Document:

EXHIBIT 10.2

                                                              January 25, 2000

Congress Financial Corporation
1133 Avenue of the Americas
New York, NY 10036

     Re:  First Amendment to Accounts Purchase and Sale Agreement

Ladies and Gentlemen:

      We refer to the ACCOUNTS PURCHASE AND SALE AGREEMENT, dated as of July 8,
1999 (the "Agreement"), among CONGRESS FINANCIAL CORPORATION, a Delaware
corporation ("Purchaser"), and AMBOY BUS CO., INC., a New York corporation,
ATLANTIC PARATRANS, INC., a New York corporation, ATLANTIC PARATRANS OF KENTUCKY
INC., a Kentucky corporation, ATLANTIC EXPRESS OF L.A. INC., a California
corporation, ATLANTIC EXPRESS OF MISSOURI INC., a Missouri corporation, ATLANTIC
EXPRESS OF PENNSYLVANIA, INC., a Delaware corporation, COURTESY BUS CO., INC., a
New York corporation, CENTRAL NEW YORK COACH SALES & SERVICE INC., a New York
corporation, JERSEY BUS SALES, INC., a New Jersey corporation, STATEN ISLAND
BUS, INC., a New York corporation, ATLANTIC PARATRANS OF COLORADO, INC., a
Colorado corporation, ATLANTIC PARATRANS OF PENNSYLVANIA, INC., a Pennsylvania
corporation and ATLANTIC EXPRESS OF NEW JERSEY, INC., a New Jersey corporation
(collectively, "Sellers"), and ATLANTIC EXPRESS TRANSPORTATION CORP., a New York
corporation.

      We have requested that you extend the term of the existing Agreement and
make certain changes in the terms thereof. The purpose of this letter (the
"First Amendment") is to set forth our agreements in connection with such
amendment. We hereby agree as follows:

      1. Defined Terms. Unless otherwise indicated, all capitalized terms used
herein but not defined herein shall have the respective meanings assigned
thereto in the Agreement, as amended hereby. The following terms used herein
shall have the following meanings:

            "Loan Agreement" means the Loan and Security Agreement, dated
      February 4, 1997, by and between Purchaser, certain subsidiaries of Parent
      and Parent.

      2. Amendments to Agreement. The Agreement is hereby amended as follows:

            (a) Section 2.1 is amended by deleting "$12,750,000" on the seventh
      line thereof and replacing it with "the Maximum Investment".

            (b) Appendix A of the Agreement is amended by inserting the
      following definitions in the appropriate alphabetical order:

                  "ABD" means Atlantic Bus Distributors, Inc., a New York
            corporation.

<PAGE>

                  "Inventory Agreement" means the Inventory Financing Agreement
            (Security Agreement), dated August 11, 1999, between Purchaser, ABD
            and Atlantic Express Transportation Group, Inc., as it now exists or
            may hereafter be amended, modified, supplemented, extended, renewed,
            restated or replaced.

                  "Inventory Loans" means the revolving loans made by Purchaser
            to ABD pursuant to the Inventory Agreement.

                  "Maximum Investment" means, at any Purchase Date, an amount
            equal to $20,000,000 minus the aggregate outstanding amount of all
            Inventory Loans on such Purchase Date.

            (c) The definition of "Termination Date" in Appendix A of the
      Agreement is deleted in its entirety and replaced with the following:

                  "Termination Date" means the earliest of (a) October 1, 2001,
            (b) the date on which the Termination Date shall occur pursuant to
            Section 10.1 hereof, or (c) ninety (90) days prior to the first to
            occur of the expiration or termination of (x) the Inventory
            Agreement or (y) the Working Capital Facility.

      3. Conditions Precedent. Each of the following is a condition precedent to
the amendments set forth in Section 2 hereof becoming effective and Lender shall
be satisfied that such conditions precedent have been satisfied before such
amendments become effective:

            (a) Lender shall have received an original copy of (i) this First
      Amendment, (ii) the Third Amendment to the Loan Agreement, dated as of the
      date hereof, and (iii) the First Amendment to the Inventory Agreement,
      each duly authorized, executed and delivered by us, and acknowledged,
      agreed and consented to by the respective guarantors thereto;

            (b) Lender shall have received an opinion of counsel, in form and
      substance satisfactory to you, that the Agreement, as amended hereby, does
      not violate the terms of the Indenture, and such other matters as you may
      request.

            (c) each of the representations and warranties made by us as set
      forth in the Transaction Documents is true and correct in all respects as
      of the date hereof; and

            (d) immediately prior, and immediately after giving effect, to the
      amendments set forth in Section 2 hereof there shall exist no Event of
      Termination or event or condition which, with the giving of notice,
      passage of time, or both, would constitute an Event of Termination.

      4. Representations and Warranties. We hereby represent, warrant and agree,
for your benefit, on and as of the date hereof, both before and after giving
effect to the amendments set forth in Section 2 hereof, that:

                                       2
<PAGE>

            (a) each of us is a corporation duly organized and in existence and
      good standing under the laws of its respective state of incorporation, and
      is duly qualified or registered as a foreign corporation and in good
      standing in all other jurisdictions where the nature and extent of the
      business transacted by us or its ownership of property makes such
      qualification or registration necessary;

            (b) the execution, delivery and performance of this First Amendment
      and the other Transaction Documents and all transactions contemplated
      thereby, both before and after giving effect to all amendments and
      agreements contained herein, are within our power, have been duly
      authorized by all necessary corporate or other action and are not in
      contravention of the terms of any of our articles of incorporation,
      by-laws or other organizational documentation or any law, regulation,
      decree, order, judgment, indenture, agreement or undertaking to which we
      are a party or by which we or any of our property are bound;

            (c) this First Amendment and the other Transaction Documents, both
      before and after giving effect to all amendments and agreements contained
      herein, constitute our legal, valid and binding obligations, enforceable
      against us in accordance with their respective terms;

            (d) each of our representations and warranties set forth in the
      Transaction Documents is true and correct in all respects, and we hereby
      remake and reaffirm each such representation and warranty with the same
      force and effect as if each such representation and warranty was being
      made originally on and as of the date hereof;

            (e) we have no defense, set-off or counterclaim to or with respect
      to the full performance of any of our obligations under the Transaction
      Documents; and

            (f) there exists no Event of Default or event or condition which,
      with the passage of time, giving of notice or both, would constitute an
      Event of Termination.

      5. Ratification. Except for the amendments expressly provided herein, the
Agreement and the other Transaction Documents are not amended, modified or
changed hereby and each such document shall remain in full force and effect in
accordance with its existing provisions. We hereby ratify and affirm, in all
respects, both before and after giving effect to the amendments and agreements
contained herein, all of the terms and provisions of the Transaction Documents
and all of our obligations thereunder.

      6. Further Assurances. We will take or cause to be taken such actions, and
shall execute and deliver such additional documents as may be necessary or
desirable to effectuate the provisions of this First Amendment.

      7. References to Agreements to include Amendments. All notices,
communications, agreements, certificates, documents or other instruments
executed and delivered after the execution and delivery of this First Amendment
may refer to the Agreement, without making specific reference to this First
Amendment, but nevertheless all such references shall include the amendments and
agreements contained in this First Amendment unless the context clearly requires
otherwise.

                                       3
<PAGE>

      8. Counterparts. This First Amendment may be executed in several
counterparts and by each party on a separate counterpart, each of which, when so
executed and delivered, shall be an original, but all of which together shall
constitute but one and the same instrument.

      9. Amendment, Etc. None of the terms of this First Amendment may be
modified, amended or waived in any manner other than by a writing executed by
the party against whom such modification, amendment or waiver is charged.

      10. Entire Understanding. This First Amendment represents our and your
entire agreement and understanding concerning the subject matter hereof and
supersedes all other prior or contemporaneous agreements, understandings,
negotiations, discussions, representations, term sheets, commitments, offers and
contracts, whether oral or written.

      11. Governing Law. This First Amendment shall be governed by and construed
in accordance with the laws of the State of New York, without regard to the
principles regarding conflict of laws that would require the application of
another state's laws.

                      [This Space Intentionally Left Blank]

                                       4
<PAGE>

                                        Very truly yours,

                                        SELLERS
                                        -------

                                        AMBOY BUS CO., INC.

                                        By: /s/ NATHAN SCHLENKER
                                           ------------------------------------
                                        Name: Nathan Schlenker
                                        Title: Secretary

                                        ATLANTIC PARATRANS, INC.

                                        By: /s/ NATHAN SCHLENKER
                                           ------------------------------------
                                        Name: Nathan Schlenker
                                        Title: Secretary

                                        ATLANTIC PARATRANS OF
                                        KENTUCKY INC.

                                        By: /s/ NATHAN SCHLENKER
                                           ------------------------------------
                                        Name: Nathan Schlenker
                                        Title: Secretary

                                        ATLANTIC EXPRESS OF L.A. INC.

                                        By: /s/ NATHAN SCHLENKER
                                           ------------------------------------
                                        Name: Nathan Schlenker
                                        Title: Secretary

                                        ATLANTIC EXPRESS OF MISSOURI, INC.

                                        By: /s/ NATHAN SCHLENKER
                                           ------------------------------------
                                        Name: Nathan Schlenker
                                        Title: Secretary

                                       5
<PAGE>

                                        COURTESY BUS CO., INC.

                                        By: /s/ NATHAN SCHLENKER
                                           ------------------------------------
                                        Name: Nathan Schlenker
                                        Title: Secretary

                                        ATLANTIC EXPRESS OF
                                        PENNSYLVANIA, INC.

                                        By: /s/ NATHAN SCHLENKER
                                           ------------------------------------
                                        Name: Nathan Schlenker
                                        Title: Secretary

                                        CENTRAL NEW YORK COACH
                                        SALES & SERVICE, INC.

                                        By: /s/ NATHAN SCHLENKER
                                           ------------------------------------
                                        Name: Nathan Schlenker
                                        Title: Secretary

                                        JERSEY BUS SALES, INC.

                                        By: /s/ NATHAN SCHLENKER
                                           ------------------------------------
                                        Name: Nathan Schlenker
                                        Title: Secretary

                                        STATEN ISLAND BUS, INC.

                                        By: /s/ NATHAN SCHLENKER
                                           ------------------------------------
                                        Name: Nathan Schlenker
                                        Title: Secretary

                                        ATLANTIC PARATRANS OF
                                        COLORADO, INC.

                                        By: /s/ NATHAN SCHLENKER
                                           ------------------------------------
                                        Name: Nathan Schlenker
                                        Title: Secretary

                                       6
<PAGE>

                                        ATLANTIC PARATRANS OF PENNSYLVANIA, INC.

                                        By: /s/ NATHAN SCHLENKER
                                           ------------------------------------
                                        Name: Nathan Schlenker
                                        Title: Secretary

                                        ATLANTIC EXPRESS OF NEW
                                        JERSEY, INC.

                                        By: /s/ NATHAN SCHLENKER
                                           ------------------------------------
                                        Name: Nathan Schlenker
                                        Title: Secretary

                                        PARENT, SELLERS' REPRESENTATIVE,
                                        AND INITIAL SERVICER
                                        --------------------------------

                                        ATLANTIC EXPRESS
                                        TRANSPORTATION CORP.
                                        By: /s/ NATHAN SCHLENKER
                                           ------------------------------------
                                        Name: Nathan Schlenker
                                        Title: Secretary

Agreed to and accepted:

CONGRESS FINANCIAL
CORPORATION

By:    /s/ HERB KORN
   ---------------------------
Name:   Herb Korn
Title:  Assistant Vice President

                                       7
<PAGE>

      The undersigned, in his capacity as guarantor under that certain Amended
and Restated Limited Guaranty, dated August 11, 1999 (the "Guaranty"), made in
favor of Congress Financial Corporation with respect to the obligations of the
Sellers (as defined in the foregoing Amendment), hereby (i) confirms that he has
reviewed the foregoing First Amendment and is familiar with its contents, and
(ii) represents, warrants and agrees that after giving effect to the First
Amendment and the transactions contemplated thereby, (a) the Guaranty continues
to be in full force and effect, is enforceable in accordance with its terms, and
is not subject to any defense, setoff or counterclaim, and (b) the Guaranteed
Obligations (as defined in the Guaranty) include, without limitation, all
indebtedness, liabilities, obligations, and agreements of any kind, now existing
or hereafter arising, which arise under, in connection with or as a result of
the First Amendment or any transaction thereunder.

                                            /s/ DOMENIC GATTO
                                            -----------------------------------
                                            Domenic Gatto

                                       8EXHIBIT 10.1

                                  ELCOTEL, INC.

                             1991 STOCK OPTION PLAN

1. Definitions

            As used in this Plan, the following  definitions  apply to the terms
indicated below:

            1. "Board" means the Board of Directors of the Company.

            2. A Change of Control  means the  occurrence  of any one or more of
the  following  events:  (i) if any  transaction  occurs  whereby a  substantial
portion of the assets of the Company  are  transferred,  exchanged  or sold to a
non-affiliated  third party other than in the ordinary course of business;  (ii)
if a merger or  consolidation  involving the Company occurs and the stockholders
of the  Company  immediately  before  such  merger or  consolidation  do not own
immediately  after such merger or  consolidation at least fifty percent (50%) of
the  outstanding  common stock of the surviving  entity or the entity into which
the common stock of the Company is converted;  or (iii) if any person (including
without  limitation  any  individual,  partnership or  corporation)  becomes the
owner, directly or indirectly, of securities of the Company or its successor (or
a parent company thereof) representing  thirty-five percent (35%) or more of the
combined voting power of the Company's or its successor's (or a parent's, as the
case may be) securities then outstanding.

            3.  "Committee"  means the  Compensation  and Stock Option Committee
appointed by the Board from time to time to administer  the Plan.  The Committee
shall consist of at least two persons, who shall be directors of the Company and
who shall not be or have been granted or awarded, while serving on the Committee
or within one year prior thereto,  stock,  stock options,  or stock appreciation
rights  pursuant  to any plan of the Company or any of its  affiliates  except a
plan that provides for formula grants or awards.

            4. "Company" means Elcotel, Inc., a Delaware corporation.

            5.  "Fair  Market  Value"  of a Share on a given day  means,  if the
Shares are traded in a public  market,  the mean  between the highest and lowest
quoted  selling  prices  of a Share  as  reported  on the  principal  securities
exchange on which the Shares are then  listed or admitted to trading,  or if not
so reported,  the mean between the highest and lowest quoted selling prices of a
Share,  or the mean between the highest  asked price and the lowest bid price as
the case may be, as reported on the National  Association of Securities  Dealers
Automated  Quotation  System.  If the Shares  shall not be so  traded,  the Fair
Market  Value shall be  determined  by the  Committee  taking  into  account all
relevant facts and circumstances.

<PAGE>

            6.  "Grantee"  means  a  person  who is  either  an  Optionee  or an
Optionee-Shareholder.

            7. "Incentive  Stock Option" means an option,  whether granted under
this Plan or otherwise,  that qualifies as an incentive  stock option within the
meaning of Section 422 of the Internal Revenue Code.

            8.  "Option"  means a right to purchase  Shares  under the terms and
conditions of this Plan as evidenced by an option  certificate  or agreement for
Shares in such form, not inconsistent with this Plan, as the Committee may adopt
for general use or for specific cases from time to time.

            9. "Optionee" means a person other than an  Optionee-Shareholder  to
whom an option is granted under this Plan.

            10.  "Optionee-Shareholder"  means a  person  to whom an  option  is
granted  under  this  Plan and who at the time  such  option  is  granted  owns,
actually or  constructively,  stock of the Company or of a Parent or  Subsidiary
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or of such Parent or Subsidiary.

            11.  "Nonqualified  Option" means an Option that is not an Incentive
Stock Option.

            12.  "Parent" means any  corporation  (other than the Company) in an
unbroken  chain of  corporations  ending  with the  Company  if,  at the time of
granting an Option,  each of the  corporations in the unbroken chain (other than
the Company)  owns stock  possessing  fifty  percent  (50%) or more of the total
combined  voting power of all classes of stock in one of the other  corporations
in the chain.

            13.  "Plan"  means  this  Elcotel,  Inc.  1991  Stock  Option  Plan,
including any amendments to the Plan.

            14. "Share" means a share of the Company's  common stock,  par value
$.01 per share,  either now or hereafter  owned by the Company as treasury stock
or authorized but unissued.

            15.  "Subsidiary"  means any corporation (other than the Company) in
an unbroken chain of corporations  beginning with the Company if, at the time of
granting an Option,  each of the  corporations in the unbroken chain (other than
the last  corporation in the chain) owns stock possessing fifty percent (50%) or
more of the total  combined  voting  power of all classes of stock in one of the
other corporations in the chain.

            16. Options shall be deemed "granted" under this Plan on the date on
which the  Committee,  by  appropriate  action,  approves the grant of an Option
hereunder or on such subsequent date as the Committee may designate.

            17. As used herein, the masculine includes the feminine,  the plural
includes the singular, and the singular includes the plural.

                                       2
<PAGE>

2. Purpose

            The purposes of the Plan are as follows.

            1. To secure  for the  Company  and its  shareholders  the  benefits
arising from share  ownership by those officers and key employees of the Company
and its Subsidiaries who will be responsible for the Company's future growth and
continued success.  The Plan is intended to provide an incentive to officers and
key  employees  by  providing  them with an  opportunity  to  acquire  an equity
interest  or  increase  an existing  equity  interest  in the  Company,  thereby
increasing their personal stake in its continued success and progress.

            2. To enable the Company and its  Subsidiaries  to obtain and retain
the  services  of key  employees,  by  providing  such  key  employees  with  an
opportunity  to acquire  Shares under the terms and conditions and in the manner
contemplated by this Plan.

3. Plan Adoption and Term

            1. This Plan shall become  effective upon its adoption by the Board,
and Options may be issued upon such  adoption and from time to time  thereafter;
provided,   however,   that  the  Plan  shall  be  submitted  to  the  Company's
shareholders for their approval at the next annual meeting of  shareholders,  or
prior thereto at a special  meeting of  shareholders  expressly  called for such
purpose; and provided further,  that the approval of the Company's  shareholders
shall be obtained  within 12 months of the date of adoption of the Plan.  If the
Plan is not approved by the affirmative vote of the holders of a majority of all
shares present in person or by proxy, at a duly called shareholders'  meeting at
which a quorum  representing a majority of all voting stock is present in person
or by proxy  and  voting on this  Plan,  then  this  Plan and all  Options  then
outstanding under it shall forthwith  automatically terminate and be of no force
and effect.

            2.  Subject to the  provisions  hereinafter  contained  relating  to
amendment or  discontinuance,  this Plan shall  continue to be in effect for ten
(10) years from the date of adoption  of this Plan by the Board.  No Options may
be granted hereunder except within such period of ten (10) years.

4. Administration of Plan

            1. This  Plan  shall be  administered  by the  Committee.  Except as
otherwise expressly provided in this Plan, the Committee shall have authority to
interpret the  provisions  of the Plan, to construe the terms of any Option,  to
prescribe,  amend and rescind  rules and  regulations  relating to the Plan,  to
determine the terms and provisions of Options granted hereunder, and to make all
other determinations in the judgment of the Committee necessary or desirable for
the  administration of the Plan.  Without limiting the foregoing,  the Committee
shall,  to the  extent  and in the  manner  contemplated  herein,  exercise  the
discretion  granted to it to  determine  to whom  Incentive  Stock  Options  and
Non-qualified Options shall be granted, how many Shares shall be subject to each
such Option,  whether a Grantee shall be required to surrender for  cancellation
an  outstanding  Option

                                       3
<PAGE>

as a  condition  to the grant of a new  Option,  and the prices at which  Shares
shall be sold to Grantees.  The  Committee  may correct any defect or supply any
omission  or  reconcile  any  inconsistency  in the Plan or in any Option in the
manner and to the extent it shall deem  expedient  to carry the Plan into effect
and shall be the sole and final judge of such expediency.

            2. No member of the  Committee  shall be liable for any action taken
or omitted or any determination  made by him in good faith relating to the Plan,
and the Company  shall  indemnify and hold harmless each member of the Committee
and each other  director  or  employee  of the Company to whom any duty or power
relating to the  administration or interpretation of the Plan has been delegated
against any cost or expense (including counsel fees) or liability (including any
sum paid in  settlement of a claim with the approval of the  Committee)  arising
out of any act or omission in connection  with the Plan,  unless  arising out of
such person's own fault or bad faith.

            3. Any power granted to the Committee  either in this Plan or by the
Board, may at any time be exercised by the Board,  and any  determination by the
Committee shall be subject to review and approval or reversal or modification by
the Board.

5. Eligibility

            Officers and key employees of the Company and its Subsidiaries shall
be eligible for  selection by the Committee to be granted  Options.  An employee
who has been  granted an Option  may,  if he or she is  otherwise  eligible,  be
granted an additional Option or Options if the Committee shall so determine.

6. Options

            1. Subject to adjustment as provided in Paragraph 13 hereof, Options
may be granted  pursuant to the Plan for the purchase of not more than 2,600,000
Shares;  provided,  however,  that if prior to the  termination  of the Plan, an
Option shall expire or terminate for any reason without having been exercised in
full, the  unpurchased  Shares subject  thereto shall again be available for the
purposes of the Plan.

            2.  The  aggregate  fair  market  value  (determined  as of the time
Options are granted) of the stock with respect to which  Incentive Stock Options
may be or become exercisable for the first time by a Grantee during any calendar
year  (whether  granted  under this Plan or any other plan of the Company or any
Parent or Subsidiary  corporation)  shall not exceed $100,000.  To the extent an
Incentive  Stock  Option  may be or  become  exercisable  in  violation  of this
limitation, it shall be deemed to be a Nonqualified Option.

7. Option Price

            The  purchase  price per Share  deliverable  upon the exercise of an
Option  shall be  determined  by the  Committee,  but shall not be less than the
greater of:

                                       4
<PAGE>

                  (1) 100% of the Fair  Market  Value of such  Share on the date
the Option is granted  (110% of the Fair Market  Value of such Share on the date
an Incentive Stock Option is granted to an Optionee-Shareholder), and

                  (2) $0.75.

8. Duration of Options

            Each Option and all rights  thereunder  shall  expire and the Option
shall no longer be  exercisable on a date not later than five (5) years from the
date on which  the  Option  was  granted.  Options  may  expire  and cease to be
exercisable  on such earlier date as the  Committee may determine at the time of
grant.  Options shall be subject to termination  before their expiration date as
provided herein.

9. Conditions Relating to Exercise of Options

            1. The Shares  subject to any  Option may be  purchased  at any time
during the term of the Option,  unless,  at the time an Option is  granted,  the
Committee  shall have fixed a specific  period or periods in which exercise must
take place.  To the extent an Option is not exercised when it becomes  initially
exercisable,  or is exercised only in part, the Option or remaining part thereof
shall not expire but shall be carried forward and shall be exercisable until the
expiration or termination of the Option.  Partial exercise as to whole Shares is
permitted  from time to time,  provided  that no partial  exercise  of an Option
shall be for a number of Shares having a purchase price of less than $100.

            2. No Option shall be transferable by the Grantee thereof other than
by will or by the  laws of  descent  and  distribution,  and  Options  shall  be
exercisable  during the  lifetime of a Grantee  only by such  Grantee or, to the
extent that such  exercise  would not prevent an Option  from  qualifying  as an
Incentive  Stock Option under the Internal  Revenue Code, by his or her guardian
or legal representative.

            3.  Certificates for Shares purchased upon exercise of Options shall
be issued  either in the name of the  Grantee or in the name of the  Grantee and
another person jointly with the right of survivorship.  Such certificates  shall
be delivered as soon as practical following the date the Option is exercised.

            4. An Option  shall be  exercised  by the delivery to the Company at
its principal  office,  to the attention of its Secretary,  of written notice of
the number of Shares with respect to which the Option is being exercised, and of
the name or names in which the certificate  for the Shares is to be issued,  and
by paying the purchase price for the Shares. The purchase price shall be paid in
cash or by certified check or bank cashier's check. Alternatively, to the extent
permitted by the Committee and in its sole discretion, the purchase price may be
paid by delivering to the Company:

                                       5
<PAGE>

                  (1) Shares (in proper form for transfer and accompanied by all
requisite  stock  transfer  tax  stamps  or cash in lieu  thereof)  owned by the
Grantee having a Fair Market Value equal to the purchase price; or

                  (2) a notarized statement attesting to ownership of the number
of Shares which are intended to be used at Fair Market Value to pay the purchase
price,  with the  certificate  number(s)  thereof,  and requesting that only the
incremental number of Shares as to which the Option is being exercised be issued
by the Company.

            5.  Notwithstanding  any other provision in this Plan, no Option may
be  exercised  unless  and  until  (i)  this  Plan  has  been  approved  by  the
shareholders of the Company,  and (ii) the Shares to be issued upon the exercise
thereof have been  registered  under the  Securities  Act of 1933 and applicable
state securities laws, or are, in the opinion of counsel to the Company,  exempt
from  such  registration.  The  Company  shall not be under  any  obligation  to
register  under  applicable  Federal or state  securities  laws any Shares to be
issued upon the exercise of an Option  granted  hereunder,  or to comply with an
appropriate  exemption from registration  under such laws in order to permit the
exercise of an Option or the issuance and sale of Shares subject to such Option.
If the Company chooses to comply with such an exemption from  registration,  the
certificates  for Shares  issued  under the Plan,  may, at the  direction of the
Committee,  bear an appropriate  restrictive  legend restricting the transfer or
pledge  of the  Shares  represented  thereby,  and the  Committee  may also give
appropriate stop-transfer instructions to the transfer agent of the Company.

            6. Any person  exercising  an Option or  transferring  or  receiving
Shares shall comply with all  regulations and  requirements of any  governmental
authority having jurisdiction over the issuance,  transfer or sale of securities
of the Company or over the extension of credit for the purposes of purchasing or
carrying any margin  securities,  or the  requirements  of any stock exchange on
which the Shares may be listed,  and as a  condition  to  receiving  any Shares,
shall execute all such  instruments as the Committee in its sole  discretion may
deem necessary or advisable.

            7. Each  Option  shall be  subject  to the  requirement  that if the
Committee shall determine that the listing, registration or qualification of the
Shares subject to such Option upon any securities exchange or under any state or
Federal law, or the consent or approval of any  governmental or regulatory body,
is necessary or desirable as a condition of, or in connection with, the granting
of such Option or the issuance or purchase of Shares thereunder, such Option may
not be  exercised  in  whole  or in  part  unless  such  listing,  registration,
qualification, consent or approval shall have been effective or obtained free of
any conditions not acceptable to the Committee.

10. Effect of Termination of Employment or Death

            1. In the event of termination  of a Grantee's  employment by reason
of such Grantee's death, disability, or retirement with the consent of the Board
or in accordance with an applicable retirement plan, any outstanding Option held
by such  Grantee  shall,  notwithstanding  the extent to which  such  Option was
exercisable prior to termination of employment,  immediately  become exercisable
as to the total number of Shares purchasable  thereunder.  Any such Option shall
remain so

                                       6
<PAGE>

exercisable at any time prior to its expiration  date or, if earlier,  the first
anniversary of termination of the Grantee's employment.

            2. In the event of  termination  of a Grantee's  employment  for any
reason other than death, disability, or retirement with the consent of the Board
or in accordance  with an  applicable  retirement  plan,  all rights of any kind
under any outstanding  Option held by such Grantee shall  immediately  lapse and
terminate;  provided, however, that the Committee may, in its discretion,  elect
to permit  exercise for a period ending on the earlier of the expiration date of
the Option  absent any such  termination  of  employment  and a date thirty days
after the termination of employment as to the total number of Shares purchasable
under the Option as of the date of such termination;  and provided further, that
the Committee  may, in its  discretion,  elect to permit  exercise  until a date
determined by the Committee but not later than the expiration date of the Option
absent  any such  termination  of  employment  as to the total  number of Shares
purchasable under the Option as of the date of such termination,  subject to any
further conditions that the Committee may determine.

            3. Whether an authorized  leave of absence or absence in military or
government   service  shall  constitute   termination  of  employment  shall  be
determined by the  Committee.  Transfer of employment  between the Company and a
Subsidiary  corporation or between one Subsidiary  corporation and another shall
not constitute termination of employment.

11. No Special Employment Rights

            Nothing contained in the Plan or in any Option shall confer upon any
Grantee any right with respect to the  continuation  of his or her employment by
the  Company  or a  Subsidiary  or  interfere  in any way with the  right of the
Company  or a  Subsidiary,  subject  to the  terms  of any  separate  employment
agreement  to the  contrary,  at any time to  terminate  such  employment  or to
increase or decrease the  compensation of the Grantee from the rate in existence
at the time of the grant of an Option.

12. Rights as a Shareholder

            The Grantee of an Option shall have no rights as a shareholder  with
respect  to any  Shares  covered by an Option  until the date of  issuance  of a
certificate to him for such Shares.  Except as otherwise  expressly  provided in
the Plan,  no  adjustment  shall be made for dividends or other rights for which
the record date occurs prior to the date of issuance of such certificate.

13. Anti-dilution Provision

            1. In case the Company  shall (i) declare a dividend or dividends on
its  Shares  payable  in  shares  of  its  capital  stock,  (ii)  subdivide  its
outstanding  Shares,  (iii) combine its outstanding Shares into a smaller number
of Shares, or (iv) issue any shares of capital stock by  reclassification of its
Shares (including any such  reclassification  in connection with a consolidation
or merger in which the  Company is the  continuing  corporation),  the number of
Shares authorized under the Plan will be adjusted proportionately. Similarly, in
any such event, there will be a proportionate adjustment in the

                                       7
<PAGE>

number of Shares subject to unexercised  Options (but without  adjustment to the
aggregate option price).

            2. The Committee may provide,  either before or at or about the time
of the  occurrence of a Change of Control,  in any  outstanding  or newly issued
Option that a Grantee's right to exercise any such Option shall  accelerate as a
consequence  of or in  connection  with a Change of Control.  In  addition,  the
Committee may provide in any outstanding or newly issued Option that a Grantee's
right to exercise any such Option shall accelerate in the event of a termination
of employment of such Grantee  without cause  pursuant to the terms of a written
agreement  between the Company  and the Grantee  which has been  approved by the
Committee.

14. Withholding Taxes

            Whenever an Option is to be  exercised  under the Plan,  the Company
shall have the right to require the  Grantee,  as a condition of exercise of the
Option,  to remit to the Company an amount  sufficient  to satisfy the Company's
(or a Subsidiary's) Federal, state and local withholding tax obligation, if any,
that will, in the sole opinion of the  Committee,  result from the exercise.  In
addition,  the  Company  shall have the  right,  at the sole  discretion  of the
Committee, to satisfy any such withholding tax obligation by retention of Shares
issuable upon such  exercise  having a Fair Market Value on the date of exercise
equal to the amount to be withheld.

15. Amendment of the Plan

            The Board may at any time and from time to time  terminate or modify
or amend the Plan in any respect, except that, without shareholder approval, the
Board may not (a)  increase  the number of Shares  which may be issued under the
Plan, or (b) modify the requirements as to eligibility for  participation  under
the Plan. The  termination or  modification  or amendment of the Plan shall not,
without the consent of a Grantee,  affect his rights under an Option  previously
granted  to him or her.  With the  consent of the  Grantee,  the Board may amend
outstanding Options in a manner not inconsistent with the Plan.

16. Miscellaneous

            1. It is expressly  understood  that this Plan grants  powers to the
Committee but does not require their exercise;  nor shall any person,  by reason
of the  adoption  of this  Plan,  be deemed to be  entitled  to the grant of any
Option;  nor shall any rights  begin to accrue  under the Plan except as Options
may be granted hereunder.

            2. All  expenses  of the  Plan,  including  the cost of  maintaining
records, shall be borne by the Company.

17. Governing Law

            This  Plan  and  all  rights  hereunder  shall  be  governed  by and
interpreted in accordance with the laws of the State of Delaware.

                                       8

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