Document:

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                                                                   Exhibit 10.54

                                                                         1031996

                               FIRM TRANSPORTATION
                       CARDINAL EXTENSION PIPELINE COMPANY

         This Service Agreement, entered into this 26th day of June, 1998, by
and between Cardinal Extension Company, LLC, a North Carolina limited liability
company, hereinafter referred to as "Transporter," and North Carolina Natural
Gas Corporation, a North Carolina corporation, hereinafter referred to as
"Shipper."

                                   WITNESSETH

         WHEREAS, Shipper has requested Transporter to transport natural gas on
a firm basis on its behalf;

         WHEREAS, Transporter is the owner of an intrastate natural gas pipeline
which interconnects with the interstate pipeline system of Transcontinental Gas
Pipe Line Corporation ("Transco") in Rockingham County, North Carolina;

         WHEREAS, Transporter has sufficient capacity available on its pipeline
system to provide firm transportation service for Shipper pursuant to the terms
specified herein;

         NOW, THEREFORE, in consideration of the mutual covenants herein
assumed, Transporter and Shipper agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

1.01     As used herein, the following terms shall have meanings defined below:

         (a)      "British Thermal Unit" or "BTU" -- The amount of heat required
                  to raise the temperature of 1 pound of water 1 degree
                  Fahrenheit at 60 degrees Fahrenheit,

         (b)      "Contract Year" -- The year beginning with the date that
                  service shall commence as set forth in Paragraph 13.01 hereof,
                  or any anniversary thereof. Provided, however, that in the
                  event firm service commences on a day other than the first day
                  of the month, the Contract Year shall be considered to
                  commence on the first day of the month following the day on
                  which service has commenced.

         (c)      "Cubic Foot" -- The volume of gas which occupies one cubic
                  foot when such gas is at a temperature of 60 degrees
                  Fahrenheit and an absolute pressure of 14.73 pounds per square
                  inch.

         (d)      "Day" -- A period of 24 consecutive hours beginning as nearly
                  as practicable at 10:00 a.m. Eastern Standard Time or Eastern
                  Daylight Time, as appropriate, or at such other hour as
                  Transporter and Shipper mutually agree.

         (e)      "Dekatherm" or "dt" -- The quantity of heat energy which is
                  1,000,000 British Thermal Units.

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         (f)      "Equivalent Quantity"-- The volume of gas measured in Mcf
                  received by Transporter at the Point of Receipt during any
                  given period of time, adjusted for any variations in Btu
                  content, it being the intent of the parties that the volumes
                  of gas delivered hereunder at the Point of Delivery be the
                  thermal equivalent of the volumes of gas received at the Point
                  of Receipt less any amounts attributable to fuel and lines
                  losses.

         (g)      Excess Rate Schedule CFT Service -- The service shall be
                  available on any Day when the total quantity of gas taken by
                  all firm shippers in Zone 1 is less than the dekatherm
                  equivalent of 130,000 Mcf per day and/or the total quantity of
                  gas taken by all Shippers in Zone 2 is less than the dekatherm
                  equivalent of 140,000 Mcf per day provided that such service
                  has been scheduled by Shipper and allocated by Transporter on
                  such Day.

         (h)      "Force Majeure" means acts of God, strikes, lockouts or other
                  industrial disturbances, acts of the public enemy or
                  terrorists, wars blockades, insurrections, riots, epidemics,
                  landslides, lightning, earthquakes, fires, storms, floods,
                  washouts, arrests, the order of any court or governmental
                  authority having jurisdiction while the same is in force and
                  effect, civil disturbances, explosions, breakage, accidents to
                  machinery or pipelines, freezing of or damage to receipt or
                  delivery facilities, National Weather Service warnings or
                  advisories, whether official or unofficial, that result in the
                  evacuation of facilities, inability to obtain or unavoidable
                  delays in obtaining material or equipment, a Force Majeure
                  event or Operating Conditions on the pipeline system of
                  Transco or any other event condition or incident which
                  prevents Transco from tendering gas to Transporter for
                  transportation hereunder, and any other cause whether of the
                  kind herein enumerated or otherwise, not reasonably within the
                  control of either party claiming suspension and which by the
                  exercise of due diligence such party is unable to prevent or
                  overcome.

         (i)      "Heating Value" -- Gross heating value on a dry basis which is
                  the number of British Thermal Units produced by the complete
                  combustion at constant pressure of the amount of dry gas which
                  would occupy a volume of one cubic foot at 14.73 Psia and 60
                  degrees Fahrenheit with combustion air at the same temperature
                  and pressure as the gas, the products of combustion being
                  cooled to the initial temperature of the gas and air and the
                  water formed by combustion condensed to the liquid state.

         (j)      "Mcf" -- 1,000 cubic feet of gas.

         (k)      "Month" -- A period beginning as nearly as practicable at
                  10:00 a.m. Eastern Standard Time or Eastern Daylight time, as
                  appropriate, or at such other hour as Transporter and Shipper
                  agree upon on the first day of a calendar month and shall end
                  at the aforesaid time on the first day of the next succeeding
                  calendar month.

         (l)      "Operating Conditions" means the necessity to make
                  modifications, tests or repairs to Transporter's pipeline
                  system. Transporter shall exercise reasonable diligence to
                  schedule maintenance so as to minimize disruption of service
                  to Shipper and shall provide reasonable notice of the same.

         (m)      "Psia" -- Pounds per square inch absolute.

         (n)      "Psig" -- Pounds per square inch gauge.

         (o)      "Scheduled Daily Delivery Quantity" -- The daily quantity of
                  gas requested in advance by Shipper electronically or
                  otherwise to Transporter covering a specific period of time.

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         (p)      "Transportation Contract Quantity" or "TCQ" -- The quantity of
                  gas specified in Article 2, Paragraph 2.01, which shall be the
                  maximum quantity that Transporter is obligated to deliver
                  hereunder on any day, at the Point(s) of delivery set forth in
                  Article 4 hereof.

         (q)      "Year" -- A period of three hundred and sixty-five (365)
                  consecutive days beginning on the date of initial delivery of
                  gas under this Service Agreement, or on any anniversary
                  thereof, provided, however, that any such year which contains
                  a date of February 29, shall consist of three hundred and
                  sixty-six (366) consecutive days.

                                    ARTICLE 2
                           GAS TRANSPORTATION SERVICE

2.01     Subject to the terms and provisions of this Service Agreement,
         Transporter agrees to receive, transport and redeliver, on a firm
         basis, for Shipper's account up to the dekatherm equivalent of a
         Transportation Contract Quantity ("TCQ") of 40,000 Mcf per day of
         natural gas from the Point of Receipt specified in Article 3 hereof to
         the Point(s) of Delivery specified in Article 4 hereto.

2.02     Transportation service rendered hereunder shall be firm and shall not
         be subject to interruption or curtailment except as provided in Article
         17 hereof.

                                    ARTICLE 3
                                POINT OF RECEIPT

3.01     Shipper shall deliver or cause to be delivered gas for transportation
         hereunder and Transporter shall receive gas quantities up to Shipper's
         TCQ, plus any applicable fuel and line loss makeup, at the existing
         point of interconnection between Transporter and the pipeline system of
         Transco in Rockingham County, North Carolina ("Point of Receipt").
         Transporter shall accept deliveries at the Point of Receipt at a
         pressure sufficient to allow the gas to enter Transporter's pipeline
         system at the varying pressures that may exist in such system from
         time-to-time; provided, however, that such pressure(s) of the gas
         delivered or caused to be delivered by Shipper shall not exceed the
         maximum operating pressure(s) specified by Transporter for the Point of
         Receipt.

3.02     Shipper shall make any necessary arrangements with Transco so as to be
         able to deliver gas to Transporter at the Point of Receipt; provided,
         however, that such arrangements are compatible with the operating
         conditions on Transporter's pipeline system.

                                    ARTICLE 4
                              POINTS(S) OF DELIVERY

         Transporter shall deliver to Shipper, or for the account of Shipper,
         Equivalent Quantities at the existing point of interconnection between
         the systems of Transporter and Shipper near Clayton, North Carolina and
         any upstream points of delivery within Shipper's TCQ capacity
         entitlements. Transporter shall design its pipeline facilities and use
         reasonable efforts to deliver gas at the Point(s) of Delivery at a
         minimum pressure of not less than 500 psig. The maximum pressure at the
         Point(s) of Delivery shall not exceed the maximum operating pressure of
         Transporter's pipeline at such point(s).

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                                    ARTICLE 5
                    DETERMINATION OF RECEIPTS AND DELIVERIES

5.01     Receipts and deliveries shall be allocated by Transporter according to
         a predetermined methodology administered by Transporter for the
         allocation among shippers each Day of each dt of gas which is delivered
         by Transporter at the Point(s) of Delivery. Under the current
         allocation methodology, the quantity of gas allocated each Day to each
         Shipper at the Point of Receipt shall be deemed to be, to the maximum
         extent possible, the quantities of gas delivered for such Shipper's
         account at the Point(s) of Delivery hereunder adjusted for any
         quantities attributable to fuel and line loss makeup.

5.02     Shipper shall cause Transco to provide Transporter with a predetermined
         daily allocation methodology in writing, or electronically (by
         electronic data transfer) for measured quantities based on scheduled
         quantities in advance of service each Day and prior to any intra-day
         changes pursuant to Section 7.02 below. The daily allocation
         methodology provided by Transco shall consist of rankings for
         allocation among all shippers nominating service such that receipts are
         equivalent to the quantities delivered by Transporter plus any
         quantities applicable for fuel or line loss makeup.

                                    ARTICLE 6
              DETERMINATION OF ALLOWABLE DAILY DELIVERY VARIATIONS
                              AND OVERRUN PENALTIES

6.01     Allowable daily delivery variations shall be the quantity computed as
         follows:

         (a)      During each Day of the period beginning May 1 of any Year and
                  extending through the next succeeding September 30, 5 percent
                  of Shipper's TCQ under this Service Agreement.

         (b)      During each Day of the period beginning on October 1 of any
                  Year and extending through the next succeeding April 30, 3.5
                  percent of Shipper's TCQ under this Service Agreement.

6.02     Any quantity of gas taken by Shipper on any Day from Transporter in
         excess of Shipper's TCQ under this Service Agreement shall, as adjusted
         by the allowable daily delivery variations above, be an unauthorized
         daily overrun unless:

         (a)      Shipper is utilizing the firm capacity entitlements of another
                  firm shipper that is not using that capacity entitlement and
                  Shipper has provided prior notice to Transporter, or

         (b)      Shipper is utilizing Excess Rate Schedule CFT Service which
                  has been scheduled by Shipper and allocated by Transporter on
                  such Day.

6.03     In the event of a Force Majeure, Shipper's revised TCQ pursuant to
         Article 17 below shall be utilized to determine the allowable daily
         delivery variation and unauthorized daily overrun quantity and any
         penalties thereon. Notice shall be provided by Transporter to Shipper
         of such revised TCQ by telephone or telecopy. Such notice shall be
         confirmed in writing as soon as reasonably possible.

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6.04     In the event on any Day Shipper takes unauthorized daily overrun
         quantities, Shipper shall pay Transporter:

         (a)      an overrun charge equal to the 100 percent load factor FT rate
                  per dt for quantities up to, but not exceeding, the daily
                  allowable delivery variation set forth in Section 6.01 above,
                  and

         (b)      an overrun penalty of $25 per dt for each dt of unauthorized
                  daily overrun quantities in excess of the daily delivery
                  variation set forth in Section 6.01 above.

6.05     All overrun penalties collected by Transporter during any calendar
         year, less an amount equal to the 100 percent load facto FT rate per dt
         multiplied by the total volume of overruns, shall be directly refunded
         to each non-overrunning firm transportation shipper for the Month(s) in
         which such penalties were incurred based on each such non-overrunning
         shipper's fixed cost contribution under its service agreement with
         Transporter as a percentage of the total fixed cost contributions of
         all non-overrunning shippers under all firm service agreements. Such
         refunds shall be made by January 31 of each calendar year.

6.06     The payment of a penalty for an unauthorized overrun quantity shall
         under no circumstances be considered as giving Shipper the right to
         take such unauthorized overrun quantity nor shall such payment be
         considered as a substitute for any other remedy available to
         Transporter or any other shipper against the offending shipper for such
         unauthorized overrun.

                                    ARTICLE 7
                            SCHEDULING AND BALANCING

7.01     Shipper shall nominate service under this Service Agreement in advance
         of each Month or in advance of each Day in accordance with the
         nomination deadlines of Transco. Transporter, in its sole judgment, may
         waive any nomination deadlines, on a non-discriminatory basis, if
         Transporter determines that operating conditions permit. Such nominated
         quantities shall be subject to confirmation by Transporter which shall
         be based on the best operating information available to Transporter.
         Such confirmed quantity shall be deemed the scheduled quantity Shipper
         and Transporter shall have scheduling personnel available to be
         contacted seven days a week, twenty-four hours a day.

7.02     During any Day, Shipper may request to reschedule, on a prospective
         basis, quantities schedule pursuant to Section 7.01 above, provided
         that such quantities are consistent with reschedule quantities and
         deadlines on Transco.

7.03     Shipper shall endeavor to balance receipts and deliveries as reasonably
         as practicable so that the quantities delivered by Transco to
         Transporter are consistent with the actual quantities taken by Shipper
         at the Point(s) of Delivery. Shipper shall have the responsibility to
         monitor daily receipts and deliveries during the Month based on the
         best information available.

7.04     Transporter shall provide its latest estimated allocation data on
         receipts and deliveries to all parties requesting such data. These
         allocated quantities will be subject to change and the data is offered
         for informational purposes only, and should not be relied on by Shipper
         for any purposes whatsoever.

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                                    ARTICLE 8
                           SHIPPER'S RESPONSIBILITIES

Shipper recognizes that, as between it and Transporter, Shipper has sole control
over its physical takes of gas from Transporter's system and therefore has a
duty to refrain from taking delivery of unauthorized overrun quantities. Shipper
further recognizes that Shipper may cause hardship and economic damage to other
shippers in the event Shipper takes delivery of unauthorized overrun quantities
for which Shipper may be held accountable either through a direct cause of
action by such other shippers or as an impleaded or third party defendant in a
suit by such other shippers. In no event shall the payment of a penalty for an
overrun quantity pursuant to this Service Agreement be considered as giving
Shipper the right to take such unauthorized overrun quantity nor shall such
payment be considered as a substitute for all other rights and remedies
(including but not limited to consequential damages) available to any other
shipper against Shipper.

                                    ARTICLE 9
                         TRANSPORTER'S RESPONSIBILITIES

Transporter recognizes that it has a duty to use reasonable care and prudent
operating procedures to allow Shipper to schedule for delivery within its TCQ,
as adjusted pursuant to a Force Majeure situation or Operating Conditions, the
gas quantities available to Shipper up to the amount verified and confirmed by
Transporter based on the best operating information available to Transporter.

Transporter also recognizes that unless forces beyond Transporter's control
(including, but not limited to, Force Majeure, or the failure of Shipper or
Shipper's gas supplier to deliver scheduled gas quantities into Transporter's
system) cause interference with Transporter's ability to redeliver, Transporter
has a duty to tender to Shipper for redelivery the gas quantities which
Transporter has verified and confirmed as available to Shipper. Transporter
further recognizes that a breach of its duties herein may cause hardship and
economic damage to Shipper, for which Shipper reserves all rights and remedies
(including but not limited to consequential damages), and for which Transporter
may be held accountable.

                                   ARTICLE 10
                                RATES AND CHARGES

10.01    For firm transportation service provided to Shipper hereunder, Shipper
         shall pay to Transporter each month the sum of the following charges:

         (a)      Reservation Charge: Shipper's TCQ multiplied by the
                  reservation rate applicable to deliveries in the rate zone in
                  which the gas is delivered and as set forth on currently
                  effective Sheet No. 1 of Transporter's tariff.

         (b)      Commodity Charge: The applicable commodity rate set forth on
                  currently effective Sheet No. 1 multiplied by the quantities
                  of gas (dts) delivered.

         (c)      Excess CFT Charge: The applicable rate set forth on currently
                  effective Sheet No. 1 multiplied by the excess CFT quantity
                  delivered during that month.

10.02    Transporter shall retain from the quantities of gas received on behalf
         of Shipper hereunder any applicable fuel and line loss make-up
         associated with the transportation service provided hereunder.
         Transporter will evaluate any fuel retention percentages applicable to
         Shipper's service on an annual basis and will make any necessary
         filings with the NCUC to reflect any changes at least thirty (30) days
         prior to April 1 of each calendar year.

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10.03    Transporter shall have the right, from time-to-time, through filings
         with the governmental agency having jurisdiction to seek to change the
         rates or allowance for fuel, and to change the other terms and
         conditions of this Service Agreement, without limitation or
         reservation; provided, however, that (a) the character of firm service,
         (b) the term, (c) the quantities, (d) the Point(s) of Receipt and
         Delivery, and (e) the delivery pressure shall not be subject to change
         hereunder without mutual agreement of the parties. Shipper shall have
         the right to oppose any of the foregoing and to seek other changes to
         the terms and conditions of this Service Agreement to the extent that
         Shipper is legally permitted to do so under applicable provision(s) of
         law.

                                   ARTICLE 11
                                 QUALITY OF GAS

11.01    The parties hereto recognize that the natural gas delivered for
         transportation hereunder will necessarily be commingled in
         Transporter's pipeline system with gas received from other sources, and
         that the specific gas delivered to Transporter cannot be redelivered
         for Shipper's account. It is further agreed that the natural gas
         delivered to and by Transporter hereunder shall be merchantable natural
         gas.

11.02    All gas delivered to Transporter for Shipper and redelivered by
         Transporter to Shipper shall meet the quality standards for
         transportation on the interstate pipeline system of Transco as amended
         from time-to-time.

                                   ARTICLE 12
                       MEASUREMENT AND MEASURING EQUIPMENT

12.01    The unit of the natural gas deliverable hereunder shall be a Dekatherm
         of gas on the measurement basis hereinafter set forth

12.02    The quantity and the Heating Value of the natural gas delivery by
         Transporter to or for the account of Shipper or delivered by Shipper to
         Transporter for redelivery shall be determined as follows:

         (i)      The unit of volume for the purpose of measurement shall be one
                  (1) Cubic Foot of gas at a temperature of 60 degrees
                  Fahrenheit and at an absolute pressure of fourteen and
                  seventy-three hundredths (14.73) pounds per square inch.

         (ii)     The unit of weight for the purpose of measurement shall be one
                  (1) pound mass of gas.

         (iii)    The average absolute atmospheric pressure shall be assumed to
                  be 14.73 pounds per square inch.

         (iv)     The temperature of the gas flowing through the meters, when
                  necessary for computing gas quantities, shall be determined by
                  the use of a recording thermometer or other temperature
                  measuring device. The arithmetic average of the temperature
                  recorded each 24-hour day, or so much of the 24 hours as gas
                  has been flowing, shall be used in computing gas quantities or
                  instantaneous temperature measurements may be applied to
                  metering instruments to provide the quantity computation.

         (v)      The specific gravity of the gas flowing through the meters,
                  when necessary for computing gas quantities, shall be, unless
                  otherwise agreed upon, determined by the use of a recording
                  gravitometer or an online process type gas chromatograph. The
                  arithmetic average of the 24-hour record, or so much of the 24
                  hours as gas has been flowing, or

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                  continuous instantaneous specific gravity measurement may be
                  applied to metering instruments to provide the quality
                  computation.

         (vi)     The deviation of the gas from Ideal Gas Laws shall be
                  calculated following the recommendations of the ANSI/API 2530
                  `Orifice Metering of Natural Gas and Other Related Hydrocarbon
                  Fluids" (A.G.A. Report No. 3) including the A.G.A. Manual for
                  Determination of Supercompressibility Factors of natural Gas
                  or the A.G.A Transmission Measurement Committee Report No. 8
                  "Compressibility and Supercompressibility for Natural Gas and
                  Other Hydrocarbon Gases." If the composition of the gas is
                  such as to render the above procedure inapplicable, other
                  methods for determination of the deviation factors, mutually
                  agreed upon by Shipper and Transporter, shall be used.

         (vii)    The Heating Value shall be determined by either (1) the use of
                  a suitably located and acceptable make gas chromatograph or
                  (2) calculation from a fractional analysis, or (3) methods
                  outlined in A.G.A. Gas Measurement Committee Report No. 5,
                  latest edition, or (4) other methods mutually acceptable.
                  Dekatherms delivered shall be determined by either (1)
                  multiplying the Mcf delivered by a fraction the numerator of
                  which is the Btu per cubic foot and the denominator of which
                  is 1,000 or (2) multiplying the pounds mass delivered by a
                  fraction the numerator of which is the Btu per pound mass and
                  the denominator of which is 1,000,000.

12.03    Unless otherwise agreed to, Transporter will install, maintain, own and
         operate, at its own expense, at or near each Point of Receipt and each
         Point of Delivery, measuring stations properly equipped with standard
         orifice meters, flange connections, orifice plates and other necessary
         measuring equipment or other standard type meter suitable for the
         purpose by which the quantity of natural gas shall be measured and
         determined. The Heating Value of natural gas received or delivered
         shall be measured and determined. The Heating Value of natural gas
         received or delivered shall be measured and determined as provided
         above. Orifice meters where used shall be installed and operated in
         accordance with ANSI/API "Orifice Metering of Natural Gas and Other
         Related Hydrocarbon Fluids," latest revision, and shall include the use
         of straightening vanes.

12.04    Shipper acting jointly with Transporter may install, maintain and
         operate, at its own expense, such heck measuring equipment as desired,
         provided that such equipment shall be so installed as not to interfere
         with the operation of Transporter's measuring equipment.

12.05    Each party shall have the right to be present at the time of
         installing, reading, cleaning, changing, repairing, inspecting,
         testing, calibrating, or adjusting done in connection with measuring
         equipment involved in billing and used in measuring or checking the
         measurement of receipts and deliveries. The records from such measuring
         equipment shall remain the property of their owner, but upon request,
         each will submit to the other its records and charts, together with
         calculations therefrom for inspection and verification, subject to
         return within ten (10) days after receipt thereof.

12.06    All installations of measurement equipment applying to or affecting
         receipts and deliveries shall be made in such manner as to permit an
         accurate determination of the quantity of natural gas delivered and
         ready verification of the accuracy of measurement. Care shall be
         exercised by Transporter and Shipper in the installation, maintenance
         and operation of pressure regulating equipment so as to prevent any
         inaccuracy in the determination of the quantity of gas received or
         delivered hereunder.

12.07    In the event a meter is out of service, or registering inaccurately,
         the quantity of natural gas received or delivered shall be determined.

         (i)      By using the registration of any check meter or meters if
                  installed and accurately registering or, in the absence of
                  (i).

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         (ii)     By correcting the error or the percentage of error if
                  ascertainable by calibration, test, or mathematical
                  calculation, or in the absence of both (i) and (ii), then

         (iii)    By estimating the quantity of receipts or deliveries during
                  periods under similar conditions when the meter was
                  registering accurately.

12.08    The accuracy of Transporter's measurement equipment shall be verified
         by Transporter at reasonable intervals, and, if requested, in the
         presence of representatives of Shipper, but Transporter shall not be
         required as a matter of routine to verify the accuracy of such
         equipment more frequently than once in any thirty (30) day period.

12.09    If, upon test, any measurement equipment, including recording gas
         chromatograph, is found to be in error not more than two percent (2%),
         previous recording of such equipment shall be considered accurate in
         computing receipts and deliveries; but such equipment shall be adjusted
         at once to record correctly. If, upon test, any measurement equipment
         shall be found to be inaccurate by an amount exceeding two percent (2%)
         at a recording corresponding to the average hourly rate of flow for the
         period since the last preceding test, then any previous recordings of
         such equipment shall be corrected to zero error for any period which is
         definitely known, but, in case the period is not known definitely or
         agreed upon, such correction shall be for a period extending over
         one-half of the time elapsed since the date of the last test, not
         exceeding a correction period of 16 days.

12.10    Transporter and Shipper shall preserve all original or equivalent
         electronic test data, charts, or other similar records for a period
         required by the applicable rules of regulatory agencies having
         jurisdiction.

                                   ARTICLE 13
                                TERM OF AGREEMENT

13.01    This Agreement shall be effective as of the date hereof and shall
         continue in effect until the expiration of the twentieth (20th)
         Contract Year, and year-to-year thereafter, subject to termination by
         either party at the end of the Contract Year or any year thereafter
         upon two years advance written notice to the other party.

13.02    Firm transportation service hereunder shall commence at the Effective
         time of the Merger between Transporter and Cardinal Pipeline Company,
         LLC as defined in the Agreement and Plan of Merger, as amended.

                                   ARTICLE 14
                               BILLING AND PAYMENT

14.01    Transporter shall render its bill on or before the first Day of each
         Month for the Reservation Charges due for service rendered hereunder
         during the preceding calendar Month. On or before the 10th day of each
         Month, Transporter shall render its bill for any remaining charges for
         gas services rendered during the preceding calendar Month. Such bill
         shall include any Commodity Charges, Excess CFT Charges, any
         adjustments to the charges billed on the first day of the Month, and
         any penalties for unauthorized overruns applicable to the Month for
         which the bill is rendered.

14.02    Transporter and Shipper shall each, upon request of the other, deliver
         to the other for examination such pertinent records and charts as shall
         be necessary to verify the accuracy of any statement, chart, or
         computation made by either of them under or pursuant to any of the
         provisions hereof.

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14.03    Shipper, except as otherwise hereinafter provided, shall pay to
         Transporter by wire transfer of immediately available funds on or
         before the 10th day of each Month for the Reservation Charges due for
         service rendered by Transporter hereunder during the preceding month
         and billed by Transporter in the statement for such month, and or
         before the 20th day for each Month for any remaining charges for
         services which are due hereunder. If the normal payment due date is a
         Saturday, Sunday or holiday, this payment is due the following business
         Day.

14.04    Should Shipper fail to pay all of the amount of any bill for service
         hereunder when such amount is due, interest on the unpaid portion of
         such amount shall accrue at the rate equal to the prime rate of
         CitiBank, N.A. or its successor, calculated from the due date until the
         date of payment. If such failure to pay continues for thirty (30) days
         after payment is due, Transporter, in addition to any other remedy it
         may have hereunder, may suspend further transportation of natural gas
         hereunder until such amount is paid; provided, however, that if Shipper
         in good faith shall dispute the amount of any such bill or any part
         hereof, and shall pay to Transporter such amount as it concedes to be
         correct, and at any time thereafter within thirty (30) days of a demand
         made by Transporter, shall furnish good and sufficient surety bond,
         guaranteeing payment to Transporter of the amount ultimately found to
         be due under such bill after a final determination, which may be
         reached either by agreement between the parties, arbitration or
         judgment for a court or by any regulatory authority having
         jurisdiction, then Transporter shall not be entitled to suspend further
         delivery of natural gas unless and until default be made in the
         conditions of such bond.

14.05    If within twelve (12) months of the date of payment, it shall be found
         that Shipper has been overcharged or undercharged in any form
         whatsoever under the provisions hereof, and Shipper shall have actually
         paid the bill(s) containing such overcharge or undercharge, then within
         thirty (30) days after the final determination thereof, Transporter
         shall refund the amount of any such overcharge with interest thereon at
         the prime rate of the CitiBank N.A. or its successor from the time such
         overcharge was paid to the date of refund, and Shipper shall pay the
         amount of any such undercharge but without interest.

14.06    In the event an error is discovered in the amount billed in any
         statement rendered by Transporter, such error shall be adjusted within
         thirty (30) days of the determination thereof, provided that claim
         therefore shall have been made within sixty (60) days from the date of
         discovery of such error, but in any event, within twelve (12) months
         from the date of payment.

14.07    If rendition of a bill to Shipper by Transporter is delayed beyond the
         date specified herein, then Shipper shall pay such bill by wire
         transfer within ten (10) days after a rendition thereof.

                                   ARTICLE 15
                               ASSUMPTION OF RISK

15.01    As between the parties hereto, Shipper shall be deemed to be in control
         and possession of the gas to be transported hereunder until it shall
         have been delivered to Transporter at the Point of Receipt; and Shipper
         shall be deemed to be in control and possession of the gas to be
         transported hereunder after delivery for Shipper's account at the Point
         of Delivery. Transporter shall be deemed to be in control and
         possession of such gas after the delivery thereof to Transporter at the
         Point of Receipt and prior to delivery thereof for Shipper's account at
         the Point of Delivery.

15.02    Transporter shall have no responsibility with respect to any gas to be
         transported hereunder or on account of anything which may be done,
         happen or arise with respect thereto until it is delivered into its
         facilities at the Point of Receipt and after it is received for
         Shipper's account at the Point of Delivery. Shipper shall have no
         responsibility with respect to such gas or on account of anything which
         may be done, happen or arise with respect thereto after causing the
         delivery thereof to

                                       10
<PAGE>

         Transporter at the Point of Receipt and prior to delivery thereof for
         Shipper's account at the Point of Delivery.

                                   ARTICLE 16
                                   WARRANTIES

Shipper warrants for itself, its successors and assigns, that it will at the
time of delivery to Transporter for transportation have good and merchanantable
title to or the legal right to tender all gas delivered hereunder free and clear
of all liens, encumbrances and claims. Shipper shall indemnify Transporter and
save it harmless from all suits, actions, debts, accounts, damages, costs,
losses and expenses arising from or out of adverse claims of any or all persons
to said gas, including claims for any royalties, taxes, license fees or charges
applicable to such gas or to the delivery thereof to Transporter for
transportation under this Service Agreement.

                                   ARTICLE 17
                                  FORCE MAJEURE

17.01    In the event of either party being rendered unable, wholly or in part,
         by Force Majeure or Operating Conditions to carry out its obligations
         other than (i) the obligation of Shipper to pay the monthly Reservation
         Charge due Transporter (except as provided in 17.03 below), and (ii)
         the obligation to make payment of amounts accrued and due at the time
         thereof, it is agreed that on such party's giving notice and full
         particulars of such Force Majeure or Operating Conditions in writing or
         by telecopy to the other party within a reasonable time after the
         occurrence of the cause relied on, the obligation of both parties, so
         far as they are affected by such Force Majeure or Operating Conditions,
         shall be suspended during the continuance of any inability so caused,
         but for no longer period, and such cause shall so far as possible be
         remedied with all reasonable dispatch. Neither party shall be liable in
         damages to the other for any act, omission or circumstance occasioned
         by, or in consequence of Force Majeure or Operating Conditions, as
         herein defined in this Service Agreement.

17.02    If, due to Force Majeure or Operating Conditions, Transporter is unable
         to receive, transport or redeliver gas tendered by Shipper for
         transportation or if Shipper is unable to deliver gas to Transporter,
         then Transporter, upon providing as much notice as possible under all
         of the circumstances, shall order reduction of Shipper's TCQ to the
         extent necessary depending upon the type and location of the
         occurrence, in accordance with the following procedures: Transporter
         shall order allocation to the extent necessary, of affected
         transportation service to all shippers proportionate to each shipper's
         TCQ. Where Transporter's ability to render service is impaired in a
         particular segment of Transporter's system, then such allocation shall
         be effected only in that segment of Transporter's system in which
         service has been impaired.

17.03    Such causes or contingencies affecting the performance by either party,
         however, shall not relieve it of liability unless such party shall give
         notice and full particulars of such cause or contingency in writing or
         by telecopy to the other party within a reasonable time after the
         occurrence relied upon, nor shall such causes or contingencies
         affecting the performance by either party relieve it of liability in
         the event of its failure to use due diligence to remedy the situation
         and remove the cause with all reasonable dispatch, provided that the
         resolution of strikes, lockouts or other labor disputes shall be within
         the sole discretion of the parties involved therein. Such causes or
         contingencies affecting the performance by either party shall not
         relieve Shipper from its obligations to make payments of monthly
         Reservation Charge except to the extent of Transporter's negligence or
         willful misconduct.

                                   ARTICLE 18
                                     NOTICES

                                       11
<PAGE>

Notice to either party shall be in writing and shall be considered as duly
delivered when mailed to the other party at the following address:

         If to Shipper:

                  North Carolina Natural Gas Corporation
                  150 Rowan Street
                  Fayetteville, North Carolina 28302
                  Attention: President
                  Facsimile number:____________________

         If to Transporter:

                  Cardinal Extension Company, LLC
                  c/o Cardinal Operating Company
                  P. O. Box 1396
                  Houston, Texas 77251
                  Attention: Vice President, Customer Service
                  Facsimile number:_____________________

Such addresses may be changed from time-to-time by mailing appropriate notice
thereof to the other party by certified or registered mail.

                                   ARTICLE 19
                                  MISCELLANEOUS

19.01    Transporter grants the right to Shipper to direct tie-ins between its
         distribution system and Transporter's intrastate pipeline for the
         purpose of serving its franchise area subject to the negotiation of
         mutual agreeable terms and conditions (Including reimbursement
         arrangements and/or incremental charges and the construction, operation
         and maintenance specifications for such tie-ins) which will be set
         forth in an Interconnect and Reimbursement Agreement to be negotiated
         and executed by Shipper and Transporter.

19.02    This Agreement reflects the entire agreement between the parties with
         respect to the subject matter hereof and supersedes all prior
         agreements and understandings, oral and written, among the parties with
         respect to the subject matter hereof. This Agreement can be amended,
         restated or supplemented only by the written agreement of Transporter
         and Shipper.

19.03    No waiver by either party of any default by the other party in the
         performance of any provision, condition or requirement herein shall be
         deemed to be a waiver of, or in any manner release the other party
         from, performance of any other provision, condition or requirement
         herein, nor shall such waiver be deemed to be a waiver of, or in any
         manner a release of, the other party from future performance of the
         same provision, condition or requirement. Any delay or omission of
         either party to exercise any right hereunder shall not impair the
         exercise of any such right, or any like right, accruing to it
         thereafter. No waiver of a right created by this Agreement by one party
         shall constitute a wavier of such right by the other party except as
         may otherwise be required by law with respect to persons not parties
         hereto. The failure of one party to perform its obligations hereunder
         shall not release the other party from the performance of such
         obligations.

19.04    This Agreement may be assigned by Shipper without the prior consent of
         Transporter provided that Shipper remains responsible for any and all
         obligations under this Agreement.

19.05    This Agreement and the obligations of the parties hereunder are subject
         to all applicable laws, rules, orders and regulations of any
         governmental authorities having jurisdiction, and to the extent of
         conflict, such laws, rules, orders and regulations of governmental
         authorities having jurisdiction shall control.

                                       12
<PAGE>

19.06    Any provision of this Agreement that is prohibited or unenforceable
         shall be ineffective to the extent of that prohibition or
         unenforceability without invalidating the remaining provisions hereof
         or affecting the validity or enforceability of that provision in any
         other jurisdiction.

19.07    This Agreement may be executed in counterparts, each of which shall be
         deemed an original, but all of which together shall constitute one and
         the same instrument.

19.08    THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
         THE LAWS OF THE STATE OF NORTH CAROLINA. EXCLUDING, HOWEVER, ANY
         CONFLICT OF LAWS RULES OR PRINCIPLES WHICH MIGHT REFER THE
         CONSTRUCTION OR OPERATION OF THE TERMS OF THIS AGREEMENT TO THE LAWS
         OF ANOTHER STATE.

         IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives as of the date first above
written.

                                               CARDINAL OPERATING COMPANY,
                                               as Operator of
                                               Cardinal Extension Company, LLC

                                               By /s/ Frank J. Ferrazi
                                                  --------------------

                                               NORTH CAORLINA NATURAL GAS
                                               CORPORATION

                                               By /s/ Terence D. Davis
                                                  --------------------

                                       13<PAGE>
                                                                     Exhibit 4.1

                               JABIL CIRCUIT, INC.
                            2002 STOCK INCENTIVE PLAN

         1.     Purposes of the Plan. The purposes of this Stock Incentive Plan
are to attract and retain the best available personnel for positions of
substantial responsibility, to provide additional incentive to Employees and
Consultants, and to promote the success of the Company's business. Awards
granted under the Plan may be Incentive Stock Options, Nonstatutory Stock
Options, Stock Awards, Performance Units, Performance Shares or Stock
Appreciation Rights.

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

                (a)     "Administrator" means the Board or any Committee or
person as shall be administering the Plan, in accordance with Section 4 of the
Plan.

                (b)     "Applicable Law" means the legal requirements relating
to the administration of the Plan under applicable federal, state, local and
foreign corporate, tax and securities laws, and the rules and requirements of
any stock exchange or quotation system on which the Common Stock is listed or
quoted.

                (c)     "Award" means an Option, Stock Appreciation Right, Stock
Award, Performance Unit or Performance Share granted under the Plan.

                (d)     "Award Agreement" means a written agreement by which an
Award is evidenced.

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

                (f)     "Change in Control" means the happening of any of the
following:

                        (i)     When any "person," as such term is used in
Sections 13(d) and 14(d) of the Exchange Act (other than the Company, a
Subsidiary or a Company employee benefit plan, including any trustee of such
plan acting as trustee) is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing fifty percent (50%) or more of the combined voting power of
the Company's then outstanding securities; or

                        (ii)    The occurrence of a transaction requiring
stockholder approval, and involving the sale of all or substantially all of the
assets of the Company or the merger of the Company with or into another
corporation.

                (g)     "Change in Control Price" means, as determined by the
Board,

                        (i)     the highest Fair Market Value of a Share within
the 60 day period immediately preceding the date of determination of the Change
in Control Price by the Board (the "60-Day Period"), or

                        (ii)    the highest price paid or offered per Share, as
determined by the Board, in any bona fide transaction or bona fide offer related
to the Change in Control of the Company, at any time within the 60-Day Period,
or

                        (iii)   some lower price as the Board, in its
discretion, determines to be a reasonable estimate of the fair market value of a
Share.

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

<PAGE>

                (i)     "Committee" means a Committee appointed by the Board in
accordance with Section 4 of the Plan.

                (j)     "Common Stock" means the Common Stock, $.001 par value,
of the Company.

                (k)     "Company" means Jabil Circuit, Inc., a Delaware
corporation.

                (l)     "Consultant" means any person, including an advisor,
engaged by the Company or a Parent or Subsidiary to render services and who is
compensated for such services, including without limitation non-Employee
Directors who are paid only a director's fee by the Company or who are
compensated by the Company for their services as non-Employee Directors. In
addition, as used herein, "consulting relationship" shall be deemed to include
service by a non-Employee Director as such.

                (m)     "Continuous Status as an Employee or Consultant" means
that the employment or consulting relationship is not interrupted or terminated
by the Company, any Parent or Subsidiary. Continuous Status as an Employee or
Consultant shall not be considered interrupted in the case of (i) any leave of
absence approved in writing by the Board, an Officer, or a person designated in
writing by the Board or an Officer as authorized to approve a leave of absence,
including sick leave, military leave, or any other personal leave; provided,
however, that for purposes of Incentive Stock Options, any such leave may not
exceed 90 days, unless reemployment upon the expiration of such leave is
guaranteed by contract (including certain Company policies) or statute, or (ii)
transfers between locations of the Company or between the Company, a Parent, a
Subsidiary or successor of the Company; or (iii) a change in the status of the
Grantee from Employee to Consultant or from Consultant to Employee.

                (n)     "Covered Stock" means the Common Stock subject to an
Award.

                (o)     "Date of Grant" means the date on which the
Administrator makes the determination granting the Award, or such other later
date as is determined by the Administrator. Notice of the determination shall be
provided to each Grantee within a reasonable time after the Date of Grant.

                (p)     "Date of Termination" means the date on which a
Grantee's Continuous Status as an Employee or Consultant terminates.

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

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

                (s)     "Employee" means any person, including Officers and
Directors, employed by the Company or any Parent or Subsidiary of the Company.
Neither service as a Director nor payment of a director's fee by the Company
shall be sufficient to constitute "employment" by the Company.

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

                (u)     "Fair Market Value" means, as of any date, the value of
Common Stock determined as follows:

                        (i)    If the Common Stock is listed on any established
stock exchange or a national market system, including without limitation the
National Market System of the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") System, the Fair Market Value of a Share of
Common Stock shall be the closing sales price for such stock (or the closing
bid, if no sales were reported) as quoted on such system or exchange (or the
exchange with the greatest volume of trading in Common Stock) on the last market
trading day prior to the day of determination, as reported in The Wall Street
Journal or such other source as the Administrator deems reliable;

<PAGE>

                        (ii)   If the Common Stock is quoted on the NASDAQ
System (but not on the National Market System thereof) or is regularly quoted by
a recognized securities dealer but selling prices are not reported, the Fair
Market Value of a Share of Common Stock shall be the mean between the high bid
and low asked prices for the Common Stock on the last market trading day prior
to the day of determination, as reported in The Wall Street Journal or such
other source as the Administrator deems reliable;

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

                (v)     "Grantee" means an individual who has been granted an
Award.

                (w)     "Incentive Stock Option" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code and the regulations promulgated thereunder.

                (x)     "Mature Shares" means Shares for which the holder
thereof has good title, free and clear of all liens and encumbrances, and that
such holder either (i) has held for at least six months or (ii) has purchased on
the open market.

                (y)     "Nonstatutory Stock Option" means an Option not intended
to qualify as an Incentive Stock Option.

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

                (aa)    "Option" means a stock option granted under the Plan.

                (bb)    "Parent" means a corporation, whether now or hereafter
existing, in an unbroken chain of corporations ending with the Company if each
of the corporations other than the Company holds at least 50 percent of the
voting shares of one of the other corporations in such chain.

                (cc)    "Performance Period" means the time period during which
the performance goals established by the Administrator with respect to a
Performance Unit or Performance Share, pursuant to Section 9 of the Plan, must
be met.

                (dd)    "Performance Share" has the meaning set forth in Section
9 of the Plan.

                (ee)    "Performance Unit" has the meaning set forth in Section
9 of the Plan.

                (ff)    "Plan" means this 2002 Stock Incentive Plan.

                (gg)    "Rule 16b-3" means Rule 16b-3 promulgated under the
Exchange Act or any successor to Rule 16b-3, as in effect when discretion is
being exercised with respect to the Plan.

                (hh)    "Share" means a share of the Common Stock, as adjusted
in accordance with Section 11 of the Plan.

                (ii)    "Stock Appreciation Right" or "SAR" has the meaning set
forth in Section 7 of the Plan.

                (jj)    "Stock Grant" means Shares that are awarded to a Grantee
pursuant to Section 8 of the Plan.

                (kk)    "Subsidiary" means a corporation, domestic or foreign,
of which not less than 50 percent 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.

<PAGE>

         3.     Stock Subject to the Plan. Subject to the provisions of Section
11 of the Plan and except as otherwise provided in this Section 3, the maximum
aggregate number of Shares that may be subject to Awards under the Plan since
the Plan became effective is:

                (a)     The 11,512,705 Shares that were available on November
14, 2003 to be subject to future Awards;

                (b)     The 7,995,944 Shares that were subject to Awards on
November 14, 2003; and

                (c)     The Shares issued prior to November 14, 2003 that were
subject to Awards prior to such date.

The Shares may be authorized, but unissued, or reacquired Common Stock.

                If an Award expires or becomes unexercisable without having
been exercised in full the remaining Shares that were subject to the Award shall
become available for future Awards under the Plan (unless the Plan has
terminated). If any Shares (whether subject to or received pursuant to an Award
granted hereunder, purchased on the open market, or otherwise obtained, and
including Shares that are deemed (by attestation or otherwise) to have been
delivered to the Company as payment for all or any portion of the exercise price
of an Award) are withheld or applied as payment by the Company in connection
with the exercise of an Award or the withholding of taxes related thereto, such
Shares, to the extent of any such withholding or payment, shall again be
available or shall increase the number of Shares available, as applicable, for
future Awards under the Plan. The Board may from time to time determine the
appropriate methodology for calculating the number of Shares issued pursuant to
the Plan.

         4.     Administration of the Plan.

                (a)     Procedure.

                        (i)    Multiple Administrative Bodies. The Plan may be
administered by different bodies with respect to different groups of Employees
and Consultants. Except as provided below, the Plan shall be administered by (A)
the Board or (B) a committee designated by the Board and constituted to satisfy
Applicable Law.

                        (ii)   Rule 16b-3. To the extent the Board considers it
desirable for transactions relating to Awards to be eligible to qualify for an
exemption under Rule 16b-3, the transactions contemplated under the Plan shall
be structured to satisfy the requirements for exemption under Rule 16b-3.

                        (iii)  Section 162(m) of the Code. To the extent the
Board considers it desirable for compensation delivered pursuant to Awards to be
eligible to qualify for an exemption from the limit on tax deductibility of
compensation under Section 162(m) of the Code, the transactions contemplated
under the Plan shall be structured to satisfy the requirements for exemption
under Section 162(m) of the Code.

                        (iv)   Authorization of Officers to Grant Options. In
accordance with Applicable Law, the Board may, by a resolution adopted by the
Board, authorize one or more Officers to designate Officers and Employees
(excluding the Officer so authorized) to be Grantees of Options and determine
the number of Options to be granted to such Officers and Employees; provided,
however, that the resolution adopted by the Board so authorizing such Officer or
Officers shall specify the total number and the terms (including the exercise
price, which may include a formula by which such price may be determined) of
Options such Officer or Officers may so grant.

                (b)     Powers of the Administrator. Subject to the provisions
of the Plan, and in the case of a Committee or an Officer, subject to the
specific duties delegated by the Board to such Committee or Committee, the
Administrator shall have the authority, in its sole and absolute discretion:

                        (i)    to determine the Fair Market Value of the Common
Stock, in accordance with Section 2(u) of the Plan;

<PAGE>

                        (ii)   to select the Consultants and Employees to whom
Awards will be granted under the Plan;

                        (iii)  to determine whether, when, to what extent and in
what types and amounts Awards are granted under the Plan;

                        (iv)   to determine the number of shares of Common Stock
to be covered by each Award granted under the Plan;

                        (v)    to determine the forms of Award Agreements, which
need not be the same for each grant or for each Grantee, for use under the Plan;

                        (vi)   to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any Award granted under the Plan.
Such terms and conditions, which need not be the same for each grant or for each
Grantee, include, but are not limited to, the exercise price, the time or times
when Options and SARs may be exercised (which may be based on performance
criteria), the extent to which vesting is suspended during a leave of absence,
any vesting acceleration or waiver of forfeiture restrictions, and any
restriction or limitation regarding any Award or the shares of Common Stock
relating thereto, based in each case on such factors as the Administrator shall
determine;

                        (vii)  to construe and interpret the terms of the Plan
and Awards;

                        (viii) to prescribe, amend and rescind rules and
regulations relating to the Plan, including, without limiting the generality of
the foregoing, rules and regulations relating to the operation and
administration of the Plan to accommodate the specific requirements of local and
foreign laws and procedures;

                        (ix)   to modify or amend each Award (subject to Section
13 of the Plan). However, the Administrator may not modify or amend any
outstanding Option so as to specify a lower exercise price or accept the
surrender of an outstanding Option and authorize the granting of a new Option
with a lower exercise price in substitution for such surrendered Option;

                        (x)    to authorize any person to execute on behalf of
the Company any instrument required to effect the grant of an Award previously
granted by the Administrator;

                        (xi)   to determine the terms and restrictions
applicable to Awards;

                        (xii)  to make such adjustments or modifications to
Awards granted to Grantees who are Employees of foreign Subsidiaries as are
advisable to fulfill the purposes of the Plan or to comply with Applicable Law;

                        (xiii) to delegate its duties and responsibilities under
the Plan with respect to sub-plans applicable to foreign Subsidiaries, except
its duties and responsibilities with respect to Employees who are also Officers
or Directors subject to Section 16(b) of the Exchange Act; and

                        (xiv)  to make all other determinations deemed necessary
or advisable for administering the Plan.

                (c)     Effect of Administrator's Decision. The Administrator's
decisions, determinations and interpretations shall be final and binding on all
Grantees and any other holders of Awards.

         5.     Eligibility and General Conditions of Awards.

<PAGE>

                (a)     Eligibility. Awards other than Incentive Stock Options
may be granted to Employees and Consultants. Incentive Stock Options may be
granted only to Employees. If otherwise eligible, an Employee or Consultant who
has been granted an Award may be granted additional Awards.

                (b)     Maximum Term. Subject to the following provision, the
term during which an Award may be outstanding shall not extend more than ten
years after the Date of Grant, and shall be subject to earlier termination as
specified elsewhere in the Plan or Award Agreement; provided, however, that any
deferral of a cash payment or of the delivery of Shares that is permitted or
required by the Administrator pursuant to Section 10 of the Plan may, if so
permitted or required by the Administrator, extend more than ten years after the
Date of Grant of the Award to which the deferral relates.

                (c)     Award Agreement. To the extent not set forth in the
Plan, the terms and conditions of each Award, which need not be the same for
each grant or for each Grantee, shall be set forth in an Award Agreement.

                (d)     Termination of Employment or Consulting Relationship. In
the event that a Grantee's Continuous Status as an Employee or Consultant
terminates (other than upon the Grantee's death or Disability), then, unless
otherwise provided by the Award Agreement, and subject to Section 11 of the
Plan:

                        (i)    the Grantee may exercise his or her unexercised
Option or SAR, but only within such period of time as is determined by the
Administrator, and only to the extent that the Grantee was entitled to exercise
it at the Date of Termination (but in no event later than the expiration of the
term of such Option or SAR as set forth in the Award Agreement). In the case of
an Incentive Stock Option, the Administrator shall determine such period of time
(in no event to exceed three months from the Date of Termination) when the
Option is granted. If, at the Date of Termination, the Grantee is not entitled
to exercise his or her entire Option or SAR, the Shares covered by the
unexercisable portion of the Option or SAR shall revert to the Plan. If, after
the Date of Termination, the Grantee does not exercise his or her Option or SAR
within the time specified by the Administrator, the Option or SAR shall
terminate, and the Shares covered by such Option or SAR shall revert to the
Plan. An Award Agreement may also provide that if the exercise of an Option
following the Date of Termination would be prohibited at any time because the
issuance of Shares would violate Company policy regarding compliance with
Applicable Law, then the exercise period shall terminate on the earlier of (A)
the expiration of the term of the Option set forth in Section 6(b) of the Plan
or (B) the expiration of a period of 10 days after the Date of Termination
during which the exercise of the Option would not be in violation of such
requirements;

                        (ii)   the Grantee's Stock Awards, to the extent
forfeitable immediately before the Date of Termination, shall thereupon
automatically be forfeited;

                        (iii)  the Grantee's Stock Awards that were not
forfeitable immediately before the Date of Termination shall promptly be settled
by delivery to the Grantee of a number of unrestricted Shares equal to the
aggregate number of the Grantee's vested Stock Awards;

                        (iv)   any Performance Shares or Performance Units with
respect to which the Performance Period has not ended as of the Date of
Termination shall terminate immediately upon the Date of Termination.

                (e)     Disability of Grantee. In the event that a Grantee's
Continuous Status as an Employee or Consultant terminates as a result of the
Grantee's Disability, then, unless otherwise provided by the Award Agreement:

                        (i)    the Grantee may exercise his or her unexercised
Option or SAR at any time within 12 months from the Date of Termination, but
only to the extent that the Grantee was entitled to exercise the Option or SAR
at the Date of Termination (but in no event later than the expiration of the
term of the Option or SAR as set forth in the Award Agreement). If, at the Date
of Termination, the Grantee is not entitled to exercise his or her entire Option
or SAR, the Shares covered by the unexercisable portion of the Option or SAR
shall revert to the Plan. If, after the Date of Termination, the Grantee does
not exercise his or her Option or SAR within the time specified herein, the
Option or SAR shall terminate, and the Shares covered by such Option or SAR
shall revert to the Plan.

<PAGE>
                        (ii)   the Grantee's Stock Awards, to the extent
forfeitable immediately before the Date of Termination, shall thereupon
automatically be forfeited;

                        (iii)  the Grantee's Stock Awards that were not
forfeitable immediately before the Date of Termination shall promptly be settled
by delivery to the Grantee of a number of unrestricted Shares equal to the
aggregate number of the Grantee's vested Stock Awards;

                        (iv)   any Performance Shares or Performance Units with
respect to which the Performance Period has not ended as of the Date of
Termination shall terminate immediately upon the Date of Termination.

                (f)     Death of Grantee. In the event of the death of a
Grantee, then, unless otherwise provided by the Award Agreement,

                        (i)    the Grantee's unexercised Option or SAR may be
exercised at any time within 12 months following the date of death (but in no
event later than the expiration of the term of such Option or SAR as set forth
in the Award Agreement), by the Grantee's estate or by a person who acquired the
right to exercise the Option or SAR by bequest or inheritance, but only to the
extent that the Grantee was entitled to exercise the Option or SAR at the date
of death. If, at the time of death, the Grantee was not entitled to exercise his
or her entire Option or SAR, the Shares covered by the unexercisable portion of
the Option or SAR shall immediately revert to the Plan. If, after death, the
Grantee's estate or a person who acquired the right to exercise the Option or
SAR by bequest or inheritance does not exercise the Option or SAR within the
time specified herein, the Option or SAR shall terminate, and the Shares covered
by such Option or SAR shall revert to the Plan.

                        (ii)   the Grantee's Stock Awards, to the extent
forfeitable immediately before the date of death, shall thereupon automatically
be forfeited;

                        (iii)  the Grantee's Stock Awards that were not
forfeitable immediately before the date of death shall promptly be settled by
delivery to the Grantee's estate or a person who acquired the right to hold the
Stock Grant by bequest or inheritance, of a number of unrestricted Shares equal
to the aggregate number of the Grantee's vested Stock Awards;

                        (iv)   any Performance Shares or Performance Units with
respect to which the Performance Period has not ended as of the date of death
shall terminate immediately upon the date of death.

                (g)     Buyout Provisions. The Administrator may at any time
offer to buy out, for a payment in cash or Shares, an Award previously granted,
based on such terms and conditions as the Administrator shall establish and
communicate to the Grantee at the time that such offer is made. Any such cash
offer made to an Officer or Director shall comply with the provisions of Rule
16b-3 relating to cash settlement of stock appreciation rights. This provision
is intended only to clarify the powers of the Administrator and shall not in any
way be deemed to create any rights on the part of Grantees to buyout offers or
payments.

                (h)     Nontransferability of Awards.

                        (i)    Except as provided in Section 5(h)(iii) below,
each Award, and each right under any Award, shall be exercisable only by the
Grantee during the Grantee's lifetime, or, if permissible under Applicable Law,
by the Grantee's guardian or legal representative.

                        (ii)   Except as provided in Section 5(h)(iii) below, no
Award (prior to the time, if applicable, Shares are issued in respect of such
Award), and no right under any Award, may be assigned, alienated, pledged,
attached, sold or otherwise transferred to encumbered by a Grantee otherwise
than by will or by the laws of descent and distribution (or in the case of Stock
Awards, to the Company) and any such purported assignment, alienation, pledge,
attachment, sale, transfer or encumbrance shall be void and unenforceable
against the Company

<PAGE>

or any Subsidiary; provided, that the designation of a beneficiary shall not
constitute an assignment, alienation, pledge, attachment, sale, transfer or
encumbrance.

                        (iii)  To the extent and in the manner permitted by
Applicable Law, and to the extent and in the manner permitted by the
Administrator, and subject to such terms and conditions as may be prescribed by
the Administrator, a Grantee may transfer an Award to:

                               (A)      a child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law of the Grantee (including adoptive relationships);

                               (B)      any person sharing the employee's
household (other than a tenant or employee);

                               (C)      a trust in which persons described in
(A) and (B) have more than 50 percent of the beneficial interest;

                               (D)      a foundation in which persons described
in (A) or (B) or the Grantee control the management of assets; or

                               (E)      any other entity in which the persons
described in (A) or (B) or the Grantee own more than 50 percent of the voting
interests;

provided such transfer is not for value. The following shall not be considered
transfers for value: a transfer under a domestic relations order in settlement
of marital property rights, and a transfer to an entity in which more than 50
percent of the voting interests are owned by persons described in (A) above or
the Grantee, in exchange for an interest in such entity.

         6.     Stock Options.

                (a)     Limitations.

                        (i)    Each Option shall be designated in the Award
Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option.
Any Option designated as an Incentive Stock Option:

                               (A)      shall not have an aggregate Fair Market
Value (determined for each Incentive Stock Option at the Date of Grant) of
Shares with respect to which Incentive Stock Options are exercisable for the
first time by the Grantee during any calendar year (under the Plan and any other
employee stock option plan of the Company or any Parent or Subsidiary ("Other
Plans")), determined in accordance with the provisions of Section 422 of the
Code, that exceeds $100,000 (the "$100,000 Limit");

                               (B)      shall, if the aggregate Fair Market
Value of Shares (determined on the Date of Grant) with respect to the portion of
such grant that is exercisable for the first time during any calendar year
("Current Grant") and all Incentive Stock Options previously granted under the
Plan and any Other Plans that are exercisable for the first time during a
calendar year ("Prior Grants") would exceed the $100,000 Limit, be exercisable
as follows:

                                        (1)     The portion of the Current Grant
that would, when added to any Prior Grants, be exercisable with respect to
Shares that would have an aggregate Fair Market Value (determined as of the
respective Date of Grant for such Options) in excess of the $100,000 Limit
shall, notwithstanding the terms of the Current Grant, be exercisable for the
first time by the Grantee in the first subsequent calendar year or years in
which it could be exercisable for the first time by the Grantee when added to
all Prior Grants without exceeding the $100,000 Limit; and

<PAGE>

                                        (2)     If, viewed as of the date of the
Current Grant, any portion of a Current Grant could not be exercised under the
preceding provisions of this Section 6(a)(i)(B) during any calendar year
commencing with the calendar year in which it is first exercisable through and
including the last calendar year in which it may by its terms be exercised, such
portion of the Current Grant shall not be an Incentive Stock Option, but shall
be exercisable as a separate Option at such date or dates as are provided in the
Current Grant.

                        (ii)   No Employee shall be granted, in any fiscal year
of the Company, Options to purchase more than 3,000,000 Shares. The limitation
described in this Section 6(a)(ii) shall be adjusted proportionately in
connection with any change in the Company's capitalization as described in
Section 11 of the Plan. If an Option is canceled in the same fiscal year of the
Company in which it was granted (other than in connection with a transaction
described in Section 11 of the Plan), the canceled Option will be counted
against the limitation described in this Section 6(a)(ii).

                (b)     Term of Option. The term of each Option shall be stated
in the Award Agreement; provided, however, that in the case of an Incentive
Stock Option, the term shall be 10 years from the date of grant or such shorter
term as may be provided in the Award Agreement. Moreover, in the case of an
Incentive Stock Option granted to a Grantee who, at the time the Incentive Stock
Option is granted, owns stock representing more than 10 percent of the voting
power of all classes of stock of the Company or any Parent or Subsidiary, the
term of the Incentive Stock Option shall be five years from the date of grant or
such shorter term as may be provided in the Award Agreement.

                (c)     Option Exercise Price and Consideration.

                        (i)    Exercise Price. The per share exercise price for
the Shares to be issued pursuant to exercise of an Option shall be determined by
the Administrator and, except as otherwise provided in this Section 6(c)(i),
shall be no less than 100 percent of the Fair Market Value per Share on the Date
of Grant.

                               (A)      In the case of an Incentive Stock Option
granted to an Employee who on the Date of Grant owns stock representing more
than 10 percent of the voting power of all classes of stock of the Company or
any Parent or Subsidiary, the per Share exercise price shall be no less than 110
percent of the Fair Market Value per Share on the Date of Grant.

                               (B)      Any Option that is (1) granted to a
Grantee in connection with the acquisition ("Acquisition"), however effected, by
the Company of another corporation or entity ("Acquired Entity") or the assets
thereof, (2) associated with an option to purchase shares of stock or other
equity interest of the Acquired Entity or an affiliate thereof ("Acquired Entity
Option") held by such Grantee immediately prior to such Acquisition, and (3)
intended to preserve for the Grantee the economic value of all or a portion of
such Acquired Entity Option, may be granted with such exercise price as the
Administrator determines to be necessary to achieve such preservation of
economic value.

                               (C)      Any Option that is granted to a Grantee
not previously employed by the Company, or a Parent or Subsidiary, as a material
inducement to the Grantee's commencing employment with the Company may be
granted with such exercise price as the Administrator determines to be necessary
to provide such material inducement.

                (d)     Waiting Period and Exercise Dates. At the time an Option
is granted, the Administrator shall fix the period within which the Option may
be exercised and shall determine any conditions that must be satisfied before
the Option may be exercised. An Option shall be exercisable only to the extent
that it is vested according to the terms of the Award Agreement.

                (e)     Form of Consideration. The Administrator shall determine
the acceptable form of consideration for exercising an Option, including the
method of payment. In the case of an Incentive Stock Option, the Administrator
shall determine the acceptable form of consideration at the time of grant. The
acceptable form of consideration may consist of any combination of cash,
personal check, wire transfer or, subject to the approval of the Administrator:

<PAGE>

                        (i)    pursuant to rules and procedures approved by the
Administrator, promissory note;

                        (ii)   Mature Shares;

                        (iii)  pursuant to procedures approved by the Committee,
(A) through the sale of the Shares acquired on exercise of the Option through a
broker-dealer to whom the Grantee has submitted an irrevocable notice of
exercise and irrevocable instructions to deliver promptly to the Company the
amount of sale or loan proceeds sufficient to pay the exercise price, together
with, if requested by the Company, the amount of federal, state, local or
foreign withholding taxes payable by the Grantee by reason of such exercise, or
(B) through simultaneous sale through a broker of Shares acquired upon exercise;
or

                        (iv)   such other consideration and method of payment
for the issuance of Shares to the extent permitted by Applicable Law.

                (f)     Exercise of Option.

                        (i)    Procedure for Exercise; Rights as a Stockholder.

                               (A)      Any Option granted hereunder shall be
exercisable according to the terms of the Plan and at such times and under such
conditions as determined by the Administrator and set forth in the Award
Agreement.

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

                               (C)      An Option shall be deemed exercised when
the Company receives:

                                        (1)     written notice of exercise (in
accordance with the Award Agreement) from the person entitled to exercise the
Option, and

                                        (2)     full payment for the Shares with
respect to which the Option is exercised. Full payment may consist of any
consideration and method of payment authorized by the Administrator and
permitted by the Award Agreement and the Plan.

                                        (3)     Shares issued upon exercise of
an Option shall be issued in the name of the Grantee or, if requested by the
Grantee, in the name of the Grantee and his or her spouse. Until the stock
certificate evidencing such Shares is issued (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company), no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to the Optioned Stock, notwithstanding the
exercise of the Option. The Company shall issue (or cause to be issued) such
stock certificate promptly after the Option is exercised. No adjustment will be
made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 11 of the
Plan.

                                        (4)     Exercising an Option in any
manner shall decrease the number of Shares thereafter available, both for
purposes of the Plan and for sale under the Option, by the number of Shares as
to which the Option is exercised.

         7.     Stock Appreciation Rights.

                (a)     Grant of SARs. Subject to the terms and conditions of
the Plan, the Administrator may grant SARs in tandem with an Option or alone and
unrelated to an Option. Tandem SARs shall expire no later than the expiration of
the underlying Option.

<PAGE>

                (b)     Exercise of SARs. SARs shall be exercised by the
delivery of a written notice of exercise to the Company, setting forth the
number of Shares over which the SAR is to be exercised. Tandem SARs may be
exercised:

                        (i)    with respect to all or part of the Shares subject
to the related Option upon the surrender of the right to exercise the equivalent
portion of the related Option;

                        (ii)   only with respect to the Shares for which its
related Option is then exercisable; and

                        (iii)  only when the Fair Market Value of the Shares
subject to the Option exceeds the exercise price of the Option.

The value of the payment with respect to the tandem SAR may be no more than 100
percent of the difference between the exercise price of the underlying Option
and the Fair Market Value of the Shares subject to the underlying Option at the
time the tandem SAR is exercised.

                (c)     Payment of SAR Benefit. Upon exercise of an SAR, the
Grantee shall be entitled to receive payment from the Company in an amount
determined by multiplying:

                        (i)    the excess of the Fair Market Value of a Share on
the date of exercise over the SAR exercise price; by

                        (ii)   the number of Shares with respect to which the
SAR is exercised;

provided, that the Administrator may provide in the Award Agreement that the
benefit payable on exercise of an SAR shall not exceed such percentage of the
Fair Market Value of a Share on the Date of Grant as the Administrator shall
specify. As determined by the Administrator, the payment upon exercise of an SAR
may be in cash, in Shares that have an aggregate Fair Market Value (as of the
date of exercise of the SAR) equal to the amount of the payment, or in some
combination thereof, as set forth in the Award Agreement.

         8.     Stock Awards. Subject to the terms of the Plan, the
Administrator may grant Stock Awards to any Employee or Consultant, in such
amount and upon such terms and conditions as shall be determined by the
Administrator.

         9.     Performance Units and Performance Shares.

                (a)     Grant of Performance Units and Performance Shares.
Subject to the terms of the Plan, the Administrator may grant Performance Units
or Performance Shares to any Employee or Consultant in such amounts and upon
such terms as the Administrator shall determine.

                (b)     Value/Performance Goals. Each Performance Unit shall
have an initial value that is established by the Administrator on the Date of
Grant. Each Performance Share shall have an initial value equal to the Fair
Market Value of a Share on the Date of Grant. The Administrator shall set
performance goals that, depending upon the extent to which they are met, will
determine the number or value of Performance Units or Performance Shares that
will be paid to the Grantee.

                (c)     Payment of Performance Units and Performance Shares.

                        (i)    Subject to the terms of the Plan, after the
applicable Performance Period has ended, the holder of Performance Units or
Performance Shares shall be entitled to receive a payment based on the number
and value of Performance Units or Performance Shares earned by the Grantee over
the Performance Period, determined as a function of the extent to which the
corresponding performance goals have been achieved.

                        (ii)   If a Grantee is promoted, demoted or transferred
to a different business unit of the

<PAGE>

Company during a Performance Period, then, to the extent the Administrator
determines appropriate, the Administrator may adjust, change or eliminate the
performance goals or the applicable Performance Period as it deems appropriate
in order to make them appropriate and comparable to the initial performance
goals or Performance Period.

                (d)     Form and Timing of Payment of Performance Units and
Performance Shares. Payment of earned Performance Units or Performance Shares
shall be made in a lump sum following the close of the applicable Performance
Period. The Administrator may pay earned Performance Units or Performance Shares
in cash or in Shares (or in a combination thereof) that have an aggregate Fair
Market Value equal to the value of the earned Performance Units or Performance
Shares at the close of the applicable Performance Period. Such Shares may be
granted subject to any restrictions deemed appropriate by the Administrator. The
form of payout of such Awards shall be set forth in the Award Agreement
pertaining to the grant of the Award.

         10.    Deferral of Receipt of Payment. The Administrator may permit or
require a Grantee to defer receipt of the payment of cash or the delivery of
Shares that would otherwise be due by virtue of the exercise of an Option or
SAR, the grant of or the lapse or waiver of restrictions with respect to Stock
Awards or the satisfaction of any requirements or goals with respect to
Performance Units or Performance Shares. If any such deferral is required or
permitted, the Administrator shall establish such rules and procedures for such
deferral.

         11.    Adjustments Upon Changes in Capitalization or Change of Control.

                (a)     Changes in Capitalization. Subject to any required
action by the stockholders of the Company, the number of Covered Shares, and the
number of shares of Common Stock which have been authorized for issuance under
the Plan but as to which no Awards have yet been granted or which have been
returned to the Plan upon cancellation or expiration of an Award, as well as the
price per share of Covered Stock, 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 issued 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 Covered Stock.

                (b)     Change in Control. In the event of a Change in Control,
then the following provisions shall apply:

                        (i)    Vesting. Any Award outstanding on the date such
Change in Control is determined to have occurred that is not yet exercisable and
vested on such date:

                               (A)      shall become fully exercisable and
vested on the first anniversary of the date of such Change in Control (the
"Change in Control Anniversary") if the Grantee's Continuous Status as an
Employee or Consultant does not terminate prior to the Change in Control
Anniversary;

                               (B)      shall become fully exercisable and
vested on the Date of Termination if the Grantee's Continuous Status as an
Employee or Consultant terminates prior to the Change in Control Anniversary as
a result of termination by the Company without Cause or resignation by the
Grantee for Good Reason; or

                               (C)      shall not become full exercisable and
vested if the Grantee's Continuous Status as an Employee or Consultant
terminates prior to the Change in Control Anniversary as a result of termination
by the Company for Cause or resignation by the Grantee without Good Reason.

For purposes of this Section 11(b)(i), the following definitions shall apply:

                               (D)      "Cause" means:

<PAGE>

                                        (1)     A Grantee's conviction of a
crime involving fraud or dishonesty; or

                                        (2)     A Grantee's continued willful or
reckless material misconduct in the performance of the Grantee's duties after
receipt of written notice from the Company concerning such misconduct;

provided, however, that for purposes of Section 11(b)(i)(D)(2), Cause shall not
include any one or more of the following: bad judgment, negligence or any act or
omission believed by the Grantee in good faith to have been in or not opposed to
the interest of the Company (without intent of the Grantee to gain, directly or
indirectly, a profit to which the Grantee was not legally entitled).

                               (E)      "Good Reason" means:

                                        (1)     The assignment to the Grantee of
any duties inconsistent in any respect with the Grantee's position (including
status, titles and reporting requirement), authority, duties or
responsibilities, or any other action by the Company that results in a
diminution in such position, authority, duties or responsibilities, excluding
for this purpose an isolated, insubstantial and inadvertent action that is not
taken in bad faith and that is remedied by the Company promptly after receipt of
written notice thereof given by the Grantee within 30 days following the
assignment or other action by the Company;

                                        (2)     Any reduction in compensation;
 ,or

                                        (3)     Change in location of office of
more than 35 miles without prior consent of the Grantee.

                        (ii)   Dissolution or Liquidation. In the event of the
proposed dissolution or liquidation of the Company, to the extent that an Award
is outstanding, it will terminate immediately prior to the consummation of such
proposed action. The Board may, in the exercise of its sole discretion in such
instances, declare that any Option or SAR shall terminate as of a date fixed by
the Board and give each Grantee the right to exercise his or her Option or SAR
as to all or any part of the Covered Stock, including Shares as to which the
Option or SAR would not otherwise be exercisable.

                        (iii)  Merger or Asset Sale. Except as otherwise
determined by the Board, in its discretion, prior to the occurrence of a merger
of the Company with or into another corporation, or the sale of substantially
all of the assets of the Company, in the event of such a merger or sale each
outstanding Option or SAR shall be assumed or an equivalent option or right
shall be substituted by the successor corporation or a Parent or Subsidiary of
the successor corporation. In the event that the successor corporation or a
Parent or Subsidiary of the successor corporation does not agree to assume the
Option or SAR or to substitute an equivalent option or right, the Administrator
shall, in lieu of such assumption or substitution, provide for the Grantee to
have the right to exercise the Option or SAR as to all or a portion of the
Covered Stock, including Shares as to which it would not otherwise be
exercisable. If the Administrator makes an Option or SAR exercisable in lieu of
assumption or substitution in the event of a merger or sale of assets, the
Administrator shall notify the Grantee that the Option or SAR shall be fully
exercisable for a period of 15 days from the date of such notice, and the Option
or SAR will terminate upon the expiration of such period. For the purposes of
this paragraph, the Option or SAR shall be considered assumed if, following the
merger or sale of assets, the option or right confers the right to purchase, for
each Share of Covered Stock subject to the Option or SAR immediately prior to
the merger or sale of assets, the consideration (whether stock, cash, or other
securities or property) received in the merger or sale of assets by holders of
Common Stock for each Share held on the effective date of the transaction (and
if holders were offered a choice of consideration, the type of consideration
chosen by the holders of a majority of the outstanding Shares); provided,
however, that if such consideration received in the merger or sale of assets was
not solely common stock of the successor corporation or its Parent, the
Administrator may, with the consent of the successor corporation and the
participant, provide for the consideration to be received upon the exercise of
the Option or SAR, for each Share of Optioned Stock subject to the

<PAGE>

Option or SAR, to be solely common stock of the successor corporation or its
Parent equal in Fair Market Value to the per Share consideration received by
holders of Common Stock in the merger or sale of assets.

                        (iv)   Except as otherwise determined by the Board, in
its discretion, prior to the occurrence of a Change in Control other than the
dissolution or liquidation of the Company, a merger of the Company with or into
another corporation, or the sale of substantially all of the assets of the
Company, in the event of such a Change in Control, all outstanding Options and
SARs, to the extent they are exercisable and vested (including Options and SARs
that shall become exercisable and vested pursuant to Section 11(b)(i) above),
shall be terminated in exchange for a cash payment equal to the Change in
Control Price (reduced by the exercise price applicable to such Options or
SARs). These cash proceeds shall be paid to the Grantee or, in the event of
death of an Grantee prior to payment, to the estate of the Grantee or to a
person who acquired the right to exercise the Option or SAR by bequest or
inheritance.

         12.    Term of Plan. The Plan shall become effective upon its approval
by the stockholders of the Company within 12 months after the date the Plan is
adopted by the Board. Such stockholder approval shall be obtained in the manner
and to the degree required under applicable federal and state law. The Plan
shall continue in effect until October 17, 2011, unless terminated earlier under
Section 13 of the Plan.

         13.    Amendment and Termination of the Plan.

                (a)     Amendment and Termination. The Board may at any time
amend, alter, suspend or terminate the Plan.

                (b)     Stockholder Approval. The Company shall obtain
stockholder approval of any Plan amendment to the extent necessary and desirable
to comply with Rule 16b-3 or with Section 422 of the Code (or any successor rule
or statute or other applicable law, rule or regulation, including the
requirements of any exchange or quotation system on which the Common Stock is
listed or quoted). Furthermore, the Company shall obtain stockholder approval of
any modification or amendment of the Plan to the extent that the Board, in its
sole and absolute discretion, reasonably determines, in accordance with the
requirements of any exchange or quotation system on which the Common Stock is
listed or quoted, that such modification or amendment constitutes a material
revision or material amendment of the Plan. Such stockholder approval, if
required, shall be obtained in such a manner and to such a degree as is required
by the applicable law, rule or regulation.

                (c)     Effect of Amendment or Termination. No amendment,
alteration, suspension or termination of the Plan shall impair the rights of any
Grantee, unless mutually agreed otherwise between the Grantee and the
Administrator, which agreement must be in writing and signed by the Grantee and
the Company.

         14.      Conditions Upon Issuance of Shares.

                (a)     Legal Compliance. Shares shall not be issued pursuant to
an Award unless the exercise, if applicable, of such Award and the issuance and
delivery of such Shares shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the rules and regulations promulgated thereunder, Applicable Law,
and the requirements of any stock exchange or quotation system upon which the
Shares may then be listed or quoted, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.

                (b)     Investment Representations. As a condition to the
exercise of an Award, the Company may require the person exercising such Award
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.

<PAGE>

         15.    Liability of Company.

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

                (b)     Grants Exceeding Allotted Shares. If the Covered Stock
covered by an Award exceeds, as of the date of grant, the number of Shares that
may be issued under the Plan without additional stockholder approval, such Award
shall be void with respect to such excess Covered Stock, unless stockholder
approval of an amendment sufficiently increasing the number of Shares subject to
the Plan is timely obtained in accordance with Section 13 of the Plan.

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

         17.    Rights of Employees and Consultants. Neither the Plan nor any
Award shall confer upon an Grantee any right with respect to continuing the
Grantee's employment or consulting relationship with the Company, nor shall they
interfere in any way with the Grantee's right or the Company's right to
terminate such employment or consulting relationship at any time, with or
without cause.

         18.    Sub-plans for Foreign Subsidiaries. The Board may adopt
sub-plans applicable to particular foreign Subsidiaries. All Awards granted
under such sub-plans shall be treated as grants under the Plan. The rules of
such sub-plans may take precedence over other provisions of the Plan, with the
exception of Section 3, but unless otherwise superseded by the terms of such
sub-plan, the provisions of the Plan shall govern the operation of such
sub-plan.

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