Document:

<PAGE>
                                                                    EXHIBIT 10.1

                                  June 27, 2002

VIA FACSIMILE
Richard W. Kramp
ATS Medical, Inc.
3905 Annapolis Lane, Suite 105
Minneapolis, MN 55447

     Re:  O.E.M. Supply Agreement dated September 24, 1990, and Carbon Agreement
          dated December 29, 1999, both as amended (collectively, the
          "Agreements")

Dear Mr. Kramp:

     Further to our recent discussions, it is in the best interest of ATS
Medical, Inc., a Minnesota corporation ("ATS") for the parties to renegotiate
and amend certain of the rights and obligations under the Agreements.
Accordingly, effective as of the date of this letter agreement, ATS and Sulzer
Carbomedics Inc. ("CMI") hereby agree as follows:

1.   ATS' obligation to purchase a minimum number of Components and/or Component
     Sets pursuant to the O.E.M. Supply Agreement, including, without limitation
     Sections 2(a) and Exhibit B thereof ("the Minimum Purchase Obligation"),
     shall be suspended as of the date that this letter agreement is executed by
     ATS (with the exception of CMI's work-in-progress as of June 5, 2002 which
     ATS agrees to take delivery of and pay for pursuant to the terms of the
     O.E.M. Supply Agreement notwithstanding this letter agreement). Said
     Minimum Purchase Obligation will resume in full on January 2007 in
     accordance with the attached Schedule 1, notwithstanding anything to the
     contrary in the O.E.M. Supply Agreement. As a result of the foregoing, the
     term of the O.E.M. Supply Agreement shall be extended only for the time
     period necessary for ATS to fulfill its Minimum Purchase Obligation as
     defined in Schedule 1.

2.   The Pricing for a Component Set, adjusted pursuant to Section 3 and Exhibit
     B of the O.E.M. Supply Agreement, shall be expressly made subject to a
     maximum price of $1,000.00 per Component Set.

3.   ATS hereby grants to CMI, its successors and assigns a security interest*
     in all of ATS' Inventory, whether now owned or hereafter acquired, together
     with the products and proceeds thereof. Until terminated, as provided
     herein or by mutual agreement of ATS and CMI this security interest is
     granted to secure all material obligations of ATS now or hereafter as owed
     to CMI under the Agreements. As used herein, the term "Inventory" means all
     Components, Valves, raw materials, work in process, or materials used for
     or consumed to produce Valves, which have been or may in the future be
     delivered by CMI to ATS, and all finished goods inventory without any
     requirement to maintain any specific inventory level, which includes
     Components or Valves (whether contained in

----------
* ATS agrees to sign and deliver, and authorizes CMI to prepare and file, one or
more financing statements or supplements thereto or other instruments as CMI may
from time to time reasonably require to comply with the Uniform Commercial Code
or other applicable law to preserve, protect and enforce the security interest
of CMI.

<PAGE>

Richard Kramp
ATS Medical, Inc.
Page 2
June 27, 2002

     sealed packages and whether such packages contain goods other than goods
     delivered by CMI to ATS), all wherever located and whether in the
     possession of ATS or any other person. While the security interest remains
     in effect, ATS shall keep all Inventory insured for full replacement value
     and shall not sell any Inventory in or as part of a Bulk Sale or outside
     the ordinary course of business. As used herein, the term "Bulk Sale" shall
     mean any sale or transfer or series of sales or transfers made or
     consummated within any given 90-day period of 1,000 or more of the
     Component Sets and/or Valves to any one party or group of related parties.
     Upon payment in full by ATS of all of its payment obligations under the
     Agreements as amended by Paragraphs 1, 5, 6 and 7 of this letter agreement,
     the security interest granted in this Section 2 shall immediately terminate
     for all purposes.

4.   Upon the occurrence of any default of ATS of its payment or other material
     obligations under the Agreements and until CMI acknowledges in writing that
     such default has been cured or waived , CMI will have the remedies of a
     secured party under the Uniform Commercial Code as enacted in Texas or
     other applicable law.

5.   Section 2.5.4 of the Carbon Agreement shall be amended and restated to read
     as follows:

     "4:  five million dollars ($5,000,000.00) which shall be deemed fully
          earned on December 28, 2002, but which shall be due and payable in
          accordance with ATS' promissory note in the form attached hereto
          Schedule 2, which note shall be payable to the order of CMI in the
          original principal amount of $5,000,000 and executed concurrent with
          this letter agreement."

6.   Sections 2.5.5, 2.5.6, 2.5.7 and 2.5.8 of the Carbon Agreement shall be
     amended and restated to read as follows:

     "5:  five million dollars ($5,000,000.00) which shall be due and payable in
          accordance with Schedule 3;

     6:   six million dollars ($6,000,000.00) which shall be due and payable in
          accordance with Schedule 3;

     7:   six million dollars ($6,000,000.00) which shall be due and payable in
          accordance with Schedule 3; and

     8:   six million dollars ($6,000,000.00) which shall be due and payable in
          accordance with Schedule 3."

7.   Notwithstanding the payment schedule outlined in Section 2.5 of the Carbon
     Agreement (as amended by this letter agreement), ATS shall pre-pay all or
     any portion of the License Fee to CMI as follows:

<PAGE>

Richard Kramp
ATS Medical, Inc.
Page 3
June 27, 2002

          From January 1, 2005, for each dollar that the balance of the
          Inventory is reduced by sales by ATS of the Components and/or Valves,
          ATS will remit to CMI seventy-seven cents ($0.77), which amount will
          be credited against the License Fee due and payable to CMI (beginning
          with a credit against the next installment scheduled to be paid to CMI
          after the date of such credit). Said remittance will occur on a
          semi-annual basis beginning on June 30, 2005. In addition to any audit
          rights under the Agreements, CMI shall have the right to have an
          independent third party audit ATS' relevant books and records upon
          thirty (30) days' advance notice solely for the purpose of confirming
          compliance with this prepayment program.

8.   CMI acknowledges and agrees that as of the effective date of this letter
     agreement, ATS is not in default or breach of the Agreements nor has it
     failed to perform under the Agreements, nor will ATS be deemed to be in
     default or breach of the Agreements or deemed to have failed to perform
     under the Agreements by (i) virtue of the parties entering into this letter
     agreement, (ii) the rescheduling, pursuant to the terms of this letter
     agreement, of the payment obligations and Minimum Purchase Obligation of
     ATS under the Agreements, or (iii) as a result of ATS' performance in
     accordance with the terms of this letter agreement. Furthermore, the
     parties' obligations under the Agreements shall be modified as follows: (i)
     under the Carbon Agreement, (a) ATS, may but is not obligated, to continue
     to build the Production Line notwithstanding Section 2.3 thereof, (b) CMI
     shall not notify ATS in writing that it is ready to initiate its transfer
     to ATS of the Licensed Technology, equipment and machining specifications
     and operating capability to permit ATS to develop the Graphite Capability
     at any time before June 30, 2006, notwithstanding anything to the contrary
     in Section 2.4 thereof, and (c) CMI shall not notify ATS in writing that it
     is ready to initiate its transfer to ATS of the Licensed Technology,
     equipment and machining specifications and operating capability to permit
     ATS to develop the Tooling Capability at any time before June 30, 2008,
     notwithstanding anything to the contrary in Section 2.4 thereof, and (ii)
     under the O.E.M. Supply Agreement, (a) ATS has no obligation to follow the
     ordering requirements and procedures stated in Section 5 thereof until it
     resumes the purchase of a minimum number of Components and/or Component
     Sets from CMI in January, 2007, and (b) CMI is not authorized to maintain a
     supply of Raw Materials on ATS' behalf pursuant to Section 5(c) thereof
     unless and until ATS resumes the purchase of Components from CMI.

9.   CMI and ATS entered into that certain License Agreement dated as of
     September 24, 1990, as amended (the "License Agreement"), which the parties
     acknowledge expired pursuant to its terms as of December 29, 2000. CMI
     acknowledges and agrees that pursuant to the License Agreement and as a
     result of its expiration, ATS retained a paidup, exclusive, worldwide,
     irrevocable and perpetual right and license, under the Patent to use and
     sell the Licensed Product, assemble Components for the Licensed Product and
     sterilize and package the Licensed Product. Nothing in this letter
     agreement, nor any

<PAGE>

Richard Kramp
ATS Medical, Inc.
Page 4
June 27, 2002

     breach or default of ATS under the Agreements or this letter agreement (or
     any other documents referenced herein), shall in any way modify, terminate,
     extend, expand or otherwise affect such license rights of ATS. ATS
     acknowledges and agrees that (a) except as expressly stated in clause (b)
     of this Paragraph 9, nothing in this letter agreement shall in any way
     modify, terminate, extend, expand or otherwise affect the license to use
     the Licensed Technology granted to ATS pursuant to Article 2.0 of the
     Carbon Agreement (the "Technology License"), which grant, as stated in the
     Carbon Agreement, shall be subject to the timely payment of the License Fee
     pursuant to the Carbon Agreement (as amended by this letter agreement), and
     (b) in the event that ATS shall default in its obligation under Paragraph 1
     of this letter agreement to pay for CMI's work-in-process as of June 5,
     2002, then ATS's right to use the Technology License shall be suspended
     until ATS has cured such payment default.

10.  ATS represents and warrants to CMI, its successors and assigns that (a) the
     Inventory is primarily located in the State of Minnesota; (b) it is duly
     authorized to execute this letter agreement; and (c) the execution of this
     letter agreement will not create or constitute a breach under any
     agreements pursuant to which ATS is a party.

11.  All capitalized terms contained in but not specifically defined in this
     letter agreement shall have the meaning set forth in the Agreements.

12.  Unless expressly modified by the terms of this letter agreement, the terms
     and conditions of the Agreements and all other obligations thereunder shall
     remain unchanged and in full force and effect.

13.  This letter agreement may be executed in one or more counterparts, and by
     the different parties hereto in separate counterparts with the effect of
     being constituted as one and the same letter agreement.

14.  This letter agreement, the Agreements and the other documents referenced
     herein contains the entire agreement between the parties with respect to
     the subject matter hereof. No waiver, alteration or modification of any of
     the provisions hereof shall be binding unless in writing and signed by the
     parties hereto. This letter agreement is binding on the parties hereto and
     their respective successors and assignees.

15.  Neither CMI nor ATS will make or authorize any other party to make any
     public announcement or disclosure regarding this letter agreement without
     the prior consent of the other party, except any such announcement or
     disclosure that may be required by rule, regulation or law, in which case
     the party required to make the announcement or disclosure will, if
     reasonably practicable, allow the other party at least 72 hours to comment
     on such announcement or disclosure in advance thereof.

<PAGE>

Richard Kramp
ATS Medical, Inc.
Page 5
June 27, 2002

     If this letter agreement accurately reflects the parties' agreement
regarding the matters set forth herein, please so indicate in the space provided
below. Of course, if you have any questions or comments, please do not hesitate
to contact me.

Sincerely,

SULZER CARBOMEDICS INC.

By  /s/ Dennis C. Wallach
    -----------------------
    Dennis C. Wallach
    President, Cardiac Care, Vascular Care and SpinTech Group

Agreed to this 27 day of June, 2002.

ATS MEDICAL, INC.

By  /s/ Richard W. Kramp
    -----------------------
    Richard W. Kramp
    Its President and Chief Executive Officer

Attachments: Schedule 1
             Schedule 2
             Schedule 3

<PAGE>

                                   SCHEDULE 1

                 ATS COMPONENT SET MINIMUM PURCHASE OBLIGATIONS

                            NUMBER OF EQUIVALENT         NEW MINIMUM PURCHASE
ORIGINAL CONTRACT YEAR           VALVE SETS            OBLIGATION BEGINNING DATE
----------------------      --------------------       -------------------------
    Q3 & Q4 2002                    3750                    January, 2011
        2003                        5000                    January, 2007
        2004                        5000                    January, 2008
        2005                        5000                    January, 2009
        2006                        5000                    January, 2010

Notwithstanding anything to the contrary in the O.E.M. Supply Agreement, CMI
will endeavor to deliver all Component Sets and/or Valves required to be
purchased by ATS pursuant to this Schedule 1 in approximately equal monthly
installments throughout the course of the applicable Contract Year, from
Contract Years 2007-2011.

<PAGE>

                                    SCHEDULE 2

                                 PROMISSORY NOTE

$5,000,000                                                Minneapolis, Minnesota
                                                                   June 27, 2002

     For value received, ATS MEDICAL, INC., a Minnesota corporation (the
"Borrower"), promises to pay to the order of SULZER CARBOMEDICS, INC., a
Delaware corporation (the "Lender"), at its office in Austin, Texas, or at such
other place as the holder hereof may hereafter from time to time designate in
writing, on December 28, 2003, in lawful money of the United States of America,
the principal sum of Five Million Dollars ($5,000,000) and to pay interest on
the principal balance of this Note outstanding from time to time (the "Principal
Balance") (computed on the basis of the actual number of days elapsed in a
360-day year) from December 29, 2002 until this Note is fully paid, at seven
percent (7%) per annum provided that, in the Lender's sole discretion, such
annual rate shall equal ten percent (10%) per annum from the date the Borrower
fails to make any payment of principal or interest when and as required until
such payment is made in immediately available funds, and the Lender's election
to charge interest at such increased rate shall not be deemed a waiver or excuse
of any such default.

     The Principal Balance shall be due and payable in two installments of
$2,500,000 each on June 28, 2003 and December 28, 2003. All payments hereunder
shall be made in immediately available funds and shall be first applied to
accrued but unpaid interest on the Principal Balance and the remainder, if any,
shall be applied to the Principal Balance. The Borrower may prepay the Principal
Balance in whole or in part at any time without premium or penalty.

     The payment of this Note is secured by a security interest granted by
Borrower to Lender pursuant to that certain Letter Agreement between the
Borrower and the Lender of even date herewith, and may now or hereafter be
secured by one or more other security agreements, mortgages, deeds of trust,
assignments or other instruments or agreements.

     If (i) any payment hereunder is not made when due in accordance with the
terms of this Note and such failure shall continue for 10 days, (ii) the
Borrower (a) shall be or become insolvent under the United States Bankruptcy
Code, (b) shall admit in writing its inability to pay its debts as they mature,
(c) shall make an assignment for the benefit of creditors, (d) shall apply for
or consent to the appointment of any receiver, trustee, or similar officer for
all or any substantial part of its property, (iii) any judgment, writ, warrant
of attachment or execution or similar process shall be issued or levied against
a substantial part of the property of the Borrower and shall remain unstayed for
90 days, (iv) any receiver, trustee, or similar officer shall be appointed for
all or any substantial part of its property without the application or consent
of the Borrower, or (v) the Borrower shall be dissolved or liquidated or go out
of business; then the holder hereof may, at its option, by notice in writing to
the Borrower, declare this Note to be immediately due and payable, whereupon the
Principal Balance and all interest thereon shall be immediately due and payable
without further notice or demand.

<PAGE>

     The Principal Balance and all interest accrued thereon shall become
automatically due and payable without notice or demand if (i) Borrower
institutes (by petition, application, answer, consent or otherwise) any
bankruptcy, insolvency, reorganization, arrangement, readjustment of debt,
dissolution, liquidation or similar proceeding relating to it under the laws of
any jurisdiction, or (ii) any such proceeding is instituted (by petition,
application or otherwise) against the Borrower and remains undismissed for 90
days.

     The Borrower shall pay all costs of collection, including reasonable
attorneys' fees and legal expenses, if this Note is not paid when due, whether
or not legal proceedings are commenced. This Note shall be governed by the
substantive law of Minnesota. No delay or omission on the part of any holder
hereof in exercising any right or remedy hereunder shall operate as a waiver of
any right or remedy under this Note. A waiver on any one occasion shall not be
construed as a waiver of any right or remedy on any future occasion.

     All makers, endorsers, sureties, guarantors and accommodation parties
hereby waive presentment, dishonor, notice of dishonor and protest. All
endorsers, sureties, guarantors and accommodation parties consent to any and all
extensions, renewals, substitutions and alterations of any of the terms of this
Note and any other documents related hereto and to the release of or failure by
the Lender to exercise any rights against any party liable for any property
securing payment thereof.

                                       ATS MEDICAL, INC.

                                   By  /s/ Richard W. Kramp
                                       -----------------------
                                       Richard W. Kramp
                                       Its President and Chief Executive Officer

<PAGE>

                                   SCHEDULE 3

Payment pursuant to Section 2.5.5  December 28, 2006

Payment pursuant to Section 2.5.6  upon the later of (i) December 28, 2007, or
                                   (ii) if ATS has determined not to develop the
                                   Graphite Capability, the Graphite Decision
                                   or (iii) if ATS has determined to develop the
                                   Graphite Capability, the date on which CMI
                                   has completed its transfer to ATS of the
                                   Graphite Capability

Payment pursuant to Section 2.5.7  December 28, 2008

Payment pursuant to Section 2.5.8  upon the later of (i) December 28, 2009, (ii)
                                   if ATS has determined not to develop the
                                   Tooling Capability, the Tooling Decision
                                   Date or (iii) if ATS has determined to
                                   develop the Tooling Capability, the date on
                                   which CMI has completed its transfer to
                                   ATS of the Tooling Capability<PAGE>
                                                                    EXHIBIT 10.8

                                 MIGRATEC, INC.
                            LONG-TERM INCENTIVE PLAN
                    (AS AMENDED AND RESTATED ON MAY 21, 2002)

         MIGRATEC, INC., a Delaware corporation, (together with its
predecessors, successors and assigns, the "Company"), hereby establishes and
adopts the following Long-Term Incentive Plan (the "Plan").

                                    RECITALS:

         WHEREAS, the Company desires to encourage high levels of performance by
those individuals who are key to the success of the Company, to attract new
individuals who are highly motivated and who will contribute to the success of
the Company and to encourage such individuals to remain as directors,
consultants, officers and/or employees of the Company by increasing their
proprietary interest in the Company's growth and success; and

         WHEREAS, to further these goals, the Company has formulated the Plan to
authorize the granting of incentive awards through grants of stock options
("Options"), Restricted Share Awards and Dividend Equivalent Rights (as such
terms are hereinafter defined) to those individuals whose judgment, initiative
and efforts are responsible for the success of the Company;

         NOW, THEREFORE, the Company hereby constitutes, establishes and adopts
the following Plan and agrees to the following provisions:

                                    ARTICLE 1

                               PURPOSE OF THE PLAN

         1.1 PURPOSE. The purpose of the Plan is to assist the Company in
attracting and retaining selected individuals to serve as directors,
consultants, officers and employees of the Company who will contribute to the
Company's success and to achieve long-term objectives which will inure to the
benefit of all shareholders of the Company through the additional incentive
inherent in the ownership of the Company's shares of common stock, par value
$0.001 per share (the "Shares"). Options granted under the Plan will be either
"incentive stock options" intended to qualify as such under the provisions of
section 422 of the Internal Revenue Code of 1986, as from time to time amended
(the "Code"), or "nonqualified stock options." For purposes of the Plan, the
term "subsidiary" shall mean "subsidiary corporation," as such term is defined
in section 424(f) of the Code, and "affiliate" shall have the meaning set forth
in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). For purposes of the Plan, the term "Award" shall mean a grant of an
Option, a Restricted Share Award, a Dividend Equivalent Right or any other award
made under the terms of the Plan.

                                    ARTICLE 2

                            SHARES SUBJECT TO AWARDS

         2.1 NUMBER OF SHARES. Subject to the adjustment provisions of Section
7.10 hereof, the aggregate number of Shares which may be issued under Awards
under the Plan, whether pursuant to

<PAGE>

Options, Restricted Share Awards or Dividend Equivalent Rights, shall not exceed
Twenty-one Million Nine Hundred Thousand (21,900,000). No Awards to purchase
fractional Shares shall be granted or issued under the Plan.

         2.2 SHARES SUBJECT TO TERMINATED AWARDS. The Shares covered by any
unexercised portions of terminated Options granted under Article 4, any Shares
forfeited as provided in Article 5 and any Shares subject to Awards which are
otherwise surrendered by the Participant (as hereinafter defined) without
receiving any payment or other benefit with respect thereto may again be subject
to new Awards under the Plan. In the event the purchase price of an Option is
paid in whole or in part through the delivery of Shares, the number of Shares
issuable in connection with the exercise of the Option shall not again be
available for the grant of Awards under the Plan.

         2.3 CHARACTER OF SHARES. Shares delivered under the Plan may be
authorized and unissued Shares or Shares acquired by the Company, or both.

                                    ARTICLE 3

                         ELIGIBILITY AND ADMINISTRATION

         3.1 AWARDS TO EMPLOYEES, OFFICERS, DIRECTORS AND CONSULTANTS.

                  (a) Participants who receive Options under Article 4 hereof
         ("Optionees"), Restricted Share Awards under Article 5 hereof or
         Dividend Equivalent Rights under Article 6 hereof (in each case, a
         "Participant") shall consist of such employees, officers, directors and
         consultants of the Company or any of its subsidiaries or affiliates as
         the Committee (as defined in Section 3.2(a) hereinafter) shall select
         from time to time. The Committee's designation of an Optionee or
         Participant in any year shall not require the Committee to designate
         such person to receive Awards or grants in any other year. The
         designation of an Optionee or Participant to receive Awards or grants
         under one portion of the Plan shall not require the Committee to
         include such Optionee or Participant under other portions of the Plan.

                  (b) No Option which is intended to qualify as an "incentive
         stock option" may be granted to any employee, officer, director or
         consultant who, at the time of such grant, owns, directly or indirectly
         (within the meaning of sections 422(b)(6) and 424(d) of the Code),
         shares possessing more than ten percent (10%) of the total combined
         voting power of all classes of shares of the Company or any of its
         subsidiaries or affiliates, unless at the time of such grant, (i) the
         option price is fixed at not less than 110% of the Fair Market Value
         (as hereinafter defined) of the Shares subject to such Option,
         determined on the date of the grant, and (ii) the exercise of such
         Option is prohibited by its terms after the expiration of five (5)
         years from the date such Option is granted.

         3.2 ADMINISTRATION.

                  (a) The Plan shall be administered by the Board of Directors
         of the Company or, upon the designation of the Board, by the
         Compensation Committee (the "Committee") of the Board of Directors.
         References herein to the Committee shall mean the Compensation
         Committee of the Board or such similar committee of the Board as
         designated by the Board of Directors or, in the absence of a
         Compensation Committee or any such designation of a similar committee,
         the Board

                                       2
<PAGE>

         of Directors of the Company. Any committee charged with administering
         the Plan shall have only such authority with respect to the making of
         Awards and the performing of other duties and responsibilities under
         the Plan as shall be delegated to such committee by the Board.

                  (b) The Committee is authorized, subject to the provisions of
         the Plan, to establish such rules and regulations as it may deem
         appropriate for the conduct of meetings and proper administration of
         the Plan. All actions of the Committee shall be taken by majority vote
         of its members.

                  (c) Subject to the provisions of the Plan, the Committee shall
         have authority to, in its sole discretion, interpret the provisions of
         the Plan and, subject to the requirements of applicable law, to
         prescribe, amend, and rescind rules and regulations relating to it as
         it may deem necessary or advisable. The Committee shall have the
         authority to, in its sole discretion, amend, rescind and alter the
         terms of any grant of Options or other Award under this Plan, provided
         that such amendment, rescission or alteration shall not adversely
         affect the rights of the Optionee or Award recipient as set forth in
         the applicable Option or Award agreement between the Company and the
         Optionee or Award recipient. All decisions made by the Committee
         pursuant to the provisions of the Plan shall be final, conclusive and
         binding on all persons, including the Company, its shareholders,
         directors, consultants, officers, employees, Optionees and
         Participants.

                                    ARTICLE 4

                                     OPTIONS

         4.1 GRANT OF OPTIONS. The Committee shall determine, within the
limitations of the Plan, the directors, consultants, officers and employees of
the Company and its subsidiaries and affiliates to whom Options are to be
granted under the Plan, the number of Shares that may be purchased under each
such Option and the option price, and shall designate such Options at the time
of the grant as either "incentive stock options" or "nonqualified stock
options;" provided, however, that Options granted to employees of an affiliate
(that is not also a subsidiary) or to non-employees of the Company may only be
"nonqualified stock options."

         All Options granted pursuant to this Article 4 herein shall be
authorized by the Committee and shall be evidenced in writing by stock option
agreements ("Option Agreements") in such form and containing such terms and
conditions as the Committee shall determine which are not inconsistent with the
provisions of the Plan, and, with respect to any Option Agreement granting
Options which are intended to qualify as "incentive stock options," are not
inconsistent with Section 422 of the Code. Granting an Option pursuant to the
Plan shall impose no obligation on the recipient to exercise such option. Any
individual who is granted an Option pursuant to this Article 4 may hold more
than one Option granted pursuant to this Article 4 at the same time and may hold
both "incentive stock options" and "nonqualified stock options" at the same
time. To the extent that any Option does not qualify as an "incentive stock
option" (whether because of its provisions, the time or manner of its exercise
or otherwise) such Option or the portion thereof which does not so qualify shall
constitute a separate "nonqualified stock option."

         4.2 OPTION PRICE. Subject to Section 3.1(b) herein, the option price
per each Share purchasable under any "incentive stock option" granted pursuant
to this Article 4 shall not be less than 100% of the Fair Market Value (as
hereinafter defined) of such Share on the date of the grant of such Option.

                                       3
<PAGE>

The option price per share of each Share purchasable under any "nonqualified
stock option" granted pursuant to this Article 4 shall be such amount as the
Committee shall determine at the time of the grant of such Option or the then
current Fair Market Value (as defined in Section 7.2 hereinafter).

         4.3 OTHER PROVISIONS. Options granted pursuant to this Article 4 shall
be made in accordance with the terms and provisions of Article 7 hereof and any
other applicable terms and provisions of the Plan.

                                    ARTICLE 5

                                RESTRICTED AWARDS

         5.1 RESTRICTED SHARE AWARDS.

                  (a) Grants of Restricted Shares. A grant of Shares made
         pursuant to this Article 5 is referred to as a "Restricted Share
         Award." The Committee may grant to any Participant an amount of Shares
         in such manner, and subject to such terms, restrictions and conditions
         relating to vesting, forfeiture, delivery and transfer (whether based
         on performance standards, periods of service or otherwise) as the
         Committee shall establish (such Shares being referred to herein as the
         "Restricted Shares"). The terms of any Restricted Share Award granted
         under this Plan shall be set forth in a written agreement (a
         "Restricted Share Agreement") which shall contain provisions determined
         by the Committee and not inconsistent with this Plan. The provisions of
         Restricted Share Awards need not be the same for each Participant
         receiving such Awards.

                  (b) Issuance of Restricted Shares. As soon as practicable on
         or after the date of grant of a Restricted Share Award by the
         Committee, the Company shall cause to be transferred on the books of
         the Company Shares, registered in the name of the Participant,
         evidencing the Restricted Shares covered by the Award, but subject to
         forfeiture to the Company retroactive to the date of grant, if a
         Restricted Share Agreement delivered to the Participant by the Company
         with respect to the Restricted Shares covered by the Award is not duly
         executed by the Participant and timely returned to the Company. All
         Restricted Shares covered by Awards under this Article 5 shall be
         subject to the restrictions, terms and conditions contained in the Plan
         and the Restricted Share Agreement entered into by and between the
         Company and the Participant. Until the lapse or release of all
         restrictions applicable to an Award of Restricted Shares, the share
         certificates representing such Restricted Shares may, in the discretion
         of the Committee, be held in custody by the Company or its designee and
         shall bear a restrictive legend describing the applicable restrictions,
         terms and conditions.

                  (c) Shareholder Rights. Beginning on the date of grant of the
         Restricted Share Award and subject to execution of the Restricted Share
         Agreement as provided in Sections 5.1(a) and (b), the Participant shall
         become a shareholder of the Company with respect to all Shares subject
         to the Restricted Share Agreement and shall have all of the rights of a
         shareholder, including, but not limited to, the right to vote such
         Shares and the right to receive distributions made with respect to such
         Shares; provided, however, that any Shares distributed as a dividend or
         otherwise with respect to any Restricted Shares as to which the
         restrictions have not yet lapsed shall be subject to the same
         restrictions as such Restricted Shares.

                                       4
<PAGE>

                  (d) Restriction on Transferability. None of the Restricted
         Shares may be assigned or transferred (other than by will or the laws
         of descent and distribution), pledged or sold prior to lapse or release
         of the restrictions applicable thereto.

                  (e) Delivery of Shares Upon Release of Restrictions. Upon
         expiration or earlier termination of any forfeiture period without a
         forfeiture and the satisfaction of or release from any other conditions
         prescribed by the Committee, the restrictions applicable to the
         Restricted Shares shall lapse. As promptly as administratively feasible
         thereafter, subject to the requirements of Section 8.1 herein, the
         Company shall deliver to the Participant or, in case of the
         Participant's death, to the Participant's beneficiary, one or more
         stock certificates for the appropriate number of Shares, free of all
         such restrictions, except for any restrictions that may be imposed by
         law.

         5.2 TERMS AND CONDITIONS OF RESTRICTED SHARES.

                  (a) Restrictions Affecting Restricted Shares. Subject to
         Section 5.2(b) herein, Restricted Shares shall be subject to such
         restrictions, terms and conditions as shall be established by the
         Committee, including, but not limited to, restrictions relating to
         vesting, forfeiture, delivery and transfer (whether based on
         performance standards, periods of service or otherwise). Such
         restrictions, terms and conditions may be set forth in the Plan or in
         the Restricted Share Agreement entered into by and between the Company
         and the Participant.

                  (b) Waiver of Conditions or Restrictions. Notwithstanding
         anything contained in this Article 5 to the contrary, the Committee
         may, in its sole discretion, waive any restrictions, terms or
         conditions set forth in the Plan or in any Restricted Share Agreement
         under appropriate circumstances (which may include the death,
         disability or retirement of the Participant, or a material change in
         circumstances arising after the date of an Award) and subject to such
         terms and conditions as the Committee shall deem appropriate.

                                    ARTICLE 6

                           DIVIDEND EQUIVALENT RIGHTS

         6.1 GRANT OF DIVIDEND EQUIVALENT RIGHTS. The Committee shall determine,
within the limitations of the Plan, the directors, consultants, officers and
employees of the Company and its subsidiaries and affiliates to whom Dividend
Equivalent Rights are to be granted under the Plan. For purposes of the Plan, a
"Dividend Equivalent Right" shall mean the right of the holder thereof to
receive credits based on the cash dividends that would have been paid on the
Shares specified in the Award if the Shares were held by the holder to whom the
Award is made. The Committee may grant a Dividend Equivalent Right, either as a
component of another Award or as a separate Award, and, in general, each such
holder of a Dividend Equivalent Right that is outstanding on a dividend record
date for the Company's common stock shall be credited with an amount equal to
the cash or stock dividends or other distributions that would have been received
had the Shares covered by the Award been issued and outstanding on the dividend
record date. The terms of any Dividend Equivalent Right awarded under this Plan
shall be set forth in a written agreement (a "Dividend Equivalent Rights
Agreement") which shall contain provisions determined by the Committee and not
inconsistent with this Plan. The provisions of any such Award need not be the
same for each Participant receiving such Awards. Dividend equivalents credited
to the holder of a Dividend Equivalent Right may be paid currently or may be
deemed to be reinvested in additional Shares (which may

                                       5
<PAGE>

thereafter accrue additional Dividend Equivalent Rights). Any such reinvestment
shall be at the Fair Market Value (as hereinafter defined) at the time thereof.
Dividend Equivalent Rights may be settled in cash or Shares, or a combination
thereof, in a single payment or in installments. The Committee may provide that
a Dividend Equivalent Right granted as a component of another Award shall be
settled upon exercise, settlement or payment for or lapse of restrictions on
such other Award, and that such Dividend Equivalent Right shall expire or be
forfeited or annulled under the same conditions as such other Award. A Dividend
Equivalent Right granted as a component of another Award may also contain
restrictions, terms and conditions different from such other Award.

                                    ARTICLE 7

                         GENERALLY APPLICABLE PROVISIONS

         7.1 OPTION PERIOD. Subject to Section 3.1(b) herein, the period for
which an Option is exercisable shall not exceed ten (10) years from the date
such Option is granted. After the Option is granted, the option period may not
be reduced.

         7.2 FAIR MARKET VALUE. Unless otherwise provided in Section 422 of the
Internal Revenue Code of 1986, as amended, for the grant of an "incentive stock
option," if the Shares are listed or admitted to trading on a securities
exchange registered under the Exchange Act, the "Fair Market Value" of a Share
as of a specified date shall mean the average of the high and low price of the
shares for the day immediately preceding the date as of which Fair Market Value
is being determined (or if there was no reported sale on such date, on the last
preceding date on which any reported sale occurred) as reported on the principal
securities exchange on which the Shares are listed or admitted to trading. If
the Shares are not listed or admitted to trading on any such exchange but are
listed as a national market security on the National Association of Securities
Dealers, Inc. Automated Quotation System ("The Nasdaq Stock Market"), traded in
the over-the-counter market or listed or traded on any similar system then in
use, the Fair Market Value of a Share shall be either, in the sole discretion of
the Committee, the average of the high and low sales price or the closing sales
price, for the day immediately preceding the date as of which the Fair Market
Value is being determined (or if there was no reported sale on such date, on the
last preceding date on which any reported sale occurred) as reported on such
system. If the Shares are not listed or admitted to trading on any such
exchange, are not listed as a national market security on The Nasdaq Stock
Market and are not traded in the over-the-counter market or listed or traded on
any similar system then in use, but are quoted on The Nasdaq Stock Market or any
similar system then in use, the Fair Market Value of a Share shall be the
average of the closing high bid and low asked quotations on such system for the
Shares on the date in question. If the Shares are not publicly traded, Fair
Market Value shall be determined by the Committee in its sole discretion using
appropriate criteria. An Option shall be considered granted on the date the
Committee acts to grant the Option or such later date as the Committee shall
specify.

         7.3 EXERCISE OF OPTIONS. Options granted under the Plan shall be
exercised by the Optionee thereof (or by his or her executors, administrators,
guardian or legal representative, as provided in Sections 7.7 and 7.8 hereof) as
to all or part of the Shares covered thereby, by the giving of written notice of
exercise to the Company, specifying the number of Shares to be purchased,
accompanied by payment of the full purchase price for the Shares being
purchased. Full payment of such purchase price shall be made within five (5)
business days following the date of exercise and shall be made (i) in cash or by
certified check or bank check, (ii) with the consent of the Committee, by
delivery of a promissory note in favor of

                                       6
<PAGE>

the Company upon such terms and conditions as determined by the Committee, (iii)
with the consent of the Committee, by tendering previously acquired Shares
(valued at their Fair Market Value, as determined by the Committee as of the
date of tender), including pursuant to a Cashless Exercise as defined in Section
7.4 herein, or (iv) with the consent of the Committee, any combination of (i),
(ii) and (iii). Such notice of exercise, accompanied by such payment, shall be
delivered to the Company at its principal business office or such other office
as the Committee may from time to time direct, and shall be in such form,
containing such further provisions consistent with the provisions of the Plan,
as the Committee may from time to time prescribe. In no event may any Option
granted hereunder be exercised for a fraction of a Share. The Company shall
effect the transfer of Shares purchased pursuant to an Option as soon as
practicable, and, within a reasonable time thereafter, such transfer shall be
evidenced on the books of the Company. No person exercising an Option shall have
any of the rights of a holder of Shares subject to an Option until certificates
for such Shares shall have been issued following the exercise of such Option. No
adjustment shall be made for cash dividends or other rights for which the record
date is prior to the date of such issuance.

         7.4 CASHLESS EXERCISE. A "Cashless Exercise" means the assignment in a
form acceptable to the Company of the proceeds of a sale or loan with respect to
some or all of the Shares acquired upon the exercise of an Option pursuant to a
program or procedure approved by the Company (including, without limitation,
through an exercise complying with the provisions of Regulation T as promulgated
from time to time by the Board of Governors of the Federal Reserve System). The
Company reserves the right, in its absolute and sole discretion, to decline to
approve or to terminate any such program or procedure. Generally, and without
limiting the Company's absolute discretion, a Cashless Exercise will be
permitted only at such times as the underlying Shares are publicly traded.

         7.5 NON-TRANSFERABILITY OF OPTIONS. Without the prior written consent
of the Company, no Option shall be assignable or transferable by the Optionee,
other than by will or the laws of descent and distribution, and may be exercised
during the life of the Optionee only by the Optionee or his duly appointed
guardian or legal representative. Notwithstanding the foregoing or any other
provisions contained in this Plan, a nonqualified stock option agreement may
provide that the Optionee may transfer the option and all rights and privileges
evidenced by the Option Agreement to (i) members of Optionee's immediate family
(i.e., Optionee's spouse, or the children, grandchildren or parents of Optionee
or Optionee's spouse) (any such person referred to herein as a "Family Member"),
(ii) one or more trusts for the benefit of any Family Member, and (iii) any
partnership whose only partners are Family Members (any person or entity
referred to in clauses (i), (ii) or (iii) above being a "Permitted Transferee"),
provided that (a) no consideration may be paid for the transfer of the option or
other rights or privileges evidenced by the Option Agreement and (b) any
Permitted Transferee who is the transferee of any option will remain subject to
all conditions (including the transfer restrictions) which were applicable to
the Option and the rights and privileges evidenced by the Plan and the Option
Agreement prior to the transfer to such Permitted Transferee.

         7.6 TERMINATION OF SERVICE. If the service of the Optionee is
terminated for any reason other than (i) Disability (as hereinafter defined) of
the Optionee, (ii) death of the Optionee, or (iii) for cause, in accordance with
any applicable employment or engagement agreement in effect between the Optionee
and the Company on the date of grant of the Option; or if no such agreement is
in effect, as determined by the Committee in its sole and absolute discretion,
an Option (to the extent exercisable on the date of such termination) shall be
exercisable by the Optionee at any time within (a) ninety (90) days after such
termination if the Optionee is a non-director employee or a consultant, or (b)
one year after such termination

                                       7
<PAGE>

if the Optionee is a director, unless such Option terminates prior to such time;
provided, however, that the Committee may, in its sole discretion, on a case by
case basis, extend the period during which any such Option must be exercised.
Unless the Option Agreement between such Optionee and the Company provides
otherwise, if such Optionee's service with the Company is terminated for cause,
any Option(s) granted to him will automatically terminate as of the time of such
cessation of service.

         7.7 DEATH. If the Optionee dies while employed by the Company or any of
its subsidiaries or affiliates or during his term as a Director of the Company
or any of its subsidiaries or affiliates, as the case may be, any Option(s)
granted to him not previously expired or exercised shall, to the extent
exercisable on the date of death, be exercisable by the estate of such Optionee
or by any person who acquired such Option by bequest or inheritance, at any time
within one (1) year after the death of the Optionee, unless earlier terminated
pursuant to its terms; provided, however, that if the term of such Option would
expire by its terms within six (6) months after the Optionee's death, the term
of such Option shall be extended until six (6) months after the Optionee's
death; provided further, that in no instance may the term of the Option, as so
extended, exceed the maximum term set forth in Section 3.1(b)(ii) or Section 7.1
herein.

         7.8 DISABILITY. If the Optionee's service is terminated by reason of
the Optionee's Disability, an Option (to the extent exercisable on the date of
the Optionee's termination of service by reason of Disability) shall be
exercisable by the Optionee at any time prior to the expiration of the Option or
within one (1) year after the date of such termination of service, whichever is
the shorter period. As used herein, the term "Disability" shall mean the
inability to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or which has lasted or can be expected to last for a continuous
period of not less than six (6) months. The determination of whether or not an
Optionee's service is terminated by reason of Disability shall be in the sole
and absolute discretion of the Committee. An individual shall not be considered
Disabled unless he furnishes proof of the existence thereof in such form and
manner, and at such times, as the Committee may require.

         7.9 AMENDMENT AND MODIFICATION OF THE PLAN. The Compensation Committee
of the Board of Directors of the Company or, in the absence of a Compensation
Committee, the Board of Directors of the Company, may, from time to time, alter,
amend, suspend or terminate the Plan as it shall deem advisable, subject to any
requirement for shareholder approval imposed by applicable law or any rule of
any stock exchange or quotation system on which Shares are listed or quoted;
provided that no amendments to, or termination of, the Plan shall in any way
impair the rights of an Optionee or a Participant under any Award previously
granted without such Optionee's or Participant's consent.

         7.10 ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event that a
dividend payable in Shares or a share split shall be hereinafter declared upon
the Shares, the number of Shares then subject to any Option hereunder and the
number of Shares reserved for issuance pursuant to the Plan but not yet covered
by an Option shall be adjusted by adding to each such Share the number of shares
which would be distributable thereon if such Share had been outstanding on the
date fixed for determining the shareholders entitled to receive such share
dividend or share split. In the event that the outstanding Shares shall be
changed into or exchanged for a different number or kind of shares of common
stock or other securities of the Company or of another corporation, whether
through reorganization, recapitalization, share split, combination of shares,
merger, consolidation, combination, spin-off, repurchase or exchange of Shares,
then there shall be substituted for each Share subject to any such Option and
for each Share reserved for issuance pursuant to the Plan but not yet covered by
an Option, the number and kind of shares

                                       8
<PAGE>

of common stock or other securities into which each outstanding Share shall be
so changed or for which each such Share shall be exchanged. In the event there
shall be any change, other than as specified above in this Section 7.10, in the
number or kind of outstanding Shares or of any shares of common stock or other
securities into which Shares shall have been changed or for which they shall
have been exchanged, then if the Committee shall in its sole discretion
determine that such change equitably requires an adjustment in the number or
kind of Shares theretofore reserved for issuance pursuant to the Plan but not
yet covered by an Option and of the Shares then subject to an Option or Options,
such adjustment shall be made by the Committee and shall be effective and
binding for all purposes of the Plan and of each Option Agreement. In the case
of any such substitution or adjustment as provided for in this Section 7.10, the
option price in each Option Agreement for each Share covered thereby prior to
such substitution or adjustment will be the option price for all shares of
common stock or other securities which shall have been substituted for such
Share or to which such adjustment provided for in this Section 7.10 shall be
made, in accordance with Section 424(a) of the Code. No adjustment or
substitution provided for in this Section 7.10 shall require the Company
pursuant to any Option Agreement to sell a fractional Share, and the total
substitution or adjustment with respect to each Option Agreement shall be
limited accordingly.

         7.11 LAPSE OF RESTRICTIONS IN THE EVENT OF A CHANGE IN CONTROL. A
"Change in Control" for purposes of this Plan shall mean (i) the dissolution or
liquidation of the Company, (ii) any sale or other disposition of all or
substantially all of the assets of the Company or (iii) the consummation of any
merger or consolidation of the Company if the shareholders of the Company
immediately before such transaction own, immediately after consummation of such
transaction, equity securities (other than Options and other rights to acquire
equity securities) possessing less than fifty and one-tenth percent (50.1%) of
the voting power of the surviving or acquiring corporation.

                  (a) Change in Control With Provision Being Made Therefor. If
         provision be made in writing in connection with a Change in Control for
         the assumption and continuance of any Option granted under the Plan, or
         the substitution for such Option of a new option covering the shares of
         the successor employer corporation, with appropriate adjustment as to
         number and kind of shares and prices, the Option granted under the
         Plan, or the new Option substituted therefor, as the case may be, shall
         continue in the manner and under the terms provided.

                  (b) Change in Control Without Provision Being Made Therefor.
         In the event provision is not made in connection with a Change in
         Control for the continuance and assumption of any Option granted under
         the Plan or for the substitution of any Option covering the shares of
         the successor employer corporation, then, subject to the $100,000
         annual limitation with respect to incentive stock options, the holder
         of any such Option shall be entitled, prior to the effective date of
         any such Change in Control and for six months thereafter, to purchase
         the full number of shares not previously exercised under such Option,
         without regard to the periods of exercisability of such Option
         established by the Committee and set forth in the Option Agreement
         evidencing such Option if (and only if) such Option has not at that
         time expired or been terminated.

                  (c) Adjustments. All adjustments under this Section 7.11 shall
         be made by the Committee, whose determination as to what adjustments
         shall be made and the extent thereof, shall be final, binding and
         conclusive for all purposes of the Plan and of each Option Agreement,
         Restricted Share Agreement and Dividend Equivalent Rights Agreement.

                                       9
<PAGE>

         7.12 QUALIFICATION OF THE PLAN. This Plan is not intended to be, and
shall not be, qualified under Section 401(a) of the Code.

                                    ARTICLE 8

                                  MISCELLANEOUS

         8.1 TAX WITHHOLDING. The Company shall notify an Optionee or
Participant of any income tax withholding requirements arising as a result of
the grant of any Award, exercise of an Option or any other event occurring
pursuant to this Plan. The Company shall have the right to withhold from such
Optionee or Participant such withholding taxes as may be required by law, or to
otherwise require the Optionee or Participant to pay such withholding taxes. If
the Optionee or Participant shall fail to make such tax payments as are
required, the Company or its subsidiaries or affiliates shall, to the extent
permitted by law, have the right to deduct any such taxes from any payment of
any kind otherwise due to such Optionee or Participant or to take such other
action as may be necessary to satisfy such withholding obligations.

         8.2 RIGHT OF DISCHARGE RESERVED. Nothing in the Plan nor the grant of
an Award hereunder shall confer upon any officer, employee, director, consultant
or other individual the right to continue in the employment or service of the
Company or any subsidiary or affiliate of the Company or affect any right that
the Company or any subsidiary or affiliate of the Company may have to terminate
the employment or service of (or to demote or to exclude from future Options
under the Plan) any such officer, employee, director, consultant or other
individual at any time for any reason. Except as specifically provided by the
Committee, the Company shall not be liable for the loss of existing or potential
profit from an Award granted in the event of termination of an employment or
other relationship even if the termination is in violation of an obligation of
the Company or any subsidiary or affiliate of the Company to the officer,
employee, director or consultant.

         8.3 NATURE OF PAYMENTS. All Awards made pursuant to the Plan are in
consideration of services performed for the Company or any subsidiary or
affiliate of the Company. Any income or gain realized pursuant to Awards under
the Plan constitutes a special incentive payment to the Optionee or Participant
and shall not be taken into account, to the extent permissible under applicable
law, as compensation for purposes of any of the employee benefit plans of the
Company or any subsidiary or affiliate of the Company except as may be
determined by the Committee or by the directors of the applicable subsidiary or
affiliate of the Company.

         8.4 COMPLIANCE WITH SECURITIES LAW.

                  (a) The grant of Options and the issuance of Shares upon
         exercise of Options shall be subject to compliance with all applicable
         requirements of federal, state and foreign law with respect to such
         securities. Options may not be exercised if the issuance of Shares upon
         exercise would constitute a violation of any applicable federal, state
         or foreign securities laws or other law or regulations or the
         requirements of any stock exchange or market system upon which the
         Shares may then be listed. In addition, no Option may be exercised
         unless (i) a registration statement under the Securities Act shall at
         the time of exercise of the Option be in effect with respect to the
         Shares issuable upon exercise of the Option or (ii) in the opinion of
         legal counsel to the Company, the shares issuable upon exercise of the
         Option may be issued in accordance with the terms of an applicable
         exemption from the registration requirements of the Securities Act. THE
         OPTIONEE

                                       10
<PAGE>

         IS CAUTIONED THAT THE OPTION MAY NOT BE EXERCISED UNLESS THE FOREGOING
         CONDITIONS ARE SATISFIED. ACCORDINGLY, THE OPTIONEE MAY NOT BE ABLE TO
         EXERCISE THE OPTION WHEN DESIRED EVEN THOUGH THE OPTION IS VESTED. The
         inability of the Company to obtain from any regulatory body having
         jurisdiction the authority, if any, deemed by the Company's legal
         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. As a condition to the exercise
         of any Option, the Company may require the Optionee to satisfy any
         qualifications that may be necessary or appropriate to evidence
         compliance with any applicable law or regulation and to make any
         representation or warranty with respect thereto as may be requested by
         the Company.

                  (b) This Plan is intended to comply in all respects with Rule
         16b-3 promulgated under the Exchange Act, with respect to Participants
         who are subject to Section 16 of the Exchange Act, and any provision
         herein that is contrary to Rule 16b-3 shall be deemed null and void to
         the extent appropriate by either the Committee or the Company's Board
         of Directors.

         8.5 INDEMNIFICATION OF COMMITTEE. The Company shall indemnify each
present and future member of the Committee against, and each member of the
Committee shall be entitled, without further act on his part, to indemnity from
the Company for all expenses (including the amount of judgments and the amount
of approved settlements made with a view to the curtailment of costs of
litigation, other than amounts paid to the Company itself) reasonably incurred
by him in connection with or arising out of any action, suit, or proceeding in
which he may be involved by reason of his being or having been a member of the
Committee, whether or not he continues to be a member of the Committee at the
time of incurring such expenses; provided, however, that such indemnity shall
not include any expenses incurred by any such member of the Committee (i) in
respect of matters as to which he shall be finally adjudged in any such action,
suit, or proceeding to have been guilty of gross negligence or willful
misconduct in the performance of his duty as a member of the Committee or (ii)
in respect of any matter in which any settlement is effected in an amount in
excess of the amount approved by the Company on the advice of its legal counsel;
and provided further, that no right of indemnification under the provisions set
forth herein shall be available to or enforceable by any such member of the
Committee unless, within sixty (60) days after institution of any such action,
suit, or proceeding, such Committee member shall have offered the Company, in
writing, the opportunity to handle and defend the same at its own expense. The
foregoing right of indemnification shall inure to the benefit of the heirs,
executors, or administrators of each such member of the Committee and shall be
in addition to all other rights to which such member of the Committee shall be
entitled as a matter of law, contract, or otherwise.

         8.6 SEVERABILITY. If any provision of the Plan shall be held unlawful
or otherwise invalid or unenforceable in whole or in part, such unlawfulness,
invalidity or unenforceability shall not affect any other provision of the Plan
or part thereof, each of which remain in full force and effect. If the making of
any payment or the provision of any other benefit required under the Plan shall
be held unlawful or otherwise invalid or unenforceable, such unlawfulness,
invalidity or unenforceability shall not prevent any other payment or benefit
from being made or provided under the Plan, and if the making of any payment in
full or the provision of any other benefit required under the Plan in full would
be unlawful or otherwise invalid or unenforceable, then such unlawfulness,
invalidity or unenforceability shall not prevent such payment or benefit from
being made or provided in part, to the extent that it would not be unlawful,
invalid or

                                       11
<PAGE>

unenforceable, and the maximum payment or benefit that would not be unlawful,
invalid or unenforceable shall be made or provided under the Plan.

         8.7 GENDER AND NUMBER. In construing the Plan, any masculine
terminology herein shall also include the feminine, and the definition of any
term herein in the singular shall also include the plural, except when otherwise
indicated by the context.

         8.8 GOVERNING LAW. The Plan and all determinations made and actions
taken thereunder, to the extent not otherwise governed by the Code or the laws
of the United States, shall be governed by the laws of the State of Delaware and
construed accordingly.

         8.9 TERMINATION OF PLAN. Awards may be granted under the Plan at any
time and from time to time on or prior to January 31, 2010, on which date the
Plan will expire except as to Awards then outstanding under the Plan. Such
outstanding Awards shall remain in effect until they have been exercised or
terminated, or have expired.

         8.10 CAPTIONS. The captions in this Plan are for convenience of
reference only, and are not intended to narrow, limit or affect the substance or
interpretation of the provisions contained herein.

         8.11 EFFECTIVE DATE OF PLAN. The Plan was adopted by the Board of
Directors of the Company on January 31, 2000 and approved by the holders of a
majority of the shares of Common Stock outstanding and entitled to vote thereon
on June 23, 2000.

                  (a) The Plan was amended effective December 29, 2000, to
         increase the number of shares issuable under the Plan from 7,000,000 to
         14,000,000. The amendment to the Plan was approved by the Board of
         Directors of the Company as of December 29, 2000.

                  (b) The Plan was again amended, effective as of January 1,
         2002, to increase the number of shares issuable under the Plan from
         14,000,000 to 21,900,000. The amendment to the Plan was approved by the
         Board of Directors of the Company on May 21, 2002.

                                       12

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