
Stock Right shall only be exercisable or may only be accepted, during the
Participant's lifetime, only by such Participant (or by his or her legal
representative) and shall not be assigned, pledged or hypothecated in any way
(whether by operation of law or otherwise) and shall not be subject to
execution, attachment or similar process. Any attempted transfer, assignment,
pledge, hypothecation or other disposition of any Stock Right or of any rights
granted thereunder contrary to the provisions of this Plan, or the levy of any
attachment or similar process upon a Stock Right, shall be null and void.

                                       9
<PAGE>

12.  EFFECT ON OPTIONS OF TERMINATION OF SERVICE OTHER THAN "FOR CAUSE" OR DEATH
     OR DISABILITY.

     Except as otherwise provided in a Participant's Option Agreement, in the
event of a termination of service (whether as an employee, director or
consultant) with the Company or an Affiliate before the Participant has
exercised an Option, the following rules apply:

     a.   A Participant who ceases to be an employee, director or consultant of
          the Company or of an Affiliate (for any reason other than termination
          "for cause", Disability, or death for which events there are special
          rules in Paragraphs 13, 14, and 15, respectively), may exercise any
          Option granted to him or her to the extent that the Option is
          exercisable on the date of such termination of service, but only
          within such term as the Administrator has designated in a
          Participant's Option Agreement.

     b.   Except as provided in Subparagraph (c) below, or Paragraph 14 or 15,
          an Option intended to be an ISO, in no event may be exercised after
          the earlier of (i) three months after the Participant's termination of
          employment, or (ii) the date of expiration of the term of the Option.

     c.   The provisions of this Paragraph, and not the provisions of Paragraph
          14 or 15, shall apply to a Participant who subsequently becomes
          Disabled or dies after the termination of employment, director status
          or consultancy, provided, however, in the case of a Participant's
          Disability or death within three months after the termination of
          employment, director status or consultancy, the Participant or the
          Participant's Survivors may exercise the Option within one year after
          the date of the Participant's termination of service, but in no event
          after the date of expiration of the term of the Option.

     d.   Notwithstanding anything herein to the contrary, if subsequent to a
          Participant's termination of employment, termination of director
          status or termination of consultancy, but prior to the exercise of an
          Option, the Board of Directors determines that, either prior or
          subsequent to the Participant's termination, the Participant engaged
          in conduct which would constitute "cause", then such Participant shall
          forthwith cease to have any right to exercise any Option.

     e.   A Participant to whom an Option has been granted under the Plan who is
          absent from work with the Company or with an Affiliate because of
          temporary disability (any disability other than a permanent and total
          Disability as defined in Paragraph 1 hereof), or who is on leave of
          absence for any purpose, shall not, during the period of any such
          absence, be deemed, by virtue of such absence alone, to have
          terminated such Participant's employment, director status or
          consultancy with the

                                       10
<PAGE>

          Company or with an Affiliate, except as the Administrator may
          otherwise expressly provide.

     f.   Except as required by law or as set forth in a Participant's Option
          Agreement, Options granted under the Plan shall not be affected by any
          change of a Participant's status within or among the Company and any
          Affiliates, so long as the Participant continues to be an employee,
          director or consultant of the Company or any Affiliate.

13.  EFFECT ON OPTIONS OF TERMINATION OF SERVICE "FOR CAUSE".

     Except as otherwise provided in a Participant's Option Agreement, the
following rules apply if the Participant's service (whether as an employee,
director or consultant) with the Company or an Affiliate is terminated "for
cause" prior to the time that all his or her outstanding Options have been
exercised:

     a.   All outstanding and unexercised Options as of the time the Participant
          is notified his or her service is terminated "for cause" will
          immediately be forfeited.

     b.   For purposes of this Plan, "cause" shall include (and is not limited
          to) dishonesty with respect to the Company or any Affiliate,
          insubordination, substantial malfeasance or non-feasance of duty,
          unauthorized disclosure of confidential information, breach by the
          Participant of any provision of any employment, consulting, advisory,
          nondisclosure, non-competition or similar agreement between the
          Participant and the Company, and conduct substantially prejudicial to
          the business of the Company or any Affiliate. The determination of the
          Administrator as to the existence of "cause" will be conclusive on the
          Participant and the Company.

     c.   "Cause" is not limited to events which have occurred prior to a
          Participant's termination of service, nor is it necessary that the
          Administrator's finding of "cause" occur prior to termination. If the
          Administrator determines, subsequent to a Participant's termination of
          service but prior to the exercise of an Option, that either prior or
          subsequent to the Participant's termination the Participant engaged in
          conduct which would constitute "cause", then the right to exercise any
          Option is forfeited.

     d.   Any definition in an agreement between the Participant and the Company
          or an Affiliate, which contains a conflicting definition of "cause"
          for termination and which is in effect at the time of such
          termination, shall supersede the definition in this Plan with respect
          to that Participant.

                                       11
<PAGE>

14.  EFFECT ON OPTIONS OF TERMINATION OF SERVICE FOR DISABILITY.

     Except as otherwise provided in a Participant's Option Agreement, a
Participant who ceases to be an employee, director or consultant of the Company
or of an Affiliate by reason of Disability may exercise any Option granted to
such Participant:

     a.   To the extent that the Option has become exercisable but has not been
          exercised on the date of Disability; and

     b.   In the event rights to exercise the Option accrue periodically, to the
          extent of a pro rata portion through the date of Disability of any
          additional vesting rights that would have accrued on the next vesting
          date had the Participant not become Disabled. The proration shall be
          based upon the number of days accrued in the current vesting period
          prior to the date of Disability.

     A Disabled Participant may exercise such rights only within the period
ending one year after the date of the Participant's termination of employment,
directorship or consultancy, as the case may be, notwithstanding that the
Participant might have been able to exercise the Option as to some or all of the
Shares on a later date if the Participant had not become Disabled and had
continued to be an employee, director or consultant or, if earlier, within the
originally prescribed term of the Option.

     The Administrator shall make the determination both of whether Disability
has occurred and the date of its occurrence (unless a procedure for such
determination is set forth in another agreement between the Company and such
Participant, in which case such procedure shall be used for such determination).
If requested, the Participant shall be examined by a physician selected or
approved by the Administrator, the cost of which examination shall be paid for
by the Company.

15.  EFFECT ON OPTIONS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.

     Except as otherwise provided in a Participant's Option Agreement, in the
event of the death of a Participant while the Participant is an employee,
director or consultant of the Company or of an Affiliate, such Option may be
exercised by the Participant's Survivors:

     a.   To the extent that the Option has become exercisable but has not been
          exercised on the date of death; and

     b.   In the event rights to exercise the Option accrue periodically, to the
          extent of a pro rata portion through the date of death of any
          additional vesting rights that would have accrued on the next vesting
          date had the Participant not died. The proration shall be based upon
          the number of days accrued in the current vesting period prior to the
          Participant's date of death.

                                       12
<PAGE>

     If the Participant's Survivors wish to exercise the Option, they must take
all necessary steps to exercise the Option within one year after the date of
death of such Participant, notwithstanding that the decedent might have been
able to exercise the Option as to some or all of the Shares on a later date if
he or she had not died and had continued to be an employee, director or
consultant or, if earlier, within the originally prescribed term of the Option.

16.  EFFECT OF TERMINATION OF SERVICE ON STOCK GRANTS.

     In the event of a termination of service (whether as an employee, director
or consultant) with the Company or an Affiliate for any reason before the
Participant has accepted a Stock Grant, such offer shall terminate.

     For purposes of this Paragraph 16 and Paragraph 17 below, a Participant to
whom a Stock Grant has been offered under the Plan who is absent from work with
the Company or with an Affiliate because of temporary disability (any disability
other than a permanent and total Disability as defined in Paragraph 1 hereof),
or who is on leave of absence for any purpose, shall not, during the period of
any such absence, be deemed, by virtue of such absence alone, to have terminated
such Participant's employment, director status or consultancy with the Company
or with an Affiliate, except as the Administrator may otherwise expressly
provide.

     In addition, for purposes of this Paragraph 16 and Paragraph 17 below, any
change of employment or other service within or among the Company and any
Affiliates shall not be treated as a termination of employment, director status
or consultancy so long as the Participant continues to be an employee, director
or consultant of the Company or any Affiliate.

17.  EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE OTHER THAN "FOR CAUSE" OR
     DEATH OR DISABILITY.

     Except as otherwise provided in a Participant's Stock Grant Agreement, in
the event of a termination of service (whether as an employee, director or
consultant), other than termination "for cause," Disability, or death for which
events there are special rules in Paragraphs 18, 19, and 20, respectively,
before all Company rights of repurchase shall have lapsed, then the Company
shall have the right to repurchase that number of Shares subject to a Stock
Grant as to which the Company's repurchase rights have not lapsed.

18.  EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE "FOR CAUSE".

     Except as otherwise provided in a Participant's Stock Grant Agreement, the
following rules apply if the Participant's service (whether as an employee,
director or consultant) with the Company or an Affiliate is terminated "for
cause":

     a.   All Shares subject to any Stock Grant shall be immediately subject to
          repurchase by the Company at the purchase price, if any, thereof.

                                       13
<PAGE>

     b.   For purposes of this Plan, "cause" shall include (and is not limited
          to) dishonesty with respect to the employer, insubordination,
          substantial malfeasance or non-feasance of duty, unauthorized
          disclosure of confidential information, breach by the Participant of
          any provision of any employment, consulting, advisory, nondisclosure,
          non-competition or similar agreement between the Participant and the
          Company, and conduct substantially prejudicial to the business of the
          Company or any Affiliate. The determination of the Administrator as to
          the existence of "cause" will be conclusive on the Participant and the
          Company.

     c.   "Cause" is not limited to events which have occurred prior to a
          Participant's termination of service, nor is it necessary that the
          Administrator's finding of "cause" occur prior to termination. If the
          Administrator determines, subsequent to a Participant's termination of
          service, that either prior or subsequent to the Participant's
          termination the Participant engaged in conduct which would constitute
          "cause," then the Company's right to repurchase all of such
          Participant's Shares shall apply.

     d.   Any definition in an agreement between the Participant and the Company
          or an Affiliate, which contains a conflicting definition of "cause"
          for termination and which is in effect at the time of such
          termination, shall supersede the definition in this Plan with respect
          to that Participant.

19.  EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE FOR DISABILITY.

     Except as otherwise provided in a Participant's Stock Grant Agreement, the
following rules apply if a Participant ceases to be an employee, director or
consultant of the Company or of an Affiliate by reason of Disability: to the
extent the Company's rights of repurchase have not lapsed on the date of
Disability, they shall be exercisable; provided, however, that in the event such
rights of repurchase lapse periodically, such rights shall lapse to the extent
of a pro rata portion of the Shares subject to such Stock Grant through the date
of Disability as would have lapsed had the Participant not become Disabled. The
proration shall be based upon the number of days accrued prior to the date of
Disability.

     The Administrator shall make the determination both of whether Disability
has occurred and the date of its occurrence (unless a procedure for such
determination is set forth in another agreement between the Company and such
Participant, in which case such procedure shall be used for such determination).
If requested, the Participant shall be examined by a physician selected or
approved by the Administrator, the cost of which examination shall be paid for
by the Company.

                                       14
<PAGE>

20.  EFFECT ON STOCK GRANTS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.

     Except as otherwise provided in a Participant's Stock Grant Agreement, the
following rules apply in the event of the death of a Participant while the
Participant is an employee, director or consultant of the Company or of an
Affiliate: to the extent the Company's rights of repurchase have not lapsed on
the date of death, they shall be exercisable; provided, however, that in the
event such rights of repurchase lapse periodically, such rights shall lapse to
the extent of a pro rata portion of the Shares subject to such Stock Grant
through the date of death as would have lapsed had the Participant not died. The
proration shall be based upon the number of days accrued prior to the
Participant's death.

21.  PURCHASE FOR INVESTMENT.

     Unless the offering and sale of the Shares to be issued upon the particular
exercise or acceptance of a Stock Right shall have been effectively registered
under the Securities Act of 1933, as now in force or hereafter amended (the
"1933 Act"), the Company shall be under no obligation to issue the Shares
covered by such exercise unless and until the following conditions have been
fulfilled:

     a.   The person(s) who exercise(s) or accept(s) such Stock Right shall
          warrant to the Company, prior to the receipt of such Shares, that such
          person(s) are acquiring such Shares for their own respective accounts,
          for investment, and not with a view to, or for sale in connection
          with, the distribution of any such Shares, in which event the
          person(s) acquiring such Shares shall be bound by the provisions of
          the following legend which shall be endorsed upon the certificate(s)
          evidencing their Shares issued pursuant to such exercise or such
          grant:

               "The shares represented by this certificate have been taken for
               investment and they may not be sold or otherwise transferred by
               any person, including a pledgee, unless (1) either (a) a
               Registration Statement with respect to such shares shall be
               effective under the Securities Act of 1933, as amended, or (b)
               the Company shall have received an opinion of counsel
               satisfactory to it that an exemption from registration under such
               Act is then available, and (2) there shall have been compliance
               with all applicable state securities laws."

     b.   At the discretion of the Administrator, the Company shall have
          received an opinion of its counsel that the Shares may be issued upon
          such particular exercise or acceptance in compliance with the 1933 Act
          without registration thereunder.

                                       15
<PAGE>

22.  DISSOLUTION OR LIQUIDATION OF THE COMPANY.

     Upon the dissolution or liquidation of the Company, all Options granted
under this Plan which as of such date shall not have been exercised and all
Stock Grants which have not been accepted will terminate and become null and
void; provided, however, that if the rights of a Participant or a Participant's
Survivors have not otherwise terminated and expired, the Participant or the
Participant's Survivors will have the right immediately prior to such
dissolution or liquidation to exercise or accept any Stock Right to the extent
that the Stock Right is exercisable or subject to acceptance as of the date
immediately prior to such dissolution or liquidation.

23.  ADJUSTMENTS.

     Upon the occurrence of any of the following events, a Participant's rights
with respect to any Stock Right granted to him or her hereunder shall be
adjusted as hereinafter provided, unless otherwise specifically provided in a
Participant's Option Agreement or Stock Grant Agreement:

     A.   STOCK DIVIDENDS AND STOCK SPLITS. If (i) the shares of Common Stock
shall be subdivided or combined into a greater or smaller number of shares or if
the Company shall issue any shares of Common Stock as a stock dividend on its
outstanding Common Stock, or (ii) additional shares or new or different shares
or other securities of the Company or other non-cash assets are distributed with
respect to such shares of Common Stock, the number of shares of Common Stock
deliverable upon the exercise or acceptance of such Stock Right may be
appropriately increased or decreased proportionately, and appropriate
adjustments may be made in the purchase price per share to reflect such events.

     B.   CORPORATE TRANSACTIONS. If the Company is to be consolidated with or
acquired by another entity in a merger, sale of all or substantially all of the
Company's assets other than a transaction to merely change the state of
incorporation (a "Corporate Transaction"), the Administrator or the board of
directors of any entity assuming the obligations of the Company hereunder (the
"Successor Board"), shall, as to outstanding Options, either (i) make
appropriate provision for the continuation of such Options by substituting on an
equitable basis for the Shares then subject to such Options either the
consideration payable with respect to the outstanding shares of Common Stock in
connection with the Corporate Transaction or securities of any successor or
acquiring entity; or (ii) upon written notice to the Participants, provide that
all Options must be exercised (either to the extent then exercisable or, at the
discretion of the Administrator, or, upon a change of control of the Company,
all Options being made fully exercisable for purposes of this Subparagraph),
within a specified number of days of the date of such notice, at the end of
which period the Options shall terminate; or (iii) terminate all Options in
exchange for a cash payment equal to the excess of the Fair Market Value of the
Shares subject to such Options (either to the extent then exercisable or, at the
discretion of the Administrator, all Options being made fully exercisable for
purposes of this Subparagraph) over the exercise price thereof.

                                       16
<PAGE>

     With respect to outstanding Stock Grants, the Administrator or the
Successor Board, shall either (i) make appropriate provisions for the
continuation of such Stock Grants by substituting on an equitable basis for the
Shares then subject to such Stock Grants either the consideration payable with
respect to the outstanding Shares of Common Stock in connection with the
Corporate Transaction or securities of any successor or acquiring entity; or
(ii) upon written notice to the Participants, provide that all Stock Grants must
be accepted (to the extent then subject to acceptance) within a specified number
of days of the date of such notice, at the end of which period the offer of the
Stock Grants shall terminate; or (iii) terminate all Stock Grants in exchange
for a cash payment equal to the excess of the Fair Market Value of the Shares
subject to such Stock Grants over the purchase price thereof, if any. In
addition, in the event of a Corporate Transaction, the Administrator may waive
any or all Company repurchase rights with respect to outstanding Stock Grants.

     C.   RECAPITALIZATION OR REORGANIZATION. In the event of a recapitalization
or reorganization of the Company other than a Corporate Transaction pursuant to
which securities of the Company or of another corporation are issued with
respect to the outstanding shares of Common Stock, a Participant upon exercising
or accepting a Stock Right after the recapitalization or reorganization shall be
entitled to receive for the purchase price paid upon such exercise or acceptance
of the number of replacement securities which would have been received if such
Stock Right had been exercised or accepted prior to such recapitalization or
reorganization.

     D.   MODIFICATION OF ISOS. Notwithstanding the foregoing, any adjustments
made pursuant to Subparagraph A, B or C above with respect to ISOs shall be made
only after the Administrator determines whether such adjustments would
constitute a "modification" of such ISOs (as that term is defined in Section
424(h) of the Code) or would cause any adverse tax consequences for the holders
of such ISOs. If the Administrator determines that such adjustments made with
respect to ISOs would constitute a modification of such ISOs, it may refrain
from making such adjustments, unless the holder of an ISO specifically requests
in writing that such adjustment be made and such writing indicates that the
holder has full knowledge of the consequences of such "modification" on his or
her income tax treatment with respect to the ISO.

24.  ISSUANCES OF SECURITIES.

     Except as expressly provided herein, no issuance by the Company of shares
of stock of any class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares subject to Stock Rights. Except as
expressly provided herein, no adjustments shall be made for dividends paid in
cash or in property (including without limitation, securities) of the Company
prior to any issuance of Shares pursuant to a Stock Right.

                                       17
<PAGE>

25.  FRACTIONAL SHARES.

     No fractional shares shall be issued under the Plan and the person
exercising a Stock Right shall receive from the Company cash in lieu of such
fractional shares equal to the Fair Market Value thereof.

26.  CONVERSION OF ISOS INTO NON-QUALIFIED OPTIONS; TERMINATION OF ISOS.

     The Administrator, at the written request of any Participant, may in its
discretion take such actions as may be necessary to convert such Participant's
ISOs (or any portions thereof) that have not been exercised on the date of
conversion into Non-Qualified Options at any time prior to the expiration of
such ISOs, regardless of whether the Participant is an employee of the Company
or an Affiliate at the time of such conversion. At the time of such conversion,
the Administrator (with the consent of the Participant) may impose such
conditions on the exercise of the resulting Non-Qualified Options as the
Administrator in its discretion may determine, provided that such conditions
shall not be inconsistent with this Plan. Nothing in the Plan shall be deemed to
give any Participant the right to have such Participant's ISOs converted into
Non-Qualified Options, and no such conversion shall occur until and unless the
Administrator takes appropriate action. The Administrator, with the consent of
the Participant, may also terminate any portion of any ISO that has not been
exercised at the time of such conversion.

27.  WITHHOLDING.

     In the event that any federal, state, or local income taxes, employment
taxes, Federal Insurance Contributions Act ("F.I.C.A.") withholdings or other
amounts are required by applicable law or governmental regulation to be withheld
from the Participant's salary, wages or other remuneration in connection with
the exercise or acceptance of a Stock Right or in connection with a
Disqualifying Disposition (as defined in Paragraph 28) or upon the lapsing of
any right of repurchase, the Company may withhold from the Participant's
compensation, if any, or may require that the Participant advance in cash to the
Company, or to any Affiliate of the Company which employs or employed the
Participant, the statutory minimum amount of such withholdings unless a
different withholding arrangement, including the use of shares of the Company's
Common Stock or a promissory note, is authorized by the Administrator (and
permitted by law). For purposes hereof, the fair market value of the shares
withheld for purposes of payroll withholding shall be determined in the manner
provided in Paragraph 1 above, as of the most recent practicable date prior to
the date of exercise. If the fair market value of the shares withheld is less
than the amount of payroll withholdings required, the Participant may be
required to advance the difference in cash to the Company or the Affiliate
employer. The Administrator in its discretion may condition the exercise of an
Option for less than the then Fair Market Value on the Participant's payment of
such additional withholding.

                                       18
<PAGE>

28.  NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION.

     Each Employee who receives an ISO must agree to notify the Company in
writing immediately after the Employee makes a Disqualifying Disposition of any
shares acquired pursuant to the exercise of an ISO. A Disqualifying Disposition
is defined in Section 424(c) of the Code and includes any disposition (including
any sale or gift) of such shares before the later of (a) two years after the
date the Employee was granted the ISO, or (b) one year after the date the
Employee acquired Shares by exercising the ISO, except as otherwise provided in
Section 424(c) of the Code. If the Employee has died before such stock is sold,
these holding period requirements do not apply and no Disqualifying Disposition
can occur thereafter.

29.  TERMINATION OF THE PLAN.

     The Plan will terminate on the date which is ten years from the EARLIER of
the date of its adoption by the Board of Directors and the date of its approval
by the shareholders. The Plan may be terminated at an earlier date by vote of
the shareholders or the Board of Directors of the Company; provided, however,
that any such earlier termination shall not affect any Option Agreements or
Stock Grant Agreements executed prior to the effective date of such termination.

30.  AMENDMENT OF THE PLAN AND AGREEMENTS.

     The Plan may be amended by the shareholders of the Company. The Plan may
also be amended by the Administrator, including, without limitation, to the
extent necessary to qualify any or all outstanding Stock Rights granted under
the Plan or Stock Rights to be granted under the Plan for favorable federal
income tax treatment (including deferral of taxation upon exercise) as may be
afforded incentive stock options under Section 422 of the Code, and to the
extent necessary to qualify the shares issuable upon exercise or acceptance of
any outstanding Stock Rights granted, or Stock Rights to be granted, under the
Plan for listing on any national securities exchange or quotation in any
national automated quotation system of securities dealers. Any amendment
approved by the Administrator which the Administrator determines is of a scope
that requires shareholder approval shall be subject to obtaining such
shareholder approval. Any modification or amendment of the Plan shall not,
without the consent of a Participant, adversely affect his or her rights under a
Stock Right previously granted to him or her. With the consent of the
Participant affected, the Administrator may amend outstanding Option Agreements
and Stock Grant Agreements in a manner which may be adverse to the Participant
but which is not inconsistent with the Plan. In the discretion of the
Administrator, outstanding Option Agreements and Stock Grant Agreements may be
amended by the Administrator in a manner which is not adverse to the
Participant.

                                       19
<PAGE>

31.  EMPLOYMENT OR OTHER RELATIONSHIP.

     Nothing in this Plan or any Option Agreement or Stock Grant Agreement shall
be deemed to prevent the Company or an Affiliate from terminating the
employment, consultancy or director status of a Participant, nor to prevent a
Participant from terminating his or her own employment, consultancy or director
status or to give any Participant a right to be retained in employment or other
service by the Company or any Affiliate for any period of time.

32.  GOVERNING LAW.

     This Plan shall be construed and enforced in accordance with the law of the
State of Delaware.

                                       20

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