Document:

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                                                                   Exhibit 10.12

                         EXECUTIVE EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of the
1ST, DAY OF FEBRUARY, 2003, by and between TELKONET COMMUNICATIONS, INC., a
Delaware corporation (the "Company"), and E. BARRY SMITH (the "Executive").

                              W I T N E S S E T H:

         WHEREAS, the Company desires to employ the Executive, and the Executive
desires to be employed by the Company, on the terms and subject to the
conditions set forth herein;

         NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties hereby agree as follows:

         1. EMPLOYMENT. The Company hereby employs the Executive as its Chief
Financial Officer and the Executive hereby accepts such employment, on the terms
and subject to the conditions hereinafter set forth.

         2. TERM. Subject to the provisions for the termination of this
Agreement as provided for herein, the term of this Employment Agreement shall
commence on the date hereof and shall continue through January 31st 2004 (the
"Base Term") and shall automatically be extended for an additional one year
(each a "Renewal Term") at the end of the Base Term and each Renewal Term unless
on or before the sixtieth (60th) day prior to the end of the Base Term or a
Renewal Term or termination occurs pursuant to Section 6.(a) (iii) of this
Agreement either party gives to the other party written notice of termination of
this Employment Agreement, in which case this Employment Agreement shall
terminate upon the completion of the then applicable employment period.

         3. POSITION AND DUTIES

                  (a) The Executive shall serve as Chief Financial Officer of
the Company. Without limiting the general scope of the Executive's position: (i)
the Executive shall not be required to report to any single individual other
than the CEO, President and Chairman of the Board of Directors, (ii) no other
individual shall be elected or appointed as Chief Financial Officer of the
Company, and (iii) no individual or group of individuals (including a committee
established or other designee appointed by the Board) shall have any authority
over or equal to the authority of the Executive in his role as Chief Financial
Officer or could have the effect of, or appear to have the effect of, giving
such authority to any such individual or group. The Executive shall be entitled
to the full protection of applicable indemnification provisions of the
certificate of incorporation and bylaws of the Company, as the same may be
amended from time to time, for his service as a director, officer and employee
of the Company.

                  (b) If:

                           (i) the Company materially changes the Executive's
duties and responsibilities as set forth in Paragraph 3 (a) without his consent
(including, without limitation, violation of any of the provisions of clause
(i), (ii) or (iii) of Paragraph 3 (a));

                           (ii) the Executive's place of employment is moved to
a location more than fifty (50) miles from the geographical center of Wayne,
Pennsylvania;

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                        (iii) there occurs a material breach by the Company of
any of its obligations under this Employment Agreement (other than those
specified in this Section 3(b)) that has not been cured in all material respects
within ten (10) days after the Executive gives notice thereof to the Company;

                         (iv) the Executive has not been paid for a cumulative
sixty (60) day period without Executive's consent in excess of the period of
non-payment for similar Executives.

Then the Executive shall have the right to terminate his employment with the
Company, but such termination shall not be considered a voluntary resignation or
termination of such employment or of this Employment Agreement by the Executive
but rather a discharge of the Executive by the Company without "cause" (as
defined in Paragraph 6 (a)(ii)).

4. COMPENSATION.

During the term of this Employment Agreement the Company shall pay or provide,
as the case may be, to the Executive the compensation and other benefits and
rights set forth in this Paragraph 4.

(a) The Company shall pay to the Executive a base salary payable in accordance
with the Company's usual pay practices (and in any event no less frequently than
monthly) at the rate of One Hundred Thirty Thousand Dollars ($130,000) per
annum, which may be increased (but not decreased) from time to time (based upon
the performance of the Company and the Executive). Currently this amount is
payable bi-weekly.

(b) The Executive shall receive options to purchase Three Hundred and Fifty
Thousand (350,000) shares of common stock from the Employee Stock Incentive Plan
at the exercise price of $1.00 per share. The terms of the options and vesting
schedule are incorporated herein by reference under section 4.(i) below.

(c) The Company may pay to the Executive bonus compensation for each calendar or
fiscal year of the Company, not later than sixty (60) days following the end of
each year or the termination of his employment, as the case may be, prorated on
a per diem basis for partial calendar of fiscal years. It is acknowledged that
these bonuses may be based in part on the Executive's performance and in part on
the Company's performance.

(d) During the Base Term of this Agreement and any Renewal Term, the Company
shall maintain in full force and effect, and the Executive shall be entitled to
participate in, all of the Company's employee benefit plan and arrangements in
effect on the date hereof in at least the same manner and capacity as the
officers and key management employees of the Company. The Company shall not make
any changes in such plans and arrangements which would adversely affect the
Executive's rights or benefits thereunder, unless such change occurs pursuant to
a program applicable to all officers and key management employees of the Company
and does not result in a proportionately greater reduction in the rights of or
benefits to the Executive as compared with any other officers of the Company.
The Executive shall be entitled to participate in or receive benefits under any
employee benefit plan or arrangement made available by the Company in the future
to its officers and key management employees, subject to and on a basis
consistent with the terms, conditions and overall administration of such plans
and arrangements. Nothing paid to the Executive under any plan or arrangement
presently in effect or made available to the Executive in the future shall be
deemed to be in lieu of any amounts payable to the Executive pursuant to this
Section 4.

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(e) The Company shall reimburse the Executive or provide him with an expense
allowance during the term of this Employment Agreement for travel, entertainment
and other expenses reasonably and necessarily incurred by the Executive in
connection with the Company's business. The Executive shall furnish such
documentation with respect to reimbursements to be made hereunder as the Company
shall reasonably request. Depending on the individuals exact duties, a Company
owned vehicle may be provided.

(f) Upon dissolution or liquidation of the Company, or upon a merger or
consolidation in which the Company is not the surviving corporation, all Options
awarded to the Executive under the ESOP and not previously exercised and vested
shall become fully exercisable and vested no later than the date of such
dissolution, merger or consolidation, and the Executive shall have the right to
exercise such Executive's Options in whole or in part at any time within the
next four (4) years.

(g) The Company shall pay the full cost of providing health and group life
insurance for the Executive, his spouse and eligible dependent children and any
other such benefits as the Company may choose to offer the employees of the
Company.

(h) The Company will reimburse the Executive for the monthly cost of his
cellular phone service.

(i) The Executive has previously served the Company under the terms of an
Interim Consulting Agreement, which is incorporated herein by reference and
attached hereto.

PAYMENT IN THE EVENT OF DISABILITY.
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                  (a) In the event of the Executive's "permanent disability" (as
hereinafter defined) during the term of this Employment Agreement, for a period
of 6 months after determination of a permanent disability the Company shall pay
to the Executive an annual amount equal to the Executive's then effective per
annum rate of salary, as determined under Paragraph 4(a). The Company to the
extent prudent, shall insure against disability through an insurance company.
Such coverage shall contain a benefit for total, as well as partial and residual
disabilities, and shall be in addition to the payment obligation contained in
this Paragraph (5a). If such insurance is obtained, the premiums shall be added
to the employees W-2 as other compensation. The Company shall review and revise
the amount of coverage not less than annually in accordance with the prior
year's total cash compensation as soon as the amount of cash compensation,
including all cash bonuses, can be calculated.

                   (b) For purposes of this Employment Agreement, the
Executive's "permanent disability" shall be deemed to have occurred after one
hundred twenty (120) days in the aggregate during any consecutive twelve (12)
month period, or after ninety (90) consecutive days, during which one hundred
twenty (120) or ninety (90) days, as the case may be, the Executive, by reason
of his physical or mental disability or illness, shall have been unable to
discharge his duties under this Employment Agreement. The date of permanent
disability shall be such one hundred twentieth (120th) or ninetieth (90th) day,
as the case may be. In the event either the Company or the Executive, after
receipt of notice of the Executive's permanent disability from the other,
dispute that the Executive's permanent disability shall have occurred, the
Executive shall promptly submit to a physical examination by the chief of
medicine of any major accredited hospital in the State of Maryland, and, unless
such physician shall issue his written statement to the effect that in his
opinion, based on his diagnosis, the Executive is capable of resuming his
employment and devoting his full time and energy to discharging his duties
within thirty (30) days after the date of such statement, such permanent
disability shall be deemed to have occurred. In lieu of any such examination, a
determination by the disability carrier for the Company shall suffice.

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         6. TERMINATION.

          (a) The employment of the Executive under this Employment Agreement,
and the terms hereof, may be terminated by the Company:

                  (i) on the death or permanent disability of the Executive (as
defined in Paragraph 5(b), or

                  (ii) for cause at any time by action of the Board. For
purposes hereof, the term "cause" shall mean:

(A) The Executive's fraud, commission of a felony or of an act or series of acts
which result in material injury to the business reputation of the Company,
commission of an act or series of repeated acts of dishonesty which are
materially inimical to the best interests of the Company, or the Executive's
willful and repeated failure to perform his lawful duties under this Employment
Agreement, which failure has not been cured within fifteen (15) days after the
Company gives notice thereof to the Executive, provided, however, that shall not
be entitled to any more than two notice cure opportunities during each fiscal
year of the Company; or

(B) The Executive's material breach of any material provision of this Employment
Agreement not involving performance of his duties, which breach has not been
cured in all substantial respects within ten (10) days after the Company gives
notice thereof to the Executive. Provided, however that Executive shall not be
entitled to any more than 2 week notice cure opportunities during each fiscal
year of the Company.

The exercise by the Company of its rights of termination under this Paragraph 6
shall be the Company's sole remedy in the event of the occurrence of an event as
a result of which such right to terminate arises. Upon any termination of this
Employment Agreement, the Executive shall be deemed to have resigned from all
offices held by the Executive in the Company.

In the event of a termination claimed by the Company to be for "cause" pursuant
to Paragraph 6(a)(ii), the Executive shall have the right to have the
justification for said termination determined by arbitration. In order to
exercise such right, the Executive shall serve on the Company within thirty (30)
days after termination a written request for arbitration. The Company
immediately shall request the appointment of an arbitrator by the American
Arbitration Association and thereafter the question of "cause" shall be
determined under the rules of the American Arbitration Association, and the
decision of the arbitrator shall be final and binding on both parties. The
parties shall use all reasonable efforts to facilitate and expedite the
arbitration and shall act to cause the arbitration to be completed as promptly
as possible. Expenses of the arbitration shall be borne equally by the parties,
unless apportioned otherwise by the arbitrators.

(C)In the event of termination for any of the reasons set forth in subparagraph
(a)(i) or (a)(ii) of this Paragraph 6, or if the Executive terminates his
employment, unless as under subparagraph 3b, the Executive shall be entitled to
no further compensation or other benefits under this Employment Agreement,
except as to that portion of any unpaid salary and other benefits accrued and
earned by him hereunder up to and including the effective date of such
termination. If the Company terminates the Executive's employment other than
pursuant to subparagraph 6(a)(i) or 6(a)(ii) or 6(a)(ii) or if the Executive
terminates his employment pursuant to subparagraph 3(b), all of the compensation
and benefits payable to the Executive pursuant to this Employment Agreement
shall be paid to the Executive for a period of six (6) months following the date
of such termination (the "Severance Period"). For purposes of this Paragraph
6(C), with respect to any benefits payable to the Executive following
termination, the Company may elect to pay to the Executive in cash an amount
equivalent to the value of the benefits to be paid for the duration of the
Severance Period; or continue to provide benefits to the Executive for the
duration of the Severance Period. If there occurs a change of control, or take
over, of the Company and the acquiring or controlling entity terminates the
Executive, then the Executive shall be paid for the balance of the present
contract term or a period not less than Six (6) months following the date of
such termination (the "Severance Period"), including all of the compensation and
other benefits payable to the Executive pursuant to this Employment Agreement.

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                           (iii) if both the President and the Chairman of the
Board of Directors request the resignation of the Executive at any time within
the Base Term and the first six (6) months of the first Renewal Term of this
Agreement in which case all of the compensation and benefits payable to the
Executive pursuant to this Employment Agreement shall be paid to the Executive
for a period of six (6) months following the date of such termination (the
"Severance Period").

(D) NON-COMPETITION AND CONFIDENTIALITY AGREEMENT The Executive acknowledges the
Company's reliance and expectation of the Executive's continued commitment to
performance of his duties and responsibilities during the term of this
Employment Agreement. In light of such reliance and expectation on the part of
the Company, the Executive hereby agrees to be bound by the terms of the
Noncompetition and Confidentiality Agreement, and is acknowledged by the
Executive's signature on this Employment Agreement.

To induce Telkonet Communications, Inc., a Delaware corporation ("Telkonet") to
employ the Employee pursuant to this Employment Agreement, the Employee agrees
that for the term of the Employment Agreement and a period of One (1) year
following termination of the Employment Agreement (the "Noncompetition Period"),
he will not (a) Participate In (as hereinafter defined) any other business or
organization which at any time during the Noncompetition Period is engaged in
the same business as or in competition with Telkonet within the geographic
confines of the markets where Telkonet's products are sold or targeted; (b)
directly or indirectly solicit for business any person or enterprise that at any
time during the two (2) year period preceding the date of termination of the
Employment Agreement was a customer of Telkonet; or (c) directly or indirectly
employ any person who, at any time during the two (2) year period preceding the
date of termination of the Employment Agreement was, or during the
Noncompetition Period is, an employee of Telkonet. As used in this Agreement,
"Participate In" shall mean "directly or indirectly, for his own benefit or for,
with, or through any other person or entity, own, manage, operate, control, loan
money to, or participate in the ownership, management, operation, or control of,
or be connected as a director, officer, employee, partner, consultant, agent,
independent contractor, or otherwise with, or acquiesce in the use of his name
in;" provided, nothing contained herein shall prohibit the Employee from owning,
directly or indirectly up to 5.0% of the outstanding voting securities of any
company, the securities of which are traded on a national securities exchange or
listed for quotation on an automated system of quotation.

In consideration of the execution, delivery and performance of this
Noncompetition Agreement by the Employee, Telkonet has executed the Employment
Agreement, which confers a substantial economic benefit upon the Employee.

Notwithstanding anything in this Noncompetition Agreement to the contrary, if at
any time the Employment Agreement is terminated by either Telkonet or the
Employee for any reason (whether or not constituting cause) or for no reason,
the provisions of this Noncompetition Agreement shall remain binding upon the
Employee. Nothing in this Noncompetition Agreement shall be deemed to entitle or
confer upon the Employee the right to be employed by Telkonet for a term or
otherwise alter the employment status of the Employee with Telkonet.

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A material breach of this Noncompetition Agreement by the Employee could not
adequately be compensated by money damages and will constitute irreparable harm
and injury to Telkonet. In the event of any such material breach or threatened
or anticipated breach, Telkonet shall be entitled, in addition to any other
right and remedy available, to an injunction restraining such breach or a
threatened breach, and no bond or other security shall be required in connection
therewith provided Telkonet satisfies the applicable burden of proof with
respect to all legal requirements applicable to the issuance of an injunction
other than with respect to the inadequacy of money damages and /or irreparable
harm or injury.

The Employee agrees that the provisions of this Noncompetition Agreement are
necessary and reasonable to protect Telkonet in the conduct of its business. If
any restriction contained in this Noncompetition Agreement shall be deemed to be
invalid, illegal, or unenforceable by reason of the extent, duration, or
geographical scope thereof, or otherwise, then the court making such
determination shall have the right to reduce such extent, duration, geographical
scope, or other provisions hereof, to the minimal extent necessary to comply
with applicable law or equitable considerations, and in its reduced form such
restriction shall then be enforceable in the manner contemplated hereby.

This Noncompetition Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, without giving effect to conflict of
laws principles.

         7. MISCELLANEOUS.

                  (a) The Executive represents and warrants that he is not a
party to any agreement, contract or understanding, whether employment or
otherwise, which would restrict or prohibit him from undertaking or performing
employment in accordance with the terms and conditions of this Employment
Agreement.

                  (b) The provisions of this Employment Agreement are severable
and if any one or more provisions may be determined to be illegal or otherwise
unenforceable, in whole or in part, the remaining provisions and any partially
unenforceable provision, to the extent enforceable in any jurisdiction,
nevertheless shall be binding and enforceable.

                  (c) The rights and obligations of the Company under this
Employment Agreement shall inure to the benefit of, and shall be binding on, the
Company and its successors and assigns, and the rights and obligations (other
than obligations to perform services) of the Executive under this Employment
Agreement shall inure to the benefit of, and shall be binding upon, the
Executive and his heirs, personal representatives and assigns.

                  (d) Any notice to be given under this Employment Agreement
shall be personally delivered in writing or shall have been deemed duly given
when received after it is posted in the United States mail, postage prepaid,
registered or certified, return receipt requested, and if mailed to the Company,
shall be addressed to its principal place of business and if mailed to the
Executive, shall be addressed to him at his home address last known on the
records of the Company, or at such other address or addresses as either the
Company or the Executive may hereafter designate in writing to the other.

                  (e) The failure of either party to enforce any provision or
provisions of this Employment Agreement shall not in any way be construed as a
waiver of any such provision or provisions as to any future violations thereof,
or prevent that party thereafter from enforcing each and every other provision
of this Employment Agreement. The rights granted the parties herein are
cumulative and the waiver of any single remedy shall not constitute a waiver of
such party's right to assert all other legal remedies available to it under the
circumstances.

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                  (f) This Employment Agreement supersedes all prior agreements
and understandings between the parties and may not be modified or terminated
orally. No modification, termination or attempted waiver shall be valid unless
in writing and signed by the party against whom the same is sought to be
enforced.

                  (g) This Employment Agreement shall be governed by and
construed according to the laws of the State of Maryland without giving effect
to applicable conflicts of law provisions.

         IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.

                                        TELKONET COMMUNICATIONS, INC.

                                        By:_____________________
                                        Name: Ronald W. Pickett
                                        Title:  President

                                        _______________________________________
                                        E. Barry Smith, Chief Financial Officer

                                       7082703 S8 Exhibit 10.3

Exhibit 10.3

8X8, INC.

1996 DIRECTOR OPTION PLAN

(as amended July 23, 2002)

1.Purposes of the Plan.  The
purposes of this 1996 Director Option Plan are to attract and retain the best
available personnel for service as Outside Directors (as defined herein) of the
Company, to provide additional incentive to the Outside Directors of the Company
to serve as Directors, and to encourage their continued service on the
Board.

All options granted hereunder shall be nonstatutory stock
options.

2.Definitions.  As used
herein, the following definitions shall apply:

(a)"Board" means the Board of Directors of the
Company.

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

(c)"Common Stock" means the Common Stock of the
Company.

(d)"Company" means 8x8 Inc., a Delaware
corporation.

(e)"Director" means a member of the Board.

(f)"Employee" means any person, including officers
and Directors, employed by the Company or any Parent or Subsidiary of the
Company.  The payment of a Director's fee by the Company shall not be sufficient
in and of itself to constitute "employment" by the Company.

(g)"Exchange Act" means the Securities Exchange
Act of 1934, as amended.

(h)"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, the Fair
Market Value of a Share of Common Stock shall be the mean between the high bid
and low asked prices for the Common Stock on the date of determination, as
reported in The Wall Street Journal or such other source as the Board
deems reliable, 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 Board.

(i)"Inside Director" means a Director who is an
Employee.

(j)"Option" means a stock option granted pursuant
to the Plan.

(k)"Optioned Stock" means the Common Stock
subject to an Option.

(l)"Optionee"  means a Director who holds an
Option.

(m)"Outside Director" means a Director who is not
an Employee. 

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

(o)"Plan" means this 1996 Director Option
Plan.

(p)"Share" means a share of the Common Stock, as
adjusted in accordance with Section 10 of the Plan.

(q)"Subsidiary" means a "subsidiary corporation,"
whether now or hereafter existing, as defined in Section 424(f) of the
Internal Revenue Code of 1986.

3.Stock Subject to the Plan.
  Subject to the provisions of Section 10 of the Plan, the maximum aggregate
number of Shares which may be optioned and sold under the Plan is 1,000,000
Shares of Common Stock (the "Pool").  The Shares may be authorized, but
unissued, or reacquired Common Stock.  

If an Option expires or becomes unexercisable without having
been exercised in full, the unpurchased Shares which were subject thereto shall
become available for future grant or sale under the Plan (unless the Plan has
terminated).  Shares that have actually been issued under the Plan shall not be
returned to the Plan and shall not become available for future distribution
under the Plan.

4.Administration and Grants
of Options under the Plan.

(a)Procedure for Grants.  The Board or its
committee may make discretionary Option grants to Outside Directors hereunder.
Additionally, automatic grants hereunder shall be made in accordance with the
following provisions:

    (i)Each Outside Director shall be automatically
granted an Option to purchase 40,000 Shares (the "First Option") on the date on
which the later of the following events occurs:  (A) the Company's initial
public offering, (B) the effective date of this Plan, as determined in
accordance with Section 6 hereof, or (C) the date on which such person
first becomes an Outside Director, whether through election by the shareholders
of the Company or appointment by the Board to fill a vacancy; provided, however,
that an Inside Director who ceases to be an Inside Director but who remains a
Director shall not receive a First Option. 

   (ii)Thereafter, each Outside Director shall be
automatically granted an Option to purchase 25,000 Shares (a "Subsequent
Option") on the date such person is elected or reelected, as the case may be, to
the Board by the shareholders at the Company's annual meeting of shareholders or
otherwise, if on such date, he or she shall have served on the Board for at
least six (6) months.

    (iii) Notwithstanding the provisions of
subsections (ii) and (iii) hereof, any exercise of an Option granted before the
Company has obtained shareholder approval of the Plan in accordance with Section
16 hereof shall be conditioned upon obtaining such shareholder approval of the
Plan in accordance with Section 16 hereof.

     (iv)The terms of a First Option granted
hereunder shall be as follows:

(A)the term of the First Option shall be ten (10)
years.

(B)the First Option shall be exercisable only while the
Outside Director remains a Director of the Company, except as set forth in
Sections 8 and 10 hereof.

(C)the exercise price per Share shall be equal to the
Fair Market Value per Share on the date of grant of the First Option.  In the
event that the date of grant of the First Option is not a trading day, the
exercise price per Share shall be the Fair Market Value on the next trading day
immediately following the date of grant of the First Option.

(D)subject to Section 10 hereof, the First Option shall
become exercisable as to twenty-five percent (25%) of the Shares subject to the
First Option on each anniversary of its date of grant, provided that the
Optionee continues to serve as a Director on such dates.

(v)  The terms of a Subsequent Option granted hereunder
shall be as follows:

(A)the term of the Subsequent Option shall be ten (10)
years.

(B)the Subsequent Option shall be exercisable only while
the Outside Director remains a Director of the Company, except as set forth in
Sections 8 and 10 hereof.

(C)the exercise price per Share shall be equal to the
Fair Market Value per Share on the date of grant of the Subsequent Option.  In
the event that the date of grant of the Subsequent Option is not a trading day,
the exercise price per Share shall be the Fair Market Value on the next trading
day immediately following the date of grant of the Subsequent Option.

(D)subject to Section 10 hereof, the Subsequent Option
shall become exercisable as to 1/48th of the Shares subject to the Subsequent
Option on each one month anniversary of its date of grant for a four-year
period, provided that the Optionee continues to serve as a Director on such
dates.

   (vi)In the event that any Option granted under the
Plan would cause the number of Shares subject to outstanding Options plus the
number of Shares previously purchased under Options to exceed the Pool, then the
remaining Shares available for Option grant shall be granted under Options to
the Outside Directors on a pro rata basis.  No further grants shall be made
until such time, if any, as additional Shares become available for grant under
the Plan through action of the Board or the shareholders to increase the number
of Shares which may be issued under the Plan or through cancellation or
expiration of Options previously granted hereunder.

5.Eligibility.  Options may be
granted only to Outside Directors.  All Options shall be automatically granted
in accordance with the terms set forth in Section 4 hereof. 

The Plan shall not confer upon any Optionee any right with
respect to continuation of service as a Director or nomination to serve as a
Director, nor shall it interfere in any way with any rights which the Director
or the Company may have to terminate the Director's relationship with the
Company at any time.

6.Term of Plan.  The
Plan shall become effective upon the earlier to occur of its adoption by the
Board or its approval by the shareholders of the Company as described in
Section 16 of the Plan.  It shall continue in effect for a term of ten (10)
years unless sooner terminated under Section 11 of the Plan.

7.Form of Consideration.  The
consideration to be paid for the Shares to be issued upon exercise of an Option,
including the method of payment, shall consist of (i) cash,
(ii) check, (iii) 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 (6) 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 said Option shall be exercised, (iv) delivery of a
properly executed exercise notice together with such other documentation as the
Company and the broker, if applicable, shall require to effect an exercise of
the Option and delivery to the Company of the sale or loan proceeds required to
pay the exercise price, or (v) any combination of the foregoing methods of
payment.

8.Exercise of Option.

(a)Procedure for Exercise; Rights as a
Shareholder. Any Option granted hereunder shall be exercisable at such times
as are set forth in Section 4 hereof; provided, however, that no Options
shall be exercisable until shareholder approval of the Plan in accordance with
Section 16 hereof has been obtained.

An Option may not be exercised for a fraction of a Share.

An Option shall be deemed to be exercised when written notice
of such exercise has been given to the Company in accordance with the terms of
the Option by the person entitled to exercise the Option and full payment for
the Shares with respect to which the Option is exercised has been received by
the Company.  Full payment may consist of any consideration and method of
payment allowable under Section 7 of the Plan.  Until the issuance (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the stock certificate evidencing
such Shares, no right to vote or receive dividends or any other rights as a
shareholder shall exist with respect to the Optioned Stock, notwithstanding the
exercise of the Option.  A share certificate for the number of Shares so
acquired shall be issued to the Optionee as soon as practicable after exercise
of the Option. No adjustment shall be made for a dividend or other right for
which the record date is prior to the date the stock certificate is issued,
except as provided in Section 10 of the Plan.

Exercise of an Option in any manner shall result in a
decrease in the number of Shares which thereafter may be 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.

(b)Termination of Continuous Status as a
Director.  Subject to Section 10 hereof, in the event an Optionee's status
as a Director terminates (other than upon the Optionee's death or total and
permanent disability (as defined in Section 22(e)(3) of the Code)), the Optionee
may exercise his or her Option, but only within three (3) months following the
date of such termination, and only to the extent that the Optionee was entitled
to exercise it on the date of such termination (but in no event later than the
expiration of its ten (10) year term).  To the extent that the Optionee was not
entitled to exercise an Option on the date of such termination, and to the
extent that the Optionee does not exercise such Option (to the extent otherwise
so entitled) within the time specified herein, the Option shall terminate.

(c)Disability of Optionee.  In the event
Optionee's status as a Director terminates as a result of total and permanent
disability (as defined in Section 22(e)(3) of the Code), the Optionee may
exercise his or her Option, but only within twelve (12) months following the
date of such termination, and only to the extent that the Optionee was entitled
to exercise it on the date of such termination (but in no event later than the
expiration of its ten (10) year term).  To the extent that the Optionee was not
entitled to exercise an Option on the date of termination, or if he or she does
not exercise such Option (to the extent otherwise so entitled) within the time
specified herein, the Option shall terminate.

(d)Death of Optionee.  In the event of
an Optionee's death, the Optionee's estate or a person who acquired the right to
exercise the Option by bequest or inheritance may exercise the Option, but only
within twelve (12) months following the date of death, and only to the extent
that the Optionee was entitled to exercise it on the date of death (but in no
event later than the expiration of its ten (10) year term).  To the extent
that the Optionee was not entitled to exercise an Option on the date of death,
and to the extent that the Optionee's estate or a person who acquired the right
to exercise such Option does not exercise such Option (to the extent otherwise
so entitled) within the time specified herein, the Option shall terminate.

9.Non-Transferability of
Options.  The Option may not be sold, pledged, 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.

10.Adjustments Upon Changes in 
Capitalization, Dissolution, Merger or Asset Sale. 

(a)Changes in Capitalization.  Subject to any
required action by the shareholders of the Company, the number of Shares covered
by each outstanding Option, the number of Shares which have been authorized for
issuance under the Plan but as to which no Options have yet been granted or
which have been returned to the Plan upon cancellation or expiration of an
Option, as well as the price per Share covered by each such outstanding Option,
and the number of Shares issuable pursuant to the automatic grant provisions of
Section 4 hereof shall be proportionately adjusted for any increase or decrease
in the number of issued Shares resulting from a stock split, reverse stock
split, stock dividend, combination or reclassification of the Common Stock, or
any other increase or decrease in the number of issued Shares effected without
receipt of consideration by the Company; provided, however, that conversion of
any convertible securities of the Company shall not be deemed to have been
"effected without receipt of consideration."  Except as expressly provided
herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of Shares subject to an Option.

(b)Dissolution or Liquidation.  In the event of
the proposed dissolution or liquidation of the Company, to the extent that an
Option has not been previously exercised, it shall terminate immediately prior
to the consummation of such proposed action.

(c)Merger or Asset Sale.  In the event of a merger
of the Company with or into another corporation or the sale of substantially all
of the assets of the Company, outstanding Options may be assumed or equivalent
options may be substituted by the successor corporation or a Parent or
Subsidiary thereof (the "Successor Corporation").  If an Option is assumed or
substituted for, the Option or equivalent option shall continue to be
exercisable as provided in Section 4 hereof for so long as the Optionee serves
as a Director or a director of the Successor Corporation.  Following such
assumption or substitution, if the Optionee's status as a Director or director
of the Successor Corporation, as applicable, is terminated other than upon a
voluntary resignation by the Optionee, the Option or option shall become fully
exercisable, including as to Shares for which it would not otherwise be
exercisable.  Thereafter, the Option or option shall remain exercisable in
accordance with Sections 8(c) through (e) above.

If the Successor Corporation does not assume an outstanding
Option or substitute for it an equivalent option, the Option shall become fully
vested and exercisable, including as to Shares for which it would not otherwise
be exercisable.  In such event the Board shall notify the Optionee that the
Option shall be fully exercisable for a period of thirty (30) days from the date
of such notice, and upon the expiration of such period the Option shall
terminate.  

For the purposes of this Section 10(c), an Option shall be
considered assumed if, following the merger or sale of assets, the Option
confers the right to purchase or receive, for each Share of Optioned Stock
subject to the Option immediately prior to the merger or sale of assets, the
consideration (whether stock, cash, or other securities or property) received in
the merger or sale of assets by holders of Common Stock for each Share held on
the effective date of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding Shares).  If such consideration received in the merger or sale
of assets is not solely common stock of the successor corporation or its Parent,
the Administrator may, with the consent of the successor corporation, provide
for the consideration to be received upon the exercise of the Option, for each
Share of Optioned Stock subject to the Option, to be solely common stock of the
successor corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the merger or sale of
assets.

11.Amendment and Termination of
 the Plan.

(a)Amendment and Termination.  The Board may at
any time amend, alter, suspend, or discontinue the Plan, but no amendment,
alteration, suspension, or discontinuation shall be made which would impair the
rights of any Optionee under any grant theretofore made, without his or her
consent.  In addition, to the extent necessary and desirable to comply with any
applicable law, regulation or stock exchange rule, the Company shall obtain
shareholder approval of any Plan amendment in such a manner and to such a degree
as required.

(b)Effect of Amendment or Termination
.  Any such amendment or termination of the Plan shall not affect Options
already granted and such Options shall remain in full force and effect as if
this Plan had not been amended or terminated.

12.Time of Granting Options.
The date of grant of an Option shall, for all purposes, be the date determined
in accordance with Section 4 hereof.  

 13.Conditions Upon Issuance of Shares.
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 pursuant
thereto shall comply with all relevant provisions of law, including, without
limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules
and regulations promulgated thereunder, state securities laws, and the
requirements of any stock exchange upon which the Shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance.

As a condition to the exercise of an Option, the Company 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 by any of
the aforementioned relevant provisions of law.

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.

  14.Reservation of Shares.  The
Company, during the term of this Plan, will at all times reserve and keep
available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.

    15.Option Agreement.  Options shall be
evidenced by written option agreements in such form as the Board shall
approve.

    16.Shareholder Approval.  Continuance of
the Plan shall be subject to approval by the shareholders of the Company at or
prior to the first annual meeting of shareholders held subsequent to the
granting of an Option hereunder.  Such shareholder approval shall be obtained in
the degree and manner required under applicable state and federal law and any
stock exchange rules.

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