Document:

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                                                                     EXHIBIT 4.1

                                  VITALCOM INC.

                        1996 EMPLOYEE STOCK PURCHASE PLAN

         The following constitute the provisions of the 1996 Employee Stock
Purchase Plan of VitalCom Inc.

         1. Purpose. The purpose of the Plan is to provide employees of the
Company and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company through accumulated payroll deductions. It is the intention
of the Company to have the Plan qualify as an "Employee Stock Purchase Plan"
under Section 423 of the Internal Revenue Code of 1986, as amended. The
provisions of the Plan, accordingly, shall be construed so as to extend and
limit participation in a manner consistent with the requirements of that section
of the Code.

         2. Definitions.

            (a) "Board" shall mean the Board of Directors of the company.

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

            (c) "Common Stock" shall mean the Common Stock of the Company.

            (d) "Company" shall mean VitalCom Inc. and any Designated Subsidiary
of the Company.

            (e) "Compensation" shall mean all base straight time gross earnings
and sales commissions, including payments for overtime, shift premium, incentive
compensation, incentive payments, bonuses and other compensation.

            (f) "Designated Subsidiaries" shall mean the Subsidiaries which have
been designated by the Board from time to time in its sole discretion as
eligible to participate in the Plan.

            (g) "Employee" shall mean any individual who is an Employee of the
Company for tax purposes whose customary employment with the Company is at least
twenty (20) hours per week and more than five (5) months in any calendar year.
For purposes of the Plan, the employment relationship shall be treated as
continuing intact while the individual is on sick leave or other leave of
absence approved by the Company. Where the period of leave exceeds 90 days and
the individual's right to reemployment is not guaranteed either by statute or by
contract, the employment relationship will be deemed to have terminated on the
91st day of such leave.

            (h) "Enrollment Date" shall mean the first day of each Offering
Period.

            (i) "Exercise Date" shall mean the last day of each Offering Period.

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            (j) "Fair Market Value" shall mean, as of any date, the value of
Common Stock determined as follows:

                (1) 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 sale 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,
or;

                (2) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean of the closing bid and asked prices for the Common Stock on
the date of such determination, as reported in The Wall Street Journal or such
other source as the Board deems reliable, or;

                (3) 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.

                (4) For the purposes of the Enrollment Date under the first
Offering Period under the Plan, the Fair Market Value of the Common Stock shall
be the price to public as set forth in the final prospectus included within the
Registration Statement on Form SB-2 filed with the Securities and Exchange
Commission for the initial public offering of the Common Stock.

            (k) "Offering Period" shall mean a period of approximately six (6)
months, commencing on the first Trading Day on or after November 1 terminating
on the last Trading Day in the period ending the following April 30, or
commencing on the first Trading Day on or after May 1 and terminating on the
last Trading Day in the period ending the following October 31, during which an
option granted pursuant to the Plan may be exercised; provided, however, that
the first Offering Period shall be the period of approximately nine (9) months,
commencing with the first Trading Day on or after the date on which the
Company's Registration Statement on Form SB-2 (or any successor form thereof) is
declared effective by the Securities and Exchange Commission and terminating on
the last Trading Day in the period ending October 31, 1996. The duration of
Offering Periods may be changed pursuant to Section 4 of this Plan.

            (l) "Plan" shall mean this Employee Stock Purchase Plan.

            (m) "Purchase Price" shall mean an amount equal to 85% of the Fair
Market Value of a share of Common Stock on the Enrollment Date or on the
Exercise Date, whichever is lower.

            (n) "Reserves" shall mean the number of shares of Common Stock
covered by each option under the Plan which have not yet been exercised and the
number of shares of Common Stock which have been authorized for issuance under
the Plan but not yet placed under option.

            (o) "Subsidiary" shall mean a corporation, domestic or foreign, of
which not less than 50% of the voting shares are held by the Company or a
Subsidiary, whether or not such corporation now exists or is hereafter organized
or acquired by the Company or a Subsidiary.

            (p) "Trading Day" shall mean a day on which national stock exchanges
and the Nasdaq System are open for trading.

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        3. Eligibility.

            (a) Any Employee (as defined in Section 2(g)), who shall be employed
by the Company on a given Enrollment Date shall be eligible to participate in
the Plan.

            (b) Any provisions of the Plan to the contrary notwithstanding, no
Employee shall be granted an option under the Plan (i) to the extent that,
immediately after the grant, such Employee (or any other person whose stock
would be attributed to such Employee pursuant to Section 424(d) of the Code)
would own capital stock of the Company and/or hold outstanding options to
purchase such stock possessing five percent (5%) or more of the total combined
voting power or value of all classes of the capital stock of the Company or of
any Subsidiary, or (ii) to the extent that his or her rights to purchase stock
under all employee stock purchase plans of the Company and its subsidiaries
accrue at a rate which exceeds Twenty-Five Thousand Dollars ($25,000) worth of
stock (determined at the fair market value of the shares at the time such option
is granted) for each calendar year in which such option is outstanding at any
time.

        4. Offering Periods. The Plan shall be implemented by consecutive
Offering Periods with a new Offering Period commencing on the first Trading Day
on or after November 1 and May 1 each year, or on such other date as the Board
shall determine, and continuing thereafter until terminated in accordance with
Section 19 hereof; provided, however, that the first Offering Period shall be
the period of approximately nine (9) months, commencing with the first Trading
Day on or after the date on which the Company's registration statement on Form
SB-2 (or any successor form thereof) is declared effective by the Securities and
Exchange Commission and terminating on the last Trading Day in the Period ending
October 31, 1996. The Board shall have the power to change the duration of
Offering Periods (including the commencement dates thereof) with respect to
future offerings without shareholder approval if such change is announced at
least fifteen (15) days prior to the scheduled beginning of the first Offering
Period to be affected thereafter.

        5. Participation.

            (a) An eligible Employee may become a participant in the Plan by
completing a subscription agreement authorizing payroll deductions in the form
of Exhibit A to this Plan and filing it with the Company's payroll office prior
to the applicable Enrollment Date.

            (b) Payroll deductions for a participant shall commence on the first
payroll following the Enrollment Date and shall end on the last payroll in the
Offering Period to which such authorization is applicable, unless sooner
terminated by the participant as provided in Section 10 hereof.

        6. Payroll Deductions.

            (a) At the time a participant files his or her subscription
agreement, he or she shall elect to have payroll deductions made on each pay day
during the Offering Period in an amount not exceeding ten percent (10%) of the
Compensation which he or she receives on each pay day during the Offering
Period.

            (b) All payroll deductions made for a participant shall be credited
to his or her account under the Plan and will be withheld in whole percentages
only. A participant may not make any additional payments into such account.

            (c) A participant may discontinue his or her participation in the
Plan as provided in Section 10 hereof, or may increase or decrease the rate of
his or her payroll deductions during the Offering Period by completing or filing
with the Company a new subscription agreement authorizing a change in payroll
deduction rate. The Board may, in its discretion, limit the number of
participation rate changes during any Offering Period. The change in rate shall
be effective with the first full payroll period following five (5) business days
after the Company's receipt of the

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new subscription agreement unless the Company elects to process a given change
in participation more quickly. A participant's subscription agreement shall
remain in effect for successive Offering Periods unless terminated as provided
in Section 10 hereof.

            (d) Notwithstanding the foregoing, to the extent necessary to comply
with Section 423(b)(8) of the Code and Section 3(b) hereof, a participant's
payroll deductions may be decreased to 0% at such time during any Offering
Period which is scheduled to end during the current calendar year (the "Current
Offering Period") that the aggregate of all payroll deductions which were
previously used to purchase stock under the Plan in a prior Offering Period
which ended during that calendar year plus all payroll deductions accumulated
with respect to the Current Offering Period equal $21,250. Payroll deductions
shall recommence at the rate provided in such participant's subscription
agreement at the beginning of the first Offering Period which is scheduled to
end in the following calendar year, unless terminated by the participant as
provided in Section 10 hereof.

            (e) At the time the option is exercised, in whole or in part, or at
the time some or all of the Company's Common Stock issued under the Plan is
disposed of, the participant must make adequate provision for the Company's
federal, state, or other tax withholding obligations, if any, which arise upon
the exercise of the option or the disposition of the Common Stock. At any time,
the Company may, but will not be obligated to, withhold from the participant's
compensation the amount necessary for the Company to meet applicable withholding
obligations, including any withholding necessary to make available to the
Company any tax deductions or benefits attributable to sale or early disposition
of Common Stock by the Employee.

        7. Grant of Option. On the Enrollment Date of each Offering Period, each
eligible Employee participating in such Offering Period shall be granted an
option to purchase on the Exercise Date of such Offering Period (at the
applicable Purchase Price) up to a number of shares of the Company's Common
Stock determined by dividing such Employee's payroll deductions accumulated
prior to such Exercise Date and retained in the Participant's account as of the
Exercise Date by the applicable Purchase Price; provided that in no event shall
an Employee be permitted to purchase during each Offering Period more than a
number of Shares determined by dividing $12,500 by the Fair Market Value of a
share of the Company's Common Stock on the Enrollment Date, and provided further
that such purchase shall be subject to the limitations set forth in Sections
3(b) and 12 hereof Exercise of the option shall occur as provided in Section 8
hereof, unless the participant has withdrawn pursuant to Section 10 hereof. The
Option shall expire on the last day of the Offering Period.

        8. Exercise of Option. Unless a participant withdraws from the Plan as
provided in Section 10 hereof, his or her option for the purchase of shares
shall be exercised automatically on the Exercise Date, and the maximum number of
full shares subject to option shall be purchased for such participant at the
applicable Purchase Price with the accumulated payroll deductions in his or her
account. No fractional shares shall be purchased; any payroll deductions
accumulated in a participant's account which are not sufficient to purchase a
full share shall be retained in the participant's account for the subsequent
Offering Period, subject to earlier withdrawal by the participant as provided in
Section 10 hereof. Any other monies left over in a participant's account after
the Exercise Date shall be returned to the participant. During a participant's
lifetime, a participant's option to purchase shares hereunder is exercisable
only by him or her.

        9. Delivery. As promptly as practicable after each Exercise Date on
which a purchase of shares occurs, the Company shall arrange the delivery to
each participant, as appropriate, of a certificate representing the shares
purchased upon exercise of his or her option.

        10. Withdrawal; Termination of Employment.

            (a) A participant may withdraw all but not less than all the payroll
deductions credited to his or her account and not yet used to exercise his or
her option under the Plan at any time by giving written notice to the Company in
the form of Exhibit B to this Plan. All of the participant's payroll deductions
credited to his or her account

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will be paid to such participant promptly after receipt of notice of withdrawal
and such participant's option for the Offering Period will be automatically
terminated, and no further payroll deductions for the purchase of shares will be
made during the Offering Period. If a participant withdraws from an Offering
Period, payroll deductions will not resume at the beginning of the succeeding
Offering Period unless the participant delivers to the Company a new
subscription agreement.

            (b) Upon a participant's ceasing to be an Employee (as defined in
Section 2(g) hereof) for any reason, he or she will be deemed to have elected to
withdraw from the Plan and the payroll deductions credited to such participant's
account during the Offering Period but not yet used to exercise the option will
be returned to such participant or, in the case of his or her death, to the
person or persons entitled thereto under Section 14 hereof, and such
participant's option will be automatically terminated. The preceding sentence
notwithstanding, a participant who receives payment in lieu of notice of
termination of employment shall be treated as continuing to be an Employee for
the participant's customary number of hours per week of employment during the
period in which the participant is subject to such payment in lieu of notice.

            (c) A participant's withdrawal from an Offering Period will not have
any effect upon his or her eligibility to participate in any similar plan which
may hereafter be adopted by the Company or in succeeding Offering Periods which
commence after the termination of the Offering Period from which the participant
withdraws.

        11. Interest. No interest shall accrue on the payroll deductions of a
participant in the Plan.

        12. Stock.

            (a) The maximum number of shares of the Company's Common Stock which
shall be made available for sale under the Plan shall be one hundred fifty
thousand (150,000) shares, subject to adjustment upon changes in capitalization
of the Company as provided in Section 18 hereof. If, on a given Exercise Date,
the number of shares with respect to which options are to be exercised exceeds
the number of shares then available under the Plan, the Company shall make a
pro-rata allocation of the shares remaining available for purchase in as uniform
a manner as shall be practicable and as it shall determine to be equitable.

            (b) The participant will have no interest or voting right in shares
covered by his option until such option has been exercised.

            (c) Shares to be delivered to a participant under the Plan will be
registered in the name of the participant or in the name of the participant and
his or her spouse.

        13. Administration.

            (a) Administrative Body. The Plan shall be administered by the Board
or a committee of members of the Board appointed by the Board. The Board or its
committee shall have full and exclusive discretionary authority to construe,
interpret and apply the terms of the Plan, to determine eligibility and to
adjudicate all disputed claims filed under the Plan. Every finding, decision and
determination made by the Board or its committee shall, to the full extent
permitted by law, be final and binding upon all parties.

            (b) Rule 16b-3 Limitations. Notwithstanding the provisions of
Subsection (a) of this Section 13, in the event that Rule 16b-3 promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
any successor provision ("Rule 16b-3") provides specific requirements for the
administrators of plans of this type, the Plan shall be administered only by
such a body and in such a manner as shall comply with the applicable
requirements of Rule 16b-3. Unless permitted by Rule 16b-3, no discretion
concerning decisions regarding the Plan shall be afforded to any committee or
person that is not "disinterested" as that term is used in Rule 16b-3.

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        14. Designation of Beneficiary.

            (a) A participant may file a written designation of a beneficiary
who is to receive any shares and cash, if any, from the participant's account
under the Plan in the event of such participant's death subsequent to an
Exercise Date on which the option is exercised but prior to delivery to such
participant of such shares and cash. In addition, a participant may file a
written designation of a beneficiary who is to receive any cash from the
participant's account under the Plan in the event of such participant's death
prior to exercise of the option. If a participant is married and the designated
beneficiary is not the spouse, spousal consent shall be required for such
designation to be effective.

            (b) Such designation of beneficiary may be changed by the
participant at any time by written notice. In the event of the death of a
participant and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such participant's death, the Company shall
deliver such shares and/or cash to the executor or administrator of the estate
of the participant, or no such executor or administrator has been appointed (to
the knowledge of the Company), the Company, in its discretion, may deliver such
shares and/or cash to the spouse or to any one or more dependents or relatives
of the participant, or if no spouse, dependent or relative is known to the
Company, then to such other person as the Company may designate.

        15. Transferability. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 14 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds from an Offering Period in accordance with Section 10 hereof.

        16. Use of Funds. All payroll deductions received or held by the Company
under the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such payroll deductions.

        17. Reports. Individual accounts will be maintained for each participant
in the Plan. Statements of account will be given to participating Employees at
least annually, which statements will set forth the amounts of payroll
deductions, the Purchase Price, the number of shares purchased and the remaining
cash balance, if any.

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

            (a) Changes in Capitalization. Subject to any required action by the
shareholders of the Company, the Reserves, as well as the price per share and
the number of shares of Common Stock covered by each option under the Plan which
has not yet been exercised, shall be proportionately adjusted for any increase
or decrease in the number of issued shares of Common Stock resulting from a
stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of shares of Common Stock 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". Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class shall affect, and no
adjustment by reason thereof shall be made with respect to the number or price
of shares of Common Stock subject to an option.

            (b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Offering Period shall terminate
immediately prior to the consummation of such proposed action, unless otherwise
provided by the Board.

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            (c) Merger or Asset Sale. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, the Offering Period then in progress shall be
shortened by setting a new Exercise Date (the "New Exercise Date"). The New
Exercise Date shall be before the date of the Company's proposed sale or merger.
The Board shall notify each participant in writing, at least ten (10) business
days prior to the New Exercise Date, that the Exercise Date for the
participant's option has been changed to the New Exercise Date and that the
participant's option shall be exercised automatically on the New Exercise Date,
unless prior to such date the participant has withdrawn from the Offering Period
as provided in Section 10 hereof.

        19. Amendment or Termination.

            (a) The Board of Directors of the Company may at any time and for
any reason terminate or amend the Plan. Except as provided in Section 18 hereof,
no such termination can affect options previously granted, provided that an
Offering Period may be terminated by the Board of Directors on any Exercise Date
if the Board determines that the termination of the Plan is in the best
interests of the Company and its shareholders. Except as provided in Section 18
hereof, no amendment may make any change in any option theretofore granted which
adversely affects the rights of any participant. To the extent necessary to
comply with Rule 16b-3 or under Section 423 of the Code (or any successor rule
or provision or any other applicable law or regulation), the Company shall
obtain shareholder approval in such a manner and to such a degree as required.

            (b) Without shareholder consent and without regard to whether any
participant rights may be considered to have been "adversely affected," the
Board (or its committee) shall be entitled to change the Offering Periods, limit
the frequency and/or number of changes in the amount withheld during an Offering
Period, establish the exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, permit payroll withholding in excess of the
amount designated by a participant in order to adjust for delays or mistakes in
the Company's processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of Common Stock
for each participant properly correspond with amounts withheld from the
participant's Compensation, and establish such other limitations or procedures
as the Board (or its committee) determines in its sole discretion advisable
which are consistent with the Plan.

        20. Notices. All notices or other communications by a participant to the
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.

        21. Conditions Upon Issuance of Shares. Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, 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 applicable provisions of law.

        22. Term of Plan. The Plan shall become effective upon the approval by
the Board of Directors and the first sale of the Company's Common Stock to the
general public pursuant to a registration statement declared effective by the
Securities and Exchange Commission. It shall continue in effect for a term of
ten (10) years unless sooner terminated under Section 19 hereof.

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                                    EXHIBIT A

                                  VITALCOM INC.

                        1996 EMPLOYEE STOCK PURCHASE PLAN

                             SUBSCRIPTION AGREEMENT

_____  Original Application                            Enrollment Date: ________

_____  Change in Payroll Deduction Rate

_____  Change of Beneficiary(ies)

1.   _________________________________________hereby elects to participate in
     the 1996 VitalCom Inc. Employee Stock Purchase Plan (the "Employee Stock
     Purchase Plan") and subscribes to purchase shares of the Company' s Common
     Stock in accordance with this Subscription Agreement and the Employee Stock
     Purchase Plan.

2.   I hereby authorize payroll deductions from each paycheck in the amount of
     _______% of my Compensation on each payday (1 to 10%) during the Offering
     Period in accordance with the Employee Stock Purchase Plan. (Please note
     that no fractional percentages are permitted.)

3.   I understand that said payroll deductions shall be accumulated for the
     purchase of shares of Common Stock at the applicable Purchase Price
     determined in accordance with the Employee Stock Purchase Plan. I
     understand that if I do not withdraw from an Offering Period, any
     accumulated payroll deductions will be used to automatically exercise my
     option.

4.   I have received a copy of the complete "Employee Stock Purchase Plan." I
     understand that my participation in the Employee Stock Purchase Plan is in
     all respects subject to the terms of the Plan. I understand that my ability
     to exercise the option under this Subscription Agreement is subject to
     obtaining shareholder approval of the Employee Stock Purchase Plan.

5.   Shares purchased for me under the Employee Stock Purchase Plan should be
     issued in the name(s) of (Employee or Employee and Spouse Only): __________
     ___________________________________________________________________________

6.   I understand that if I dispose of any shares received by me pursuant to the
     Plan within 2 years after the Enrollment Date (the first day of the
     Offering Period during which I purchased such shares), I will be treated
     for federal income tax purposes as having received ordinary income at the
     time of such disposition in an amount equal to the excess of the fair
     market value of the shares at the time such shares were purchased by me
     over the price which I paid for the shares. I HEREBY AGREE TO NOTIFY THE
     COMPANY IN WRITING WITHIN 30 DAYS AFTER THE DATE OF ANY DISPOSITION OF
     SHARES AND I WILL MAKE ADEQUATE PROVISION FOR FEDERAL, STATE OR OTHER TAX
     WITHHOLDING OBLIGATIONS, IF ANY, WHICH ARISE UPON THE DISPOSITION OF THE
     COMMON STOCK. The Company may, but will not be obligated to, withhold from
     my compensation the amount necessary to meet any applicable withholding
     obligation including any withholding necessary to make available to the
     Company any tax deductions or benefits attributable to sale or early
     disposition of Common Stock by me. If I dispose of such shares at any time
     after the expiration of the 2-year holding period, I understand that I will
     be treated for

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     federal income tax purposes as having received income only at the time of
     such disposition, and that such income will be taxed as ordinary income
     only to the extent of an amount equal to the lesser of (1) the excess of
     the fair market value of the shares at the time of such disposition over
     the purchase price which I paid for the shares, or (2) 15% of the fair
     market value of the shares on the first day of the Offering Period. The
     remainder of the gain, if any, recognized on such disposition will be taxed
     as capital gain.

7.   I hereby agree to be bound by the terms of the Employee Stock Purchase
     Plan. The effectiveness of this Subscription Agreement is dependent upon my
     eligibility to participate in the Employee Stock Purchase Plan.

8.   In the event of my death, I hereby designate the following as my
     beneficiary(ies) to receive all payments and shares due me under the
     Employee Stock Purchase Plan:

NAME: (Please print)____________________________________________________________
                         (First)          (Middle)          (Last)

_________________________                        _______________________________
Relationship
                                                 _______________________________
                                                              (Address)

Employee's Social
Security Number:                                 _______________________________

Employee's Address:                              _______________________________

                                                 _______________________________

                                                 _______________________________

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I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT
SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.

Dated: ____________________                   __________________________________
                                              Signature of Employee

                                              __________________________________
                                              Spouse's Signature (If beneficiary
                                              other than spouse)

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                                    EXHIBIT B

                                  VITALCOM INC.

                        1996 EMPLOYEE STOCK PURCHASE PLAN

                              NOTICE OF WITHDRAWAL

        The undersigned participant in the Offering Period of the VitalCom Inc.
1996 Employee Stock Purchase Plan which began on ______________________ 19____
(the "Enrollment Date") hereby notifies the Company that he or she hereby
withdraws from the Offering Period. He or she hereby directs the Company to pay
to the undersigned as promptly as practicable all the payroll deductions
credited to his or her account with respect to such Offering Period. The
undersigned understands and agrees that his or her option for such Offering
Period will be automatically terminated. The undersigned understands further
that no further payroll deductions will be made for the purchase of shares in
the current Offering Period and the undersigned shall be eligible to participate
in succeeding Offering Periods only by delivering to the Company a new
Subscription Agreement.

                                                Name and Address of Participant:

                                                ________________________________

                                                ________________________________

                                                ________________________________

                                                Signature:

                                                ________________________________

                                                Date: __________________________

                                       11Yifan Communications, Inc.
                     AMENDED YEAR 2000 INCENTIVE STOCK PLAN

1.       Purpose of the Plan

         This 2000 Incentive  Stock Plan is intended to promote the interests of
Yifan Communications, Inc., a Delaware corporation (the "Company"), by providing
the employees of the Company,  who are largely  responsible  for the management,
growth  and  protection  of the  business  of the  Company,  with a  proprietary
interest in the Company.

2.       Definitions

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

         (a) "Board of  Directors"  shall mean the Board of  Directors  of Yifan
Communications, Inc., a Delaware corporation.

         (b)  "Cause,"  when  used  in  connection  with  the  termination  of a
Participant's  employment  with the Company,  shall mean the  termination of the
Participant's  employment by the Company by reason of (i) the  conviction of the
Participant by a court of competent  jurisdiction  as to which no further appeal
can be taken of a crime involving moral turpitude; (ii) the proven commission by
the  Participant  of an act of fraud upon the  Company;  (iii) the  willful  and
proven  misappropriation  of  any  funds  or  property  of  the  Company  by the
Participant;  (iv)  the  willful,  continued  and  unreasonable  failure  by the
Participant  to perform  duties  assigned  to him and agreed to by him;  (v) the
knowing  engagement  by the  Participant  in any  direct,  material  conflict of
interest with the Company  without  compliance  with the  Company's  conflict of
interest  policy,  if any,  then in effect;  (vi) the knowing  engagement by the
Participant,  without the  written  approval  of the Board of  Directors  of the
Company,  in any  activity  which  competes  with the business of the Company or
which would  result in a material  injury to the  Company;  or (vii) the knowing
engagement in any activity  which would  constitute a material  violation of the
provisions  of the Company's  Policies and  Procedures  Manual,  if any, then in
effect.

         (c)  "Cash  Bonus"  shall  mean an  award  of a bonus  payable  in cash
pursuant to Section 10 hereof.

         (d) "Change in Control" shall mean:

         (1)      a  "change  in  control"  of the  Company,  as  that  term  is
                  contemplated in the federal securities laws; or

         (2)      the occurrence of any of the following events:

                           (A) any Person  becomes,  after the effective date of
                  this Plan,  the  "beneficial  owner" (as defined in Rule 13d-3
                  promulgated  under the Exchange Act),  directly or indirectly,
                  of securities of the Company  representing  20% or more of the
                  combined  voting  power  of  the  Company's  then  outstanding
                  securities;  provided,  that  the  acquisition  of  additional
                  voting  securities,  after the effective date of this Plan, by
                  any Person who is, as of the effective  date of this Plan, the
                  beneficial  owner,  directly or indirectly,  of 20% or more of
                  the combined  voting power of the Company's  then  outstanding
                  securities,  shall not constitute a "Change in Control" of the
                  Company for purposes of this Section 2(d).

                           (B) a majority of  individuals  who are  nominated by
                  the Board of Directors  for election to the Board of Directors
                  on any date, fail to be elected to the Board of Directors as a
                  direct or  indirect  result of any  proxy  fight or  contested
                  election for positions on the Board of Directors, or

                           (C) the Board of Directors determines in its sole and
                  absolute discretion that there has been a change in control of
                  the Company.

         (e) "Code"  shall mean the Internal  Revenue  Code of 1986,  as amended
from time to time.

         (f) "Committee"  shall mean the Compensation  Committee of the Board of
Directors or such other  committee as the Board of Directors  shall appoint from
time to time to administer the Plan.

         (g) "Common  Stock" shall mean the Company's  Common  Stock,  par value
$.008 per share described in a previously amendment to the Company's Certificate
of  Incorporation  as filed with the Secretary of State of the State of Delaware
on July 28, 2000.

         (h)  "Company"  shall  mean  Yifan  Communications,  Inc.,  a  Delaware
corporation, and each of its Subsidiaries, and its successors.

         (i) "Exchange Act" shall mean the  Securities  Exchange Act of 1934, as
amended from time to time.

         (j) "Fair Market Value" of a share of Common Stock on any date shall be
(i) the closing sales price on the immediately preceding business day of a share
of Common Stock as reported on the principal securities exchange on which shares
of  Common  Stock are then  listed  or  admitted  to  trading  or (ii) if not so
reported,  the average of the closing bid and asked prices for a share of Common
Stock on the  immediately  preceding  business  day as  quoted  on the  National
Association of Securities Dealers Automated Quotation System ("NASDAQ") or (iii)
if not quoted on NASDAQ,  the average of the closing bid and asked  prices for a
share of Common Stock as quoted by the National Quotation Bureau's "Pink Sheets"
or the National Association of Securities Dealers' OTC Bulletin Board System. If
the price of a share of Common Stock shall not be so  reported,  the Fair Market
Value of a share of Common  Stock shall be  determined  by the  Committee in its
absolute discretion.

         (k)  "Incentive  Award"  shall  mean an Option,  a share of  Restricted
Stock, a share of Phantom Stock, a Stock Bonus or Cash Bonus granted pursuant to
the terms of the Plan.

         (l)  "Incentive  Stock  Option"  shall  mean  an  Option  which  is  an
"incentive stock option" within the meaning of Section 422 of the Code and which
is  identified  as an  Incentive  Stock  Option in the  agreement by which it is
evidenced.

         (m) "Issue Date" shall mean the date  established  by the  Committee on
which  certificates  representing  shares of Restricted Stock shall be issued by
the Company pursuant to the terms of Section 7(d) hereof.

         (n)  "Non-Qualified  Stock Option" shall mean an Option which is not an
Incentive Stock Option and which is identified as a  Non-Qualified  Stock Option
in the agreement by which it is evidenced.

         (o) "Option" shall mean an option to purchase shares of Common Stock of
the  Company  granted  pursuant  to  Section  6  hereof.  Each  Option  shall be
identified as either an Incentive Stock Option or a  Non-Qualified  Stock Option
in the agreement by which it is evidenced.

         (p) "Participant" shall mean a full-time employee of the Company who is
eligible to  participate  in the Plan and to whom an Incentive  Award is granted
pursuant to the Plan, and, upon his death, his successors,  heirs, executors and
administrators, as the case may be, to the extent permitted hereby.

         (q)  "Person"  shall mean a "person,"  as such term is used in Sections
13(d) and 14(d) of the  Exchange  Act, and the rules and  regulations  in effect
from time to time thereunder.

         (r) "Phantom  Stock" shall  represent  the right to receive in cash the
Fair  Market  Value of a share of Common  Stock of the  Company,  which right is
granted  pursuant  to Section 8 hereof and  subject to the terms and  conditions
contained therein.

         (s) "Plan" shall mean the Yifan  Communications,  Inc.  2000  Incentive
Stock Plan, as it may be amended from time to time.

         (t)  "Qualified  Domestic  Relations  Order"  shall  mean  a  qualified
domestic  relations  order as  defined in the Code,  in Title I of the  Employee
Retirement  Income  Security Act, or in the rules and  regulations  as may be in
effect from time to time thereunder.

         (u)  "Restricted  Stock"  shall mean a share of Common  Stock  which is
granted  pursuant  to the terms of  Section 7 hereof and which is subject to the
restrictions set forth in Section 7 (c) hereof for so long as such  restrictions
continue to apply to such share.

         (v) "Securities  Act" shall mean the Securities Act of 1933, as amended
from time to time.

         (w) "Stock  Bonus"  shall mean a grant of a bonus  payable in shares of
Common Stock pursuant to Section 9 hereof.

         (x) "Subsidiary" or "Subsidiaries"  shall mean any and all corporations
in which at the pertinent time the Company owns,  directly or indirectly,  stock
vested  with 50% or more of the total  combined  voting  power of all classes of
stock of such corporations within the meaning of Section 424(f) of the Code..

         (y) "Vesting Date" shall mean the date  established by the Committee on
which a share of Restricted Stock or Phantom Stock may vest.

3.       Stock Subject to the Plan

         Under the Plan,  the Committee may grant to  Participants  (i) Options,
(ii) shares of  Restricted  Stock,  (iii)  shares of Phantom  Stock,  (iv) Stock
Bonuses and (v) Cash Bonuses.

         The Committee may grant Options,  shares of Restricted Stock, shares of
Phantom  Stock and Stock  Bonuses  under  the Plan with  respect  to a number of
shares  of  Common  Stock  that in the  aggregate  at any time  does not  exceed
1,500,000 shares of Common Stock. The grant of a Cash Bonus shall not reduce the
number of shares  of Common  Stock  with  respect  to which  Options,  shares of
Restricted  Stock,  shares of  Phantom  Stock or Stock  Bonuses  may be  granted
pursuant to the Plan.

         If any outstanding  Option  expires,  terminates or is canceled for any
reason,  the shares of Common Stock subject to the  unexercised  portion of such
Option  shall  again be  available  for grant  under the Plan.  If any shares of
Restricted  Stock or Phantom  Stock,  or any shares of Common Stock granted in a
Stock Bonus are forfeited or canceled for any reason, such shares shall again be
available for grant under the Plan.

         Shares of Common Stock issued under the Plan may be either newly issued
or treasury shares, at the discretion of the Committee.

4.       Administration of the Plan

         The Plan shall be administered by a Committee of the Board of Directors
consisting  of two or  more  persons,  each of whom  shall  be a  "disinterested
person" within the meaning of Rule  16b-3(c)(2)(i)  promulgated under Section 16
of the  Exchange  Act.  The  Committee  shall  from time to time  designate  the
employees  of the Company who shall be granted  Incentive  Awards and the amount
and type of such Incentive Awards.

         The  Committee  shall  have  full  authority  to  administer  the Plan,
including  authority to interpret and construe any provision of the Plan and the
terms  of any  Incentive  Award  issued  under it and to adopt  such  rules  and
regulations for  administering  the Plan as it may deem necessary.  Decisions of
the Committee shall be final and binding on all parties.

         The Committee  may, in its absolute  discretion (i) accelerate the date
on which any Option granted under the Plan becomes exercisable,  (ii) extend the
date on which any Option granted under the Plan ceases to be exercisable,  (iii)
accelerate  the  Vesting  Date or Issue  Date,  or waive any  condition  imposed
pursuant to Section 7(b) hereof,  with respect to any share of Restricted  Stock
granted  under  the Plan and  (iv)  accelerate  the  Vesting  Date or waive  any
condition  imposed  pursuant to Section 8 hereof,  with  respect to any share of
Phantom Stock granted under the Plan.

         In  addition,  the  Committee  may, in its absolute  discretion,  grant
Incentive  Awards  to  Participants  on the  condition  that  such  Participants
surrender  to  the  Committee  for  cancellation  such  other  Incentive  Awards
(including, without limitation, Incentive Awards with higher exercise prices) as
the Committee  specifies.  Notwithstanding  Section 3 hereof,  Incentive  Awards
granted on the condition of surrender of outstanding  Incentive Awards shall not
count  against  the limits  set forth in such  Section 3 until Such time as such
Incentive Awards are surrendered.

         Whether an  authorized  leave of  absence,  or absence in  military  or
government  service,   shall  constitute  termination  of  employment  shall  be
determined by the Committee in its absolute discretion.

         No member of the Committee shall be liable for any action, omission, or
determination  relating to the Plan,  and the Company  shall  indemnify and hold
harmless each member of the Committee and each other director or employee of the
Company  to  whom  any  duty  or  power  relating  to  the   administration   or
interpretation  of the Plan  has been  delegated  from and  against  any cost or
expense  (including  attorneys'  fees) or liability  (including  any sum paid in
settlement  of a claim with the  approval of the  Committee)  arising out of any
action,  omission or determination relating to the Plan, unless, in either case,
such  action,  omission  or  determination  was  taken  or made by such  member,
director or employee in bad faith and without  reasonable  belief that it was in
the best interests of the Company.

5.       Eligibility

         The persons who shall be eligible to receive  Incentive Awards pursuant
to the Plan shall be such  full-time  employees of the Company as the Committee,
in its absolute discretion,  shall select from time to time. Notwithstanding the
generality  of the  foregoing,  no employee of the Company  shall be eligible to
receive  Incentive Awards pursuant to this Plan if the employee is also entitled
to receive an Incentive  Award under the terms of his employment  agreement with
the  Company,  or any  specialty  Incentive  Stock Plan  adopted  after the date
hereof,  unless such employment  agreement or specialty plan expressly  provides
otherwise.

6.       Options

         The  Committee may grant  Options  pursuant to the Plan,  which Options
shall be evidenced by agreements  in such form as the Committee  shall from time
to time approve. Options shall comply with and be subject to the following terms
and conditions:

         (a)      Identification of Options

         All Options  granted under the Plan shall be clearly  identified in the
agreement  evidencing  such  Options  as either  Incentive  Stock  Options or as
Non-Qualified Stock Options.

         (b)      Exercise Price

         The exercise price of any Non-Qualified  Stock Option granted under the
Plan shall be such price as the Committee  shall  determine on the date on which
such Non-Qualified Stock Option is granted; provided, that such price may not be
less than the minimum price required by law.  Except as provided in Section 6(d)
hereof,  the exercise price of any Incentive Stock Option granted under the Plan
shall be not less than 100% of the Fair Market  Value of a share of Common Stock
on the date on which such Incentive Stock Option is granted.

         (c)      Term and Exercise of Options

         (1) Each Option shall be exercisable on such date or dates, during such
       period  and for  such  number  of  shares  of  Common  Stock  as shall be
       determined  by the  Committee  on the day on which such Option is granted
       and set forth in the agreement evidencing the Option; provided,  however,
       that no Option shall be  exercisable  after the  expiration  of ten years
       from the date such Option was granted; and, provided,  further, that each
       Option   shall  be  subject  to  earlier   termination,   expiration   or
       cancellation as provided in the Plan.

         (2) Each Option shall be  exercisable  in whole or in part with respect
       to whole shares of Common Stock.  The partial exercise of an Option shall
       not cause the  expiration,  termination or  cancellation of the remaining
       portion thereof.  Upon the partial  exercise of an Option,  the agreement
       evidencing  such Option shall be returned to the  Participant  exercising
       such Option together with the delivery of the  certificates  described in
       Section 6(c)(5) hereof.

         (3) An Option shall be exercised by delivering  notice to the Company's
       principal office,  to the attention of its Secretary,  no fewer than five
       business days in advance of the effective date of the proposed  exercise.
       Such notice shall be accompanied by the agreement  evidencing the Option,
       shall  specify the number of shares of Common Stock with respect to which
       the Option is being  exercised  and the  effective  date of the  proposed
       exercise,  and shall be signed by the  Participant.  The  Participant may
       withdraw  such  notice at any time prior to the close of  business on the
       business day  immediately  preceding the  effective  date of the proposed
       exercise,  in  which  case  such  agreement  shall  be  returned  to  the
       Participant.  Payment  for  shares of  Common  Stock  purchased  upon the
       exercise  of an  Option  shall  be  made  on the  effective  date of such
       exercise either (i) in cash, by certified check,  bank cashier's check or
       wire transfer or (ii) subject to the approval of the Committee, in shares
       of Common Stock owned by the  Participant and valued at their Fair Market
       Value on the effective date of such  exercise,  or (iii) partly in shares
       of Common  Stock  with the  balance in cash,  by  certified  check,  bank
       cashier's  check or wire transfer.  Any payment in shares of Common Stock
       shall be effected by the delivery of such shares to the  Secretary of the
       Company,  duly  endorsed  in blank or  accompanied  by stock  powers duly
       executed in blank, together with any other documents and evidences as the
       Secretary of the Company shall require from time to time.

         (4)  Any  Option   granted  under  the  Plan  may  be  exercised  by  a
       broker-dealer  acting on behalf of a Participant if (i) the broker-dealer
       has  received  from  the  Participant  or the  Company  a  duly  endorsed
       agreement   evidencing  such  Option  and  instructions   signed  by  the
       Participant  requesting the Company to deliver the shares of Common Stock
       subject to such Option to the  broker-dealer on behalf of the Participant
       and  specifying  the account into which such shares  should be deposited,
       (ii) adequate  provision has been made with respect to the payment of any
       withholding  taxes due upon such exercise and (iii) the broker-dealer and
       the  Participant  have  otherwise  complied with Section  220.3(e)(4)  of
       Regulation T, 12 CFR Part 220.

         (5) Certificates for shares of Common Stock purchased upon the exercise
       of an Option shall be issued in the name of the Participant and delivered
       to the Participant as soon as practicable following the effective date on
       which the Option is  exercised;  provided,  however,  that such  delivery
       shall be effected for all  purposes  when a stock  transfer  agent of the
       Company shall have deposited such certificates in the United States mail,
       addressed to the Participant.

         (6) During the  lifetime of a  Participant  each Option  granted to him
       shall be  exercisable  only by him.  No  Option  shall be  assignable  or
       transferable  otherwise  than  by  will or by the  laws  of  descent  and
       distribution.

         (d)      Limitations on Grant of Incentive Stock Options

         (1) The  aggregate  Fair  Market  Value of shares of Common  Stock with
       respect to which "incentive stock options" (within the meaning of Section
       422,  without regard to Section 422(d) of the Code) are  exercisable  for
       the first time by a  Participant  during any calendar year under the Plan
       (and any other stock option plan of the Company, or any subsidiary of the
       Company  shall not  exceed  $100,000.  Such Fair  Market  Value  shall be
       determined  as of the date on which each such  Incentive  Stock Option is
       granted.  If such  aggregate  Fair Market Value of shares of Common Stock
       underlying such Incentive Stock Options exceeds $100,000,  then Incentive
       Stock Options granted hereunder to such Participant  shall, to the extent
       and in the order required by Regulations  promulgated  under the Code (or
       any other authority  having the force of  Regulations),  automatically be
       deemed  to be  Non-Qualified  Stock  Options,  but all  other  terms  and
       provisions of such Incentive Stock Options shall remain unchanged. In the
       absence of such Regulations  (and authority),  or if such Regulations (or
       authority)  require or permit a  designation  of the options  which shall
       cease to constitute  Incentive  Stock  Options,  Incentive  Stock Options
       shall,  to the extent of such  excess and in the order in which they were
       granted,  automatically be deemed to be Non-Qualified Stock Options,  but
       all other terms and  provisions  of such  Incentive  Stock  Options shall
       remain unchanged.

         (2) No Incentive  Stock Option may be granted to an  individual  if, at
       the  time of the  proposed  grant,  such  individual  owns,  directly  or
       indirectly (based on the attribution rules in Section 424(d) of the Code)
       stock possessing more than ten percent of the total combined voting power
       of all classes of stock of the Company or any of its subsidiaries, unless
       (i) the exercise price of such Incentive Stock Option is at least 110% of
       the  Fair  Market  Value  of a share of  Common  Stock  at the time  such
       Incentive Stock Option is granted and (ii) such Incentive Stock Option is
       not  exercisable  after the  expiration  of five years from the date such
       Incentive Stock Option is granted.

         (e)      Effect of Termination of Employment

         (1) If the employment of a Participant with the Company shall terminate
       for any reason other than Cause,  "permanent and total disability (within
       the  meaning  of  Section  22(e)(3)  of the  Code)  or the  death  of the
       Participant (i) Options granted to such  Participant,  to the extent that
       they  were  exercisable  at the time of such  termination,  shall  remain
       exercisable until the expiration of one month after such termination,  on
       which  date  they  shall  expire,   and  (ii)  Options  granted  to  such
       Participant,  to the extent that they were not exercisable at the time of
       such  termination,  shall  expire at the close of business on the date of
       such termination;  provided, however, that no Option shall be exercisable
       after the expiration of its term.

         (2) If the employment of a Participant with the Company shall terminate
       as a result of the "permanent and total disability (within the meaning of
       Section  22(e)(3)  of  the  Code)  of  the  Participant,   the  voluntary
       retirement of the Participant in accordance with the Company's retirement
       policy  as then in effect or the  death of the  Participant  (i)  Options
       granted to such Participant,  to the extent that they were exercisable at
       the  time  of  such  termination,  shall  remain  exercisable  until  the
       expiration of one year after such  termination,  on which date they shall
       expire, and (ii) Options granted to such Participant,  to the extent that
       they were not exercisable at the time of such  termination,  shall expire
       at the  close  of  business  on the date of such  termination;  provided,
       however,  that no Option shall be exercisable after the expiration of its
       term.

         (3) In the event of the termination of a  Participant's  employment for
       Cause, all outstanding  Options granted to such Participant  shall expire
       at the commencement of business on the date of such termination.

         (f)      Acceleration of Exercise Date Upon Change in Control

         Upon the  occurrence of a Change in Control,  each Option granted under
the Plan and  outstanding  at such  time  shall  become  fully  and  immediately
exercisable and shall remain  exercisable  until its expiration,  termination or
cancellation pursuant to the terms of the Plan.

7.       Restricted Stock

         The  Committee  may grant shares of  Restricted  Stock  pursuant to the
Plan.  Each  grant of  shares  of  Restricted  Stock  shall be  evidenced  by an
agreement in such form as the Committee  shall from time to time  approve.  Each
grant of shares of  Restricted  Stock  shall  comply  with and be subject to the
following terms and conditions:

         (a)      Issue Date and Vesting Date

         At the time of the grant of shares of Restricted  Stock,  the Committee
shall establish an Issue Date or Issue Dates and a Vesting Date or Vesting Dates
with respect to such shares.  The  Committee may divide such shares into classes
and assign a different Issue Date and/or Vesting Date for each class.  Except as
provided in Sections 7(c) and 7(f) hereof, upon the occurrence of the Issue Date
with respect to a share of Restricted  Stock, a share of Restricted  Stock shall
be issued in accordance  with the  provisions  of Section 7(d) hereof.  Provided
that all  conditions  to the  vesting  of a share of  Restricted  Stock  imposed
pursuant  to Section  7(b)  hereof are  satisfied,  and  except as  provided  in
Sections  7(c) and 7(f)  hereof,  upon the  occurrence  of the Vesting Date with
respect  to a  share  of  Restricted  Stock,  such  share  shall  vest  and  the
restrictions of Section 7(c) hereof shall cease to apply to such share.

         (b)      Conditions to Vesting

         At the time of the grant of shares of Restricted  Stock,  the Committee
may impose such restrictions or conditions, not inconsistent with the provisions
hereof,  to the vesting of such shares as it in its  absolute  discretion  deems
appropriate.  By way of example and not by way of limitation,  the Committee may
require,  as a  condition  to the  vesting  of any class or classes of shares of
Restricted   Stock,   that  the  Participant  or  the  Company  achieve  certain
performance criteria, such criteria to be specified by the Committee at the time
of the grant of such shares.

         (c)      Restrictions on Transfer Prior to Vesting

         Prior to the vesting of a share of Restricted  Stock,  no transfer of a
Participant's   rights  with  respect  to  such  share,   whether  voluntary  or
involuntary,  by operation of law or otherwise,  shall vest the transferee  with
any interest or right in or with respect to such share, but immediately upon any
attempt to  transfer  such  fights,  such share,  and all of the rights  related
thereto,  shall be forfeited by the  Participant and the transfer shall be of no
force or effect.

         (d)      Issuance of Certificates

         (1) Except as  provided  in Sections  7(c) or 7(f)  hereof,  reasonably
       promptly after the Issue Date with respect to shares of Restricted Stock,
       the Company shall cause to be issued a stock  certificate,  registered in
       the name of the Participant to whom such shares were granted,  evidencing
       such shares: provided, that the Company shall not cause to be issued such
       a stock  certificates  unless it has received a stock power duly endorsed
       in blank with respect to such shares.  Each such stock  certificate shall
       bear the following legend:

                  The  transferability  of this  certificate  and the  shares of
                  stock  represented  hereby are  subject  to the  restrictions,
                  terms and conditions  (including  forfeiture and  restrictions
                  against transfer) contained in the Yifan Communications,  Inc.
                  2000  Incentive  Stock  Plan  and an  Agreement  entered  into
                  between  the  registered   owner  of  such  shares  and  Yifan
                  Communications,  Inc. A copy of the Plan and  Agreement  is on
                  file in the office of the  Secretary of Yifan  Communications,
                  Inc., 1134 Broadway, New York, NY 10010.

       Such legend shall not be removed  from the  certificate  evidencing  such
       shares until such shares vest pursuant to the terms hereof.

         (2) Each  certificate  issued  pursuant to  Paragraph 7 (d)(1)  hereof,
       together with the stock powers relating to the shares of Restricted Stock
       evidenced by such certificate,  shall be held by the Company. The Company
       shall issue to the Participant a receipt evidencing the certificates held
       by it which are registered in the name of the Participant.

         (e)      Consequences Upon Vesting

         Upon the vesting of a share of Restricted  Stock  pursuant to the terms
hereof,  the  restrictions  of Section  7(c) hereof shall cease to apply to such
share.  Reasonably  promptly after a share of Restricted Stock vests pursuant to
the terms  hereof,  the Company  shall cause to be issued and  delivered  to the
Participant  to whom such shares were  granted,  a certificate  evidencing  such
share, free of the legend set forth in Paragraph 7 (d)(1) hereof,  together with
any other property of the Participant  held by Company  pursuant to Section 7(d)
hereof, provided, however, that such delivery shall be effected for all purposes
when the Company shall have deposited such certificate and other property in the
United States mail, addressed to the Participant.

         (f)      Effect of Termination of Employment

         (1) If the employment of a Participant with the Company shall terminate
       for any  reason  other  than  Cause  prior to the  vesting  of  shares of
       Restricted Stock granted to such  Participant,  a portion of such shares,
       to the extent not  forfeited or canceled on or prior to such  termination
       pursuant  to any  provision  hereof,  shall  vest  on the  date  of  such
       termination.  The portion referred to in the preceding  sentence shall be
       determined  by the  Committee  at the time of the grant of such shares of
       Restricted  Stock and may be based on the  achievement  of any conditions
       imposed by the Committee with respect to such shares  pursuant to Section
       7(b). Such portion may equal zero.

         (2) In the event of the termination of a  Participant's  employment for
       Cause, all shares of Restricted  Stock granted to such Participant  which
       have not vested as of the date of such termination  shall  immediately be
       forfeited.

         (g)      Effect of Change in Control

         Upon the  occurrence  of a Change in Control,  all shares of Restricted
Stock which have not theretofore  vested  (including those with respect to which
the Issue Date has not yet occur-red) shall immediately vest.

8.       Phantom Stock

         The Committee  may grant shares of Phantom Stock  pursuant to the Plan.
Each grant of shares of Phantom Stock shall be evidenced by an agreement in such
form as the Committee  shall from time to time approve.  Each grant of shares of
Phantom  Stock  shall  comply  with and be  subject to the  following  terms and
conditions:

         (a)      Vesting Date

         At the time of the grant of  shares of  Phantom  Stock,  the  Committee
shall establish a Vesting Date or Vesting Dates with respect to such shares. The
Committee  may divide such shares  into  classes and assign a different  Vesting
Date for each class.  Provided that all  conditions to the vesting of a share of
Phantom Stock imposed pursuant to Section 8(c) hereof are satisfied,  and except
as provided in Section 8(d) hereof, upon the occurrence of the Vesting Date with
respect to a share of Phantom Stock, such share shall vest.

         (b)      Benefit Upon Vesting

         Upon the vesting of a share of Phantom  Stock,  a Participant  shall be
entitled  to  receive  in cash,  within 90 days of the date on which  such share
vests,  an amount in cash in a lump sum equal to the sum of (i) the Fair  Market
Value of a share of Common  Stock of the Company on the date on which such share
of Phantom Stock vests and (ii) the aggregate amount of cash dividends paid with
respect to a share of Common Stock of the Company  during the period  commencing
on the date on which the share of Phantom Stock was granted and  terminating  on
the date on which such share vests.

         (c)      Conditions to Vesting

         At the time of the grant of shares of Phantom Stock,  the Committee may
impose such  restrictions or conditions,  not  inconsistent  with the provisions
hereof,  to the vesting of such shares as it, in its absolute  discretion  deems
appropriate.  By way of example and not by way of limitation,  the Committee may
require,  as a  condition  to the  vesting  of any class or classes of shares of
Phantom Stock,  that the Participant or the Company achieve certain  performance
criteria,  such  criteria to be  specified  by the  Committee at the time of the
grant of such shares.

         (d)      Effect of Termination of Employment

         (1) If the employment of a Participant with the Company shall terminate
       for any reason other than Cause prior to the vesting of shares of Phantom
       Stock granted to such Participant a portion of such shares, to the extent
       not forfeited or canceled on or prior to such termination pursuant to any
       provision hereof, shall vest on the date of such termination. The portion
       referred  to in  the  preceding  sentence  shall  be  determined  by  the
       Committee  at the time of the grant of such  shares of Phantom  Stock and
       may  be  based  on  the  achievement  of any  conditions  imposed  by the
       Committee  with  respect to such shares  pursuant to Section  8(c).  Such
       portion may equal zero.

         (2) In the event of the termination of a  Participant's  employment for
       Cause, all shares of Phantom Stock granted to such Participant which have
       not  vested  as of the  date of such  termination  shall  immediately  be
       forfeited.

         (e)      Effect of Change in Control

         Upon the occurrence of a Change in Control, all shares of Phantom Stock
which have not theretofore vested shall immediately vest.

9.       Stock Bonuses

         The Committee may, in its absolute  discretion,  grant Stock Bonuses in
such  amounts as it shall  determine  from time to time.  A Stock Bonus shall be
paid at  such  time  and  subject  to such  conditions  as the  Committee  shall
determine at the time of the grant of such Stock Bonus.  Certificates for shares
of Common  Stock  granted  as a Stock  Bonus  shall be issued in the name of the
Participant  to whom such grant was made and  delivered to such  Participant  as
soon as  practicable  after the date on which such Stock Bonus is required to be
paid.

10.      Cash Bonuses

         The Committee may, in its absolute discretion, grant in connection with
any grant of Restricted Stock or Stock Bonus or at any time  thereafter,  a cash
bonus,  payable  promptly after the date on which the Participant is required to
recognize  income  for  federal  income tax  purposes  in  connection  with such
Restricted  Stock  or  Stock  Bonus,  in such  amounts  as the  Committee  shall
determine  from  time to time;  provided,  however,  that in no event  shall the
amount of a Cash Bonus  exceed the Fair Market  Value of the  related  shares of
Restricted  Stock or Stock Bonus on such date.  A Cash Bonus shall be subject to
such  conditions  as the Committee  shall  determine at the time of the grant of
such Cash Bonus.

11.      Adjustment Upon Changes in Common Stock

         (a)      Outstanding Restricted Stock and Phantom Stock

         Unless the Committee in its absolute discretion  otherwise  determines,
if a Participant  receives any securities or other property (including dividends
paid in cash) with respect to a share of Restricted  Stock,  the Issue Date with
respect to which occurs prior to such event,  but which has not vested as of the
date of such event, as a result of any dividend,  stock split  recapitalization,
merger,  consolidation,  combination,  exchange  of  shares or  otherwise,  such
securities or other property will not vest until such share of Restricted  Stock
vests, and shall be held by the Company pursuant to Paragraph 7 (d) (2) hereof.

         The  Committee  may, in its  absolute  discretion,  adjust any grant of
shares of  Restricted  Stock,  the  Issue  Date  with  respect  to which has not
occurred as of the date of the occurrence of any of the following events, or any
grant of  shares of  Phantom  Stock,  to  reflect  any  dividend,  stock  split,
recapitalization,  merger,  consolidation,  combination,  exchange  of shares or
similar  corporate  change as the Committee may deem  appropriate to prevent the
enlargement or dilution of rights of Participants under the grant.

         (b)      Outstanding  Options,  Increase or  Decrease in Issued  Shares
                  Without Consideration

         Subject to any required action by the  shareholders of the Company,  in
the event of any  increase or decrease in the number of issued  shares of Common
Stock resulting from a subdivision or consolidation of shares of Common Stock or
the payment of a stock dividend (but only on the shares of Common Stock), or any
other increase or decrease in the number of such shares effected without receipt
of consideration by the Company, the Committee shall  proportionally  adjust the
number of shares and the  exercise  price per share of Common  Stock  subject to
each outstanding Option.

         (c)      Outstanding Options, Certain Mergers

         Subject to any required action by the  shareholders of the Company,  if
the Company shall be the surviving  corporation  in any merger or  consolidation
(except a merger of  consolidation as a result of which the holders of shares of
Common Stock receive securities of another corporation), each Option outstanding
on the date of such merger or  consolidation  shall entitle the  Participant  to
acquire upon exercise the  securities  which a holder of the number of shares of
Common  Stock  subject to such  Option  would have  received  in such  merger or
consolidation.

         (d)      Outstanding Options, Certain Other Transactions

         In the event of a dissolution or liquidation of the Company,  a sale of
all or  substantially  all of the Company's  assets,  a merger or  consolidation
involving the Company in which the Company is not the surviving corporation or a
merger or  consolidation  involving  the  Company  in which the  Company  is the
surviving  corporation  but the  holders  of  shares  of  Common  Stock  receive
securities of another  corporation  and/or other  property,  including cash, the
Committee shall, in its absolute discretion, have the power to:

       (1) cancel,  effective immediately prior to the occurrence of such event,
       each Option  outstanding  immediately prior to such event (whether or not
       then exercisable),  and, in full consideration of such cancellation,  pay
       to the Participant to whom such Option was granted an amount in cash, for
       each share of Common Stock  subject to such Option equal to the excess of
       (A) the value, as determined by the Committee in its absolute discretion,
       of the property  (including  cash)  received by the holder of a. share of
       Common  Stock as a result of such  event over (B) the  exercise  price of
       such Option; or

       (2) provide for the exchange of each Option outstanding immediately prior
       to such event (whether or not then  exercisable) for an option on some or
       all of the  property  for which such Option is  exchanged  and,  incident
       thereto,  make an equitable  adjustment as determined by the Committee in
       its  absolute  discretion  in the  exercise  price of the option,  or the
       number  of shares or amount of  property  subject  to the  option  or, if
       appropriate,  provide for a cash payment to the  Participant to whom such
       Option was  granted  in partial  consideration  for the  exchange  of the
       Option.

         (e)      Outstanding Options. Other Changes

         In the event of any  change in the  capitalization  of the  Company  or
corporate  change other than those  specifically  referred to in Sections 11(b),
(c) or (d) hereof,  the  Committee  may, in its absolute  discretion,  make such
adjustments in the number and class of shares subject to Options  outstanding on
the date on which such change occurs and in the per share exercise price of each
such Option as the Committee  may consider  appropriate  to prevent  dilution or
enlargement of rights.

         (f)      No Other Rights

         Except as expressly provided in the Plan, no Participant shall have any
rights by reason of any subdivision or  consolidation  of shares of stock of any
class,  the payment of any  dividend,  any increase or decrease in the number of
shares  of  stock  of any  class  or any  dissolution,  liquidation,  merger  or
consolidation  of the  Company  or any other  corporation.  Except as  expressly
provided  in the Plan,  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 of shares of Common Stock  subject to an Incentive  Award or the exercise
price of any Option.

12.      Rights as a Shareholder

         No person  shall have any rights as a  shareholder  with respect to any
shares of Common Stock  covered by or relating to any  Incentive  Award  granted
pursuant to this Plan until the date of the issuance of a stock certificate with
respect to such  shares.  Except as otherwise  expressly  provided in Section 11
hereof,  no  adjustment  to any  Incentive  Award shall be made for dividends or
other  rights  for which the  record  date  occurs  prior to the date such stock
certificate is issued.

13.      No Special Employment Rights; No Right to Incentive Award

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

         No person shall have any claim or right to receive an  Incentive  Award
hereunder.  The  Committee's  granting of an Incentive Award to a Participant at
any time shall neither require the Committee to grant an Incentive Award to such
Participant  or any other  Participant  or other person at any time nor preclude
the Committee  from making  subsequent  grants to such  Participant or any other
Participant or other person.

14.      Securities Matters

         (a) The Company shall be under no obligation to effect the registration
pursuant  to the  Securities  Act of any  shares  of  Common  Stock to be issued
hereunder or to effect similar compliance under any state laws.  Notwithstanding
anything herein to the contrary,  the Company shall not be obligated to cause to
be  issued or  delivered  any  certificates  evidencing  shares of Common  Stock
pursuant to the Plan unless and until the Company is advised by its counsel that
the  issuance  and  delivery  of such  certificates  is in  compliance  with all
applicable laws,  regulations of governmental  authority and the requirements of
any  securities  exchange  on which  shares of  Common  Stock  are  traded.  The
Committee  may  require,  as  a  condition  of  the  issuance  and  delivery  of
certificates  evidencing  shares of Common Stock  pursuant to the terms  hereof,
that  the  recipient  of  such  shares  make  such  covenants,   agreements  and
representations, and that such certificates bear such legends, as the Committee,
in its sole discretion, deems necessary or desirable.

         (b)  The  exercise  of any  Option  granted  hereunder  shall  only  be
effective at such time as counsel to the Company shall have  determined that the
issuance and delivery of shares of Common Stock  pursuant to such exercise is in
compliance with all applicable laws, regulations of governmental authorities and
the requirements of any securities  exchange on which shares of Common Stock are
traded. The Company may, in its sole discretion,  defer the effectiveness of any
exercise of an Option granted hereunder in order to allow the issuance of shares
of Common  Stock  pursuant  thereto to be made  pursuant to  registration  or an
exemption  from  registration  or other methods for compliance  available  under
federal or state  securities  laws. The Company shall inform the  Participant in
writing of its decision to defer the  effectiveness of the exercise of an Option
granted  hereunder.  During the period that the effectiveness of the exercise of
an Option has been deferred,  the Participant  may, by written notice,  withdraw
such exercise and obtain the refund of any amount paid with respect thereto.

15.      Withholding Taxes

         Whenever  shares of Common  Stock are to be issued upon the exercise of
an Option,  the  occurrence  of the Issue Date or Vesting Date with respect to a
share of  Restricted  Stock or the payment of a Stock Bonus,  the Company  shall
have the right to require  the  Participant  to remit to the  Company in cash an
amount   sufficient  to  satisfy  federal,   state  and  local  withholding  tax
requirements, if any, attributable to such exercise, occurrence or payment prior
to the delivery of any certificate or certificates for such shares. In addition,
upon the grant of a Cash  Bonus or the  making of a payment  with  respect  to a
share of Phantom  Stock,  the Company  shall have the right to withhold from any
cash  payment  required  to be made  pursuant  thereto an amount  sufficient  to
satisfy the  federal,  state and local  withholding  tax  requirements,  if any,
attributable to such exercise or grant.

16.      Amendment of the Plan

         The Board of Directors may at any time suspend or discontinue  the Plan
or revise or amend it in any respect whatsoever, provided, however, that without
approval  of the  shareholders  no  revision  or  amendment  shall (i) except as
provided  in Section 11 hereof,  increase  the number of shares of Common  Stock
that may be  issued  under the  Plan,  (ii)  materially  increase  the  benefits
accruing to individuals holding Incentive Awards granted pursuant to the Plan or
(iii) materially  modify the requirements as to eligibility for participation in
the Plan.

17.      No Obligation to Exercise

         The grant to a Participant of an Option shall impose no obligation upon
such Participant to exercise such Option.

18.      Transfers Upon Death

         Upon the death of a Participant,  outstanding  Incentive Awards granted
to such Participant may be exercised only by the executors or  administrators of
the  Participant's  estate or by any person or persons  who shall have  acquired
such right to exercise by will or by the laws of descent  and  distribution.  No
transfer by will or the laws of descent and distribution of any Incentive Award,
or the right to exercise  any  Incentive  Award,  shall be effective to bind the
Company  unless the Committee  shall have been furnished with (a) written notice
thereof and with a copy of the will and/or such  evidence as the  Committee  may
deem necessary to establish the validity of the transfer and (b) an agreement by
the  transferee  to comply with all the terms and  conditions  of the  Incentive
Award that are or would have been  applicable to the Participant and to be bound
by the  acknowledgments  made by the Participant in connection with the grant of
the Incentive Award.

19.      Expenses and Receipts

         The  expenses of the Plan shall be paid by the  Company.  Any  proceeds
received by the Company in connection  with any Incentive Award will be used for
general corporate purposes.

20.      Failure to Comply

         In addition  to the  remedies of the  Company  elsewhere  provided  for
herein,  failure by a Participant to comply with any of the terms and conditions
of the  Plan  or the  agreement  executed  by  such  Participant  evidencing  an
Incentive Award,  unless such failure is remedied by such Participant within ten
days after  having been  notified  of such  failure by the  Committee,  shall be
grounds for the cancellation and forfeiture of such Incentive Award, in whole or
in part as the Committee, in its absolute discretion, may determine.

21.      Effective Date and Term of Plan

         The Plan was  adopted  by the Board of  Directors  effective  August 3,
2000,  subject to approval by the shareholders of the Company in accordance with
applicable law, the requirements of Section 422 of the Code and the requirements
of Rule 16b-3 under  Section  16(b) of the  Exchange  Act. The Plan was ratified
ratified  by  the  written   consent  of  the  holders  of  a  majority  of  the
corporation's issued and outstanding common stock on September 22, 2000.

       No Incentive Award may be granted under the Plan after August 2, 2010.

         IN  WITNESS  WHEREOF,  this Year  2000  Incentive  Stock  Plan has been
executed in Flushing, Queens, New York, this 22nd day of September, 2000.

YIFAN COMMUNICATIONS, INC.                           ATTEST

/s/ Yifan He                                         /s/ Sally A. Fonner
-----------------------------                        ---------------------------
Yifan He, President                                  Sally A. Fonner, Secretary

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