Document:

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EXHIBIT 10.2

                              EMPLOYMENT AGREEMENT

This Agreement is executed effective October 1, 2000 (the "Effective Date")
between SVI Solutions, Inc., a Delaware corporation (the "Company"), having an
address for notices at 12707 High Bluff Drive, Suite 335, San Diego, California
92130, and Barry Schechter ("Executive"), having an address for notices at 12707
High Bluff Drive, Suite 335, San Diego, California 92310, who agree as follows:

1. Hiring. The Company hereby hires Executive as, and Executive hereby agrees to
act as Chief Executive Officer of the Company.

2. Duties. Executive shall faithfully and diligently perform the following
duties on a full-time basis: (a) Devoting Executive's entire productive time,
ability and attention to the business of the Company; (b) Performing such other
duties as the board of directors of the Company (the "Board"), shall from time
to time specify that are consistent with the duties normally performed by a
Chief Executive Officer; and (c) reporting directly to the Board.

3. Base Compensation. Executive's total compensation ("Base Compensation") under
this Agreement shall be:

                  First Year        $27,082 per month ($325,000 per annum)
                  Second Year       $29,167 per month ($350,000 per annum)
                  Third Year        $31,250 per month ($375,000 per annum)

payable monthly in arrears from the Effective Date, in accordance with and at
the same times as the Company's ordinary payroll procedures.

3.1. The Company reserves the right to change the compensation level, at its
sole discretion, during the term of this Agreement.

4. Additional Compensation. As additional compensation, Executive shall receive,
on each anniversary of his employment under this Agreement, the option to
purchase from the Company a number of shares (the "Option Shares") equal to 150%
of the Executive's Base Compensation, for the preceding year, divided by the
closing price on the anniversary date (the "Option Price"). The Share Option may
be exercised by the Executive, in whole or in part, at any time within ten (10)
years of the date of the grant by written notice tendering payment of the Option
Price. Such Option will be fully vested on the date of the grant.

5. Benefits. Executive shall be entitled to the following benefits during the
term of this Agreement:

5.1. Twenty (20) business days paid vacation for each one-year period during the
term of this Agreement (prorated for any partial year), to be taken at such
times that are consistent with Executive's performance of Executive's duties
under this Agreement.

5.2. Reimbursement for reasonable out-of-town travel expenses and local expenses
incurred in the proper performance of Executive's duties under this Agreement,
in accordance with the Company's policy.

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5.3. Reimbursement for reasonable expenses, including reasonable and customary
automobile expenses, incurred in the proper performance of Executive's duties
under this Agreement and in accordance with the Company's policy.

5.4. Inclusion in the Company's medical plan for the Company's other Executives.

5.5. All benefits generally available to other officers of the Company.

6. Term. The term of this Agreement shall commence on the Effective Date and
unless terminated earlier as set forth below, shall expire on September 30,
2003. Upon expiration of this Agreement, the parties shall negotiate, in good
faith, an extension of the contract on such terms and conditions as shall
reasonably be agreed to. At any time that Good Cause (as defined below) exists
or has arisen, the Company may, at its election, terminate this Agreement upon
14 days written notice. For purposes of this Agreement, "Good Cause" shall mean
the existence or occurrence of any of the following:

6.1.1. Any repeated breach of duty by Executive, or any repeated failure by
executive to perform such duties as may be delegated to Executive by the Company
from time to time after written notice specifying such breach or failure which
Executive fails to cure within fourteen (14) days of receipt of such notice.

6.2. If Executive is convicted of a felony.

6.3. If Executive commits theft, larceny, embezzlement, fraud, any acts of
dishonesty, illegality, moral turpitude or gross mismanagement.

6.4. If Executive otherwise materially and repeatedly breaches any provision of
this Agreement.

6.5. The death of Executive.

6.6. If Executive becomes materially disabled to such an extent that Executive
is precluded from performing the duties set forth in this Agreement for a period
of six (6) months.

7. Confidentiality. Executive hereby acknowledges that the Company has made (or
may make) available to Executive certain customer lists, product design
information, performance standards and other confidential and/or proprietary
information of the Company or licensed to the Company, including without
limitation trade secrets, copyrighted materials and/or financial information of
the Company (or any of its affiliates) including without limitation financial
statements, reports and data (collectively, the "Confidential Material"). Except
as essential to Executive's obligations under this Agreement, neither Executive
nor any agent, employee, officer, or independent contractor of or retained by
Executive shall make any disclosure of this Agreement, the terms of this
Agreement, or any of the Confidential Material. Except as essential to
Executive's obligations under this Agreement, neither Executive nor any agent,
employee, officer, or independent contractor of or retained by Executive shall
make any duplication or other copy of any of the Confidential Material.
Immediately upon request from the Company, Executive shall return to the Company
all Confidential Material. Executive shall notify each person to whom any
disclosure is made that such disclosure is made in confidence, that the
Confidential Material shall be kept in confidence by such person, and that such
person shall be bound by the provisions of this Paragraph.

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8. Proprietary Information. For purposes of this Agreement, "Proprietary
Information" shall mean any information, observation, data, written material,
record, document, computer program, software, firmware, invention, discovery,
improvement, development, tool, machine, apparatus, appliance, design,
promotional idea, customer list, practice, process, formula, method, technique,
trade secret, product and/or research related to the actual or anticipated
research, development, products, organization, business or finances of the
Company (or any of its affiliates). All right, title and interest of every kind
and nature whatsoever in and to the Proprietary Information made, discussed,
developed, secured, obtained or learned by Executive during the term of this
Agreement, or the 60-day period immediately following termination of this
Agreement, shall be the sole and exclusive property of the Company for any
purposes or uses whatsoever, and shall be disclosed promptly by Executive to the
Company. The covenants set forth in the preceding sentence shall apply
regardless of whether any Proprietary Information is made, discovered,
developed, secured, obtained or learned (a) solely or jointly with others, (b)
during the usual hours of work or otherwise, (c) at the request and upon the
suggestion of the Company or otherwise, or (d) with the Company's materials,
tools, instruments or on the Company's premises or otherwise. All Proprietary
Information developed, created, invented, devised, conceived or discovered by
Executive that are subject to copyright protection are explicitly considered by
Executive and the Company to be works made for hire to the extent permitted by
law. Executive hereby assigns to the Company all of Executive's right, title and
interest in and to the Proprietary Information. Executive hereby forever fully
releases and discharges the Company, any affiliates of the Company and their
respective officers, directors and employees, from and against any and all
claims, demands, damages, liabilities, costs and expenses of Executive arising
out of, or relating to, any Proprietary Information. Executive shall execute any
documents and take any action the Company may deem necessary or appropriate to
effectuate the provisions of this Agreement, including without limitation
assisting the Company in obtaining and/or maintaining patents, copyrights or
similar rights to any Proprietary Information assigned to the Company, if the
Company, in its sole discretion, requests such assistance. Executive shall
comply with any reasonable rules established from time to time by the Company
for the protection of the confidentiality of any Proprietary Information.
Executive irrevocably appoints the Chairman of the Company to act as Executive's
agent and attorney-in-fact to perform all acts necessary to obtain and/or
maintain patents, copyrights and similar rights to any Proprietary Information
assigned by Executive to the Company under this Agreement if (a) Executive
refuses to perform those acts, or (b) is unavailable, within the meaning of any
applicable laws. Executive acknowledges that the grant of the foregoing power of
attorney is coupled with an interest and shall survive the death or disability
of Executive. Executive shall promptly disclose to the Company, in confidence
(a) all Proprietary Information that Executive creates during the term of this
Agreement, and (b) all patent applications filed by Executive within one year
after termination of this Agreement. Any application for a patent, copyright
registration or similar right filed by Executive within one year after
termination of this Agreement shall be presumed to relate to Proprietary
Information created by Executive during the term of this Agreement, unless
Executive can prove otherwise. Nothing contained in this Agreement shall be
construed to preclude the Company from exercising all of its rights and
privileges as sole and exclusive owner of all of the Proprietary Information
owned by or assigned to the Company under this agreement. The Company, in
exercising such rights and privileges with respect to any particular item of
Proprietary Information, may decide not to file any patent application or any
copyright registration on such Proprietary Information, may decide to maintain
such Proprietary Information as secret and confidential, or may decide to
abandon such Proprietary Information or dedicate it to the public. Executive
shall have no authority to exercise any rights or privileges with respect to the
Proprietary Information owned by or assigned to the Company under this
Agreement. This Agreement does not apply to any Proprietary Information that
qualifies fully under the provisions of California Labor Code Section 2870 or
any similar or successor statute.

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9. Survival. The representations, warranties and covenants of Executive in this
Agreement shall survive any termination of this Agreement.

10. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.

11. Further Assurances. Each party to this Agreement shall execute all
instruments and documents and take all actions as may be reasonably required to
effectuate this Agreement.

12. Venue and Jurisdiction. For purposes of venue and jurisdiction, this
Agreement shall be deemed made and to be performed in the City of San Diego,
California.

13. Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original and all of which together shall constitute one
document.

14. Time of Essence. Time and strict and punctual performance are of the essence
with respect to each provision of this Agreement.

15. Attorney's Fees. In the event any litigation, arbitration, mediation, or
other proceeding ("Proceeding") is initiated by any party(ies) against any other
party(ies) to enforce, interpret or otherwise obtain judicial or quasi-judicial
relief in connection with this Agreement, the prevailing party(ies) in such
Proceeding shall be entitled to recover from the unsuccessful party(ies) all
costs, expenses, and actual attorney's fees relating to or arising out of (d)
such Proceeding (whether or not such Proceeding proceeds to judgment), and (e)
any post-judgment or post-award proceeding including without limitation one to
enforce any judgment or award resulting from any such Proceeding. Any such
judgment or award shall contain a specific provision for the recovery of all
such subsequently incurred costs, expenses, and actual attorney's fees.

16. Modification. This Agreement may be modified only by a contract in writing
executed by the party(ies) to this Agreement against whom enforcement of such
modification is sought.

17. Headings. The headings of the Paragraphs of this Agreement have been
included only for convenience, and shall not be deemed in any manner to modify
or limit any of the provisions of this Agreement, or be used in any manner in
the interpretation of this Agreement.

18. Prior Understandings. This Agreement contains the entire agreement between
the parties to this Agreement with respect to the subject matter of this
Agreement, is intended as a final expression of such parties' agreement with
respect to such terms as are included in this Agreement, is intended as a
complete and exclusive statement of the terms of such agreement, and supersedes
all negotiations, stipulations, understandings, agreements, representations and
warranties, if any, with respect to such subject matter, which precede or
accompany the execution of this Agreement.

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19. Interpretation. Whenever the context so requires in this Agreement, all
words used in the singular shall be construed to have been used in the plural
(and vice versa), each gender shall be construed to include any other genders,
and the word "person" shall be construed to include a natural person, a
corporation, a firm, a partnership, a joint venture, a trust, an estate or any
other entity.

20. Partial Invalidity. Each provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law. If any provision of this
Agreement or the application of such provision to any person or circumstance
shall, to any extent, be invalid or unenforceable, the remainder of this
Agreement, or the application of such provision to persons or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected by such invalidity or unenforceability, unless such provision or such
application of such provision is essential to this Agreement.

21. Notices. All notices or other communications required or permitted to be
given to a party to this Agreement shall be in writing and shall be personally
delivered, sent by certified mail, postage prepaid, return receipt requested, or
sent by an overnight express courier service that provides written confirmation
of delivery, to such party at its address as set forth above in the introductory
Paragraph of this Agreement. Each such notice or other communication shall be
deemed given, delivered and received upon its actual receipt, except that if it
is sent by mail in accordance with this Paragraph, then it shall be deemed
given, delivered and received three days after the date such notice or other
communication is deposited with the United States Postal Service in accordance
with this Paragraph. Any party to this Agreement may give a notice of a change
of its address to the other party(ies) to this Agreement.

22. Drafting Ambiguities. Each party to this Agreement has reviewed and revised
this Agreement. Each party to this Agreement has had the opportunity to have
such party's legal counsel review and revise this Agreement. The rule of
construction that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or of any
amendments or exhibits to this Agreement.

SVI HOLDINGS, INC., a Nevada corporation

     /s/ David Reese
By:  David Reese
     Secretary

EMPLOYEE

     /s/ Barry Schechter
By:  Barry Schechter
     Chief Executive Officer<PAGE>
EXHIBIT 10.4

                               SVI Holdings, Inc.
                            1998 INCENTIVE STOCK PLAN
                          AMENDED AS OF AUGUST 18, 2000

         1.       PURPOSES.
                  ---------

                  (a) The purpose of this 1998 Incentive Stock Plan is to
provide a means by which Employees, Directors and Consultants of the Company,
and its Affiliates, may be given an opportunity to benefit from increases in
value of the common stock of the Company through the granting of (i) incentive
stock options, (ii) non-statutory stock options, (iii) stock bonuses, (iv)
rights to purchase stock, and (v) stock appreciation rights.

                  (b) The Company, by means of this 1998 Incentive Stock Plan,
seeks to retain the services of persons who are now Employees, Directors, or
Consultants of the Company, to secure and retain the services of new Employees,
Directors and Consultants, and to provide incentives for such persons to exert
maximum efforts for the success of the Company.

                  (c) The Company intends that the Stock Awards issued under
this Plan shall, in the discretion of the Board or any Committee to which
responsibility for administration of the Plan has been delegated pursuant to
subsection 3(c), be either (i) Options granted pursuant to Section 6, including
Incentive Stock Options and Non-statutory Stock Options, (ii) Stock bonuses or
rights to purchase Stock granted pursuant to Section 7, or (iii) Stock
appreciation rights granted pursuant to Section 8. All Options shall be
separately designated Incentive Stock Options or Non-statutory Stock Options at
the time of grant, and in such form as issued pursuant to Section 6, and a
separate certificate or certificates will be issued for shares purchased on
exercise of each type of Option.

                  (d) This 1998 Incentive Stock Plan was adopted by the Board of
Directors on October 5, 1998 and approved by the shareholders on November 2,
1998. The Board of Directors approved the amended Plan on August 18, 2000, and
the stockholders approved the amendments to Section 4 submitted for shareholder
approval on September 21, 2000.

         2.       DEFINITIONS.
                  -----------

                  (a) "AFFILIATE" means any parent corporation or subsidiary
corporation, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f) respectively, of the Code.

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

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

                  (d) "COMMITTEE" means a Committee appointed by the Board in
accordance with subsection 3(c) of the Plan.

                  (e) "COMPANY" means: SVI Holdings, Inc. a Nevada corporation.

                  (f) "CONCURRENT STOCK APPRECIATION RIGHT" or "CONCURRENT
RIGHT" means a right granted pursuant to subsection 8(b)(ii) of the Plan.

                  (g) "CONSULTANT" means any person, including an advisor,
engaged by the Company or an Affiliate to render services and who is compensated
for such services; provided that the term "Consultant" shall not include
Directors who are paid only a director's fee by the Company or who are not
compensated by the Company for their services as Directors.

                  (h) "CONTINUOUS STATUS OF EMPLOYEE, DIRECTOR OR CONSULTANT"
means the employment or relationship as a Director or Consultant is not
interrupted or terminated by the Company or any Affiliate. The Board in its sole
discretion, may determine whether Continuous Status as an Employee, Director or
Consultant shall be considered interrupted in the case of: (i) any leave of
absence approved by the Board, including sick leave, military leave, or any
other personal leave. For purposes of Incentive Stock Options and Stock
Appreciation Rights appurtenant thereto, any such leave may not exceed ninety
(90) days, unless re-employment upon the expiration of such leave is guaranteed
by contract (including certain Company policies) or statute; or (ii) transfers
between locations of the Company or between the Company, its Affiliates or its
successor.

                  (i) "COVERED EMPLOYEE" means the chief executive officer and
the four (4) other highest compensated Officers of the Company for whom total
compensation is required to be reported to stockholders under the Exchange Act,
as determined for purposes of Section 162(m) of the Code.

                  (j) "DIRECTOR" means a member of the Company's Board of
Directors.

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

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

                  (m) "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.

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                  (n) "FAIR MARKET VALUE" means the average of the high and low
sale prices per share of Stock on the American Stock Exchange, composite tape or
other recognized market source, as determined by the Board, on the applicable
date of reference hereunder, or if there is no sale on such date, the average
high and low sale prices on the last previous day on which a sale is reported.

                  (o) "FAMILY MEMBER" means any child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in- law, or
sister-in-law, including adoptive relationships, any person sharing the
Employee's or Consultant's household (other than a tenant or employee), a trust
in which these persons have more than fifty percent of the beneficial interest,
a foundation in which these persons (or the Employee or Consultant) control the
management of assets, and any other entity in which these persons (or the
Employee or Consultant) own more than fifty percent of the voting interests,
including any changes as may be made from time to time to the definition of
"Family Member" as promulgated by the Securities and Exchange Commission in
connection with the general instructions for Form S-8 promulgated under the
Securities Act of 1933, as amended, or any successor form.

                  (p) "INCENTIVE STOCK OPTION" means an Option granted pursuant
to the Plan which is designated as an incentive stock option by the Board, and
qualifies as an incentive stock option within the meaning of Section 422 of the
Code and the regulations promulgated thereunder.

                  (q) "INDEPENDENT STOCK APPRECIATION RIGHT" means a right
granted under subsection 8(b)(iii) of the Plan.

                  (r) "NON-EMPLOYEE DIRECTOR" means a Director of the Company
who either (i) is not a current Employee or Officer of the Company or its parent
or a subsidiary, does not receive compensation (directly or indirectly) from the
Company or its parent or a subsidiary for services rendered as a Consultant or
in any capacity other than as a Director (except for an amount as to which
disclosure would not be required under Item 404(a) of Regulation S-K promulgated
pursuant to the Securities Act of 1933, as amended ("Regulation S-K")), does not
possess an interest in any other transaction as to which disclosure would be
required under Item 404(a) of Regulation S-K, and is not engaged in a business
relationship as to which disclosure would be required under Item 404(b) of
Regulation S-K; or (ii) is otherwise considered a "non- employee director" for
purposes of Rule 16b-3.

                  (s) "NON-STATUTORY STOCK OPTION" means an Option granted
pursuant to the Plan which is not an Incentive Stock Option.

                  (t) "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.

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                  (u) "OPTION" means an option to purchase Stock granted
pursuant to the Plan.

                  (v) "OPTION AGREEMENT" means a written agreement between the
Company and an Optionee evidencing the terms and conditions of an individual
Option grant. The Option Agreement is subject to the terms and conditions of the
Plan.

                  (w) "OPTION PRICE" shall mean the price per share of Stock to
be paid by the Optionee upon exercise of the Option and as set forth in the
Option Agreement.

                  (x) "OPTIONEE" means an Employee, Director or Consultant who
holds an outstanding Option.

                  (y) "OUTSIDE DIRECTOR" means a Director of the Company who
either (i) is not a current employee of the Company or an "affiliated
corporation" (within the meaning of Treasury Regulations promulgated under
Section 162(m) of the Code), is not a former employee of the Company or an
"affiliated corporation" receiving compensation for prior services (other than
benefits under a tax qualified pension plan), was not an officer of the Company
or an "affiliated corporation" at any time, and is not currently receiving
direct or indirect remuneration from the Company or an "affiliated corporation"
for services in any capacity other than as a Director or (ii) is otherwise
considered an "outside director" for purposes of Section 162(m) of the Code.

                  (z) "PARTICIPANT" means an Employee, Director or Consultant
who receives a Stock Award.

                  (aa) "PLAN" means this 1998 Incentive Stock Plan, as may be
amended from time to time.

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

                  (cc) "STOCK" shall mean the $0.0001 par value common stock of
the Company.

                  (dd) "STOCK APPRECIATION RIGHT" means any of the various types
of rights which may be granted under Section 8 of the Plan.

                  (ee) "STOCK AWARD" means any right granted under the Plan,
including any Option, any Stock Bonus, any Stock Purchase Right, and any Stock
Appreciation Right.

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                  (ff) "STOCK AWARD AGREEMENT" means a written agreement between
the Company and a Participant evidencing the terms and conditions of an
individual Stock Award grant. The Stock Award Agreement is subject to the terms
and conditions of the Plan.

                  (gg) "TANDEM STOCK APPRECIATION RIGHT" or "TANDEM RIGHT" means
a right granted under subsection 8(b)(i) of the Plan.

         3.       ADMINISTRATION.
                  ---------------

                  (a) The Plan shall be administered by the Board unless and
until the Board delegates administration to a Committee or Committees, as
provided in subsection 3(c).

                  (b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:

                           (1) To determine from time to time which of the
persons eligible under the Plan shall be granted Stock Awards; when and how
Stock Awards shall be granted; whether a Stock Award will be an Incentive Stock
Option, a Non-statutory Stock Option, a Stock Bonus, a Stock Purchase Right, a
Stock Appreciation Right, or a combination of the foregoing; the provisions of
each Stock Award granted (which need not be identical), including the time or
times when a person shall be permitted to receive Stock pursuant to a Stock
Award, whether a person shall be permitted to receive Stock upon exercise of an
Independent Stock Appreciation Right; and, subject to subsection 4(d), the
number of shares with respect to which Stock Awards shall be granted to each
such person.

                           (2) To construe and interpret the Plan and Stock
Awards granted under it, and to establish, amend and revoke rules and
regulations for its administration. The Board, in the exercise of this power,
may correct any defect, omission or inconsistency in the Plan or in any Stock
Award Agreement, in a manner and to the extent it shall deem necessary or
expedient to make the Plan fully effective.

                           (3) To amend the Plan as provided in Section 14.

                           (4) Generally, to exercise such powers and to perform
such acts as the Board deems necessary or expedient to promote the best
interests of the Company.

                  (c) The Board may delegate administration of the Plan to a
Committee or Committees of one (1) or more members of the Board, and the term
"Committee" shall apply to any person or persons to whom such authority has been
delegated. If administration is delegated to a Committee, the Committee shall
have, in connection with the administration of the Plan, the powers theretofore
possessed by the Board, including the power to delegate to a subcommittee any of

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the administrative powers the Committee is authorized to exercise (and
references in this Plan to the Board shall thereafter be to the Committee or
subcommittee), subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan. A Committee may consist solely of two (2) or more
Outside Directors, and/or solely of two or more Non- Employee Directors. Within
the scope of such authority, the Board or the Committee may (i) delegate to a
committee of one (1) or more members of the Board who are not Outside Directors,
the authority to grant Stock Awards to eligible persons who are either (a) not
then Covered Employees and are not expected to be Covered Employees at the time
of recognition of income resulting from such Stock Award or (b) not persons with
respect to whom the Company wishes to comply with Section 162(m) of the Code
and/or (ii) delegate to a committee of one (1) or more members of the Board who
are not Non- Employee Directors the authority to grant Stock Awards to eligible
persons who are not then subject to Section 16 of the Exchange Act.

         4.       SHARES SUBJECT TO THE PLAN.
                  ---------------------------

                  (a) Subject to the provisions of Section 13 relating to
adjustments upon changes in Stock, the Stock that may be issued pursuant to
Stock Awards shall not exceed in the aggregate four million (4,000,000) shares.
The number of shares available shall be adjusted as provided in Section 13.
Stock issued under any other stock option plan of the Company shall not be
counted against the maximum number of shares that can be issued under the Plan.
If any Stock Award shall for any reason expire or otherwise terminate without
having been exercised in full, the Stock not purchased under such Stock Award
shall again become available for issuance under the Plan. Shares subject to
Stock Appreciation Rights exercised in accordance with Section 8 of the Plan
shall not be available for subsequent issuance under the Plan.

                  (b) The Stock subject to the Plan may be unissued shares or
reacquired shares.

                  (c) The number of shares of Stock available for issuance under
the Plan shall automatically increase on the first trading day in each fiscal
year during the term of the Plan, beginning with the fiscal year ending March
31, 2001, by an amount equal to the least of (i) 2% of the total number of
shares of Stock outstanding on the last trading day of the immediately preceding
fiscal year; (ii) 600,000 shares of Stock; or (iii) an amount determined by the
Board.

                  (d) No one person participating in the Plan may receive Stock
Awards for more than 500,000 shares of Stock in the aggregate per calendar year.

                                       6

<PAGE>

         5.       ELIGIBILITY.
                  ------------

                  (a) Incentive Stock Options and Stock Appreciation Rights
appurtenant thereto may be granted only to Employees. Stock Awards other than
Incentive Stock Options and Stock Appreciation Rights appurtenant thereto may be
granted only to Employees, Directors or Consultants.

                  (b) A Director or Officer shall in no event be eligible for
the benefits of the Plan unless at the time discretion is exercised in the
selection of the Director or Officer as a person to whom Stock Awards may be
granted, or in the determination of the number of shares which may be covered by
Stock Awards granted to the Director or Officer: (i) the Board has approved the
grant of the Stock Awards; (ii) the Board has delegated its discretionary
authority over the Plan to a Committee which consists solely of two or more
Non-Employee Directors; or (iii) the grant otherwise complies with the
requirements of Rule 16b-3.

                  (c) No person shall be eligible for the grant of an Option if,
at the time of grant, such person owns (or is deemed to own pursuant to Code
Section 424(d)) Stock possessing more than ten (10%) percent of the total
combined voting power of all classes of capital stock of the Company or of any
of its Affiliates unless the exercise price of such Option is at least one
hundred ten (110%) percent of the Fair Market Value of the Stock at the date of
grant and the Option is not exercisable after the expiration of five (5) years
from the grant date.

         6.       OPTION PROVISIONS.
                  ------------------

         Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions of the Plan by reference in the Option or otherwise)
the substance of each of the following provisions:

                  (a) TERM. No Option shall be exercisable after the expiration
of ten (10) years from the date it was granted; provided that an Option granted
to a person possessing ten (10%) percent or more of the combined voting power of
all classes of capital stock of the Company or its Affiliates shall have a term
not exceeding five (5) years.

                  (b) PRICE. The exercise price of each Incentive Stock Option
shall be not less than one hundred percent (100%) of the Fair Market Value of
the Stock subject to the Option on the date the Option is granted. The exercise
price of each Non-statutory Stock Option shall be not less than eighty-five
(85%) of the Fair Market Value of the Stock subject to the Option on the date
the Option is granted. Despite the previous two sentences, the purchase price
for Options granted to a person who possesses more than ten percent (10%) of the
total combined voting power of all classes of capital stock of the Company or
its Affiliates shall be at least one hundred ten percent (110%) of the Fair
Market Value of the Stock at the date of grant.

                                       7

<PAGE>

                  (c) CONSIDERATION. The Option Price of Stock acquired pursuant
to an Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (1) in cash at the time the Option is exercised, or (2) at
the discretion of the Board, either at the time of the grant or exercise of the
Option, (A) by delivery to the Company of other Stock of the Company, (B)
according to a deferred payment or other arrangement (which may include, without
limiting the generality of the foregoing, the use of other Stock of the Company
valued at Fair Market Value as provided herein) with the person to whom the
Option is granted or to whom the Option is transferred pursuant to subsection
6(d), or (C) an agreement with the Company whereby a portion of the Optionee's
Options are terminated, and where the Built in Gain on any Options which are
terminated as part of the agreement equals the aggregate Option Price of the
Option being exercised.

The Board may permit deemed or constructive transfer of shares in lieu of actual
transfer and physical delivery of certificates. Except to the extent prohibited
by applicable law, the Board may take any necessary or appropriate steps in
order to facilitate the payment of the Option Price. The Board, in its sole and
exclusive discretion, may require satisfaction of any rules or conditions in
connection with paying the Option Price at any particular time, in any
particular form, or with the Company's assistance.

In the event the Board determines in its sole discretion to provide an Optionee
with a deferred payment arrangement, interest shall be payable at least annually
and shall be charged at the minimum rate of interest necessary to avoid the
treatment as interest, under any applicable provisions of the Internal Revenue
Code of 1986, of any amounts other than amounts stated to be interest under the
deferred payment arrangement. "Built in Gain" means the excess of the aggregate
Fair Market Value of Stock subject to an Option otherwise issuable on exercise
of a terminated Option over the aggregate Option Price otherwise due the Company
on such exercise. If Stock used to pay any Option Price is subject to any prior
restrictions imposed in connection with any stock option or stock purchase plan
or agreement of the Company (including this Plan), an equal number of the shares
of Stock acquired on exercise shall be made subject to such prior restrictions
in addition to any further restrictions imposed on the Stock by the terms of the
particular Agreement or by the Plan.

                  (d) TRANSFERABILITY. To the extent required by Code Section
422, Options, (or the rights of Optionees pursuant to the Agreement), shall not
be transferable in any manner, whether voluntary or involuntary, except by will
or the law of descent and distribution. A Non-Qualified Stock Option may be
transferred: (i) by gift to a Family Member; (ii) under a domestic relations
order in settlement of marital property rights; and (iii) to any entity in which
more than fifty percent of the voting interests are owned by Family Members (or
the Employee or Consultant) in exchange for an interest in that entity. An
attempted non-permitted transfer shall be void and shall immediately terminate
the Option.
                                       8

<PAGE>

                  (e) VESTING. The total number of shares of Stock subject to an
Option may, but need not, be allotted in periodic installments (which may, but
need not, be equal). The Option Agreement may provide that from time to time
during each of such installment periods, the Option may become exercisable
("vest") with respect to some or all of the shares allotted to that period, and
may be exercised with respect to some or all of the shares allotted to such
period and/or any prior period as to which the Option became vested but was not
fully exercised. The vesting provisions of individual Options may vary but in
each case will provide for vesting of at least twenty percent (20%) of the total
number of shares subject to the Option per year. During the remainder of the
term of the Option (if its term extends beyond the end of the installment
periods), the Option may be exercised from time to time with respect to any
shares then remaining subject to the Option. The provisions of this subsection
6(e) are subject to any Option provisions governing the minimum number of shares
as to which an Option may be exercised.

                  (f) SECURITIES LAW COMPLIANCE. The Company may require any
Optionee, or any person to whom an Option is transferred under subsection 6(d),
as a condition of exercising any such Option, to give written assurances
satisfactory to the Company, if any, that are necessary to ensure compliance
with federal securities laws. These requirements, and any assurances given
pursuant to such requirements, shall be inoperative if (i) the issuance of the
shares upon the exercise of the Option has been registered under a then
currently effective registration statement under the Securities Act of 1933, as
amended, or (ii) as to any particular requirement, a determination is made by
counsel for the Company that such requirement need not be met in the
circumstances under the then applicable securities laws.

                  (g) TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR
CONSULTANT. If an Optionee's Continuous Status as an Employee, Director or
Consultant terminates (other than "for cause", or upon the Optionee's death or
Disability), the Optionee may exercise his or her Option, but only within such
period of time as is determined by the Board (which period shall not be less
than three (3) months from the date of such termination), and only to the extent
that the Optionee was entitled to exercise it at the date of termination (but in
no event later than the expiration of the term of such Option as set forth in
the Option Agreement). If, at the date of termination, the Optionee is not
entitled to exercise his or her entire Option, the shares covered by the
unexercisable portion of the Option shall revert to the Plan. If, after
termination, the Optionee does not exercise his or her Option within the time
specified in the Option Agreement, the Option shall terminate, and the shares
covered by such Option shall revert to the Plan. If an Optionee's Continuous
Status as an Employee, Director or Consultant terminates "for cause", the right
to exercise the Option shall immediately cease.

                  (h) DISABILITY OF OPTIONEE. If an Optionee's Continuous Status
as an Employee, Director or Consultant terminates as a result of the Optionee's
Disability, the Optionee may exercise his or her Option, but only within such
period of time as is determined by the Board (which period from the date of

                                       9

<PAGE>

such termination shall not be less than one (1) year, and only to the extent
that the Optionee was entitled to exercise it at the date of such termination
(but in no event later than the expiration of the term of such Option as set
forth in the Option Agreement). If, at the date of termination, the Optionee is
not entitled to exercise his or her entire Option, the shares covered by the
unexercisable portion of the Option shall revert to the Plan. If, after
termination, the Optionee does not exercise his or her Option within the time
specified herein, the Option shall terminate, and the shares covered by the
Option shall revert to the Plan.

                  (i) DEATH OF OPTIONEE. In the event of the death of an
Optionee, the Option may be exercised, at any time within such period as is
determined by the Board (which period shall not be less than twelve (12) months
following the date of death) by the personal representative of the Optionee's
estate or by a person who acquired the right to exercise the Option by bequest
or inheritance, and only to the extent the Optionee was entitled to exercise the
Option at the date of death (but in no event later than the expiration of the
term of such Option as set forth in the Option Agreement). 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 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.

                  (j) WITHHOLDING. To the extent provided by the terms of an
Option Agreement, the Optionee may satisfy any federal, state or local tax
withholding obligation relating to the exercise of such Option by any of the
following means or by a combination of such means: (1) tendering a cash payment;
(2) authorizing the Company to withhold shares from the shares of the Stock
otherwise issuable to the Optionee as a result of the exercise of the Option; or
(3) delivering to the Company unencumbered shares of Stock owned by Optionee.

         7.       TERMS OF STOCK BONUSES AND STOCK PURCHASES.
                  ------------------------------------------

         Each Stock Bonus or Stock Purchase agreement shall be in such form and
shall contain such terms and conditions as the Board shall deem appropriate. The
terms and conditions of Stock Bonus or Stock Purchase agreements may change from
time to time, and the terms and conditions of separate agreements need not be
identical, but each Stock Bonus or Stock Purchase agreement shall include
(through incorporation of provisions hereof by reference in the agreement or
otherwise) the substance of each of the following provisions as appropriate:

                  (a) PURCHASE PRICE. The purchase price under each Stock
Purchase agreement shall be such amount as the Board shall determine and
designate in such agreement (which purchase price shall in any event be not less
than eighty-five (85%) percent of the Fair Market Value of the Stock on the

                                       10

<PAGE>

date such award is made), provided that the purchase price shall be one hundred
(100%) percent of the Fair Market Value of the Stock on the date the award is
made, in the case of any person who owns Stock possessing more than ten (10%)
percent of the total combined voting power of all classes of capital stock of
the Company or its Affiliates.

                  (b) TRANSFERABILITY. Rights under a Stock Bonus or Stock
Purchase agreement shall not be transferable in any manner, whether voluntary or
involuntary, except by will or the law of descent and distribution. Rights under
a Stock Bonus or Stock Purchase agreement may be transferred: (i) by gift to a
Family Member; (ii) under a domestic relations order in settlement of marital
property rights; and (iii) to any entity in which more than fifty percent of the
voting interests are owned by Family Members (or the Employee or Consultant) in
exchange for an interest in that entity. An attempted non-permitted transfer
shall be void and shall immediately terminate the rights.

                  (c) CONSIDERATION. The purchase price of Stock acquired
pursuant to a Stock Purchase agreement shall be paid either: (i) in cash at the
time of purchase; (ii) at the discretion of the Board, according to a deferred
payment or other arrangement with the person to whom the Stock is sold; or (iii)
in any other form of legal consideration (including shares of previously owned
Stock) that may be acceptable to the Board in its discretion.

                  (d) VESTING. Shares of Stock sold or awarded under the Plan
may, but need not, be subject to a repurchase option in favor of the Company in
accordance with a vesting schedule to be determined by the Board.

                  (e) TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR
CONSULTANT. In the event a Participant's Continuous Status as an Employee,
Director or Consultant terminates, the Company may repurchase or otherwise
reacquire any or all of the shares of Stock held by that person which have not
vested as of the date of termination under the terms of the Stock bonus or Stock
purchase agreement between the Company and such person.

         8.       STOCK APPRECIATION RIGHTS.
                  --------------------------

                  (a) The Board shall have full power and authority, exercisable
in its sole discretion, to grant Stock Appreciation Rights to Employees,
Directors or Consultants of the Company or its Affiliates under the Plan. Each
such right shall entitle the holder to a distribution based on the appreciation
in the Fair Market Value per share of a designated amount of Stock.

                  (b) three types of Stock Appreciation Rights shall be
authorized for issuance under the Plan:

                           (i) TANDEM STOCK APPRECIATION RIGHTS. Tandem Rights
will be granted appurtenant to an Option and will require the holder to elect
between the exercise of the underlying Option for shares of Stock and the
surrender, in whole or in part, of the Option for an appreciation distribution
equal to the excess of (A) the Fair Market Value (on the date of Option
surrender) of vested shares of Stock purchasable under the surrendered Option
over (B) the aggregate exercise price payable for those shares.

                                       11

<PAGE>

                           (ii) CONCURRENT STOCK APPRECIATION RIGHTS. Concurrent
Rights will be granted appurtenant to an Option and may apply to all or any
portion of the shares of Stock subject to the underlying Option and will be
exercised automatically at the same time the Option is exercised for those
shares. The appreciation distribution to which the holder of such Concurrent
Right shall be entitled upon exercise of the underlying Option shall be in an
amount equal to the excess of (A) the aggregate Fair Market Value (at date of
exercise) of the vested shares purchased under the underlying Option with such
Concurrent Rights over (B) the aggregate exercise price paid for those shares.

                           (iii) INDEPENDENT STOCK APPRECIATION RIGHTS.
Independent Rights may be granted independently of any Option and will entitle
the holder upon exercise to an appreciation distribution equal in amount to the
excess of (A) the aggregate Fair Market Value (at the date of exercise) of a
number of shares of Stock equal to the number of vested share equivalents
exercised at such time (as described in subsection 8(c)(iii)(B)) over (B) the
aggregate Fair Market Value of such number of shares of Stock at the date of
grant.

                  (c) The terms and conditions applicable to each Tandem Right,
Concurrent Right and Independent Right shall be as follows:

                           (i) TANDEM RIGHTS.

                               (A) Tandem Rights may be tied to either Incentive
Stock Options or Non-statutory Stock Options. Each Tandem Right shall, except as
specifically set forth below, be subject to the same terms and conditions
applicable to the particular Option to which it pertains. If Tandem Rights are
granted appurtenant to an Incentive Stock Option, they shall satisfy any
applicable Treasury Regulations so as not to disqualify the Option as an
Incentive Stock Option under the Code.

                               (B) The appreciation distribution payable on the
exercised Tandem Right shall be in cash in an amount equal to the excess of (I)
the Fair Market Value (on the date of the Option surrender) of the number of
shares of Stock covered by that portion of the surrendered Option in which the
Optionee is vested over (II) the aggregate exercise price payable for those
vested shares.

                           (ii) CONCURRENT RIGHTS.

                               (A) Concurrent Rights may be tied to any or all
of the shares of Stock subject to any Incentive Stock Option or Non-statutory
Stock Option grant made under the Plan. A Concurrent Right shall, except as
specifically set forth below, be subject to the same terms and conditions
applicable to the particular Option grant to which it pertains.

                                       12

<PAGE>

                               (B) A Concurrent Right shall be automatically
exercised at the same time the underlying Option is exercised with respect to
the particular shares of Stock to which the Concurrent Right pertains.

                               (C) The appreciation distribution payable on an
exercised Concurrent Right shall be in cash in an amount equal to such portion
as shall be determined by the Board at the time of the grant of the excess of
(I) the aggregate Fair Market Value (on the Exercise Date) of the vested shares
of Stock purchased under the underlying Option which have Concurrent Rights
appurtenant to them over (II) the aggregate exercise price paid for those
shares.

                           (iii) INDEPENDENT RIGHTS.

                               (A) Independent Rights shall, except as
specifically set forth below, be subject to the same terms and conditions
applicable to Non- statutory Stock Options as set forth in Section 6. They shall
be denominated in share equivalents.

                               (B) The appreciation distribution payable on the
exercised independent Right shall be in an amount equal to the excess of (I) the
aggregate Fair Market Value (on the date of the exercise of the Independent
Right) of a number of shares of Company Stock equal to the number of share
equivalents in which the holder is vested under such Independent Right, and with
respect to which the holder is exercising the Independent Right on such date,
over (II) the aggregate Fair Market Value (on the date of the grant of the
Independent Right) of such number of shares of Company Stock.

                               (C) The appreciation distribution payable on the
exercised Independent Right may be paid, in the discretion of the Board, in
cash, in shares of Stock or in a combination of cash and Stock. Any shares of
Stock so distributed shall be valued at Fair Market Value on the date the
Independent Right is exercised.

                           (iv) TERMS APPLICABLE TO TANDEM RIGHTS, CONCURRENT
RIGHTS AND INDEPENDENT RIGHTS.

                               (A) To exercise any outstanding Tandem,
Concurrent or Independent Right, the holder must provide written notice of
exercise to the Company in compliance with the provisions of the instrument
evidencing the right.

                                       13

<PAGE>

                               (B) If a Tandem, Concurrent, or Independent Right
is granted to an individual who is at the time subject to Section 16(b) of the
Exchange Act (a "Section 16(b) Insider"), then the instrument of grant shall
incorporate all the terms and conditions at the time necessary to assure that
the subsequent exercise of the right shall qualify for the safe-harbor exemption
from short-swing profit liability provided by Rule 16b-3.

                               (C) No limitation shall exist on the aggregate
amount of cash payments the Company may make under the Plan in connection with
the exercise of Tandem, Concurrent or Independent Rights.

         9.       CANCELLATION AND RE-GRANT OPTIONS AND CANCELLATION AND
                  ------------------------------------------------------
RESCISSION OF AWARDS.
---------------------

                  (a) The Board shall have the authority to effect, at any time
and from time to time, with the consent of the affected holders of Options
and/or Stock Appreciation Rights, (i) the re-pricing of any outstanding Options
and/or any Stock Appreciation Rights under the Plan and/or (ii) the cancellation
of any outstanding Options and/or any Stock Appreciation Rights under the Plan
and the grant in substitution therefor of new Options and/or Stock Appreciation
Rights under the Plan covering the same or different numbers of shares of Stock,
but having an exercise price per share not less than eighty-five (85%) percent
of the Fair Market Value (one hundred (100%) percent of the Fair Market Value in
the case of an Option or, in the case of a ten (10%) percent shareholder (as
described in subsection 5(c)), not less than one hundred ten (110%) percent of
the Fair Market Value) per share of Stock on the new grant date.

                  (b) Unless the Stock Award Agreement specifies otherwise, the
Board may cancel, rescind, suspend, withhold or otherwise limit or restrict any
unexpired, unpaid, or deferred Stock Award at any time if the Participant is not
in compliance with all applicable provisions of the Stock Award Agreement and
the Plan, or if the Participant engages in any "Detrimental Activity." For
purposes of this subsection 9(b), "Detrimental Activity" shall include: (i) the
rendering of services for any organization or engaging directly or indirectly in
any business which is or becomes competitive with the Company, or which
organization or business, or the rendering of services to such organization or
business, is or becomes otherwise prejudicial to or in conflict with the
interests of the Company; (ii) the disclosure to anyone outside the Company, or
the use in other than the Company's business, without prior written
authorization from the Company, of any confidential information or material, as
defined in the Company's confidential information or similar agreement, relating
to the business of the Company, acquired by the Participant either during or
after employment with the Company; (iii) the failure or refusal to disclose
promptly and to assign to the Company, pursuant to the Company's confidential
information or similar agreement, all right, title and interest in any invention
or idea, patentable or not, made or conceived by the Participant during
employment by the Company, relating in any manner to the actual or anticipated
business, research or development work of the Company or the failure or refusal
to do anything reasonably necessary to enable the Company to secure a patent

                                       14

<PAGE>

where appropriate in the United States and in other countries; (iv) activity
that results in termination of the Participant's employment for cause; (v) a
violation of any rules, policies, procedures or guidelines of the Company,
including but not limited to the Company's business conduct or similar
guidelines; (vi) any attempt directly or indirectly to induce any employee of
the Company to be employed or perform services elsewhere or any attempt directly
or indirectly to solicit the trade or business of any current or prospective
customer, supplier or partner of the Company; (vii) the Participant being
convicted of, or entering a guilty plea with respect to, a crime, whether or not
connected with the Company; or (viii) any other conduct or act determined to be
injurious, detrimental or prejudicial to any interest of the Company.

                  (c) In connection with subsection 9(b) herein, upon exercise,
payment or delivery pursuant to a Stock Award, the Participant shall certify in
a manner acceptable to the Company that he or she is in compliance with the
terms and conditions of the Plan. In the event a Participant engages in a
Detrimental Activity prior to, or during the six months after, any exercise,
payment or delivery pursuant to a Stock Award, such exercise, payment or
delivery may be rescinded within two years thereafter. In the event of any such
rescission, the Participant shall pay to the Company the amount of any gain
realized or payment received as a result of the rescinded exercise, payment or
delivery, in such manner and on such terms and conditions as may be required,
and the Company shall be entitled to set-off against the amount of any such gain
any amount owed to the Participant by the Company.

         10.      COVENANT OF THE COMPANY.
                  ------------------------

         During the terms of the Stock Awards, the Company shall keep available
at all times the number of shares of Stock required to satisfy such Stock Awards
up to the number of shares of Stock authorized under the Plan

         11.      USE OF PROCEEDS FROM STOCK.
                  ---------------------------

         Proceeds from the sale of Stock pursuant to Stock Awards shall
constitute general funds of the Company.

         12.      MISCELLANEOUS.
                  --------------

                  (a) Neither an Optionee nor any person to whom an Option is
transferred under subsection 6(d) shall be deemed to be the holder of, or to
have any of the rights of a holder with respect to, any shares subject to such
Option unless and until such person has satisfied all requirements for exercise
of the Option pursuant to its terms.

                  (b) Throughout the term of any Option granted pursuant to the
Plan, the Company shall make available to the holder of such Option, not later
than one hundred twenty (120) days after the close of each of the Company's
fiscal years during the Option term, such financial and other information
regarding the Company as comprises the annual report to the stockholders of the
Company provided for in the bylaws of the Company.

                                       15

<PAGE>

                  (c) Nothing in the Plan or any instrument executed or Stock
Award granted pursuant thereto shall confer upon any Participant any right to
continue in the employ of the Company or any Affiliate (or to continue acting as
a Director or Consultant) or shall affect the right of the Company or any
Affiliate to terminate the employment of any Employee, or the relationship as a
Director or Consultant of any Director or Consultant with or without cause.

                  (d) To the extent that the aggregate Fair Market Value
(determined at the time of grant) of Stock with respect to which Incentive Stock
Options are exercisable for the first time by any Optionee during any calendar
year under all plans of the Company and its Affiliates exceeds one hundred
thousand dollars ($100,000), the Options or portions thereof which exceed such
limit (according to the order in which they were granted) shall be treated as
Non-statutory Stock Options.

         13.      ADJUSTMENTS UPON CHANGES IN STOCK.
                  ----------------------------------

                  (a) If any change is made in the Stock subject to the Plan, or
subject to any Stock Award (through merger, consolidation, reorganization,
recapitalization, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or otherwise), the Plan and outstanding Stock Awards will
be appropriately adjusted in the class(es) and maximum number of shares subject
to the Plan and the class(es) and number of shares and price per share of Stock
subject to outstanding Stock Awards.

                  (b) In the event of: (1) a merger or consolidation in which
the Company is not the surviving corporation or (2) a reverse merger in which
the Company is the surviving corporation but the shares of Stock outstanding
immediately preceding the merger are converted by virtue of the merger into
other property, whether in the form of securities, cash or otherwise, then, at
the sole discretion of the Board and to the extent permitted by applicable law:
(i) any surviving corporation shall assume any Stock Awards outstanding under
the Plan or shall substitute similar Stock Awards for those outstanding under
the Plan, or (ii) such Stock Awards shall continue in full force and effect. In
the event any surviving corporation refuses to assume or continue such Stock
Awards, or to substitute similar awards for those outstanding under the Plan,
the Stock Awards shall be terminated if not exercised prior to such event. In
the event of a dissolution or liquidation of the Company, any Stock Awards
outstanding under the Plan shall terminate if not exercised prior to such event.

                                       16

<PAGE>

         14.      AMENDMENT OF THE PLAN.
                  ----------------------

                  (a) The Board at any time, and from time to time, may amend
the Plan. However, except as provided in Section 13 relating to adjustments upon
changes in Stock, any amendments shall be approved by the shareholders of the
Company where required by law.

                  (b) It is expressly contemplated that the Board may amend the
Plan in any respect the Board deems necessary or advisable to provide Optionees
with the maximum benefits provided or to be provided under the provisions of the
Code and the regulations promulgated thereunder relating to Incentive Stock
Options and/or to bring the Plan and/or Incentive Stock Options granted under it
into compliance with the Code.

                  (c) Rights and obligations under any Stock Award granted
before amendment of the Plan shall not be altered or impaired by any amendment
of the Plan unless (i) the Company requests the consent of the person to whom
the Stock Award was granted and (ii) such person consents in writing.

         15.      TERMINATION OR SUSPENSION OF THE PLAN.
                  --------------------------------------

                  (a) The Plan shall terminate ten (10) years following its
effective date. Despite the preceding sentence, the Board may suspend or
terminate the Plan at any time. No Stock Awards may be granted under the Plan
while the Plan is suspended or after it is terminated.

                  (b) Rights and obligations under any Stock Award granted while
the Plan is in effect shall not be altered or impaired by suspension or
termination of the Plan, except with the consent of the person to whom the Stock
Award was granted.

         16.      EFFECTIVE DATE OF PLAN.
                  -----------------------

         The Plan shall become effective upon the later of the date it is first
adopted by the Board or approved by the Company's shareholders.

                                       17

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