Document:

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                                                                   Exhibit 10.46

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                                 AMENDMENT NO. 1

                                       TO

                       ASSET AND SHARE PURCHASE AGREEMENT

                                  BY AND AMONG

                                SEQUA CORPORATION

                              MEGTEC SYSTEMS, INC.

                        BALDWIN TECHNOLOGY COMPANY, INC.

                            BALDWIN ENKEL CORPORATION

                                 BALDWIN AMAL AB

                                       AND

                        BALDWIN ASIA PACIFIC CORPORATION

                        EFFECTIVE DATE - AUGUST 31, 2001
                       EXECUTION DATE - SEPTEMBER 25, 2001

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                                 AMENDMENT NO. 1
                                       TO
                       ASSET AND SHARE PURCHASE AGREEMENT

         This Amendment No. 1 to Asset and Share Purchase Agreement (the "First
Amendment") is executed this 25th day of September, 2001 and is dated effective
as of the 31st day of August, 2001, is by and among Sequa Corporation, a
Delaware corporation ("Sequa"), MEGTEC Systems, Inc., a Delaware corporation
("MEGTEC"), Baldwin Technology Company, Inc., a Delaware corporation ("Baldwin
Technology"), Baldwin Enkel Corporation, a Delaware corporation ("Baldwin
Enkel"), Baldwin Amal AB, a Swedish limited liability company ("Baldwin Amal"),
and Baldwin Asia Pacific Corporation, a Delaware corporation ("Baldwin Asia").

                                    RECITALS

         (A) Sequa, MEGTEC, Baldwin Technology, Baldwin Enkel, Baldwin Amal and
Baldwin Asia (collectively the "Parties") entered into an Asset and Share
Purchase Agreement dated July 20, 2001 (the "Purchase Agreement").

         (B) The Parties desire to amend and supplement and by this First
Amendment do hereby amend and supplement the Purchase Agreement as and to the
extent set forth in this First Amendment.

                                    AGREEMENT

         NOW, THEREFORE in consideration of the premises and the agreements,
representations, warranties and covenants contained herein and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged and subject to and upon the terms and conditions of this First
Amendment, the Parties, intending to be legally bound, do hereby agree as
follows:

                          Article I: GENERAL PROVISIONS

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         SECTION 1.01. DEFINITIONS. Terms not otherwise defined in this First
Amendment shall have the meanings ascribed to them by definition in the Purchase
Agreement or in EXHIBIT A thereto.

                  ARTICLE II: AMENDMENTS TO PURCHASE AGREEMENT

         SECTION 2.01. PURCHASED ASSETS. Clause (t) of Section 2.02 of Article
II of the Purchase Agreement is hereby deleted in its entirety.

         SECTION 2.02. EXCLUDED ASSETS. Clause (a) of Section 2.03 of Article II
of the Purchase Agreement is hereby amended to read in its entirety as follows:

         (a) All cash of Baldwin Enkel and Baldwin Amal;

         SECTION 2.03. EXCLUDED ASSETS. Clause (d) of Section 2.03 of Article II
of the Purchase Agreement is hereby amended to read in its entirety as follows:

         (d) All bank accounts and lock boxes of Baldwin Amal and Baldwin Enkel
         and those bank guarantees issued on behalf of Baldwin Amal listed in
         SCHEDULE 2.03(D);

         SECTION 2.04. EXCLUDED ASSETS. Section 2.03 of Article II of the
Purchase Agreement is hereby amended by adding thereto a new clause (m) which
reads in its entirety as follows:

         (m) All trade accounts receivable from Goss Holdings, Inc. and Goss
         Graphic Systems, Inc., but not from any other Affiliate of Goss
         Holdings, Inc.

         SECTION 2.05. EXCLUDED ASSETS. Section 2.03 of Article II of the
Purchase Agreement is hereby amended by adding thereto a new clause (n) which
reads in its entirety as follows:

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         (n) All foreign exchange contracts of any of the Baldwin Entities,
         including any member of the Roll Handling Group, whether relating to
         Receivables, Customer Contracts or otherwise as well as any such
         foreign exchange contracts listed in any of the Schedules hereto,
         including SCHEDULE 6.08.

         SECTION 2.06. EXCLUDED LIABILITIES. Section 2.05 of Article II of the
Purchase Agreement is hereby amended by adding thereto new clauses (aa) and (bb)
which respectively read in their entirety as follows:

         (aa) All obligations and liabilities relating to or arising out of all
         foreign exchange contracts of any of the Baldwin Entities, including
         any member of the Roll Handling Group, whether relating to Receivables,
         Customer Contracts or otherwise, as well as any such foreign exchange
         contracts listed in any of the Schedules hereto, including SCHEDULE
         6.08.

         (bb) All obligations and liabilities relating to or arising out of
         those bank guarantees relating to Baldwin Amal listed in SCHEDULE
         2.03(d).

         SECTION 2.07. TRANSFERRED ASSETS. Section 2.07 of Article II of the
Purchase Agreement is hereby amended by adding thereto a new clause (f) which
reads in its entirety as follows:

         (f)      All trade accounts receivable, if any, from Goss Holdings,
                  Inc. and Goss Graphic Systems, Inc., but not from any other
                  Affiliate of Goss Holdings, Inc.

         SECTION 2.08. INDEMNIFIED LIABILITIES. Section 2.11 of Article II of
the Purchase Agreement is hereby amended by adding thereto a new clause (z)
which reads in its entirety as follows:

         (z)      All obligations and liabilities to any Persons on account of,
                  arising out of or relating to the cancellation of:

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                  (i) the License Agreement, dated as of January 31, 1997,
                  relating to the manufacture, sale and distribution of the
                  Autoweb Model Nos. 203845 and 233850, between Baldwin Enkel
                  Corporation and Baldwin Asia Pacific Limited (a corporation
                  that was liquidated and all of its rights and obligations
                  under this agreement were transferred to Baldwin Asia Pacific
                  Corporation);

                  (ii) the License Agreement, dated as of October 1, 1999,
                  relating to the manufacture, sale and distribution of SE Zero
                  Speed Splicers, between Baldwin Enkel Corporation and Baldwin
                  Asia Pacific Corporation;

                  (iii) the License Agreement, dated as of January 31, 1997,
                  relating to the manufacture, sale and distribution of the
                  Autoweb Model Nos. 203845 and 233850, between Baldwin Asia
                  Pacific Limited (a corporation that was liquidated and all of
                  its rights and obligations under this agreement were
                  transferred to Baldwin Asia Pacific Corporation) and Baldwin
                  Printing Control Equipment (Beijing) Co., Ltd.;

                  (iv) the License Agreement, dated as of October 1, 1999,
                  relating to the manufacture, sale and distribution of SE Zero
                  Speed Splicers, between Baldwin Asia Pacific Corporation and
                  Baldwin Printing Control Equipment (Beijing) Co., Ltd.;

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                  (v) the Agreement regarding the licensing of know-how, not
                  dated, relating to the manufacture, sale and distribution of
                  zero-speed splicers and autoweb splicers, COV-109
                  Count-o-Veyors and KANSA stackers, between Baldwin Printing
                  Control Equipment (Beijing) Co., Ltd. and Baldwin Printing
                  Equipment (Shanghai) Company, Ltd.; and

                  (vi) the Agreement regarding the licensing of the Autoweb,
                  dated December 22, 1998, between Baldwin Printing Control
                  Equipment (Beijing) Co., Ltd. and Baldwin Printing Equipment
                  (Shanghai) Company, Ltd.

         The foregoing constitute the only license agreements by and among any
         of the Baldwin Entities, on the one hand, and any member of the Roll
         Handling Group, on the other hand.

         SECTION 2.09. INDEMNIFIED LIABILITIES. Section 2.11 of Article II of
the Purchase Agreement is hereby amended by adding thereto a new clause (aa)
which reads as follows:

         (aa) Subject to Section 8.16 hereof, all obligations and liabilities
         arising out of or relating to violation of Legal Requirement or
         otherwise on account of or relating to Permits required in connection
         with any aspect of the lease or occupancy by Baldwin Printing of the
         Shanghai Facility, including Permits required to be held, obtained or
         maintained by the owner of the Shanghai Facility.

         SECTION 2.10. PURCHASE PRICE. Section 3.01 of Article III of the
Purchase Agreement is hereby amended to read in its entirety as follows:

         SECTION 3.01. PURCHASE PRICE. The purchase price for the Purchased
         Assets and the CS Printing Shares shall be an amount equal to the
         tangible net book value as of the Closing Time of the

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         Inventories, Receivables, Prepaids, Fixed Assets, Retained Cash,
         Retained Inventories, Retained Receivables, Retained Prepaids and
         Retained Fixed Assets, less Accounts Payable, Accrued Expenses,
         Retained Accounts Payable and Retained Accrued Expenses (collectively,
         the "Closing Tangible Net Book Value"), plus a fixed premium of One
         Million Seven Hundred Thousand Dollars ($1,700,000) (the "Purchase
         Price").

         SECTION 2.11. PAYMENT OF ESTIMATED PURCHASE PRICE. Section 3.03 of
Article III of the Purchase Agreement is hereby amended to read in its entirety
as follows:

         At the Closing, MEGTEC shall pay or cause any Designated Purchaser to
         pay to Baldwin Enkel, Baldwin Amal and Baldwin Asia an estimated
         purchase price, in the aggregate, in the amount of Six Million Eight
         Hundred Thousand Dollars ($6,800,000) (the "Estimated Purchase Price").

         SECTION 2.12. ADJUSTMENT TO ESTIMATED PURCHASE PRICE. The first
sentence of clause (a) of Section 3.04 of Article III of the Purchase Agreement
is hereby amended to read in its entirety as follows:

         The Estimated Purchase Price will be subject to a post-Closing
         adjustment (a "Purchase Price Adjustment"), up or down, to the extent
         the Closing Tangible Net Book Value as of the Closing Time plus a fixed
         premium of One Million Seven Hundred Thousand Dollars ($1,700,000) is
         more or less than the Estimated Purchase Price.

         SECTION 2.13. CLOSING TIME. The first sentence of clause (a) of Section
4.01 of Article IV of the Purchase Agreement is hereby amended to read in its
entirety as follows:

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         The closing of the transactions contemplated by this Agreement shall
         take place as soon as possible following fulfillment of the conditions
         to Closing set forth in this Agreement but in no event later than
         September 26, 2001 at the offices of Morgan, Lewis & Bockius LLP, 101
         Park Avenue, New York, New York, or at such other place or date as may
         be agreed upon from time to time in writing by Baldwin Technology and
         MEGTEC (the "Closing Time").

         SECTION 2.14. DELIVERIES AT THE CLOSING BY BALDWIN TECHNOLOGY, BALDWIN
AMAL, BALDWIN ASIA AND BALDWIN ENKEL. Subclause (14) of clause (b) of Section
4.01 of Article IV of the Purchase Agreement is hereby deleted in its entirety.

         SECTION 2.15. DELIVERIES AT THE CLOSING BY BALDWIN TECHNOLOGY, BALDWIN
AMAL, BALDWIN ASIA AND BALDWIN ENKEL. Clause (b) of Section 4.01 of Article IV
of the Purchase Agreement is hereby amended by adding thereto a new paragraph
which reads in its entirety as follows:

         b) At the time of Closing, the Corporate Minute Book and Corporate Seal
         for Baldwin Printing shall be physically located at the Shanghai
         Facility and in the possession of Mr. Zhou Yang (Joe) Lu.

         SECTION 2.16. DELIVERIES AT THE CLOSING BY BALDWIN TECHNOLOGY, BALDWIN
AMAL, BALDWIN ASIA AND BALDWIN ENKEL. Clause (b) of Section 4.01 of Article IV
of the Purchase Agreement is hereby amended by adding thereto a new subclause
(24) which reads in its entirety as follows:

         (24) A special opinion from counsel in the Peoples Republic of China
         reasonably satisfactory to MEGTEC and MEGTEC's Chinese counsel with
         respect to the transfer, if any, of Intellectual Property (i) under the
         Shanghai Goss Quality Agreement or the Memorandum between Baldwin
         Beijing and Shanghai Goss or (ii) as a result of the

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         cancellation and termination of the license agreements referred to in
         Section 2.11(z) hereof.

         SECTION 2.17. DELIVERIES AT THE CLOSING BY BALDWIN TECHNOLOGY, BALDWIN
AMAL, BALDWIN ASIA AND BALDWIN ENKEL. Clause (b) of Section 4.01 of Article IV
of the Purchase Agreement is hereby amended by adding thereto a new subclause
(25) which reads in its entirety as follows:

         (25) An instruction letter in form satisfactory to the Parties and
         Baldwin Amal's bank authorizing certain daily wire transfers of funds
         from Baldwin Amal's bank account received after the Closing Time to a
         bank account of MEGTEC or any Designated Purchaser.

         SECTION 2.18. PRODUCT WARRANTY. The last sentence of Section 8.07 of
Article VIII of the Purchase Agreement is hereby amended to read in its entirety
as follows:

         Any customer claim to the extent seeking any remedy other than product
         repair, return or replacement or product purchase price refund, which
         for purposes of this Agreement shall include (i) any liabilities or
         obligations for consequential, incidental, liquidated, punitive,
         indirect, special and similar damages (as well as lost profits and
         other monetary amounts due to customers of the Roll Handling Group)
         whether imposed by contract, Legal Requirement or otherwise, for goods
         and equipment shipped prior to the Closing Time, or (ii) any extension
         by the Roll Handling Group of the warranty periods set forth in
         SCHEDULE 6.33(e), shall be Excluded Liabilities or Indemnified
         Liabilities and from and after the Closing Time, neither MEGTEC,
         MEGTEC's Affiliates, any Designated Purchaser nor Baldwin Printing
         shall have any obligation or liability whatsoever therefor.

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         SECTION 2.19. REMOVAL OF PURCHASED ASSETS FROM THE ROCKFORD FACILITY.
Section 8.11 of Article VIII of the Purchase Agreement is hereby amended by
adding thereto a new clause (e) which reads in its entirety as follows:

         (e) Notwithstanding anything in this Agreement to the contrary, Baldwin
         Enkel shall not be required (i) to dismantle crate and otherwise
         prepare for shipment any of the office equipment, including, without
         limitation, computers and software, and supplies and other related
         assets included in the Purchased Assets or (ii) to transfer any
         Personal Property Leases included in the Purchased Assets and located
         at the Rockford Facility, before such time as Baldwin Enkel has
         completed all of its undertakings as provided in Section 8.15 hereof.

         SECTION 2.20. REMOVAL OF PURCHASED ASSETS FROM THE ROCKFORD FACILITY.
Section 8.12 of Article VIII of the Purchase Agreement is hereby amended by
adding thereto a new clause (g) which reads in its entirety as follows:

         (g) Baldwin Enkel shall use all commercially reasonable efforts to
         retain the services and maintain employment of those employees
         designated in SCHEDULE 8.12(g) hereto until the respective dates set
         forth in SCHEDULE 8.12(g).

         Section 8.12(a) of Article VIII of the Purchase Agreement is hereby
amended by changing the reference to "SCHEDULE 8.12" therein to now read
"SCHEDULE 8.12(a)".

         SECTION 2.21. PRODUCTION DRAWINGS. Article VIII of the Purchase
Agreement is hereby amended by adding thereto a new Section 8.15 which reads in
its entirety as follows:

         SECTION 8.15. PRODUCTION DRAWINGS. As soon as practicably possible and
         in any event no later than October 15, 2001, Baldwin Enkel shall, at
         its sole cost and expense, to MEGTEC's reasonable

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         satisfaction, have converted all CAD production drawings from Accugraph
         to Auto CAD with respect to the following products:

                           (i)      Zero Speed Splicer - Model 10;

                           (ii)     Zero Speed Splicer - Model 12; and

                           (iii)    Auto Web Splicers - All Models.

         SECTION 2.22. SHANGHAI FACILITY. Article VIII of the Purchase Agreement
is hereby amended by adding thereto a new Section 8.16 which reads in its
entirety as follows:

         SECTION 8.16. SHANGHAI FACILITY. (a) Notwithstanding anything to the
         contrary in this Agreement or in any Additional Document, from and
         after the Closing Time until the earlier of December 31, 2001 or the
         date Baldwin Printing moves out of the Shanghai Facility, Baldwin
         (Beijing) Printing Control Equipment Co., Ltd. ("Baldwin Beijing"), an
         Affiliate of Baldwin Technology, shall be entitled to maintain, at no
         cost to any of the Baldwin Entities, an office for purposes of receipt
         of mail only, at the Shanghai Facility, and (b) if at any time during
         the term of the lease which began August 20, 2000 between Baldwin
         Printing and the owner of the Shanghai Facility, pertaining to the
         Shanghai Facility, Baldwin Printing is required by the owner thereof by
         Legal Requirement or otherwise by Legal Requirement to vacate all or
         any portion of the Shanghai Facility covered by such lease as a result,
         in any such case, of Baldwin Printing or the owner of the Shanghai
         Facility not having had, as of the Closing Time, either all necessary
         Permits and Governmental Approvals or the ability to register legally
         the lease in Shanghai, and provided that Baldwin Printing has first
         made reasonable efforts, without incurring any out of pocket cost or
         expense not paid or reimbursed by a Baldwin Entity, in cooperation

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         with the owner of the Shanghai Facility to register legally the lease
         for the Shanghai Facility in accordance with applicable Legal
         Requirement, and to obtain any necessary Permits and Government
         Approvals, then Baldwin Technology will pay to Baldwin Printing all
         Damages as and when incurred, arising out of or relating thereto
         including all reasonable costs and expenses, legal fees and expenses,
         costs for permitting, employee wages and remuneration while not
         working, relocation, any increase in rent, disassembly and assembly
         costs, all legally or contractually required remaining rental payments
         for the Shanghai Facility for the remainder of the lease for the
         Shanghai Facility, in any such event incurred by Baldwin Printing to
         relocate its operations performed at the Shanghai Facility to other
         premises located in Shanghai, China. In any such case, Baldwin Printing
         will be responsible for rental payments for square footage, if any, in
         excess of that contained in the Shanghai Facility. In connection with
         any such move, Baldwin Printing will act in a commercially reasonable
         manner under the circumstances and taking into account its commitments
         with its customers. For the avoidance of doubt, Baldwin Technology
         shall not be responsible for lost profits of Baldwin Printing arising
         out of the foregoing.

         SECTION 2.23. NO OTHER LIABILITIES. Article VIII of the Purchase
Agreement is hereby amended by adding thereto a new Section 8.17 which reads in
its entirety as follows:

         SECTION 8.17. NO OTHER LIABILITIES. As a material inducement to Sequa,
         MEGTEC and any Designated Purchaser becoming a Party to this Agreement,
         the Baldwin Entities hereby jointly and severally, represent and
         warrant to Sequa, MEGTEC and any such Designated Purchaser their
         respective acknowledgment, understanding and agreement that neither
         Sequa, MEGTEC, any Designated Purchaser nor any of their respective
         Affiliates have

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         assumed or agreed to assume or discharge any liabilities or obligations
         of any of the Baldwin Entities or their respective Affiliates
         associated with or otherwise pertaining to the Purchased Assets, except
         as specifically provided in Section 2.04 or 2.11 hereof.

         SECTION 2.24. LEGAL OPINIONS. Section 10.11 of Article X of the
Purchase Agreement is hereby amended in its entirety to read as follows:

         SECTION 10.11. LEGAL OPINIONS. MEGTEC shall have received the favorable
         opinions of counsel for Baldwin Technology, Baldwin Enkel, Baldwin Amal
         and Baldwin Asia dated as of the Closing in form and substance as set
         forth in EXHIBITS X-1, X-2, X-3 AND X-4 hereto.

         SECTION 2.25. KEY EMPLOYEES. Section 10.14 of Article X of the Purchase
Agreement is hereby deleted in its entirety.

         SECTION 2.26. PRODUCTION DRAWINGS. Section 10.17 of Article X of the
Purchase Agreement is hereby deleted in its entirety.

         SECTION 2.27. CERTAIN TRANSFERS TO BALDWIN PRINTING. Section 10.18 of
Article X of the Purchase Agreement is hereby amended in its entirety to read as
follows:

         SECTION 10.18. CERTAIN CANCELLATIONS AND TRANSFERS TO BALDWIN PRINTING.
         Baldwin Asia and its Affiliates shall have transferred to Baldwin
         Printing, prior to the Closing Time, all of the Retained Receivables,
         the Retained Leases and the Retained Customer Contracts not owned by
         Baldwin Printing. All such transfers and assignments shall be in form
         and substance reasonably satisfactory to MEGTEC's Chinese counsel. At
         or prior to the Closing Time, Baldwin Technology will cause the
         appropriate Baldwin Entities to terminate and cancel the license
         agreements referred to in Section

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         2.11(z) hereof, provided that such termination and cancellation must
         provide that no Baldwin Entity (other than Baldwin Printing) or any
         other Person (other than any of the MEGTEC Entities or any Affiliate of
         any MEGTEC Entity) shall have any rights whatsoever on account of the
         Intellectual Property or Business IP covered by such licenses or any
         other licenses, grants or transfers related to the zero speed or the
         autoweb.

         SECTION 2.28. DELIVERY AND APPROVAL OF CERTAIN SCHEDULES AND EXHIBITS.
Section 10.19 of Article X of the Purchase Agreement is hereby amended in its
entirety to read as follows:

         SECTION 10.19 DELIVERY AND APPROVAL OF CERTAIN SCHEDULES AND EXHIBITS.
         The Parties have agreed, in their respective sole discretion, as to the
         form and substance of the Schedules and Exhibits which were delivered
         and initialed on the date of the Purchase Agreement as amended by or
         added to by the amended Schedules and additional Schedules and amended
         Exhibits and additional Exhibits that have been delivered on or before
         the date hereof and initialled by and on behalf of the Parties.

         SECTION 2.29. LETTER OF CREDIT OR ESCROW OF FUNDS. Article X of the
Purchase Agreement is hereby amended by adding thereto a new Section 10.19A
which reads in its entirety as follows:

                  SECTION 10.19A LETTER OF CREDIT OR ESCROW OF FUNDS. Baldwin
         Technology shall have delivered, or caused to be delivered by an
         Affiliate of Baldwin Technology, to MEGTEC Systems Amal AB (the
         Designated Purchaser of MEGTEC with respect to Baldwin Amal's portion
         of the Purchased Assets) either (i) a letter of credit in favor of
         MEGTEC Systems Amal AB in form and substance reasonably commercially
         satisfactory to MEGTEC Amal in its sole

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         discretion in the amount of two hundred fifty thousand dollars
         ($250,000) and expiring on the date eighteen (18) months after the
         Closing Time or (ii) two hundred and fifty thousand dollars ($250,000)
         in immediately available funds to be placed and held by MEGTEC Amal in
         an interest-bearing escrow account. The delivery of either the letter
         of credit or the immediately available funds is for the sole purpose of
         securing, at least in part, the reimbursement obligation of Baldwin
         Technology under Section 11.13 hereof and shall only be drawn upon or
         disbursed in accordance with Section 11.13 hereof.

         SECTION 2.30. LIMITATIONS. Clause (h) of Section 11.05 of Article XI of
the Purchase Agreement is hereby amended by adding thereto a new clause (iii)
which reads in its entirety as follows:

                  (iii) Notwithstanding anything to the contrary in this
         Agreement or in any Schedule or in any Supplement or in any other
         Additional Document, none of the individuals listed on Schedule 1.04
         shall for any reason whatsoever be deemed to have had, at or prior to
         the Closing Time, actual knowledge of any inaccuracy or
         misrepresentation in or breach of any of the following representations
         and warranties of the Baldwin Entities:

                  (A)      Sections 6.22(b), 6.22(c);

                  (B)      Sections 6.23(a), 6.23(b);

                  (C)      Section 6.33(e); and

                  (D) Section 6.37 as such relates to Sections 6.22(b), 6.22(c),
         6.23(a), 6.23(b) and 6.33(e).

         In addition with respect to the foregoing provisions of this Section
         11.05(h)(iii), only Section 6.33(e) hereof and including SCHEDULE
         6.33(e), (1) the right of any MEGTEC Entity to recover Damages

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         from any of the Baldwin Entities as a result of any such inaccuracy or
         misrepresentation or breach shall not be subject to the limitation
         contained in clause (e) of Section 11.05 hereof and (2) the amount of
         any such Damages shall not be taken into account in determining whether
         the MEGTEC Entities collectively have incurred Damages in excess of
         Three Hundred Thousand Dollars ($300,000).

         SECTION 2.31. SURVIVAL. Clause (A) in the first sentence of Section
11.01 of Article XI of the Purchase Agreement is hereby amended to read in its
entirety as follows:

         (A) the representations and warranties contained in Sections 6.19,
         6.22, 6.23, 6.33(e) hereof and Section 6.37 hereof as relates to the
         foregoing which shall expire five (5) years after the Closing Time.

         SECTION 2.32. SPECIAL INTELLECTUAL PROPERTY INDEMNIFICATION BY BALDWIN
TECHNOLOGY, BALDWIN AMAL, BALDWIN ASIA AND BALDWIN ENKEL. Article XI of the
Purchase Agreement is hereby amended by adding thereto a new Section 11.12 which
reads in its entirety as follows:

         Baldwin Technology, Baldwin Enkel, Baldwin Amal and Baldwin Asia shall,
         jointly and severally, defend the MEGTEC Entities against any and all
         Proceedings arising from, and shall defend, indemnify and hold harmless
         the MEGTEC Entities for, and will pay to the MEGTEC Entities the amount
         of, any Damages and lost profits, incurred or suffered, directly or
         indirectly, by a MEGTEC Entity as a result of any transfer (whether
         voluntary or involuntary, known or unknown) by any of the Baldwin
         Entities or Baldwin Printing to either Proctor & Gamble or Goss
         Shanghai prior to the Closing Time of any rights, title or interest
         (whether ownership, license or otherwise) to any Intellectual Property
         or Business IP. The limitations contained in Section 11.05(h) hereof
         shall not apply to the foregoing indemnity.

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         [SECTION 2.33. SPECIAL REIMBURSEMENT OBLIGATION OF BALDWIN TECHNOLOGY
FOR PAYMENTS TO KBA. Article XI of the Purchase Agreement is hereby amended by
adding thereto a new Section 11.13 which reads in its entirety as follows:

         SECTION 11.13 SPECIAL REIMBURSEMENT OBLIGATION OF BALDWIN TECHNOLOGY
FOR PAYMENTS TO KBA.

         (a) Baldwin Technology shall reimburse the Designated Purchaser of
         MEGTEC with respect to Baldwin Amal's portion of the Purchased Assets,
         MEGTEC Amal AB ("MEGTEC Amal"), for all amounts paid (other than for or
         in connection with product repair, return or replacement or product
         purchase price refund in accordance with Section 8.07 hereof) by MEGTEC
         Amal to Koenig & Bauer Aktiengesellschaft ("KBA") pursuant to MEGTEC
         Amal's guarantee to KBA of certain of Baldwin Amal's obligations
         arising under the Basic Contract, dated April 7, 2000, ("Basic
         Contract") (all of which are acknowledged and agreed by the Parties to
         be Excluded Liabilities for purposes of this Agreement) with KBA for
         products manufactured, sold and delivered prior to the Closing Time,
         all as provided for in the Letter Agreement dated as of September 25th,
         2001 among Baldwin Technology, Baldwin Amal and MEGTEC Amal and
         acknowledged and agreed to by KBA (the "KBA Letter Agreement") provided
         the following procedures are followed:

                  (i) If MEGTEC Amal or any other MEGTEC Entity is notified by
                  KBA of a claim by KBA with respect to products manufactured,
                  sold and delivered by Baldwin Amal prior to the Closing Time,
                  as soon as reasonably practical thereafter, MEGTEC Amal or
                  such other MEGTEC Entity shall notify

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                  Baldwin Technology and Baldwin Amal in writing of the details
                  of such claim and, if requested by Baldwin Technology or
                  Baldwin Amal, shall meet with representatives of Baldwin
                  Technology and Baldwin Amal and shall request in writing that
                  representatives of KBA participate in such meeting in order to
                  attempt to resolve all disputes with respect to such claim,
                  the obligation of Baldwin Amal to pay KBA and/or the
                  obligation of Baldwin Technology to reimburse MEGTEC Amal
                  pursuant to this paragraph (a);

                  (ii) If either Baldwin Technology or Baldwin Amal disputes
                  either the obligation of Baldwin Amal to pay the claim by KBA
                  under the Basic Contract or the obligation of Baldwin
                  Technology to reimburse MEGTEC Amal pursuant to this paragraph
                  (a) for MEGTEC's payment to KBA pursuant to the KBA Letter
                  Agreement, such Baldwin Entity shall deliver to MEGTEC Amal
                  within five (5) days after receiving written notice of such
                  claim, a written statement in reasonable detail setting forth
                  the nature of the dispute. The Parties shall use commercially
                  reasonable efforts to resolve the dispute for a period of ten
                  (10) days after Baldwin Technology or Baldwin Amal shall have
                  given the notice of dispute to MEGTEC Amal. Thereafter, if
                  MEGTEC Amal pays such disputed amount to KBA, MEGTEC Amal
                  shall notify Baldwin Technology in writing of its payment to
                  KBA;

                  (iii) If the Parties do not reach a final resolution within
                  ten (10) days after Baldwin Technology or Baldwin Amal shall
                  have given the notice of dispute, and provided that
                  Proceedings have not been instituted by KBA with respect to
                  such matter either against a Baldwin Entity or a MEGTEC

                                       18
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                  Entity, the Parties shall submit the dispute to arbitration
                  before a mutually acceptable arbitrator, and if MEGTEC Amal
                  and Baldwin Technology are unable so to choose an arbitrator,
                  the matter shall be submitted before an arbitrator selected in
                  accordance with the rules of the American Arbitration
                  Association. The arbitration shall be held in the City of New
                  York, New York in accordance with, and subject to the rules
                  of, the American Arbitration Association. The Parties hereto
                  agree to be bound by the decision of the arbitrator. If the
                  arbitrator decides in favor of MEGTEC Amal, then MEGTEC Amal
                  shall be entitled to reimbursement of the amount paid by
                  MEGTEC Amal to KBA; and

                  (iv) All fees, costs and expenses of any such arbitration will
                  be paid by the Party which does not have the arbitration
                  determined in its favor.

                  (v) for the avoidance of doubt, if KBA institutes any
                  Proceedings against any MEGTEC Entity or any Baldwin Entity,
                  the arbitration proceedings referred to in this Section 11.13
                  shall not proceed during the pendency of the Proceedings
                  initiated by or on behalf of KBA.

         (b) As security, at least in part, for Baldwin Technology's
         reimbursement obligation provided for in paragraph (a) of this Section
         11.13, Baldwin Technology shall deliver, or shall cause to be delivered
         by an Affiliate of Baldwin Technology, at or prior to the Closing Time,
         to MEGTEC Amal either (i) a letter of credit to be issued in favor of
         MEGTEC Amal in the amount of two hundred fifty thousand dollars
         ($250,000) and expiring on the date eighteen (18) months after the
         Closing Time which shall be in form satisfactory to

                                       19
<PAGE>   20
         MEGTEC Amal in its sole discretion or (ii) two hundred fifty thousand
         dollars ($250,000) in immediately available funds which shall be placed
         and held by MEGTEC Amal in an interest-bearing escrow account. MEGTEC
         Amal will accept delivery of the letter of credit which shall be in
         form reasonably commercially satisfactory to MEGTEC Amal in its sole
         discretion or accept delivery of and hold in escrow the funds, as the
         case may be, for the sole purpose of securing, at least in part, such
         reimbursement obligation of Baldwin Technology and, in the case of a
         letter of credit, the letter of credit shall be drawn upon or, in the
         case of funds, the funds shall be disbursed, only in accordance with
         paragraph (a) of this Section 11.13. If funds are delivered to MEGTEC
         Amal and for so long as such funds are held in escrow by MEGTEC Amal,
         such funds shall be invested by MEGTEC Amal in direct obligations of
         the United States government, none of which obligations shall have a
         maturity of more than ninety (90) days from the date the investment is
         made therein, and MEGTEC Amal shall receive and collect and hold in
         escrow all sums payable in connection with any such investment and
         reinvestment and shall reinvest all such sums. All interest and gains
         received by MEGTEC Amal as a result of any such investment or
         reinvestment shall be added to the funds held by MEGTEC Amal hereunder.
         If Baldwin Technology shall have delivered funds to MEGTEC Amal as
         provided in this paragraph (b), Baldwin Technology shall have the right
         at any time to deliver to MEGTEC Systems a letter of credit issued in
         favor of MEGTEC Amal which shall be in form reasonably commercially
         satisfactory to MEGTEC Amal in its sole discretion in the maximum
         amount equal to the funds then held in escrow by MEGTEC Amal and
         expiring on the date eighteen (18) months after the Closing Time in
         substitution of such funds and, in such event, MEGTEC Amal shall
         redeliver all such funds to Baldwin Technology and shall thereafter
         have the right

                                       20
<PAGE>   21
         to draw on such letter of credit in accordance with paragraph (a) of
         this Section 11.13.

         (c) for the avoidance of doubt all payments due KBA under the Basic
         Contract pursuant to the Side Letter Agreement and covered by the
         reimbursement obligation provided for in paragraph (a) of this Section
         11.13, shall, in the first instance, be paid directly by Baldwin
         Technology to KBA, and, if not so paid, then payment shall be made from
         the escrowed funds or a draw on the letter of credit as applicable.

         (d) the dollar limitations referred to in this Section 11.13 shall not
         limit or modify the obligations of the Baldwin Entities with respect to
         the foregoing matters being an Excluded Liability.

         SECTION 2.34. TERMINATION BY BALDWIN TECHNOLOGY, BALDWIN AMAL, BALDWIN
ASIA OR BALDWIN ENKEL. Clause (a) of Section 12.02 is hereby amended to read in
its entirety as follows:

         (a) the Closing has not occurred (other than through the failure of
         Baldwin Technology, Baldwin Enkel, Baldwin Amal or Baldwin Asia to
         comply with any of its obligations under this Agreement) on or before
         September 26, 2001, or such later date as the parties may agree upon
         five (5) Business Days after such expiration or termination (such date
         the "Extended Closing Time"):

         SECTION 2.35. TERMINATION BY MEGTEC. Clause (a) of Section 12.03 is
hereby amended to read in its entirety as follows:

         (a) the Closing has not occurred (other than through the failure of
         Sequa or MEGTEC to comply with any of its obligations under this
         Agreement) on or before September 26, 2001 or the Extended

                                       21
<PAGE>   22
         Closing Time;

         SECTION 2.36. INTERPRETATION. Section 13.11 of Article XIII of the
Agreement is hereby amended by adding thereto a new sentence which reads in its
entirety as follows:

         Notwithstanding anything in this Agreement or in any Additional
         Document to the contrary, in the case of any conflict between the terms
         and conditions of this Agreement and the terms and conditions of any
         Additional Document, the terms and conditions of this Agreement shall
         govern.

         SECTION 2.37. AMENDMENT OF CERTAIN EXHIBITS. Exhibits B and C to the
Purchase Agreement are hereby amended in their entirety to read as set forth in
Exhibits B and C, attached to this First Amendment.

                          ARTICLE III: OTHER AGREEMENTS

         SECTION 3.01. DESIGNATED PURCHASER. The parties agree that MEGTEC has
designated MEGTEC Systems Amal AB, a Swedish limited liability company ("MEGTEC
Amal") as a Designated Purchaser to purchase all of the Purchased Assets owned
by Baldwin Amal and to assume and thereafter pay, perform or discharge all of
the Assumed Liabilities of Baldwin Amal, all as provided for in the Purchase
Agreement.

         SECTION 3.02. PAYMENT OF SEVERANCE. Baldwin Enkel hereby represents and
warrants to the MEGTEC Entities that, except as set forth in those employment
agreements and severance agreements listed in SCHEDULE 6.25(a) to the Purchase
Agreement, it is the policy of Baldwin Enkel not to pay severance to employees
who voluntarily terminate their employment. Baldwin Enkel agrees to continue to
adhere to such policy and thereby, except as set forth in said employment
agreements and severance agreements, not make any severance

                                       22
<PAGE>   23
payment to any employee of Baldwin Enkel who voluntarily terminates his or her
employment with Baldwin Enkel before such time as Baldwin Enkel has completed
all of its undertakings as provided in Sections 8.11 and 8.15 of the Purchase
Agreement.

                          ARTICLE IV: NO OTHER CHANGES

         SECTION 4.01. NO OTHER CHANGES. Except as amended or supplemented by
this First Amendment all of the terms and provisions of the Purchase Agreement
are hereby ratified and remain in full force and effect.

                                       23
<PAGE>   24
         IN WITNESS WHEREOF, the Parties hereto have caused this First Amendment
to be executed as of the day and year first above written.

                                            SEQUA CORPORATION

                                            By:
                                               ---------------------------------
                                            Name:
                                                 -------------------------------
                                            Title:
                                                  ------------------------------

                                            MEGTEC SYSTEMS, INC.

                                            By:
                                               ---------------------------------
                                            Name:
                                                 -------------------------------
                                            Title:
                                                  ------------------------------

                                            BALDWIN TECHNOLOGY COMPANY, INC.

                                            By:
                                               ---------------------------------
                                            Name:
                                                 -------------------------------
                                            Title:
                                                  ------------------------------

                                            BALDWIN ENKEL CORPORATION

                                            By:
                                               ---------------------------------
                                            Name:
                                                 -------------------------------
                                            Title:
                                                  ------------------------------

                                       24
<PAGE>   25
                                            BALDWIN AMAL AB

                                            By:
                                               ---------------------------------
                                            Name:
                                                 -------------------------------
                                            Title:
                                                  ------------------------------

                                            BALDWIN ASIA PACIFIC CORPORATION

                                            By:
                                               ---------------------------------
                                            Name:
                                                 -------------------------------
                                            Title:
                                                  ------------------------------

                                       25
<PAGE>   26
MEGTEC Systems Amal AB, a Swedish limited liability company ("MEGTEC Amal"),
acknowledges and agrees that is has been designated by MEGTEC Systems, Inc.
("MEGTEC") as the Designated Purchaser to purchase all of the Purchased Assets
owned by Baldwin Amal AB ("Baldwin Amal") and to assume and thereafter pay,
perform or discharge all of the Assumed Obligations of Baldwin Amal and agrees
to be bound by all of the terms and provisions of the Agreement and to accept
delivery of all of such Purchased Assets and to assume and thereafter pay,
perform or discharge all of such Assumed Obligations.

                                            MEGTEC SYSTEMS AMAL AB

                                            By:
                                               ---------------------------------
                                            Name:
                                                 -------------------------------
                                            Title:
                                                  ------------------------------

                                       26<PAGE>
                                                                     EXHIBIT 4.4

                                  M-PACT, INC.

                                 1995 STOCK PLAN

     1. Purposes of the Plan. The purposes of this Stock Option Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees and Consultants of
the Company and its Subsidiaries and to promote the success of the Company's
business. Options granted under the Plan may be incentive stock options (as
defined under Section 422 of the Code) or nonstatutory stock options, as
determined by the Administrator at the time of grant of an option and subject to
the applicable provisions of Section 422 of the Code, as amended, and the
regulations promulgated thereunder.

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

         (a) "Administrator" means the Board or any of its Committees appointed
pursuant to Section 4 of the Plan.

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

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

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

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

         (f) "Company" means M-Pact, Inc., a California corporation.

         (g) "Consultant" means any person who is engaged by the Company or any
Parent or Subsidiary to render consulting or advisory services and is
compensated for such services, and any director of the Company whether
compensated for such services or not. If and in the event the Company registers
any class of any equity security pursuant to the Exchange Act, the term
Consultant shall thereafter not include directors who are not compensated for
their services or are paid only a director's fee by the Company.

         (h) "Continuous Status as an Employee or Consultant" means that the
employment or consulting relationship with the Company, any Parent, or
Subsidiary, is not interrupted or terminated. Continuous Status as an Employee
or Consultant shall not be considered interrupted in the case of (i) any leave
of absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor. A
leave of absence approved by the Company shall include sick leave, military
leave, or any other personal leave approved by an authorized representative of
the Company. For purposes of Incentive Stock Options, no such leave may exceed
90 days, unless reemployment upon expiration of such leave is guaranteed by
statute or contract, including Company policies. If reemployment upon expiration
of a leave of absence approved by the Company is not so guaranteed, on the 181st
day of such leave any Incentive Stock Option held by the Optionee shall

<PAGE>

cease to be treated as an Incentive Stock Option and shall be treated for tax
purposes as a Nonstatutory Stock Option.

         (i) "Employee" means any person, including Officers and directors,
employed by the Company or any Parent or Subsidiary of the Company. The payment
of a director's fee by the Company shall not be sufficient to constitute
"employment" by the Company.

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

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

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

               (ii) If the Common Stock is quoted on the NASDAQ System (but not
on the Nasdaq National Market thereof) or regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
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, or;

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

         (1) "Incentive Stock Option" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code.

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

         (n) "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.

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

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

         (q) "Optionee" means an Employee or Consultant who receives an Option.

                                      -2-
<PAGE>

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

         (s) "Plan" means this 1995 Stock Option Plan.

         (t) "Section 16(b)" means Section 16(b) of the Securities Exchange Act
of 1934, as amended.

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

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

     3. Stock Subject to the Plan. Subject to the provisions of Section 11 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 1,500,000 Shares. The Shares may be authorized, but unissued,
or reacquired Common Stock.

         If an Option expires or becomes unexercisable without having been
exercised in full, or is surrendered pursuant to an option exchange program, the
unpurchased Shares which were subject thereto shall become available for future
grant or sale under the Plan (unless the Plan has terminated); provided,
however, that Shares that have actually been issued under the Plan shall not be
returned to the Plan and shall not become available for future distribution
under the Plan, except that if unvested Shares are repurchased by the Company at
their original purchase price, and the original purchaser of such Shares did not
receive any benefits of ownership of such Shares, such Shares shall become
available for future grant under the Plan. For purposes of the preceding
sentence, voting rights shall not be considered a benefit of Share ownership.

     4. Administration of the Plan.

         (a) Initial Plan Procedure. Prior to the date, if any, upon which the
Company becomes subject to the Exchange Act, the Plan shall be administered by
the Board or a committee appointed by the Board.

         (b) Plan Procedure after the Date if any upon Which the Company becomes
Subject to the Exchange Act.

               (i) Administration with Respect to Directors and Officers. With
respect to grants of Options to Employees who are also Officers or directors of
the Company, the Plan shall be administered by (A) the Board if the Board may
administer the Plan in compliance with the rules under Rule 16b-3 promulgated
under the Exchange Act or any successor thereto ("Rule 16b-3") relating to the
disinterested administration of employee benefit plans under which Section 16(b)
exempt discretionary grants and awards of equity securities are to be made, or
(B) a Committee designated by the Board to

                                      -3-
<PAGE>

administer the Plan, which Committee shall be constituted to comply with the
rules under Rule 16b-3 relating to the disinterested administration of employee
benefit plans under which Section 16(b) exempt discretionary grants and awards
of equity securities are to be made. Once appointed, such Committee shall
continue to serve in its designated capacity until otherwise directed by the
Board. From time to time the Board may increase the size of the Committee and
appoint additional members thereof, remove members (with or without cause) and
appoint new members in substitution therefor, fill vacancies, however caused,
and remove all members of the Committee and thereafter directly administer the
Plan, all to the extent permitted by the rules under Rule 16b-3 relating to the
disinterested administration of employee benefit plans under which Section 16(b)
exempt discretionary grants and awards of equity securities are to be made.

               (ii) Multiple Administrative Bodies. If permitted by Rule 16b-3,
the Plan may be administered by different bodies with respect to directors,
non-director Officers and Employees who are neither directors nor Officers.

               (iii) Administration With Respect to Consultants and Other
Employees. With respect to grants of Options to Employees or Consultants who are
neither directors nor Officers of the Company, the Plan shall be administered by
(A) the Board or (B) a committee designated by the Board, which committee shall
be constituted in such a manner as to satisfy the legal requirements relating to
the administration of incentive stock option plans, if any, of California
corporate and securities laws, of the Code, and of any applicable stock exchange
(the "Applicable Laws"). Once appointed, such Committee shall continue to serve
in its designated capacity until otherwise directed by the Board. From time to
time the Board may increase the size of the Committee and appoint additional
members thereof, remove members (with or without cause) and appoint new members
in substitution therefor, fill vacancies, however caused, and remove all members
of the Committee and thereafter directly administer the Plan, all to the extent
permitted by the Applicable Laws.

         (c) Powers of the Administrator. Subject to the provisions of the Plan
and, in the case of a Committee, the specific duties delegated by the Board to
such Committee, and subject to the approval of any relevant authorities,
including the approval, if required, of any stock exchange upon which the Common
Stock is listed, the Administrator shall have the authority, in its discretion:

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

               (ii) to select the Consultants and Employees to whom Options may
from time to time be granted hereunder;

               (iii) to determine whether and to what extent Options are granted
hereunder;

               (iv) to determine the number of shares of Common Stock to be
covered by each such award granted hereunder;

                                      -4-
<PAGE>

               (v) to approve forms of agreement for use under the Plan;

               (vi) to determine the terms and conditions of any award granted
hereunder;

               (vii) to determine whether and under what circumstances an Option
may be settled in cash under subsection 9(f) instead of Common Stock;

               (viii) to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of the Common Stock covered
by such Option has declined since the date the Option was granted; and

               (ix) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan.

         (d) Effect of Administrator's Decision. All decisions, determinations
and interpretations of the Administrator shall be final and binding on all
Optionees and any other holders of any Options.

     5. Eligibility.

         (a) Nonstatutory Stock Options may be granted to Employees and
Consultants. Incentive Stock Options may be granted only to Employees. An
Employee or Consultant who has been granted an Option may, if otherwise
eligible, be granted additional Options.

         (b) Each Option shall be designated in the written option agreement as
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 5(b), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.

         (c) The Plan shall not confer upon any Optionee any right with respect
to continuation of employment or consulting relationship with the Company, nor
shall it interfere in any way with his or her right or the Company's right to
terminate his or her employment or consulting relationship at any time, with or
without cause.

         (d) Upon the Company or a successor corporation issuing any class of
common equity securities required to be registered under Section 12 of the
Exchange Act or upon the Plan being assumed by a corporation having a class of
common equity securities required to be registered under Section 12 of the
Exchange Act, the following limitations shall apply to grants of Options to
Employees:

                                      -5-
<PAGE>

               (i) No Employee shall be granted, in any fiscal year of the
Company, Options to purchase more than 500,000 Shares.

               (ii) In connection with his or her initial employment, an
Employee may be granted Options to purchase up to an additional 500,000 Shares
which shall not count against the limit set forth in subsection (i) above.

               (iii) The foregoing limitations shall be adjusted proportionately
in connection with any change in the Company's capitalization as described in
Section 11.

               (iv) If an Option is cancelled in the same fiscal year of the
Company in which it was granted (other than in connection with a transaction
described in Section 11), the cancelled Option will be counted against the limit
set forth in subsection (i) above. For this purpose, if the exercise price of an
Option is reduced, the transaction will be treated as a cancellation of the
Option and the grant of a new Option.

     6. Term of Plan. The Plan shall become effective upon the earlier to occur
of its adoption by the Board of Directors or its approval by the shareholders of
the Company, as described in Section 17 of the Plan. It shall continue in effect
for a term often (10) years unless sooner terminated under Section 13 of the
Plan.

     7. Term of Option. The term of each Option shall be the term stated in the
Option Agreement; provided, however, that the term shall be no more than ten
(10) years from the date of grant thereof However, in the case of an Incentive
Stock Option granted to an Optionee who, at the time the Option is granted, owns
stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the term of the
Option shall be five (5) years from the date of grant thereof or such shorter
term as may be provided in the Option Agreement.

     8. Option Exercise Price and Consideration.

         (a) The per share exercise price for the Shares to be issued pursuant
to exercise of an Option shall be such price as is determined by the
Administrator, but shall be subject to the following:

               (i) In the case of an Incentive Stock Option

                    (A) granted to an Employee who, at the time of the grant of
such Incentive Stock Option, owns stock representing more than ten percent (10%)
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% of the Fair
Market Value per Share on the date of grant.

                    (B) granted to any Employee other than an Employee described
in the preceding paragraph, the per Share exercise price shall be no less than
100% of the Fair Market Value per Share on the date of grant.

                                      -6-
<PAGE>

               (ii) In the case of a Nonstatutory Stock Option

                    (A) granted to a person who, at the time of the grant of
such Option, owns stock representing more than ten percent (10%) 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% of the Fair Market Value
per Share on the date of the grant.

                    (B) granted to any person, the per Share exercise price
shall be no less than 85% of the Fair Market Value per Share on the date of
grant.

         (b) The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant) and may consist entirely of(1) cash, (2) check,
(3) promissory note, (4) other Shares which (x) in the case of Shares acquired
upon exercise of an Option have been owned by the Optionee for more than six
months on the date of surrender and (y) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised, (5) delivery of a properly executed exercise notice
together with such other documentation as the Administrator and the broker, if
applicable, shall require to effect an exercise of the Option and delivery to
the Company of the sale or loan proceeds required to pay the exercise price, or
(6) any combination of the foregoing methods of payment. In making its
determination as to the type of consideration to accept, the Administrator shall
consider if acceptance of such consideration may be reasonably expected to
benefit the Company.

     9. Exercise of Option.

         (a) Procedure for Exercise; Rights as a Shareholder. Any Option granted
hereunder shall be exercisable at such times and under such conditions as
determined by the Administrator, including performance criteria with respect to
the Company and/or the Optionee, and as shall be permissible under the terms of
the Plan, but in no case at a rate of less than 20% per year over five (5) years
from the date the Option is granted.

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

               An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Administrator, consist of any
consideration and method of payment allowable under Section 8(b) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) such stock certificate promptly

                                      -7-
<PAGE>

upon exercise of the Option. 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.

               Exercise of an Option in any manner shall result in a decrease in
the number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.

         (b) Termination of Employment or Consulting Relationship. In the event
of termination of an Optionee's Continuous Status as an Employee or Consultant
with the Company (but not in the event of an Optionee's change of status from
Employee to Consultant (in which case an Employee's Incentive Stock Option shall
automatically convert to a Nonstatutory Stock Option on the date three (3)
months and one day from the date of such change of status) or from Consultant to
Employee), such Optionee may, but only within such period of time as is
determined by the Administrator, of at least thirty (30) days, with such
determination in the case of an Incentive Stock Option not exceeding three (3)
months after the date of such termination (but in no event later than the
expiration date of the term of such Option as set forth in the Option
Agreement), exercise his or her Option to the extent that Optionee was entitled
to exercise it at the date of such termination. To the extent that Optionee was
not entitled to exercise the Option at the date of such termination, or if
Optionee does not exercise such Option to the extent so entitled within the time
specified herein, the Option shall terminate.

         (c) Disability of Optionee. In the event of termination of an
Optionee's consulting relationship or Continuous Status as an Employee as a
result of his or her disability, Optionee may, but only within twelve (12)
months from the date of such termination (and in no event later than the
expiration date of the term of such Option as set forth in the Option
Agreement), exercise the Option to the extent otherwise entitled to exercise it
at the date of such termination; provided, however, that if such disability is
not a "disability" as such term is defined in Section 22(e)(3) of the Code, in
the case of an Incentive Stock Option such Incentive Stock Option shall
automatically convert to a Nonstatutory Stock Option on the day three months and
one day following such termination. To the extent that Optionee is not entitled
to exercise the Option at the date of termination, or if Optionee does not
exercise such Option to the extent so entitled within the time specified herein,
the Option shall terminate, and the Shares covered by such Option shall revert
to the Plan.

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

                                      -8-
<PAGE>
             (e) Rule 16b-3. Options granted to persons subject to Section 16(b)
of the Exchange Act must comply with Rule 16b-3 and shall contain such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
Plan transactions.

             (f) Buyout Provisions. The Administrator may at any time offer to
buy out for a payment in cash or Shares, an Option previously granted, based on
such terms and conditions as the Administrator shall establish and communicate
to the Optionee at the time that such offer is made.

         10. Non-Transferability of Options. Options may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.

         11. Adjustments Upon Changes in Capitalization or Merger.

             (a) Changes in Capitalization. Subject to any required action by
the shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per share of Common Stock covered
by each such outstanding Option, 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
Administrator, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an Option.

             (b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify the
Optionee at least fifteen (15) days prior to such proposed action. To the extent
it has not been previously exercised, the Option will terminate immediately
prior to the consummation of such proposed action.

             (c) Merger. In the event of a merger of the Company with or into
another corporation, the Option may be assumed or an equivalent option may be
substituted by such successor corporation or a parent or subsidiary of such
successor corporation. If, in such event, the Option is not assumed or
substituted, the Option shall terminate as of the date of the closing of the
merger. For the purposes of this paragraph, the Option shall be considered
assumed if, following the merger, the option confers the right to purchase, for
each Share of Optioned Stock subject to the Option immediately prior to the
merger, the consideration (whether stock, cash, or other securities or property)
received in the

                                      -9-
<PAGE>

merger 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 was not
solely common stock of the successor corporation or its Parent, the
Administrator may, with the consent of the successor corporation, provide for
the consideration to be received upon the exercise of the Option for each Share
of Optioned Stock subject to the Option to be solely common stock of the
successor corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the merger.

     12. Time of Granting Options. The date of grant of an Option shall, for all
purposes, be the date on which the Administrator makes the determination
granting such Option, or such other date as is determined by the Board. Notice
of the determination shall be given to each Employee or Consultant to whom an
Option is so granted within a reasonable time after the date of such grant.

     13. Amendment and Termination of the Plan.

         (a) Amendment and Termination. The Board may at any time amend, alter,
suspend or discontinue the Plan, but no amendment, alteration, suspension or
discontinuation shall be made which would impair the rights of any Optionee
under any grant theretofore made, without his or her consent. In addition, to
the extent necessary and desirable to comply with Rule 16b-3 under the Exchange
Act or with Section 422 of the Code (or any other applicable law or regulation,
including the requirements of the NASD or an established stock exchange), the
Company shall obtain shareholder approval of any Plan amendment in such a manner
and to such a degree as required.

         (b) Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options already granted, and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and
the Administrator, which agreement must be in writing and signed by the Optionee
and the Company.

     14. Conditions Upon Issuance of Shares. Shares shall not be issued pursuant
to the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act, the rules and regulations promulgated thereunder, and
the requirements of any stock exchange upon which the Shares may then be listed,
and shall be further subject to the approval of counsel for the Company with
respect to such compliance.

         As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.

                                      -10-
<PAGE>

     15. 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.

         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.

     16. Agreements. Options shall be evidenced by written agreements in such
form as the Administrator shall approve from time to time.

     17. Shareholder Approval. Continuance of the Plan shall be subject to
approval by the shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such shareholder approval shall be obtained
in the degree and manner required under applicable state and federal law and the
rules of any stock exchange upon which the Common Stock is listed.

     18. Information to Optionees and Purchasers. The Company shall provide to
each Optionee, not less frequently than annually, copies of annual financial
statements. The Company shall also provide such statements to each individual
who acquires Shares pursuant to the Plan while such individual owns such Shares.
The Company shall not be required to provide such statements to key employees
whose duties in connection with the Company assure their access to equivalent
information.

                                      -11-
<PAGE>

                                  ATTACHMENT 1
              STATE OF CALIFORNIA - CALIFORNIA ADMINISTRATiVE CODE
         Title 10. Investment - Chapter 3. Commissioner of Corporations

     260.141.11: Restriction on Transfer. (a) The issuer of any security upon
which a restriction on transfer has been imposed pursuant to Sections
260.102.6, 260.141.10 or 260.534 shall cause a copy of this section to be
delivered to each issuer or transferee of such security at the time the
certificate evidencing the security is delivered to the issuer or transferee.

     (b) It is unlawful for the holder of any such security to consummate a sale
or transfer of such security, or any interest therein, without the prior written
consent of the Commissioner (until this condition is removed pursuant to Section
260.141.12 of these rules), except:

         (1) to the issuer;

         (2) pursuant to the order or process of any court,

         (3) to any person described in Subdivision (i) of Section 25102 of the
     Code or Section 260.105.14 of these rules;

         (4) to the transferor's ancestors, descendants or spouse, or any
     custodian or trustee for the account of the transferor or the transferor's
     ancestors, descendants, or spouse; or to a transferee by a trustee or
     custodian for the account of the transferee or the transferee's ancestors,
     descendants or spouse;

         (5) to holders of securities of the same class of the same issuer.

         (6) by way of gift or donation inter vivos or on death;

         (7) by or through a broker-dealer licensed under the Code (either
     acting as such or as a finder) to a resident of a foreign state, territory
     or country who is neither domiciled in this state to the knowledge of the
     broker-dealer, nor actually present in this state if the sale of such
     securities is not in violation of any securities law of the foreign state,
     territory or country concerned;

         (8) to a broker-dealer licensed under the Code in a principal
     transaction, or as an underwriter or member of an underwriting syndicate or
     selling group;

         (9) if the interest sold or transferred is a pledge or other lien given
     by the purchaser to the seller upon a sale of the security for which the
     Commissioner's written consent is obtained or under this rule not required;

         (10) by way of a sale qualified under Sections 25111, 25112, 25113 or
     25121 of the Code, of the securities to be transferred, provided that no
     order under Section 25140 or subdivision (a) of Section 25143 is in effect
     with respect to such qualification;

         (11) by a corporation to a wholly owned subsidiary of such corporation,
     or by a wholly owned subsidiary of a corporation to such corporation;

         (12) by way of an exchange qualified under Section 25111, 25112 or
     25113 of the Code, provided that no order under Section 25140 or
     subdivision (a) of Section 25143 is in effect with respect to such
     qualification;

         (13) between residents of foreign states, territories or countries who
     are neither domiciled nor actually present in this state;

         (14) to the State Controller pursuant to the Unclaimed Property Law or
     to the administrator of the unclaimed property law of another state; or

         (15) by the State Controller pursuant to the Unclaimed Property Law or
     by the administrator of the unclaimed property law of another state if, in
     either such case, such person (i) discloses to potential purchasers at the
     sale that transfer of the securities is restricted under this rule, (ii)
     delivers to each purchaser a copy of this rule, and (iii) advises the
     Commissioner of the name of each purchaser;

         (16) by a trustee to a successor trustee when such transfer does not
     involve a change in the beneficial ownership of the securities;

         (17) by way of an offer and sale of outstanding securities in an issuer
     transaction that is subject to the qualification requirement of Section
     25110 of the Code but exempt from that qualification requirement by
     subdivision (f) of Section 25102; provided that any such transfer is on the
     condition that any certificate evidencing the security issued to such
     transferee shall contain the legend required by this section.

     (c) The certificates representing all such securities subject to such a
restriction on transfer, whether upon initial issuance or upon any transfer
thereof, shall bear on their face a legend, prominently stamped or printed
thereon in capital letters of not less than 10-point size, reading as follows:

          "IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR
          ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR,
          WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS
          OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S
          RULES."

<PAGE>

                                   M-PACT, INC.                     CONFIDENTIAL

                                 1995 STOCK PLAN

                             STOCK OPTION AGREEMENT

     Unless otherwise defined herein, the terms defined in the Plan shall have
the same defined meanings in this Stock Option Agreement.

I. NOTICE OF STOCK OPTION GRANT

[Optionee's Name and Address]

-----------------------------------------------

     You have been granted an option to purchase Common Stock of M-Pact, Inc., a
California Corporation (the "Company"), subject to the terms and conditions of
the Plan and this Stock Option Agreement, as follows:

        Grant Number
                                             -----------------------------------
        Date of Grant
                                             -----------------------------------
        Vesting Commencement Date
                                             -----------------------------------
        Exercise Price per Share
                                             -----------------------------------
        Total Number of Shares Granted                                        *
                                             -----------------------------------
        Total Exercise Price
                                             -----------------------------------
        Type of Option:                      Incentive Stock Option
                                       ----
                                             Nonstatutory Stock Option
                                       ----

        Term/Expiration Date:
                                             -----------------------------------

----------

*    After giving effect to the two for one stock split of the company effected
     in November 1995.

Exercise and Vesting Schedule:

     25% of the Shares subject to the Option shall vest one year after the
Vesting Commencement Date, and 1/48th of the Shares subject to the Option shall
vest each month thereafter, so that all of the Shares shall be vested 48 months
after the Vesting Commencement Date.

     Termination Period:

     This Option may be exercised, to the extent vested, for thirty (30) days
after termination of Optionee's employment or consulting relationship, or such
longer period as may be applicable upon death
<PAGE>

or disability of Optionee as provided in the Plan, but in no event later than
the Term/Expiration Date as provided above.

II. AGREEMENT

     1. Grant of Option. The Company, hereby grants to the Optionee named in the
Notice of Grant (the "Optionee"), an option (the "Option") to purchase the total
number of shares of Common Stock (the "Shares") set forth in the Notice of
Grant, at the exercise price per share set forth in the Notice of Grant (the
"Exercise Price") subject to the terms, definitions and provisions of the 1995
Stock Option Plan (the "Plan") adopted by the Company, which is incorporated
herein by reference.

         If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an ISO as defined in Section 422
of the Code. However, if this Option is intended to be an ISO, to the extent
that it exceeds the $100,000 rule of Code Section 422(d) it shall be treated as
a Nonstatutory Stock Option ("NSO").

     2. Exercise of Option. This Option shall be exercisable during its term in
accordance with the provisions of Section 9 of the Plan as follows:

         (i) Right to Exercise.

               (a) Subject to subsections 2(i)(b) through 2(i)(e) below, this
Option shall be exercisable cumulatively according to the vesting schedule set
out in the Notice of Grant. For purposes of this Stock Option Agreement, Shares
subject to Option shall vest based on continued employment of Optionee with the
Company.

               (b) This Option may not be exercised for a fraction of a Share.

               (c) In the event of Optionee's death, disability or other
termination of the employment consulting relationship, the exercisability of the
Option is governed by Sections 6, 7 and 8 below, subject to the limitation
contained in subsection 2(i)(d).

               (d) In no event may this Option be exercised after the date of
expiration of the term of this Option as Set forth in the Notice of Grant.

         (ii) Method of Exercise. This Option shall be exercisable by written
notice (in the form attached as Exhibit A) which shall state the election to
exercise the Option, the number of Shares in respect of which the Option is
being exercised, and such other representations and agreements with respect to
such shares of Common Stock as may be required by the Company pursuant to the
provisions of the Plan. Such written notice shall be signed by the Optionee
shall be delivered in person or by certified mail to the Secretary of the
Company. The written notice shall be accompanied by payment of the Exercise
Price. This Option shall be deemed to be exercised upon receipt by the Company
of such written notice accompanied by the Exercise Price.

               No Shares shall be issued pursuant to the exercise of an Option
unless such issuance and such exercise shall comply with all relevant provisions
of law and the requirements of any stock exchange upon which the Shares may then
be listed. Assuming such compliance, for income tax

                                      -2-
<PAGE>

purposes the Shares shall be considered transferred to the Optionee on the date
on which the Option is exercised with respect to such Shares.

     3. Optionee's Representations. In the event the Shares purchasable pursuant
to the exercise of this Option have not been registered under the Securities Act
of 1933, as amended, at the time this Option is exercised, Optionee shall, if
required by the Company, concurrently with the exercise of all or any portion of
this Option, deliver to the Company his or her Investment Representation
Statement in the form attached hereto as Exhibit B, and shall read the
applicable rules of the Commissioner of Corporations attached to such Investment
Representation Statement.

     4. Method of Payment. Payment of the Exercise Price shall be by any of the
following, or a combination thereof, at the election of the Optionee:

         (i) cash; or

         (ii) check; or

         (iii) if at the time of exercise the Company has a class of securities
registered under Section 12 of the Securities Exchange Act of 1934, surrender of
other shares of Common Stock of the Company which (A) in the case of Shares
acquired pursuant to the exercise of a Company option, have been owned by the
Optionee for more than six (6) months on the date of surrender, and (B) have a
Fair Market Value on the date of surrender equal to the Exercise Price of the
Shares as to which the Option is being exercised; or

         (iv) if at the time of exercise the Company has a class of securities
registered under Section 12 of the Securities Exchange Act of 1934, and to the
extent permitted by the Administrator, delivery of a properly executed exercise
notice together with such other documentation as the Administrator and the
broker, if applicable, shall require to effect an exercise of the Option and
delivery to the Company of the sale or loan proceeds required to pay the
Exercise Price.

     5. Restrictions on Exercise. This Option may not be exercised until such
time as the Plan has been approved by the stockholders of the Company, or if the
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule under
Part 207 of Title 12 of the Code of Federal Regulations ("Regulation G") as
promulgated by the Federal Reserve Board. As a condition to the exercise of this
Option, the Company may require Optionee to make any representation and warranty
to the Company as may be required by any applicable law or regulation.

     6. Termination of Relationship. In the event an Optionee's Continuous
Status as an Employee or Consultant terminates, Optionee may, to the extent the
Option was vested at the date of such termination (the "Termination Date"),
exercise this Option during the Termination Period set out in the Notice of
Grant. To the extent that Optionee was not vested in this Option at the date of
such termination, or if Optionee does not exercise this Option within the time
specified herein, the Option shall terminate.

                                      -3-
<PAGE>

     7. Disability of Optionee. Notwithstanding the provisions of Section 6
above, in the event of termination of an Optionee's consulting relationship or
Continuous Status as an Employee as a result of his or her disability, Optionee
may, but only within twelve (12) months from the date of such termination (and
in no event later than the expiration date of the term of such Option as set
forth in the Stock Option Agreement), exercise the Option to the extent the
Option was vested at the date of such termination; provided, however, that if
such disability is not a "disability" as such term is defined in Section
22(e)(3) of the Code, in the case of an ISO such ISO shall cease to be treated
as an ISO and shall be treated for tax purposes as an NSO on the ninety-first
(91st) day following such termination. To the extent that Optionee is not
vested in the Option at the date of termination, or if Optionee does not
exercise such Option within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.

     8. Death of Optionee. In the event of termination of Optionee's Continuous
Status as an Employee or Consultant as a result of the death of Optionee, the
Option may be exercised at any time within twelve (12) months following the date
of death (but in no event later than the date of expiration of the term of this
Option as set forth in Section 10 below), by Optionee's estate or by a person
who acquires the right to exercise the Option by bequest or inheritance, but
only to the extent the Option was vested at the date of death. To the extent
that Optionee is not vested in the Option at the date of death, or if the Option
is not exercised within the time specified herein, the Option shall terminate,
and the Shares covered by such Option shall revert to the Plan.

     9. Non-Transferability of Option. This Option may not be transferred in any
manner otherwise than by will or by the laws of descent or distribution and may
be exercised during the lifetime of Optionee only by Optionee. The terms of this
Option shall be binding upon the executors, administrators, heirs, successors
and assigns of the Optionee.

     10. Term of Option. This Option may be exercised only within the term set
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option. The limitations set out
in Section 7 of the Plan regarding Options designated as ISOs and Options
granted to more than ten percent (10%) stockholders shall apply to this Option.

     11. Tax Consequences. Set forth below is a brief summary as of the date of
this Option of some of the federal and state tax consequences of exercise of
this Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE
SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE
SHARES.

         (i) Exercise of ISO. If this Option qualifies as an ISO, there will be
no regular federal income tax liability or state income tax liability upon the
exercise of the Option, although the excess, if any, of the Fair Market Value of
the Shares on the date of exercise over the Exercise Price will be treated as an
adjustment to the alternative minimum tax for federal tax purposes and may
subject the Optionee to the alternative minimum tax in the year of exercise.

         (ii) Exercise of ISO Following Disability. If the Optionee's Continuous
Status as an Employee or Consultant terminates as a result of disability that is
not total and permanent disability as

                                      -4-
<PAGE>

defined in Section 22(e)(3) of the Code, to the extent permitted on the date of
termination, the Optionee must exercise an ISO within 90 days of such
termination for the ISO to be qualified as an ISO.

         (iii) Exercise of NSO. There may be a regular federal income tax
liability and state income tax liability upon the exercise of an NSO. The
Optionee will be treated as having received compensation income (taxable at
ordinary income tax rates) equal to the excess, if any, of the Fair Market Value
of the Shares on the date of exercise over the Exercise Price. If Optionee is an
Employee, the Company will be required to withhold from Optionee's compensation
or collect from Optionee and pay to the applicable taxing authorities an amount
equal to a percentage of this compensation income at the time of exercise. If
the Optionee is subject to Section 16 of the Securities Act of 1934, as amended,
the date of income recognition may be deferred for up to six months.

         (iv) Disposition of Shares. In the case of an NSO, if Shares are held
for at least one year, any gain realized on disposition of the Shares will be
treated as long-term capital gain for federal and state income tax purposes. In
the case of an ISO, if Shares transferred pursuant to the Option are held for at
least one year after exercise and are disposed of at least two years after the
Date of Grant, any gain realized on disposition of the Shares will also be
treated as long-term capital gain for federal and state income tax purposes. If
Shares purchased under an ISO are disposed of within such one-year period or
within two years after the Date of Grant, any gain realized on such disposition
will be treated as compensation income (taxable at ordinary income rates) to the
extent of the difference between the Exercise Price and the lesser of (1) the
Fair Market Value of the Shares on the date of exercise, or (2) the sale price
of the Shares.

         (v) Notice of Disqualifying Disposition of ISO Shares. If the Option
granted to Optionee herein is an ISO, and if Optionee sells or otherwise
disposes of any of the Shares acquired pursuant to the ISO on or before the
later of (1) the date two years after the Date of Grant, or (2) the date one
year after the date of exercise, the Optionee shall immediately notify the
Company in writing of such disposition. Optionee agrees that Optionee may be
subject to income tax withholding by the Company on the compensation income
recognized by the Optionee.

     12. Lock-up Agreement. Optionee hereby agrees that if so requested by the
Company or any representative of the underwriters in connection with any
registration of the offering of any securities of the Company under the
Securities Act, Optionee shall not sell or otherwise transfer any Shares or
other securities of the Company during the 180-day period following the
effective date of a registration statement of the Company filed under the
Securities Act; provided, however, that such restriction shall only apply to the
first registration statement of the Company to become effective under the
Securities Act which include securities to be sold on behalf of the Company to
the public in an underwritten public offering under the Securities Act. The
Company may impose stop-transfer instructions with respect to securities subject
to the foregoing restrictions until the end of such 180-day period.

                                      -5-
<PAGE>

     OPTIONEE ACKNOWLEDGES THAT IT IS OPTIONEE'S SOLE RESPONSIBILITY AND NOT THE
COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b), EVEN IF OPTIONEE
REQUESTS THE COMPANY OR ITS REPRESENTATIVE TO MAKE THIS FILING ON OPTIONEE'S
BEHALF.

                                       M-PACT, INC.

                                       By:
                                           -------------------------------------
                                       Tide:
                                             -----------------------------------

     OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE
OPTION HEREOF IS EARNED ONLY BY CONTINUING CONSULTANCY OR EMPLOYMENT AT THE WILL
OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR
ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT
NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY'S STOCK OPTION PLAN WHICH IS
INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT WITH
RESPECT TO CONTINUATION OF EMPLOYMENT OR CONSULTANCY BY THE COMPANY, NOR SHALL
IT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE OPTIONEE'S EMPLOYMENT OR CONSULTANCY AT ANY TIME, WITH OR WITHOUT
CAUSE.

     Optionee acknowledges receipt of a copy of the Plan and represents that he
is familiar with the terms and provisions thereof, and hereby accepts this
Option subject to all of the terms and provisions thereof. Optionee has reviewed
the Plan and this Option in their entirety, has had an opportunity to obtain the
advice of counsel prior to executing this Option and fully understands all
provisions of the Option. Optionee hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Administrator upon
any questions arising under the Plan or this Option. Optionee further agrees to
notify the Company upon any change in the residence address indicated below.

Dated:
      -----------------------------    -----------------------------------------
                                       Optionee

                    Residence Address:
                                       -----------------------------------------

                                       -----------------------------------------

                                      -6-
<PAGE>

                                   EXHIBIT A

                                 1995 STOCK PLAN

                                 EXERCISE NOTICE

M-PACT, INC.
Attn: Chief Financial Officer
4110 Clipper Court
Fremont, CA 94538

Ladies and Gentlemen:

     1. Exercise of Option. Effective as of today, ___________ 19__, the
undersigned ("Optionee") hereby elects to exercise Optionee's Option to purchase
__________ shares of the Common Stock (the "Shares") of M-Pact, Inc., (the
"Company") under and pursuant to the Company's 1995 Stock Plan, as amended (the
"Plan"), and the [ ] Incentive [ ] Nonqualified Stock Option Agreement dated
________________ (the "Option Agreement").

     2. Representations of Optionee. Optionee acknowledges that Optionee has
received, read and understood the Plan and the Option Agreement and agrees to
abide by and be bound by their terms and conditions.

     3. Rights as Stockholder. 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.

         Optionee shall enjoy rights as a stockholder until such time as
Optionee disposes of the Shares or the Company and/or its assignee(s) exercises
the Right of First Refusal hereunder. Upon such exercise, Optionee shall have no
further rights as a holder of the Shares so purchased except the right to
receive payment for the Shares so purchased in accordance with the provisions of
this Agreement, and Optionee shall forthwith cause the certificate(s) evidencing
the Shares so purchased to be surrendered to the Company for transfer or
cancellation.

     4. Company's Right of First Refusal. Before any Shares held by Optionee
or any transferee (either being sometimes referred to herein as the "Holder")
may be sold or otherwise transferred (including transfer by gift or operation of
law), the Company or its assignee(s) shall have a right of first refusal to
purchase the Shares on the terms and conditions set forth in this Section (the
"Right of First Refusal").

         (a) Notice of Proposed Transfer. The Holder of the Shares shall deliver
to the Company a written notice (the "Notice") stating: (i) the Holder's bona
fide intention to sell or otherwise

<PAGE>

transfer such Shares; (ii) the name of each proposed purchaser or other
transferee ("Proposed Transferee"); (iii) the number of Shares to be transferred
to each Proposed Transferee; and (iv) the bona fide cash price or other
consideration for which the Holder proposes to transfer the Shares (the "Offered
Price"), and the Holder shall offer the Shares at the Offered Price to the
Company or its assignee(s).

         (b) Exercise of Right of First Refusal. At any time within thirty (30)
days after receipt of the Notice, the Company and/or its assignee(s) may, by
giving written notice to the Holder, elect to purchase all, but not less than
all, of the Shares proposed to be transferred to any one or more of the Proposed
Transferees, at the purchase price determined in accordance with subsection (c)
below.

         (c) Purchase Price. The purchase price ("Purchase Price") for the
Shares purchased by the Company or its assignee(s) under this Section shall be
the Offered Price. If the Offered Price includes consideration other than cash,
the cash equivalent value of the non-cash consideration shall be determined by
the Board of Directors of the Company in good faith.

         (d) Payment. Payment of the Purchase Price shall be made, at the option
of the Company or its assignee(s), in cash (by check), by cancellation of all or
a portion of any outstanding indebtedness of the Holder to the Company (or, in
the case of repurchase by an assignee, to the assignee), or by any combination
thereof within 30 days after receipt of the Notice or in the manner and at the
times set forth in the Notice.

         (e) Holder's Right to Transfer. If all of the Shares proposed in the
Notice to be transferred to a given Proposed Transferee are not purchased by the
Company and/or its assignee(s) as provided in this Section, then the Holder may
sell or otherwise transfer such Shares to that Proposed Transferee at the
Offered Price or at a higher price, provided that such sale or other transfer is
consummated within 120 days after the date of the Notice and provided further
that any such sale or other transfer is effected in accordance with any
applicable securities laws and the Proposed Transferee agrees in writing that
the provisions of this Section shall continue to apply to the Shares in the
hands of such Proposed Transferee. If the Shares described in the Notice are not
transferred to the Proposed Transferee within such period, a new Notice shall be
given to the Company, and the Company and/or its assignees shall again be
offered the Right of First Refusal before any Shares held by the Holder may be
sold or otherwise transferred.

         (f) Exception for Certain Family Transfers. Anything to the contrary
contained in this Section notwithstanding, the transfer of any or all of the
Shares during the Optionee's lifetime or on the Optionee's death by will or
intestacy to the Optionee's immediate family or a trust for the benefit of the
Optionee's immediate family shall be exempt from the provisions of this Section.
"Immediate Family" as used herein shall mean spouse, lineal descendant or
antecedent, father, mother, brother or sister. In such case, the transferee or
other recipient shall receive and hold the Shares so transferred subject to the
provisions of this Section, and there shall be no further transfer of such
Shares except in accordance with the terms of this Section.

         (g) Termination of Right of First Refusal. The Right of First Refusal
shall terminate as to any Shares 90 days after the first sale of Common Stock of
the Company to the general public pursuant to a registration statement filed
with and declared effective by the Securities and Exchange Commission under the
Securities Act of 1933, as amended.

                                      -2-
<PAGE>

     5. Tax Consultation. Optionee understands that Optionee may suffer adverse
tax consequences as a result of Optionee's purchase or disposition of the
Shares. Optionee represents that Optionee has consulted with any tax consultants
Optionee deems advisable in connection with the purchase or disposition of the
Shares and that Optionee is not relying on the Company for any tax advice.

     6. Restrictive Legends and Stop-Transfer Orders.

         (a) Legends. Optionee understands and agrees that the Company shall
cause the legends set forth below or legends substantially equivalent thereto,
to be placed upon any certificate(s) evidencing ownership of the Shares together
with any other legends that may be required by state or federal securities laws:

     THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
     SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") AND MAY NOT BE OFFERED, SOLD
     OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
     REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL IN FORM AND
     SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE
     OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.

     THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
     RESTRICTIONS ON TRANSFER AND RIGHT OF FIRST REFUSAL OPTIONS HELD BY THE
     ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN THE EXERCISE NOTICE BETWEEN THE
     ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE
     OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER SUCH TRANSFER RESTRICTIONS
     AND RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THESE SHARES.

         (b) Stop-Transfer Notices. Optionee agrees that, in order to ensure
compliance with the restrictions referred to herein, the Company may issue
appropriate "stop transfer" instructions to its transfer agent, if any, and
that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.

                                      -3-
<PAGE>

         (c) Refusal to Transfer. The Company shall not be required (i) to
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement or (ii) to treat as owner
of such Shares or to accord the right to vote or pay dividends to any purchaser
or other transferee to whom such Shares shall have been so transferred.

     7. Successors and Assigns. The Company may assign any of its rights under
this Agreement to single or multiple assignees, and this Agreement shall inure
to the benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer herein set forth, this Agreement shall be binding upon
Optionee and his or her heirs, executors, administrators, successors and
assigns.

     8. Interpretation. Any dispute regarding the interpretation of this
Agreement shall be submitted by Optionee or by the Company forthwith to the
Company's Board of Directors or the committee thereof that administers the Plan,
which shall review such dispute at its next regular meeting. The resolution of
such a dispute by the Board or committee shall be final and binding on the
Company and on Optionee.

     9. Governing Law: Severability. This Agreement shall be governed by and
construed in accordance with the laws of the State of California excluding that
body of law pertaining to conflicts of law. Should any provision of this
Agreement be determined by a court of law to be illegal or unenforceable, the
other provisions shall nevertheless remain effective and shall remain
enforceable.

     10. Notices. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail by certified mail, with postage and fees
prepaid, addressed to the other party at its address as shown below beneath its
signature, or to such other address as such party may designate in writing from
time to time to the other party.

     11. Further Instruments. The parties agree to execute such further
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Agreement.

     12. Delivery of Payment. Optionee herewith delivers to the Company the full
Exercise Price for the Shares.

     13. Lock-up Agreement. Optionee hereby agrees that if so requested by the
Company or any representative of the underwriters in connection with any
registration of the offering of any securities of the Company under the
Securities Act, Optionee shall not sell or otherwise transfer any Shares or
other securities of the Company during the 180-day period following the
effective date of a registration statement of the Company filed under the
Securities Act; provided, however, that such restriction shall only apply to the
first registration statement of the Company to become effective under the
Securities Act which include securities to be sold on behalf of the Company to
the public in an underwritten public offering under the Securities Act. The
Company may impose stop-transfer instructions with respect to securities subject
to the foregoing restrictions until the end of such 180-day period.

                                      -4-
<PAGE>

     14. Entire Agreement. The Plan and Notice of Grant/Option Agreement are
incorporated herein by reference. This Agreement, the Plan, the Option
Agreement, the Restricted Stock Purchase Agreement, and the Investment
Representation Statement constitute the entire agreement of the parties and
supersede in their entirety all prior undertakings and agreements of the
Company and Optionee with respect to the subject matter hereof

Submitted by:                          Accepted by:

OPTIONEE:                              M-PACT, INC.

                                       By:
-----------------------------------       --------------------------------------
(Signature of Optionee)

                                       Its:
                                           -------------------------------------

Address:

-----------------------------------

-----------------------------------

                                      -5-
<PAGE>

                                   EXHIBIT B

                       INVESTMENT REPRESENTATION STATEMENT

OPTIONEE :

COMPANY  :   M-PACT, INC.

SECURITY :   COMMON STOCK

AMOUNT   :

DATE     :

In connection with the purchase of the above-listed Securities, the undersigned
Optionee represents to the Company the following:

         (a) Optionee is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Securities. Optionee is
acquiring these Securities for investment for Optionee's own account only and
not with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").

         (b) Optionee acknowledges and understands that the Securities
constitute "restricted securities" under the Securities Act and have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Optionee's investment intent as expressed herein. In this connection,
Optionee understands that, in the view of the Securities and Exchange
Commission, the statutory basis for such exemption may be unavailable if
Optionee's representation was predicated solely upon a present intention to hold
these Securities for the minimum capital gains period specified under tax
statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other fixed
period in the future. Optionee further understands that the Securities must be
held indefinitely unless they are subsequently registered under the Securities
Act or an exemption from such registration is available. Optionee further
acknowledges and understands that the Company is under no obligation to register
the Securities. Optionee understands that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of the
Securities unless they are registered or such registration is not required in
the opinion of counsel satisfactory to the Company, a legend prohibiting their
transfer without the consent of the Commissioner of Corporations of the State of
California and any other legend required under applicable state securities laws.

         (c) Optionee is familiar with the provisions of Rule 701 and Rule 144,
each promulgated under the Securities Act, which, in substance, permit limited
public resale of "restricted securities" acquired, directly or indirectly from
the issuer thereof, in a non-public offering subject to the satisfaction of
certain conditions. Rule 701 provides that if the issuer qualifies under Rule
701 at the time of the grant of the Option to the Optionee, the exercise will be
exempt from registration under the Securities Act. In the event the Company
becomes subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, ninety (90) days thereafter (or such longer
period as any market stand-off agreement may require) the Securities exempt
under Rule 701 may be resold,

                                      -1-
<PAGE>

subject to the satisfaction or certain of the conditions specified by Rule 144,
including: (1) the resale being made through a broker in an unsolicited
"broker's transaction" or in transactions directly with a market maker (as said
term is defined under the Securities Exchange Act of 1934); and, in the case of
an affiliate, (2) the availability of certain public information about the
Company, (3) the amount of Securities being sold during any three month period
not exceeding the limitations specified in Rule 144(e), and (4) the timely
filing of a Form 144, if applicable.

     In the event that the Company does not qualify under Rule 701 at the time
of grant of the Option, then the Securities may be resold in certain limited
circumstances subject to the provisions of Rule 144, which requires the resale
to occur not less than two years after the later of the date the Securities were
sold by the Company or the date the Securities were sold by an affiliate of the
Company, within the meaning of Rule 144; and, in the case of acquisition of the
Securities by an affiliate, or by a non-affiliate who subsequently holds the
Securities less than three years. the satisfaction of the conditions set forth
in sections (1), (2), (3) and (4) of the paragraph immediately above.

         (d) Optionee hereby agrees that if so requested by the Company or any
representative of the underwriters in connection with any registration of the
offering of any securities of the Company under the Securities Act, Optionee
shall not sell or otherwise transfer any Shares or other securities of the
Company during the 180-day period following the effective date of a registration
statement of the Company filed under the Securities Act; provided, however, that
such restriction shall only apply to the first registration statement of the
Company to become effective under the Securities Act which include securities to
be sold on behalf of the Company to the public in an underwritten public
offering under the Securities Act. The Company may impose stop-transfer
instructions with respect to securities subject to the foregoing restrictions
until the end of such 180-day period.

         (e) Optionee further understands that in the event all of the
applicable requirements of Rule 701 or 144 are not satisfied, registration under
the Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules 144
and 701 are not exclusive, the Staff of the Securities and Exchange Commission
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rules 144 or 701 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk. Optionee understands that no assurances can be given that any
such other registration exemption will be available in such event.

                                       Signature of Optionee:

                                       -----------------------------------------

                                       Date:                   , 19
                                            -------------------    --

                                      -2-
<PAGE>
                                  ATTACHMENT 1
              STATE OF CALIFORNIA - CALIFORNIA ADMINISTRATIVE CODE
         Title 10. Investment - Chapter 3. Commissioner of Corporations

         260.141.11: Restriction on Transfer. (a) The issuer of any security
upon which a restriction on transfer has been imposed pursuant to Sections
260.102.6.260.141.10 or 260.534 shall cause a copy of this section to be
delivered to each issuee or transferee of such security at the time the
certificate evidencing the security is delivered to the issuee or transferee.

         (b) It is unlawful for the holder of any such security to consummate a
sale or transfer of such security, or any interest therein, without the prior
written consent of the Commissioner (until this condition is removed pursuant
to Section 260.141.12 of these rules), except:

                  (1) to the issuer;

                  (2) pursuant to the order or process of any court;

                  (3) to any person described in Subdivision (i) of Section
         25102 of the Code or Section 260.105.14 of these rules;

                  (4) to the transferor's ancestors, descendants or spouse, or
         any custodian or trustee for the account of the transferor or the
         transferor's ancestors, descendants, or spouse; or to a transferee by a
         trustee or custodian for the account of the transferee or the
         transferee's ancestors, descendants or spouse;

                  (5) to holders of securities of the same class of the same
         issuer;

                  (6) by way of gift or donation inter vivos or on death;

                  (7) by or through a broker-dealer licensed under the Code
         (either acting as such or as a finder) to a resident of a foreign
         state, territory or country who is neither domiciled in this state to
         the knowledge of broker-dealer, nor actually present in this state if
         the sale of such securities is not in violation of any securities law
         of the foreign state, territory or country concerned;

                  (8) to a broker-dealer licensed under the Code in a principal
         transaction, or as an underwriter or member of an underwriting
         syndicate or selling group;

                  (9) if the interest sold or transferred is a pledge or other
         lien given by the purchaser to the seller upon a sale of the security
         for which the Commissioner's written consent is obtained or under this
         rule not required;

                  (10) by way of a sale qualified under Sections 25111, 25112,
         25113, or 25121 of the Code, of the securities to be transferred,
         provided that no order under Section 25140 or subdivision (a) of
         Section 25143 is in effect with respect to such qualification;

                  (11) by a corporation to a wholly owned subsidiary of such
         corporation, or by a wholly owned subsidiary of a corporation to such
         corporation;

                  (12) by way of an exchange qualified under Section 25111,
         25112, or 25113 of the Code, provided that no order under Section 25140
         or subdivision (a) of Section 25143 is in effect with respect to such
         qualification;

                  (13) between residents of foreign states, territories or
         countries who are neither domiciled nor actually present in this state;

                  (14) to the State Controller pursuant to the Unclaimed
         Property Law or to the administrator of the unclaimed property law of
         another state; or

                  (15) by the State Controller pursuant to the Unclaimed
         Property Law or by the administrator of the unclaimed property law of
         another state if, in either such case, such person (i) discloses to
         potential purchasers at the sale that transfer of the securities is
         restricted under this rule, (ii) delivers to each purchaser a copy of
         this rule, and (iii) advises the Commissioner of the name of each
         purchaser;

                  (16) by a trustee to a successor trustee when such transfer
         does not involve a change in the beneficial ownership of the
         securities;

                  (17) by way of an offer and sale of outstanding securities in
         an issuer transaction that is subject to the qualification requirement
         of Section 25110 of the Code but exempt from that qualification
         requirement by subdivision (f) of Section 25102; provided that any such
         transfer is on the condition that any certificate evidencing the
         security issued to such transferee shall contain the legend required by
         this section.

         (c) The certificates representing all such securities subject to such
a restriction on transfer, whether upon initial issuance or upon any transfer
thereof, shall bear on their face a legend, prominently stamped or printed
thereon in capital letters of not less than 10-point size, reading as follows:

                    "IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS
                    SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY
                    CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF
                    THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA,
                    EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES."

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