Document:

EXHIBIT 10.xii
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                            STOCK PURCHASE AGREEMENT

                                 BY AND BETWEEN

                        PK SPUR CO., AN OHIO CORPORATION,

                                    AS BUYER

                                       AND

                            SONICS & MATERIALS, INC.

                                    AS SELLER

                   WITH RESPECT TO NINETY PERCENT (90%) OF THE

                          ISSUED AND OUTSTANDING SHARES

                               OF COMMON STOCK OF

                                  TOOLTEX, INC.

                           DATED AS OF AUGUST 21, 2001

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                            STOCK PURCHASE AGREEMENT

            THIS STOCK PURCHASE AND EXCHANGE AGREEMENT (together with all
Schedules hereto, the "Agreement"), dated as of August 21, 2001 (the "Effective
Date"), is entered into by and between: (i) PK SPUR CO., an Ohio corporation,
(hereinafter referred to as "Buyer" and/or "PK SPUR"), and (ii) SONICS &
MATERIALS, INC., a Delaware corporation (hereinafter referred to as "Seller").

            A. RECITALS

            WHEREAS, Seller owns, beneficially and of record, all of the issued
and outstanding shares of the common stock, with no par value , of ToolTex,
Inc., an Ohio corporation, (hereinafter referred to as "ToolTex"), comprising
and constituting all of the issued and outstanding capital stock of ToolTex (the
"ToolTex Shares"); and

            WHEREAS, Seller desires to sell, and Buyer desires to buy, ninety
percent (90%) of the outstanding ToolTex Shares on the terms and conditions set
forth in this Agreement; and

            WHEREAS, Paul Spurgeon owned the majority of the ToolTex Shares, and
acted as a director of Tooltex from January 27, 1987 to July 25, 1997, and has
served as President of Tooltex from July 26, 1997 to the date hereof and serves
as President of Buyer.

            NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby mutually acknowledged, Seller and
Buyer agree as follows:

                               W I T N E S S E T H

                             ARTICLE I - DEFINITIONS

            As used in this Agreement, the following terms shall have the
following meanings:

            "Agreement" - Defined in the preamble.

            "Buyer's Counsel" - Porter, Wright, Morris & Arthur LLP.

            "Closing" - The consummation of the transactions contemplated by
this Agreement, which shall take place on the date agreed upon by Buyer and
Seller at the offices of Buyer's Counsel and Seller's Counsel, or such other
place as agreed to by Seller and Buyer, to occur by execution of documents and
simultaneous delivery by facsimile, or in such manner as the Closing takes
place. The Closing, when completed, shall be deemed to have been completed at
5:00 p.m., local time, on the date of Closing.

            "Code" - The Internal Revenue Code of 1986, as amended.

            "GAAP" - Generally accepted accounting principles as in effect in
the United States as of the date of this Agreement.

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            "Governmental Authority" - Any nation or government, any state or
other political subdivision thereof, and any entity or person exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.

            "Indebtedness" - As to any Person, at any time, (a) all indebtedness
of such Person for borrowed money or for the deferred purchase price of property
or services (whether from public or private sources) (other than current trade
liabilities incurred in the ordinary course of business and payable in
accordance with customary practices), (b) any other indebtedness of such Person
which is evidenced by a note, bond, debenture or similar instrument, (c) all
obligations of such Person under capitalized leases, (d) all obligations of such
Person in respect of acceptances issued or created for the account of such
Person, (e) all liabilities secured by any lien or other encumbrance of any kind
(other than any lien or other encumbrance of any kind in respect of operating
leases) on any property owned by such Person even though such Person has not
assumed or otherwise become liable for the payment thereof, and (f) all
guarantees of any Indebtedness or obligations referred to in clauses (a) through
(e) above.

            "Indemnified Party" - Defined in Section 5.3.

            "Loss" - Defined in Section 5.1.

            "Material Adverse Effect" - A material adverse effect on or a
material adverse change in the business, operations, property, results of
operation or financial condition of ToolTex or Buyer, as the case may be, or on
the ability of Seller, ToolTex or Buyer, as the case may be, to consummate the
transactions contemplated hereby.

            "Material Contracts" - All written contracts, commitments,
agreements (including agreements for the borrowing of money or the extension of
credit), leases, licenses, guarantees, understandings and obligations to which
ToolTex is a party or by which ToolTex is bound except for (a) contracts which
may be canceled by ToolTex without penalty on not more than ninety days' notice;
(b) employment contracts and miscellaneous service contracts terminable on not
more than ninety days' notice without penalty; (c) purchase orders with
suppliers involving payment by ToolTex of amounts less than $5,000.00 in the
aggregate; (d) equipment maintenance agreements involving payment by ToolTex of
amounts less than $5,000.00 per year in the aggregate; and (e) other contracts
whose aggregate liabilities to the company do not exceed $5,000.00 in any
twelve-month period.

            "Person" - An individual, partnership, corporation, business trust,
joint stock company, limited liability company, trust, joint venture,
Governmental Authority or other individual or entity of whatever nature.

            "Receivables" - The accounts receivable accrued and owing to
ToolTex.

            "Requirement of Law" - Any federal, state, local, municipal,
foreign, international, multinational or other administrative order,
constitution, law (statutory or otherwise), treaty, rule, regulation, ordinance
or determination of any arbitrator or court or other Governmental

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Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.

            "SEC" - The Securities and Exchange Commission.

            "Seller's Counsel" - Tyler Cooper & Alcorn, LLP., or such other
counsel as is designated by Seller.

            "Survival Date" - Defined in Section 6.14..

            "Tax" or "Taxes" - Any and all taxes, fees, levies, duties, tariffs,
imposts, and other charges of any kind (together with any and all interest,
penalties, additions to tax and additional amounts imposed with respect thereto)
imposed by any government or taxing authority, including, without limitation:
taxes or other charges on or with respect to income, franchises, windfall or
other profits, gross receipts, property, sales, use, capital stock, payroll,
employment, social security, workers' compensation, unemployment compensation,
or net worth; taxes or other charges in the nature of excise, withholding, ad
valorem, stamp, transfer, value added, or gains taxes; license, registration and
documentation fees; and customs duties, tariffs, and similar charges.

            "Tax Return" or "Tax Returns" - Any report, return declaration or
other information, or any amendment thereof, required to be filed or supplied in
connection with any Tax.

            "ToolTex Shares" - The shares of common stock of ToolTex owned by
Seller, which, as of the Closing, constitute all of the issued and outstanding
shares of capital stock of ToolTex.

                ARTICLE II - PURCHASE AND SALE OF TOOLTEX SHARES

            2.1 PURCHASE AND SALE. Upon the terms and subject to the conditions
set forth in this Agreement and the representations and warranties herein made
by each of the parties to this Agreement, Seller agrees to sell to Buyer, and
Buyer agrees to buy from Seller, at the Closing, ninety percent (90%) of the
ToolTex Shares, free and clear of all claims, liens, security interests and
other encumbrances of any nature whatsoever.

            2.2 CONSIDERATION:

                (a) Enumeration of Consideration. The consideration to be paid
by Buyer to the Seller for the ToolTex Shares shall be One Hundred Twenty-five
Thousand Dollars ($125,000) in the form of a promissory note(the "Note") from
Buyer to Seller, in form attached as Exhibit 2.2(a) -1 (the "Consideration").
Paul Spurgeon and ToolTex shall execute guaranties of the Note in form attached
as Exhibits 2.2(a)-2 (the "Personal Guaranty") and 2.2(a)-3 (the "ToolTex
Guaranty") respectively, and the ToolTex Guaranty shall be secured by a security
interest in ToolTex' furniture and equipment pursuant to a Security Agreement in
form attached as Exhibit 2.2(a)-4 (the "Security Agreement").

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                (b) Tender of Consideration. Buyer shall at the Closing, execute
and deliver the promissory note described in 2.2(a) to Seller pursuant to the
provisions of this Agreement.

                  ARTICLE III -- REPRESENTATIONS AND WARRANTIES

            3.1 REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents and
warrants to Buyer the following as of the Closing and with full understanding
that such representations and warranties constitute a material inducement to
Buyer to enter into the transaction contemplated hereby:

                (a) Share Ownership. Seller is the owner, beneficially and of
record, of all of the ToolTex Shares free and clear of all liens, pledges,
encumbrances, security interests and other restrictions. Seller is not a party
to any option, warrant, right, contract, call, put, voting trust, buy-sell,
close corporation or other agreement or commitment providing for the issuance,
disposition, acquisition or voting of any of the capital stock of ToolTex,
including the ToolTex Shares (other than as set forth in this Agreement).

                (b) Organization. ToolTex is duly organized, validity existing,
and is in good standing under the laws of the State of Ohio. ToolTex has all
requisite corporate powers and governmental authorizations to own, operate and
lease its properties and assets and to carry on its business as presently
conducted.

                (c) Authority of Seller. Seller has all requisite power and
authority to execute and deliver this Agreement and any other agreement or
document executed or to be executed by Seller in connection herewith, and to
perform the transactions contemplated hereby and thereby. The execution,
delivery and performance of this Agreement and any other agreement or document
executed or to be executed by Seller in connection herewith will at Closing have
been duly and validly authorized by Seller and no further such action is
required on the part of Seller. This Agreement and any other agreement or
document executed or to be executed by Seller in connection herewith has been or
will timely be duly executed and delivered by Seller and constitutes the valid
and binding obligation of Seller, enforceable in accordance with its respective
terms, except that enforceability hereof or thereof may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.

                (d) Capitalization and Long-term Indebtedness.

                    (i) ToolTex is authorized by its Articles of Incorporation
to issue 850 shares of common stock with no par value. All of the shares of
ToolTex's validly issued and outstanding common stock are fully paid,
non-assessable and owned by the Seller. There are no shares of any other class
of stock of ToolTex issued, authorized or outstanding.

                    (ii) There are no outstanding options, warrants,
commitments, or agreements of any character whatsoever relating to the issuance
of ToolTex's common stock or other securities.

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                (e) No Conflict or Breach. The execution, delivery and
performance of this Agreement by Seller does not and will not:

                    (i) conflict with or constitute a violation of the Articles
of Incorporation or Code of Regulations or other constituent document or
governing instrument of ToolTex, any Subsidiary of ToolTex, or Seller;

                    (ii) conflict with or constitute a violation of any law,
statute, judgment, order, decree or regulation of any legislative body, court,
administrative agency, Governmental Authority or arbitrator applicable to or
relating to Seller,

                    (iii) conflict with, violate or result in a breach of, or
constitute a default under, or result in the termination of or accelerate the
performance required by, or result in a right of termination or acceleration
under, any mortgage, note, indenture, deed of trust, lease, loan agreement or
other agreement or instrument applicable to ToolTex or Seller, ToolTex's, or
Seller's properties or assets, except for conflicts, violations, breaches or
defaults which, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect;

                    (iv) result in the creation of any lien, charge, or
encumbrance upon the ToolTex Shares or the assets of ToolTex;

                    (v) terminate, delay, or give any party thereto the right to
terminate, delay, amend, abandon, or refuse to perform any provision of any
agreement or instrument to which ToolTex is a party; or

                    (vi) require the consent or approval of any other person,
governmental authority, or other entity, or any notice to or filing with any
such person, authority, or entity, other than the board of directors of Seller
and any other consents to be obtained by Seller and delivered at the Closing.

                (f) Title to Assets. All tangible personal property owned by
ToolTex and used in or necessary to the operation of Tooltex's business
(collectively, the "Tangible Personal Property") is owned by ToolTex free and
clear of any liens, charges, equitable interests, options, rights of first
refusal, encumbrances, claims, security interests, mortgages or pledges of any
nature in favor of Seller or Seller's or ToolTex's creditors.

                (g) Absence of Certain Changes. Except with the express consent
of Paul Spurgeon, Buyer's President, Seller has not since July 31, 2001,

                    (i) sold, transferred, distributed or otherwise disposed of
any assets used in ToolTex's operations, except for assets not material to the
conduct of ToolTex's business;

                    (ii) made, authorized, entered into, or permitted to go into
effect any general wage or salary increase for the ToolTex employees as a group;
other than in the ordinary course of business consistent with past practice;

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                    (iii) amended or terminated, or authorized the amendment or
termination of, any Material Contract;

                    (iv) caused ToolTex to incur any material obligation or
liability;

                    (v) experienced or learned of any change which could
reasonably be expected to have a Material Adverse Effect; or

                    (vi) agreed or committed, whether in writing or otherwise,
to take any action described in this Section 3.1(g).

                (h) Compliance with Laws. To the best of Seller's knowledge,
ToolTex is in compliance with all laws, regulations, reporting and licensing
requirements and orders applicable to its business or employees conducting its
business, the breach or violation of which could reasonably be expected to have
a Material Adverse Effect. Seller has not received any notification or
communication from any Governmental Authority: (1) asserting that ToolTex is not
in compliance with any of the statutes, treaties, regulations or ordinances that
such Governmental Authority enforces, which noncompliance could reasonably be
expected to have a Material Adverse Effect or (2) threatening to revoke any
license, franchise, permit or authorization of any Governmental Authority which
would have a Material Adverse Effect.

                (i) Taxes. ToolTex has paid and discharged in all material
respects, or has reserved on the Financial Statements or its books and records
in all material respects, all Taxes required to be paid and currently due, as of
the Closing Date in respect of the business and operations of ToolTex, during
the period when Seller owned 100% of the ToolTex Shares and ToolTex has filed
all Tax Returns required in connection therewith to be filed where the failure
to file such reports and returns would have a Material Adverse Effect on ToolTex
or on the transactions contemplated hereby, and all such Tax Returns were
correct and complete in all material respects. ToolTex has not, during the
period when Seller owned 100% of the ToolTex Shares, executed or filed with the
Internal Revenue Service or any other taxing authority, domestic or foreign, any
extension or agreement extending the period for the assessment or collection of
any Taxes. ToolTex is not a party to any pending action or proceeding and has
not received written notice of any audit or review of any Tax Return or report
which would result in the imposition of any material Tax upon ToolTex. The
Internal Revenue Service has not asserted a claim for assessment against
ToolTex. No election under Section 341(f) of the Code is in effect with respect
to any of ToolTex's assets. Specifically excluded from this section is (a)
personal property tax liability owed to the State of Ohio or any subdivision
thereof; and (b) payroll taxes owed to Franklin County, Ohio.

                (j) Brokers. All negotiations relative to this Agreement and the
transaction contemplated hereby have occurred directly between Buyer and Seller
without the intervention or assistance of any brokerage or other person or
entity on behalf of the parties hereto (other than to provide accounting and/or
legal counsel). No party to this Agreement, nor any third party, has any right
or claim to any commission, brokerage fee or other compensation relative to the
negotiation of and entry into this Agreement or the transaction contemplated
hereby.

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            3.2 REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and
warrants to Seller the following as of the Closing and with full understanding
that such representations and warranties constitute a material inducement to
Seller to enter into the transaction contemplated hereby:

                (a) Organization. Buyer is duly organized, validity existing,
and is in good standing under the laws of the State of Ohio. Buyer has all
requisite corporate powers and governmental authorizations to own, operate and
lease its properties and assets and to carry on its business as presently
conducted.

                (b) Authority of Buyer. Buyer has all requisite power and
authority to execute and deliver this Agreement and any other agreement or
document executed or to be executed by Buyer in connection herewith, and to
perform the transactions contemplated hereby and thereby. The execution,
delivery and performance of this Agreement and any other agreement or document
executed or to be executed by Buyer in connection herewith will at Closing have
been duly and validly authorized by Buyer and no further such action is required
on the part of Buyer. This Agreement and any other agreement or document
executed or to be executed by Buyer in connection herewith has been or will
timely be duly executed and delivered by Buyer and constitutes the valid and
binding obligations of Buyer, enforceable in accordance with its respective
terms, except that enforceability hereof or thereof may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.

                (c) No Conflict or Breach. The execution, delivery and
performance of this Agreement and any other agreement or document delivered in
connection herewith by Buyer do not and will not:

                    (i) conflict with or constitute a violation of the Articles
of Incorporation or Code of Regulations or other constituent document or
governing instrument of Buyer;

                    (ii) conflict with or constitute a violation of any law,
statute, judgment, order, decree or regulation of any legislative body, court,
administrative agency, Governmental Authority or arbitrator applicable to or
relating to Buyer or its properties or assets in any manner that would have a
Material Adverse Effect; or

                    (iii) conflict with, violate or result in a breach of, or
constitute a default under, or result in the termination of or accelerate the
performance required by, or result in a right of termination or acceleration
under, any mortgage, note, indenture, deed of trust, lease, loan agreement or
other agreement or instrument applicable to Buyer or its properties or assets,
except for conflicts, violations, breaches or defaults which, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect.

                (d) Consents and Approvals. No: (a) consent, approval,
authorization, registration or filing with any federal, state or local judicial
or Governmental Authority or administrative agency; or (b) consent, approval,
authorization of or notice to any other third

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party, is required in connection with the valid execution and delivery by Buyer
of this Agreement or the consummation by Buyer of the transactions contemplated
herein except such consents, approvals, authorizations and notices as to which
the failure to obtain or give the same would not have a Material Adverse Effect.

                (e) Brokers. All negotiations relative to this Agreement and the
transaction contemplated hereby have occurred directly between Buyer and Seller
without the intervention or assistance of any brokerage or other person or
entity on behalf of the parties hereto (other than to provide accounting and/or
legal counsel). No party to this Agreement, nor any third party, has any right
or claim to any commission, brokerage fee or other compensation relative to the
negotiation of and entry into this Agreement or the transaction contemplated
hereby.

                (f) Absence of Certain Changes. Neither Buyer nor any of its
officers and directors, nor Paul Spurgeon in his capacity as President of
ToolTex, has taken any action that has caused or would reasonably be expected to
cause a breach of Seller's representations and warranties set forth in Section
3.1.

            3.3 Paul Spurgeon and Buyer's officers and directors are not aware
of any facts or circumstances that would serve as the basis for a claim
(regardless of the nature or legal basis for the claim) by Buyer against Seller
based upon a breach of any of the representations or warranties of Seller, and
Buyer shall be deemed to have waived in full any breach of any of Seller's
representations or warranties of which Buyer has awareness as of the Closing.

                          ARTICLE IV - MUTUAL COVENANTS

            4.1 MUTUAL COVENANTS. Buyer and Seller each covenant and agree with
each other the following:

                (a) Seller and Buyer will notify each other immediately of any
litigation, arbitration or administrative proceeding pending or to its
knowledge, threatened against either of them which challenges the transactions
contemplated in this Agreement.

                (b) Seller and Buyer agree: (i) to furnish upon request to each
other such further information, (ii) to execute and deliver to each other such
other documents, and (iii) to do such other acts and things, all as the other
party may reasonably request for the purpose of carrying out the intent of this
Agreement. The provisions of this subsection 4.1(b) shall survive the Closing of
this Agreement.

                (c) Each party shall pay for its own legal and accounting fees
in connection with this Agreement and the transactions contemplated hereby.
Spurgeon represents that he has not submitted any such fees to Tooltex prior to
closing.

                (d) Confidentiality. Following the Closing, Seller and Buyer
agree to retain in confidence, and to require their employees, consultants,
professional representatives and agents (collectively, "Representatives") and
their subsidiaries and their subsidiaries'

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Representatives, to retain in confidence, for a period of two years following
the Closing, all information concerning ToolTex and its business and not use for
their own benefit or disclose to any third party, or permit the use or
disclosure by such Representative or subsidiaries or subsidiaries'
Representative to any third party of, any such information, except that Seller
and Buyer may disclose the information to those of their Representatives who
need the information for the proper performance of their assigned duties with
respect to the consummation of the transactions contemplated hereby and the
preparation of appropriate Tax Returns. In making such information available to
the Representatives, Seller and Buyer shall take any and all precautions
necessary to ensure that the Representatives use the information only as
permitted hereby. Notwithstanding the foregoing, such information may be
disclosed: (i) if it is required by court order or decree or applicable law or
in connection with the preparation of Tax Returns, (ii) if it is ascertainable
or obtained from public or published information, or (iii) if it is received
from a third party not known to Seller or Buyer to be under an obligation to
keep such information confidential. If Seller or Buyer shall be required to make
disclosure of any such information by operation of law (other than in connection
with the preparation of Tax Returns), Seller shall give Buyer, or Buyer shall
give Seller, prior notice of the making of such disclosure and shall use all
reasonable efforts to afford Buyer or Seller, as the case may be, an opportunity
to contest the making of such disclosure.

                (e) Seller and Buyer agree that any federal, state or local
taxes assessed against or payable by ToolTex as a result of the removal of the
intercompany transactions between Seller and ToolTex, which is indicated by a
zero balance under "Accounts Receivable from ToolTex" on the August 21, 2001
Unaudited Balance Sheet - Post-Sale Estimate attached as Exhibit 4.1(e), shall
be borne one-half by Buyer and one-half by Seller. If either party intends to
pay such a tax, or becomes aware of a claim by any Governmental Authority that
such a tax is due and payable, it shall promptly notify the other and consult
with it regarding the matter.

                           ARTICLE V - INDEMNIFICATION

            5.1 INDEMNIFICATION BY SELLER. Subject to the provisions of Section
5.5, Seller shall indemnify, defend and hold harmless Buyer and its officers,
directors, employees, and agents from, against, and with respect to any and all
loss, damage, claim, obligation, liability, cost and expense (including, without
limitation, reasonable attorneys' fees and costs and expenses incurred in
investigating, preparing, defending against or prosecuting any litigation,
claim, proceeding or demand), of any kind or character (a "Loss") arising out of
or in connection with any of the following:

                (a) any failure by Seller to perform or observe, or to have
performed or observed, any material covenant or agreement to be performed or
observed by it pursuant to this Agreement; or

                (b) any debt or liability of ToolTex incurred while Seller owned
100% for the ToolTex Shares other than Buyer's share of taxes covered by Section
4.1(e) and any claim asserted by Ken McClelland, to the extent not disclosed,
provided for or reserved against, on the August 21, 2001 Unaudited Balance Sheet
- Post-Sale Estimate.

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            5.2 INDEMNIFICATION BY BUYER. Subject to the provisions of Section
5.5, Buyer shall indemnify, defend and hold harmless Seller and its officers,
directors, employees, agents and affiliates from, against, and with respect to
any and all loss, damage, claim, obligation, liability, cost and expense
(including, without limitation, reasonable attorneys' fees and costs and
expenses incurred in investigating, preparing, defending against or prosecuting
any litigation, claim, proceeding or demand), of any kind or character (a
"Loss") arising out of or in connection with any of the following:

                (a) any material breach of any of the representations and
warranties of Buyer contained in this Agreement; or

                (b) any failure by Buyer to perform or observe, or to have
performed or observed, any material covenant or agreement to be performed or
observed by it pursuant to this Agreement.

            5.3 NOTICE OF CLAIM. If any third party shall notify any party (the
"Indemnified Party") with respect to any matter (a "Third Party Claim") which
may give rise to a claim for indemnification against any other party (the
"Indemnity Obligor") under this Article V, then the Indemnified Party shall,
within 30 days following receipt of such Third Party Claim, promptly notify the
Indemnity Obligor in writing of any claim for recovery, specifying in reasonable
detail the nature of the Loss and the amount of the liability estimated to arise
therefrom. If the Indemnified Party does not so notify the Indemnity Obligor
within 30 days of its discovery of a claim for recovery, such claim shall be
barred only to the extent that the Indemnity Obligor is prejudiced by such
failure to notify. The Indemnified Party shall provide to the Indemnity Obligor
as promptly as practicable thereafter all information and documentation
reasonably requested by the Indemnity Obligor to verify the claim asserted.

            5.4 DEFENSE. If the facts relating to a Loss arise out of the claim
of any third party, or if there is any claim against a third party available by
virtue of the circumstances of the Loss, the Indemnity Obligor may, by giving
written notice to the Indemnified Party within 15 days following its receipt of
the notice of such claim, elect to assume the defense or the prosecution
thereof, including the employment of counsel or accountants at its cost and
expense; provided, however, that during the interim the Indemnified Party shall
use its commercially reasonable efforts to take all action (not including
settlement) reasonably necessary to protect against further damage or loss with
respect to the Loss. The Indemnified Party shall have the right to employ
counsel separate from counsel employed by the Indemnity Obligor in any such
action and to participate therein, but the fees and expenses of such counsel
shall be at the Indemnified Party's own expense, unless (i) the employment
thereof has been specifically authorized by the Indemnity Obligor, (ii) such
Indemnified Party has been advised by counsel reasonably satisfactory to the
Indemnity Obligor that there may be one or more legal defenses available to it
which are different from or additional to those available to the Indemnity
Obligor and in the reasonable judgment of such counsel it is advisable for such
Indemnified Party to employ separate counsel, or (iii) the Indemnity Obligor has
failed to assume the defense of such action and employ counsel reasonably
satisfactory to the Indemnified Party. Whether or not the Indemnity Obligor
chooses so to defend or prosecute such claim, all the parties hereto shall
cooperate in the defense or prosecution thereof and shall furnish such records,
information and testimony and shall attend such conferences, discovery
proceedings and trials as may be reasonably requested in connection therewith.
The Indemnity Obligor shall not be liable for any

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settlement of any such claim effected without its prior written consent. In the
event of payment by the Indemnity Obligor to the Indemnified Party in connection
with any Loss arising out of a third party claim, the Indemnity Obligor shall be
subrogated to and shall stand in the place of the Indemnified Party as to any
events or circumstances in respect of which the Indemnified Party may have any
right or claim against such third party relating to such Loss. The Indemnified
Party shall cooperate with the Indemnity Obligor in prosecuting any subrogated
claim. The Indemnity Obligor will take no action in connection with any claim
that would adversely affect the Indemnified Party without the consent of the
Indemnified Party.

            5.5 TIME FOR CLAIMS. Any claim asserted with respect to Sections
5.1(a), 5.1(b),5.1(c) 5.2(a), or 5.2(b) must be submitted to the Indemnity
Obligor in writing, or invoked in official proceedings, by the Survival Date.

                           ARTICLE VI - MISCELLANEOUS

            6.1 PAYMENT OF EXPENSES. [Deleted by agreement of the parties].

            6.2 PUBLICITY. Seller and Buyer agree that they will not make any
press releases or other announcements prior to the Closing with respect to the
transactions contemplated hereby, except as required by applicable law, without
the prior approval of the other party.

            6.3 NOTICES. All notices, demands, requests or other communications
made pursuant to, under or by virtue of this Agreement must be in writing and
either hand delivered, delivered by overnight courier or telecopier or facsimile
transmission, or mailed through the United States Postal Service by certified or
registered mail, return receipt requested, to the party to which the notice,
demand, request or communication is being made, as follows:

                To Buyer:               PK SPUR CO.
                                        Attn.: Kathy and Paul Spurgeon
                                        6160 Seeds Road
                                        Grove City, Ohio 43123-8603
                                        (614) 539-3223 (fax)

                with a copy to:         Dixon F. Miller, Esq.
                                        Kyle A. Knapp, Esq.
                                        Porter Wright Morris & Arthur, LLP
                                        41 South High Street
                                        Columbus, Ohio 43215-6194
                                        (614) 227-2100 (fax)

                To Seller:              Sonics & Materials, Inc.
                                        Attn.: Robert S. Soloff
                                        53 Church Hill Road, Suite 906
                                        Newtown, Connecticut 06470-1614
                                        (203) 270-4610 (fax)

                                       12
<PAGE>

                with a copy to:         Tyler, Cooper & Alcorn, LLP
                                        Att:  Jon T. Hirschoff, Esq.

                                        205 Church Street
                                        P.O. Box 1936
                                        New Haven, Connecticut 06509
                                        (203) 865- 7865 (fax)

or to such other address as may be hereafter designated by either Buyer or
Seller by giving written notice to the other party. Any notice, demand, request
or other communication shall be deemed to be given upon actual receipt in the
case of hand delivery, facsimile or telecopier transmission, or delivery by
overnight courier. In the event of any notice via telecopier or facsimile
transmission, a hard copy shall be sent via certified mail, return receipt
requested on the day of such transmission. Any such transmission received after
5:00 P.M. Eastern Standard Time shall be deemed to have been received on the
next following business day. For purposes of delivering and receiving any
notices, demands, requests or other communications under this Agreement, the
attorneys for each party may directly contact any of the other parties hereto.
The respective attorneys for Seller and/or Buyer are hereby expressly authorized
to give any notice, demand, request or to make any other communication pursuant
to the terms of this Agreement on behalf of their respective clients.

            6.4 GOVERNING LAW / VENUE / CONSTRUCTION. This Agreement shall be
construed and enforced in accordance with the laws of the State of Ohio,
exclusive of choice of law rules, and this Agreement shall not be construed more
strictly against one party than against the other merely by virtue of the fact
that it may have been prepared by counsel for one of the parties, it being
recognized that all parties hereto have contributed substantially and materially
to the negotiation and preparation of this Agreement. The obligations of the
parties are performable in Franklin County, Ohio. The venue for any legal action
initiated by the Seller arising out of this Agreement shall lie in Fairfield
County, Connecticut. The venue for any legal action initiated by the Buyer
arising out of this Agreement shall lie in Franklin County, Ohio.

            6.5 ATTORNEY'S FEES AND COSTS. If any legal action or other
proceeding is brought for the enforcement of this Agreement, or because of an
alleged dispute, breach, default or misrepresentation in connection with any of
the provisions of the Agreement, the prevailing party shall be entitled to
recover reasonable paralegal and attorneys' fees and other costs incurred in
that action or proceeding, including those related to appeals, in addition to
any other relief to which it may be entitled.

            6.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Signatures by facsimile
transmission of this Agreement shall be acceptable and binding upon all parties.

                                       13
<PAGE>

            6.7 ASSIGNMENT. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns. Except as expressly provided herein, neither this Agreement nor any of
the rights, interest or obligations hereunder shall be assigned by either of the
parties hereto without the prior written consent of the other party hereto, and
any purported assignment without such consent shall be void.

            6.8 THIRD PARTY BENEFICIARIES. None of the provisions of this
Agreement or any document contemplated hereby is intended to grant any right or
benefit to any person or entity which is not a party to this Agreement.

            6.9 HEADINGS, PLURAL AND SINGULAR. The headings which have been used
throughout this Agreement have been inserted for convenience of reference only
and do not constitute matter to be construed in interpreting this Agreement.
Words of any gender used in this Agreement shall be held and construed to
include any other gender and words in the singular shall be held to include the
plural, and vice versa, unless the context requires otherwise. The words
"herein", "hereof", "hereunder" and other similar compounds of the word "here"
when used in this Agreement shall refer to the entire Agreement including any
Schedules attached hereto, and not to any particular provision or section. If
the last day of any time period stated herein shall fall on a Saturday, Sunday,
legal or banking holiday, then the duration of such time period shall be
extended so that it shall end on the next succeeding day which is not a
Saturday, Sunday, legal or banking holiday. The term "business day" shall mean
any day other than a Saturday, Sunday, legal or banking holiday.

            6.10 AMENDMENTS; WAIVER. Any amendment, modification or supplement
of or to any term or condition of this Agreement shall be effective only if in
writing and signed by both parties hereto. No waiver by any party of any of the
provisions hereof shall be effective unless explicitly set forth in writing and
executed by the party so waiving. The waiver by any party hereto of a breach of
any provision of this Agreement shall not operate or be construed as a waiver of
any other or subsequent breach. No failure on the part of either party hereto to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof. The remedies herein are cumulative and not exclusive of any
remedies provided by law.

            6.11 INTEGRATION. This Agreement contains all of the terms agreed
upon between the parties with respect to the subject matter hereof, and is the
complete, final, exclusive and entire understanding between the parties with
respect to the subject matter hereof, and supersedes all previous contracts,
agreements, and understandings of the parties, either oral or written. All of
the Exhibits referenced in this Agreement are incorporated into this Agreement
by such reference thereto and made a part hereof.

            6.12 PARTIAL INVALIDITY. If any term or provision of this Agreement
or the application thereof to any person or circumstances shall be declared
invalid and unenforceable by a court of competent jurisdiction, such term or
provision shall be modified to the minimum extent necessary to make it or its
application valid and enforceable, and the validity and enforceability of all
other provisions of this Agreement and all other applications of any such term
or provision shall not be affected thereby, and each term and provision of this
Agreement shall be valid and be enforced to the fullest extent permitted by law.

                                       14
<PAGE>

            6.13 FURTHER ACTS. In addition to the acts recited in this Agreement
to be performed by the parties hereto, Buyer and Seller agree to perform or
cause to be performed at or after the Closing any and all such further acts as
may be reasonably necessary to consummate the transaction contemplated hereby.

            6.14 SURVIVAL. Notwithstanding any provisions of this Agreement to
the contrary, the warranties and representations of the parties shall expressly
survive Closing until the date ("the Survival Date")(a) ninety days after the
Closing for general claims and (b) until the expiration of the statute of
limitations for tax claims under Section 3.1(i) which arise from the period
during which Seller owned 100% of the ToolTex Shares.

            IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be signed by its duly authorized officer as of the date first above
written.

                                      BUYER:

                                      PK SPUR CO., an Ohio corporation

                                      By:_____________________________________
                                      Printed Name:___________________________
                                      Its:____________________________________
                                      Date:___________________________________

                                      By:_____________________________________
                                      Printed Name:___________________________
                                      Its:____________________________________
                                      Date:___________________________________

                                      SELLER:

                                      ---------------------------------------
                                      Sonics & Materials, Inc.
                                      Date:__________________________________

                                      By:____________________________________
                                      Printed Name:__________________________
                                      Its:___________________________________
                                      Date:__________________________________

                                       15
<PAGE>

                                    Exhibits

        2.2(a)-1        Term Note (see Closing document # III(3))

        2.2(a)-2        Agreement of Guaranty and Suretyship [for execution by
                        Paul Spurgeon] (see Closing document # III(4))

        2.2(a)-3        Agreement of Guaranty and Suretyship [for execution by
                        Tooltex] (see Closing document # III(5))

        2.2(a)-4        Security Agreement (see Closing document # III(6))

        4.1(e)          The August 21, 2001 Unaudited Balance Sheet - Post-Sale
                        Estimate.EXHIBIT 4.1

                              PAN WORLD CORPORATION

                             1999 STOCK OPTION PLAN

                           Adopted on November 2, 1999

<PAGE>

                              PAN WORLD CORPORATION

                             1999 STOCK OPTION PLAN

1.       PURPOSES OF THE PLAN.

         The purposes of this 1999 Stock Option Plan (sometimes hereafter "Plan"
or "Equity Incentive Plan") are to attract and retain the best available
personnel for positions of substantial responsibility, to provide additional
incentive to Employees, Directors and Consultants and to promote the success of
the Company's business, and to provide additional compensation to such personnel
for the services they render after receiving an award hereunder. The Company
intends that the Plan accomplish these goals by granting incentives in the form
of Incentive Stock Options, Nonstatutory Stock Options, Stock Purchase Rights,
or combinations thereof, all as more fully described below.

2.       DEFINITIONS.

         As used herein, the following definitions shall apply:

         (a)    "ADMINISTRATOR" means the Board or any of its Committees as
                shall be operate and administer the Plan in accordance with
                Section 0 hereof.

         (b)    "APPLICABLE LAWS" means the requirements relating to the
                administration of stock option plans under U.S. state corporate
                and tax laws, U.S. federal and state securities, labor and tax
                laws (including without limitation the Code), any stock exchange
                or quotation system on which the Common Stock is listed or
                quoted and the applicable laws of any other country or
                jurisdiction where Options or Stock Purchase Rights are granted
                under the Plan.

         (c)    "BOARD" means the Board of Directors of the Company.

         (d)    "CHANGE OF CONTROL" refers to the occurrence of any of the
                following after the Company's adoption of this Plan: (1) any
                person or entity (persons or entities acting together) is or
                becomes the beneficial owner of more than 50% of the Voting
                Stock of the Company; (2) a consolidation, merger, or sale of
                substantially all of the assets of the Company, with the effect
                that any person or entity becomes the beneficial owner of more
                than 50% of the Voting Stock of the Company or the Company is
                not the surviving entity; and (3) any order, judgment or decree
                of dissolution or split-up of the Company, and such order
                remains undischarged or unstayed for a period in excess of 60
                days. For purposes of this provision, "more than 50% of the
                Voting Stock" means more than 50% of one or more classes of
                stock pursuant to which the holders have the general power to
                vote for the election of members of the Board of Directors, and
                the aggregate of such classes for which the person or entity
                holds more than 50% has the power to elect more than 50% of the
                members of the Board of Directors. Except where required by law,
                no Change of Control shall occur for purposes of this Plan
                merely because of a modification of ownership or control
                described in Code Section 280G(b)(2)(A).

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

         (f)    "COMMITTEE" means a committee of Directors appointed by the
                Board in accordance with Section 0 hereof.

                                      -2-

<PAGE>

         (g)    "COMMON STOCK" means the voting Common Stock of the Company,
                par value $.01.

         (h)    "COMPANY" means Pan World Corporation, a Nevada corporation.

         (i)    "CONSULTANT" means any person who is engaged by the Company or
                any Parent or Subsidiary to render consulting or advisory
                services to such entity.

         (j)    "DIRECTOR" means a member of the Board of Directors of the
                Company.

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

         (l)    "EMPLOYEE" means any person designated by the company as an
                Employee, including Officers and Directors employed by the
                Company or any Parent or Subsidiary of the Company, and
                excluding any person who may be a common law employee of the
                Company but is not designated by the Company as Employee.
                Neither service as a Director nor payment of a director's fee by
                the Company shall be sufficient to constitute "employment" by
                the Company.

         (m)    "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
                amended.

         (n)    "FAIR MARKET VALUE" means, as of any date, the value of Common
                Stock determined as follows:

                (i)     If the Common Stock is listed on any established stock
                exchange or a national market system, including without
                limitation the Nasdaq National Market or The Nasdaq SmallCap
                Market of The Nasdaq Stock Market, its Fair Market Value shall
                be the closing sales price for such stock (or the closing bid,
                if no sales were reported) as quoted on such exchange or system
                for the last market trading day prior to the time of
                determination, as reported in The WALL STREET JOURNAL or such
                other source as the Administrator deems reliable;

                (ii)    If the Common Stock is regularly quoted by a recognized
                securities dealer but selling prices are not reported, its Fair
                Market Value shall be the mean between the high bid and low
                asked prices for the Common Stock on the last market trading day
                prior to the day of determination; or

                (iii)   In the absence of an established market for the Common
                Stock, the Fair Market Value thereof shall be determined in good
                faith by the Administrator.

                (iv)    For purposes of calculating taxable gain, the
                Administrator may determine the Fair Market Value of Optioned
                Stock sold on the date of exercise to be the actual selling
                price on any established national stock exchange or national
                market system.

                While the Common Stock trades in the market called
                Over-the-Counter Pink Sheets ("OTC"), the Company intends that,
                to the extent determined by the Administrator, any valuation of
                Optioned Stock shall reflect activity on the OTC.

                                      -3-

<PAGE>

         (n)    "INCENTIVE STOCK OPTION" means an Option intended to qualify as
                an incentive stock option within the meaning of Section 422 of
                the Code.

         (o)    "NONSTATUTORY STOCK OPTION" means an Option which does not
                qualify as an Incentive Stock Option.

         (p)    "OFFICER" means a person who is an officer of the Company within
                the meaning of Section 16 of the Exchange Act and the rules and
                regulations promulgated thereunder.

         (q)    "OPTION" means a stock option granted pursuant to the Plan.

         (r)    "OPTION AGREEMENT" means a written or electronic agreement
                between the Company and an Optionee evidencing the terms and
                conditions of an individual Option grant. The Option Agreement
                is subject to the terms and conditions of the Plan.

         (s)    "OPTION EXCHANGE PROGRAM" means a program whereby outstanding
                Options are exchanged for Options with a lower exercise price.

         (t)    "OPTIONED STOCK" means the Common Stock subject to an Option or
                a Stock Purchase Right.

         (u)    "OPTIONEE" means the holder of an outstanding Option or Stock
                Purchase Right issued under the Plan.

         (v)    "PARENT" means a parent corporation, whether now or hereafter
                existing, as defined in Section 424(e) of the Code.

         (w)    "PLAN" means this Pan World Corporation 1999 Stock Option Plan.

         (x)    "PUBLIC COMPANY" means a company whose shares are listed on an
                established national stock exchange or national market system,
                such as the National Small CapMarket, the National Market
                System, or the New York Stock Exchange. Where required by law,
                the term Public Company as used in this Plan refers to any
                publicly held corporation, within the meaning of Code Section
                162(m), issuing any class of common equity securities required
                to be registered under Section 12 of the Exchange Act.

         (y)    "RESTRICTED STOCK" means shares of Common Stock acquired
                pursuant to a grant of a Stock Purchase Right under Section 0
                below.

         (z)    "SECTION 16(b)" means Section 16(b) of the Exchange Act.

         (aa)   "SECURITIES ACT" means Securities Act of 1933, as amended.

         (bb)   "SERVICE PROVIDER" means an Employee, Director or Consultant.

         (cc)   "SHARE" means a share of the Common Stock, as adjusted in
                accordance with Section 0 below.

         (dd)   "STOCK PURCHASE RIGHT" means a right to purchase Common Stock
                pursuant to Section 0 below.

                                      -4-

<PAGE>

         (ee)   "SUBSIDIARY" means a subsidiary corporation, whether now or
                hereafter existing, as defined in Section 424(f) of the Code.

         (ff)   "TEN-PERCENT SHAREHOLDER" is any person who at the time of grant
                owns, directly or indirectly, or is deemed to own by reason of
                the attribution rules of Section 424(d) of the Code, stock
                possessing more than 10% of the total combined voting power of
                all classes of stock of the Company or any Parent or Subsidiary.

3.       STOCK SUBJECT TO THE PLAN.

         (a) Subject to provisions of Section 0 of the Plan, the maximum
         aggregate number of Shares which may be issued under the Plan is
         1,600,000 Shares. The Shares may be authorized but unissued, or
         reacquired Common Stock. If an Option or Stock Purchase Right expires
         or becomes unexercisable without having been exercised in full, or is
         surrendered pursuant to an Option Exchange Program, the unpurchased
         Shares which were subject thereto shall become available for future
         grant or sale under the Plan (unless the Plan has terminated). However,
         Shares that have actually been issued under the Plan, on exercise of
         either an Option or Stock Purchase Right, shall not be returned to the
         Plan and shall not become available for future distribution under the
         Plan, except that if Shares of Restricted Stock are repurchased by the
         Company at their original purchase price, such Shares shall become
         available for future grant under the Plan.

         (b) Subject to provisions of Section 0 of the Plan, the maximum number
         of shares of Stock as to which Options may be granted under the Plan to
         any Optionee is one-third of the maximum number of shares issuable
         under the Plan. For purposes of this paragraph, except as otherwise
         provided in Code Section 162(m) or in regulations or generally
         applicable administrative pronouncements thereunder, any repricing of
         an Option shall be treated as an original grant.

4.       ADMINISTRATION OF THE PLAN.

         (a) FUNCTIONS OF THE ADMINISTRATOR. The Plan shall be administered by
         the Board or a Committee appointed by the Board, which Committee shall
         be constituted to comply with Applicable Laws. Unless and until a
         Committee is appointed, the Plan shall be administered by the entire
         Board, and references in the Plan to the "Administrator" shall be
         deemed references to the Board. A majority of the members of the
         Committee shall constitute a quorum, and all determinations of the
         Committee shall be made by a majority of its members. Any determination
         of the Committee under the Plan may be made without notice or meeting
         of the Committee by a writing signed by a majority of the Committee
         members. All decisions, determinations and interpretations of the
         Administrator shall be final and binding on all Optionees.

         (b) POWERS OF THE ADMINISTRATOR. Subject to the provisions of the Plan
         and, in the case of a Committee, the specific duties delegated by the
         Board to such Committee, and subject to the approval of any relevant
         authorities, the Administrator shall have the authority in its
         discretion to take all action necessary or appropriate to effect the
         purposes of the Plan, including but not limited to the following, and
         to delegate such powers as may be delegated under Applicable Laws:

                (i)     to determine the Fair Market Value;

                                      -5-

<PAGE>

                (ii)    to select the Service Providers to whom Options and
                Stock Purchase Rights may from time to time be granted
                hereunder;

                (iii)   to determine the number of Shares to be covered by each
                such award granted hereunder;

                (iv)    to approve forms of agreement for use under the Plan;

                (v)     to determine the terms and conditions of any Option or
                Stock Purchase Right granted hereunder. Such terms and
                conditions include, but are not limited to, the exercise price,
                the time or times when Options or Stock Purchase Rights may be
                exercised (which may be based on performance criteria), any
                vesting acceleration or waiver of forfeiture restrictions, and
                any restriction or limitation regarding any Option or Stock
                Purchase Right or the Common Stock relating thereto, based in
                each case on such factors as the Administrator, in its sole
                discretion, shall determine;

                (vi)    to determine whether and under what circumstances an
                Option may be settled in cash under subsection 0(h) instead of
                Common Stock;

                (vii)   to reduce the exercise price of any Option to the then
                current Fair Market Value if the Fair Market Value of the Common
                Stock covered by such Option has declined since the date the
                Option was granted;

                (viii)  to initiate an Option Exchange Program;

                (ix)    to prescribe, amend and rescind rules and regulations
                relating to the Plan, including rules and regulations relating
                to sub-plans established for the purpose of qualifying for
                preferred tax treatment under foreign tax laws;

                (x)     to allow Optionees to satisfy withholding tax
                obligations by electing to have the Company withhold from the
                Shares to be issued upon exercise of an Option or Stock Purchase
                Right that number of Shares having a Fair Market Value equal to
                the amount required to be withheld. The Fair Market Value of the
                Shares to be withheld shall be determined by reference to the
                date on which the obligation to withhold accrues. All elections
                by Optionees to have Shares withheld for this purpose shall be
                made in such form and under such conditions as the Administrator
                may deem necessary or advisable; and

                (xi)    to construe and interpret the terms of the Plan and
                awards granted pursuant to the Plan.

                In exercising any power or authority granted hereunder, the
                Administrator shall have the broadest possible discretionary
                authority permitted by law, including without limitation,
                discretionary authority to make determinations of fact and to
                construe ambiguities in any Plan document, Option Agreement, or
                other related instrument. The Company intends that no court,
                arbitrator or other person shall set aside, annul or modify any
                decision or action of the Administrator unless such decision or
                action is capricious and clearly contrary to the terms of the
                Plan.

                                      -6-

<PAGE>

5.       OPTION GRANTS

         (a)    Nonstatutory Stock Options and Stock Purchase Rights may be
         granted to Service Providers. Incentive Stock Options may be granted
         only to Employees.

         (b)    Each Option shall be designated in the Option Agreement as
         either an Incentive Stock Option or a Nonstatutory Stock Option.
         However, notwithstanding such designation, to the extent that the
         aggregate Fair Market Value of the Shares with respect to which
         Incentive Stock Options are exercisable for the first time by the
         Optionee during any calendar year (under all plans of the Company and
         any Parent or Subsidiary) exceeds $100,000 (or such other amount as
         specified under ss.422 of the Code), such Options shall be treated as
         Nonstatutory Stock Options. For purposes of this Section, Incentive
         Stock Options shall be taken into account in the order in which they
         were granted.

         (c)    Neither the Plan nor any Option or Stock Purchase Right shall
         confer upon any Optionee any right with respect to continuing the
         Optionee's relationship as a Service Provider with the Company, nor
         shall it interfere in any way with his or her right or the Company's
         right to terminate such relationship at any time, with or without
         cause.

6.       TERM OF PLAN.

         The Plan shall become effective upon its adoption by the Board. It
shall continue in effect for a term of ten (10) years unless sooner terminated
under Section 0 of the Plan. Thereafter, the Plan shall remain in effect with
respect to Options and Stock Purchase Rights outstanding on the date of
termination, but new Options and Stock Purchase Rights may not be granted after
the date of termination.

7.       DURATION OF OPTIONS.

         The latest date on which an Option may be exercised will be the tenth
anniversary (fifth anniversary, in the case of an ISO granted to a Ten-Percent
Shareholder) of the day immediately preceding the date the Option was granted,
or such earlier date as may be specified in the Option Agreement or by operation
of other provisions herein or in the Option Agreement.

8.       OPTION EXERCISE PRICE AND VESTING.

         (a)    EXERCISE PRICE.  The per share exercise price for the Shares to
         be issued upon exercise of an Option shall be such price as is
         determined by the Administrator, but shall be subject to the following:

                (i)     In the case of an Incentive Stock Option,

                        (A) granted to an Employee who, at the time of grant
                        of such Option, is a Ten-Percent Shareholder, the
                        exercise price shall be no less than 110% of the Fair
                        Market Value per Share on the date of grant.

                        (B) granted to any other Employee, the per Share
                        exercise price shall be no less than 100% of the Fair
                        Market Value per Share on the date of grant.

                                      -7-

<PAGE>

                (ii)    In the case of a Nonstatutory Stock Option,

                        (A) granted to a Service Provider who, at the time of
                        grant of such Option, is a Ten-Percent Shareholder,
                        the exercise price shall be no less than 110% of the
                        Fair Market Value per Share on the date of the grant.

                        (B) granted to any other Service Provider, the per
                        Share exercise price shall be no less than 85% of the
                        Fair Market Value per Share on the date of grant.

                (iii)   Notwithstanding the foregoing, Options may be granted
                with a per Share exercise price other than as required above
                pursuant to a merger or other corporate transaction.

                (iv)    In no case may the exercise price paid for Stock which
                        is part of an original issue of authorized
                        Stock be less than the par value per share of the
                        Stock.

         (b)    VESTING AND OTHER TERMS. Any Option granted hereunder shall be
                exercisable according to the terms hereof at such times and
                under such conditions as determined by the Administrator and
                set forth in the Option Agreement. Unless the Company is a
                Public Company at the time of grant, in no case may an Option
                vest at a rate of less than 20% per year over five (5) years
                from the date the Option is granted. An Option may not be
                exercised for a fraction of a Share.

         (c)    CALIFORNIA SECURITIES REGULATIONS

                This Plan shall comply with California Corporations Code
                Section 25102(o) and applicable regulations where the Company
                determines that it is in its best interest to avail itself of
                an exception to the obligation to qualify the Common Stock or
                any other securities issued hereunder.

9.       EXERCISE OF OPTION.

         (a)    METHOD OF EXERCISE. An Option shall be deemed exercised when the
         Company receives (i) written or electronic notice of exercise (in
         accordance with the Option Agreement) from the person entitled to
         exercise the Option, and (ii) full payment for the Shares with respect
         to which the Option is exercised. Full payment may consist of any
         consideration and method of payment authorized by the Administrator and
         permitted by the Option Agreement and the Plan. Shares issued upon
         exercise of an Option shall be issued in the name of the Optionee or,
         if requested by the Optionee, in the name of the Optionee and his or
         her spouse. Until the Shares are issued (as evidenced by the
         appropriate entry on the books of the Company or of a duly authorized
         transfer agent of the Company), no right to vote or receive dividends
         or any other rights as a shareholder shall exist with respect to the
         Shares, notwithstanding the exercise of the Option. The Company shall
         issue (or cause to be issued) such Shares promptly after the Option is
         exercised. No adjustment will be made for a dividend or other right for
         which the record date is prior to the date the Shares are issued,
         except as provided in Section 0 of the Plan. Exercise of an Option in
         any manner shall result in a decrease in the number of Shares
         thereafter available, both for purposes of the Plan and for sale under
         the Option, by the number of Shares as to which the Option is
         exercised.

                                      -8-

<PAGE>

         (b)    PAYMENT OF EXERCISE PRICE. The consideration to be paid for the
         Shares to be issued upon exercise of an Option, including the method of
         payment, shall be determined by the Administrator (and, in the case of
         an Incentive Stock Option, shall be determined at or prior to the time
         of grant). Such consideration may consist of (1) cash, (2) bank draft
         or money order payable to the Company, (3) check in a form and type
         acceptable to the Administrator, (4) promissory note, (5) other Shares
         which (x) in the case of Shares acquired upon exercise of an Option,
         have been owned by the Optionee for more than six months on the date of
         surrender, and (y) have a Fair Market Value on the date of surrender
         equal to the aggregate exercise price of the Shares as to which such
         Option shall be exercised, (6) consideration received by the Company
         under a cashless exercise program implemented by the Company in
         connection with the Plan, or (7) any combination of the foregoing
         methods of payment. In making its determination as to the type of
         consideration to accept, the Administrator shall consider if acceptance
         of such consideration may be reasonably expected to benefit the
         Company. If the Stock delivered upon exercise of the Option is an
         original issue of authorized Stock, at least so much of the exercise
         price as represents the par value of such Stock must be paid other than
         by the Optionee's promissory note or personal check.

         (c)    TERMINATION OF RELATIONSHIP AS A SERVICE PROVIDER.If an Optionee
         ceases to be a Service Provider, such Optionee may exercise his or her
         Option within such period of time as is specified in the Option
         Agreement to the extent that the Option is vested on the date of
         termination, but in no event later than the expiration of the term of
         the Option as set forth in the Option Agreement. In the absence of a
         specified time in the Option Agreement, the Option shall remain
         exercisable for three (3) months following the Optionee's termination.
         If, on the date of termination, the Optionee is not vested as to his or
         her entire Option, the Shares covered by the unvested portion of the
         Option shall revert to the Plan. If, after termination, the Optionee
         does not exercise his or her Option within the time specified by the
         Administrator, the Option shall terminate, and the Shares covered by
         such Option shall revert to the Plan.

         (d)    DISABILITY OF OPTIONEE. If an Optionee ceases to be a Service
         Provider as a result of the Optionee's Disability, the Optionee may
         exercise his or her Option within such period of time as is specified
         in the Option Agreement to the extent the Option is vested on the date
         of termination, but in no event later than the expiration of the term
         of such Option as set forth in the Option Agreement. In the absence of
         a specified time in the Option Agreement, the Option shall remain
         exercisable for twelve (12) months following the Optionee's
         termination. If, on the date of termination, the Optionee is not vested
         as to his or her entire Option, the Shares covered by the unvested
         portion of the Option shall revert to the Plan. If; after termination,
         the Optionee does not exercise his or her Option within the time
         specified herein, the Option shall terminate, and the Shares covered by
         such Option shall revert to the Plan.

         (e)    DEATH OF OPTIONEE. If an Optionee dies while a Service Provider,
         the Option may be exercised within such period of time as is specified
         in the Option Agreement to the extent the Option is vested on the date
         of death, but in no event later than the expiration of the term of such
         Option as set forth in the Option Agreement. In the absence of a
         specified time in the Option Agreement, the Option shall remain
         exercisable for twelve (12) months following the Optionee's date of
         death. If at the time of death, the Optionee is not vested as to his or
         her entire Option, the Shares covered by the unvested portion of the
         Option shall immediately revert to the Plan. Such Option may be
         exercised by the executor or administrator of the Optionee's estate or,
         if none, by the person(s) entitled to exercise the Option under the
         Optionee's will or the laws of descent or

                                      -9-

<PAGE>

         distribution. If the Option is not so exercised within the time
         specified herein, the Option shall terminate, and the Shares covered by
         such Option shall revert to the Plan.

         (f)    LEAVE OF ABSENCE. Unless the Administrator provides otherwise,
         vesting of Options granted hereunder shall be tolled during any unpaid
         leave of absence. An Employee shall continue to be treated as an
         Employee for purposes of this Plan in the case of (i) any leave of
         absence approved by the Company or (ii) transfers between locations of
         the Company or between the Company, its Parent, any Subsidiary, or any
         successor. If the leave of absence exceeds ninety days, unless
         reemployment upon expiration of such leave is guaranteed by statute or
         contract, any Incentive Stock Option exercised more than three months
         following the end of such 90-day period of leave shall remain in effect
         but may cease to be treated as an Incentive Stock Option and instead be
         treated for tax purposes as a Nonstatutory Stock Option, based on
         Applicable Laws then in effect.

         (g)    MISCONDUCT. If an Optionee is determined by the Administrator to
         have committed Misconduct, neither the Optionee, the Optionee's estate
         nor such other person who may then hold the Option shall be entitled to
         exercise any Option with respect to any shares whatsoever after
         termination of employment, whether or not after termination of
         employment the Optionee may receive payment from the Company for
         vacation pay, for services rendered prior to termination, for services
         rendered for the day on which termination occurs, for salary in lieu of
         notice, or for any other benefits. As used herein, "Misconduct"
         includes but is not limited to committing an act of theft,
         embezzlement, fraud, dishonesty, a breach of fiduciary duty to the
         Company, or deliberate disregard of the rules of the Company, or if an
         Optionee makes any unauthorized disclosure of any of the trade secrets
         or confidential information of the Company, engages in any conduct
         which constitutes unfair competition with the Company, induces any
         customer of the Company to break any contract with the Company, or
         induces any principal for whom the Company acts as agent to terminate
         such agency relationship. For the purpose of this paragraph,
         termination of employment shall be deemed to occur on the date when the
         Company dispatches notice or advice to the Optionee that his employment
         is terminated for misconduct as determined hereunder.

         (h)    BUYOUT PROVISIONS.The Administrator may at any time offer to buy
         out for a payment in cash or Shares, an Option previously granted,
         based on such terms and conditions as the Administrator shall establish
         and communicate to the Optionee at the time that such offer is made.

10.      NON-TRANSFERABILITY OF OPTIONS AND STOCK PURCHASE RIGHTS.

         Options and Stock Purchase Rights may not be sold, pledged, encumbered,
         alienated, assigned, hypothecated, transferred, or disposed of in any
         manner other than by will or by the laws of descent or distribution and
         may be exercised, during the lifetime of the Optionee, only by the
         Optionee.

11.      RESTRICTED STOCK AND REPURCHASE RIGHTS.

         (a)    RIGHTS TO PURCHASE. Stock Purchase Rights may be issued either
         alone, in addition to, or in tandem with other awards granted under the
         Plan and/or cash awards made outside of the Plan. After the
         Administrator determines that it will offer Stock Purchase Rights under
         the Plan, it shall advise the offeree in writing or electronically of
         the terms, conditions and restrictions related to the offer, including
         the number of Shares that such person shall be entitled to purchase,

                                      -10-

<PAGE>

         the price to be paid, and the time within which such person must accept
         such offer. The terms of the offer shall comply in all respects with
         Section 260.140.42 of Title 10 of the California Code of Regulations.
         The offer shall be accepted by execution of a Restricted Stock Purchase
         Agreement in the form determined by the Administrator.

         (b)    REPURCHASE RIGHT. Unless specified otherwise in the Restricted
         Stock Purchase Agreement, a Restricted Stock Purchase Agreement shall
         grant the Company a Repurchase Right exercisable upon the voluntary or
         involuntary termination of the purchaser's service with the Company for
         any reason (including death or disability). The purchase price for
         Shares repurchased pursuant to Repurchase Right shall be the original
         price paid by the purchaser and may be paid by cancellation of any
         indebtedness of the purchaser to the Company. The Repurchase Right
         shall lapse at such rate as may be specified in the Restricted Stock
         Purchase Agreement, but in no case at a rate of less than 20% per year
         over five (5) years from the date of purchase. Unless otherwise
         specified in the Restricted Stock Purchase Agreement, the Repurchase
         Right shall lapse on a Change of Control.

         (c)    OTHER PROVISIONS. The Restricted Stock Purchase Agreement shall
         contain such other terms, provisions and conditions not inconsistent
         with the Plan as may be determined by the Administrator in its sole
         discretion.

         (d)    RIGHTS AS A SHAREHOLDER. Once a Stock Purchase Right is
         exercised, the purchaser shall have rights equivalent to those of a
         shareholder and shall be a shareholder when his or her purchase is
         entered upon the records of the duly authorized transfer agent of the
         Company. No adjustment shall be made for a dividend or other right for
         which the record date is prior to the date the Stock Purchase Right is
         exercised, except as provided in Section 0 of the Plan.

         (e)    ESCROW. To facilitate the consummation of the Company's
         Repurchase Right hereunder, at the request of the Committee, the
         Service Provider and the Company shall execute Joint Escrow
         Instructions and the Service Provider shall deliver and deposit with
         the Escrow Agent named in the Joint Escrow Instructions two
         "Assignments Separate from Certificate," together with all certificates
         evidencing the Shares of Common Stock that are issued to the Service
         Provider pursuant to the Plan, duly endorsed in blank.

         (f)    REPURCHASE PROCEDURE.  The Company may exercise its Repurchase
         Right by sending a written notice to the Service Provider and to the
         Escrow Agent, if any, of its taking such action and specifying the
         number of Shares being repurchased. The Company's Repurchase Right
         shall terminate if not exercised by written notice from the Company to
         the Service Provider within ninety (90) days of the date on which the
         Company learns of Service Provider's termination of services or the
         last date any Stock Purchase Right held by such Service Provider is
         exercised, whichever is later. If the Company exercises its Repurchase
         Right, the Service Provider, or if applicable, the Escrow Agent, shall
         deliver to the Company every stock certificate representing the Shares
         being repurchased, together with appropriate Assignments Separate from
         Certificates and the Company shall then promptly pay the total
         Repurchase Price in cash to the Service Provider, or if applicable, to
         the Escrow Agent, for delivery to the Service Provider.

         (g)    RIGHT OF FIRST REFUSAL. Notwithstanding any other provision of
         this Plan, if the Common Stock is listed on any United States
         securities exchange or traded on any formal over-the-counter market in
         general use in the United States at the time the Optionee would
         otherwise be required to transfer his or her Shares, the Company shall
         not have the Right of First Refusal described

                                      -11-

<PAGE>

         herein, and the Optionee shall have no obligation to comply with this
         Section 0(g). The Right of First Refusal shall not apply to any
         gratuitous transfers by Service Provider to any ancestors, descendants,
         spouse or immediate family members, provided that such transferees
         shall be bound by the obligations set forth in this Section 11(g).

         With respect to any transfer of Shares by any Service Provider, the
         Company shall have the right of first refusal (the "Right of First
         Refusal") to purchase any Shares proposed to be transferred in the
         manner set forth herein. Before any Service Provider effects any
         transfer of any Shares, such person shall give to the Company a written
         notice ("Transfer Notice") of intent to transfer the Shares stating (a)
         the bona fide intention to transfer such Shares; (b) the number of
         Shares proposed to be transferred (the "Offered Stock"); (c) the name,
         address and relationship, if any, to the Service Provider of proposed
         transferee; and (d) the bona fide cash price or, in reasonable detail,
         other consideration, per share for which Service Provider proposes to
         transfer Offered Stock ("Offered Price"). Upon request, Service
         Provider will promptly furnish such information to the Company as may
         be reasonably requested to establish that the offer and proposed
         transferee are bona fide. Within twenty (20) days of such notice, the
         Company shall have the opportunity to purchase all of the Offered
         Stock. If the Company exercises its Right of First Refusal, the portion
         of the Offered Stock to be purchased by the Company shall be delivered
         to the Company, and the remaining portion, if any, may be transferred
         to the proposed transferee as stated in the Transfer Notice. The
         purchase price for the Offered Stock to be purchased by the Company
         pursuant to exercise of its Right of First Refusal shall be the Offered
         Price. If the Offered Price includes consideration other than cash, the
         cash equivalent value of the non-cash consideration will be determined
         by the Board of Directors in good faith, which determination will be
         binding upon Service Provider and the Company absent fraud or error. If
         the Company has not elected to purchase all or part of the Offered
         Stock, Service Provider may transfer that portion of the Offered Stock
         permitted to be sold to any person named in the Transfer Notice, at the
         Offered Price, provided that such transfer (i) is consummated within
         sixty (60) days after the Transfer Notice. If the Offered Stock is not
         so transferred during such sixty (60) day period, then the Service
         Provider may not transfer any of such Offered Stock without complying
         again in full with the provisions of this Section 11(g).

         (h)    BINDING EFFECT. The Company's Right of Repurchase and Right of
         First Refusal shall inure to the benefit of its successors and assigns
         and shall be binding upon any representative, executor, administrator,
         heir or legatee of the Optionee. Any transfer in contravention of
         provisions hereof shall be null and void and shall not confer any
         benefit as shareholder of the Company to such transferee.

12.      CHANGES IN CAPITALIZATION, DISSOLUTION OR LIQUIDATION, MERGER OR ASSET
         SALE.

         (a)    CHANGES IN CAPITALIZATION. Subject to any required action by the
         shareholders of the Company, the number of shares of Common Stock
         covered by each outstanding Option or Stock Purchase Right, and the
         number of shares of Common Stock which have been authorized for
         issuance under the Plan but as to which no Options or Stock Purchase
         Rights have yet been granted or which have been returned to the Plan
         upon cancellation or expiration of an Option or Stock Purchase Right,
         as well as the price per share of Common Stock covered by each such
         outstanding Option or Stock Purchase Right, shall be proportionately
         adjusted for any increase or decrease in the number of issued shares of
         Common Stock resulting from a stock split, reverse stock split, stock
         dividend, combination or reclassification of the Common Stock, or any
         other

                                      -12-

<PAGE>

         increase or decrease in the number of issued shares of Common Stock
         effected without receipt of consideration by the Company. The
         conversion of any convertible securities of the Company shall not be
         deemed to have been "effected without receipt of consideration." Such
         adjustment shall be made by the Board, whose determination in that
         respect shall be final, binding and conclusive. 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 of Common Stock subject to an
         Option or Stock Purchase Right.

         (b)    DISSOLUTION OR LIQUIDATION. In the event of the proposed
         dissolution or liquidation of the Company, the Administrator shall
         notify each Optionee as soon as practicable prior to the effective date
         of such proposed transaction. The Administrator in its discretion may
         provide for an Optionee to have the right to exercise his or her Option
         until fifteen (15) days prior to such transaction as to all of the
         Optioned Stock covered thereby, including Shares as to which the Option
         would not otherwise be exercisable. In addition, the Administrator may
         provide that any Company repurchase option applicable to any Shares
         purchased upon exercise of an Option or Stock Purchase Right shall
         lapse as to all such Shares, provided the proposed dissolution or
         liquidation takes place at the time and in the manner contemplated. To
         the extent it has not been previously exercised, an Option or Stock
         Purchase Right will terminate immediately prior to the consummation of
         such proposed action.

13.      AMENDMENT AND TERMINATION OF THE PLAN.

         (a)    AMENDMENT AND TERMINATION. Except with respect to material
         amendments or alterations hereof, which shall require shareholder
         approval to such amendments or alterations under Applicable Laws, the
         Board may at any time amend or alter the Plan. Notwithstanding the
         foregoing, Board of Directors may at any time suspend or terminate the
         Plan.

         (b)    EFFECT OF AMENDMENT OR TERMINATION. No amendment, alteration,
         suspension or termination of the Plan shall impair the rights of any
         Optionee, unless mutually agreed otherwise between the Optionee and the
         Administrator, which agreement must be in writing and signed by the
         Optionee and the Company. Termination of the Plan shall not affect the
         Administrator's ability to exercise the powers granted to it hereunder
         with respect to Options or Rights granted under the Plan prior to the
         date of such termination. Termination of the Plan shall not prevent the
         Plan from being amended, after the date of termination, with respect to
         any Options or Stock Purchase Rights which remain outstanding.

14.      CONDITIONS UPON ISSUANCE OF SHARES.

         (a)    COMPLIANCE. Shares shall not be issued pursuant to the exercise
         of an Option unless the exercise of such Option and the issuance and
         delivery of such Shares shall comply with Applicable Laws and shall be
         further subject to the approval of counsel for the Company with respect
         to such compliance.

         (b)    INVESTMENT REPRESENTATIONS. As a condition to the exercise of an
         Option, the Administrator may require the person exercising such Option
         to represent and warrant at the time of any such exercise that the
         Shares are being purchased only for investment and without any present
         intention to sell or distribute such Shares if, in the opinion of
         counsel for the Company, such a representation is required.

                                      -13-

<PAGE>

15.      INABILITY TO OBTAIN AUTHORITY.

         The inability of the Company to obtain authority from any regulatory
         body having jurisdiction, which authority is deemed by the Company's
         counsel to be necessary to the lawful issuance and sale of any Shares
         hereunder, shall relieve the Company of any liability in respect of the
         failure to issue or sell such Shares as to which such requisite
         authority shall not have been obtained.

16.      RESERVATION OF SHARES.

         The Company, during the term of this Plan, shall at all times reserve
         and keep available such number of Shares as shall be sufficient to
         satisfy the requirements of outstanding Options and Stock Purchase
         Rights

17.      SHAREHOLDER APPROVAL.

         The Plan shall be subject to approval by the shareholders of the
         Company within twelve (12) months before or after the date the Plan is
         adopted. Such shareholder approval shall be obtained in the degree and
         manner required under Applicable Laws.

18.      INFORMATION TO OPTIONEES AND PURCHASERS.

         The Company shall provide to each Optionee and to each individual who
         acquires Shares pursuant to the Plan, not less frequently than annually
         during the period such Optionee or purchaser has one or more Options or
         Stock Purchase Rights outstanding, and, in the case of an individual
         who acquires Shares pursuant to the Plan, during the period such
         individual owns such Shares, copies of annual financial statements. So
         long as the Company is not a Public Company, the Company shall not be
         required to provide such statements to key employees whose duties in
         connection with the Company assure their access to equivalent
         information.

19.      MISCELLANEOUS.

         (a)    Best Payments

                (1)     If the gross amount of any payment, benefit or
         acceleration of vesting or accrual under this Plan, either separately
         or in combination with any other payment or benefit payable by the
         Company or any of its affiliates or pursuant to a plan of the Company
         or an affiliate, would constitute a parachute payment within the
         meaning of the Code Section 280G, then the total payments and benefits
         accrued and payable under this Plan shall not exceed the amount
         necessary to maximize the amount receivable by the Employee after
         payment of all employment, income and excise taxes imposed on the
         Employee with respect to such payments or benefits.

                (2)     The Employee may elect by written notice which items of
         compensation, if any, shall be reduced so as to meet the requirements
         of Section 19(a)(1) above. If there is a dispute between the Company
         and the Employee regarding (i) the extent, if any, to which any
         payments or benefits to the Employee are parachute payments or excess
         parachute payments, under Code Section 280G, or (ii) the base amount of
         such Employee's Compensation under Code Section 280G, or (iii) the
         status of such Employee as a disqualified individual, under Code
         Section 280G, such dispute shall be resolved in the same manner as a
         claim for benefits under this Plan.

                                      -14-

<PAGE>

                (3)     Within 60 days of a Change in Control or, if later,
         within 30 days of the Employee's receiving notice of termination of
         employment from the Company or the Company's receiving notice of
         termination of employment from the Employee, either the Employee or the
         Company may request (i) a determination of the amount of any parachute
         payment, excess parachute payment, or base amount of compensation, or
         (ii) a determination of the reduction necessary to maximize the net
         receipts of the Employee as described in Section 19(a)(1) above. Any
         fees, costs or expenses incurred by the Employee in connection with
         such determinations shall be paid equally by the Employee and the
         Company.

         (b)    INSIDER RESTRICTION.

         Regarding any year in which Employee is an insider subject to any
         provisions of Section 16 of the Exchange Act, Employee shall cooperate
         fully with Company and its agents in avoiding (i) any deficiencies in
         reporting or disclosure of ownership or changes in ownership required
         to be reported under Section 16(a) of the Exchange Act and (ii) any
         short-swing trading liability under Section 16(b) of the Exchange Act.
         Company shall have no obligation to hold Employee harmless from any
         losses or liabilities attributable to Employee's failure to comply with
         or Employee's failure to cooperate with Company in complying with
         Section 16(a) and (b) of the Exchange Act or other relevant laws,
         including but not limited to Applicable Laws, with respect to the
         operation of this Plan or the issuance, management or disposition of
         securities issued under this Plan.

         (c)    COMPENSATION RESTRICTIONS

         Regarding any year in which Employee is the chief executive officer of
         the Company or is an individual acting in such a capacity or any year
         in which the total compensation of Employee for such year is required
         to be reported to shareholders under the Exchange Act by reason of
         Employee's being among the four (4) highest paid officers for such year
         (other than the chief executive officer), Employee shall cooperate
         fully with Company and its agents in avoiding (i) any deficiencies in
         reporting or disclosure of compensation required to be reported under
         the Exchange Act and (ii) any disallowance of deductions or other tax
         benefits under Section 162(m) of the Code. Company shall have no
         obligation to hold Employee harmless from any losses or liabilities
         attributable to Employee's failure to comply with any securities, tax
         or other relevant laws, including but not limited to Applicable Laws,
         with respect to the operation of this Plan or the issuance, management
         or disposition of securities issued under this Plan.

         (d)    ASSUMPTION OF TRIBEWORKS, INC. OPTIONS

         Effective upon the merger of Tribeworks Acquisition Corp., a Delaware
         Corporation and a wholly owned subsidiary of the Company, into
         Tribeworks, Inc., the Company shall assume unexercised Tribeworks, Inc.
         options that have not yet lapsed under the Tribeworks, Inc. 1999 Equity
         Incentive Plan. The Company shall issue one share of its Common Stock
         upon the exercise of each Tribeworks, Inc. option in accordance with
         the provisions of this Plan. Neither the merger of Tribeworks
         Acquisition Corp. into Tribeworks, Inc., nor any related change in the
         capital structure of Tribeworks, Inc. or the Company shall require any
         adjustment to the number or price of shares of stock subject to Options
         or Stock Purchase Rights under Section 12 of the Tribeworks, Inc. 1999
         Equity Incentive Plan or under Section 12 of this Plan.

                                      -15-

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