Document:

<PAGE>
                                                                     EXHIBIT 4.2

                                   EXHIBIT A-1
                                 (Face of Note)

                     __% [Series__] Senior Note due [_____]

[INSERT THE GLOBAL NOTE LEGEND, IF APPLICABLE PURSUANT TO THE PROVISIONS OF
THE INDENTURE]

CUSIP:
No:                                                         $______________

                     ANNUITY AND LIFE RE (HOLDINGS), LTD.

promises to pay to ______________ or registered assigns, the principal sum of
_______________________________________ Dollars on _____________.
Interest Payment Dates: _____________.
Record Dates: _____________.

                                          ANNUITY AND LIFE RE (HOLDINGS) LTD.

                                          By:______________________________
                                          Name:
                                          Title:

This is one of the Notes referred to in the within-mentioned Indenture:

CITIBANK, N.A.,
as Trustee

By: __________________________________
Authorized Officer
<PAGE>
                                 (Back of Note)

                     __% [Series __] Senior Note due [____]

            Capitalized terms used herein have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.

            1. INTEREST. Annuity and Life Re (Holdings), Ltd., a Bermuda
corporation (the "Company"), promises to pay interest on the principal amount of
this Note at __% per annum from [__________] until maturity. The Company will
pay interest [__________] on _________ and _________ of each year, or if any
such day is not a Business Day, on the next succeeding Business Day (each an
"Interest Payment Date"). Interest on the Notes will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from the
date of issuance; provided that if there is no existing Default in the payment
of interest, and if this Note is authenticated between a record date referred to
on the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided, further, that
the first Interest Payment Date shall be ___________. The Company shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest (without regard to any
applicable grace periods) from time to time on demand at the same rate to the
extent lawful. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.

            2. METHOD OF PAYMENT. The Company will pay interest on the Notes
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on the ________ or ________ next preceding the Interest
Payment Date, even if such Notes are canceled after such record date and on or
before such Interest Payment Date, except as provided in Section 2.14 of the
Indenture with respect to defaulted interest. The Notes will be payable as to
principal, premium and interest at the office or agency of the Company
maintained for such purpose within or without the City and State of New York,
provided that payment by wire transfer of immediately available funds will be
required with respect to principal of and interest and premium on, all Global
Notes and all other Notes the Holders of which shall have provided wire transfer
instructions to the Company or the Paying Agent. Such payment shall be in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts.

            3.    PAYING AGENT AND REGISTRAR.  Initially, Citibank, N.A., the
Trustee under the Indenture, will act as Paying Agent and Registrar.  The
Company may change any Paying Agent or Registrar without notice to any
Holder.  The Company may act in any such capacity.

            4. INDENTURE. The Company has issued the Notes under an Indenture
dated as of _____________ (the "Indenture") between the Company and the Trustee.
The terms of the Notes include those stated in the Indenture and in [a
Supplemental Indenture] [resolutions of the ___ committee of the Board of
Directors], dated ____, and those terms made part of the Indenture by reference
to the Trust Indenture Act of 1939, as amended (15 U.S. Code Sections
77aaa-77bbbb) (the "TIA"). The Notes are subject to all such terms, and Holders
are referred to the Indenture and the TIA for a statement of such terms. The
Notes are general

                                       2
<PAGE>
obligations of the Company. "Notes" means this Note and all other Notes of the
series of which this Note is a part. The Notes are "Securities" within the
meaning of the Indenture, and references in the Indenture to "Securities"
(including terms such as "Global Securities") include the Notes (and any "Global
Notes" as used herein).

            5.    OPTIONAL REDEMPTION.

             [(a)] The Notes will not be redeemable at the Company's option
prior to _____________. The Notes may be redeemed, in whole or in part, at the
option of the Company on or after _____________, at the redemption prices
specified below (expressed as percentages of the principal amount thereof), in
each case, together with accrued and unpaid interest, hereon to the date of
redemption, upon not less than 30 nor more than 60 days' notice, if redeemed
during the twelve-month period beginning on ___________ of the years indicated
below:

<TABLE>
<CAPTION>
                                                     REDEMPTION
YEAR                                                    PRICE
----                                                    -----
<S>                                                  <C>

</TABLE>

            [(b) Notwithstanding the foregoing, prior to ____________, the
Company may, on any one or more occasions, use the net proceeds of one or more
offerings of its capital stock to redeem up to __% of the aggregate principal
amount of all notes that had been issued under the Indenture up to the time of
redemption at a redemption price of __% the principal amount of the notes
redeemed, plus accrued and unpaid interest, to the date of redemption; provided
that, after any such redemption, the aggregate principal amount of the Notes
outstanding (excluding Notes held by the Company and its Subsidiaries) must
equal at least __% of the Notes that had been issued under the Indenture up to
the time of redemption; and provided further, that any such redemption shall
occur within 90 days of the date of closing of such offering of capital stock of
the Company.]

            6. MANDATORY REDEMPTION. The Company shall not be required to make
mandatory redemption or sinking fund payments with respect to the Notes. OR
[Describe mandatory redemption or sinking fund provisions.]

            7. NOTICE OF REDEMPTION. Notice of Redemption will be mailed at
least 30 days but not more than 60 days before the redemption date to each
Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest shall cease to accrue on
Notes or portions thereof called for redemption.

            8. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered
form without coupons in all appropriate denominations. The transfer of Notes may
be registered and Notes may be exchanged as provided in the Indenture. The
Registrar and the Trustee may require

                                       3
<PAGE>
a Holder, among other things, to furnish appropriate endorsements and transfer
documents and the Company may require a Holder to pay any taxes and fees
required by law or permitted by the Indenture. The Company need not transfer or
exchange any Note selected for redemption, except for the unredeemed portion of
any Note being redeemed in part. Also, it need not transfer or exchange any Note
for a period of 15 days before a selection of Notes to be redeemed.

            9. PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.

            10. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented with the consent of
the Holders of a majority in principal amount of the then outstanding Notes and
other series of Securities affected (treating the Notes and such other series as
a single class), and any existing default or compliance with any provision of
the Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes and other series of
Securities affected (treating the Notes and such other series as a single
class). Without the consent of any Holder of a Note, the Indenture or the Notes
may be amended or supplemented to cure any ambiguity, defect or inconsistency,
to provide for uncertificated Notes in addition to or in place of certificated
Notes, to provide for the assumption of the Company's obligations to Holders of
the Notes in case of a merger or consolidation, to make any change that would
provide any additional rights or benefits to the Holders of the Notes or that
does not adversely affect the legal rights under the Indenture of any such
Holder, or to comply with the requirements of the SEC in order to effect or
maintain the qualification of the Indenture under the TIA.

            11. DEFAULTS AND REMEDIES. Each of the following constitutes an
Event of Default: (i) default by the Company in the payment of interest on the
Notes when the same becomes due and payable and the Default continues for a
period of 30 days; (ii) default by the Company in the payment of the principal
of or premium, if any, on the Notes when the same becomes due and payable at
maturity, upon redemption or otherwise; (3) failure by the Company for 60 days
after notice to comply with any of its other agreements in the Indenture or the
Notes and (4) certain events of bankruptcy or insolvency with respect to the
Company. If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes and
other series of Securities affected (treating the Notes and such other series as
a single class) may declare all the Notes to be due and payable immediately.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency with respect to the Company, all
outstanding Notes will become due and payable without further action or notice.
Holders of the Notes may not enforce the Indenture or the Notes except as
provided in the Indenture. Subject to certain limitations, Holders of a majority
in principal amount of the then outstanding Notes and other series of Securities
affected (treating the Notes and such other series as a single class) may direct
the Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of the Notes notice of any continuing Default or Event of Default
(except a Default or Event of Default relating to the payment of principal or
interest) if it determines that withholding notice is in their interest. The
Holders of a majority in aggregate principal amount of the Notes then
outstanding and other series of Securities affected (treating the Notes and such
other series as a single class) by notice to the Trustee may on behalf of the
Holders of all of the Notes waive any existing Default or Event of Default and
its consequences under the Indenture except a continuing Default or Event of
Default

                                       4
<PAGE>
in the payment of principal, interest or premium on the Notes. The Company is
required to deliver to the Trustee annually a statement regarding compliance
with the Indenture, and the Company is required upon becoming aware of any
Default or Event of Default, to deliver to the Trustee a statement specifying
such Default or Event of Default.

            12. TRUSTEE DEALINGS WITH THE COMPANY. The Trustee, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company or its Affiliates, and may otherwise deal with
the Company or its Affiliates, as if it were not the Trustee.

            13. NO RECOURSE AGAINST OTHERS. No director, officer, employee,
incorporator or stockholder of the Company shall have any liability for any
obligations of the Company under the Notes or the Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder of Notes by accepting a Note waives and releases all such liability.
The waiver and release are part of the consideration for the issuance of the
Notes.

            14. AUTHENTICATION. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.

            15. ABBREVIATIONS. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).

            16. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.

       The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture. Requests may be made to:

                     Annuity and Life Re (Holdings), Ltd.
                     Cumberland House
                     1 Victoria Street
                     Hamilton, HM AX Bermuda
                     Attention:  John F. Burke, Chief Financial Officer

                                       5
<PAGE>
                               ASSIGNMENT FORM

To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to

________________________________________________________________________________
                (Insert assignee's soc. sec. or tax I.D. no.)

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

(Print or type assignee's name, address and zip code)

and irrevocably appoint_________________________________________________________

to transfer this Note on the books of the Company. The agent may substitute
another to act for him.

Date: ________________
                                                Your
                                                Signature:__________________
                                                (Sign exactly as your name
                                                appears on the face of this
                                                Note)

SIGNATURE GUARANTEE.

                                       6
<PAGE>
            SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE

         The following exchanges of a part of this Global Note for an interest
in another Global Note or for a Definitive Note, or exchanges of a part of
another Global Note or Definitive Note for an interest in this Global Note, have
been made:

<TABLE>
<CAPTION>
                                                             Principal
                        Amount of         Amount of          Amount of       Signature of
                       decrease in       increase in        this Global       authorized
                        Principal         Principal       Note following      officer of
Date of Exchange     Amount of this     Amount of this     such decrease      Trustee or
                       Global Note       Global Note       (or increase)    Note Custodian
<S>                  <C>                <C>               <C>               <C>

</TABLE>

                                       7<PAGE>

                         LITHIUM TECHNOLOGY CORPORATION
                            2002 STOCK INCENTIVE PLAN

         1.       Objectives. The Lithium Technology Corporation (the
"Company") 2002 Stock Incentive Plan (the "Plan") is designed to attract,
motivate and retain selected employees and directors of, and other individuals
providing services to, the Company. These objectives are accomplished by
making long-term incentive and other awards under the Plan, thereby providing
Participants with a proprietary interest in the growth and performance of the
Company.

         2.       Definitions.

                  (a)      Affiliate. Any corporation, partnership or other
                  legal entity in which the Company owns, directly or
                  indirectly, 50% or more of the total combined voting power
                  of all classes of stock of such corporation or of the
                  capital interest or profits interest of such partnership or
                  other legal entity.

                  (b)      Award. The grant of any form of stock option, stock
                  appreciation right or stock award, whether granted singly,
                  in combination or in tandem, to a Participant pursuant to
                  such terms, conditions, performance requirements, and
                  limitations and restrictions as the Committee may establish
                  in order to fulfill the objectives of the Plan.

                  (c)      Award Agreement.  An agreement between the Company
                  and a Participant setting forth the terms, conditions,
                  performance requirements, limitations and restrictions
                  applicable to an Award.

                  (d)      Board.  The Board of Directors of Lithium
                  Technology Corporation.

                  (e)      Change in Control. A change in control shall be
                  deemed to have occurred if (i) any "person", including a
                  "group" (as such terms are used in Sections 13(d) and
                  14(d)(2) of the Exchange Act, but excluding the Company, any
                  Affiliate, or any employee benefit plan of the Company, or
                  any Affiliate) is or becomes the "beneficial owner" (as
                  defined in Rule 13(d)(3) under the Exchange Act), directly
                  or indirectly, of securities the Company representing 50% or
                  more of the combined voting power of the Company's then
                  outstanding securities; (ii) a change of more than 25% in
                  the composition of the Board of Directors occurs within a
                  two-year period unless such change was approved in advance
                  by at least two-thirds of the previous directors; or (iii)
                  the stockholders of the Company shall approve a definitive
                  agreement for the sale or other disposition of all or
                  substantially all of the assets of the Company to any other
                  entity.

                  Notwithstanding the foregoing, a "Change in Control" shall
                  not be deemed to occur in the event the Company files for
                  bankruptcy, liquidation or reorganization under the United
                  States Bankruptcy Code.

                                      1

<PAGE>

                  (f)      Change in Control Price. The higher of (i) the
                  highest price per share of Stock offered in conjunction with
                  any transaction resulting in a Change in Control (as
                  determined in good faith by the Committee if any part of the
                  offered price is payable other than cash) or, (ii) the
                  highest Fair Market Value of the Stock on any of the 30
                  trading days immediately preceding the date on which a
                  Change in Control occurs.

                  (g)      Code.  The Internal Revenue Code of 1986, as
                  amended from time to time.

                  (h)      Committee. The committee of the Board as may be
                  designated from time to time by the Board to administer the
                  Plan. If at any time no Committee shall be in office, then
                  the functions of the Committee specified in the Plan shall
                  be exercised by the Board.

                  (i)      Company.  Lithium Technology Corporation and its
                  direct and indirect subsidiaries.

                  (j)      Disabled or Disability. Permanent and total
                  disability as determined under the Company's long-term
                  disability program or, if no such program has been adopted,
                  the continuous absence of an employee for 187 consecutive
                  days or more due to physical or mental illness or
                  incapacity.

                  (k)      Exchange Act.  Securities Exchange Act of 1934, as
                  amended, together with the rules and regulations thereunder.

                  (l)      Fair Market Value. The value of a share of Stock on
                  a particular date, determined as follows: (i) if the Stock
                  is not listed on such date on any national securities
                  exchange but is traded in the over-the-counter market, the
                  closing "bid" quotations of a share of Stock on such date
                  (or if none, on the most recent date on which there were bid
                  quotations of a share of Stock), as reported on the National
                  Association of Securities Dealers, Inc. Automated Quotation
                  System, or, if not so reported, as reported by the National
                  Quotation Bureau, Incorporated, or any other similar service
                  selected by the Board; or (ii) if the Stock is listed on
                  such date on one or more national securities exchanges, the
                  last reported sale price of a share of Stock on such date as
                  recorded on the composite tape system, or, if such system
                  does not cover the Stock, the last reported sale price of a
                  share of Stock on such date on the principal national
                  securities exchange on which the Stock is listed, or if no
                  sale of Stock took place on such date, the last reported
                  sale price of a share of Stock on the most recent day on
                  which a sale of a share of Stock took place as recorded by
                  such system or on such exchange, as the case may be; or
                  (iii) if the Stock is neither listed on such date on a
                  national securities exchange nor traded in the
                  over-the-counter market, as determined by the Committee on
                  an annual basis, within 45 days after the completion of the
                  audit of the Company's annual financial statements.

                  (m)      Participant. An individual to whom an Award has
                  been made under the Plan. Awards may be made to any
                  employee, director, officer or consultant to the Company, or
                  any other individual providing services to, the Company.
                  However, incentive stock

                                      2

<PAGE>

                  options may be granted only to individuals who are employed
                  by the Company or by a subsidiary corporation (within the
                  meaning of Section 424(f) of the Code) of the Company,
                  including a subsidiary that becomes such after the adoption
                  of the Plan.

                  (n)      Stock.  Authorized and issued or unissued shares of
                  Common Stock of the Company or any security issued in
                  exchange or substitution therefor.

         3.       Stock Available for Awards. Subject to Section 11 hereof, a
total of 7,000,000 shares of Stock shall be available for issuance pursuant to
Awards granted under the Plan. Shares of Stock may be made available from the
authorized but unissued shares of the Company or from shares held in the
Company's treasury and not reserved for some other purpose. For purposes of
determining the number of shares of Stock issued under the Plan, no shares
shall be deemed issued until they are actually delivered to a Participant, or
such other person in accordance with Section 7 hereof. Shares of Stock related
to Awards, or portions of Awards, that are forfeited, cancelled or terminated,
expire unexercised, are surrendered in exchange for other Awards, or are
settled in such manner that all or some of the shares of Stock covered by an
Award are not and will not be issued to a Participant, shall be restored to
the total number of shares of Stock available for issuance pursuant to Awards.
Further, shares tendered to or withheld by the Company in connection with the
exercise of stock options, or the payment of tax withholding on any Award,
shall also be available for future issuance under Awards.

         4.       Administration. The Plan shall be administered by the
Committee, which Committee shall have full power to select Participants, to
grant Awards to interpret the Plan, to grant waivers of Award restrictions to
whom Awards may be granted from time to time, to continue, accelerate or
suspend exercisability, vesting or payment of an Award and to adopt such
rules, regulations and guidelines for carrying out the Plan as it may deem
necessary or proper. The interpretation and construction by the Committee of
any provision of this Plan or of any agreement or document evidencing the
grant of any Award and any determination by the Committee pursuant to any
provision of this Plan or any such agreement, notification or document, shall
be final and conclusive. No member of the Committee shall be liable to any
person for any such action taken or determination made in good faith.

         5.       Awards. The Committee shall determine the types and timing
of Awards to be made to each Participant and shall set forth in the related
Award Agreement the terms, conditions, performance requirements, and
limitations applicable to each Award. Awards may include those listed below in
this Section 5. Awards may be granted singly, in combination or in tandem, or
in substitution for, or as alternatives to, grants or rights under any other
benefit plan of the Company, including any plan of any entity acquired by, or
merged with or into, the Company. Awards shall be effected through Award
Agreements executed by the Company in such forms as are approved by the
Committee from time to time.

                  The Committee may determine to make any or all of the
following Awards:

                  (a)      Stock Options. A grant of a right to purchase a
                  specified number of shares of Stock at an exercise price not
                  less than 100% of the Option Price of the Stock on the date
                  of grant, in accordance with Subsection (i) below, provided
                  that, in the case of a

                                      3

<PAGE>

                  stock option granted retroactively in tandem with or as
                  substitution for another award granted under any plan of the
                  Company or plan of any entity acquired by, or merged with or
                  into the Company, the exercise price may be the same as the
                  purchase or designated price of such other award. If the
                  optionee is an owner of stock (as determined under Section
                  424(d) of the Internal Revenue Code) that possesses more
                  than 10% of the total combined voting power of all classes
                  of stock of the Company or a parent or subsidiary
                  corporation ("Ten Percent Stockholder"), the option price
                  per share in the case of an incentive stock option shall not
                  be less than 110% of the fair market value of a share of
                  Common Stock on the date of the option grant. A stock option
                  may be in the form of (i) an incentive stock option
                  ("Incentive Stock Option" or "ISO") which, in addition to
                  being subject to such terms, conditions and limitations as
                  are established by the Committee, complies with Section 422
                  of the Code or (ii) a non-qualified stock option subject to
                  such terms, conditions and limitations as are established by
                  the Committee. The aggregate Fair Market Value (as
                  determined as of the time of grant) of the Stock with
                  respect to which incentive stock options are exercisable for
                  the first time by an employee in any calendar year under the
                  Plan (and/or any other incentive stock option plans of the
                  Company) shall not exceed $100,000. To the extent that any
                  Stock Option is not designated as an Incentive Stock Option
                  or even if so designated does not qualify as an Incentive
                  Stock Option, it shall constitute a Nonqualified Stock
                  Option.

                  Stock Options granted under the Plan shall be subject to the
                  following terms and conditions and shall contain such
                  additional terms and conditions as the Committee shall deem
                  desirable and set forth on the Award Agreement:

                           (i)      Option Price. The option price per share
                           of Common Stock shall not be less than the Fair
                           Market Value of the Common Stock subject to the
                           Stock Option on the date of grant; provided,
                           however, that for any Nonqualified Stock Option,
                           the option price per share of Common Stock may,
                           alternatively, be fixed at any price deemed to be
                           fair and reasonable, as of the date of grant, by
                           the Committee.

                           (ii)     Option Term. The term of each Stock Option
                           shall be fixed by the Committee, but no Incentive
                           Stock Option shall be exercisable more than 10
                           years after the date the Stock Option is granted.

                           (iii)    Exercisability. Except as otherwise
                           provided herein, Stock Options shall be exercisable
                           at such time or times and subject to such terms and
                           conditions as shall be determined by the Committee.
                           If the Committee provides that any Stock Option is
                           exercisable only in installments, the Committee may
                           at any time waive such installment exercise
                           provisions, in whole or in part, based on such
                           factors as the Committee may determine. In
                           addition, the Committee may at any time accelerate
                           the exercisability of any Stock Option.

                                      4

<PAGE>

                           (iv)     Payment of Exercise Price. The price at
                           which shares of Stock may be purchased under a
                           Stock Option shall be paid in full in cash at the
                           time of the exercise or, if permitted by the
                           Committee, by means of tendering Stock or
                           surrendering another Award or any combination
                           thereof. The Committee shall determine acceptable
                           methods of tendering Stock or other Awards and may
                           impose such conditions on the use of Stock or other
                           Awards to exercise a Stock Option as it deems
                           appropriate.

                  (b)      Stock Appreciation Rights. A right to receive a
                  payment, in cash or Stock, equal in value to the excess of
                  the Fair Market Value of a specified number of shares of
                  Stock on the date the stock appreciation right ("SAR") is
                  exercised over the grant price of the SAR, which shall not
                  be less than 100% of the Fair Market Value on the date of
                  grant of such SAR, as determined by the Committee, provided
                  that if an SAR is granted in tandem with or in substitution
                  for another award granted under any plan of the Company, the
                  grant price may be the same as the exercise or designated
                  price of such other award.

                  (c)      Stock Awards. An Award made in Stock or denominated
                  in units of Stock. All or part of any stock award may be
                  subject to conditions established by the Committee, and set
                  forth in the Award Agreement, which may include, but are not
                  limited to, continuous service with the Company, achievement
                  of specific business objectives, increases in specified
                  indices, attaining growth rates, and other comparable
                  measurements of the Company performance.

         6.       Tax Withholding. Prior to the payment or settlement of any
Award, the Participant must pay, or make arrangements acceptable to the
Company for the payment of, any and all federal, state and local tax
withholding that in the opinion of the Company is required by law. The Company
shall have the right to deduct applicable taxes from any Award payment and
withhold, at the time of delivery or vesting of shares under the Plan, an
appropriate number of shares for payment of taxes required by law or to take
such other action as may be necessary in the opinion of the Company to satisfy
all obligations for withholding of such taxes.

         7.       Transferability. No Award shall be transferable or
assignable, or payable to or exercisable by, anyone other than the Participant
to whom it was granted, except, (a) by law, will or the laws of descent and
distribution, (b) as a result of the disability of a Participant or (c) that
the Committee (in the form of an Award Agreement or otherwise) may permit
transfers of Awards by gift or otherwise to a member of a Participant's
immediate family and/or trusts whose beneficiaries are members of the
Participant's immediate family, or to such other persons or entities as may be
approved by the Committee. Notwithstanding the foregoing, in no event shall
ISOs be transferable or assignable other than by will or by the laws of
descent and distribution.

         8.       Termination of Employment. If the employment of a
Participant terminates, other than as a result of the death or disability of a
Participant, all unexercised, deferred and unpaid Awards shall be canceled
immediately, unless the Award Agreement provides otherwise. In the event of
the death of a Participant or in the event a Participant is deemed by the
Company to be Disabled, the

                                      5

<PAGE>

Participant or the Participant's estate, beneficiaries or representative, as
the case may be, shall have the rights and duties of the Participant under the
applicable Award Agreement.

         9.       Change in Control.

                  (a)      Subject to the provisions of Section 9(b) below, in
                           the event of a Change in Control, each Stock Option
                           shall, at the discretion of the Committee, either
                           be cancelled in exchange for a payment in cash of
                           an amount equal to the excess, if any, of the
                           Change in Control Price over the exercise price for
                           such Stock Option, or be fully exercisable
                           regardless of the exercise schedule otherwise
                           applicable to such Stock Option and all restricted
                           shares of Stock and all SARs shall become
                           nonforfeitable and be immediately transferable or
                           payable, as the case may be.

                  (b)      Notwithstanding Section 9(a), no cancellation,
                           acceleration of exercisability, vesting, cash
                           settlement or other payment shall occur with
                           respect to any Award or any class of Awards if the
                           Committee reasonably determines in good faith prior
                           to the occurrence of a Change in Control that such
                           Award or Awards shall be honored or assumed, or new
                           rights substituted therefore (such honored, assumed
                           or substituted award hereinafter called an
                           "Alternative Award"), by a Participant's employer
                           (or for the parent or an Affiliate of such
                           employer) immediately following the Change in
                           Control, provided that any such Alternative Award
                           must:

                           (i)      be based on stock which is traded on an
                                    established securities market, or which
                                    will be so traded within 60 days of the
                                    Change in Control;

                           (ii)     provide such Participant (or each
                                    Participant in a class of Participants)
                                    with rights and entitlements substantially
                                    equivalent to or be better than the
                                    rights, terms and conditions applicable
                                    under such Award, including, but not
                                    limited to, an identical or better
                                    exercise or vesting schedule and identical
                                    or better timing and methods of payment;

                           (iii)    have substantially equivalent economic
                                    value to such Award (determined at the
                                    time of Change in Control); and

                           (iv)     have terms and conditions which provide
                                    that in the event that the Participant's
                                    employment is involuntarily terminated or
                                    constructively terminated, any conditions
                                    on a Participant's rights under, or any
                                    restrictions on transfer or exercisability
                                    applicable to, each such Alternative Award
                                    shall be waived or shall lapse, as the
                                    case may be.

For this purpose, a constructive termination shall mean a termination by a
Participant following a material reduction in the Participant's base salary or
a Participant's incentive compensation opportunity or a material reduction in
the Participant's responsibilities, in either case without the Participant's
written consent.

                                      6

<PAGE>

         10.      Term, Amendment, and Termination of the Plan.  The Plan will
terminate on January 22, 2012.  Awards outstanding as of the date of any such
termination shall not be affected or impaired by the termination of the Plan.

The Board may amend, alter, or discontinue the Plan to the extent it deems
appropriate in the best interest of the Company, but no amendment, alteration
or discontinuation shall be made which would (a) impair the rights of an
optionee under a Stock Option or a recipient of a SAR or restricted share of
Stock theretofore granted without the optionee's or recipient's consent,
except such an amendment which is necessary to cause any Award or transaction
under the Plan to qualify, or continue to qualify, for the exemption provided
by Rule 16b-3 or (b) disqualify any Award or transaction under the Plan from
the exemption provided by Rule 16b-3. In addition, no such amendment shall be
made without the approval of the Company's stockholders to the extent such
approval is required by law or agreement.

The Committee may amend the terms of any Award Agreement, but no such
amendment shall impair the rights of any participant without the participant's
consent except such an amendment which is necessary to cause any Award or
transaction under the Plan to qualify, or to continue to qualify, for the
exemption provided by Rule 16b-3.

Subject to the above provisions, the Board shall have authority to amend the
Plan to take into account changes in law and tax and accounting rules as well
as other developments, and to grant Awards that qualify for beneficial
treatment under such rules without stockholder approval.

         11.      Adjustments. In the event of any change in the outstanding
Stock of the Company by reason of a stock split, stock dividend, combination
or reclassification of shares, recapitalization, merger or similar event, the
Committee may adjust proportionally (a) the number of shares of Stock (i)
available for issuance under the Plan, and (ii) covered by outstanding Awards
denominated in stock or units of Stock; (b) the exercise and grant prices
related to outstanding Awards; and (c) the appropriate Fair Market Value and
other price determinations for such Awards as the Committee in its sole
discretion may in good faith determine to be equitably required in order to
prevent dilution or enlargement of the rights of Participants. Moreover, in
the event of any such transaction or event, the Committee may provide in
substitution for any or all outstanding Awards under this Plan such
alternative consideration as it may in good faith determine to be equitable
under the circumstances and may require in connection therewith the surrender
of all Awards so replaced. The Committee may also make or provide for such
adjustments in the number of Shares specified in Section 3 of this Plan as the
Committee in its sole discretion may in good faith determine to be appropriate
in order to reflect any transaction or event described in this Section 11. In
the event of any other change affecting the Stock or any distribution to
holders of Stock, such adjustments in the number and kind of shares and the
exercise, grant and conversion prices of the affected Awards as may be deemed
equitable by the Committee, including adjustments to avoid fractional shares,
shall be made to give proper effect to such event.

                                      7

<PAGE>

         12.      Miscellaneous.

                  (a)      Any notice to the Company required by any of the
                  provisions of the Plan shall be addressed to the Committee,
                  c/o the Secretary of the Company, and shall become effective
                  when it is received.

                  (b)      The Plan shall be unfunded and the Company shall
                  not be required to establish any special account or fund or
                  to otherwise segregate or encumber assets to ensure payment
                  of any Award.

                  (c)      Nothing contained in the Plan shall prevent the
                  Company from adopting other or additional compensation
                  arrangements or plans, subject to shareholder approval if
                  such approval is required, and such arrangements or plans
                  may be either generally applicable or applicable only in
                  specific cases.

                  (d)      No Participant shall have any claim or right to be
                  granted an Award under the Plan and nothing contained in the
                  Plan shall be deemed or be construed to give any Participant
                  the right to be retained in the employ of the Company or to
                  interfere with the right of the Company to discharge any
                  Participant at any time without regard to the effect such
                  discharge may have upon the Participant under the Plan.
                  Except to the extent otherwise provided in any plan or in an
                  Award Agreement, no Award under the Plan shall be deemed
                  compensation for purposes of computing benefits or
                  contributions under any other plan of the Company.

                  (e)      The Plan and each Award Agreement shall be governed
                  by the laws of the State of Delaware, excluding any
                  conflicts or choice of law rule or principle that might
                  otherwise refer construction or interpretation of the Plan
                  to the substantive law of another jurisdiction.

                  (f)      The Committee shall have full power and authority
                  to interpret the Plan and to make any determinations
                  thereunder and the Committee's determinations shall be
                  binding and conclusive. Determinations made by the Committee
                  under the Plan need not be uniform and may be made
                  selectively among individuals, whether or not such
                  individuals are similarly situated.

                  (g)      If any provision of the Plan is or becomes or is
                  deemed invalid, illegal or unenforceable in any
                  jurisdiction, or would disqualify the Plan or any Award
                  under any law deemed applicable by the Committee, such
                  provision shall be construed or deemed amended or limited in
                  scope to conform to applicable laws or, in the discretion of
                  the Committee, it shall be stricken and the remainder of the
                  Plan shall remain in full force and effect.

                  (h)      The Plan shall become effective on the date it is
                  approved by the Board, subject to approval by the holders of
                  a majority of the shares of Stock then outstanding. The
                  Committee may grant Awards subject to the condition that
                  this Plan shall have been approved by the stockholders of
                  the Company.

                                      8

<PAGE>

                  (i)      With respect to persons subject to Section 16 of
                  the Exchange Act, transactions under this Plan are intended
                  to comply with all applicable conditions of Rule 16b-3 or
                  its successors under the Exchange Act. To the extent any
                  provision of the Plan or action by the Committee fails to so
                  comply, it shall be deemed null and void, to the extent
                  permitted by law and deemed advisable by the Committee.

                  (j)      The Committee may grant Awards to employees who are
                  subject to the tax laws of nations other than the United
                  States, which Awards may have terms and conditions that
                  differ from other Awards granted under the Plan for the
                  purposes of complying with foreign tax laws.

                                      9

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